Siemens

1.  issue of bonus shares
 
 Pursuant to the approval of shareholders, the Committee of Directors
 for allotment of bonus shares, at their meeting on 12 March 2008 issued
 bonus shares aggregating Rs 337.16 million by capitalization of
 securities premium.  Consequent to the allotment of the bonus shares,
 the paid up share capital of the Company has increased from 168,580,100
 equity shares of Rs 2 each, fully paid up to 337,160,200 shares of Rs 2
 each, fully paid up.
 
 2.  Amalgamation of Siemens Industrial Turbomachinery Services Private
 Limited (SITS)
 
 Pursuant to the scheme of amalgamation (the scheme) of the erstwhile
 SITS with the Company as approved in the Board Meeting held on 22
 November 2007 and subsequently sanctioned by the Honorable High Court
 of Karnataka on 26 September 2008, the assets and liabilities of the
 erstwhile SITS were transferred to and vested in the Company with
 effect from 1 April 2008. Accordingly, the scheme has been given effect
 to in these accounts.
 
 The operations of SITS include overhauling and servicing of gas
 turbines.
 
 The amalgamation has been accounted for under the pooling of
 interests method as prescribed by AS -14 Accounting for
 Amalgamations. Accordingly, the assets, liabilities and other reserves
 of the erstwhile SITS as at 1 April 2008 have been taken over at their
 book values.
 
 Net deficit of Rs 172,640 being the difference between the equity
 shares of SITS and the value of investment in SITS by the Company, has
 been debited to the profit and loss account.
 
 In view of the aforesaid amalgamation with effect from 1 April 2008,
 the figures for the current year are not strictly comparable to those
 of the prior year.
 
 3.  Discontinued operations
 
 (a) Building Technologies:
 
 The Board of Directors of the Company at its meeting held on 23 April
 2007 approved a detailed formal plan for the discontinuance of its
 business activities pertaining to Building Technologies (SBT)
 segment of the Company.
 
 During the previous year, the shareholders pursuant to the provisions
 of section 293(1)(a) and section 192A of the Act approved the sale and
 transfer of SBT segment to Siemens Building Technologies Private
 Limited (SBTPL), a subsidiary of the Company. Accordingly, the
 Company entered into a business transfer agreement with SBTPL to
 transfer the business of SBT segment on a slump sale basis as a going
 concern for a total consideration of Rs 275,000 with effect from 1
 October 2007. The Company recognised a pre-tax profit of Rs 10,635 on
 account of sale of the SBT segment. The income tax expense on the
 profit on sale of SBT segment business is Rs 1,969.
 
 As per the business transfer agreement, the Company has received
 380,887 shares of SBTPL as consideration for sale of the SBT segment.
 
 (b) Automotive
 
 The Board of Directors of the Company at its meeting held on 23 April
 2007 approved a detailed formal plan for the discontinuance of its
 business activities pertaining to Automotive (SVDO) segment of the
 Company.
 
 During the previous year, the shareholders pursuant to the provisions
 of section 293(1 )(a) and section 192A of the Act approved the sale and
 transfer of SVDO segment to Continental Automotive Components (India)
 Private Limited (formerly Siemens VDO Automotive Components Private
 Limited) (CACPL). Accordingly, the Company entered into a business
 transfer agreement with CACPL to transfer the business of SVDO segment
 on a slump sale basis as a going concern for a total consideration of
 Rs 1,700 million with effect from 1 December 2007. The Company received
 the consideration during the year end and recognised a pre-tax profit
 of Rs 1,235 million on account of sale of the SVDO segment. The income
 tax expense on the profit on sale of SVDO segment business is Rs 262
 million.
 
 (c) Information and communication
 
 The Board of Directors of the Company at its meeting held on 23
 November 2006, approved a detailed formal plan for the discontinuance
 of its business activities pertaining to enterprise networks and
 services (EN) which form part of the Information and Communication
 division of the Company. During the previous year, the shareholders
 pursuant to the provisions of section 293(1 )(a) and section 192A of
 the Act approved the sale and transfer of EN division to Siemens
 Enterprise Communications Private Limited(SECPL). Accordingly, the
 management entered into a business transfer agreement with SECPL to
 transfer the business of EN division on a slump sale basis as a going
 concern for a total consideration of Rs 609 million with effect from 1
 August 2007.  The Company received the consideration in the previous
 year and recognised a pre-tax profit of Rs 524 million on account of
 sale of the EN business. The income tax expense on the profit on sale
 of EN business is Rs 117 million.
 
 4 Disclosure relating to Provisions
 
 Provision for warranty
 
 Warranty costs are provided based on a technical estimate of the costs
 required to be incurred for repairs, replacement, material cost,
 servicing and past experience in respect of warranty costs. It is
 expected that this expenditure will be incurred over the contractual
 warranty period.
 
 Provision for liquidated damages
 
 Liquidated damages are provided based on contractual terms when the
 delivery/ commissioning dates of an individual project have exceeded or
 are likely to exceed the delivery/ commissioning dates as per the
 respective contracts. This expenditure is expected to be incurred over
 the respective contractual terms upto closure of the contract
 (including warranty period).
 
 Provision for loss orders
 
 A provision for expected loss on construction contracts is recognised
 when it is probable that the contract costs will exceed total contract
 revenue. For all other contracts loss order provisions are made when
 the unavoidable costs of meeting the obligation under the contract
 exceed the currently estimated economic benefits.
 
 Personnel related provisions
 
 Personnel related provisions primarily include provisions for variable
 performance pay. Variable performance pay is expected to be paid in the
 next financial year. Personnel related provisions do not include
 expected payouts relating to the pending wage settlement and
 non-statutory ex-gratia where negotiations are in process and the
 disclosure of these amounts could prejudicially affect the interests of
 the Company.
 
 Contingencies
 
 The Company has made provisions for known contractual risks, litigation
 cases and pending assessments in respect of taxes, duties and other
 levies, the outflow of which would depend on the cessation of the
 respective events.
 
 Other disclosures :
 
 Inter-segment prices are normally negotiated amongst the segments with
 reference to the costs, market price and business risks.
 
 All profits/losses on inter segment transfers are eliminated at the
 Company level.
 
 Segment information :
 
 The primary and secondary reportable segments are business segments and
 geographical segments respectively.
 
 Business Segments: The business of the Company is divided into nine
 segments. These segments are the basis for management control and
 hence, form the basis for reporting. The business of each segment
 comprises of:
 
 Information & communication * :- Convergence communications solutions
 for enterprises, communications, video conferencing, and call centers,
 networking, mobility, teleworking, multimedia customer relation
 management. Provide mobile handsets and accessories.
 
 Automation & drives :- Provide the complete range of automation
 products & systems, from large and standard drives and motors, special
 purpose motors, process and motion control systems, industrial
 automation systems to low-voltage controls and distribution and
 electrical installation technology.
 
 Industrial solutions & services :- Undertakes turnkey projects in the
 industrial and infrastructure sectors over the entire life cycle
 including concept, engineering, procurement, supplies, installation,
 commissioning and after sales services.
 
 Power :- Provides automation solutions for a wide range of applications
 in power plants, focusing on a complete range of medium and high
 voltage switchgears, medium voltage switchboards, protection and
 control systems for sub-stations, power system control and energy
 management systems, meters, transformers and industrial turbines.
 
 Transport :- Provides solutions for rail automation, railway
 electrification, light and heavy rail, locomotives, trains, turnkey
 projects and integrated services.
 
 Healthcare & other services:- Provides diagnostic, therapeutic and
 life-saving products in computer tomography (CT), magnetic resonance
 imaging (MRI), ultrasonography, nuclear medicine, digital angiography,
 patient monitoring systems, digital radiography systems, radiology
 networking systems, lithotripsy and linear accelerators.
 
 Building Technologies * :- Executes projects for providing Integrated
 Building Management Systems including Building Automation Systems, Fire
 Alarm/Access Control/Security Systems.
 
 Automotive * :- Manufacturing and trading of dashboard instruments,
 tachographs and other allied equipments for the automobile industry.
 
 Real estate :- Provides comprehensive real estate management.
 
 Geographical Segments: The business is organised in two geographic
 segments i.e. domestic and exports.
 
 * Discontinued operations (refer Schedule 4)
 
 5 Disclosure pursuant to AS -15Employee Benefits:
 
 (i) Effective 1 October 2006, the Company adopted AS 15 on Employee
 Benefits. Pursuant to the adoption, the transitional obligations
 aggregating Rs 20,090 as at 1 October 2006 has been recorded with the
 transfer of the amount to the opening balance of the reserves and
 surplus.
 
 (ii) Defined contribution plans
 
 Amount of Rs 81,959 (2007 : Rs 72,971) is recognised as an expense and
 included in Personnel costs (Refer Schedule 21) in the profit and
 loss account.
 
 (iii) General Descriptions of significant defined plans
 
 I Gratuity Plan
 
 Gratuity is payable to all eligible employees of the Company on
 superannuation, death and permanent disablement, in terms of the
 provisions of the Payment of Gratuity Act, 1972 or as per the Companys
 Scheme whichever is more beneficial.
 
 II Leave Plan
 
 Eligible employees can carry forward and encash leave on
 superannuation, death, permanent disablement and resignation subject to
 maximum accumulation of 90 days.
 
 III Silver Jubilee
 
 Silver Jubilee benefit is payable to eligible employees on completion
 of 25 years of service. The benefit is payable at the rate of 1 to 1.5
 months salary for eligible employees on completion of 25 years of
 service.
 
 IV Medical
 
 Post-Retirement Medical Benefit is paid to eligible employees in case
 of survival upto the retirement age and after death, benefits are
 available to the employees spouse. The Company reimburses the
 employees for expenses
 
 6 Prior years comparatives
 
 Pursuant to the purchase of SITS (Refer Schedule 3) and discontinuation
 of the EN, SBT and SVDO segments (Refer Schedule 4), the figures
 of the current year are not strictly comparable to those of the
 previous year. Previous years figures have been regrouped/
 reclassified wherever necessary, to conform to current years
 classification.