1. Basis of preparation of financial statements
The financial statements are prepared and presented under the
historical cost convention, on the accrual basis of accounting except
for certain derivative instruments which are measured at fair value in
accordance with generally accepted accounting principles in India
(Indian GAAP) and comply in all material respects with the accounting
standards notified in the Companies (Accounting Standards) Rules 2006,
(as amended) issued by the Central Government, in consultation with
National Advisory Committee on Accounting Standards (''NACAS'') and
relevant provisions of the Companies Act, 1956 (''the Act'') read with
General Circular 08/2014 dated 04 April 2014 issued by Ministry of
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
a) Shares held by holding company and subsidiary of holding company:
255,351,805 (2013: 255,351,805) Equity shares of Rs. 2 each, fully
paid-up, are held by the Holding Company, Siemens AG, Germany;
11,738,108 (2013: 11,738,108) Equity shares of Rs. 2 each, fully
paid-up, are held by Siemens VAI Metals Technolo- gies GmbH, a 100%
subsidiary of Siemens AG, Germany.
Notes to the financial statements (Continued) as at 30 September 2014
(Currency: Indian rupees millions)
b) Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs. 2 per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividends in Indian rupees.
During the year ended 30 September 2014, the amount of per share
dividend recognised for distribution to equity shareholders is Rs. 6
(2013: Rs. 5)
In the event of liquidation of the Company, the holder of equity shares
will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts (if any). The distribution
will be in proportion to the number of equity shares held by the
2 Commitments and contingent liabilities
(a) Commitments 2014 2013
Estimated amount of contracts remaining
to be executed on capital account
and not provided for (net of advances) 629 682
(b) Contingent liabilities
Income tax (excluding interest) 170 201
Excise / sales tax liabilities, under dispute 3,464 1,945
Customs liabilities, under dispute 120 120
Claims against the company not acknowledged as debts 537 105
In respect of above contingent liabilities, the future cash outflows
are determinable only on receipt of judgements pending at various
forums / authorities.
3 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
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.
Provision for other matters
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
Lease rent debited to the statement of profit and loss Rs. 790 (2013:
Rs. 965) Sub-lease payments recognised in the statement of profit and
loss Rs. 51 (2013: Rs. 74)
There is no contingent rent recognised in the statement of profit and
loss General description of the leasing arrangement:
(i) The Company has entered into operating lease arrangements for its
office premises, storage locations, machinery, residential premises and
motor cars for its employees.
(ii) The future lease rental payments are determined on the basis of
the monthly lease payment terms as per the agreements.
(iii) At the expiry of the non cancellable lease period the option of
renewal rests with the Company.
(iv) Some of the lease agreements have escalation clause ranging from
5% to 15%. There are no exceptional / restrictive covenants in the
4. (iii) Other disclosures :
* Inter-segment prices are normally negotiated amongst the segments
with reference to the costs, market price and business risks.
* Profits / losses on inter segment transfers are eliminated at the
* During the year, there has been a reorganisation of certain
businesses across segments and accordingly, the figures in relation to
Industry, Infrastructure and Cities and unallocable for the previous
year have been regrouped to make them comparable.
(iv) 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 five
segments. These segments are the basis for management control and
hence, form the basis for reporting. The business of each segment
comprises of :
* Infrastructure and Cities:- Provides Electrical Installation
Technologies, i.e. Products for Building, e.g. Miniature Circuit
breakers, Distribution boards, Residual Current Circuit Breakers etc.
It also provides solutions for rail automation, railway
electrification, light and heavy rail, locomotives, trains, turnkey
projects and integrated services. Also provides solutions for the
automation of power grids to products like medium- voltage switchgear
* Energy:- Offers highly efficient products and solutions for power
generation based on fossil fuels. It ranges from individual gas and
steam turbines and generators, to turnkey power plants. Also offers
customers products and solutions used for the extraction, conversion
and transport of oil and gas. Also provides solutions for power
generation and distribution including products and solutions in the
high-voltage field - such as High Voltage Direct Current (HVDC)
transmission systems, substations, switchgear and transformers.
* Industry:- Provides complete range of automation products & systems,
industrial automation systems & low- voltage Switchgears, complete
range of large and standard drives and motors, special purpose motors,
process and motion control systems. Also 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.
* Healthcare:- 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.
* Others:- Services provided to other group companies and lease rentals
have been classified as Others.
Geographical Segments: The business is organised in two geographical
segments i.e. within India and outside India.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
5. Disclosure pursuant to Accounting Standard - 15 ''Employee Benefits''
(i) Defined Contribution Plans
Amount of Rs. 240 (2013: Rs. 240) is recognised as an expense and
included in employee benefits expense (Refer note 22) in the
statement of profit and loss.
6. Disclosure pursuant to Accounting Standard - 15 ''Employee Benefits''
a) The fund formed by the Company manages the investments of the
Gratuity Fund. Expected rate of return on investments is determined
based on the assessment made by the Company at the beginning of the
year on the return expected on its existing portfolio, along with the
estimated incremental investments to be made during the year. Yield on
portfolio is calculated based on a suitable mark-up over the benchmark
Government securities of similar maturities. The Company expects to
contribute Rs. 150 (2013: Rs. 150) to gratuity fund in 2014-15.
b) The estimates of future salary increases, considered in actuarial
valuation, take in to account inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
c) The Company has contributed Rs. 457 (2013: Rs. 449) towards
provident fund during the year ended 30 September 2014. The Guidance on
Implementing AS 15, Employee Benefits (Revised 2005) issued by
Accounting Standard Board (ASB) states that benefits involving employer
established provident funds, which require interest shortfalls to be
recompensed are to be considered as defined benefit plans. The Actuary
has accordingly provided a valuation and based on the assumptions
provided below there is a shortfall as at 30 September 2014.
(iii) General descriptions of significant defined plans
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 Company''s
Scheme whichever is more beneficial.
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 employee''s spouse. The Company reimburses the
employees for expenses incurred over and above the claim accepted by
the insurance company. The Company pays 80% of difference between
liability incurred by employee and claim received from insurance
company subject to ceiling based on the grade of employees.
7. Derivative Instruments a) Forward Contracts
The Company uses forward contracts to mitigate its risks associated
with foreign currency fluctuations having underlying transaction and
relating to firm commitments or highly probable forecast transactions.
The Company does not enter into any forward contract which is intended
for trading or speculative purposes.
The forward contracts have been converted in Indian rupees, at the spot
rates, as at 30 September to facilitate reading purposes only.
The Company has a policy of hedging its foreign currency exposure on a
* denotes figures less than a million
8. Discontinuing operations
The Board of Directors and the Committee of Directors at their meetings
held on 05 November 2014 and 08 November 2014 respectively, considered
and approved a proposal to sell and transfer the Metals Technologies
business, forming part of the Industry segment of the Company to a
subsidiary (which is being incorporated) of Siemens VAI Metals
Technologies GmbH, Germany for a consideration of Rs. 10,233 with
effect from the close of business hours on 31 December 2014, subject to
the approval of shareholders by requisite majority.
9. Proposed acquisition
The Board of Directors at its meeting held on 30 January 2014, had
approved the acquisition of 100% Equity stake in Siemens Rail
Automation Pvt. Ltd. (SRAPL) from Siemens International Holding BV,
Netherlands (99.99%) and Siemens AG (0.01%) for a sum of Rs. 550.
Subsequent to the year end, the Company has acquired SRAPL which
accordingly has become a subsidiary of the Company effective from 01
10. Prior year comparatives
Previous year''s figures have been regrouped / reclassified wherever
necessary, to conform to current year''s classification.