SENSEX NIFTY India | Notes to Account > Infrastructure - General > Notes to Account from Siemens - BSE: 500550, NSE: SIEMENS


BSE: 500550|NSE: SIEMENS|ISIN: INE003A01024|SECTOR: Infrastructure - General
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« Sep 15
Notes to Accounts Year End : Sep '16

a) Shares held by holding company and subsidiary of holding company:

255,351,805 (2015: 255,351,805) Equity shares of Rs. 2 each, fully paid-up, are held by the Holding Company, Siemens AG, Germany;

11,738,108 (2015: 11,738,108) Equity shares of Rs.2 each, fully paid-up, are held by Siemens Metals Technologies Vermogensverwaltungs GmbH (formerly known as Siemens VAI Metals Technologies GmbH), a 100% subsidiary of Siemens AG, Germany

As per records of the Company, including its register of shareholders / members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

* denotes figures less than a million

e) 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 2016, the amount of per share interim dividend distributed to equity shareholders is Rs.27.50 (2015: Rs.Nil) aggregating Rs.9,793. The amount of per share final dividend recognized for distribution to equity shareholders is Rs.6 (2015: Rs.10).

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 shareholders.

1 Fixed assets (Continued)

i Gross block of buildings includes Rs.831 (2015: Rs.392) representing 365 shares of Rs.50 each and 11 shares of Rs.100 each (2015: 345 shares of Rs.50 each and 10 shares of Rs.100 each) in various co-operative housing societies respectively.

iv Plant and equipments includes Gross Block of Rs.25 (2015: Rs.25) and Net Block of Rs.5 (2015 Rs.7) cost incurred by the Company on certain assets ownership of which vests with the West Bengal State Electricity Board.

Particulars in respect of loans and advances in the nature of loans as required by Regulation 53(f) read with Para A of Schedule V of the the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and section 186 of the Companies Act, 2013

32 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 up to closure of the contract (including warranty period).

Provision for loss orders

A provision for expected loss on construction contracts is recognized 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 respective events.

Lease rent debited to the statement of profit and loss Rs.677 (2015: Rs.676)

Sub-lease payments recognized in the statement of profit and loss Rs.240 (2015: Rs.32)

The future sub-lease payments expected to be received under non cancellable sub-lease as at 30 September 2016 is Rs.1,238 (2015: Rs.Nil)

There is no contingent rent recognized 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% pa. There are no exceptional / restrictive covenants in the lease agreements.

Lease income recognized during the year in statement of profit and loss Rs.554 (2015: Rs.265)

There is no contingent rent recognized in the statement of profit and loss.

General description of the leasing arrangement:

(i) The Company has entered into operating lease arrangements of its factory premises, office premises, storage locations, machinery and residential premises.

(ii) The future lease rental income is determined on the basis of the monthly lease terms as per the agreements.

(iii) At the expiry of the non cancellable lease period the option of renewal rests with both parties.

(iv) The lease agreements have escalation clause of 5% to 10% pa. There are no exceptional / restrictive covenants in the lease agreements.

2 (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 Company level.

- During the year, there has been a reorganization of certain businesses across segments and accordingly, the figures 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 eight segments. These segments are the basis for management control and hence, form the basis for reporting. The business of each segment comprises of :

- Power and Gas: - Provides products and solutions for generation of electricity from fossil and renewable fuels for utilities, independent power producers and engineering, procurement and construction (EPC) companies and the reliable transport of oil and natural gas.

- Energy Management: - Supplier of products, systems, solutions and services for transmission and distribution of electrical energy for power utilities and industrial companies. Portfolio ranges from systems for low-voltage grids and distribution grids to solutions for smart grids and energy automation systems to power supply systems for industrial plants and high-voltage transmission systems.

- Building Technologies: - Provider of safe, secure, energy-efficient and eco-friendly buildings and infrastructures. As a technology partner, consultant, service provider, systems integrator and product vendor, offerings range from fire safety, security, building automation, heating, ventilation, air conditioning and energy management.

- Mobility: - Supplier of solutions for passenger and freight transportation - including rail vehicles, rail automation systems, rail electrification systems, road traffic technology and IT solutions.

- Digital Factory: - Contains portfolio of leading edge software solutions and automation technologies covering the complete life cycle from product design and production execution to services for manufacturing companies.

- Process Industries and Drives: - Provides products, systems, solutions and services across entire life cycles for all industry sectors.

- Healthcare:- Provides technology for the healthcare industry - medical imaging, laboratory diagnostics and solutions for the healthcare IT.

- Metals Technologies: - Provides Metallurgical Plant Building Technology catering services, design and engineering, equipment supply and supervision of erection and commissioning of wire rods and bar mills.

- Others:- Services provided to other group companies and lease rentals have been classified as Others.

Geographical Segments: The business is organized 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 corporate items

Unallocated items include general corporate items which are not allocated to any business segment.

3 Disclosure pursuant to Accounting Standard - 15 ''Employee Benefits'' :

(i) Defined Contribution Plans

Amount of Rs.210 (2015: Rs.222) is recognized as an expense and included in employee benefits expense (Refer note 21) in the statement of profit and loss.

* Plan assets include balance of ''208 which is in process of being transferred to the Gratuity Trust of Siemens Healthcare Pvt. Ltd. pursuant to the transfer of Healthcare undertaking as detailed in note 42(a).

* Plan assets include balance of ''208 which is in process of being transferred to the Gratuity Trust of Siemens Healthcare Pvt. Ltd. pursuant to the transfer of Healthcare undertaking as detailed in note 42(a).

b) 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.172 (2015: Rs.153) to gratuity fund in 2016-17.

c) 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.

d) The Company has contributed Rs. 497 (2015: Rs.493) towards provident fund during the year ended 30 September 2016. 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 no shortfall as at 30 September 2016.

(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 Company''s Scheme whichever is more beneficial.

II Medical

Post-Retirement Medical Benefit is paid to eligible employees in case of survival up to 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.

4 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.

(a) I n accordance with the periodic impairment assessment, the Company has re-assessed the usability of certain assets and consequently recognized impairment loss of Rs.355 (2015: Rs.Nil)

(b) Earlier, the Company had recognized impairment loss on wind power manufacturing facility which was shown under capital work-in-progress. During previous year, the Company had entered into leasing agreement for the said facility on an as is where is basis. Accordingly, the said facility was capitalized under fixed assets and investment property and impairment provision had been reassessed considering value in use and pre-tax discount rate of 11%. Consequently, an impairment loss of Rs.1,032 and other consequential provisions of Rs.35 was reversed in previous year.

(c) During previous year, the Company had amended the gratuity plan to remove the ceiling for gratuity payout to employees. Accordingly, the one time impact of the increase in the gratuity obligation was shown under exceptional items.

5 Discontinued operations

a) The Board of Directors at its meeting held on 4 March 2016 and the Members of the Company by way of Postal Ballot which closed on 27 April 2016, approved the sale and transfer of the Healthcare undertaking forming the Healthcare segment of the Company to Siemens Healthcare Private Limited (a subsidiary of Siemens AG, Germany) for a consideration of Rs.30,500 as a slump sale on a going concern basis, with effect from commencement of business on 1 July 2016 and recorded a profit of Rs.30,278 on sale of Healthcare undertaking which is shown under exceptional items (Refer note 41). Corresponding tax expense on the said transaction amounts to Rs.7,099.

b) The Board of Directors and the Committee of Directors at their meetings held on 5 November, 2014 and 8 November, 2014 respectively, had approved sale and transfer of it''s Metals Technologies (MT) business which formed part of Metals Technologies segment of the Company to VAI Metals Technologies Pvt. Ltd. (a subsidiary of Siemens VAI Metals Technologies GmbH, Germany) as a slump sale on a going concern basis for a consideration of Rs.10,233 with effect from the close of business hours on 31 December 2014 and had recorded a profit of Rs.7,120 on sale of MT business which was shown under exceptional items (Refer note 41). Corresponding tax expense on the said transaction amounted to Rs.1,785.

6 Change in accounting policy

During previous year, the Company had changed its accounting policy for revenue recognition of its Healthcare business whereby the equipment sale are now recognized on installation and extended warranty was recognized over the warranty period as opposed to the earlier practice whereby the revenue for both equipment and extended warranty was recognized on dispatch.

Consequently, the revenue from sale of products, sale of services and profits were lower by Rs.1,013, Rs.1,120 and Rs.74 respectively.

7 Prior year comparatives

Pursuant to the transfer of Healthcare undertaking and Metals Technologies business (Refer note 42) during current and previous year respectively, the current year figures are not strictly comparable with those of the previous year. Previous year''s figures have been regrouped / reclassified wherever necessary, to conform to current year''s classification.

Source : Dion Global Solutions Limited
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