New Delhi: Siemens Ltd announced on Tuesday that it plans to demerge its energy business and list it as Siemens Energy India Ltd, following a similar restructuring undertaken by its German parent company three years ago. Shareholders of Siemens Ltd will receive one share of Siemens Energy India Ltd for each Siemens Ltd share they hold. The process is anticipated to be completed by 2025.
Sunil Mathur, Managing Director and CEO of Siemens Ltd, stated that the demerger will allow both companies to chart their paths. “The market dynamics and capital allocation needs are significantly different for the energy sector compared to the industrial sector. This separation will enable each company to concentrate on their specific strategies, core portfolios, and capital allocation decisions,” he explained.
Previously, ABB India Ltd executed a similar demerger of its power transmission business, reflecting its shareholding in a new entity before selling its stake to Hitachi. Siemens Ltd had previously encountered opposition from shareholders in India over a proposal to sell its low-voltage and geared motors to Siemens Large Drives India Private Limited for ₹2,200 crore, a valuation confirmed by independent auditors.
Shriram Subramanian, Managing Director of proxy advisory firm InGovern, remarked that demerging the company and reflecting minority investors’ shareholding is a more transparent approach. He noted that selling the business to the parent company could raise valuation concerns, especially since the parent cannot vote on related party transactions.
In 2020, Siemens AG demerged its energy business into Siemens Energy AG. However, Siemens Ltd in India retained the energy business vertical. Last November, Siemens AG acquired an 18% stake in Siemens Ltd from Siemens Energy AG. In December, Siemens Energy India Ltd was established in preparation for the demerger. Over time, Siemens Energy AG will secure a majority stake in Siemens Energy India Ltd.
On Tuesday, Siemens Ltd reported a 74% increase in profit to ₹896 crore for the March quarter, with revenue rising by 19% to ₹5,248 crore. The company plans to invest an additional ₹500 crore to expand its manufacturing capacity in India. Mathur attributed the revenue growth to a “strong order backlog,” noting that profit growth benefited from volume and price effects, ongoing productivity measures, property sales, and subsidiary dividends.
Although some large orders have been deferred and there has been a slowdown in industrial automation product orders due to normalized demand, Siemens received new orders worth ₹5,184 crore during the quarter. Additionally, Siemens will invest ₹333 crore in an intelligent infrastructure business factory in Goa and ₹186 crore in a metro train manufacturing facility in Aurangabad, complementing its existing bogie manufacturing facility at the exact location.
