Siemens India is a subsidiary of the US$ 110 bn German engineering behemoth Siemens AG, one of the largest engineering companies in the world. Siemens India operates in many areas like power (manufacturing generation and T&D equipments) and industrial solutions service (providing process automation, manufacturing automation drives). In health care services, the company manufactures diagnostic equipments and hearing equipments. During the period between FY03 and FY08, the company grew its revenues and net profits at compounded annual rates of 42% and 34% respectively.
Siemens’ standalone sales remained flat during the nine-month period ended June 2009. Also, the company discontinued some of its businesses during the period including Siemens Information Services Ltd., which was sold off to the parent company. Operating margins expanded during the period on the back of a fall in raw material expenses. Net profits saw an increase of 97% YoY for 9mFY09 largely on the back of a strong rise in operating margins.
Siemens has significantly benefited from the improvement in the country’s power scenario where increased investments are being pumped into setting up generation, transmission and distribution capacities. The company sold of one of its important and profitable subsidiaries, Siemens Information Services Ltd. (SISL) recently to its German parent Siemens AG. Overall, apart from the visibility that a large order book provides to Siemens in terms of future growth, Siemens strong position in its industry and large size will continue to help it bag big-ticket orders going forward. Further, ramp up in manufacturing capacity and, consequently, lower share of outsourced components shall further help Siemens’ improve its profitability levels.