The board of Siemens Limited approved the proposal to demerge its energy business into a separate legal entity – Siemens Energy India Limited – a wholly owned subsidiary of Siemens.

Siemens Energy India Limited will be subsequently listed and will mirror the shareholding of Siemens, upon the receipt of requisite approvals, the company says.

The multinational conglomerate says the demerger will lead to the creation of two strong and independent entities which are able to better address their respective markets and customers with a more focused approach. It also aims to unlock value of both businesses for shareholders.

Siemens will continue to be a technology-focused company in industry, infrastructure and mobility while Siemens Energy India will focus on being the most valued energy technology company supporting its customers in transitioning to a more sustainable world, the company says.

Siemens Energy India will provide solutions across the entire energy value chain – from power and heat generation, transmission to storage through a portfolio that includes conventional and renewable energy technology such as gas and steam turbines, hybrid power plants operated with hydrogen as well as power generators and transformers.

As per the scheme of arrangement, shareholders of Siemens will receive one share of Siemens Energy India for every one share of Siemens. The new entity will subsequently be listed on the BSE Limited and National Stock Exchange of India Limited.

“Siemens Energy India Limited and Siemens Limited will script new paths as two independent, publicly-listed companies. The underlying market drivers and capital allocation requirements are fundamentally different in the energy business compared to the industrial business. The demerger will enable both companies to pursue their specific strategies, focus on their core portfolios and take decisions on capital allocation. This will enable the full value of each of the businesses to be unlocked for the benefit of the shareholders,” says Sunil Mathur, managing director and chief executive officer, Siemens.

Siemens on Tuesday posted a 74% rise in March quarter profit at ₹896 crore, aided by higher revenues. Revenue during the quarter stood at ₹5,248 crore, a 19% increase over ₹4,400 crore in the March quarter 2023. The company, which follows the October-September financial year, received new orders of ₹5,184 crore.

“The second quarter of Fiscal Year 2024 showed a robust growth in Revenues built off a strong order backlog. Some large orders have been deferred. There has also been a slowdown in ordering of industrial automation products due to normalisation of demand following shorter delivery cycles,” says Mathur.

Siemens announced the expansion of two of its 32 factories in India. This is in addition to the capacity expansions of the Power Transformer factory in Kalwa and Vacuum Interrupter factory in Goa announced by the Company in November 2023. With this, total Capex investment is expected to exceed ₹1,000 crore.

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