Siemens Ltd is a subsidiary of Siemens AG Germany. Over the last few years, it has focused on restructuring its finances and business portfolio. Siemens is planning to invest more in India. Siemens is also expanded its medical equipment factory in Goa by developing X-ray equipment for the company globally. Company is eyeing to outsource its IT needs from India and plans to expand its development centers in the country. Besides, penetrating further into the existing markets, it will explore new and untapped markets with new products, technology and solutions. Company plans to continue with its emphasis on cost reduction, through the alignment of various internal processes and the asset management measures already being practiced. Established in 1957, the company has a wide presence across the country. Siemens’s Worli plant makes medical equipment. The 3 Kalwe units make motors, switchgear, and switchboards. Nashik unit makes industrial automation products, controllers, PLCs and UPS. Joka works makes control boards and switchboards. Aurangabad makes switchgear and photovoltaic modules. Goa makes medical equipment. Company derives around 33% of its revenues from the automation and drives division, followed by 24% from the power division, 18% each from SISL and healthcare/other services divisions. In 2005, it acquired Siemens VDO Automotive, Demag Delaval Industrial Turbo machinery and 51% interest in Pimac Engineers and Services. Siemens has a vast global network of over 445,000 people, operating in over 190 countries.

Products & services—

Company has a dominant presence in the field of electrical and electronics engineering. It has the capability to integrate diverse products, systems and services into turnkey solutions across the life cycle of a project. It is also a major player in power, industrial projects, industrial automation, healthcare engineering, transportation and telecommunications. Company has a wide presence across the country, where its operations include 15 manufacturing plants and 16 sales offices.

Company is planning to focus on supplying equipment for women’s healthcare through its medical equipment division. Company is expanding operations in India through a “Centre of Excellence”, which would act as the hub for working on high voltage direct current projects all over the world. This would be a new department and operate as a profit center within the transmission and distribution department.

Recent developments—

In January 2010, Siemens announced that a consortium of the company and Siemens, Germany has won an order from Qatar General Electricity & Water Corporation (Kahramaa), Qatar worth Rs 29.56 billion. The commissioning of the project is scheduled to be completed in April 2013. The scope of work for this turnkey project includes complete design, engineering, supply, erection, civil, testing and commissioning of 14 new substation, 5 modification substation and 5 cable diversions.

In February, Siemens announced that it has received an order from Power Grid Corporation of India to construct a new 765 / 400 kv substation at Meerut (Uttar Pradesh) and augmentation of substations at Mandola (Uttar Pradesh) and Baalabgarh (Haryana). Company will supply the high-end technology products such as circuit breakers, current transformers, capacitor voltage
transformers, disconnectors, surge arrestors and solutions like substation automation. The order will be commissioned in January 2011 and has a value of nearly Rs 1 billion. Siemens also planned to invest more than Rs 18 billion in India over the next three years. A major part of this will be invested to set footprints in the renewable energy market and to expand presence in value priced products. Siemens will be investing Rs 5 billion over the next three years to build high end technology wind turbines for the Indian market. The first of these turbines should ship in 2012. Siemens will also make India a major centre for value-priced products. It will establish six new hubs in India, responsible for the design, development, production and sale of these products for India and for the world market. The goal is to generate total revenue of about Rs. 85 billion by fiscal 2020 with value priced products from India.

In February, Siemens has received an order from Prakash Industries, worth nearly Rs 550 million. The scope of work for this order includes design, engineering, manufacture, packing and forwarding, and supply of 100 mw bleed condensing turbo generator sets and supervision of its erection and commissioning. The said order will be commissioned by August 2011.

Valuation—
At current market price, stock is trading at 18.94 P/E multiple of its FY2011 estimated earnings. We recommend investors to BUY “Siemens India Ltd” with a medium to long-term investment horizon.