India’s Siemens Ltd will explore a spin-off of its energy business at the behest of some of its stakeholders, sending its shares to a record high. Its board also approved the incorporation of a unit in the financial hub of Mumbai if and when it decides to implement the demerger.
The Munich-based company will set up a wholly-owned subsidiary in India to take forward the proposed separation of its energy business, it said in a release. The move reflects the importance of India to Siemens globally, with its India arm contributing 2.5 percent of the group revenue.
Siemens will continue to invest in the Indian market, with a long track record of success. The company first set up its operations in the country in 1922, a year before India achieved independence from British rule. In 1955, Siemens opened its first full-fledged factory in Worli, making switchboards. The firm was encouraged by the industry-friendly policies of Prime Minister Jawaharlal Nehru and has grown exponentially in the decades since.
Its products and solutions include integrated automation and digitalization for manufacturing industries, drives for process industries, intelligent infrastructure and buildings, efficient and clean power generation from fossil fuels and oil & gas, and transmission and distribution of electrical energy and rail vehicles and railway automation systems. The company also offers various diagnostic and therapeutic systems and medical laboratory equipment.
In recent years, Siemens has made significant changes to streamline its sprawling conglomerate. It merged its gas and power divisions to form Siemens Energy in 2015. The company spun off its Gamesa wind business last month, which has struggled with losses and debt. Last week, the company confirmed it was in talks with the government for loan guarantees, seeking backing worth as much as EUR16 billion for future projects.
The German industrial giant plans to offer guarantees to allow Siemens Energy to build more plants, potentially in India. The company will also sell a stake in the subsidiary to investors.
