Home >companies >people >Smart cities, energy and mobility our target areas: Siemens India CEO

Siemens India will focus on profit-led growth and will go for orders that does not dilute its bottomline, said the company’s managing director and chief executive Sunil Mathur. For this, Mathur said, he will focus on three areas: smart cities, energy and mobility.

Siemens India has already floated a consortium to bid for smart city projects. The German conglomerate has committed to invest €1 billion in India as part of its growth strategy.

Mathur sees greenshoots in the economy and believes that private spending will follow increased public spending. “Every economy will have blips at some point in time, but I believe we are right now at the cusp of something great as a country," he said.

Edited excerpts from the interview:

What are three areas that Siemens will target in India?

Smart cities, energy and mobility. We will be there in Make in India as and when it picks up. We already have 22 factories in India and we have said as the demand comes we will add more. Or we will buy companies—whatever it takes to grow in India. What we are saying is investments can come in many ways. They can come in factory expansions or they can come in terms of inorganic growth.

I understand Siemens would now focus on profitable growth, selectly participate in large orders and focus on cash.

There are two strategies. We have decided to adopt the second one. One is you go for the topline. Growth and growth. It means sometimes you’ve got to drop your prices. It means you get into a price war. It means that you may be growing and gaining market share may be at the price of profitability. And there’s another strategy where my target is the bottomline and my driver is my topline. I will do business so long as it gives me a healthy bottomline. And the enabler to give me a healthy bottomline is my topline.

So profit will be focus?

Naturally, I want to gain market share and I will continue to gain market share because without gaining market share I will not even get a bottomline. But I will not compromise on bottomline for topline. In other words I do not want to take an order below a particular margin level. Even though it’s a large order and looks nice on my growth charts, it will be profit dilution. I do not want to do profit dilution. At the end of the day, what the stakeholders want is profit and dividend. The dividend comes out of profit and not turnover. So I have to ensure that the profit is there and I do it with customers who are paying me. That is why we will continue to concentrate on profit and cash and will use profit and cash as the targets and the topline will be enablers for growth.

Is there any change in the business model of healthcare?

The last budget in India announced that they are moving healthcare allocation from centre to the states. The intention also was to grow healthcare contribution from 1% of GDP to 2%. But instead of doing central spending, they want to now devolve it into the states. So instead of us going to one customer we now have to go to various states. Siemens has viewed healthcare as a growth area and therefore I have said technology in healthcare is heading in a different direction, and so you need to be prepared. We have to see how things are going.

Indian government has come out with various flagship projects including Make In India, power for all, health for all and smart cities. How are you going to gain from it?

We have technology that helps to bring a product into market 50% faster than anybody else with the help of automation, digitisation. We have a vertical which is known as digital factories. So the Make In India is made for Siemens. Next is 24/7 power for all. We have a vertical of power generation and transmission and distribution. In other words, from generation of power and to a switch, we are there. So 24/7 power is made for Siemens.

Next one is health care for all. I have products designed for Indian market. Fourth one is smart cities. We are global players for smart cities for last 10 years. We know what smart cities are. We have designed and built most sustainable buildings in the world. So smart cities are made for Siemens.

How important is India for Siemens?

We are excited by the programmes (such as Make In India and smart cities) that the government has announced. I had my entire board visiting India in September. They wanted to know what are the strategies for Indian market for next five years. Our global CEO had also announced Siemens’ willingness to invest €1 billion in India as a part of our growth strategy. So that shows the commitment of our parent company to India. Our global CEO and another board member responsible for Asia are on board of Siemens India, the only company in the world where they are on the board. Our global CEO has visited India four times. All these trends of electrification, digitisation and automation have terrific opportunities for us.

Where will you invest €1 billion in India? Which areas?

Again it depends on the demand. I don’t want to go out and just spend the money like that unless there is a requirement. If we win a large mobility order and if the order requires us to set up a factory, we will set up the factory.

On mobility, you lost out on a multi-billion dollar order. Last month your rivals General Electric and Alstom secured orders to set up about 40,000-crore worth diesel and electric locomotive factories in Marhora and Madhepura, respectively, in Bihar.

We lost one order. Everybody is shouting about the one order that we lost. I would have liked to win it. But it’s fine. You lose some and you gain some.

Are you waiting for any other large orders?

There’s another inquiry that has come and we have bid for it. It is the same size as the earlier ones.

Any plans to delist Siemens India?

We have not heard anything like that from our parent company.

So you still believe in India growth story?

I think we have got our act together. The macroeconomic conditions are favourable. There is a government that wants to drive growth. There is an industry that wants to push for growth as well. There is an intrinsic demand in the country that will fuel growth. There is a global environment at the end that leaves very few options for growth outside of India. It’s a perfect recipe for success. Can we trip over ourselves? Anyone can. But the likelihood is much lower than it was in the past.

Is there anything moving on the ground?

Some areas are moving forward. In railways, major changes are happening. I look at it from the perspective of whether purchase orders are coming or not. Thousands of crore worth of purchase orders are being issued by the government. Things are moving in transmission too. As a capital good manufacturer of the country, I see very clear traction.

Can you really make changes in cities?

Towards the smart city project, we have signed a consortium agreement with Confederation of Indian Industries (CII). We went out and joined hands with 10 companies that are technology leaders in their respective area. Together with these specialists, we have designed the perfect solutions. For money, we went out and got two banks. Deutsche Bank AG and KfW (a German development bank).

Are you seeing any greenshoots?

I am convinced that to kickstart the economy, to grow the economy, public spending will be the key driver. Private spending will follow public spending. Public spending has started happening in railways and transmission and distribution. But it has to pick up in the other areas. And when it picks up in the other areas, private spending will follow at some point. As of now, greenshoots one can say, yes, are beginning to be visible. But it needs to pick up.

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