Siemens bets on India’s growth, move towards sustainability

Mumbai: Siemens is betting on India's economic expansion and its move towards digitalisation and sustainability that is fast gaining momentum to support the company’s growth in the coming years, two top executives at the German engineering major said.

The company will also have a sharp focus on expansion into new fields, either through organic or inorganic investments, said Sunil Mathur, the managing director of Siemens Ltd, the Indian-listed unit of the firm.

"As the business opportunities are coming, the board is beginning to see the business cases and is allocating capital over here based on how the market is developing,” Mathur told Mint. “At the same time, they challenge me to come back with fresh investment opportunities.”

“We did C&S Electric acquisition, we've done Mass-Tech, and the board also decided that we will get into rolling stock. There was a huge investment over there (railways). Now we've got a 3-billion-euro order in locomotives, which wasn't there earlier on,” he said.

Siemens acquired the Indian business of C&S Electricin 2021 and the electric vehicle (EV) division of Mass-Tech last year in a bet on rising demand for electrification and increasing penetration of EVs in India. The company’s mobility division last year won an Indian Railways contract to supply 1,200 electric locomotive engines.

The focus of Indian companies on sustainability has been increasing in recent years, driven by a push for energy efficiency, requirements for exports to other parts of the world, customer demand for greener products in consumer-facing companies and due to regulations, said Judith Wiese, chief people & sustainability officer at Siemens AG, the Munich-based parent company.

To keep up with this, Siemens has invested around $1 billion in India over the last 6-7 years to acquire businesses, develop new units and upgrade its factories, she said.

“With the drive for clean technology and clean mobility, there has been a lot of government investment and also lots of private sector investment (in this area). This is also where we have a chance to transition and grow with,” she said.

“We've been around for a while, and we've invented ourselves over and over again. And I think now we're at a next stage of evolution where the lines are blurring between what is hardware, software-enabled-hardware and software, and so the journey of digitalization is obviously a huge one,” Wiese said.

The company has gone through a significant portfolio change across the globe in recent years, including exiting several non-core businesses to become what Siemens calls a focused technology company. It sold its businesses including its electric commercial vehicles powertrain unit, its mail and parcel unit, and high-voltage grid components business called Trench. The company also spun off its gas and power business into a separately-listed company called Siemens Energy.

“This has been really one of the reasons why Siemens globally is still around, 175 years later, because they're continuously reinventing themselves ahead of the market,” Mathur said.

“The portfolio changes, the structuring, the revised focus - we went from being a mechanical to electrical to automation company. Now we've become a technology company, and this is way ahead of the curve. But every time you want to move ahead of the curve, you've got to reshuffle your portfolio,” he said.

The company’s restructuring has been highly effective, with its new businesses garnering significant orders, he said, adding that this has been rewarded by shareholders.

The Siemens Ltd stock has gained over 350% in the last five years to reach ₹4,665.25 on the BSE as of last week. The benchmark Sensex has gained around 95% over the same period. Globally, the stock of Siemens has nearly doubled in the last five years on the Frankfurt Stock Exchange, beating the benchmark DAX, which has gained around 50% over the same period.