Siemens

We are all poised at a moment in our history, where economies across
 the world are witnessing a series of changes that are unprecedented in
 the scale and extent of their impact. Indeed, the last 12 months must
 rank amongst the most eventful and transformational periods in recent
 times. Closer to home, for most part of the last year, Indias economic
 prowess was a matter of awe for the international community. It was
 also a year where India has demonstrated its technical prowess in
 space, with the successful launch of a lunar probe.
 
 To briefly reflect on the events that have unfolded, India had begun
 the fiscal year on a buoyant note, as it continued on its phase of
 amazing growth. The initial market parameters were encouraging and once
 again reflected the multifaceted and multidimensional strengths of our
 domestic economy. However, as the year unfolded, global markets were
 subject to developments such as volatility in the price of crude oil,
 inflationary pressures and later on, the sub-prime crisis in the US.
 This resulted in tight liquidity conditions in the market. Over the
 last six-months, an economic slowdown has enveloped the whole world.
 Needless to say, India has also been impacted and consequently, the
 markets have witnessed a moderation in growth. Against this backdrop,
 Siemens Ltd.  was able to optimally stand up to the varied challenges
 and developments on its growth path.
 
 Performance Highlights
 
 During the year under review, Siemens recorded a steady growth, in
 accordance with the prevailing market trends.
 
 In comparison to earlier years, if we were to take away the effect of
 large projects, the growth of our base businesses was impressive. Our
 company had based its operations on certain guiding principles. A lot
 of emphasis was laid on the quality of our results, with a sustained
 focus on operational excellence. It was also our consistent endeavor to
 book healthy orders and to ensure professional execution. Consequently,
 we were able to absorb additional cost impacts in certain large
 projects, and yet consolidate our market position with a healthy order
 pipeline.
 
 For the year ended September 30, 2008, Sales Turnover increased by 7%
 and stood at Rs.82,955 million (Rs.8,296 crore), as compared to
 Rs.77,268 million (Rs.7,727 crore) in the corresponding period of the
 previous year. New Orders stood at Rs.87,182 million (Rs.8,718 crore)
 as compared to Rs. 101,085 million (Rs. 10,109 crore) in the
 corresponding period of the previous year, registering a drop of 14%.
 After adjusting the mega order impacts in the comparative fiscals, the
 Orders rose by 27%. The Unexecuted Order Value as of September 30, 2008
 stood at a healthy Rs. 98,338 million (Rs.9,834 crore), a rise of 5%
 over the previous fiscal.
 
 The companys Profit Before Tax stood at Rs. 8,918 million (Rs.892
 crore) for the year ended September 2008, as compared to Rs.8,742
 million (Rs.874 crore) in the previous year, registering an increase of
 2%. Our Profit After Tax remained steady and stood at Rs. 5,933 million
 (Rs.593 crore) as compared to Rs.5,965 million (Rs.597 crore) in the
 previous year. The effect on our profits was due to the additional cost
 impacts in large projects.
 
 Nevertheless, in tune with our tradition, the Board of Directors have
 recommended a dividend of Rs.3/- (150%) for an equity share of Rs.2/-
 each for the financial year ended September 2008. During the previous
 fiscal, the Company had paid a dividend of Rs.4.80 (240%), for an
 equity share of Rs.2/- each.
 
 Performance Analysis
 
 In many ways, the markets had witnessed steep variations during the
 previous fiscal and it was a true test of resilience for the market
 players. On our part, some of the tough business decisions that Siemens
 took last year have made our company stronger, less complex and faster.
 These changes placed us in a situation where our company could
 anticipate unfolding scenarios and act accordingly in a proactive
 manner. Throughout, our focus was clearly on driving healthy growth,
 and on acquiring orders that gave us good results.
 
 Our strategy was to focus on key growth areas - in domestic and export
 markets. One such example is Metals and Mining. We enhanced our local
 manufacturing competencies by setting up new capacities. For instance,
 our factories for Power Transformer and Instrument Transformers
 commenced operations during the year at Kalwa and Aurangabad
 respectively. Incidentally, in the Instrument Transformer segment,
 Siemens is the only manufacturer in India to offer SF6 Insulated
 Transformers that are reliable, safe and explosion proof. During the
 year, we also introduced several high-end products and solutions in the
 Indian market.
 
 Over the years, Siemens has developed a broad portfolio of solutions
 across diverse divisions. Following our structural re-organization at
 the global level, our businesses are now grouped into three sectors -
 Industry, Energy and Healthcare. This simple model, with its
 customer-focused structure and clear responsibilities has increased our
 efficiency and transparency. We are now able to approach our customers
 with the collective strengths of various divisions under one sector
 roof.
 
 Keeping in line with our strategy of strengthening the customer-centric
 portfolio, the Board has approved the proposal of buying the balance
 50% stake in Flender, which is currently held by Siemens AG. This
 business will then be integrated into Siemens Ltd. The Board has also
 approved the proposal of transferring the business of SIPS (our unit
 supporting back office operations) - to a 100% subsidiary of our parent
 company, Siemens AG. Continuing with its activities in Bangalore, SIPS
 will now focus on captive business to support global operations.
 
 People Excellence
 
 Our employees, who are fundamental force behind our success, continued
 to demonstrate their spirit of commitment and hard work. Their
 unrelenting determination to succeed, even in a tough and fiercely
 competitive market environment enabled us to build and sustain the
 financial stability of the company. During the year, we focused on
 excelling our workforce through several HR initiatives. A special
 emphasis was laid on training of business and technical skills across
 all levels from top management to workmen. Our resource management
 initiatives helped us control attrition to levels that were much lower
 than the industry average. This clearly proves the loyalty and pride
 expressed by our employees to be part of the Siemens Family.
 
 The Road ahead - Outlook for Siemens
 
 Taking a look at the present economic scenario, the Indian economy is
 going through a phase of moderation and several key sectors are
 experiencing a significant dip in growth. However, on an average, India
 should be able to achieve an economic growth of 7%, though the second
 half of the year looks bleaker. Going forward, to sustain economic
 growth, we need to aim at achieving higher growth across sectors. This
 definitely needs certain strong measures from the Government, coupled
 with a strategic operational focus from organizations that will help us
 weather tougher times. The investment in infrastructure is one such
 initiative that is crucial for our economy and we are sure that the
 Government will continue its commitment towards the same.
 
 Maintaining our strategic focus on the infrastructure sector, we have
 put in place a definitive strategy to optimally tap emerging
 opportunities and sustain profitable growth. Our company will continue
 to aim at key growth opportunities in the domestic as well as export
 markets.  Further, Siemens in India will be leveraged for regional and
 global markets as a sourcing base of products and services including
 R&D. Further, our company has proactively leveraged on its inherent
 strengths to improvise our sourcing and purchasing capabilities. We
 have also toughened our compliance processes.
 
 Conclusion
 
 Dear Shareholders, over the years, Siemens has kept pace with the
 evolution of the Indian economy, and maintained a sustained rate of
 growth. As a result, the company is financially strong today. We
 continue to have a comfortable level of liquidity and enjoy a debt free
 status. This will stand in good stead in supporting our initiatives for
 profitable growth.
 
 I am pleased to announce the arrival of a new member Mr. Sunil Mathur
 in to our family. Mr. Mathur, who has been the Executive Director since
 October 1, 2008, has also been appointed as the Chief Financial Officer
 (CFO) from December 1, 2008. His responsibilities of a Country CFO are
 in addition to his function of a Cluster CFO for the South Asia region
 comprising countries such as India, Sri Lanka, Bangladesh, Nepal,
 Bhutan and Maldives.  Mr. Mathur comes with a rich international
 experience especially in Germany and England. He has served as a CFO in
 several business units of Siemens globally and we are sure that with
 his global experience and financial insights, he will bring tremendous
 value to our company.
 
 Mr. Mathur has taken over from Mr. Patrick de Royer, who is now moving
 on to a new assignment in Siemens Netherlands. Mr. de Royer, during his
 three year tenure in India, had successfully managed growth with a
 clear focus on risk management, asset management and process
 improvement. He was also instrumental in leading our M&A projects. In
 2007, Mr. de Royer was named the best CFO in an MNC by IMA
 (International Markets Assessment). We thank him for his valuable
 contribution to Siemens Ltd. and wish him the very best for his future.
 
 At this juncture, I would also like to sincerely thank the Board, the
 management team and especially all the employees, who have time and
 again supported us in our growth journey. Looking into the future, with
 the commitment and zeal of all our employees, I am positive that
 Siemens will be able to meet the growth targets that the company has
 set for the coming fiscal.
 
                                                          Thank you
 
 Mumbai                                            Deepak S. Parekh
 December, 2008                                            Chairman