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Siemens

BSE: 500550|NSE: SIEMENS|ISIN: INE003A01024|SECTOR: Infrastructure - General
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Chairman's Speech (Siemens) Year : Sep '17

Dear Shareholders,

During the Financial Year 2016-17, the global economy showed signs of a pick-up in sentiment and investments due to favorable economic conditions in the developed markets. In India, two significant reform measures announced by the government -demonetization in November 2016 and the introduction of Goods and Services Tax in July 2017 did impact the capital goods industry, though the announcement of the bank recapitalization programme and insolvency rules should have a positive impact on the economy. These landmark reforms do entail structural adjustments and recalibration in the short-term, but over the medium and longer term will enable the country to attain its true growth potential.

Large orders during the Financial Year were mainly driven by government investments in infrastructure. Muted growth was witnessed from the private sector and industrial capacity utilization still needs to improve. Large capital expenditure plans have, however, been announced during the Financial Year and hopefully some of these should materialize in the coming year. The growth of Siemens Limited is closely linked to the capital expenditure spend in the economy. Keeping in view market conditions in 2017, the Company delivered a strong performance, with order backlog touching an all-time high during the financial year.

Performance

The Company received New Orders valued at Rs.135,736 million for the Financial Year ended 30th September, 2017, a 12 percent increase over Rs.121,199 million in the Financial Year ended 30th September 2016. The Order Backlog as of 30th September 2017 stood at Rs.122,627 million - an increase of 23 percent compared with Rs.99,463 million in the previous year. Sales (excluding Other Operating Revenues) were up by 1 percent to Rs.110,602 million, compared with Rs.109,642 million in the previous year.

On a continuing operations basis, for the Financial Year ended 30th September 2017, Siemens Limited reported a 26 percent increase in New Orders at Rs.135,006 million compared to Rs.106,770 million in the Financial Year ended 30th September 2016. Sales from continuing operations, which was based on a strong order backlog, was at Rs.110,602 million, 14 percent higher than Rs.97,083 million in the previous financial year. The Company’s Profit before exceptional items and tax from continuing operations increased by 22 percent to Rs.11,016 million in the Financial Year 2016-17 compared to Rs.9,026 million in the Financial Year 2015-16. The Earning Per Share (EPS) before exceptional items from continuing operations stood at Rs.19.80, a 19 percent increase over the EPS of Rs.16.61 in the previous financial year.

Profits from Operations stood at Rs.8,546 million compared to Rs.7,939 million in the previous year.

For the Financial Year ended 30th September 2017, the Company’s Profit before Tax stood at Rs.16,691 million (including exceptional income of Rs.5,675 million) compared to Rs.39,416 million (including exceptional income of Rs.29,923 million) in the previous year. The Profit after Tax for the year was Rs.11,336 million, down by 61 percent compared with Rs.29,171 million in the previous year.

The Board of Directors has recommended a dividend of Rs.7/- per equity share of face value of Rs.2/- each (350%) for the Financial Year ended 30th September 2017.

Performance Analysis

From an operational perspective, the Company continued to focus on profitable growth, introducing innovative solutions to the market, and operational excellence.

Among the key highlights during the financial year, the Energy Management Division won a large order from Power Grid Corporation of India Limited for India’s first HVDC link featuring voltage-sourced converter technology. This was Siemens Limited’s largest order during the year. The Power and Gas Division won an order from ONGC for zero hour overhauling of power turbines - the first to be implemented in India.

The low-voltage switchgear factory under the Digital Factory Division became Siemens’ first truly digital factory in India. The globally-benchmarked factory can produce over 180 variants of products in one line, and one product every nine seconds. Process Industries and Drives Division won many orders from various government and private customers across cement, pharmaceuticals, defence, mining, industrial, shipping and ports, while also being recognized for leadership in energy-efficiency for its products. The Mobility Division too won contracts from Nagpur Metro, Diesel Locomotive Works and Indian Railways.

Business Responsibility

Siemens Limited significantly ramped up its Corporate Social Responsibility (CSR) activities during the Financial Year and now spends 2% of its average net profits of the last three years on various CSR projects. Project Asha, which focuses on enhancing living conditions through integrated rural development, has helped bring 1,065 acres of land under irrigation and made available 72 million litres of water to over 18,000 individuals. In line with Siemens Limited’s focus on skill development, the Scholarship Program, which is into its fifth year, is now supporting 285 students from low income families through four years of engineering studies and has enabled 57 of them to get employment. The introduction of the Dual Vocational Educational System in collaboration with state governments and Industrial Training Institutes across the country will also bring employment to thousands of low income talent. Further, contributions were made to support 2,000 families affected by floods in three districts of Assam and Bihar.

People Excellence

During the financial year, the Company maintained its focus on its employees, implementing several initiatives to retain, develop and sustain its committed, talented workforce. Flexible working hours, a new open office concept, focus on working women’s needs and on health of our employees such as healthy breaks and increased awareness of health management were some of the measures introduced during the year. The Company launched a sustained initiative to equip People Managers to create a great workplace experience within their work groups as well as driving an ownership culture within the organization. The Company also emphasized on identifying and grooming potential leaders through a structured framework as part of the potential development programme.

Outlook

The growth driver for the Company continues to be increased public sector investments in power generation, transmission and distribution as well as private sector capacity expansion.

The Company will also increase its focus on providing digital solutions to enable greater productivity and increase the competitiveness of our customers across all segments of our business. Siemens’ digital MindSphere platform is already gaining interest from many customers and pilot projects are ongoing. The Company expects continued focus in this area in the year ahead.

In conclusion, I would like to sincerely thank our customers, the board, management, unions and most importantly, the dedicated employees for their constant support and commitment to Siemens Limited.

Deepak Parekh

Chairman

Source : Dion Global Solutions Limited
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