Engineering firm Siemens Ltd said its board has approved sale of its mechanical drives business to Siemens AG's arm Flender Drives for Rs 440 crore. Flender Drives Private Limited is a subsidiary of Flender GmbH, which in turn is a subsidiary of Siemens AG.
"The Board of Directors of Siemens Limited has approved the sale and transfer of its Mechanical Drives (MD) business for a consideration of Rs. 4,400 million (Rs 440 crore) to Flender Drives Private Ltd, subject to adjustment for the change in net current assets and capital expenditure, subsequent to June 30, 2020 up to the date of actual transfer of the MD business," Siemens said in a statement.
The consideration has been arrived at on the basis of an independent valuation, recommended by the Committee of Directors and the audit committee, the statement added.
The sale and transfer of the business is on a going concern and slump sale basis, with effect from January 1, 2021.
The same is subject to receipt of requisite statutory and regulatory approvals, it added.
The mechanical drives business within Siemens Ltd achieved a revenue of Rs 683.8 crore for FY 2019, with an operating loss of Rs 55.3 crore.
"Potential growth in this business will require substantial Capex and moreover, there are no synergies with the existing businesses of Siemens Limited.
"Keeping the interests of the shareholders in mind, the Board of Siemens Limited has approved the sale of this business to Siemens AG which has also announced their intention to publicly list this business via a spin-off," Siemens Limited MD and CEO Sunil Mathur said.