Siemens Ltd to set up subsidiary to house energy business

Siemens Ltd has taken the first exploratory step towards demerging its energy business, with the board approving the setting up of a wholly-owned subsidiary for that purpose.

The board of directors in a meeting today, “authorised the management to commence exploratory steps as may be required to examine a potential demerger of the company’s energy business…”, it said in an exchange filing.

It said it had approved “the immediate incorporation of a wholly-owned subsidiary in Mumbai on the basis that the proposed subsidiary may be required if and when the board decides to implement the aforesaid demerger.”

This follows a request made by its promoters, Siemens AG and Siemens Energy, to “consider, evaluate and, thereafter, start taking exploratory steps towards a potential demerger of the company’s energy business into a separate entity.”

Siemens Ltd’s shares were up over 5 per cent at Rs 4,119.95 on the NSE in afternoon trades. The stock has appreciated over 15 per cent during a 30-day period to date.

In November, Siemens AG had said it intended making this merger proposal, post which Siemens Energy would acquire a majority stake in the demerged entity. The demerger is expected to be completed by 2025.

The restructuring is part of Siemens Group’s plan to unbundle Siemens Energy and Siemens AG in India. In 2020, when Siemens Energy was established under a restructuring of the Siemens Group, the Indian subsidiary was not unbundled for administrative reasons. In FY22 (year-ending September), Siemens India’s energy business reported a revenue of Rs 5,371 crore, contributing 32.6 per cent to total revenues

The restructuring also involves Siemens AG buying 18 per cent more stake in the Indian subsidiary from Siemens Energy, which transaction was done last week, according to an exchange filing. The parent acquired 6.4 crore shares for Rs 18,677.5 crore, taking its stake in Siemens Ltd to 69 per cent.

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