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Financial year 2012–13 was yet another challenging year for the Indian economy. The investment scenario was weighed down by numerous factors such as delays in statutory approvals, slow decision–making, land acquisition issues, volatility in I commodity prices and exchange rates, higher capital costs and non–availability of raw material. Accentuating the low business and investor confidence, the Reserve I Bank of India (RBI) revised downward, the GDP growth forecast to 4.8 percent for the period April 2013 to March 2014.
The uncertain macro–economic environment also affected Siemens Ltd., which A operates in the business segments of infrastructure, power, industrial automation and healthcare. While order growth was reasonable, revenues declined and the Company's profitability was also impacted due to increased project costs, lower off–take of finished goods and project delays.
For the financial year ended September 30, 2013, the Company received new orders valued at Rs. 10,957.3 crores, a 7% increase over Rs. 10,235.1 crores in the financial year ended September 30, 2012. Sales were down by 12% to Rs. 11,145.2 crores, compared with Rs. 12,708.1 crores in the previous year.
The order backlog as of September 30, 2013 stood at Rs. 12,926.4 crores – a decline of 5% compared with Rs. 13,660.4 crores in the previous year. Profits from operations stood at Rs. 170.5 crores, down by 75% compared with Rs. 690.3 crores in financial year 2011–12.
For the year ended September 30, 2013, the Company's profit before tax stood at Rs. 218.6 crores, down by 58% compared with Rs. 520.9 crores in the previous year. The profit after tax for the year was Rs. 194 crores, down by 43% compared with Rs. 343.2 crores in the previous year.
The Board of Directors has recommended a dividend of Rs. 5 per equity share of face value of Rs. 2 per share for the financial year ended September 30, 2013. The Company had paid a dividend of Rs. 6 per equity share during the previous financial year.
Keeping the challenging economic conditions in perspective, all four Sectors – Energy, Healthcare, Industry and Infrastructure & Cities – performed at par with the market.
Among the highlights of the financial year 2012–13, the Energy Sector won an order to install a state–of–the–art distributed control system for the renovation and modernization of the Korba Stage–II plant of National Thermal Power Corporation. The Sector was awarded a contract by Bangladesh Steels Re–Rolling Mills Ltd. to supply the first private sector funded gas–insulated switchgear substation project in Bangladesh. It also established Global Engineering Centres in Coimbatore and Mumbai in order to strengthen its capability to support global customers with high quality, end–to–end solutions.
The Healthcare Sector received a major order from Sir HN Hospital and Research Centre, Mumbai (Reliance) for the complete imaging package. Additionally, NM Medical, a diagnostic imaging chain with a pan–India presence, selected Siemens MAGNETOM Spectra 3T MRI scanner for installation in its new diagnostic center at Sancheti Hospital in Pune. This will be one of the first installations of MAGNETOM Spectra with the newly introduced 3T MRI in the country. Other major highlights include the installation of India's first simultaneous PET MRI at Indraprastha Apollo, New Delhi and Somatom Definition Edge, the newly–introduced Cardiac CT scanner at PSG Hospital, Coimbatore.
The Industry Sector received an order from Rashtriya Ispat Nigam Ltd. to modernize the Visakhapatnam steel plant. The Steel Authority of India Ltd. signed a three–year Memorandum of Understanding (MoU) with the Sector's SITRAIN unit to provide training for its technical staff. The Sector also unveiled the Siemens Productivity Tour, a nationwide, multi–city mobile road show aimed at providing small and medium manufacturing enterprises across India with technologies that will enhance their productivity and efficiency.
The Infrastructure & Cities Sector secured two new contracts to construct 38 sub–stations that will improve power distribution throughout Bangladesh. The Sector continued to support Bangladesh's Rural Electrification Board in its efforts to provide reliable power supplies and improve economic development in western Bangladesh. In this connection, the Sector installed and upgraded existing power distribution facilities in the country. The Sector also won orders to supply rolling stock, electrification and a signaling system for the Gurgaon Metro and Delhi Metro, thereby improving travel for over 30,000 passengers per hour.
The Company continued its focus on its localization initiatives under the SMART (simple–to–use, maintenance–friendly, affordable, reliable and timely–to–market) strategy and launched additional solutions such as SMART@MT packages for the metals industry and SMART numerical relays. The SMART products provide a competitive edge to the Company over local and Asian competitors through a combination of quality features and affordability.
Siemens Ltd. has been conscious of its responsibilities as a corporate towards all its key stakeholders – society, employees, customers and the environment.
During the financial year 2012–13, Siemens Ltd. increased its focus on the social and education sector through corporate citizenship initiatives. I am glad to inform you about the success of 'Project Asha', an integrated, sustainable development initiative that is transforming the lives of around 300 villagers in Amle village, around 130 kilometers from Mumbai.
Among other corporate citizenship initiatives at Siemens in India is Sanjeevan Mobile Clinic that provides accessible and affordable primary healthcare focusing on community outreach, health promotion, preventive education and curative services in remote rural areas. The Company has also undertaken upgradation of various Industrial Training Institutes (ITIs). The Company has also awarded scholarships for engineering students from less–privileged communities and continues to provide support for the development of children at the Welfare Society for Destitute Children, Mumbai. These initiatives are already content–wise, fully in line with the recent amendment to the Company's Act.
In addition, our sustainability initiatives were also acknowledged by the Confederation of Indian Industry (CII), when the Company was ranked Number 1 in the Capital Goods Sector (as per BSE classification) and graded as a Sustainable Plus Platinum Company as part of CII's Sustainability Rating. The Company was amongst the Top 6 out of the Top 100 listed companies in India.
Siemens Ltd. continued to focus on the sustained development of its dynamic workforce, an important asset to the Company. New learning and development programs launched included the 'Local Key Expert Career Program' aimed at developing customized career paths linked to critical business roles in research and development, engineering and manufacturing.
Various HR processes were simplified and made flexible, such as medical insurance, group personal accident insurance, parents' insurance and superannuation fund.
As of September 30, 2013, the Company's employee strength was 11,539 as compared to 12,041 as of September 30, 2012. This includes an addition of 908 employees as a result of the merger of Siemens Power Engineering Pvt. Ltd. and Winergy Drive Systems India Pvt. Ltd. The new employees have been integrated into the Energy Sector and Industry Sector respectively.
During the financial year 2012–13, the Company initiated measures to optimize capacity and resource utilization across locations to counter the lack of market demand.
The Company continues to have a cordial relationship with its unions.
The road ahead – the outlook for Siemens Ltd.
While the company has already initiated measures to optimize its cost position and productivity in the factories, the growth of the Company is also dependent on the implementation of government policies to promote infrastructure development within the country and create an environment conducive to investment in capital goods.
It is therefore imperative that the government and the RBI work in unison to take urgent steps to create an investment friendly environment. The recent clearances given by the Project Monitoring Group and the Cabinet Committee on Investment for projects in the power and infrastructure space are positive signs, but more needs to be urgently done.
In conclusion, I would like to sincerely thank our customers, the board, management, unions and most importantly, the dedicated employees for their consistent support and commitment to Siemens Ltd. during a very challenging year.