OK. Thank you, Sir. So my second question is on the demerger now. So it it'll be at mirror demerger. So what happens to the cross holding of the promoter shareholding of Siemens Energy? And so will that trigger any sell off? Will you look at reducing stake or you looking to do like status quo or some swap between the two entities? So how are you looking at the shareholding post listing of the Siemens Energy in India?
So I think what I can do is basically I can't speak on behalf of the parent. As you rightly said, both the merger both companies will have identical holdings. But all I can do is quote what we said in our November 2023 disclosure where we said subsequent to the proposed demerger, the parties to the shareholder agreement, that is the promoters of Siemens limited, they have agreed to certain procedures to enable Siemens Energy AG to acquire majority share in the newly listed entity containing Siemens Limited's Energy business. So I can't speak about time, I can't speak about quantum. We are not privy to that information. All I can quote is what they have said in their global disclosures as well, which we have repeated.
Understood, Sir. Secondly, Altair Engineering has been a significant addition to our DI portfolio globally. So is there any way it helps our India software and simulation portfolio in the immediate future? Also, what is the revenue contribution of this software and related offerings within our DI segment at the moment? I am asking this because its contribution in the global DI segment is increasing at a rapid pace and it is also impacting the margins very favorably at the global level.
So Harshit, the Altair acquisition as you know has recently been closed or is under closure right now; it is only announced the closure has not yet happened. So we are not yet completely into the details of what the implications of that will be for Siemens in India. So that's the first thing. The important part is from the Siemens perspective Altair provides simulation for non-linear technologies and I am sure there will be a benefit to us with it making Siemens globally maybe one of the top 2-3 players in the world in the area of simulation technologies. From an India perspective, from a Siemens Limited perspective, we don't know more than that and I can't tell you the implications of what Altair will be for Siemens Limited moving forward. We will have to see. As and when something happens we will keep you informed. A lot of the software business is done through licensing through Siemens software company outside of Siemens Limited. But we work closely together with them. There is also software business that we do within Siemens Limited which is project-based as well and depends on solutions that are required by the end customer. We do not track software separately. It runs as a horizontal across all three of our businesses - Digital Industries, Smart Infrastructure and Mobility. But you have already seen an increase in profitability.
Understood. But is there any? Because what we understand is that Railways had already put out their larger plan that there is a requirement of, let's say 1,100 to 1,200 electric locos, on an annual basis in order to replace existing locomotives, etc. So clearly over a period of, let's say the next two to three years, it will be a requirement for Indian Railways to procure these locomotives. So do you see most of these manufacturing, again shifting back to the Railways' own coach factories or is this still a good visibility that these will pan out over the next, let's say two to three years?
I don't know the answer to be honest. We will have to wait and see what gets tendered. Of now it is still on our data screen. We will have to just wait and see what decisions the Railways takes in terms of how much they want to do themselves and how much they want to tender out. The 12000 HP they do not have the technologies for but the 6000 they do. So, there is a possibility that they could do it themselves but right now we do not have that transparency.
To me, the second question is on the DI piece, on the growth piece part of it, and when I look at some of your peer sets like Honeywell and ABB in the relevant segments also the performance has been muted. But when we go and visit factories, the small and medium scale, the intensity to automate and what they are automating is considerably higher and so what when I see the performance actually it kind of confuses me. So on a little longer term leaving out some idiosyncrasies that could be there because of restocking, etc. Is the underlying growth in this segment possibly in the high 20s. Your thoughts on it?
So look the industrial segment, the industrial business is driven primarily by the large and medium companies. The small scale companies, there's a huge opportunity there but a lot of it is driven by demand as well. Now, currently we are running at 75 to 80% capacity utilizations in the country. The runway is still not particularly visible to most private sector players and therefore they are being hesitant in CapEx expansions. There is absolutely no doubt that they will need to go in for automation and digitalization solutions as and when they scale up. But currently the market as you're aware is relatively muted on private CapEx. I expect that this will change in the next couple of quarters. The government is already focusing on areas right now. The PLI scheme is showing results on the new tech businesses that they are supporting there. But as I mentioned earlier the traditional verticals are not really spending on CapEx at this point in time. Moving forward as and when the segment grows it will start feeding in terms of automation and digitalization not only the large companies but also the entire supply chains that are feeding into these companies. And that's when I see a huge growth potential for the private sector CapEx players or industries in the area of the Digital Industries business.
Good afternoon, Sir, and thanks for the opportunity. First question is to understand a bit more on the export side. Can you share what was the share of exports in Mobility and Energy portfolio for us for last year and specifically for the Mobility business where is Siemens with respect to large international projects for Metros and bogies? And how large can this portfolio be over the next three to five years? Reason for asking is if you see most of the unlisted peers global peers on the Mobility side earn the larger share of profit from the export business, so will that also roll out the road map for our Mobility business moving from mid-single digit margins to double digit as exports scale up.
I think I answered that question earlier on. Our intention is very clearly to increase the export content. it's also been strategically indicated by our global CEO to make India a manufacturing hub not only for the Indian business but also for the global business. Bogies - I gave the example we've already started exporting. I don't, can't give you the numbers of percentage of exports separately for Siemens Energy or Mobility. We're not doing that at a segmental level but the focus is very clear. In the Mobility business to serve not only the local business because but also the global business. The reality is the business case for setting up a factory for example counts only when you are able to combine the local and the global synergies over there. On the bogies we already got the orders I mentioned earlier from Hungary Bucharest for bogies that we delivered in the last financial year. We are expecting additional orders coming in as well for exports. Metros - as and when the factory is built it will be used for export projects. First we will gain experience out of export projects before addressing the Indian projects. So I think our strategy is in a way similar to the strategy of the other large players and I think there are only a handful of large players in the Mobility space. So our strategy will be very very similar to that.
And what would be the share of exports today in the Energy portfolio?
I don't have it offhand, Renu, we haven't disclosed that in Energy or at a segmental level.
Lastly you did touch upon this that for the core Siemens business ex of Energy they will be focused to improve profitability but if we see the portfolio that mix, the pluses and minuses, broad margins currently are in 12.5 - 13% range. In your view what could be the share of exports today in the Energy portfolio? Can these margins be in mid-teens level over the next two to three years, given the tailwinds, on the mix, on the end market demand and considering the effects and other impact that you have seen in the near term. Or you think the teen margins for the core business could be a bit of stretch until Mobility inches close to double digit margins?
So Renu, you have been following us for a long time. You've seen the growth in the margins of the business here and you've seen how it's picked up in the last couple of years once the economy picked up as well. Our intent is very clear as Management, I've been talking as long as I've been around about profitable growth - and our intent has Management is to grow the top line and grow the bottom line as well.
Congratulations on a decent quarter, Sir. So my first question is on the HVDC. I just wanted to understand for us as a place. So we have both the technologies, right, LCC and VSC. So are we bidding for these projects? I mean, two large orders have been tendered and kind of awarded. One is awarded and one is getting finalized. So have we participated in these tenders. What's our view on the entire HVDC thing? I mean, is there a play for us here?
So Parikshit, I will not comment on running tenders right now, but what is important for you to know is we are not participating in LCC technology in India or indeed anywhere in Siemens globally. We believe very strongly in the VSC technology, so we will participate in the VSC technology projects that emerge. We believe this is a technology which is superior and is being adopted around the world as well. We have the capabilities to do that. We continue to build up capabilities for that in India, not only for the local demand, but also providing out of India support for global projects on engineering and commissioning and so on. So simple answer, we are not present in LCC. We are present in VSC technologies.
Congratulations on a great set of numbers, Sir. And advanced greeting for the new year. Sir, two questions. First, if we see the order book of the ex-Energy business, that's largely flat. And within that also, if I remove the large loco order, then probably we're looking at a 9 to 10% growth in the order book. You know, how does this read in terms of growth prospects for the coming financial year, given that we're sitting on a book that is just about 10% higher and in a scenario where Digital Industries, which was the growth driver in the last maybe three years is sort of still not recovered. So if at all we have to think of a scenario of a higher order inflow or order book exiting FY25, out of the three segments, which one would you be most bullish on from a 12 month perspective?
Maybe I can step in here. So I believe overall the order book is growing, but you also have to consider on one hand we do see significant New Orders growth which is around 14%. And then we also see significant revenue growth, so more or less we book orders and we turn them into revenue. And this is going to continue. If you look at the Book to Bill, the Book to Bill is about one, which means we always create or add to the New Order book. From this perspective, I believe the future, I am not afraid of the future with regard to the orders. There is a positive market environment in the Smart Infrastructure business and we also expect recovery in the Digital Industries business. Sunil added: Exactly, the electrification business as you said is doing very well. The Smart Infrastructure business is growing. Mobility is also growing with the number of orders coming in for electrification, signalling and Vande Bharat - locomotives, bogies, Metros, are growing market as I mentioned in my presentation. Digital Industries is a little bit muted right now. When private sector investment picks up this business will pick up as well. When the destocking of the inventory reaches its bottom which we expect in the next couple of quarters that will pick up as well. So effectively the ex-Energy business I think we have got three verticals that will be firing on all cylinders.
Got it. My second question is if you can update us on the loco order itself in terms of progress and from which should one expect it go up materially in the revenue line. Did it have any role to play on the margin side of Mobility this year? Was it a drag, accretive? If you can just update.
OK. As I mentioned the first loco will go out in the latter part of 2025. Wolfgang would you like to expand on that please? This is order as per a POC system of accounting. So basically as the costs come in the revenue is recognized there as well. This project is being executed over a period of 11 years. As the cost come in, revenue recognition will take place. Wolfgang added: No, as you said the progress of this project we will recognize revenue and you will see then the respective revenue growth also in our books.
Understood. Lastly, Wolfgang if you could tell us, what is the order intake in C&S and when you declare the order intake on the slide on Smart Infrastructure business which is INR 73 billion odd is it consolidated for C&S or we have to clear it up for C&S?
The numbers I have shown today is Siemens Limited standalone. So C&S Electric business is not included in these numbers. The order intake for C&S Electric in fiscal year 24 is INR 18.2 billion, up by 9% versus the prior year and the Revenue was INR 16.9 billion, up 13.3% versus prior year.
Thank you very much. Thank you. So my first question is on the Digital Industries segment. What part we are playing in the upcoming semiconductor industries as well as OSAT units in India? So the automation solutions for this. They are provided by us or they will be directly done by the parent company? Also, are there any active discussions or orders booked with any of the potential customers over here?
So Harshit, good question. Yes we do the automation for this business, for the fab part of it as well. We are in discussion for the OSAT well. We have already started getting orders. By we I mean Siemens Limited has already got some orders from customers around this business. So we do not only the automation but also the software design for the manufacturing processes.
You did give us a lot of details on the HVDC side. So what I wanted to understand is beyond the current two HVDCs that are under tendering, we understand that there could be three or four more which could come over the next, let's say two years or so in the company. Are any of these already planned on VSC technology? And secondly on the export side, with regard to, you know, component exports on HVDC to patent is there already a large visible pipeline that is there at the parent level and that gives you a lot more visibility on that front as well?
So currently Subhadip most of the projects are using the LCC technology and therefore that is a technology that we are not working with. On the VSC technology as I mentioned on the HVDC right now the numbers are not material in terms of the export support that we give to the parent company. They are a part of the Siemens Energy segment there but there are clear plans in place to build up the engineering competency here as well as the commissioning competency, under in Siemens Energy in India, and in the next couple of quarters we would be able to see that impact the numbers of Siemens Energy in India.
OK. Understood. Secondly, on the Mobility side, in terms of the larger, chunkier orders that were expected on the locos front, whether it was the 6000HP pull order, the 12,000 HP as well as on the Vande Bharat orders and metros, if you can give us some color as to you know how that TAM is panning out, because since elections there seems to be some bit of a slowdown in terms of those Big Bang large orders that were to come.
I think you are right over there. We have not seen the tenders for the 6000 HP / 12000 HP orders. Vande Bharat tenders are coming out. There are a couple of passenger train tenders that are coming out over there. But you are right, the large big ones have not come out yet. In terms of the locos, the 6000 HP loco has not been tendered neither is the 12000 HP loco.
I understand. Lastly, you know on the Metros front as well as you know the export orders for Mobility because you know I believe when the global CEO had visited India few months back, he had put a lot of focus on making India the local or the regional hub for exports for the Mobility business. So on that front for Metro as well as exports, do you see a large visibility panning out over the next two years?
Yes, so exports is increasing very clearly. And you're probably aware we did the first large export order for bogies to Bucharest in Hungary. That order is now concluded. We're expecting further growth of orders also for bogies. The Metro we announced the building of the factory which will take another year-year and a half. But when that is up the idea is to build the factory was primarily to serve not only the Indian market requirements but also the global requirements. So absolutely, we are exporting. We do export of propulsion equipment as well. The intent of building the Metro factory is also for export so increasingly India will become a major player in the overall manufacturing network Siemens Mobility.
My first question is on the margins and I'm taking a slightly longer term view on the margins for the the Energy that we have seen margins hovering between 10 and 12% prior to 23 to if I take 2014 to 2023, we have seen a very strong increase here to 15.7. So what part of this in your view is driven by the bunching up of the business and what in your view is sustainable because we have seen cyclicality and supply catches up in this segment pretty fast? The Part 2 of the margins is the ex of the Energy segment where some parts of the segments we have seen margins move up steadily like Smart Infrastructure as well as the Digital Industries over a longer period of time and variability in Mobility. The question here is how should one think about the margins in the ex-Energy piece on a sustainable basis because what I understand is a Smart Infrastructure as a piece is a very closely guarded market with couple of MNCs. Digital Infra has a lot of impact on the increase in the installed base as your installed base goes up, the margins comes with a lag. So if you can give us a little longer term picture on the margin trajectory of the Energy and ex-Energy piece, that would be more helpful.
I think Wolfgang has already spoken about the Energy margins over there as outlined that against the 15.7% margin that is there. There about 3% of one-time impacts in there in Q4. So let's say the underlying would probably be in the range of 12 and a half percent. I also mentioned to you that Transmission business is growing and that is filling our factories. We are increasingly investing in the Siemens Energy business. We announced the investment in the large power transformers. A lot of that will be used for export business. The local domestic market is growing as well. So I believe the underlying margins for Siemens Energy will continue to be strong. If I move on to the DI business, the Digital Industries business, there as you rightly mentioned the margins have increased over the last couple of years as well. Our intent is that they continue to grow. As we bring in greater offerings this is not only about installed base this is also about bringing in Factory Automation, Motion Control businesses making that in with the energy efficiency solutions that we have. This goes back to the One Tech company which will effectively increase the margins because we are able to bring in a combined offering for the customer which earlier on was served either by the Digital Industries business or by the Smart Infrastructure business. So our expectation is that in the medium-long term we would like to see margin expansion happening on the Digital Industries business as well. Smart infrastructure also, you are right, electrification will continue to be a focus area particularly in the DISCOMS. As we get more renewable energy entering the grid, you will need stability over there. There will be the need for SCADA systems coming in, there will be the need for greater electrification, energy efficiency solutions. So here again, for Smart Infrastructure I expect a growth in the margins moving forward as the volumes increase and as the market continues to grow there. Finally, on the Mobility segment, the margins are currently let's say lower than the other businesses coming primarily out of the fact that we are doing heavy investments over there. And those investments as and when they come up and we start commercial production, we expect that the margins in the Mobility segment will pick up as well. So as we look forward I would really be driving for growth in the top line but also driving for growth in the bottom line in all our segments.
Just a follow up, does the enquiry book give you confidence of a significant pick up in the next couple of quarters as you highlighted?
Currently not.
My question is a continuation of an earlier participant on the Mobility business. Now you know when you had received this order for locomotive I think the timeline for execution indicated that you were expected to deliver 5 locomotives in FY24. Now you just indicated that the first loco is expected to be delivered only in FY25. Does this mean that the overall execution of the entire project would be delayed beyond FY34. Maybe by one year or and if there is any penalty clause for any delay beyond FY34. That's my first question. Thank you.
We did not say that we will deliver the first 5 locomotives in 24. The schedule was to start delivering in 25. We are on track. Please be aware this is an 11-year project. It is too early to start talking right now about the delays in the project. So the journey has started. Suffice it to say we are on track. Yeah and it's too early to talk about penalties and LDs on an 11-year project.
Got it. My second question is - you have a long CapEx plan, almost INR 11 billion over the next 2-3 years. I want to understand if you can lay out where specifically this money is going to be spent on, and if you can actually further classify it. You know how much of that could actually be spent on Siemens Energy and Siemens India, given, you know, we are looking at a global shortage of transformers? I just want to understand this 11 billion breakdown.
So this is already being disclosed at various points in time. But for your benefit the Siemens Energy part is about INR 4.6 billion that has been announced. The Smart Infrastructure is another 4 billion and the Mobility segment is about 2 billion. So we are looking at roughly 11 billion over there.
Thank you for the opportunity everyone. My question was more focused from the perspective of exports for the Energy business. Could you talk us through prospects of growing in both geographically as well as from a product or service perspective in the export segment or the Energy business for the next three years?
So I think I mentioned it earlier as well. Part of the exports is on the transformer side. There's a huge demand globally for transformers as also in India for transformers so that is one of the reasons for building an additional factory for expanding. So transformers on the Energy side is definitely one area. We are looking also at the, this is not only...this is also for the VSC technology HVDC projects that we have there. So that is one large area we are exporting our steam turbines as well out of our Baroda factory which are used for exports over there. We're exporting switchgear. We are effectively, I think supplying to Southeast Asia, South America and parts of Europe as well.
Understood. So there should not be any changes in the mandates or are there prospects of you kind of getting some global mandates on from a geographical perspective and that was the side question in this one?
I think there is no change in mandate post-demerger. If anything the mandate will be strengthened post demerger.
The second question was kind of picking up from an earlier participant. As in when you talk about DI. As in, there's a product angle and there's an automation angle what can drive growth. Just wanted to get a sense of how to kind of think through as in today as we think through DI, is this more product driven kind of purposes which means automation can only add to as much growth and when do you see that changing you talked about supply chain becoming part of that, it's just somewhat what would be useful for us to understand when does the automation part start becoming heavy in that portfolio
I think the automation will become heavy as private sector investment picks up very clearly. Right now the private sector has not yet reached its full potential. Automation is definitely part of it. It is product business but it is not only product business, it is also integration of product. It is also providing solutions, so the spray drying example that I gave you is not only plain automation, it is combining automation with software as well. And bring a complete solution to the customer.The example that we gave you on cybersecurity is in the manufacturing space, which is another area. There are also companies who are turning around and we've done work for steel companies asking, "can you find the solution for us for our for improving our in-plant logistics." So this is not only providing plain automation this is actually planning out the entire logistics process for the company and looking at the entire possibilities of automation but also digitalization through gaining greater transparency out of digital solutions that we are able to provide partly ourselves and partly also with the other Siemens software company in India.
Sure. So just coming back on the Energy part of the business while order flows outlook everything is pretty healthy. So this year's 5% revenue growth was it largely because of capacity constraints or there were other bottlenecks also which constrained the overall revenue growth?
I think it's a mixture of multiple things. I don't think it was capacity constraints only. I think it is also delayed offtake by customers who are delaying offtake for various reasons. As you know most of the revenue comes out of the backlog in Energy. So it's just the nature of the business. And therefore part of it is delays by customers in offtaking and part of it is project delays probably by customers as well and part of it is just the normal delivery schedules that are linked to the order inflows that we have received. Wolfgang added: Maybe I can add to this, Renu, when you look at the quarterly slices of revenue you can see that last year in Q4 we had also a tremendous order with almost over 18 billion in revenue so which also then Q1 was a little bit muted from a revenue perspective and then we are picking up again. So it's I believe, it's kind of better this year and then overall I believe the revenue development is pretty nice. Sunil added: A large part of this revenue comes out of backlog.
Yeah, you hear me? Right. OK. So congratulations to the Management on the great quarter. So, Sir, my first question is, are we hearing about any upcoming new orders for locomotive business?
Currently nothing on the horizon.