So my first question is with regard to the Mobility segment. As I understand that, you know, we have probably three legs of growth there, Indian Railways related orders, Metros and high-speed rail signaling and exports. Would it be possible to throw some color as to, you know, what is the overall size of the market or potential orders that you might see in each of these three segments?
So I don't want to give you numbers over here, but what I can tell you is in each of the three segments that you that you described, I can give you a qualitative response to that Subhadip. As far as the railways are concerned in terms of rolling stock you are aware of the entire Vande Bharat trains. There's propulsion systems, there is bogies, there is locomotives, all of which are in the pipeline as far as the Indian Railways are concerned. So you are aware that they want to introduce Vande Bharat trains running between all the major cities in the country and that pipeline will start. You're also aware that locomotives are going to be we've done the 9000 or we're doing the 9000 horsepower. There are also other horsepower levels, 6000 horsepower being discussed, 12,000 horsepower being discussed. The market definitely needs many more locomotives than are currently out there and that brings demand automatically for bogies as well. When I move on to Metros, I think it's every single city in the country requires metros, not only the Tier 1 cities, but it's now moving to Tier 2 Tier 3 cities as well. And every city will require more than one line, as you have seen already in the major metros, they will require multiple lines. So the demand for Metros is also there.I must put a word of caution in over here, of course, because Metros is run not by the Ministry of Railways. It's run by the Ministry of Housing and Urban Development and consequently it is not only a central issue, it is a central and state issue. And linked to that is of course the financing model for Metro. So This is why currently there aren't too many metros happening, but at some point in time PPPs will probably kick in and we expect this market to pick up as the need for urban mobility increases. Moving on to signaling and electrification, I think electrification of the main line is pretty much done, over 97-98% of mainline has been electrified. So there's too much more on the main line. There is however much. A very large opportunity for electrification of Metros, as this market grows and this is something that is still happening independent of the rolling stock activities. Signaling you have heard already, 67,000 kilometers of signaling still need to be upgraded with the new Kavach system that the government is bringing in. And signaling is really a large opportunity over there as well. So overall and on high-speed trains and bullet trains, as you call them, this again you're aware the Ahmedabad-Mumbai sector is under construction. There are seven other sectors that are in the pipeline as well. I think the government has to take a view when they want to start the next one or the next ones, but the market is definitely there for that as well. So effectively I would see this market pretty robust with the visibility that we have already in the short term of the pipeline, I see this pretty robust in the next five to seven years.
And can I say Mobility and SI next year is going to be meaningful ramp up in profitability because in SI we are late/ If you see medium and low voltage players like Schneider, I'm sure portfolios are different but still we have a lot of headroom on SI Profitability and even on the Mobility side next year can be an inflection point for profitability.
So I'm not going to compare to the competition, but I think all I can say is that the profitability levels that we achieved last year in September is very much comparable with local competition as well in SI. And I see that our profitability levels... Look, we are not lumpy in our growth and we are not lumpy in our profitability. You know, we will continue to grow steadily and we will continue to grow the bottom line steadily as well because we want to ensure that this is a steady state growth and that this is not spikes that you see quarter to quarter that we then got to come back and explain to everyone and therefore we are very, very conscious that we build up a pipeline that is robust. That pipeline helps us grow the top line, but also helps us grow the bottom line. So the intent is very clearly in SI to do that. In mobility as well as we start getting into execution of these orders the top line and the bottom line will start coming in as well. I don't know what you mean by meaningful, but we will get continue to increase the ... or our aim is very clearly to increase the bottom lines as well for Mobility indeed, also for our Digital Industries business, once we start growing the volumes over there as well. So, as I mentioned in my summary slide, we are continuing to look and continuing on our path of profitable growth in every single segment.
My questions are just for clarity whether DI normalization is on volume or as well as on price. Also, what is the software percentage in DI Revenue? Is it in low single digits? And on MO yesterday your JV was awarded the bullet train signaling contract where your bid was 1/3 of that of the L2. I believe that includes maintenance as well. And what's the length of the maintenance contract? What's your share in the overall contract.
So I think in terms of DI as I mentioned, DI is a volume game and the volumes and the margins are very closely interlinked. So we expect the volume to be normalized both or we expect the business to be normalized both on the volumes as well as on the margins. Software is negligible right now in the overall DI business. We want to build this up and we see an opportunity over here and we are also collaborating with the other sister company outside of the legal entity. To see whether we can combine our hardware solutions, their software solutions, and bring in fresh solutions over here for the customer. And this is part of Siemens Xcelerator, which is what we are now building up here as a business where we already have over 200 use cases and we are looking to now expand on this business. Currently, however, the software business is negligible in overall volume. On the Mobility signaling order the prices have been opened recently. The tender is still under evaluation. I would not like to talk about it at this point in time. Once there has been a conclusion to the order, we will give you complete transparency about that business.
And the next question is to understand for the past two years, FY23 and FY24, the Energy segment has grown like 13% and 4% whereas there was huge demand for Power Transformers, switchgears and like other peers have grown at like 20-30% so just wanted to understand what was the reason for that?
So as Radhika mentioned Suraj, we will not talk about the Siemens Energy business in this analyst meeting. There will be a separate analyst meeting that will be called at the right time with the management of Siemens Energy and we will allow them to provide the responses to that.
So his first question is what kind of orders will be undertaken for the bullet train orders? How different are these in the fitting versus the orders with L&T? And the second question being, is cash being paid out to Siemens Energy and the related reduction in other income for continuing operations?
So I'll take the first one, Wolfgang will take the second one. The first one was in terms of the...is this talking specifically about which order? The current signaling order. Yeah. Look at this point in time. I wouldn't like to talk about details of the current signaling order or signaling tender. It is under tender evaluation. Both. There are two parties. One of us is and we will allow the Technical Evaluation Committee to do their evaluation, award the contract and once that is done, we will provide you all the details of the order. All I can tell you is I don't know what the strategy of the competition was in bidding, but our bid price over here meets our margin orders and meets our overall strategy of profitable growth. So there is there is no compromise on that. As I said, I can't comment on what the competition has done. OK. On the matter of the demerger. So yes, we went through the demerger process and in this process we allocated assets and liabilities to the Energy business and certainly a cash position was also part of this allocation and was transferred 1st of March to the Energy business. So the amount was in the range of Rs.25 billion.
My first question is on the Digital Industries margins. What are the different levels that we have to expand the margins over here since the business does not have a much localized manufacturing footprint in the country? I understand that increasing share of software would be one of the drivers, so if you can share your thoughts on DI margin trajectory ahead, that will be helpful. Also, just a follow up to that, what kind of CapEx and localization we have done in case of the instrumentation portfolio, I mean by gas meters, your pressure transmitters, viscosity meters, that kind of a portfolio.
OK. Thanks Harshit. Let me take the first one. The levers to expand the DI business. I think look this is very, very much very clearly a volume story. And the more you sell, the greater the volumes because the more you are able to cover your fixed costs over there particularly since, as you rightly mentioned this is entirely important material that we are selling. Software does play a link and we are including that as part of solution providing as part of system integrations that we do with partners. Will this play a major role in the next couple of quarters? I doubt it because the first criteria for profitability growth is of course the volumes need to come in. The areas that are impacted that really have an impact on profitability in DI are of course the transfer pricing and that is the underlying element, but there is also foreign exchange and commodity prices that also have an impact on that. Broadly, though, we expect that the levels of profitability will go back to the levels of normalization that we had experienced couple of years ago as well as was showed in the chart by Wolfgang. On CapEx and localization of instruments, we do not currently have any plans to localize pressure transfer transmitters and sensors and communication devices here. We do not yet see a business case to set up local manufacturing for that.
Just as a follow up on the Smart Infra piece, we've seen strong margins and strong growth, do you see that level of growth and margins also continuing?
Yes, I would expect them to actually increase.
My first question is on the mobility, the shaping up there. I think very strong order booked for last few years. My question is, any color on the execution as you move forward, especially with your larger order? You got a large order in this quarter. And the 9000HP order. Any color on the execution as you move to next fiscal? And as you start executing the large orders, any color on the margin profile is still the single digit right now?
So as far as the Mobility orders, look, there are again, as Subhadip mentioned earlier, if I break this down into the three different segments that we have - on the electrification, these are orders that run for 18 to 24 months, are supply and commissioning, and those orders are all on track. No area of concern, this is routine business for us as is also the signaling business. So, I don't have too many concerns over there, implementation is not an issue. The 9000 horsepower production, as I mentioned, the prototype is under homologation. I expect that to happen in the next couple of months and then it is basically moving on towards commercial production. We are completely on track with the schedules of the manufacturing there. And I think we will continue to deliver as per the contract requirements, ramping up from 5 to 20 to 60 to 100 eventually and I do not have any areas for concern over there. The order that you mentioned that was booked in the quarter was more for maintenance, which will be post deliveries. So, this is a part of the post-delivery 30 year maintenance project or order that we have received as well and that is also more or less business as usual. I do not have any concerns on the execution cycle. These are not large projects that we are implementing which are highly complex. These are largely production orders and the electrification and signaling are more smaller orders that we've been doing regularly without any slippages for the last couple of years. In terms of margins, we are moving up in the range of the margins that are also globally the target margins and our intent is to continue to be in that range. You need to keep in mind that we continue to invest also in this business. We are investing in capacities. We're investing additional technologies, etc. and that is where part of the margins are initially impacted. But of course, all this investment plays out eventually in the ordering that we get for bogies, propulsion and so on. And so on for bogies, propulsion equipment and so on that we that we have set up over here.
Hi Sunil, you know. Good performance in order. I just have one question on Mobility and SI. C&S electric, you know. Somehow C&S and Siemens. Do you think you're very happy with the C&S Electric ramp up when it comes to the, you know low, medium voltage value exports? And also on the Mobility side, do you think we're under shooting on the export orders from parent? Can we do much better? So just on these two parts, largely on export business.
So on C&S, we are actually quite, quite pleased with the progress of C&S. Exports has picked up tremendously this year. Double digit numbers growth already in the exports and we expect this to continue to grow in exports as well. We are very, very happy with the overall performance of C&S. In terms of Mobility. Look, we've got a massive domestic demand already in place. And there is a pipeline over there. Our bogie factory is already being filled up with orders coming in from the parent. We continue to export propulsion equipment as well out of our Aurangabad factory. So there is a steady pipeline coming in from our parent for bogies as well as components. Can we do more? Yes, we can do more. Once we start the locomotive productions and this gets more into a steady state mode of production, I'm sure there are possibilities to export locomotives out of our Dahod factory as well. So yes, as the business starts increasing and as we continue to build local capacities over here, opportunities in the global markets will come up as well.
Mr. Mathur, just two quick questions. Firstly, and this is continuing from Amit's question. So you know what we see is the share of exports is about 12-odd %. The consolidated entity with energy used to have exports of closer to 20%-plus. Over a three-to-four-year period, should one assume that this portfolio, the residual portfolio that we have now, can have the export share going up back to 20%? And the second question was on SI. You know, our parent entity derives almost 20% plus of its segment revenues from services. Could you share what it is for the Indian entity here and in a way you know, these two questions are sort of interrelated because, as we see the financials of Siemens India ex-Energy now, we see that almost 28-30% of sales come from traded goods. While we understand it's largely the impact of DI, I was looking at what could be the offsetting levers in the form of either services or exports that could probably help margins on a more medium-term basis.
OK so I think the simple answer to your question in terms of exports currently at 12%, is yes, our intent is to grow the exports. They will grow or we will aim to grow them primarily in the SI and the Mobility businesses. Again, this will be a steady growth. We will have to see how we can contribute more. The SI business is very closely linked in to the global electrification environment and to data centers and areas like that. There's been a little bit of a slowdown over there at a global level, which has probably also impacted us marginally over here as well. But I do expect that our SI business as global exports or global economies pick up over there, in a three to five year time frame, as you mentioned, the intent would be to grow it. Mobility as well as we, as I said earlier, once we stabilize production locally, once we are able to develop completely localized products over here, the intend very clearly of the global parent is to source out of India. So, whether this is 3-5 or it is over 5, I can't tell you, but a lot of it depends on how soon we can localize here, which is dependent on local demand and the execution over here. Once we have localized here, stabilized here, then the exports will start. I must mention, though, that we are very fast adopters and adapters of global technology. In the 9000 horsepower, first time ever done by Siemens, were done in the country. We are already 90+ percent localization and bogies we are already exporting. This is the third export job that we have obtained. So we are able to quickly turn around adoption of technology here, build our factories, adopt the technology, adapt it, bring the right price levels and export. So the intent very clearly will be and I think globally it is also a part of their strategy to use India much more, particularly taking into account the geopolitical situation right now, is really to use India much more for their export business. In terms of the mix between traded and services and exports, we do have a service business. If I were to break this down DI has got a good service business in it. SI is a growing service business. Right now it is not very material, but there is a potential for it. There is a growing market for services. Mobility services are largely done by the Railways themselves and therefore that market for us is more or less not there but very, very small because the Indian Railways does their own service activities, although that is marginally also engaging as you see with the maintenance orders that we have started getting. They include all the orders for supply, also include maintenance in them. So again, margin expansions will come with increased localization with increased export business as well as well with the volume increases that. We can expect in India's private sector CapEx picks up.
I have two questions. First is now post the demerger of the Energy segment. If you could just help us understand for Siemens in India, what are the entities which would be outside the listed entities when you compare the parent business? That's the first question. The second question is when I look at the Smart Infra business and compare with some of your peers like ABB, Schneider, L&T where the margins are in the 20s. Could you help us understand qualitatively the difference in the margins? Is it due to the mix or is it due to some where localization levels or could be lower.
So ex-Energy Siemens Limited has got basically two subsidiaries. One is C&S and the other is Siemens Rail Automation Limited. So, these are the two subsidiaries of Siemens Limited which 100% roll into Siemens Limited. Siemens has other entities outside of the listed company. One of them is basically almost entirely captive for software, DI Software, which is basically primarily local for global. The other is captive for shared services, which takes into account the technology, R&D, technology, application software, but also shared services in terms of accounting, HR and so on. These are the two major entities outside Siemens Limited. The other question was margins above 20%. To be honest, I don't see those margins in the other companies that you mentioned as being sustainably around 20%. Our margins are growing. I mentioned that, I mean, we started three or four years ago, four or five years ago with 8 or 9%. Our margins are now close, in the SI business to around 13 percent, 12 to 13% and we will continue to grow them. Taking into account the level that I just mentioned, I do not see 20% margins with the other companies that you've talked about as being sustainable margins and they have maintained over the last couple of years, couple of quarters. I cannot compare our margins on a like-to-like basis in terms of businesses also with their business. L&T overlaps with us are very, very negligible. And the others are also not at 20% right now.
My first question is on some numbers reconciliation. If I look at the last H2 FY 24 presentation, the order intake for March 24 says 2000, it says Rs.1790 crores. Whereas if I look at the current presentation, the March 2024 order intake for smart increase Rs.2220 crores. So that's a difference of more than Rs.400 crores. So can you help reconcile these numbers?
Yeah. So, Suraj, just on your this question, what you're looking at for the previous year numbers, those are on a standalone basis, what you're seeing now is consolidated including C&S, yeah.
So my question is on the Smart Infrastructure business. So as I understand there are three distinct and large segments within this one. Electrification and Automation, Electrification Products as well as Building Solutions. Could you explain how these large 3 segments have felt in the past few quarters and outlook for these segments? Also, is there a very substantial difference in the margins between these three?
The Electrification and Automation business is primarily in simple terms, medium voltage, right? So everything that is primarily medium voltage switchgear and solutions comes under the Electrification and Automation business. The Electrical Products business is low voltage business and this covers low voltage switchgear and panels as well, and the Building Solution is energy efficiency solutions, which is basically a mixture of fire safety, security and building management systems. So that is the split of the three segments or subsegments that we have in the SI business. Electrification, when I talk about electrification which might talk about both the medium voltage as well as the low voltage business and both of these businesses in the last couple of quarters, and I expect in the couple of quarters moving ahead. Looking at the at the increased demand for energy in the country, I expect there these businesses will continue to do fairly well. I must, however, put in a little bit of a rider over here. Both Electrification and Automation, as well as the Energy Products businesses have an element of private sector investment as well, right? So this is not only in terms of the Electrification and Automation business, it is very largely Public Utilities, but there is also a very large private sector component in there. Medium voltage. The Electrical Products has a mixture also of selling in to the industrial segment as also into the infrastructure segment. As I mentioned in my in my comments right at the beginning the Infrastructure segment is doing well, although the industrial segment right now is a little bit muted and that's what we see reflected in the Electrification Automation as well as in the Electrical Products business. As a private sector opens up and starts their expansions, we expect both these businesses to expand further. On the Building Solutions, this is primarily going around commercial buildings, malls, stadiums, commercial buildings as well. Here, there is a growth that is coming in. Both for Greenfield, but also for Brownfield, increasing interest in energy efficiency solutions, increasing interest as regulations come in, in fire safety and security solutions. But this is largely project business. So this takes into account not only the products of fire safety security but also takes into account projects where we work on an EPC basis with other suppliers and system integrators, either work into system integrators or do the EPC activity ourselves. And therefore this business is OK but will grow as public CapEx in the building space actually starts expanding. I hope that answers the question.
The first question is can you share business outlook for the Siemens buildings automation portfolio? Second one is, can you quantify the value of maintenance order value for the loco recently one? Also, what is the mix of short cycle electrification and SMT orders? Sorry, short cycle, short cycle electrification and signaling orders versus long lead cycle mega orders with more than five years execution cycle, the third one being by when will the bogie factory be ready for exports? Execution has been in the last six months versus strong double strong double digit inflows. By when do we see execution headwinds easing out and execution catching up with double digit growth?
OK. So on the building automation, I just responded to Harshit's question over there. We see that very closely linked in to commercial buildings. And the business is mixed. We see as I mentioned in my slide today, commercial buildings increasing. A large element of this is Greenfield and they are using our safety security systems as well and building management systems. How fast will this grow? I think it is. We are growing reasonably well over there, but we are watching it because we are concentrating on margins in this business because it is profitable, it is a project business. Right now, the margins are below what we would like them to be. So we are actually being cautious in first getting the margin levels up to levels that meet our requirements before we start taking every order that is out there on the market. So you will probably see a slightly slow development on the building automation side as we concentrate and focus on margin improvements vis-a-vis the volumes over there. On the maintenance job of the current project booked. It's about Rs.7.5- Rs.7.7 billion. As Wolfgang mentioned, this is part of the contract which allows for certain expansions based on technical agreements and technical solutions that are provided. So that's on the 9000 horsepower maintenance project Rs.7.7 billion. The short cycle, electrification and signaling, yes, in terms of the long lead projects I think right now the short cycle business, 1 1/2 to 2-year projects, electrification signaling will dominate. The long leads are basically product linked and are primarily as we speak right now linked in to product supplies coming out of factories for bogies for the export jobs and for the 9000HP, which is in line with their delivery schedules by moving to 60, moving to 100 locomotives a year and this will kick in within the next one to two years in terms of the in terms of the delivery schedules over there. So I see overall the stabilization of the 9000HP products in the next two years probably. Once we get this up to 60 and 100. I think once we get to 100 a year, which will probably be in about three years' time, then we will be in a stable mode and then we can start looking at export projects products after that. In terms of the bogie factory, the bogie factory is already ready and we've already started exporting over there. As I mentioned, this is the third export job that we have got. The 9000 horsepower factory is also ready and was viewed by the Minister. As I mentioned earlier, it is now really gearing up to start commercial production of the Locomotives five first and then sixty and then moving up to 100. So this will happen in the next two or three years.