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| 'The crisis will provide opportunities' | | Q&A: Joe Kaeser |
| Nevin John / Mumbai Nov 26, 2008, 00:52 IST |
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 German giant Siemens has seen many ups and downs in its business in India. The Indian subsidiary, which has slashed its workforce to manage losses in the late nineties, is now emerging as the hub for the group's operations in West and South Asia. It has recorded annual sales of over Rs 8,000 crore from its Indian operations. Siemens Chief Financial Officer Joe Kaeser told Nevin John that the company would take steps to increase its productivity to deal with the financial crisis rather than investing heavily in capacity.
The economic downturn has affected the performance of a host of companies. How has it affected Siemens globally?
The financial crisis is inching closer to all the companies. However, we recognise that this crisis will provide opportunities for serious players. We have ¤7 billion of free cash in our balance sheet and another ¤6 billion is lying in our credit lines, giving us financial flexibility for the short term. So we have pulled up our socks and will focus more on productivity. Nine moths ago, we started cost reduction in sales, marketing and general administration areas. Our supply chain will be made efficient to reduce the cost of goods. We are a job-creating machine globally. In the last two years, Siemens has added 17,000 people.
Do you see orders falling in the so called pre-recession phase?
We have not yet seen any slowdown in orders. But we are anticipating a fall in the order book growth, predominantly in businesses close to the consumers. In the recent past, we have seen a fall in businesses such as lighting, building technology and factory automation. Our infrastructure business has witnessed some slowdown, but it has recovered and is expecting higher growth in the coming quarters.
What are your strategies for countering slowdown?
Most importantly, we have to show our strength when most others are weak. With this, the customers will feel that Siemens will be here for long term.
What are your capital expenditure plans for the current financial year? Last year, we spent about ¤2.5 billion on capex. We expect that it would go down a little this year, but not significantly. We had invested massively for building factories in India and China and boosted our international business in the last couple of years. Now we need to emphasise more on increasing productivity rather than adding capacity.
Do you have any immediate fund-raising plans?
We are solidly financed. In this financial year, we have ¤1 billion on bonds to roll over. Until 2010, the company does not have to repay even a single euro for debt. This will help us to focus more on business.
India operations seem to be a major contributor to your global growth. What is your assessment?
Siemens has been here for more than 80 years. We have established a fairly large network over the decades. We want to develop India as our hub of activities in West and South Asia. We are expecting a tremendous growth in the country's infrastructure sector.
Industry experts say this is the time for acquisitions as the value of most of the assets are down. Do you have any such plans?
We will focus more on organic growth in India because it adds more value to profitability and cash flow. At the same time, we are not ruling out any strategic acquisitions.
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