Siemens Turnaround Goal Pushed Back

Siemens Ltd, which posted a loss of Rs 155.6 crore in its previous 18-month fiscal, hopes to break even in next two years. The company had earlier set itself a stretch target of breaking even during the current fiscal ending September 30, 1998, subject to the revival of the economy.

Siemens now hopes that it will take another two years to stage a turnaround, said J Schubert, managing director, Siemens Ltd. A lacklustre first half result may be one of the major causes for extending the turnaround target date by two years. Siemens will hold a board meeting at the end of the current month to assess its first-half performance.

Siemens will closely watch the impact of international sanctions on the countrys infrastructure projects before formulating any investment plans. The company has kept its investment options for the country open which will be determined to a large extent, besides other factors, by the interest rates and labour costs, Schubert said.

The executive committee of the parent company, Siemens AG, had last year allocated a $2 billion investment package for the Asia Pacific region spanning three years till the turn of the century. A chunk of this is likely to go to China. Siemens currently has nearly 55 per cent of its facilities located outside Germany.

In case of India, the executive committee had allocated $500 million to be invested over a period of three years. This period of investment may now be further extended.

Siemens is currently on a drive to reduce its overhead costs and reorganise its automation and industrial drives businesses due to changes in technology and market demand.

Siemens second round of early-bird voluntary retirement scheme(VRS) for workers, staff and executive grade officers, which started from April, has so far met with some success. Nearly 600 people have already opted for it, Schubert said.

This VRS scheme, which takes into account age, grade and years of service as part of a severance package, will be closed on May 31, 1998. Around 1,280 people had opted for the earlier VRS scheme for which the company had to shell out around Rs 56 crore. The company, however, is expected to save around Rs 15 crore per annum following the implementation of this scheme.

Schubert denied recent media reports of Siemens planning to enter the white goods market.

Meanwhile, Siemens Public Commu-nication Network Ltd (SPCNL), a subsidiary of Siemens AG of Germany, has asked the department of telecommunication (DoT) and the ministry of finance to hasten the tendering process which is taking a long time for finalisation.

The top officials of the company have also approached Jyoti Basu, chief minister of West Bengal to take up the issue with the Union government.

SPCNL expects that orders will be placed in the next few weeks by DoT, which has been sitting on the decision since November 1997. Otherwise the company will be compelled to take hard decisions, said senior executives of the company who were here recently to launch a roadshow.

Its factory has been lying idle for months but still, SPCNL has not retrenched any of its workers.

However, Siemens Communications Software(SCS), the 100 per cent export oriented software division of Siemens Public Communica-tions Network Ltd (SPCNL) in Bangalore is emerging as one of the groups fastest growing divisions.

While Siemens has been working hard to shed off excess workforce in most of its units by offering various schemes, the number of personnel working for SCS has increased to around 650 from 400 last year.