Siemens hammered on sale of IT subsidiary

15 January 2009

With the IT sector sharply in focus after Satyam, news of Siemens India selling it's IT business to its German parent company Siemens AG has caught the attention of investors and analysts.

On 9 January, Siemens had announced the transfer of its 100-per cent stake in Siemens Information System Ltd. (SISL) to a fully owned subsidiary of Siemens AG.

Siemens Ltd had said in a media communique, that the decision to divest SISL was brough tabout by the change in structure of the global software business, where SISL businesses have also been aligned with the parent group.

In the new model, SISL will serve as an internal software factory supporting the R&D and product development initiatives for business sectors globally. It will also focus on increasing its presence in the domestic market and continue to act as an offshore development centre for Siemens worldwide.

Commenting on the development, Dr Armin Bruck, managing director, Siemens Ltd, said, "The transfer of 100-per cent stake of SISL from Siemens Ltd to the parent company is a part of the global strategy. This portfolio realignment will enable Siemens Ltd to further focus on core businesses of industry, energy and healthcare. At the same time, the integration of SISL with global operations will ensure that their developmental capabilities are harnessed most effectively for the Siemens global growth strategy."

Market unhappy with valuation of sale
However the market has not taken kindly to this sale'; in the three trading sessions, Siemens, which is part of the Nifty 50 index, fell by 30 per cent.