Analysis of Siemens

India Ltd.
Non-Financial Ratios

Arunav Dey
PGDM-Operations
Roll No - 15
About the Company:

The Siemens Group in India is a unique player in the field of electrical and electronics
engineering. Siemens has the unique capability to integrate diverse products, systems and
services into turnkey solutions across the life- cycle of a project. Siemens is known by its
customers for their reliability in executing quality projects, while delivering value.

Siemens is present in a number of different sectors and offers a range of offerings. The various
sectors in which the company has a presence includes the following:

Automation and Control: Intelligent system solutions - from building automation to process
control to plant operation systems

Energy: Siemens offers consolidated solutions to the energy sector by combining its full range
expertise in the areas of Power Generation (PG) and Power Transmission & Distribution (PTD)

Healthcare: The Division’s solutions range from point-of-care applications to the automation of
large laboratories. Siemens is also engaged in the business of generating clinical diagnostic test
results using tissue and fluid analysis, immune diagnostics and molecular analysis.

Information and Communication: Siemens provides software solutions across the IT service
chain, from consulting and system integration to IT infrastructure management in the areas of
telecommunications, healthcare, manufacturing, public sector, utilities & government.

Lighting: Through Osram, Siemens also offers a large range of lighting solutions for both
industrial and commercial lighting.

Building Technology: This division offers a range of products and services for security, comfort
and efficiency in high-end buildings, and covers the entire chain of offerings from engineering to
services.

Cross-sector business: Siemens provides software solutions across the IT service chain, from
consulting and system integration to IT infrastructure management in the areas of
telecommunications, healthcare, manufacturing, public sector, utilities and government.

Siemens has a wide presence across the country; with operations include 17 manufacturing
plants and an extensive network of sales and service offices. It is a part of the Siemens group, a
vast global network of 475,000 people, operating in over 190 countries.

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Mission:
Through our global network of innovation and strong local presence, we are pooling and
developing our knowledge and competencies within a high performance organization, aiming to
create outstanding value for our clients, employees, shareholders and society.

Corporate Vision
A world of proven talent, delivering breakthrough innovations, giving our customers a unique
competitive edge, enabling societies to master their most vital challenges and creating
sustainable value.

Values:
Responsible – Committed to responsible and ethical actions
Innovative – Achieving high performance and excellent results
Excellent – Being innovative to create sustainable value

Management Efficiency Ratios:

  2004 2005 2006 2007 2008
Inventory Turnover Ratio 11.05 8.77 9.63 10.46 11.3
Debtors Turnover Ratio 4.63 4.8 4.9 4.43 2.85
Investments Turnover Ratio 11.2 8.87 9.9 10.76 11.3
Fixed Assets Turnover Ratio 9.56 13.49 15.06 16.9 8.58
Total Assets Turnover Ratio 2.94 3.6 4.27 4.93 4.06
Average Raw Material Holding 36.73 33.34 36.58 29.75 34.03
Average Finished Goods Held 10.46 15.17 24.68 6.05 6.87
Number of Days In Working
Capital 59.21 28.63 16.65 26.44 39.17
           
Gross Profit Margin(%) 13.2 14.5 11.79 9.36 5.99

Net Profit Margin(%) 8.06 8.84 7.72 7.61 7.1

Operating Profit Margin(%) 9.06 10.71 8.95 8.13 6.76
           
Return On Capital Employed(%) 36.95 49.58 46.5 43.07 26.72

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Analysis of Ratios:

Inventory Turnover and Average Finished Goods Held:

Inventory turnover ratio has shown an improvement over the last 4 years indicating an
improvement in inventory management and more efficient use of inventory. This is also reflected
by the steady decrease in the amount of finished goods inventory held.

Debtors Turnover Ratio:

There has been a sharp decline in this ratio, indicating that the company is encountering
difficulties in collecting receivables. This is reflected in the fact that receivables have gone up by
over 50% from 2007 to 2008 while the corresponding increase in sales was only about 10%

Fixed Asset Turnover Ratio:

This ratio indicates how well the fixed assets are being utilized. There has been a sharp decline in
this ratio indicating that assets are not being efficiently utilized. A significant part of this decline
can be explained by the increased investment in fixed assets which have grown b y about 20%
over the past year.

Margins:

The profit margins have seen a steady decline in the past 5 years. This is primarily due to a large
increase in manufacturing costs other than raw materials

Venture In to Non Core Areas

Siemens is also venturing into the home-appliances business and offers a wide range of white-
goods right from laundry to cooking appliances. These are distributed in 9 cities through RBS
Home Appliances Pvt. Ltd.

Siemens also provides IT and Communications solutions through its subsidiary SISL.

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