The tussle between German engineering major Siemens India and its Indian investors is snowballing into a serious corporate governance
controversy. The investors are now accusing the company of tampering with financial statements to show lower profits before the sale of its subsidiaries to parent Siemens AG.
In a letter to the company, the institutional shareholders of Siemens India said that they have observed that the profits of Siemens Information Systems (SISL) for 2008 have fallen sharply over the previous year. However, only last year shows a sharp drop in profitability right from the EBITA level. The Siemens India auditor is SR Batliboi, an arm of Ernst & Young. The company board recently approved the sale of its Rs 994-crore IT arm, SISL, to Siemens AG for Rs 449 crore. The company management had earlier met these investors and explained its position. But the latter are not convinced. They are now saying Siemens had done similar deals before, where they had shown a sharp drop in profits before selling the Indian subsidiaries to Siemens AG.
The investors fear that the drop in profits fits into a pattern observed for other subsidiaries/divisions of Siemens India prior to their purchase by the promoters. They added that in two prior instances where a subsidiary was divested, it was observed that in the period just before corporate action, profitability of companies/divisions that Siemens India sold to the parent deteriorated significantly. This was observed in the case of Siemens Public Communications Network (SPCNL), divested in April 2007, and Information & Communication Division, divested in August 2007.
crackcrack| Company Name | CMP |
|---|---|
| Havells India | 1240.20 |
| Siemens | 3845.95 |
| Apar Inds | 12796.35 |
| ABB India | 7329.30 |
| Waaree Energies | 3183.00 |
| View more.. | |
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