Siemens Limited (SIEMENS.NS) Earnings Call Transcript & Summary

Good morning, everyone. It's a pleasure to welcome you all to the Analysts and Investor Meet for Siemens Limited. I'm Radhika Arora, Head of Investor Relations. It's wonderful to see so many of you here today, especially as this is our in-person gathering after a long time. The past couple of years have brought significant change and progress for our company, as many of you would have seen. A major development during this period has been the demerger of Siemens Energy India Limited, which is now a separately listed pure-play energy company. Many of you would have attended their Analyst and Investor Meet just a few days ago. Today, our focus is firmly on Siemens Limited, our business and financial performance and our future. I'm delighted to introduce our management team, Mr. Sunil Mathur, Managing Director and Chief Executive Officer, who will share insights into our strategic direction; Mr. Wolfgang Wrumnig, Executive Director and Chief Financial Officer, who will present a detailed financial overview and discuss priorities as we move forward. Today's agenda will cover a review of Siemens Limited's performance since 2021, a detailed business and financial overview of our segments: Digital Industries, Smart Infrastructure and Mobility, and a discussion on our future priorities. The presentation will be followed by a Q&A session. Please note, we will be discussing the 12-month period ending September 2025. This is not our financial year-end. As you may be aware, Siemens Limited is transitioning its financial year from September into March end cycle so our next financial year will conclude in March 2026. Before we begin, I would like to remind everyone that the disclaimer page is a part of the presentation we will be discussing today and is also available on our website. By participating, we take it as read that you have reviewed and acknowledge the disclaimer. During the course of the meeting, I would request all of you to please put your phones on silent mode. Thank you once again for joining us. We look forward to an engaging and insightful session. With that, I would like to invite Sunil and Wolfgang on stage, and Sunil to start his presentation.

So good morning, and thank you, Radhika. Good morning to everyone, and welcome to the analyst meet. A long one or a long-awaited one, where we were also looking forward to interacting with you. And I hope we can keep it interactive after we've done our presentation here. As Radhika mentioned, our intent is today to give a little bit of how we see the macro environment in the country, how we see Siemens addressing the macroeconomic environment in the country. And then we will deep dive a little bit into the performance over the last couple of years to set the context for what we are actually planning to do in each of the three segments: Digital Industries, Smart Infrastructure and Mobility. So let's start first with how we see actually what's happening in the economy. Now 6.5% growth from our perspective or from my perspective, I think, is more or less a given. I think the question is, can we get to a 7%, 7.5% growth rate particularly taking into account the fact that private sector CapEx has been muted. The last couple of years and indeed the last year has been encouraging on multiple accounts. Firstly, investment in CapEx in infrastructure has continued. So public sector CapEx in spite of everything has continued to happen and I know there were a lot of discussions about why the CapEx in infrastructure in the budget had not been bumped up substantially. It was only a 10% increase over there. The reality is that over the last 5 years, we have seen, unlike in prior periods, that roughly 70% to 80% of the announcement made in the budget in terms of CapEx spending in infrastructure have actually got converted. Now there is a limit at one point in time to the element that you can keep bumping up 20% or 30% CapEx. So from my perspective, I think we are not unduly worried about the fact that there was a 10% CapEx increase in the last budget. And I wouldn't be unduly worried in the coming budget if something similar happened again. The more important factor for us is to make sure that we are able to achieve the announcements that have been made in the budget. That is more critical for us to plan our capacities and to ensure that we deliver accordingly. So I think the government has done a fair amount on public spending in CapEx. As you all know, the critical factor was consumption and the consumption story, 57% of India's GDP is consumption-linked, and that was not picking up, and that had a knock-on impact on the demand, and consequently, private sector investment in CapEx. And we did see muted CapEx in the last two or three years, which probably was one of the reasons why the country was stuck at 6.5% GDP levels. I think the government did a great move by revising the income tax rates and then subsequently the GST rates. We saw our first uptick in November. There is always a lag effect. We saw first uptick in November. December so far is not looking too bad. But I think it is too early for us to say whether that uptick is really consistently happening and whether this will be a sustainable event or not. The consumption story always takes 5 to 6 months to kick in once the income tax rates have actually been revised down, which was April onwards. And then in September, the GST rates got revised down. And I think it's usually about 5 or 6 months after that. So we will be looking carefully -- monitoring this very, very carefully in the next couple of months. And I think the first signs will probably come starting April onwards when you start seeing whether that consumption story has started picking up. And consequently, whether private sector CapEx is picking up. Having said that, I think it is fair to say new age CapEx, and I've said this before, electronics, battery manufacturing, solar cells, all of these areas have been doing well. Pharmaceuticals have been doing well. Where we have still to see a catch-up, and we'll discuss this a little later, is the areas of food and beverages, chemicals, fertilizers, steel. Steel was impacted, steel and cement was impacted. Steel, as you know, was impacted because of the dumping that was happening to them. We've seen the first signs, but really the first signs of initial CapEx coming back in. Again, too soon to celebrate. But at least we haven't seen a continued decline in that area. And that's a good sign. The moment we start seeing steel and cement beginning to pick up and automotive, which is a lead indicator for us as well and automotive as well. And automotive is beginning to pick up. Commercial vehicles, of course, as you know, is doing pretty well. Passenger vehicles have picked up, but is still sluggish there. And we'll just see how this pans out in the next couple of months. So with that, with these two impacts of private sector, of the income tax reduction, the GST reduction, having an impact on the consumption story, impacting in turn the demand. Hopefully, private sector CapEx will pick up. Now the -- and that means, hopefully, there's an uptick expected very clearly out of the 6.5% GDP levels that we have been currently at. Link that now to the headwinds that we currently have on account of the U.S. tariffs, and while to a large extent, I don't believe that, that has a direct impact on a lot of the CapEx industries here in the country, I think it is more a question of sentiment and the question of uncertainty. What will really -- how will these tariffs really impact the global economy. So I believe for us, there's a greater challenge of an indirect impact rather than a direct impact over there. As and when the tariffs do start coming down, and there is an agreement reached over there, I do believe that's a further possibility for an uptick in the economy because that will free up a lot of Indian entrepreneurs who are currently probably a little bit more cautious because they don't really know what is happening. And I'm talking mainly about the CapEx cycle overall as we see it. Moving on, and you look at the plans of India, and you look at the plans of India under the Viksit Bharat program. We've focused on four that we find particularly relevant to us and you're looking at an economy where the government has an ambition to grow from where we are, $4 trillion economy to a $30 trillion economy in 2047, that means roughly a 9% to 10% growth rate that needs to be achieved. Now is that possible? Yes, it is. Could the entire consumption cycle or will the entire consumption cycle contribute to that? Most definitely, it will. But what will be the major drivers? And we've outlined 4 elements over here, which tie in, in a way to the consistent statement that the government has been giving, which is talking about increasing the share of manufacturing in the GDP from 15% of GDP to 25% of GDP. Now what does that mean? If you look at 15% of GDP, $4 trillion economy, you're talking about $600 billion contribution to GDP today. If you assume a 7% to 8% growth rate in the near future, and let's take a number, $5 trillion economy in the near future. 25% of GDP kicking in, you're already talking about $1.25 trillion contribution to GDP which means in the next couple of years, you're looking at a gap, $1.25 trillion to $600 billion, $600 billion roughly of contribution to GDP coming out of manufacturing itself. Now if you're looking at a $600 billion contribution to GDP coming out of this program, you're looking at roughly double that element, $600 billion going up to $1.2 trillion to $1.5 trillion of CapEx that is going to be required to deliver on the $600 billion of contribution to GDP. Now there's no other country in the world that is able to do that right now. And if you look at where the world is going, they are looking at smart manufacturing for lack of a better term. There are multiple terms for it. We in Siemens are very much into industrial metaverse into industrial AI. We're probably the only company in the world that is actually having a platform on industrial AI there. But if you look at the program of the government, and again, there have been programs and programs, but linked to the programs that are critical for us. You're looking at innovation and AI and manufacturing growth. And the government has got very clear programs aligned to those ambitions. When you look at urban development, again, over here, very clear programs in place that have started kicking in to start boosting that. Energy transition and the green energy initiative over there the same thing. And when you look at where we are positioned at Siemens, we are positioned in all of this. When you look at our digital industries business that coincides very clearly with the innovation, AI leadership and the manufacturing growth ambitions that the country has. When you look at our smart infrastructure, that goes very closely in line with the energy transition and the green energy leadership and carbon footprint that the country is focusing on. When you look at our mobility segment, that falls into the urban development and the advanced infrastructure. So very clearly, we are synced in to the ambitions of the government, are structurally synced in and not only as an ambition, we are structured in line with the ambitions of the government. Now that then boils down into specific verticals, market segments as well. And that means verticals like automotive, life sciences, rail transportation, et cetera. All those verticals will have to grow over a period of time in order to achieve these ambitions. And again, we will talk more about these verticals as I flip to the next slide. But we are present in every single one of these verticals with technologies that can really transform these verticals. And when you look at it from our strategy overall, you see our growth levers, and I've spoken about them multiple times. We are very clearly increasing our focus on customers finding new ways to address customer needs as customer needs change. Now how are customer needs changing? Traditionally, the business has been customers come out with a tender, you get 5 companies that are bidding for those businesses and the lowest party wins. That is changing. Customers right now are looking at flexibility, are looking at quality, are looking at speed, are looking at agility. And when you're looking at all these different elements, it is not about a product at the cheapest price. It is about delivering a solution that answers the specific problem of a customer. It could be, can you reduce the amount of wastage in my biscuit plant? Can you help me bring in energy efficiency in my hotel? Can you help me increase the speed and flexibility of manufacturing in my pharmaceutical plant? Can you help me speed up the cycle from development of a drug to commercial production of a drug? So the challenge that customers are now putting on to companies is different. Now most companies can choose will we continue to sell products, individual boxes? Or can you go out with a solution that is an end-to-end solution that answers these specific needs. And that is what we are actually aiming to do. And I'll talk more about this further down. Now when you start saying this is what we are aiming to do, you can't have an identical product or solution for a biscuit plant as you have for an automotive plant. And this is where you need vertical know-how. You need the know-how of the process of manufacturing of cars and buses and motor bikes as much as you need process knowledge of how to manufacture noodles and pharmaceutical drugs. That is what we have. And that is what we are able to stitch together, and I'll talk more about that as well. Products and portfolio is what I just talked about, we do have the family of products that is able to deliver answers to these challenges. We do have solutions and partners with whom we are combining to see that we can deliver the complete suite of products. And finally, our strategy has always been we will localize and continue to expand our portfolio where it makes sense. Now the continuous question that we have is make or buy. Do we continue to import? Do we continue to buy from the local market? Or does it make more sense for us to manufacture ourselves? Today, the new company, Siemens Limited, ex Siemens Energy India Limited has 25 factories. We still have 25 factories. A lot of our businesses are still very heavily localized, and the process of localization continues. So when you look at that and look at where our footprint currently is in the country, when you look at the industrial metaverse and the digitalization footprint that we do have, one in three automation controllers, PLCs in the country that have been installed are from Siemens. Over 75% of utilities, distribution discoms are powered by Siemens' switchgear, over 75%. Over 50% of the metros in the country are electrified by Siemens. So we do have a strong footprint in the country. We do understand the customers. We do have a bandwidth that is continuously increasing, but also deepening. Where has that led us over the last 5 years? And I'm just talking about 5 years. We've doubled our revenues, tripled our margins, right? Almost every business. Now if you look at the Digital Industries business, that is private sector CapEx, as we all know, in the last 5 years, there has not been too much of an uptick on private CapEx. It is a business where we have no localization. That's why the margins are driven by transfer pricing. But effectively, the business has still grown at 1.5x in the last 5 years with a corresponding growth in the profitability. As public sector CapEx has continued to grow, our smart infrastructure and our mobility businesses have also grown substantially with margin expansions continuing to happen. I'd just like to remind you, particularly on the mobility segment, a lot of the margins have been impacted because we did heavy investments. We moved from only looking at being an electrification and signaling business in mobility to expanding that into rolling stock. And obviously, that has an impact initially on the margins. You've already seen we won the locomotive order and there are other opportunities there. We've started exporting bogeys out of our factories over there. And all of this required CapEx, where the kick in now on revenues and margins will come in. But this is not the end of the story. Again, this is a CAGR that we were talking about, which is not just a point-to-point number. This has been a continuous growth over the last 5 years, year-on-year, both on the top line as well as on the bottom line. And that really reflects the strategy that we have is to ensure that we continuously have a top line growth as well as a bottom line growth, which is embedded into our growth strategy in the company. That, of course, has reflected as well in the markets where we have outperformed the market in spite of the fact that there have been global headwinds, in spite of the fact that private sector CapEx has not yet kicked in, in spite of the fact that currency volatility has continuously been there. We've also been recognized right now as being a leader in the area of governance and sustainability. Sustainability is an element that is becoming critical even for our customers right now, and we can do a separate segment on that, if any of you are interested at a later point in time. But we are doing a lot in sustainability internally within Siemens but also helping our customers who have got an increasingly ambitious target on their sustainability goals to help them be more carbon-friendly over there. So moving on. I'll move now into the individual segments and try and give some color over there, and then Wolfgang will take over and talk about the financials for each of the segments. So if I start with the Digital Industries business. Now this is a completely different picture from what we have been talking in the past. In the past, we've given you a macro overview. We are now shifting the focus to give you a more 360-degree perspective of what we actually do in the Digital Industries business. Roughly 50% of our business comes from three market verticals. That's manufacturing, particularly machine building, that's metals, particularly steel, and that's automotive. Roughly 40% to 50% of the business of digital industries comes from these 3 verticals. The rest of it comes from pharmaceuticals, food and beverages, cement and so on. And the route to the markets are also different. The route to the markets happen via our OEMs. It happens via our territory sales that are selling into industries as well over there. But if you look at the growth that has happened in '21 to '25 in these three segments, you can say roughly 50% of the business has grown at around 5%, right? And I'm talking about the Siemens content in this business. So don't mix this up with the growth of the industry. We are looking at it as a growth of the Siemens content in these three businesses has grown at roughly 5%. The expectation is with the uptick in private sector CapEx that we hope will kick in that this will now grow from around 5% to 8%, possibly more as well as there becomes a CapEx expansion in the private sector. And what are we doing here is mentioned there on the chart for each of these verticals. It's just symbolic to show you what exactly we do in terms of each of these verticals. I don't need to go into the details, each of these are elements where we are helping the customers with end-to-end solutions. This is not only providing a box over there, but it is also providing an end-to-end solution that makes a major difference to this customer and that we do not only by ourselves, but we do it also with partners, and this is the difference. So how are we doing this? We've got a suite of products. Yes, there is a hardware part of it, but there's also the software part of it, which is linked into the hardware that we sell. In addition to that, there is a layer of software that comes on top, which is not a part of Siemens Limited, but is complementary, and we work with the other company of Siemens in India to support our customers with that additional software layer. But there is an embedded software in the products that we already deliver. And we use these offerings that we have got to bring real value to customers. And I talk about one of them in particular. When you look at the PLCs, traditionally, PLCs were boxes where you had these controllers in them, and every time you needed an upgrade, you had to go to the factory and you had to upgrade the software on that particular PLC or you had to replace a PLC completely for the upgrade. We've now come out with a virtual PLC, which is essentially upgrading the software by remote. And this means a complete revolution in the way automation is done in the industry, right? This means that our fixes to software can be done remotely, time is reduced, speed is increased, cost is optimized both for the customer as well as for us. And this is something that customers are looking for. How can you increase the speed and bring in new variants without us having to keep on changing the hardware every 6 months, every year. And these are the kind of technological advancements that we are able to offer the customers as well. When you look at the plant engineering software, the COMOS, this is something where you can actually design the product, design the manufacturing process and you can design the entire flow of automation and of manufacturing in a plant before you have even put the first brick in the ground. Now when you can design it and you put a layer of artificial intelligence on top of it, and you put a stack of metaverse onto that, you can actually get a digital experience where you can walk into a factory, you can walk around the factory, you can open the machines in the factory, you can look into each machine, you can already identify where people should be standing, what angle they should be bending at, so how high the workplaces should be. All of this you can design and cost before you have put the first brick in the ground. And then when you have put the factory up and you start the manufacturing process, you link what you had designed with what is physically happening on the ground and you do this in real time. So every time you want to make a change in the manufacturing process, you don't need to first do it on the ground and see what impact that has, you can do that first and simulate the impact of that in the software and see what the impact of that is going to be and how much you are able to optimize each machine individually and then optimize each machine collectively to see that you get the best product at the most productive value. Let me make this clear. In the overall plans for India to become a manufacturing hub for the world. We have a factory in Germany that is manufacturing products at a productivity level of 99.99%. India's average productivity level is 75%. There is no way you will bridge 25% of productivity just by skilling people. Technology will be that differentiator, and we have that technology. And that is a potential for the Digital Industries business as the Indian manufacturing environment grows. So what will be our focus moving forward? One is very clearly our digital industries will focus now on verticals, on finding solutions for customers, not only selling individual products for all the reasons that I mentioned. Now we are conscious that no individual company has got a complete portfolio to provide an end-to-end solution. And that is where we are starting partnering. We partner with system integrators. We partner with distributors. We partner with technology, other technology players, we partner with other suppliers, we partner with solution architects, we partner with IT firms. And together, we curate solutions that bring the best impact for our customers. So that's going to be the second focus. And the third is really going to see how can we leverage our installed base, and I talked about the installed capacity in the country that we already had. How can we leverage that installed base to grow the service business. So that's going to be the focus for our digital business moving forward. Moving on to the smart infrastructure business. Here again, three key verticals contribute 40% to 50% of the business. And this is transmission and distribution in the power sector, data centers and commercial buildings. Now transmission, we don't do transmission that is done by Siemens Energy India Limited, but we do the software for that. And the entire distribution framework is what we do, Siemens Energy does not do. On data centers, the entire energy requirements, and you know that data centers are the largest guzzlers of energy, and you know that increasingly, data center operators are turning around and saying, "We only want green energy. And can you help us create data centers which are much greener." And that is what we can support them with. And finally, commercial buildings. How can we make commercial buildings safer and more energy efficient? And that's what we can bring in with our complete offerings of distribution, automation, smart grids, but also in the building space, network operations and so on. So there is a very wide range of offerings that we have got here. The market here has grown over 10%. And that's why you have seen a good growth rate in the Smart Infrastructure segment. Commercial buildings is growing extremely well. Data centers are growing extremely well. And the power distribution market is opening up and is becoming increasingly conscious about upgrading their technologies, becoming more efficient in their energy distribution cycles and more green resilient as well. And that's where we are right now. Moving in the next 5 years, we believe for the next 5 years, this trend will continue. The smart infrastructure at least in these 3 segments will continue to grow at plus 10%. So I think this is our prognosis there, how will we address this market? And here again, we do have the hardware solutions, but we also have software solutions. And I point out, one, when you look at the chiller optimization solution that we have, this is about the heating, ventilation, air conditioning in commercial buildings. Let's start with hotels. 40% of the fixed cost of running a hotel is actually the energy that they use. Now if we can help bring down their energy costs by -- energy consumption by 10% to 15%, that goes straight to their bottom line. And that is the technology that we are able to bring, not only with the hardware, but also with the software, not only by ourselves, but partnering with system integrators as well and partnering with other solution providers. We have a platform for a command and control center, where if there are companies that have got multiple factories that are using electricity, multiple offices, multiple stores, stadiums, malls, we are able to support them in comparing the energy consumption in one stadium with the energy consumption in another building and find out where there are leakages in energy. Now you see over here as well, similar to the digital industries business, this is not only about selling hardware. It's also about selling solutions. And this is about changing the narrative from only selling medium voltage switchgear to saying we can answer some of the most complex problems that you have being a technology company, which is where we have now moved towards, away from being only an electrical company, away from being only an automation company and now to being a technology company, where we can provide and bring together the combined strengths of electrification, automation and digitalization to provide solutions to our customers that make a difference in their operations. So if I focus here as well, here again, the focus has to be on vertical markets. And we will continue to look at hospitals, hotels, ports, airports, distribution centers, data centers, commercial buildings and so on. We will continue to localize and expand capacities. We've already done that with the medium-voltage GIS programs, the vacuum interrupter localization as well. So this will continue to be an ongoing program. And finally, partnerships will form a critical part of our expansion strategy, which will be not only doing -- trying to do everything ourselves, but combining with a host of other partners to deliver solutions. M&A is something that we are looking at to see whether we can expand the portfolio here, more in the buildings area rather than in the electrification area, where we are already pretty strong. C&S continues to be a great success, where their exports continue to grow. We continue to get traction there. The business is growing. But more important than the exports, we are seeing significant traction happening in the C&S acquisition, even on the domestic business as well. And we think this is a strategy that worked and can be replicated in some of our other businesses as well. Finally, mobility. This is going to be the growth driver that we believe in terms of volumes in the business moving forward. Here again, the market has grown in the last 5 years, at over 8% to 10%. Now it is very difficult, really, when you talk about the mobility market to say this is going to be continuous growth. You get one large order of a locomotive, you get a spike. The next year, you may not get the large order, you may get other orders, not of the same magnitude. But this is very clearly a business that is going to be on an upward trajectory. As you know, until 2025, really, we were very clearly primarily operational in the electrification, signaling space as also in the propulsion area. Moving forward from 2022, we've got into the rolling stock. We introduced rolling stock into our portfolio. That is we reopened the bogey factory, started manufacturing bogeys. Of course, you know about the locomotive project there and we continue to look at expanding that portfolio, signaling, we are looking at both mainline commuter rail as well as metros, and we will continue to do signaling there. What has been the growth drivers? I think the continuous CapEx spend by the railways of INR 2.5 lakh crores on an average, that is something that they have actually been delivering on. The rate of tenders coming out of the railways continues to be at the right pace there. Of course, the entire signaling network in the country continues to be a huge opportunity. The entire 67,000 kilometers of network still needs the latest signaling operations will not be able -- the railways will not be able to deliver on their ambition of bringing down logistic costs, increasing the passenger freight unless the signaling systems are able to keep track with the speed that is required on the network. And that's why the coverage program is so critical. Of course, the entire rollout of the Vande Bharat, the Vande Metros, high-speed rails, metro projects, all of these present huge opportunities, and we see that coming in over the years ahead. And finally, of course, we won a great success in the high-speed rail signaling project for the Ahmedabad-Mumbai route. Moving forward, again, that portfolio continues. The opportunities are there. As I mentioned, we have -- we will continue to localize. The pipeline continues to be strong. We have increasing visibility on the pipeline there as well. And we do believe this business should be growing at least at a 10%-plus rate, and the market should continue to grow at that level. So our focus here will be now -- in addition to electrification and signaling will now be on rolling stock and the increased signaling under the new Kavach program. We will continue to transfer technology to India, either software for the Kavach, for example, or hardware technologies for the propulsion systems and the rest of the rolling stock portfolio. And of course, this is all about implementation. These are large projects, many of them are actually product supplies coming out of factories. So the locomotive business, which is categorized as a project is actually manufacturing multiple locomotives in a factory and getting it out. But we need to ensure that we are continuing to be efficient in that project excellence process. So finally, the low-voltage motors, as you've probably heard, the Board has approved the sale of low-voltage motors to Innomotics India. Now this -- just to give you a quick recap, globally in October '24, Siemens AG carved out the low-voltage business to KPS at a global level, low-voltage business in Siemens AG was called Innomotics, and they carved it out to KPS capital. Consequently, the IPs got carved out, Siemens in India did not have the IP rights, does not have the IP rights. Neither do we do manufacturing here in the country. We -- it is within Siemens Limited, it is outsourced manufacturing. Revenues are cyclical, as you know, for motors. The expectation was that the volumes will increase. Those volumes have not increased in the country. These are very closely interlinked to economic activity, particularly private sector CapEx very closely linked to commodity prices, in particular, copper. So basically, the business in Siemens Limited is a sales organization, which is licensed to sell products, low-voltage motors, where the IPs or the parent, the brand is in Innomotics in the Indian market. And this was then finally approved by the Board of Siemens Limited. In terms of a sale and transfer on a slump sale basis to Innomotics India at a purchase price of INR 22 billion, which I will remind you, was the same price that had been offered earlier on by the parent company, considering the fact that the volumes have declined. In the meantime, it's only 6% of the overall volume of Siemens and only 2% of Siemens profits in the meantime. We believe this is a deal which is in the interest of shareholders. And we expect the transaction to be closed sometime in mid of next year as well. Finally, very quickly around the sustainability, just to highlight the fact that 90% of the products that we have within Siemens contribute to the sustainability requirements of customers. And essentially, this is in 3 areas: decarbonization, resource efficiency and people centricity. And we do have examples around all of these here in India. And when you look at energy efficiency, as I mentioned, in the Taj Hotel Group, already, we have addressed over 18 properties where we have helped them bring energy efficiency into their operations there. When you look at resource efficiency in the manufacturing, particularly looking at consumption of water, we've been able to help an automotive company to reduce the consumption of water by approximately 4 liters a wash in terms of their operations as well. Finally, on the people part, of course, our entire offerings in terms of the railways, in this very prestigious line, the Sivok Rangpo rail line has been able to bring connectivity to people as they're able to move in and out of Sikkim well. So very clearly, our portfolios are also aligned to the sustainability portfolios. With that, I hand over to Wolfgang to give you a quick overview of the financials. And then I'll summarize at the end and then we open it up for Q&A.

Thank you, Sunil. So a warm welcome from my side as well. My name is Wolfgang Wrumnig. I'm the CFO, and I started my journey here in India in March 2024. So before I come to the financials, maybe a couple of introductory statements regarding our operations here in India. As you are very familiar with our operations, we are operating in 3 major businesses: Digital Industries, Smart Infrastructure and Mobility. Of course, our numbers for this fiscal year still includes the Low Voltage Motors business. But as you just heard, we announced a couple of days ago, the sale of the business. And going forward, it will be then a discontinued operation. And I'm not covering the business in my presentation today anymore. Secondly, Siemens includes then all 4 businesses, including LVM, but also two consolidated subsidiaries, which is C&S Electric and also Siemens Rail Automation, which is also included in the total financial KPIs. And finally, just as a recap, you have heard from Sunil, our more or less success story over the last 5 years, doubling our volume, our revenue and tripling our profitability, also increasing our share price by 380%, outperforming the Nifty 100. And I have to say all businesses have contributed to the success story. And we are continuing addressing with the success story with focusing on growing verticals and I can only say we are well positioned in India's success story, Viksit Bharat going forward. So with this, I move on to digital industries. So I'm sure you remember in our last virtual analyst meet, I gave you a more detailed insight on the story of digital industries over the last couple of years and about the business development. And this business development, this development was not specific to India only. It was also seen in other countries. It was even seen on the global level, but you could also see it with our competition. So just to summarize, this story started pre-COVID, more or less at a very stable business with a book-to-bill of one approximately with growth rates about 5% and a profitability in the range of 6% to 8%. Then COVID came, we saw a significant drop in the top line. And then after COVID, we were faced with the supply crisis, supply chain crisis. In this period, so you know that the price levels have increased significantly. The orders were skyrocketing, prices went up and our backlog went up. We were faced with a book-to-bill rate of 1.4, 1.5, which is very unusual for this business. So -- and also followed by an increase in revenue, but also what we have seen at this point in time was significant order cancellations. So after this period, we saw the business then again stabilizing in the years 2023 and 2024. Orders were coming back to normal. Revenue went still up because of the huge order backlog we had and also the margins were coming down from the peak level. I would say as this business is preliminary or predominantly a trading business, so more or less, we are selling products, we import from our mother company from Siemens AG. And Sunil already mentioned it, it's a business driven by the transfer price framework. So this is more or less the business, I have summarized it in the last virtual meet and I could say right now, we are more or less now back to a normal business cycle. So which brings me then to the financial KPIs. So as you can see, last fiscal year, our orders finished at INR 38 billion with a growth of 13%. And to point out specifically, we had a very strong Q4 with a growth of plus 30%. So more or less the book-to-bill was plus 1, so which also reconfirms that we are back into a normal business cycle. When it comes to revenue, we have seen in last fiscal year, a minus 7% decline in revenue, so which was more or less as a result of a kind of a slow start into the first quarter. So the revenue was pretty slow, also based on a low backlog, and as already mentioned, muted private CapEx, but we could catch up. So when you look at Q2 until Q4, the average revenue went up to almost INR 10 billion on average, which is clearly a sign of recovery. And also based on the expectation that private CapEx will pick up going forward, we are cautiously optimistic with regards to the future development. As also already mentioned, the key verticals we address in this business are automotive, metals, machine building, food and beverage and chemicals. The sales channels we use in this business, our partners and distributors. Also, we are working directly with OEMs, but also with end customers. Our portfolio ranges from industrial automation hardware to process instrumentation and motion control and drive technologies. Some insight on the business mix. I mentioned already the DI business is predominantly a product business. So we sell products to our customers, but also we sell solutions. And last but not least, we also have, I would say, a sizeable service business, which is close to the 20% range. Important, and I repeat it, this business is a transfer price regulated business, so which more or less make sure that our margin quality, margin range is more or less in the 6% to 8% range plus/minus. With regards to manufacturing, unfortunately, we don't have a lot of local value add means manufacturing in this business in India. So we just started a small operation with regards to flow meters here in India. And we will continue to discuss opportunities to localize, but we will only do it if it makes financial sense. With regards to exports, as we don't have local manufacturing, there is also not a lot of export in this business. We do export projects on a case-by-case basis. And it's currently the export share is in the low single digits. And we will see how this develops going forward. When it comes to profitability, and I mentioned it, transfer pricing minus 45% versus prior year. So we are now down to INR 2.7 billion profit in fiscal year '25 which is a profit margin of 7.3%. And also when you look into the different quarters, you could see there is some fluctuation in the quarters from 4.7% to even 11.1%. And this is due to transfer price adjustments. So usually, this happens also then in the following quarter. But on an annual basis, on a fiscal year basis, we'll make sure going forward that more or less the margin will be in this target range of 6% to 8%. So in summary, I would say again, our business is now back to normal. Our focus going forward will be on top line, addressing the growing verticals in India, also expanding channels, optimizing our sales setup and gaining market share. So this would be my summary on DI, and I move on with Smart Infrastructure. So smart infrastructure. I can only repeat again excellent performance over the last couple of years, doubled the revenue and even 5x profitability. A reason for this development is also that we expanded our local footprint here in India. You have heard from Sunil already that we have, especially in the SI business, a significant manufacturing footprint here in India. So when it comes to manufacturing, so -- and you know it, we are continuing to invest in manufacturing in smart infrastructure. In 2023, we announced the investment in -- CapEx investment in vacuum interrupter factory. In Goa in 2024, we announced the investment in the factory in Goa as well for gas-insulated switchgears and Blue GIS for domestic and for the global markets, an investment of INR 3.3 billion and we will continue to look for opportunities and also the investment in local footprint will also give us opportunities to expand our margins. From an overall perspective, our portfolio is roughly 65% localized, so the rest is imported. We are addressing, as you already heard, verticals like power utilities for power transmission and distribution solutions and data centers. In other segment, we are addressing the low-voltage market with protection devices. And last but not least, we are also addressing verticals like commercial buildings and data centers as well. The sales channels we are using in this business are very similar to DI. So we are working with partners, distributors, OEMs, also with EPCs and end customers. With regards to product mix, still more than 50% of our business is product business in smart infrastructure, followed by solution and systems and we also have a growing service business. The export share of this business is pretty much stable, close to 20%. And we will continue to look for opportunities to increase the share of exports going forward. And also with the investments we announced and we are right now executing, we assume that it will also impact our share of exports going forward. But also, our focus is the domestic market in India. With regards to competition, and also a statement for Smart Infrastructure, we do see competition and competitive pressure rising. But also I believe we are well positioned. We are well equipped and also the strong performance in fiscal year '25 confirms we have a strong market position, and we are committed to profitable growth going forward. So now when it comes to the financials, orders, INR 103 billion, plus 15%; investments in power grids, public transportation and commercial buildings, but also the new technologies like AI, have a very strong impact on the demand with regards to data centers and data centers is one of the focus verticals in this business. With regards to revenue, plus 14% versus prior year, INR 92 billion in revenue. Despite the fact we had a slow start into Q1 as well. Due to -- one reason was the QCO topic. So -- but then we managed it pretty well, picking up so in Q4, we hit INR 27 billion, a growth of 19%, which is more or less very close to the CAGR we have seen over the last 5 years. And this was not only one segment, all business segments within Smart Infrastructure have contributed to this development in Q4. With regards to profit, I believe this is also another success story, INR 12.5 billion in fiscal year '24, plus 13.6% profitability. We have been able to expand the margin by another 20 basis points, and this is due to, of course, the revenue increase due to mix, but also due to operational execution despite the fact we have seen heavy competition in this business. So let me summarize here as well. I would say the success story in Smart Infrastructure continues. And we will continue to focus on top line and on margin expansion. We will continue to do investments in manufacturing and we will keep our strong focus on operational efficiency. With this, I'll move to the last business, which is Mobility. So also in Mobility, we have been able to expand our performance. We have increased our revenue 4x. We have doubled the profit. And also I have to point out here, the Mobility business is a complete different business than the other 2 businesses. So from a business mix, it's predominantly a project business. Is it electrification? Is it signaling? Then of course, related to the projects, there is also a share of service business. And we also have kind of product business when we sell components like propulsion systems to customers, to Indian railways and sometimes even to competition. Also one specialty in this business is sometimes we also do turnkey projects. So more or less where we are the general contractor, for example, I can quote here the Pune Metro, where we do turnkey projects, more or less delivering a full metro line, including construction, including signaling, electrification and including rolling stock. With regards to our portfolio, was already mentioned by Sunil, it's signaling, it's electrification, it's rolling stock, it's bogies and it's components. Our customers are, of course, in India, Indian railways as a railway operator, municipalities for metros, for example. But as already said, sometimes even competition. And of course, we also have a share of export in this business as well. When it comes to manufacturing, we have 2 manufacturing locations here in India, 1 for components in Nashik and 1 for bogies in Aurangabad, both addressing the domestic and the export market. And there is 1 other factory we are operating right now, which is the factory in the [ hot ] for our local 9K horsepower project. I come to this a little bit later. So with regards to exports, we are high single digits with regards to export share in this business. And it's especially bogies for some European rolling stock projects. And I'm sure there will be future opportunities coming up as well. So I'm positive that we will be able to expand export share for the Mobility business going forward. When it comes to competition, yes, you're certainly aware that we are faced with strong local competition here in India. And there is strong pressure, also pressure on prices in the market. Also, I mentioned it already, the Mobility business is different. It's a very lumpy business. Sunil mentioned it as well. Sometimes you have quarters where orders are skyrocketing, then sometimes you have quarters where you don't see a lot of orders. And it's just the nature of the business. Maybe the revenue is a little bit more stable, but also there, you see some ups and downs. And you're certainly aware, this is a business where we recognize revenue on a percentage of completion method. So when costs are coming in, then, of course, also then the revenue is increasing. So let me now come to the financials. INR 50 billion in fiscal year '25, almost 50% growth. Major orders in this fiscal year, we have won the high-speed rail signaling, the first one in India for the line Ahmedabad-Mumbai based on the ETCS technology in Q3. Then we have also won signaling and communication for Metro Nagpur in this fiscal year. And I said lumpy business. Also, just if you look at the development of the quarters in this fiscal year, Q1, we booked [ INR 8 billion ] in orders. In Q2, we booked [ INR 16 billion ]. In Q3, we booked [ INR 19 billion ]. And in Q4, back to [ INR 7 billion ]. So it's really a little bit of a roller coaster. So -- but anyway, important is that we win orders. With regards to revenue, INR 33 billion, plus 15%. And here, the growth is coming from the project ramp-up and from execution in our projects. Revenue, I mentioned it already, is a result of cost coming in for the various projects. So it's based on percentage of completion. And usually, when we enter into a new fiscal year, I would say maybe roughly 80% of the future revenue in the new fiscal year is already in our backlog. So more or less the book-to-bill in -- or more or less the orders we need to book in the fiscal year is more the smaller portion to get to our revenue targets. We are doing well on the ramp-up of the loco delivery. As you most probably know, we have delivered the first loco in May this year. And our Prime Minister has flagged off the first locomotive. And for us and not only this project, but in general, the execution of the project is very critical for our margins going forward. Just as FYI as well 9K horsepower. So this year, the increase in revenue for this project versus prior year was close to 60%. So you see the revenue for this project is picking up. Just a few comments on this project because it's really one of the project for us. The project and the development and the ramp-up is on track. The first loco was delivered. The factory was set up in record time. So we are ready to raise capacity as planned. And for the future, of course, flawless execution of the ramp-up is critical. With regards to profit, we have reached INR 2.6 million -- INR 2.6 billion, sorry, in fiscal year '25, which means the profitability went up by 23% and reached a margin of 7.7%, which is an improvement of 50 basis points versus prior year. The reason for this improvement, again is, of course, the revenue ramp-up. It's the mix of the business. And we have been able to more or less minimize negative impacts like NCCs, nonconformance costs in last fiscal year. In summary, fiscal year '25 for Mobility was a good year. We booked some important orders, which are critical also for the future success, also adding again to our already big backlog and the successful ramp-up of our operations is happening. And you could see the effect in 50 basis points margin improvement. So now I come to the total picture for fiscal year '25. Orders are up 21% to INR 200 billion. We have a huge backlog of INR 423 billion on our books. The revenue grew 8%. SI and Mobility have contributed by double-digit growth. As already mentioned, DI was down due to the development back to normal, but we have seen already in DI as well growth in Q4 in revenue. Profit and margin is down. The reason is the decline of profitability in DI. Also, we had some decline in profitability in the low-voltage motors business, but Mobility and Smart Infrastructure, both businesses have compensated. Profit before tax is also down, and there are 2 major, I would say, onetime impacts we have seen this year. In 2024, we had a sale of property of INR 2.9 billion. We couldn't unfortunately repeat in '25. So that's one of the reasons. And the second one, we had energy demerger-related expenses. In '24, it was just INR 0.1 billion. In '25, it was INR 1 billion. So more or less these 2 topics explains the significant decline in the reported profit before tax. So let me finish. We -- 2025 for us was another successful year. We have completed the demerger of the energy business in record time, and we have increased or more or less shareholder value of plus 40%, combining both share prices. We have grown our top line, especially orders double digit, but also with the revenue at 8%, also close to double digit. We have expanded our profitability in SI and Mobility, and we will continue to focus on profitable growth, productivity and execution. And as also mentioned, our focus will also continue to be on investment in capacity in India for domestic and global wherever it makes financial sense. So with this, I close my presentation and hand it back to Sunil.

Thanks, Wolfgang. So final slide before we open it up for questions. First is, I think you can see that we've delivered consistent performance over the last 5 years. Our portfolio and our strategy is very clearly linked to the Siemens global strategy, is very closely linked to the India country strategy as well. Differentiators will, of course, be sustainability and digitalization. The way we go to the market is very different now. We are focusing on verticals. We are focusing on solutions primarily. We will continue to expand our capacities and localize wherever it makes sense. And of course, we have to continue to keep an eye on operational excellence. There was a question in the break earlier on around how significant is Siemens India for Siemens Global. Maybe just to put that into context, we are the fourth largest country in the Siemens AG world. We are the fastest-growing country or the fastest-growing market for Siemens in -- globally. And I think that puts it in context in totality, the importance for Siemens Global in Siemens India is increasing. Strategies are very clearly aligned, and you saw the first major moves that were done, which was bringing in rolling stock in the mobility area as well. A lot of transformation that has happened in our mobility area with the Kavach technologies, with software coming in, with the rolling stocks as well. Smart Infrastructure continuing on its growth path. So I think the focus is very, very clear. We have almost monthly visits from global Board members coming to India, which gives an increased focus here on the country. Our global CEO has visited India, comes once, twice, thrice a year on an average. So there is a very clear focus now on India, India for India, but also using India for the rest of the world. With that, I hand it back to Radhika for question and answers.

I think you can raise your hands and maybe we can pass on the mic to you. There is somebody in the front row.

This is Mohit Kumar from ICICI Securities. My first question on the Mobility. Given the strong order book of maybe more than in [ INR 50 billion ] and 1.8 book-to-bill ratio, even excluding the 9,000 HP loco order and the expected supply ramp-up in the 9,000 loco HP, I think there are 35 trains loco which is supposed to be delivered in the near term, right? My question is, should we expect greater than 20% CAGR in the revenue in the next couple of years and double-digit margin with improvement in the revenues.

Yes. So if I understood your question correctly, so the loco project should more or less contribute to the significant -- to growth going forward in the next couple of years.

The growth in the margin.

The growth in the margin. Okay. Yes, it will. It definitely will. And it will be a kind of a step-up process. So most probably, you will not see the growth consistently on the same level. So whenever we reach the next level of delivery, the delivery schedule, the revenue, of course, will ramp up also because the costs are coming in. So yes, we will see significant growth in the next couple of years, definitely double digit going forward. And it also should contribute to the margin expansion going forward.

So just to put that into context, the contract requirements are 40 to be delivered for the next 2 years, which then gets stepped up to 80, which then -- for 2 years, which then gets stepped up to 100 for 2 years, which then gets stepped up to 160 for the rest. So every time -- and that's going back to the comment he made, every time there is a step-up, there will be that step-up in the volumes and then there will be continuous growth.

And to add to that, of course, also with the delivery of the locomotives going forward, whenever the locomotive is delivered, and also the service part of the contract will kick in as well. So it will be over the next couple of years, then definitely a growth story.

Question on Smart Infrastructure. It has done pretty well for us for the last 5 years. Do you think we can sustain the double-digit growth? And the question is, is it -- can you see the margin improvement given the fact that the global [indiscernible] reports 18% EBIT margin, if I'm not wrong, in the same segment, right? And we -- I think we have almost localized almost, I think, 65% is the localization level, which is pretty high.

So the growth will continue as the India continues to go. And why am I saying that? Your DISCOMs, the moment they get privatized and the more privatized they get, the more they will need to upgrade their equipment. The entire space that I talked about in terms of buildings and so on will increase. So the top line growth, we definitely do expect. The bottom line growth, yes, you're right. The global achievement is 18%. We are not 100% localized yet in that business but the intent is to continue to expand the bottom line as well.

This is Harshit from Equirus. Sir, firstly, on Digital Industries, we had launched Siemens Xcelerator a few years back in India to have the complete ecosystem of hardware, software services alongside our partners. So what have been the adoption levels in India at the moment? And what proportion of our DI business now comes through this route?

So Siemens Xcelerator, a very good point. We today have over 500 customers who have used -- who have received orders or who have given us orders through the Siemens Xcelerator platform. Now we don't measure digitalization per se as a separate metric there because when you look at Xcelerator, that is running across all of Siemens, right? It is not only a DI or an SI portfolio, it is covering both of them, and it runs across multiple subsegments as well. So we don't measure that. What we do measure is the number of customers who are getting interested in solutions that we are offering on Siemens Xcelerator is increasing. That has contributed overall to the revenues, not only of DI, but there could be also SI. And I give you an example. You can have a -- we had a dairy manufacturer who turned around and said, can you help reduce my fat content from the time the milk is taken from the cow to the tetra pack. There is no human intervention in that process. Now that involves a part of process knowledge, which is DI, but it could also involve a part of heating ventilation of the air conditioning as the milk is transported from the farm to the factory. And therefore, you have a combination of both of these elements coming in where we have to look at the combined offering of Siemens. And that's why we don't measure it individually. We look at it customer inwards, which is can we deliver that solution to the customer and then bring together the complete offerings. And this is what we offer on Xcelerator. Once we have that offering, customers can go in, other customers can go in and say, hey, they have achieved that efficiency over there, I'd like to have something similar.

Understood. Sir, secondly, on the Smart Infrastructure business, what would be the size of India's building automation market in your assessment? And at the moment with the portfolio that we have, what proportion of that we are able to address? So -- and what we are going to do to fill up the wide spaces that we have at the moment?

So look, the building automation market is the entire commercial buildings, the new commercial offices, et cetera, complexes that are coming up. It is malls, it is stadiums, it is airports, it is ports, right? It is even factories when you put up a factory building. So all of these first require electricity, which we can deliver them via the low-voltage, medium-voltage products that we have. And then they require air conditioning and the management of the energy that is used, which we can also deliver to them. And finally, they require an overall portfolio that -- or an overall platform that can help bring energy down, consumption down, which is also what we can offer them. So the size of the market is huge. It is growing. The number of airports, you have to see 70, 80 airports coming up in the next 4 or 5 years. That's an opportunity. Every airport requires electrification, requires energy savings, et cetera, and that's where we have a space in. But just to give you an example. Hospitals, all of these are all part of that portfolio.

Just one clarification on the Mobility piece because it's going to be a percentage of completion methodology, will the profit margins be in line, let's say, at step-ups or will give or take a few basis points. I'm not saying that if it's X, so it should be X or will it be also in a step-up form like it can be a percentage and then next, and then next.

Of course, the margin will develop somehow close to the development of the revenue. So when we see a step-up in revenue, then you will also see an increase in margin. And of course, if I look at the overall business of Mobility, maybe the contribution then to the overall profitability of Mobility will be maybe a little bit less than specifically only for the project piece. But expect also a margin expansion going forward, yes, from the project.

Ex services.

Ex services.

Because loco would be -- the delivery of loco would be one part. Services would be one part theoretically, services should be higher margin than delivery of loco theoretically. So if I just -- the revenue recognition is on a percentage of completion, so will the cost recognition be in line?

In general, if you really look long term, and you know this Mobility project, first, there is 11 years of delivery of locomotives. And then during this period already, the service part will partially kick in and then later. So more or less -- and you said it, you expect the service margin to be higher. So more or less then you would see more margin than in the outer years?

The bump up because even now when we deliver the 40, the service starts for those 40. So there will be that increase over a period of time.

And just -- I think we were -- during the break discussing the capital allocation piece. Now if I want to put numbers behind it, we have almost INR 70-odd billion of cash. We will be getting INR 22-odd billion of cash from the sale of LV. We do 20 billion of PAT every year. So -- and that is going to be increasing at a percentage every year. Today, our fixed assets are close to INR 11 billion, INR 12-odd billion, give or take. For our next leg, because there are 2 elements to it. One, you mentioned there will be strategic M&A. So cash -- a part of cash will go there as and when it comes. But from our localization perspective, especially in the DIPs where it seems like a chicken and egg situation that India is not scaling up, so we are not localizing. And maybe India is not scaling up because we are not localizing. So do you think that maybe we want to -- we can -- given that we have enough balance sheet, we can upfront some of the investments to localize and then look at profitability. I'm talking from a 5- to 10-year perspective. How are you thinking from that?

So look, the capital allocation, one is definitely in M&A. The second is continuous investments that we will continue to do in Mobility. And by the way, the investments are not only CapEx, right? We are adding hundreds of people every year, right, for engineering, for signaling, for example, for a lot of the other areas as well. So it also goes into that. Now localizing ahead of a curve, that is ambitious, right? You've got to turn around and say we will put the money on the table and because we expect the volumes to come. The question that we've got to answer, and he asks more pointedly is when will that volume come because that has a difference on your IRRs, whether it comes in 1 year or in 5 years, right? We expected private CapEx to kick in 3 years ago. Had I invested 3 years ago, we would have had a challenge right now, right? So it's a continuous call that we are taking. Where do you invest? The other part that we have to keep in mind is the global -- some of these products are already being manufactured globally. Now if you look at the global environment, we have the opportunity to say, either you sell the product to us at a price that is competitive in the Indian market. That's all that we are interested in, or we will manufacture it ourselves over here. And that's a continuous conversation that we have with the parent company because it doesn't make sense neither for them because we are a part of their global supply chain as well, where, for example, our Goa factory is exporting substantially to the parent company. So we are integrated into the global supply chain. For them, they have to take a call, does it make sense for us -- for them to set up another factory in India and have vacant capacities in some other part of the world just to achieve a local price level? Or does it make sense for them to drop their price to us so that we can address the local market. The critical discussion that we have to have is it's not about setting up a new factory, it's about meeting the price level in the market, right? And if we can meet the price level and continue to deliver margin improvement because you want profitable growth. If we can meet the price level and continue to deliver margin improvement by importing or by buying, then that's obviously a preference. It's a much more efficient way to do things.

No, I just wanted to add, at the end of the day, it's a question of global demand as well. We do see right now in the energy environment, utilities globally, the demand is rising, rising, rising, which makes it just much easier to make investment decisions in India, yes. So if you have other industries where the demand is not rising and the manufacturing footprint is already there, so it makes, of course, investment decision much, much more difficult.

One last question from me. Coming back to Mobility, electrification order, the large electrification order, we know that as per press reports, the gap between you and the L2 was pretty large. Does that give us a sense that given where you are in signaling, your cost efficiency is where competitive intensity versus competition is that you can be extremely competitive in that piece and electrification, like you mentioned, 50% market share in metals. Do you think that market share at least is sustainable as India electrifies more in railways?

So yes, I think the simple answer to that is yes. Our intent is to continue to gain market share. Our intent is to continue to grow the top line, but to grow the bottom line along with it, right? So we will not sacrifice the top line at the cost of the bottom line. We've not done that in the last 10 years. We won't do that in the next 5 years. The critical factor over there is, yes, every now and then you have to take a strategic call on one or the other project. But so long as the general trend continues, as we showed you on the chart, continuous growth in the top line and the bottom line, we will continue to take those calls, absolutely.

I think there's somebody here asking, yes.

Bhavin from SBI Mutual Fund. A couple of questions. So when we virtually met last year, your outlook on private CapEx was not so positive. How do you see that now? I mean how positive are you versus the last year? Because it looks from the presentation more positive. And while there are impediments that you mentioned about the tariff, 3 years out, so the outlook 1 year and 3 years, how positive are you in high, low or medium? And what drives the change in the view that you have? What's driving the optimism?

So I mentioned it in my initial comments. The reason why a year ago, I was cautious on private CapEx was the consumption story was not kicking in, right? You had the problem on consumption, therefore, on demand. You had capacity utilizations at 80%, 85%. So the logical message would be if you have capacity at 80% and you see the India, you believe in the India growth story, that private sector should be investing, but they weren't. Why? Because the rate of consumption continuously went down. Obviously, the government had a similar view, which is why they came out with these 2 interventions, reduction in the income tax rates and in the GST in September with the hope that, that will pick up, that will drive consumption. Of course, there is a lag period, which is where we are right now. So in the medium term, I am optimistic. I believe in -- by April to June, we should start logically with everything the government has done, you've got a PLI in place, you've got to reduce income tax in place, you've got to reduce GST in place. I don't know what else the government can do. The only thing that is not rounded is the tariff, right? That's the only thing where we don't have a conclusion yet. How much of a role that plays finally in a private sector decision? Yes, there will be some who are cautious, more cautious than others. But logically, with the reduction in income tax and GST, there should be an uptick in private sector, and that's my -- that's why I'm more positive. Where do I see this story going 3 years later or 2 to 3 years later, I'm very positive. I believe the discussions with the U.S. and with Europe, the FDA discussions will get resolved. Whether it happens in 1 month, 3 months or 6 months is a matter of detail. But on a medium-term horizon, 3 to -- 2 to 3 years, I believe that should get resolved, and I hope that the tariffs will come down from the U.S. If they do come down substantially, that should definitely contribute to an uptick in the GDP and also therefore, into the private sector CapEx.

The second question again is on Mobility. What was the share of locomotive in the revenues the year gone by? And in one of the conference calls...

I don't want to go into that granularity.

So in one of the conference calls that you had mentioned that the margins of the locomotive would be equal to the company margins, which were at about 10%, 11% then. So are you seeing the margin level now that -- because that was the time you had just bid, now that you have finished the execution, the construction, how do you see the margins now versus your anticipation and now that you're...

So I think Wolfgang has mentioned, this is a POC contract, right? And those -- the project has been calculated at the right margins. It has met our margin hurdle targets over there, taking into account the volume of the business. And now it's a question really of over the life cycle of the project, delivering on those margins. And that is a function of the cost, as you mentioned.

So I said it in my presentation, more or less the project ramp-up is on track. So more or less -- right now, no areas of concern. And so with this, I would assume that we continue this way.

So when I look through the other segments, mobility by far has the highest level of localization and the manufacturing intensity. Maybe you mentioned there is some new costs that are there. Why are the margins lowest amongst all 3? And to us, it seems disappointment, these should be at least high teens or low teens. How do you see over 2 to 3 years out given the investments that you have done over?

CapEx. Look at the amount of CapEx we put in, in the last 2 or 3 years. We've done in Mobility. We opened a bogie factory. We invested in the locomotive factory there. We continue to invest in Kavach, signaling activities over there, electrification, continuous CapEx going in over there. So it's a CapEx cycle that we are putting in there.

Look at the margins of other companies in the Mobility business. So most probably you know the global mobility business has a margin of, I don't know, double digit, 10%, 9.9%. So -- and if you look at other competitors, maybe they are more in the range where we are right now with 7.7% or 7.8%. Of course, there are also exceptions but also these exceptions, maybe then your question, is this really the real margin or not the real margin? Or is it subsidized when you look into further, further to the east. So I believe we are not bad with the 7.7%. And as we both said, we believe in this business. We will see revenue going up, and we also believe that we will see margin expansion. So -- and of course, maybe our aspiration is, of course, we want to get to the same level as the global business at some point in time.

Just last question on the Digital Industries. We had low teens margins over the previous 3 years this year. And my understanding of this business was the product may be sold free, but the money is made in the services, which you said is 20%.

No, no, no.

The high margin in the past couple of...

That's not a business model here.

It was related to really the special circumstances. There was a lot of demand from customers because they were afraid that they don't get any shipments because of the supply chains. So that the prices were skyrocketing at the end of the day. So the transfer price model didn't work the other way around. So more or less we didn't transfer any profits back to the headquarter, but we kept it here. So that was more or less the reason why we had significant higher margins than in the normal business cycle. And I told you that more or less the margin range we expect is 6% to 8% plus/minus where we are right now and where we also will be in the future. Of course, the more we grow the more in absolute terms, the margin will grow, yes. But the margin ranges will be, I would assume, in the similar ranges. Other than we grow the service business significantly because the service business is local business and not -- at least not -- you need to exclude spare parts, but everything which is related to value add, this gives us opportunities to grow. And here, we will, of course, focus on service as well. But I told you, predominantly, the majority of the business is product business.

And we won't sell an INR 8 crore -- INR 5 crore, INR 8 crore automation system for free, just to expect potentially service project later on.

Subhadip here from Nuvama. My question is around the Mobility business. I think if you were to look at the scenario....

We'll do a separate section on Mobility. Go ahead.

Right. So maybe about 1.5 years or 2 back, I think the narrative was more around these big bang, large local orders, Vande Bharat orders, et cetera, whereas today, it seems to be that the market has moved a little bit more towards subcomponent and subsystem orders. Do you envision that the larger orders can come back over a period of time? And secondly, there was a large export potential that we had thought of. I understand that exports have already started. But again, anything big bang anticipated on that side, let's say, over a 2- to 3-year period?

So you're absolutely right. The challenge is the railways takes a decision on a case-by-case basis, right? Yes, there was a 12,000 horsepower, which is on the horizon. Yes, there is a 9,000 horsepower. Yes, there is a 6,000 horsepower on the locomotive, Vande Bharat, Vande metros, all of these are there. Question, there's a commuter [ rail one ] MRVC tender, which is now out, et cetera. The challenge is every tender is unique in itself, right? Some of them, they turn around and say just supply us the components. Some of them, they turn around and they say, do the whole thing. Some of them, they turn around and they say, supply parts of this and the rest we will do. So it's -- do the entire EPC, right? So there are different models that they are adopting for different tenders. So there's -- which makes it, to be honest, difficult for any supplier to really plan in terms of how do you want to go. You have to react to every tender that is coming out in a unique manner. Having said that, will more cities require trains, suburban trains? Yes. Right, not only Mumbai. Will there be intercity trains coming in? So you're looking already at NHRCTL (sic) [ NHSRCL ] between Delhi to Varanasi, Delhi to Agra, Delhi to all these places, those are going to increase, right? That is their intent, et cetera, et cetera. So -- but everyone is different. Some they say, just give us the components. Some they say, just do the electrification. So it's a mixture. It's very difficult to generalize on what their business model is going to be. Keeping in mind, they already have their existing factories, which they also have to keep occupied as well. So it's a mix and match for them, but they need technology. They need to upgrade the technology. So it's a question of where do they do it? Who supplies the car bodies, who supplies the wagons, who supplies the interiors, who supplies the propulsion system, the bogies. On your second question on exports, yes, we have done 2 major export deliveries in our bogie factory. We are looking at future opportunities as well coming out of the bogie factory. We're exporting out of our propulsion equipment. So there are exports taking place. When you talk about a big bang export, it doesn't happen in -- necessarily in the railway business, right? So you won't export a series of metro trains, right? You will export 5 cars, 6 cars, et cetera. But that depends on how the global market is developing and how global decides to service that requirement as well.

Understood. Secondly, taking cue from the slides that you presented, the 3 key segments. If I look at the story of the last 5 years, I think the industry was growing somewhere between 5% to 8%. Naturally, you grew at a much faster pace. Your own estimates of industry growth are much better now, and then that's taking cue from what you also said about the private sector CapEx. So probably we are looking at 8% to 10% plus growth. So let's say, over a 3- to 5-year scenario, can we assume that SI continues to grow at 20% plus and the overall business is, let's say, a high teen to 20% growth story, let's say, from a top line perspective.

So I'm not going to give a number because a lot of it -- and it's not because I don't want to, it's just that the visibility in these kind of projects or in these kind of businesses is very short term, right? When you look at the SI business, there is -- a lot of it depends on how much investment is going to go, when will the investment actually happen in airports and ports, right? As and when an airport gets built, we will be there. As and when a hotel gets built, we will be there, right? As and when a port, a stadium, a mall gets built, we will be there. So a lot of it is dependent on that visibility. We have an element of that business, which also feeds into private sector CapEx, right? So same electricals are used in factories. So as and when private sector CapEx picks up, that should also pick up, right? So there are a lot of variables over there, which are very closely interlinked into India's growth story. And that is why it becomes difficult. I don't go out deliberately with giving a number because it has to be linked in to India's growth story because the Indian investment pattern will determine our growth story over there.

Understood. Lastly, specifically in SI, any levers for further margin expansion?

Yes, we've spoken. Localization, we've talked about. We are looking at -- the more you grow the top line, it's a volume game. Low and medium voltage is a volume game. So the more you grow the top line, there is margin -- the cost degression is happening over there, which will help. We are looking in all our businesses, DI as well as SI to get broader in our offerings and deeper in the offerings. And that should also help in that process.

I think we can have one.

Sameer Thakur from AMBIT. So just on M&A strategy you talked about, is it more on bolt-on acquisitions? Or you're looking for bigger acquisitions as well? And would it be driven by global or local management?

No, no. We are looking for everything, to be honest. We have a deal book. We scanned the entire market, and this ranges from small, very small to very large. The challenge that we have, and it is more driven by the needs in the local market rather than in the global requirement. What we look at is a couple of things. Will this acquisition give us a product that we don't have or access to a market that we are not present in or a technology that we don't have, which we can scale up not only in India, but globally as well, right? So broadly, these are the parameters that we are looking at. And if we can find -- and it has to meet our margin hurdles as well, right? So how do you get all of that, right? And the challenge is we have a deal book that we are continuously reviewing, not only internally, the Board reviews it. Globally, they review it as well to really see what are the opportunities there. But this is the criteria that we are following right now.

And just on margins, you talked about DI margins between 6% to 8%. So do you have any number for SI and mobility, any range which you can talk about?

We're not giving guidance. We gave the guidance on 6% to 8% because it's transfer price driven. So there's not much that we can do over there unless we do increase service business, as you said. But on the rest, we don't give the guidance.

Just the last one. On Kavach, what is the strategy there? Are you bidding for Kavach orders or it's just for your locomotives or something like that?

No, no, no. We are -- we want to be a serious player in Kavach. We already have a first developmental order from the Indian Railways in Bangalore, and we will definitely be a player in the Kavach market.

Jonas here from Aditya Birla. So a couple of questions. Firstly, given that the company is now sort of ex energy...

Only 2.

Yes, yes, a couple. So if you can give us a broad split of revenues, I think you used to give it earlier, projects versus products. It will be good to understand ex energy, how does that split look like now? Also, you spoke a lot about the solution selling. Which of the 3 segments is more indexed to that? And does it only have a read-through on revenue or also has a margin impact? And lastly, on the government-facing side of the business, particularly which of the 3 segments? Mobility, obviously, will have a government facing, but between SI and DI, which is more direct government facing, if you can speak.

I'll start from the back because that's what I can remember and then I hand over to Wolfgang. Government facing, you're right, Mobility is entirely government-facing. SI is to the extent of power utilities, the distribution business, that is government facing. The rest of this -- of the business is a mixture of government and industries both. Digital Industries is no government, is 100% private CapEx. The share of project to -- you just take what we have shown in the last analyst meet, it hasn't changed significantly. That's why we decided not show again because there was no major movement between project and product business.

And on the solution piece.

So on the solutions, it varies. It depends how we do those solutions there. There will be some solutions where we go to a system integrator, where we provide products to the system integrator, then our margins -- our product margins and the system integrator gets a solution over there. There will be some customers who will want us to stitch the whole thing together. And then we buy everything in and then it becomes a kind of a solution, but we prefer not to do that unless we are able to develop a scalable model out of it. So most of the solution, which is primarily DI, SI would be the kind where we offer the products and the system integrator stitches it together.

We have one question behind.

First, on the cash flows front, if you look at your operating cash flows versus what Siemens used to do in the past, they are much weaker, right, less than 20% of EBITDA. So any specific thing because on a year-on-year basis, that might not be comparable because...

CapEx investment has gone up.

On the operating front because of...

Sunil is right. On one hand, of course, we have CapEx with regards to our investments in manufacturing. Then also we have also OpEx related to these investments. And one big portion is also we invest a lot in working capital right now for the Mobility business.

Okay. And as the Mobility share goes up, that means it would keep on increasing the working capital need?

Honestly, no. This was just more or less related to the ramp-up of the 9K horsepower project and also some other larger projects. So I would expect right now the majority is done. So it will stabilize. And so we should see a more positive development on the cash flow side going forward.

And second question, sorry, on the again, Mobility front, just to explain the percentage completion metric because it's a contract which is 2 parts, O&M as well as the product delivery, right? So when you consider margins as per Ind AS 115, these would be considered 2 separate obligations and you first recognize margin only on products or it's considered entire life cycle, including O&M for margins?

No, it is considered as 2 separate contracts. There is a supply contract and there is a service contract. Both of them are POC. And as and when each one -- the cost comes in for each of them, the revenue is recognized.

And maybe just to clarify my statement. So when I say our cash flow should improve, it's not that you will see now something in Q1 already. So I'm talking about the full fiscal year.

So we'll just take last 2 questions.

Amit Mahawar from UBS. I have 2 questions. First on Smart Infra. Since the time you've taken over C&S, we took some time. A lot of cleansing has happened and the profitability is up, but I think the revenue momentum of C&S integrating and marketing Siemens and Siemens marketing C&S portfolio globally and locally, we are yet to see the best of it. So if you can throw some light on how are we geared up even on the capacity side for C&S and non-C&S portfolio? Because theoretically speaking, it can be a large market and you will choose when C&S markets Siemens to the infra customers and Siemens markets C&S to the energy customers, the rationale. And the second part is on the Mobility side. The pipeline from a 2-, 3-year view, I understand railways is very unpredictable. So metros, Indian Railways and the semi high-speed and the locos. Still you must be having a 3-, 4-year glide path of what kind of pipeline is there? So these 2 questions.

Okay. So on C&S, actually, the volumes are not too bad. We have plus 20% volume increases in C&S. So those are increasing. What we don't do, we won't do -- deliberately won't do is we will not get C&S to market Siemens products and Siemens to market C&S. Otherwise, we cannibalize each other's markets, right? And that's why we are keeping a very clear firewall between C&S and Siemens Limited in the market. Of course, at the back end, we coordinate. But we don't -- we make sure that you don't get a C&S salesman going to a customer and a Siemens salesman going to the same customer, right? Because obviously, then you have got cannibalization happening. So effectively, we have identified clear markets in which C&S will enter into, which are the mid-level markets, which is why we bought it, where Siemens is, in any case, not competitive, right? And Siemens stays in the premium markets, which are more mature, where C&S can't get a foothold into over there. Come to the export. The export process has taken time to pick up. And the reason is every country that you go to, you need to get that qualification done of your products, and that is taking time over there. Having said that, it's still doing reasonably good exports, but that is something that we have to grow. The domestic business of C&S is doing very well. On the Mobility side, yes, our visibility is there for the next 2 or 3 years. Kavach is definitely -- the question that we can't answer to you is when will the next bunch of tenders come out, right? The opportunity on Kavach is there. The market is there. When will the next bunch of signaling tenders come out? When will the next bunch of commuter rail come out, right? Usually, they do 1 or 2 a year, but a lot of it depends on states. A lot of it is not only central subject, it's also a state subject. And then you have the mainline, which is mainly the railways, where they are looking at semi high speed and so on over there. That is continuing. But there, again, going back to the earlier question, they are adopting different business models. Is it -- do they want only components or do they want the complete wagon over there, the complete car, et cetera, et cetera. So the need and the market is visible to us. The timing for when the tenders will come, that is not visible to us. We know what is coming in the next 3 to 6 months because that is the time lag that it requires to prepare the tender. But beyond that, we don't really have that visibility.

Have a mic there, please.

Just one question from my side. This is Teena from Motilal Oswal. Which all segments of Siemens got impacted by QCO norms? And is it possible for you to quantify the impact on overall cost because of this? And is it over or it may continue for another few more quarters?

So as Wolfgang mentioned, we had 1 quarter where there was a slowdown because of QCO, but then we picked up afterwards, and we haven't had any impact of QCO sales, right, in none of our businesses. And the reason is we started this process. We were the first company that got the license from the QCO authorities, the moment they announced it over there. But it took us those 2, 3 months, that 1 quarter time to get it, not because of us, but more because of the government internal processes. Over a period of time, we have continued on this path of localization. So the impact for us is -- has not been very, very high. Where has it impacted primarily in the low-voltage business, to a little extent in the Mobility, but very, very negligible over there, but mainly in the low-voltage business, both in CNS and both in the -- in our regular low voltage, but both of them were up and running after that first bump that Wolfgang talked about in Q1.

So now they are fully compliant and no more incremental investments.

Now we're okay. Now we're okay. And as you know, the QCO has now been lifted indefinitely. And we will continue our process of localization. Not knowing whether they will bring it down again at some point in time. So we are well aware of that. But we are working with the BIS and all the others on that process. So it has not impacted us. We are not worried.

Just one last question, please.

Yes. This is Mohit from Citi Research. Firstly, if you can just share an update on the ongoing CapEx, the likely commissioning time lines.

So the ongoing CapEx is basically the medium voltage, GIS medium voltage and the vacuum interrupters. I think we will start commercial production in October '26 on the medium voltage and a couple of months earlier, plus/minus a couple of months on the vacuum interrupters. Those are the major ones that are happening. The rest are routine.

And on the Mobility side, I understand in Aurangabad, certain CapEx is...

Sorry?

Mobility CapEx, Aurangabad.

So Aurangabad is bogies. We have done it already. And we are looking now whether -- how we need to do that. We are even considering whether it really makes sense to do it ourselves, whether we work with partners instead, how much to localize. So those are the discussions that we're having right now.

Understood. And second question is on DISCOM privatization. Just wanted to get a sense of how meaningful it could be given that you're saying already 75% or more of the DISCOMs are using switchgears, right? So can it be very meaningful from these levels already?

I didn't say that the market for DISCOMs is over, quite to the contrary. I only said the installed capacity, right, has got a lot of our switchgear in it. Now all this -- all the installed capacity needs to be upgraded. The DISCOMs weren't able to do it. They didn't have the financial capability to do it. All of that needs to be upgraded. You need fresh switchgear, you need fresh scanner systems, et cetera, et cetera. And all of that is something that we have. As privatization comes in, the first thing that the developers do is to see how to cut losses over there, both transmission, commercial and transmission losses, distribution losses as well. And that is where we come in, and we can help them on the switchgear side, on the circuit protect, overall on the automation side, networking, et cetera, et cetera.

Okay. So with that, we will close the session today. Thank you, everyone, for joining us, both who are joining us online and who are here with us, and you can join us now outside for some tea and coffee. Thank you so much. Thank you.