Siemens AG president and CEO Peter Loescher says India is in a fast growing mode

Peter Loescher, the President and Chief Executive officer at Siemens AG, took the reins of the company in troubled times in July 2007. This July, (2011) Loescher was given another five years by the company's board. Clearly, they liked what he has achieved. He is visiting India in the last week of September.  In an emailed interview with Suman Layak, Loescher talks about Siemens' plans in India and the new business plan for the global company.

Q. How does the Indian operation fit into Siemens's global plan? There are the two parts - the India market- and using India as a manufacturing base. Do tell us your thoughts about both the aspects and how India contributes to Siemens at present and how will it be in the future.
A. India is at a central point of our global growth strategy, both in terms of its vibrant domestic market and as a manufacturing base for the global market. Over the past few years, India's contribution to Siemens' global revenues has been steadily rising. The country is in a fast growing mode. Therefore, we expect the country to play an even larger role in our global operations in the future. We intend to expand market share, with all our business divisions growing faster than the market in the next five years. Siemens is excellently positioned to capture an above-average share of the growth taking place in these markets.

Q. A whole range of new products targeted at a new segment is being developed by Siemens. This is, I am told, also dominating dialogue at Siemens globally, targeting a market that the company did not look at before -- with products that are more affordable for this market. Kindly tell us about your thoughts on the subject.
A. We see a huge potential for growth in the emerging markets for products in entry-level segments. This is one field where we focus our innovations on in these markets. Siemens has always been known for being an inventor and innovator. Through our deep customer engagements in emerging markets like India we learned that a huge untapped potential existed for value-based products with limited features but uncompromised quality. These products have a very high utility value and are available at prices that attract a larger group of customers. These products are developed in emerging markets but by no means only attract customers restricted to them. For example: A small hospital in a developed economy will find our value-based X-Ray machines developed in India equally useful. We sell these products around the world. Customers can be assured of the superior quality that Siemens has always been known for.

Q. Siemens AG has just increased its stake in Siemens Ltd to almost 75 per cent. Why was this move necessary? When Siemens needs to raise funds in India for investing in the local market, will the parent now be ready to infuse funds into the company as is needed?
A. The increased stake, which we made with an investment of over Euro 1 billion, proves that we are committed to our business in India.  We increased the stake because we felt it was necessary to provide us the flexibility to further develop our business in this highly-dynamic market. As early as February 2010, we announced Euro 250 million to be invested in increasing our manufacturing footprint, developing and launching new products.

Q. How does Siemens look at the emerging markets as a part of its global strategy? Is it committing financial resources through the bank that it is setting up for these markets too?
A. Emerging markets is a major focus for Siemens. Siemens Financial Services Private Limited is not a bank in the literal sense but an asset financing institution. It would primarily be supporting the various business units within Siemens, providing innovative financing solutions to help their customers purchase products with high capital costs.

Q. Does Siemens see a huge potential for green energy, solar and wind, in the emerging markets? What are your thoughts on investing in solar and wind power in India?
A. The entire range solutions based around renewables, environmental technologies and energy efficiency has tremendous potential in India. An important factor driving the growing demand for alternative energy like solar and wind in India is the reducing cost of implementing the technology while at the same time cost for fossil fuel is on the rise. A fast growing economy like India needs a reliable energy supply. With its excellent natural conditions for wind and solar energy, India can have a balanced energy mix with the share of renewables constantly rising.

India has huge potential for wind power solutions, particularly in the low wind segment. Siemens recently introduced a high-efficiency wind turbine which is ideally suited to exploit low wind conditions prevalent in India. It has better power quality and grid stability, simple design with fewer parts and less moving parts reducing mechanical complexity and need for maintenance.

The environmental portfolio, which includes green energy, solar and wind, makes up over 30 per cent of Siemens' global as well as its Indian revenues. So, the focus here very clearly is on delivering energy-efficient, energy-saving technologies as well as innovative energy generation solutions. An example of Siemens' focus on wind power for India is the investment in setting up a wind turbine factory. Siemens will be investing Euro 70 million until 2012 on the factory at Vadodara.

As you know, India's strong economic growth has been creating demand for energy and infrastructure solutions, with 35 per cent of the country's population without energy. With the government's "Power for All" programme expected to add 200 GW to the electricity generation capacity by 2020, per capita power consumption will be brought up from 700 KWh to 1,000 KWh. So far, coal has been the dominant source of power. As India starts looking for efficient alternatives, Siemens is targeting a larger share of the renewable energy market.

We are optimistic that government initiatives like the Jawaharlal Nehru National Solar Mission to augment solar power generation by 20 GW by 2020 will be a success.  Another of the Indian Government's initiatives that will provide a boost to the green energy portfolio is its concerted efforts on increasing Wind Generated electricity with Generation Based Incentives. Siemens is gearing up with top-notch high-efficiency wind turbines suitable for low wind conditions found in India.