Siemens Pakistan Engineering Company Limited has been in here since pre-partition days. The company had its first office of the subcontinent in Lahore in 1922. Its footprint in Pakistan started with first cable laying project in Karachi. The firm was incorporated as public limited company 1963 when it established a factory for motors and transformers in addition to the production of switchboards. Later in 1976, the firm introduced diesel generating sets.
In the entire eighties, Siemens Pakistan was involved in the production of 30MVA power transformers, which were extended to 60MVA in 1987. The engineering firm made another breakthrough in 1996 and 1998 when it was able to successfully set-up 412MW combined cycle Rousche Power Plant, and became the first value-added seller of SAP. In 2000s, Siemens Pakistan completed the first load dispatch centre for K-Electric. It brought in the 250kV transformers in Pakistan, and continued grid stations for K-Electric, WAPDA and DEWA Dubai.
The firm has also been successful in completing commissioning of Sawan and Kandhkot gas compression trains, equipping of Al Razi Medical Diagnostic Centre with imaging equipment, and getting a contract for airfield lighting for Benazir Bhutto International Airport.
Later in 2012, the firm armed Karachi's largest mall - Dolmen Malls - with safety, security & building management technology. As far as its business segments are concerned, it has four sectors with 16 divisions. Within the energy sector, it has divisions for power generation, wind power, power transmission and energy services. The healthcare segment involves imaging and therapy systems, clinical products, and diagnostics and customer solutions, while its industry divisions consist of industry automation, technologies, and customer service. Another vital segment of Siemens Pakistan is the infrastructure & cities which consists of building technologies, rail systems, mobility and logistics, and smart grids. Of these segments, energy sector has been the forerunner of whatever growth the company has witnessed in the past 4-5 years.
Past performance
Siemens Pakistan Engineering Company Limited has been in rougher time lately as revenues and profits over the last five years have been on a steep decline. Similar trend has been seen in exports, new orders, and contracts outside of Pakistan. Net turnover and annual orders have halved, while the firm has moved from yearly profit of over a billion rupees in 2009 to a loss of almost a million for the year ended September 30, 2013.
Causes contributing to the company's dwindling performance have been the termination of contract worth of Rs 1.992 billion by the Civil Aviation Authority (CAA) relating to power supply and telecommunication network at New Benazir Bhutto International Airport, Islamabad. The firm has been impugned for delays on the project, which led to such an action.
Also, delays in other projects have affected its various business segments as well. With lessening revenues and income coupled with issues mentioned before, the firm has been involved in restructuring, rightsizing, portfolio adjustment activities for a few years now, which are other reasons for a cut in profitability.
In 2014 particularly, saw some signs of recovery as the firm got the contract for the work at New Benazir Bhutto International Airport, Islamabad by the CAA again in the financial year 2014. The highlight of financial performance by Siemens Pakistan in 2014 was the improvement in gross margins.
However, the firm continued to bear loss for the year as both orders received and sales revenues were less by 25 percent year-on-year in 2014. As per the company's financial statements, 48 percent of the new orders were in the energy sector including orders for the design, supply, erection, testing and commissioning of 220kV and 132kV substations. And the declining growth in turnover has been mostly due to missing orders for transformers and transmission business. Infrastructure and cities, industry and healthcare sectors contributed 26 percent, 20 percent and 6 percent, respectively. In sales too, energy sector led the growth with 49 percent contribution, followed by Infrastructure & Cities, Industry and Healthcare sectors.
2015 performance
During the year Siemens Pakistan signed a contract with K-Electric worth approximately Rs 10.7 billion, for execution of transmission package aimed at enhancement of K-Electric's transmission system capacity and improving reliability and stability of transmission infrastructure. As for the financial performance of the company, the firm's new orders and sales saw a negative growth of 4.8 percent and 5.3 percent year-on-year, respectively. Its bottom-line further dipped into the loss with the increase of Rs 101 million. It must be mentioned that the firm's year ends on September 30. As per the Director's Report, the main reasons for loss include increase in prolongation costs in the Islamabad International Airport Projects, cost over runs in some other projects and under absorption of fixed costs due to reduced sales.
In 2015, the company's office in Islamabad was relocated to a new location, which will apparently bring the company closer to its customers. Effective December 31, 2015, Siemens Pakistan's annual report highlights that the firm will cease to participate in business in Afghanistan due to withdrawal of sales right by Siemens AG, Germany for the Afghanistan territory. However, it will continue to execute the order in hand as well as all such orders which will be awarded till the decided date.
Outlook
The firm has been looking into transferring the Healthcare Division of the company, in 2015, the BoD decided to transfer the Healthcare business, at a fair market value, to Siemens Healthcare (Pvt) Limited - a subsidiary of Siemens Diagnostic Holding II B.V., Netherlands - after getting the necessary approval.
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