Siemens has announced that its wholly owned IT subsidiary, SISL would be transferred to the parent, Siemens AG, at an undisclosed valuation. This decision comes close on the heels of the company reporting an unexpectedly weak result for SISL in FY2008 and the Satyam accounting malpractices revelation, which has brought down average valuations in the sector. On the back of these events, we believe the sell-out price is likely to be low. The company has sold many of its businesses, including automotive and communications, to Siemens AG over the past one year at low valuations. Where is the Investor Protection ?
SISL accounts for 9% of our consolidated PAT for FY2009, and thus the sale would impact our estimates to this extent. The company was not reporting its consolidated nos, including SISL, on a quarterly basis. Thus, the sale would at least remove one grey area in the company’s quarterly accounts.