 "Industrial Internet of Things, and AI")
In the past few years, global industrial majors have busied themselves with the revamp of their business structures. Amidst these amalgamations and demergers, many of these are also navigating Indian regulatory requirements and shareholder concerns along the way.
Linde Plc, Siemens, and GE are three such entities that have made changes to their global business structures in the past few years.
Globally, Linde and Praxair are a merged entity named Linde Plc. In India, however, their listed entities operate separately. In a latest development, related party transactions between the two Indian entities have landed Linde in trouble with the market regulator. An email query sent to Linde India on Thursday remained unanswered.
Proxy advisory firm Institutional Investor Advisory Services (IiAS) in a report on March 28, noted, “Linde India’s parent filed a writ petition in January, in connection with SEBI seeking financial information and details regarding certain business transactions of the company. SEBI has also issued summons to the parent's management and directors.” The note said Linde Plc has filed a writ petition seeking to quash the proceedings and a stay in the interim.
In a scathing note on the company, IiAS also noted, as the India business grows, and newer opportunities emerge, the question is which group entity gets to service the sector – the parent company directly, the wholly owned subsidiary, or one in which the economics are shared with public investors. “This, as already mentioned, will have a bearing on the entity’s profitability,” the report said.
Linde India in a clarification shared on April 26 said, "There are two material factual inaccuracies relating to the IiAS article and subsequent media articles. First, the articles incorrectly name the Company’s parent company (i.e. Linde plc) as the petitioner. The Company ( Linde India) is the petitioner. Further, it has been stated that summons have been issued by SEBI to Linde plc’s management and directors, which is also an inaccurate statement."
More From This Section
India’s perceived growth potential and hence the valuation of businesses operating in this geography has been a steady bone of contention.
In July, Siemens India’s shareholders voted out the company’s attempt to sell its motors business to the parent company’s German arm, over valuation-related concerns.
Similarly, in November, the parent company requested Siemens India’s board to consider, evaluate and thereafter start taking exploratory steps towards a potential demerger of the India entity’s energy business into a separate entity. Once the demerged entity is listed, Siemens Energy is to ultimately acquire a controlling stake in it.
In response to Business Standard’s query, Siemens India said, a wholly-owned subsidiary housing the energy business was incorporated on February 7, which may be required if and when the Board decides to implement the aforesaid demerger.
Siemens Energy was established in 2020 and remains financially troubled. In India, however, Siemens’ energy segment remains financially robust, with a profit of Rs 125.1 crore and revenue of Rs 1,145.4 crore, reported for the December 2023 quarter. For the full year ended September 2023, the energy business had the second-largest share in Siemens India’s profit and revenue.
GE is the third global industrial major, with a restructuring underway. Last week, GE completed a three-way split, and announced three standalone companies – GE Aerospace, GE Vernova, and GE Healthcare. As a result, India listed entities – GE T&D India and GE Power India, announced with the spin-off, the promoter share in each entity will be transferred to GE Vernova Inc., the energy company.
GE Power India, however, also noted the global spin-off is independent of another GE announcement made in February 2022, which stated an intent to reduce stake in GE Power and de-promoterise within 36 months. In an April 3 stock notification, the company said, the proposed spin-off is certain, while there is no update on the de-promoterisation as of now. The concerned spokesperson at GE Vernova did not comment on an email query sent on Thursday.
