In an interview with CNBC-TV18's Archana Shukla, Joe Kaesar, President and CEO, Siemens AG, discussed the company's restructuring plans, business operations and the outlook going forward.
The German industrial conglomerate recently completed a restructuring operation, which involved cutting roughly 2 percent (about 7,800) of its 3.43 lakh workforce, a move that is expected to streamline operations as well as save 1 billion euros.
In the interview, Kaeser also talked about the company's India plans.
Below is the transcript of the interview on CNBC-TV18.
Q: The first one and a half years have been pretty exciting if I look back on the reports that I have been reading for you, winning some battles, losing some and you have a large restructuring plan that you have put out for the company in the last one and half years. How far have you reached in your goals that you had set out to achieve?
A: So far we are very much on track. We have achieved everything we wanted to achieve. Sometimes it was a bit harder than we thought but we also had some benefits coming from international economic terms. So, all in all it is going pretty well. 2014 has been the year of strategic direction.
We laid out our vision 2020, on how we grow the company going forward and make it fit and strong for the next generation in Siemens. 2015 will be the year of operational consolidation. We will now get the benefits of the new strategic direction. We are able to save I billion euro on support. We get close to the customer, close to the business and so I like what I see.
Q: What sort of a role is India playing in this restructured model that you have built?
A: India plays quite a strong role because at the end this is all about profitability and value creating sustainable growth. If we look at how to improve the topline in the long term, we need to see where are the areas of growth? Where do we see economies which are developing well and they have a lot of potential going forward? First place is India.
Q: Currently in the market and the environment that you operate in, is still reeling under a big slowdown across geographies. Europe is still under the weather, US is slightly recovering but yet not on the fast track, China is slowing down. Most of the emerging economies are also slowing down or at least are under some sort of a slowdown. How do you see the global growth recovery from hereon and how are you strategising to fits Siemens growth along that line?
A: Wherever there is a concern there is also opportunity and that is very important. Management is there to see that opportunity. Management is there to help its people in the company to find and see the direction. If I look at the global economy, 2.6-2.7 percent growth is not that bad.
Secondly with the oil price now coming down that should actually boost the global economy between 30 and 50 basis points more which is a lot. 2.7 percent GDP growth average means that some countries are not growing at all but others grow a lot. India with 5.5 percent GDP growth is not bad. Could it be more? Absolutely.
China with 7.5 percent growth is not that bad. There are a lot of emerging economies too which are not that bad either.
Even Europe has some pockets of growth like Germany in industrial automation, car manufacturing. United States a lot of consumer related growth. However again I believe that India has got the biggest potential because of the changes which happened in the government and in the opportunities that government is actually now trying to pursue.
Q: Crude oil prices – it is another debacle that is already in the making. Do you think it has some sort of an negative impact on companies like Siemens particularly when you are going through the integration of a large acquisition?
A: First of all for the oil exporting countries and companies it is a debacle. For the ones who are receiving it, it is a big opportunity. Think about India, the import bill is going to go massively down and India can use that money to build infrastructure. So, as I said where there is a risk, there is also opportunity on the other side. The coin has always two sides.
As far as Siemens is concerned same thing, industrial automation will benefit from it. Energy obviously has its issues because if oil companies don't make that much money they invest less. This is true, we did acquisitions in the oil and gas environment but we are in for the long term. Siemens is not about quarters. Siemens is about years to develop an attractive industry.
Q: So, you are saying the opportunity outweighs all the negatives?
A: Absolutely.
Q: If we talk about the infrastructure revival across geographies, are you seeing green shoots? How does it look like in the Indian market vis-à-vis the global growth?
A: India is very much in focus. I had the opportunity to speak to Prime Minister Narendra Modi in October. He also asked me about what I think needs to be done. First of all I told him there is nothing worse than honest advises but if he asks me I said build infrastructure, make sure that there is energy agenda in place which provides electricity and energy in a sustainable, in an affordable and a reliable way. That sets the foundation for everything. Then on that one the country can build on building out infrastructure.
So, it seems that the Prime Minister is very decisive about doing it. I am very positive about what I heard. I told the Prime Minister that wherever we can support you we will be there, not just with a lot of advice or exports or imports but also with building new manufacturing, add engineering and first and foremost help to train young people which we believe is important.
Q: Particularly which are the policies that you think will actually bring that positive change in your discussion with the Prime Minister?
A: He said he will cut down bureaucracy a lot, make it easier to do business. Secondly I think the government and the Prime Minister has clearly understood that logistical inefficiencies cannot be compensated by the monetary policy of the Reserve Bank of India to get the inflation down.
Agricultural inflation is not something which can be dealt with just the monetary policy, agricultural inflation needs to be brought down by making logistics more efficient. From the farmers field to the consumer in the city and that is about logistic, that is about infrastructure, that is about locomotives and build out an efficient system of distributing the goods and services in the country.
