Siemens Information Systems Ltd may be up for sale and India’s largest IT services firm, Tata Consultancy Services is believed to have shown interest in it.
The IT business arm of Siemens Ltd, Siemens Information Systems Ltd (SISL), may be up for sale and India’s largest IT services firm, Tata Consultancy Services (TCS) is believed to have shown interest in it, says sources.
A TCS spokesperson told DNA the company does not comment on market speculation. Sources say that TCS, which had recently announced that it was looking for two more large acquisitions in the BPO space after the $505-million acquisition of Citigroup Global Services, has already initiated talks with Siemens for a possible buyout of SISL.
In a note to the Bombay Stock Exchange on Friday, Siemens Ltd announced the transfer of 100% stake of SISL to Siemens Corporate Finance Ltd, a subsidiary of Siemens AG, the German parent company of Siemens Ltd. In November, SCFL had taken 51% stake in Bangalore-based Siemens Information Processing Services Pvt Ltd.
A Siemens spokesperson denied SISL is up for sale. A statement quoting Armin Bruck, managing director, Siemens Ltd, said, “The transfer of 100% stake of SISL from Siemens Ltd to the parent company is a part of the global strategy. This portfolio realignment will enable Siemens Ltd to further focus on core businesses of industry, energy and healthcare. At the same time, the integration of SISL with global operations will ensure that their developmental capabilities are harnessed most effectively for the Siemens global growth strategy.”
Analysts say the transfer to a corporate finance arm could be a first step towards its sale. Also, the profit margins of SISL have reduced by more than half, from 16% in FY 2006-07 to 7% in 2007-08. SISL generates 85% of its revenues from Siemens Ltd. In 2007-08, SISL earned revenues of Rs 995 crore, down 2.73% from Rs 1,023 crore in 2006-07. It has over 3,000 professionals on rolls, and provides systems integration and consultancy services in healthcare, telecommunications, manufacturing, utilities, and public sector.
It has technology partnerships with firms such as SAP AG, IBM, i2 Technologies and others.
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