MUMBAI, JAN 18: Siemens Ltd has posted a net loss of Rs 22.29 crore in the first quarter (Q1) ended December 31, 1999. The company has reported a turnover of Rs 168.10 crore, which is half of what it expected, said Siemens chairman FA Mehta at the company's annual general meeting here on Monday. The first three months' performance is not indicative to the company's annual performance, he said.The gross loss was Rs 12.69 crore and the operating losses were reported at Rs 3.36 crore. While the interest outgo was Rs 9.30 crore, the depreciation was reported at Rs 8.85 crore. Expenditure of the company was reported at Rs 171.46 crore.The company is planning to launch an ordinary share issue to redeem the preference shares issued earlier. Out of the authorised preferential share capital of Rs 150 crore, the company still has a liability of Rs 107 crore which is to be paid by September 2000.According to the chairman, "although the company has made a good progress in overcoming its economic problems,Siemens is not in position to redeem the preference share out of its earnings. Hence this redemption has to be funded via an additional share issue as directed by the parent company, Siemens AG." The details regarding timings and the size of the issue has yet to be worked out and the company will take shareholders approval for the same later this year.The company's performance for the first three months to the corresponding period last year is not possible in lieu of the corresponding figure for the last year. This is due to the change in the company's accounting year which was introduced last year. In September 1998 the company announced financial result of 18 months.Siemens which has been incurring losses for some time plans to break-even by the end of the year in September 1999. The major restructuring drive initiated two years ago is still in the process, said Mehta.The latest in the process is the hiving off its electronic equipment facility and the automotive business unit at Nasik,Maharashtra. The on-going cost-cutting measures also included voluntary retirement schemes.The poor performance of the company has been attributed to the general slow down of the economy. However, the future outlook of the company is promising, said the managing director J Schubert. While the Siemens do not expect the economy to improve faster in the coming months, it also do not hope a further decline, said Schubert.Issuing equity to redeem debentures seems at first glance to substitute high-cost funds for low-cost money. However, it may not be as bad as it sounds, provided the equity is issued to the parent company through preferential allotment route. The company has posted operating loss for the first quarter but has opted not to provide figures for the corresponding quarter of last year. Since this information is in any case provided to its parent, there seems to be little reason for not providing the same to investors. The loss, before exceptional items, in the first quarter is greater by 60 percent compared to the loss in 1997-98. The stock after moving up from Rs 192 in December to Rs 268 in January has declined to Rs 211. The proposed dilution may hurt the stock further.
