“The availability of semiconductors is a global challenge, and in my assessment this will continue well into next year. We are not seeing any easing yet of the semiconductor supply chain.”
NSE 1.36 % Ltd, the flagship listed company of Germany‘s Siemens AG in India, is seeing growth across its business verticals. But some challenges remain. In an interview with Kalpana Pathak, the company’s managing director, Sunil Mathur, said the semiconductor problem could continue into next year. Edited excerpts:
The industry has been facing a semiconductor shortage. Is there any easing yet?
The availability of semiconductors is a global challenge, and in my assessment this will continue well into next year. We are not seeing any easing yet of the semiconductor supply chain. On the other hand, there is an increase in demand for automotive, FMCG products and for digitalisation. A lot of work is being done, globally and here in the country, to increase the capacities of semiconductors. But it will take some time for that to come online.
Are inflation and the depreciating rupee a concern for Siemens?
Inflation definitely is.
We will have to watch what the impact of inflation or the relation between inflation and interest rates is.
Commodity prices are something that we have to watch as well. They have started easing off a bit. So there are a lot of areas right now that we’ve got to be concerned about and,
frankly, there are no real answers on how to deal with it. So we’ll have to see what happens on these fronts and then adapt our businesses accordingly.
How are you looking at adapting to these situations?
We are looking at localising a lot more so that our exposures to global forex risks are reduced. We are looking at localisation measures. We are doing a lot of hedging. We are looking at bringing in products, new products that can be more efficient, bringing greater efficiency as well. We are looking at working on different business models,
seeing whether we can start moving more towards an operation expenditure versus a capital expenditure model so that helps our customers much more, among others.
Could there be project delays due to these challenges?
I am not seeing a major impact or project delays so far. Some projects are getting pushed out by a couple of months, but I do not see it as being currently hugely material.
The industry and us have seen this coming, and in the last couple of quarters, therefore, we have started doing advanced ordering to make sure that we don't have those delays. So, we are ordering more in advance, which by the way, is the greatest stress in the supply chain, because everyone is ordering in advance and to ensure that delays do not happen, thereby putting further stress on the supply chain of course. The delays are less on projects and more on short-sighted products.
Which segment do you see most growth coming from?
Growth is coming from every segment. During Covid, the digital business boomed. People began to realise and feel the benefits of digitalisation and digital manufacturing. And that has continued. For our smart infra business, with sustainability growing and energy efficiency elements coming in, there is a need for energy efficiency and smart grids, which is a growth area, too. And then the mobility segment, the railways and the metros – which is another growth area. And finally, our transmission business.