KARACHI: Siemens Pakistan Engineering Company announced on Monday that the it had decided to sell its transformer business.

The company, a giant on the KSE’s general industrial sector with Rs17bn in total assets, had also agreed “in principle, the sale of company’s land and buildings situation at Estate Avenue, Sindh Industrial Trading Estate Karachi, Pakistan in one or more parcels.”

The decision to cast away the transformer business was made in the meeting of the board on March 1. Siemens pointed out that the sale of the said transformers business, land and building was subject to the board’s final approval and consent of the shareholders as well as of any other applicable regulators.

That Siemens should sever one of the principal arm of operations seemed surprising to the market.

Yet, people in the industry said that the development looked like a step in the restructuring, rightsizing, and portfolio adjustment activities initiated by the company last year.

The annual accounts for the year ended Sept 30, 2013 revealed that the company had incurred employee separation cost of Rs464 million which significantly affected profit of the company.

For FY13, Siemens incurred loss before tax amounting to Rs821m. Net sale also declined in 2013 to Rs13bn, from Rs13.8bn YoY.

Directors explained that the main reasons for the loss were termination of a major contract by Civil Aviation Authority (CAA) and restructuring and process optimisation activities which continued throughout the year.

Siemens Pakistan is noted to be “principally engaged in the execution of projects under contracts and in manufacturing sales and installation of electric and electrical capital goods.”

During FY2013, new orders of Rs12.4bn were received by the company. The main contributor to the new orders was stated to be the energy segment with 57pc share which included orders for design, erection, testing and commissioning of 220kV and 132kV substations and supply of transformers to public utilities.

In Nov last year, Siemens Pakistan had re-purchased its own shares. It was a silent, ‘off-market’ deal of 0.716 million shares, valued at $8.47 million. Market players speculated the buyer was the parent company, Siemens AG Germany, which already holds 66.10 per cent of its Pakistani subsidiary’s stock.