The Board of Directors of Siemens Ltd has approved the sale and transfer of its Mechanical Drives (MD) business for a consideration of ₹440 to Flender Drives Private Ltd which is a step down subsidiary of Siemens AG.

The transaction is subject to adjustment for the change in net current assets and capital expenditure, subsequent to June 30, 2020 up to the date of actual transfer of the MD business, the company said.

The consideration has been arrived at on the basis of an independent valuation, recommended by the Committee of Directors and the Audit committee, it added.

The sale and transfer of MD business is as going concern and on a slump sale basis, with effect from January 1, 2021

The same is subject to receipt of requisite statutory and regulatory approvals, as applicable.

The MD business within Siemens Ltd achieved a revenue of ₹683.8 crore for FY 2019 and had an operating loss of ₹55.3 crore.

Sunil Mathur, Managing Director and Chief Executive Officer, Siemens Ltd , said, “Potential growth in this business will require substantial Capex and moreover, there are no synergies with the existing businesses of Siemens Ltd.”

“Keeping the interests of the shareholders in mind, the Board of Siemens Ltd has approved the sale of this business to Siemens AG which has also announced their intention to publicly list this business via a spin-off,” he added.