Siemens India's decision to sale its low voltage and geared motor business to a parent entity has raised corporate governance issues as many market analysts are seeing it as an act against the interest of domestic public shareholders. At least four brokerages including Nomura, Jefferies, Haitong and IDBI Capital have raised concerns over Siemens India's move. 

Siemens, however, shall be taking minority approval for this transaction but some questions need to be answered. First being, the cogitation for arriving at the given valuation of Rs. 2,200 crore. As per the company, independent valuation by a reputed firm further supported by a fairness opinion from a merchant banker has been used to arrive at the transaction value.

The analyst community thinks, prima facie, the deal seems unattractive for minority shareholders and hence their approval is unlikely. 

Projection of weak growth prospect, sale proceed as special dividend, why is Siemens not able to gain significant pricing power, and state of governance are other things which need more detailed representations from the company.

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