Schneider Electric Infrastructure Ltd

Parent Company Schneider Electric

Category Electrical Equipment
Sector Energy Power and Industrial Equipment
Tagline/ Slogan
The global specialist in energy management/Make the most of your
energy
USP
It has a unique vision; Makes high quality infrastructure based on green
technology
STP
Segment
Power Generation and Infrastructure, Green Buildings, Water, Marine, Oil
and Gas
Target Group
Electrical distribution (utilities) and Power generation companies, Electro-
intensive industry,Water & waste treatment plants, Public-sector
investors, Oil & gas infrastructure, Marine sector
Positioning
Global specialist in energy management; Aims to make energy safe,
reliable, efficient, productive and green
SWOT Analysis
Strength
1. Global presence all over the world with 31 manufacturing units spread
across many countries
2. Pioneer in green energy, it has diversified into green energy segment
3. Schneider electric has size advantages which lower its risks. Large size
has ensured Schneider electric gets more resources to pursue new markets
and defend themselves
4. Schneider is a very strong brand. This has enabled it to charge premium
price as its customers place high value the quality which is reflected by
brand
5. High investments in R & D and Superior technology has allowed
Schneider electric to better meet the needs of their customers in unique
ways that rivalscannot simulate
Weakness
1. Schneider made few bad acquisitions. These can increase their costs
and reduce the value of their combined businesses. They can also affect
the core business and merge cultures that are incompatible which can
lower the productivity
2.On the back of shortage of liquidity, the margin is not improving in the
shorter term
3. Bad debts and Financial difficulties with customers have increased the
debtor's provisions affecting profit
Opportunity
1. Incorporating new services and new customized products can help
Schneider electric to better meet their customers needs. Also these can
expand Schneider electrics business and customer base
2.Relaxation of regulations will allow Schneider electric to perform in a
way that is most advantages for them and their customers
Threats
1. A bad economy may slow down its growth and curtail its green
initiatives
2. The dynamic political scenario can increase risk, as governments can
change business rules that may have negative affect Schneider electrics
business
Competition
Competitors
1.ABB
2.Siemens
3.Emerson








Peer Comparison
Company
Market Cap
(Rs. in Cr.)
P/E
(TTM)
(x)
P/BV
(TTM)
(x)
EV/EBIDTA
(x)
ROE
(%)
ROCE
(%)
D/E
(x)
B H E L 58,179.45 16.79 1.76 3.53 23.7 23.4 0.03
Siemens 32,182.54 174.13 7.99 32.11 4.4 5.2 0.00
A B B 21,109.48 112.31 7.88 30.47 6.7 12.5 0.18
Havells India 14,275.66 29.82 6.70 16.30 23.9 28.4 0.08
Crompton Greaves 12,465.62 23.93 3.73 8.27 15.6 21.2 0.00
Suzlon Energy 8,711.43 0.00 3.12 0.00 0.0 0.0 2.09
Alstom T&D India 7,801.84 66.67 6.25 13.06 8.0 13.7 0.57
ALSTOM India 3,320.15 21.44 4.17 5.98 24.8 36.0 0.00
Schneider Elect. 2,993.53 0.00 26.36 65.60 0.0 0.0 0.91
Triveni Turbine 2,981.30 43.65 16.46 9.83 102.7 122.3 0.17
V-Guard Inds. 1,642.94 23.42 5.16 12.77 26.7 26.5 0.58
Techno Elec. 1,547.98 22.08 2.44 8.82 11.0 12.0 0.36
Matra Kaushal 1,169.86 0.00 56.86 0.00 0.0 0.0 0.01
TD Power Sys. 1,167.56 34.34 2.40 9.66 8.0 12.3 0.07
Honda Siel Power 890.14 35.95 3.03 7.64 7.6 11.3 0.00




Schneider Electric Infrastructure- Key Fundamentals
Market Cap (Rs Cr.):2,994
EPS - TTM (Rs):-3.66
P/E Ratio (x):-33.61
Face Value (Rs):2.00
Latest Div. (%):20.00
Div. Yield (%):N.A.
Book Value / sh. (Rs) :4.75
P/B Ratio (x):26.36


Schneider Electric Infrastructure- Financials

Q4 / 2014 Ann 2013
Total Income Cr. 304 1,317
EBIT Cr. -7 14
PAT Cr. -36 -28
EPS (Rs.) -1.50 -1.19




Profit & Loss - Schneider Electric Infrastructure Ltd.Rs (in Crores)
Mar'13 Mar'12 Mar'11
12Months 12Months 12Months
INCOME:
Sales Turnover 1310.41 1349.19 .00

Excise Duty .00 .00 .00

NET SALES 1310.41 1349.19 .00

Other Income 0 0 0

TOTAL INCOME 1317.24 1353.50 .00

EXPENDITURE:
Manufacturing Expenses 7.09 6.68 .00

Material Consumed 902.62 959.11 .00

Personal Expenses 148.27 122.44 .00

Selling Expenses .00 .00 .00

Administrative Expenses 219.54 166.63 .02

Expenses Capitalised .00 .00 .00

Provisions Made .00 .00 .00

TOTAL EXPENDITURE 1277.53 1254.86 .02

Operating Profit 32.89 94.33 -.02

EBITDA 39.72 98.64 -.02

Depreciation 25.95 21.50 .00

Other Write-offs .00 .00 .00

EBIT 13.77 77.14 -.02

Interest 31.83 15.85 .00

EBT -18.07 61.29 -.02

Taxes .39 21.53 -.00

Profit and Loss for the Year -18.46 39.76 -.02

Non Recurring Items -10.00 .00 .00

Other Non Cash Adjustments .00 .00 .00

Other Adjustments .00 .00 .00

REPORTED PAT -28.46 39.76 -.02

KEY ITEMS
Preference Dividend .00 .00 .00

Equity Dividend .00 8.01 .00

Equity Dividend (%) .00 16.75 .00

Shares in Issue (Lakhs) 2391.04 2391.04 5.00

EPS - Annualised (Rs) -1.19 1.66 -.32

















ACTIVITY
Global Leader In The Field Of Electrical Distribution, Industrial Control & Automation.
Manufacturers & Exporters of Merlin Gerin C60-MCB, Protec-MCB, CG Range-ACB, MCCB,
Contractors, Switch-Disconnecter Fuse Units And LV Switch Boards, Starters, Merlin Gerin - SM6
Switch And Fuse Combination Panels, Package Substation Ring Master Typer MV.
GENERAL INFORMATION
Year Established:1995
www :http://www.schneider-electric.co.in
Type of company :Headquarters
CERTIFICATIONS
Type:ISO 9000
Type:ISO 9001
Type:ISO 14000
BRAND/TRADENAMES
CLIPSAL
MERLIN GERIN
SQUARE D
T.A.C.
TELEMECANIQUE
IMPORT / EXPORT REGIONS
Import regions :
Export regions :
Central/East Europe







Schneider Electric SA is a France-based company that specializes in electricity distribution, automation
management and produces installation components for energy management. The Company has five
divisions organized by business: Energy and Infrastructure, which includes medium and low voltage,
installation systems and control, renewable energies and includes customer segments in Utilities, Marine,
residential and oil & gas sector; Industry, which includes automation & control which includes water
treatment and mining, minerals & metals industries; Buildings, which includes building automation and
security, whose customers are hotels, hospitals, office and retail buildings; Data centres and networks, and
Residential which is engaged in solutions for saving electricity bills by combining lighting and heating
control features. In January 2014, it acquired Invensys PLC. In April 2014, it announced that the
divestiture of IT consulting activities of Telvent Global Services is completed.


Office Location
SCHNEIDER ELECTRIC INDIA (P) (LTD)
9TH FLOOR, DLF BUILDING NO. 10, TOWER C,
DLF CYBER CITY, PHASE II,
GURGAON - 122002
HARYANA, INDIA
TEL: +91 124 3940 400
FAX: +91 124 4222 036
www.schneider-electric.co.in











Financing treasury:
Main Group Rules KICs
Cash
Scarcity
Financial
Cost
Risk
Exposure
Financial
Soundness
1. Centralize Cash Csh.04
2. Establish Banking Relations with Preferred
Bank Partners
Csh.06
3. Dividend is equal to the Net Income
4. Set up a Standard Credit Management
Organization
Crt.
01-07

5. Use the Risk Assessment Template for Projects PS.01
6. Carry out Cost Efficiency Actions (Tenders,
Payment Factory)

7. Centralize Foreign Exchange (Forex)
Operations
Csh.05
8. Centralize Metal Hedging
9. Centralize Long Term Debt Management
10. Enforce Mandatory Double Signature Csh.01
11. Enforce Power Delegation Limit
12. Minimum Rating for Cash Investments



Centralize Cash
Rules
o Cash pooling
o Remuneration rates
o Excess cash and Excess cash
o Intra-Group loans
o Netting - General rules
o Netting - Cash flows to be netted
Procedures
o Zero balance account
o Notional cash pool

Key Internal Controls (KIC)
Csh.04
Entities must join the Corporate Treasury cash pooling system. Only because of stringent legal
considerations will entities remain outside the cash pooling mechanism, after approval from Corporate
Treasury.
When in the cash pool mechanism, entities can make daily transfers for amounts as small as 100k. If
cash pool is not possible, cash must be invested in strong currency with banks with a short term rating of
at least A1. Investments in structured products or derivatives are forbidden. Investments above 1 year
must by approved by Corporate Treasury.
Establish Banking Relations with Preferred Bank Partners
Rules
o Privileged bank partners
o Corporate treasury VS Group
companies (Who does what?)
o Counterparty risk
o Joint account - Authorised
signatures
Procedures
o Joint account - Opening
o Joint account - Closing
o Joint account - Monitoring fund
movements and bank balances

Key Internal Controls (KIC)
Csh.06
Opening and closing of bank accounts are performed according to a detailed procedure aligned with Chart
of Authority and involving Corporate Treasury.
Dividend is equal to the Net Income
Rules and Procedures
o Dividends allocation
o Dividends distribution - Exchange rates risks
Set up a Standard Credit Management Organization
Rules
o Group standard organisation of
credit management
o Preventing risk (5 rules)
Procedures
o Opening an account
o Preventing risk
o Managing credit
o Managing credit (4 rules)
o Collecting the cash (3 rules)
o Responsabilities of operational
entities and corporate credit
management
o Collecting the cash
o Opening an account
o Risk control
o Decision on risk taking
o Debt collection

Key Internal Controls (KIC)
Crt.01-07
Click here to read the 7 KICs about Credit Management
Use the Risk Assessment Template (RAT) for Projects
Rules
o General rules
Procedures
o Document to fill in for each project
(download)

Key Internal Controls (KIC)
PS.01
Risk Assessment Template (RAT) to be enforced by Finance as the mandatory control in project selection
phase (bid no bid decision) and for contractual negotiation (for projects above 500k).
Risk Assessment
The Risk Assessment Template (or "the Template") is a Group Procedure including Group Rules
& Questions to deal with before making any final commitment (binding offer, conclusion of
contract...) in relation with sales or projects which are not governed by our General Sales Terms
and Conditions.
The objectives are
To limit the risks and secure the profitability of SE contracts
Homogeneous SE analysis and cover of contracts
To build up SE experience and to share it.
4 fields constitute the Template
Commercial Environment of the Project
Execution & Performance of the Contract
Contractual & Legal Risks
Financial Risks
The Risk Assessment Template is a Group Management Tool
to be aware of the content of our decision in contracting, under the responsibility of the
signatories thereof
to ensure SE commitment is in relation with SE know-how
to refuse SE exposure & liability on part of project not executed by SE.
Its use is mandatory : RAT has to be filled in for each project, the amount of which exceeds 500 kEUR.
Its use is nevertheless recommended when aforementioned limit is not exceeded. The final bid and
contractual documents as well as the Template must remain available for consultation until the project is
completed and all commitments are either fulfilled or waived. The Template is complemented with a list
of Contacts and a Glossary.

Cash pooling
Rules
Cash pooling is the centralisation of the cash positions of subsidiaries.
1. It is mandatory for a company majority-owned (above 50%) by the Group, be it directly or indirectly,
to manage its cash position through the cash pooling system.
2. The selection of the process is up to the Corporate Treasury Dept and may change over time, according
to local regulations.
The Corporate Treasury uses three types of processes:
n Current Account
n Notional Cash Pool
n IG Loans
It is the Corporate Treasury Dept that chooses the process according to legal, fiscal and financial criteria.
Objectives
For Group Companies:
- benefit from interest rates that are lower than those proposed on the market,
- leave the search for financing and investment to Corporate Treasury.
For the Group:
- reduce group debt (and thus improve our rating)
- cut down on banking costs.

Zero blnce ac
Current Account - ZBA
Cash Pooling through Current Account - Zero Balance Account
Agreement through which a subsidiary entrusts its cash management to Boissire Finances.
Minimum balance to be cash pooled
Any need/excess of cash of at least 150 kEUR (or equivalent) should be requested from/transferred to
Boissire Finances. If justified, this minimum amount can be reduced. Depending on the situation,
Corporate Treasury could cap specific current accounts i.e. set a ceiling on a maximum level.

Manual vs. automatic
1. On a Manual Basis
The subsidiaries concerned determine their cash balance on a daily basis. They then either request
the needed funds to Boissire or inform Boissire of the excess funds that will be transferred.
2. On an Automatic Basis (ZBA - Zero Balance Account)
This system works only if Boissire Finances (BF) has opened a bank account (cash pool master
account) with the same bank as the one where the subsidiary's main account is maintained. On an
automatic basis, the subsidiary's balance is set to zero each night, either transferring the needed
funds from BF's account or transferring the excess funds to BF's account. Debit/Credit interests
are charged/credited to the relevant bank accounts according to the terms and conditions
negociated with the bank when the cash pooling system was set up. This system is aimed at
alleviating the subsidiary's cash management burden.
Procedure
Weekly Cash Forecast
Regardless of the system (i.e. manual or automatic), the person in charge of the country cash pool
reports each week (at the latest on Friday), either by fax or Lotus Notes to Corporate Treasury, a
daily cash forecast for the following week.
Bank transfer
Any transfer from/to Corporate Treasury is to be reported in KTP, at 11:00 am (Paris time) at the
latest.
Value Date : equal or higher than the transfer date (no retroactivity)
Interest Rate : determined by the Current Account Agreement.
For French Subsidiaries only
When calling Corporate Treasury to request a transfer, an index is given to the transfer. This
index, that changes the first three digits of the amount to be transferred, identifies and confirms
the transfer.
The first 2 digits identify the number of the transaction and the last one identifies the direction (0
transfer to Sub and 5 : transfer to BF).
Charging the interests
Account Statement
Corporate Treasury prepares each month a provisory statement with all movements, current
account balances and credit/debit interests. This statement can be accessed in KTPWeb. The
statement is sent by mail only to subsidiaries that are not connected to the SWEBI.
Interests
Crediting/Debiting the interests is done on a monthly basis. The relevant interests are posted on
the subsidiary's current account with BF on the 1st working day of the following month.
Notional cash pooling
Notional Cash Pool
Cash Pooling through Notional Account
Notional Cash Pooling is a process whereby different bank account balances are pooled for interest
calculation purposes. Actual bank transfers are not necessary for the process to operate. Debit balances
will offset credit balances before interests are charged or credited to the master account.
Operations concerned
All flows regardless of the balances.
Implementation
Corporate Treasury opens an account (in foreign currency) in the same bank as where the subsidiary's
main current account is maintained.
The terms and conditions of the notional cash pool are negociated by Corporate Treasury directly with the
bank.
How does it work?
Cash Forecast
The person in charge of the country cash pool reports each week (at the latest on Friday), either
by fax or Lotus Notes to Corporate Treasury, a daily cash forecast for the following week
Movement Confirmation
Any movement on the notional account of the subsidiary should be reported through KTP by
10:00 am (Paris time) of the same day at the latest
Charging the interests
Account Statement
The bank counterpart prepares each month a statement of debit/credit accrued interests.
Interests
The interests are credited/debited to the subsidiary's bank account on the first working day of the
following quarter




Ig
Intra-Group Loan
Cash Pooling through Intra-Group Loans
Granting a loan (from Boissire Finance to the subsidiary or the other way around) will take place in one
of the following cases :
Funding of an investment project
Structural need or excess cash
Impossibility to implement either a Current Account or Notional Cash Pool
The decision is up to the Corporate Finance and Treasury Dept. The objective is to reduce the financial
costs.
For more detail, please refer to the Financial Control site.


Excess Cash


Objective
To maintain a level of cash strictly sufficient to enable a smooth functioning of the company.
Principles
Excess cash should be avoided.
n Cash on hand is to be set to a level just high enough to cover the immediate cash outflows and transfers of funds.
n Cash Management aims at keeping a close-to-zero balance on all bank accounts. This requires the negotiation of overdraft facility high enough to avoid the
situation of non-remunerated cash excesses.
n The first source of financing is the excess cash available in group subsidiaries. One should avoid concurrently drawing on lines of credit in one subsidiary
while having cash on hand in another one.

n No exception to this rule is allowed on the investment of excess cash.


Rules

1. A company belonging to the netting centre must declare all its intra-
group flows carried out with netted companies.
-

2.

In the event of a difference in declaration between the Selling Company
and the Buying Company, the Corporate Treasury will choose
the selling Company's position.
Please note that due to legal restrictions, some entities use the buyer's
rule. It will reject any declaration coming from an entity using the
seller's rule or will cancel it if both entities are using the buyer's rule and
have differences between their declarations.
-

3.

The Corporate Treasury will under no circumstances arbitrate in case of
disagreement.





Rules
Bank Relationships
A Group subsidiary (majority owned i.e. > 50%) is allowed to maintain banking relationships with AA-
rated banks only. Any exception to this principle is subject to explicit approval by Financing & Treasury
Dept (FTD).
It is strictly prohibited to open offshore bank accounts without the exceptional and written consent of the
Senior VP Financing & Treasurer. An offshore bank account is any account held outside of the country
where the Schneider Electric subsidiary is incorporated.A Group bank is a bank that supports Schneider
Electric by providing significant funding at better-than-average conditions.


Grouped according to the total amount financed, these banks are :
TIER I CACIB
BOTM
BNP P
BARCLAYS
BANK OF AMERICA
CIC
DEUTSCHE BANK
HSBC
JP MORGAN
RBS
SANTANDER
SOCIETE GENERALE
NATIXIS
TIER II ANZ
CITI
BBVA
ICBC
ING
NORDEA
STAND.CHARTERED


Dividend allocation
Rules for Determination and Payment



Dividend Payment Date - Rule
Rule
To pay out 100 % of the net profit as dividend while taking into account the legal, tax and financing
constraints of the subsidiary.
Principles
After year-end closing, the subsidiary communicates to DFT the net statutory result after tax, the retained
earnings available for distribution, the maximum dividend that can be distributed and hence the resulting
residual retained earnings. It will indicate the possible tax effects of such a distribution. It will also
indicate the earliest possible date for the payment of the dividends.
DFT is the key decision-maker for dividend management and is responsible for
Decisions and modifications agreed upon during the Financial Review Meetings on the amount as
well as the payment date
Hedging and managing the forex risk related to the dividend to be received
Coordinating with :
The Tax Dpt,which monitors the application and compliance with possible deductions,
withholding tax and possible tax credits
The Corporate Accounting Dpt, which properly posts the operations.
Remark about the Withholding TaxIn most cases, the presentation of a Certificate of Domicile allows
the group company to avoid the withholding of a tax on the dividend by relying on the tax treaty between
France and the country where the subsidiary is incorporated.
Steps
1. In first quarter of each year, DFT contacts the subsidiary to confirm the exact amount of
dividends to be distributed based on the final statutory net result of the preceding year and the
decisions made in the financial review meeting.
2. The Board of Directors passes a resolution to authorise the distribution. The actual transfer of
funds is coordinated with the Central Treasury.
3.
1. Wherever it is not forbidden by local law, the dividend should be paid at the latest on the
day following the shareholders assembly which decided the distribution.
2. In the countries where there is a foreign exchange control, the shareholders assemblys
decision of dividend distribution should mention that the decision is subject to the
approval of the countrys central bank or foreign control administration. The dividend is
then effectively paid, at the latest, on the day following the reception of such approval.
( download the attached rule or read it on the related page)
Links
http://www.constructionweekonline.com/article-20973-schneider-electric-pushes-ecostruxure-
system/1/print/
Swebi.schneider-electric.com (intranet)