Mr. Sunil Mathur, Managing Director & CEO, Siemens India Limited, recipient of Rotary Club of Bombay’s Ramkrishna Bajaj Award for Good Governance

Mr. Sunil Mathur, Managing Director & CEO, Siemens India Limited, recipient of Rotary Club of Bombay’s Ramkrishna Bajaj Award for Good Governance

A very good afternoon, and a huge thanks to the Rotary Club of Bombay, and especially to all of you here for the honour that we and Siemens have received with this award today.

Mr. Sunil Mathur, Managing Director & CEO, Siemens India Limited, recipient of Rotary Club of Bombay’s Ramkrishna Bajaj Award for Good Governanceere is no higher recognition than the Ramakrishna Bajaj Award for Good Governance. It is significant in two ways. Firstly, the Ramakrishna Award holds immense relevance today. Secondly, good governance is not something one can take for granted. Therefore, we are especially proud, and I am especially proud, to receive this award on behalf of 30,000 people at Siemens. I am sure they will be as proud as I am today.

On corporate governance, it’s something that depends on who you talk to, as everyone has a different version of what it means.

For Siemens, governance is not just about complying with laws and regulations — that is a given and non-negotiable. It is less about doing things right, which concerns processes and procedures. Instead, it is about doing the right things. It is about trust and empowerment, which is what we have concentrated on within the company.

You can have the best regulations, rules, guidelines, and laws, but without an underlying fabric of ethics and integrity, they will be of little use. We learned this the hard way in Siemens in 2006, during one of the biggest corporate scandals in history, which led to the entire board, including the CEO, resigning globally. This made us realise that despite having excellent rules and processes, something was missing in the organisation’s fabric. Since then, we have worked on fundamentally transforming the organisation’s fabric, removing over 300 people globally, to understand what truly motivates people.

From this, we realised that having an inner compass is crucial. People can have the best rules and processes, but people who do not have an inner compass or whose compass is switched off, for whatever reason, they can believe they are doing the right thing for the company by securing quick profis through unethical means – this nearly costing the organisation its licence to operate. This led us to refocus on ethics and integrity.

We decided to trust and empower our employees but, as the great Spiderman said, “With great power comes great responsibility.” We emphasised that with trust and empowerment comes the responsibility to do the right thing. Employees often asked for guidelines to know what the right thing was and asked if we could share a circular so that there was no confusion; we responded that no amount of circulars would solve this problem, we had already been down that route.

We suggested a simple test: if you would be comfortable seeing your actions in the headlines of tomorrow’s Economic Times or Financial Times, then go ahead and do it. If not, do not do it, and the company will support you. This provided a fundamental moral compass for everyone, regardless of their role within the company, be iin sales or procurement or projects – it doesn’t matter.

From then, we started building the organisation. And, over a period of time, I think this is the fourth or Fourth year in a row, that Siemens has been ranked as the number one sustainability company on the New York Stock Exchange. And that came only through this long journey, starting with pain, learning and then evolution through that process. So, this award has extra significance to it. It has demonstrated that what we are doing is the right thing to do.

Customers, suppliers, employees, and shareholders all prefer to work with and invest in well-governed organisations. That is what makes large organisations in general and Siemens in particular successful but, more importantly, relevant, to ensure that we can continue growing our business but only do it in a clean manner, on the basis of a strong foundation. Because we can have the best strategies, processes, procedures, but if you don’t have the underlying foundation of a strong governance process, a process that ensures that there is transparency, a process that ensures that there is integrity and ethics in everything that you do, your customers will not order from you, your suppliers will not work with you, you will not get the best employees, and you will have people leaving you very quickly and, more importantly, your shareholders will not invest in you. In conclusion, while complying with laws and regulations is essential, what truly matters is having an inner moral compass to guide our business practices. Thank you again for this immense honour, which I will share with the 30,000 Siemens employees. I am happy to answer any questions.

Mr. Mathur, could you share some insights on your initiatives for ESG sustainability and similar areas?

We are doing a lot in this area, particularly in terms of the environment. Decarbonisation is significant; we have reduced our energy costs by about 40% in the last five years across our 32 factories and offces. We have a central command and control centre at our Kalwa factory to monitor energy and water consumption across 1,300 Siemens offices globally. This allows us to identify ineffciencies and make comparisons – for instance, why an once with 50 people in Norway is using more water and electricity than an once with 50 people in Australia – thus, driving greater effciencies in our operations. We have eliminated plastics and aim for zero landfill, focusing on circularity of operations. We are working on creating green buildings and using recyclable materials in our factories. In addition to environmental efforts, we address governance, ethics, resource effciency, and equity, creating an inclusive workplace for all.

We integrate sustainability into our incentive targets and daily operations, ensuring it is a core part of our business.

How do you recruit people with a good moral compass?

Everyone has an internal compass; the choice to listen to it is individual. We focus on finding individuals who share Siemens’ moral values, teamwork, and collaboration. Our selection process includes interviews and a two-day orientation programme followed by a year-long buddy system. This process clearly outlines what is acceptable and expected at Siemens, setting high standards for ethics and integrity. Trust, empowerment, responsibility, and consequences are all demonstrated and expected within our organisation.

How do you handle losing business due to your ethics or morality?

There is no grey zone there for us; it is black and white. We will lose business if necessary to maintain our ethics. The risk of being unethical is too high, as we learned in 2006. Therefore, we do not compromise on this, ensuring that our operations are always ethical.

Do you think the time has also come where corporates talk about personal moral compasses to their partners? For example, the number of clothes we buy or our dietary preferences, because finally, that is leaving a carbon footprint. I know it’s a sensitive topic, but what I do for myself when nobody’s watching me, not at all at the corporate level, is something that I’ll bring into the corporate. So, is there a responsibility for corporates, or is the time not yet there? Your views.

It’s a diffcult question, and I would have liked to pass that on to someone else, but I think there’s a saying: you can’t live crooked and think straight. I think you are absolutely right; you can’t have one lifestyle and one way of thinking at home, and a completely different way of thinking in the once. These two come together. When it comes to the environmental angle and so on, yes, it is a debate and a discussion that needs to be had. I think corporates have got to decide in this particular area which aspects they would like to concentrate on. there are so many needs and things that need to be done. We can’t tackle them all, so we have to figure out the five or six or ten items we want to focus on and then really focus on doing a great job. So, while everything that you mentioned is definitely something that needs to be thought about and discussed, for Siemens, we’ve taken the view that this is probably not a discussion for us at this point in time. It may come up later. As a country, we are churning out millions of engineers with an emphasis on STEM. However, we seem to be opting for quantity over quality, with institutions of dubious quality popping up everywhere. How do you balance recruiting between top-tier institutions like IITs and lesser-known universities churning out unemployable graduates?

We follow two tracks. We train about 100,000 people every year, skilling them in different areas, including STEM and simple trades like welding and fitting. Obviously, we can’t absorb 100,000; we only take in a couple of hundred annually. These individuals then go out into the industry and already demonstrate that they are a cut above the rest. We train them using the Dual Vocational Educational System, the success story of the German economy, where apprentices receive a third of their education in a classroom, a third on the shop floor, and a third in the workplace. When recruiting, I prioritise teamwork and collaboration over technical skills, which we can train. We train our recruits for a year, sometimmes two, before they join the front line. This approach cannot be solely government-driven; all of us must play our part. We’ve found some of our best performers among those who never had an opportunity. We sponsor about 500 students annually through engineering colleges, covering everything from books and accommodation to mentorship. The key criterion is that their family income does not exceed Rs two lakh per year. these students, often the children of maids and drivers, have gone on to work for companies like Amazon and Microsoft, transforming their lives. This approach, teaching them how to sh rather than giving them a sh, unleashes their potential and contributes to India’s growth.

In recent years, ESG has become quite a trend. All stakeholders lean towards companies demonstrating it. How much of this can be converted into a quantitative scorecard, considering one needs to compare numerous companies? Will it always remain a subjective framework?

It will largely remain subjective. SEBI has introduced BRSR reporting with 144 parameters, which is cumbersome for the average person to assess across multiple companies. The challenge is to distill this into a few key indicators. Rankings in different areas provide some guidance, though not perfectly. Companies will have to act on ESG due to increasing shareholder demands, stringent regulations, and mandates for funding banks to support ESG-compliant companies. It’s not about how much a company is doing but that they are doing something meaningful, integrating decarbonisation and circularity into their strategy. If the top 500 companies focus on this, we will see a positive impact.

Mr. Mathur, congratulations to you and Siemens for this award. Is the command centre in India the only one in the Siemens world? Yes, it is, which is a matter of great pride for us, showcasing the tremendous talent of our people in India. Thank you very much.

Stakeholders usually trust multinational companies for their corporate governance. However, the issue of royalties or payments to parent companies can be contentious. How do you balance the interests of minority shareholders and what is due to the parent company?

Speaking for Siemens, our royalties are less than 1%. the technology and R&D support we receive from the parent company is invaluable. Our local success and profitability would not be possible without these efforts. From our perspective, 1% is a small price to pay for such crucial support.