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Automotive component manufacturer Siemens VDO Automotive is mulling a merger with its parent, the engineering giant Siemens which holds an 86% stake in the company.

The company makes automotive electrical and electronic systems.

The board has authorised management to prepare a proposal for a merger with Siemens AG.

The proposed merger, if approved by the board, will be subject to approval by the shareholders of the respective companies.

During its third quarter ended June 2004, Siemens VDO posted net sales of INR263 million while net profit was INR11.6 million.

A merger with Siemens is expected to see the German giant take more active interest in running of Siemens VDO.

More investment in the Indian operations is also expected.

Deepesh Rathore / Tilak Swarup