BENGALURU (Reuters) - India's Siemens Ltd said on Tuesday it will demerge its energy business into a separate listed entity to focus on core businesses that meet the demands of shareholders at its German parent, Siemens AG.

Siemens Ltd in December 2023 had said that it was exploring a spin-off of its energy business at the behest of some of its stakeholders. Siemens Energy sold an 18% stake in the Indian entity to Siemens AG for about 2.1 billion euros to enable the demerger.

The German engineering group had spun off and listed Siemens Energy in 2020.

Post the demerger, Siemens Ltd will continue to focus on technology-focused development in infrastructure and industry segments, while the power generation segments, including renewable energy, will come under Siemens Energy India.

Shareholders of Siemens Ltd will receive one share of Siemens Energy India for every share held, the company said.

"The underlying market drivers and capital allocation requirements are fundamentally different in the energy business compared to the industrial business," said CEO and MD Sunil Mathur.

The demerger will enable both companies to pursue their specific strategies and make decisions on capital allocation, Mathur added.

Plans for the demerger come at a time when India expects its power generation to grow at its fastest pace since at least 2011-2012 in fiscal 2025. Siemens AG has been eyeing future investments in the country that is seeing higher grid upgrades and electrification programmes.

Siemens' India arm also said that it will expand two of its 32 factories in the country, with capacity expansions at two factories in the western Indian state of Goa, bringing the total capex investment to 10 billion rupees (around $120 million).

Separately, Siemens Ltd reported a 70% rise in its second-quarter profit, driven by gains from its energy and smart infrastructure businesses, which make up about 50% of the total pre-tax profit.

($1 = 83.4984 Indian rupees)

(Reporting by Manvi Pant in Bengaluru; Editing by Eileen Soreng)