SKF group expects India drive future growth

Swedish automotive components maker SKF group expects India to outperform other markets soon and become the “future growth” market for them globally, a top company executive has said.

“Given the kind of growth that India is witnessing, we are sure India is going to be a clear future growth market for us,” Alrik Danielson, global chief executive and president, SKF Group, told PTI here.

Just as SKF had growth “miracle” in China in the last 20 years, it is hopeful of clocking similar growth here as well, he said, adding, “we expect this market to outgrow the rest of our operations globally.”

“In India, we are growing at mid-teens. We have been clocking 15 per cent growth in revenue and in operating margins since the past couple of years. But we expect India to grow in the low-to-high 20s for both,” SKF India managing director Manish Bhatnagar said.

China, Europe and the US are the major markets for the SKF group now.

Bhatnagar said the domestic arm is expected to be among the top five markets for the group globally in terms of revenue and operating margin over the next three years.

As much as 90 per cent of its domestic business comes from bearings with lubricants,seals and services, constituting the rest, he said, adding they meets 40 percent of domestic demand through imports.

Bearings will continue to drive growth here, he added.

Globally the group is growing at 7 per cent while the target is grow at 5 per cent over a cycle, Danielson said, adding there is “uncertainty” in the marketplace due to the Brexit issues and trade tension between the US and China.

There was some “softening” in the automotive market globally but its is too early to assess the actual reasons for it, he said.

In the December quarter, SKF India reported a net income of ₹ 88.45 crore, up 2.67 per cent, over sales of ₹ 767.65 crore.

The domestic auto-component industry logged 18.3 per cent higher revenue at ₹3,45,635 crore in the previous fiscal, while exports grew 23.9 per cent to ₹90,571 crore, and the aftermarket grew 9.8 per cent to ₹ 61,601 crore, as per the industry report.

On capex plan, Bhatnagar said they typically invest ₹ 100-150 crore a year and this rate of investment will continue. But if the market demands, they are ready to put in more, he added.

“Given that we are importing 40 per cent of domestic demand and considering the expected demand growth, we are looking at increasing investment significantly in the next couple of years,” he said.

The SKF group is into bearings, seals, lubrication systems, and technology services, and has six facilities in the country--in Pune, Bengaluru, Mysore, Haridwar and Ahmedabad. Globally it is present across 130 countries with 108 facilities.