For SKF, slowdown has no bearing on expansion

SKF, a global leader in ball bearings, is building capacity in India, betting against a slowdown in industrial activity and automobiles sales.

The company is investing over `150 crore in developing two manufacturing units — at Mysore and Bengaluru. The Mysore unit will commence operation in mid next year.

The company also plans to build four new factories in the next few years.

High growth in the automotive segment in India had prompted the company to build the two units, Tom Johnstone, president and chief executive officer, AB SKF, said.

The company, which has six factories in the country, had set a growth target of 15% in operating margin, 8% in annual sales and 27% in return on capital in the next few fiscals. “Through our acquisition of Lincoln and the new production lines coming up, SKF will achieve this long-term target very soon,” said Johnstone.
SKF opened its Global Technical Centre in Bengaluru on Wednesday. The centre, set up at a cost of `50 crore, will have over 400 engineers working in the areas of product engineering, development and testing, as well as a global laboratory for metallurgy, chemistry and bearing performance analysis.

SKF is bullish on vehicle sales in the country. “We have doubled our sale and trebled our assets in India in the last eight years and SKF hopes to maintain its growth trajectory in India,” said Johnstone.

The company had global revenues of €6.7 billion last fiscal, of which €1.8 billion came from the Asia-Pacific region.
India contributed 20% of Asia-Pacific sales.

“SKF had invested $175 million in developing technical centres across the globe for R&D and the company’s products had saved $425 million for clients by increasing energy efficiency of products,” said Johnstone.

Going by him, SKF’s R&D investment during 2011 would be nearly 27% more than the previous year and most of the research work is focused on manufacturing products which help in reducing carbon emission.     

Johnstone was optimistic the acquisition of Lincoln would enhance the company’s market share globally. Specifically, Lincoln’s huge presence in the heavy earth moving machines segment would immensely benefit SKF in strengthening its footprint in India.

Asked if the company was looking at acquisitions in India, Johnstone replied in the negative. “We have no specific acquisition plan in India at this moment but if there is any opportunity to adopt in Indian market then we would definitely look up.”

SKF had made 21 acquisitions since 2003, 19 of them in the industrial segment.