Mumbai: Bearings maker SKF India Ltd is spending about Rs100 crore in 2010 to ramp up capacity as it tries to keep up with growing demand, a top official said on Friday.
The firm, a unit of Sweden’s SKF, the world’s largest bearings maker, follows the calendar year as its fiscal.
“There is a problem with capacities, not only with us, but also with our supplier base. The whole chain has to scale up capacities,” Shishir Joshipura, managing director of SKF India, told Reuters.
“The Indian market is running ahead of everybody’s capacity plans.”
SKF supplies bearings to the automotive and industrial segments and currently produces about 105 million ball bearings annually from its plants in Pune and Bangalore.
It has set up a third plant at Haridwar in Uttarakhand with a declared capacity of 60 million units. This plant would achieve full capacity in two-and-a-half years and has become operational recently, Joshipura said.
This facility will supply bearings to major auto makers in India including Tata Motors and Hero Honda.
The Indian automotive industry in particular has seen a scorching pace of growth as vehicles sales are expected to reach a record high for the second year in a row in 2010-11, with incomes in a rapidly growing economy boosting demand.
“We have reasonable plans in place to work with these growth rates...what works to our advantage is our global network. If there is more demand we can always source from them.”
SKF, which also supplies bearings for wind turbines to Suzlon Energy, said the surge in automotive demand as well as a pick-up in business among industrial customers may help its revenues grow 20-25% in 2010.
The auto and industrial segment contribute almost equally to its revenues.
“We had earlier forecast a (revenue) growth of 15-20%. We are revising that to 20-25 percent,” he said, adding the economic recovery since the second half of 2009 led to the upward revision in outlook.
Cost Push Factor
SKF India’s net profit for the quarter ended 31 March surged to Rs435.7 million from Rs145.1 million a year ago helped by higher sales and lower costs.
But the firm has seen raw material prices rise and would try to pass on the cost push to customers to maintain margins and profitability.
“Prices, especially steel, is heading north and much will depend on our ability to pass it on to customers in an efficient way. That’s what we are attempting to do. (Input) Prices have already increased,” he said.
Shares of SKF India, valued at $480.9 million closed up 7.68% at Rs437.5 in a firm Mumbai market.