The world’s largest maker of bearings for cars and planes, AB SKF, is investing Rs420 crore in two new manufacturing facilities in India, in an attempt to cater to growing demand from auto makers as well as emerging demand from new sectors such as wind energy, oil and gas, power and infrastructure. This will take the company’s total number of plants in the country to five.
The Swedish bearings maker will invest Rs270 crore in a plant in Ahmedabad to make large-sized industrial bearings for high-growth sectors, including oil and gas, and power. This unit is expected to become operational in the first quarter of 2009.
AB SKF president and CEO Tom Johnstone
“We acquired 50 acres of land for this facility only about a week ago. The land acquisition process was delayed, but the deal is now closed,” said Rakesh Makhija, managing director, SKF India Ltd, the local arm of the Swedish bearings maker.
In April, the company said it would invest Rs150 crore in a new bearings factory in Haridwar, Uttarakhand in an attempt to manufacture bearings at a location close to where its customers such as Hero Honda Motors Ltd, Bajaj Auto Ltd, Tata Motors Ltd and Mahindra & Mahindra Ltd had set up plants. This unit, which will cover 40,000 sq. m, will make tapered roller bearings used in two-wheelers and four-wheelers.
“Although India’s share to our global turnover is only around 3-4%, it is one of fastest growing markets and involves some of our biggest investments going forward,” said Tom Johnstone, president and chief executive, AB SKF.
Makhija estimates the domestic bearings market to be around Rs4,500 crore—SKF India has a 30% market share. Almost 90% of SKF India’s turnover (Rs387 crore in the quarter ended September) comes from its bearings business.
To reduce its dependence on the bearings business, SKF India aims to double the share of its seals business to 12% over the next five years.
The company has a 10% share in the bearings and seals market for railways, where it supplies products for 25- and 30-tonne axle loads for the Indian freight car market. “We don’t make many of our railway products in India. Once the facility in Ahmedabad becomes operational, we will make these products there as well.” said Makhija.
On Thursday, shares of SKF India closed 0.7% up at Rs403 a share on the Bombay Stock Exchange, on a day when the exchange’s benchmark index Sensex fell 0.72% to 19,784.89.