### **Overview** SKF India Limited, established in 1961 and operational since 1965, is a leading provider of motion and rotating equipment solutions in India. As a subsidiary of the Sweden-based AB SKF (founded in 1907), SKF India serves over 40 global industries through integrated offerings in **bearings, seals, lubrication systems, mechatronics, and advanced condition monitoring services**. With three manufacturing plants in **Pune, Bengaluru, and Haridwar**, and four offices across India, the company employs approximately **1,727 people** and maintains a supplier network of over 1,800 vendors. SKF India’s mission centers on **friction reduction, energy efficiency, equipment reliability, and sustainability**, positioning it as a technology partner to both industrial and automotive customers. The company is currently undergoing a **strategic demerger** to separate its **Automotive** and **Industrial** businesses into two independent, listed entities—aiming to unlock growth, enhance agility, and improve capital allocation. --- ### **Strategic Transformation: Demerger of Automotive & Industrial Businesses (Planned: Q4 2025)** Driven by fundamentally different market dynamics, customer needs, and manufacturing philosophies, SKF India is implementing a **demerger** to create two focused, autonomous companies: | **Aspect** | **Automotive Business** | **Industrial Business** | |----------|-------------------------|--------------------------| | **Capital Allocation** | Tailored for high-volume, cost-efficient production | Aligned with innovation, customization, and long-term contracts | | **Manufacturing Model** | Large-batch, automated lines | Flexible, smaller-batch, application-specific lines | | **Customer Base** | OEMs in 2W, PV, CV, EV | Diverse industries: wind, steel, cement, railways, heavy machinery | | **Growth Strategy** | Electrification, safety systems, wheel-end solutions | Aftermarket, digital services, infrastructure-led demand | - **Rationale**: - Sharper strategic focus and faster decision-making. - Distinct investor appeal—industrial for infrastructure/renewables, automotive for EV/ecosystem growth. - De-risking operations from macroeconomic volatility in either sector. - Enhanced innovation and capital efficiency. - **Timeline**: - **Shareholder approval**: Scheduled Q3 2025 - **Listing & trading of separate entities**: Expected Q4 2025 --- ### **Operational & Manufacturing Strategy** #### **Manufacturing Footprint & Localization** SKF India is transitioning toward **"local for local" production**, with over **80% of components sourced domestically** and **95% localization in automotive** production. Plans include: - **Capacity Expansion (Jun 2025 – 2030)**: - ₹3,500 crore capex: Pune (unitized wheel bearings), Haridwar (EV powertrains), Bangalore (2W-EV bearings). - **New industrial plant in Pune (by 2028)**: Focused on deep groove, tapered roller, and unitized bearings (invest ₹450–500 crore). - ₹350–450 crore invested in channel expansion and automation. - **Demerger-Based Asset Separation**: - **Bangalore**: 7/10 lines → Automotive; 3 → Industrial - **Pune**: 12 → Automotive; 10 → Industrial - **Haridwar**: All 4 lines → Automotive - Land & manpower split: ~55–60% automotive, 40–45% industrial - **Lean, Green, Digital Factories**: - Smart factories with IoT, AI-driven predictive analytics, and automation. - Focus on energy efficiency, water conservation, CO₂ reduction, and waste elimination. - IIoT pilots in Pune & Bengaluru for real-time monitoring. --- ### **Market Position & Growth Segments** #### **Automotive Business** - **Revenue Contribution**: ~50% (historical), aiming for higher per-vehicle revenue via advanced systems. - **Key Trends**: - **EV Electrification**: Hybrid ceramic bearings for motor insulation, sensorized hub units for e-2W & e-3W. - **Safety & Performance**: ABS-integrated bearings, high-speed, low-noise solutions. - **Global OEM Partnerships**: Unitized wheel end bearings exported to Europe, Africa. - **OEM Customers**: Bajaj, TVS, Tata, Mahindra, Royal Enfield, global EV startups. - **Aftermarket Strategy**: - Network of **321+ distributors**, digital platforms (App ka Humsafar, Digi-Connect), retailer expansion. - Service kits, digital access, loyalty programs (Value Edge). #### **Industrial Business** - **Revenue Mix**: 50% OEM, 50% Aftermarket - **Key Verticals**: - **Wind Energy**: Localized main shaft bearings; 3MW turbine contract with top OEM. - **Railways**: 44 Vande Bharat rakes supplied; 60% market share in locomotive TBU, 100% in anti-roll/drive bearings. - **Steel & Metals**: Custom 4R CRB solutions; intelligent monitoring systems. - **Cement, Mining, F&B, General Machinery**: High-durability, maintenance-free bearings. - **Aftermarket & Services Growth Drive**: - Target: Expand service business from **<15% to 20% of total revenue**. - **Three Pillars of Service Business**: 1. **Condition Monitoring**: AI-powered software for vibration, temperature, speed analysis. 2. **Bearing Remanufacturing**: 3 centers in Pune, Ahmedabad, Jamshedpur—90% less energy, faster turnaround. 3. **Reliability Engineering (REP/REP Contracts)**: - Outcome-based contracts (e.g., pay-per-ton with SAIL). - Focus on uptime, ROI, and reduced TCO. - 5–7% of revenue, with strong growth potential. --- ### **Innovation & Digitalization** - **Digital Tools**: - **SKF IMx & Microlog** for predictive diagnostics. - **System 24 (TLDD)**: IoT-based remote lubrication monitoring in steel plants. - **CO₂ Calculator Tool**: Assess environmental impact of bearing choices. - **SKF Bearing Select**: Includes emissions modeling for customer sustainability. - **R&D Edge**: - 200+ engineers in India dedicated to EV and industrial innovation. - Co-development with OEMs on low-friction TRBs (Mahindra), ceramic bearings for EVs. - Patents: 5 filed, 5 co-developed in FY24–25. - **AI & Automation**: - Predictive quality control using noise pattern analysis. - AI for maintenance, logistics, sales planning. --- ### **Go-to-Market & Distribution** - **Industrial Distribution**: - Network of **120+ distributors**; expansion into Tier 2/3 cities. - Retail partnerships, improved last-mile availability to counter counterfeits. - **Automotive Aftermarket**: - Combating counterfeit market (larger than genuine) through availability and education. - Product expansion beyond bearings (e.g., sprockets, belts, suspension kits). - **Digital Channels**: - E-marketplace, e-shop, WhatsApp integration—currently ~5% of revenue, growing. --- ### **Financial & Strategic Metrics** | **Metric** | **Details** | |----------|-----------| | **Market Share** | ~20% in India (bearings), leader in automotive electrification, railways, steel | | **Exports** | ~8% of revenue—primarily passenger vehicle products to Europe, Southeast Asia, Americas | | **Customer Concentration** | Industrial top 5 customers: 16.0% (FY25), up from 13.5% (FY22) | | **Service Revenue** | Target: 20% of total (current: <15%) | | **Long-Term Goal** | **Double revenue by 2030** with improved margins, driven by industrial, services, and EV | --- ### **Sustainability & ESG** - **Circular Economy**: - **RecondOil**: DST technology regenerates used lubricants—reduces waste, cost, and emissions. - Bearing remanufacturing: Saves 90% energy vs. new. - **Green Manufacturing**: Solar rooftops, lean operations, digital efficiency. - **Make in India & Aatmanirbhar Bharat**: Localized steel sourcing, domestic supplier ecosystem, export of India-made components.