SKF India (Industrial) presents a clean audit record and a debt-free balance sheet, but its first year as a standalone entity is shaped by a demerger that makes comparisons difficult and by a related-party structure that will route more than half the company’s transactions through group entities. The record is disclosed, not hidden; the question is whether the related-party flows deliver returns commensurate with their scale.
Key findings
- The demerger makes every number a fresh start
Minor- The Scheme of Arrangement was sanctioned by NCLT Mumbai on 26 September 2025 with an effective date of 1 October 2025, and comparative periods have been restated as if the Scheme had been effective from incorporation. The Company states that assets, liabilities and retained earnings as at 31 March 2026 are not comparable with those as at 31 March 2025. An exceptional loss of ₹196.1 crore was booked, comprising ₹163.92 crore in estimated stamp duty, ₹28.69 crore in demerger expenses for IT and professional services, and ₹3.49 crore in gratuity impact. - Operating cash flow trails profit as a multi-year capex cycle begins
Minor- Cash from operations was ₹164 crore against a profit after tax of ₹218 crore in FY26, a coverage ratio of 0.75 times. Capital work in progress stood at ₹134 crore, and management has outlined over ₹800 crore of planned capex across FY26-FY30, including a new Pune plant expected by end of calendar 2028. The final dividend recommended for FY25 fell to ₹14.5 per share from ₹130 per share for FY24. - Receivable quality shows strain from channel curbs
Minor- In Q4 FY2025-26, management stated that the distribution business declined because shipments were held back from distributors with outstanding payments. Receivable days reached 88, and trade receivables stood at ₹82.8 crore in FY2025-26. - Audit opinions are clean, but two procedural exceptions and pending title updates flag the demerger’s unfinished paperwork
Minor- The statutory auditor issued an unqualified opinion for every year from FY2022-23 through FY2025-26. For FY2025-26, the auditor reported that daily backup of electronic books was not maintained and that audit trail was absent for the period 1 April 2025 to 30 September 2025. CARO notes that immovable properties acquired via the demerger remain in the predecessor’s name, with applications to update title pending as at 31 March 2026. - Tax disputes stay with the predecessor, while residual claims and uncommissioned guarantees remain
Minor- All disputed tax liabilities for periods up to 1 October 2025 are retained by SKF India Limited under the demerger scheme. The Company disclosed unspecified contingent liabilities for civil cases and noted that SKF India Limited issued bank guarantees for non-consenting customers of the Industrial business without charging commission. A customs show cause notice for an advance licence from FY1997-98 remained unresolved as at 31 March 2025. - The post-demerger structure is a simple standalone entity with no subsidiaries
Clean- As of FY2025-26, the Company has no subsidiaries, joint ventures or associates. The Company was incorporated on 17 December 2024 as a wholly owned subsidiary of SKF India Limited and became a direct subsidiary of AB SKF (Sweden) from 30 September 2025.
What to watch
- Intercompany settlement. Outstanding balances with SKF India Limited and sister companies, referenced in the Q4 FY2025-26 transcript, remain to be settled.
- Title deed updates. Applications to update the name on immovable property title deeds acquired via the demerger were pending as at 31 March 2026.
- Customs notice. The show cause cum demand notice for an advance licence issued in FY1997-98 remained unresolved as at 31 March 2025.
- Income tax penalty appeals. Appeals against four penalty orders totalling ₹13.12 crore were filed with CIT(Appeals) in FY2024-25.
Bottom line: This is a disclosed, debt-free record with an unbroken chain of unqualified audit opinions. The demerger resets the accounting baseline and the post-demerger structure concentrates the company's economic activity inside the group as a standalone entity with no subsidiaries. Watch the AGM vote on 16 July 2026 and the settlement of intercompany balances, together they will signal whether the governance around those flows matches the scale of the exposure.