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Bearing Industry in India can be divided into two segments - the organized sector and unorganized sector. The organized sector primarily caters to the original equipment manufacturers' (OEM) segment, which is predominantly automotive, railways and other industrial users. The unorganized sector primarily caters to the replacement market and continues to serve the very low-end market as well as forms the core of the counterfeit product in the market. With a renewed focus on quality & reliability, the replacement market is increasingly turning to the organized sector, a sector that was once the domain of the unorganized sector. The bearing industry in India is estimated to be around Rs 5000 crore.
Industry reports a flattish performance for the quarter ended Mar’08
The Bearing Industry as a whole reported a flattish performance as a whole for the quarter ended Mar’08 primarily on account of sharp rise in the input costs. The Aggregate Net Sales revenue of 6 companies for the quarter ended Mar’08 stood at Rs 712 crore which was 10% higher when compared with corresponding period last year. The Aggregate OPM decreased by 150 basis points to 17.4%. The Aggregate Operating Profit for the quarter under review stood at Rs 124 crore which was marginally higher by 2% when compared with corresponding period last year.
The Aggregate Other Income increased by 29% to Rs 9 crore. The subsequent Aggregate PBIDT for the quarter ended Mar’08 stood at Rs 133 crore which was higher by 3% on a Y-o-Y basis comparison. The Aggregate Interest Income for the quarter under review stood at Rs 5 crore as compared to an Aggregate Interest Income to the tune of Rs 2 crore during the corresponding period last year. The Aggregate Depreciation remained flat at Rs 17 crore. The subsequent Aggregate PBT for the quarter under review stood at Rs 121 crore which was 6% higher on a Y-o-Y basis comparison.
The Aggregate Tax expense for the quarter under review stood at Rs 42 crore, resulting in an Aggregate PAT of Rs 79 crore which was 5% higher when compared with corresponding period last year.
Rising Steel prices is an area of concern for the Industry
Rising input costs pose a major challenge, especially in a price sensitive market like India. Steel and alloy steel forms the basic material for the manufacturing of bearings and accounts for almost 45% of total cost. Steel prices therefore have significant impact on margins. Steel prices in the past few months have appreciated significantly riding on the shortage of iron ore, one of the principal raw materials for steel. The significant increase in steel prices has resulted in pricing and margin pressure on bearing manufacturers.
Some of the Bearings manufacturers have planned to be innovative so as to offset the steep rise in steel prices. Companies are also planning to diversify their product range. Some of the companies have launched power transmission products as a new product range to capture the growth in the energy sector.
NRB Bearings inaugurates Pantnagar manufacturing facility at Uttarakhand
NRB Bearings has inaugurated a new manufacturing facility at Pantnagar (Uttarakhand) during the month May’08. The modern manufacturing facility was completed in a record time of 8 months. The plant at Pantnagar is part of company’s strategy to be located in close proximity to companies’ customers. Furthermore the company also plans to be the most preferred bearing supplier to all its important customers.
With an initial investment of Rs 25 crores, the facility will manufacture Ball & Roller Bearings for the domestic market. The facility spread over 5 acres, will have a capacity of producing over 22 million Ball & Roller Bearings over the next 3 years.
Austin Engineering Company profits smoothen up
Austin Engineering company recorded 21% rise in PAT before EO to Rs 6.62 crore on 12% rise in net sales to Rs 72.99 crore in the year ended March 2008. The net profit after EO and prior period items were about Rs 6.51 crore in FY 2007-08, representing 22% rise over the previous year.
Austin is one of the small players in the Indian bearing industry, but offers the entire range of antifriction bearings namely Ball, Tapered Roller, Spherical Roller, Needle Roller and Thrust Bearing. Its bearings cater to automobiles, Defence, State Road Transport Corporation, Steel Plants. Thermal plants, Cements Plants, Sugar and Paper Industries, Fan and Pump Industry and material handling equipments.
Outlook
The Bearings Industry as a whole reported a flattish performance for the quarter ended Mar’08, primarily on account rise in input costs especially steel. The Aggregate OPM of the companies for the quarter ended Mar’08 declined by 150 bps.
The current year is expected to be a challenging year for the Bearing Industry. On the one hand there is a muted performance seen in the Automobile sector, while on the other hand the industrial growth remains healthy, driven by new capacities in the manufacturing sector and the continued spending on infrastructure.
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