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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 are 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 – 5400 crore.
Industry reports a mediocre performance for the quarter ended Dec'08
The Bearing Industry as a whole reported a mediocre performance as a whole for the quarter ended Dec'08. The Aggregate Net Sales revenue of 10 companies for the quarter ended Dec'08 stood at Rs 700 crore which was 10% lower when compared with corresponding period last year. The Aggregate OPM decreased by 480 basis points to 10.5%. The Aggregate Operating Profit for the quarter under review stood at Rs 74 crore which was lower by 38% when compared with corresponding period last year.
The Aggregate Other Income decreased by 13% to Rs 13 crore. The subsequent Aggregate PBIDT for the quarter ended Dec'08 stood at Rs 87 crore which was lower by 35% on a Y-o-Y basis comparison. The Aggregate Interest expense for the quarter under review stood at Rs 8 crore as compared to an Aggregate Interest Income to the tune of Rs 1 crore during the corresponding period last year. The Aggregate Depreciation declined by 9% to Rs 20 crore. The subsequent Aggregate PBT for the quarter under review stood at Rs 59 crore which was 48% lower on a Y-o-Y basis comparison.
The Aggregate Tax expense for the quarter under review stood at Rs 19 crore, resulting in an Aggregate PAT of Rs 40 crore which was 45% lower when compared with corresponding period last year. The Aggregate Net PAT Margin decreased from 9.3% during the quarter ended Dec'07 to 5.6% during the quarter ended Dec'08.
Fag Bearings reported healthy set of numbers for the quarter ended Dec'08
FAG Bearings reported robust set of numbers for the quarter ended Dec'08. The Total Income (Net Sales / Income from Operations + Other Operating Income) for the quarter under review stood at Rs 186.76 crore which was 10% higher when compared with corresponding period last year. The OPM Increased by 250 bps to 19.5%. The Subsequent Operating Profit for the quarter ended Dec'08 stood at Rs 36.51 crore which was 26% higher when compared with quarter ended Dec'08 figures. The ensuing PAT for the quarter ended Dec'08 stood at Rs 21.35 crore which is higher by 47% when compared with corresponding period last year.
The Rise in OPM coupled with a 900 basis points fall in Tax incidence (33.7% during the quarter ended Dec'08 as compared to 42.7% during quarter ended Dec'07) aided FAG Bearings to report healthy set of numbers for the quarter ended Dec'08.
SKF India reported dismal set of numbers for the quarter ended Dec'08
SKF India reported a lackluster performance for the quarter ended Dec'08. The performance was significantly impacted on the back of slow down seen from different user Industries. The performance was also impacted by a partial shut down taken by the company during the quarter under review.
For the quarter under review, the Net Sales/ Income from operations of SKF India stood at Rs 366.55 crore, which was 13% lower when compared with corresponding previous quarter last year. However the OPM (Operating Profit Margin) decreased by sharply by 760 basis points to 6.9%.
The resultant Operating Profit for the quarter ended Dec'08 was Rs 25.38 crore which was 58% lower when compared with quarter ended Dec'07 figures. The ensuing PAT for the quarter ended Dec'08 was Rs 16.29 crore, which was 59% lower when compared with corresponding previous quarter last year.
Outlook
Currently the Bearings Industry as a whole is witnessing challenging times, largely due to sluggishness in demand, especially in auto OEMs segment. As a result of which the Aggregate OPM declined by 480 basis points to 10.5% while the Aggregate PAT declined by 45% to Rs 40 crore during the quarter ended Dec'08.
Currently the Bearings Industry as a whole is witnessing challenging times, largely due to sluggishness in demand, especially in auto OEMs segment. As a result of which the Aggregate OPM declined by 480 basis points to 10.5% while the Aggregate PAT declined by 45% to Rs 40 crore during the quarter ended Dec'08. The cut in excise duty from 10% to 8% will benefit bearings producers in the replacement segment, while they have to fully pass on the benefit in the OEM segment. Also, fall in steel prices will help. But so long as demand remains sluggish, the near term outlook for bearings remain negative.
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