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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 crore.
While steel and non ferrous metal prices flared up, the ball Bearing prices moved up by only 3% in July and 4% in August 2008, on y-o-y basis. They have also sequentially increased by about 3.4% from between April and August 2008. On the other hand, the roller bearing prices are about 8% higher in July 2008 and 9% higher in August 2008, though sequentially there was no change in prices between June and August 2007.
Industry as a whole reported a mediocre performance as a whole for the quarter ended Jun’08 primarily on account of sharp rise in the input costs. The Aggregate Net Sales revenue of 12 companies for the quarter ended Jun’08 stood at Rs 913 crore which was 13% higher when compared with corresponding period last year. The Aggregate OPM decreased by 320 basis points to 15.2%. The Aggregate Operating Profit for the quarter under review stood at Rs 139 crore which was lower by 6% when compared with corresponding period last year.
The Aggregate PAT stood at Rs 90 crore which was 3% lower when compared with corresponding period last year. The Aggregate Net PAT Margin decreased from 11.5% during the quarter ended Jun’07 to 9.8% during the quarter ended Jun’08.
To counter the slow down in the Automobile sector bearings, companies are planning to boost the share of its Industrial Segment Sales. NRB Bearings plans to boost the share of its industrial segment sales, which is around 20% currently. As per company sources the NRB Bearings is looking at increasing automotive sales overseas and increasing industrial sales in India.
As per findings by a leading international business research company Global demand for ball, roller and plain bearings will climb 6.4% annually through 2012. As per the report the gains will be driven by a shift toward more expensive, better performing units. The findings further reveals that the demand in developing parts of Asia, Eastern Europe, Africa/ Middle east and Latin America will outpace sales in the US, Western Europe and Japan.
Bearing sectors sees the current year as a challenging year. On the one hand, it was neither successful in passing on the rise in costs nor able to significantly improve volumes in the auto OEM segment. On the other, they were quite successful in increasing the prices in the industrial segment. Further, the huge capacity additions in various industries have brightened the medium term prospects in the bearings demand from industrial sector. So, players are planning to scale up the share of supply to industrial sector in their total sales. While the recent softening of steel and non ferrous metal prices augurs well, much depends on the player’s ability to hold on to prices and increase volumes.
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