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Schaeffler India held its conference call on 18 April 2018 which was addressed by D Arora, CEO
Key Highlights
At proforma level (after considering merger of Schaeffler India, Ina Bearings and Luk India Pvt ltd), net sales for Mar 18 quarter stood at Rs 1113 crore (up by 16.5% YoY). Ebidta margin stood at 16.8% and PAT stood at Rs 111.10 crore up by 10% YoY.
The recent hike in custom duties on imports will affect the company. It has increased cost of imports by around 1% for the company.
Overall, the GST effects have stabilized. The industrial activity is moving on. Budget allocation towards infra and Railways is encouraging for CY 18.
Net sales grew by around 14.5% YoY in Mar 18 quarter driven by Automotive segment (grew by 26.5%) and industrials which grew by 14.4%.
Manufacturing sales account for around 58% of total sales in Mar 18 quarter; exports were around 15% while the trading sales accounted for around 27%. Distribution segment account for around 35% of total sales of the company and rest is from OEMs.
Exports were lower during the Mar 18 quarter. The company exports to its group companies who in turn perform the final sales. Exports primary is from industrial segment
Ebidta margin in Mar 18 quarter was under pressure due to adverse product mix and lower distribution sales as compared to past. Higher steel prices and other commodity prices also affected the business.
The company has increased the finished products prices from 1 April 18 onwards to compensate for higher input costs.
If one sees sales from Schaeffler India (erstwhile Fag bearing) then of the total sales, 81% comes from industrials and 19% is automotive. However, considering the proposed merger with Ina Bearings and Luk India pvt ltd, of the total sales, Automotive would account for 57% and Industrial around 43%.
The company will spend around 40 M Euro for CY 18 on capex. Construction of 2nd plant in Pune should be over by end of CY 18. Enhancing plant building space in Savli will start by H2 of CY 18.
Utilization level continues to remain at around 85-90%.
Wind bearings have seen lower demand due to some structural and policy issues within the sector.
Ina Bearings have grown by 10% in Mar 18 quarter. Around 75% of its sales come from passenger vehicle business which has overall grown by only 6% in Mar 18 quarter. Some timing difference occurred on volumes from customers, which will ramp as the time to come.
Merger to be effective by end of FY 18.
Overall, management remains optimistic about the growth prospects going forward. Domestic outlook remains strong while exports will pick up gradually. Company will try to maintain the margins for CY 17 in CY 18 as well, but raw material prices continue to remain a challenge.
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