SKF Indian and FAG bearings are the two prominent players in the Indian market. SKF India's and FAG's share in the total Indian market is around 30% and 14% respectively. The demand for bearing industry is derived from demand in two key user segments – automotive and industrial sector. The automotive industry is the largest user segment for Indian bearing market accounting for almost 50 % of demand. The fortunes of the bearing industry in India are linked to the growth of the automotive industry.

The Bearing Industry as a whole reported a mediocre performance as a whole for the quarter ended September 2009. The Aggregate Sales revenue of 9 companies for the quarter ended September 2009 stood at Rs 873 crore which was 8% lower when compared with corresponding period last year. The Aggregate OPM decreased by 350 basis points to 13.5%. The Aggregate Operating Profit for the quarter under review stood at Rs 118 crore which was lower by 27% when compared with corresponding period last year. The resultant Aggregate PAT stood at Rs 71 crore which was 24% lower when compared with corresponding period last year.

SKF India has earmarked green field expansion plans in Haridwar and Ahmedabad. The Haridwar facility will be exclusively used for automobile industry and Ahmedabad facility is for large industrial bearings. Previously company used to largely trade in the industrial bearing segment, but subsequent to the coming up of the plant at Ahmedabad, lot of manufacturing activities will be undertaken in this plant. The company would incur a capex of about Rs 450 crore both plant put together which will be operational from Q1 CY'10 (calendar year ending). The plant will take about 6 month's timeframe to ramp up the production. At peak level the plant has capacity to produce additional sales of about Rs 600-800 crore, both plants put together.

The fortunes of the Bearings sector are closely linked with the Automobile Sector. Since April 2009 on a sequential basis, there is revival in the Indian automotive sector. However although the growth in automobile bearings particularly from two wheelers and passenger cars started from April-May'09 onwards on net basis for the entire year from Jan 2009 –Oct 2009 the growth of automobiles bearing stands nearly flat to low single digit growth as there was lot of inventory correction in the bearing Industry. On the other hand, the industrial bearing industry continued negative growth in H1CY'09. However slowly the growth has started to pick up and by this time all the user industries are showing signs of recovery, although in single digits. Overall we have a neutral view on the sector with a positive bias over a short to medium term horizon