For the quarter ended March 2010, the quarterly numbers of SKF India were better than general street expectations. For the quarter under review total Sales crossed the Rs 500 crores mark and the company was able to report impressive OPM (Operating Profit Margin). Robust demand from the key user industry segments such as automobiles and Industrials aided the company to report healthy performance and notable rise in margins. The OPM increased notably by 570 basis points to 13.2% (quarter ended March 2009 OPM stood at around 7.5%). There were no one offs during Q1CY'10. The management is reasonably confident of maintaining Q1CY'10 margins for the balance part of CY 2010.

SKF India inaugurated its Haridwar plant during the month April 2010. The factory is set up with an overall capital outlay of Rs 150 crore and utilizes state of the art technology for manufacturing Deep Grove Ball Bearings for the automotive sector. When fully ramped up the Haridwar plant would generate revenue to the tune of Rs 200 crore per annum. It will have a production capacity of 60 million bearings annually when fully operational.

SKF group also continues to grow in India and the group has further invested in a new large size bearing factory in Ahmedabad (also inaugurated in the month April 2010). In a time frame of 5 years the Ahmedabad Plant is expected to have a turnover of Rs 900 crore. The domestic sales of the Ahmedabad factory will be handled through SKF India. Currently the large size bearing market in India is in excess of Rs 1000 crore, out of which around 80% of the requirement is imported.

For the FY'11 NRB bearings has chalked out a capex plan to the tune of Rs 50 crore. The capex would be incurred towards capacity addition and new products. During the current fiscal (i.e. FY'11) the management is targeting a 30% in sales.

The bearings industry as a whole reported impressive set of numbers for the quarter ended March 2010. The Aggregate sales increased by 42% while on the back of 240 basis points rise in Aggregate OPM the PAT increased sharply by 122%. The Industry is on a strong footing on the back of robust demand scenario from the key user industry segments such as Automobiles and Industrials. The capacity expansion carried out / to be carried out by players within the sector which is operational and / or would be operational is expected to yield good returns. Overall we have a neutral view on the sector with a positive bias over a short to medium term horizon