SKF plans 50 percent increase in its capex over next three years

Bucking its capex trend of the previous 4-5 years, SKF India –a leading supplier of bearings to auto and other sectors — now plans to increase it by 40-50 percent over next three years.

The investment plan will see introduction of new products, plant capacity enhancement and increasing localisation. The company usually invested around Rs 150 crore annually as capex, the company’s top leadership told Autocar Professional. 

Sweden-headquartered SKF supplies customised bearings, seals and related products for wheel-end, driveline,e-powertrain, engine, suspension and steering applications to manufacturers of cars, light and heavy trucks, trailers, buses and two-wheelers. 

SKF also has a big presence in the vehicle aftermarket segment where it offers spare parts, both directly and indirectly through a network of more than 550 distributors in India. The revenue contribution from the automotive segment for SKF during FY22 stood at close to 42 percent while the rest were from industrial segment and exports. 

Shailesh Sharma, whole time director and head of manufacturing at SKF said the company’s overall capacity utilisation at load level currently stands at about 85 percent. “But as of now we have a little bit of a shortage of capacity in a particular product line I am talking about and that is hub-ball and taper hub assembly. This is more of a wheel application in which we are running short of capacity and we are going to invest in it and it is in the pipeline,” said Sharma. 

Secondly, SKF has recently invested in developing a truck hub in Pune, as its current capacity is  booked fully by auto major Tata Motors. SKF expects demand from other existing and new OEM players to pick up significantly in coming months. 

While the automotive side of the business remains 95-97 percent localized, the industrial segment needs further work to be done. The segment for SKF includes construction equipment, mining, infrastructure amongst others. Currently 35-40 percent of production is localized. With Covid19 followed by the Ukraine-Russia war literally breaking the supply chain, SKF now intends to strengthen the local supply chain to safeguard itself from external disruptors. 

The Indian bearings industry is expected to grow at 10.9 percent and is expected to touch US$ 3.4 billion by 2027. The robust demand in automotive, construction and mining equipment markets is expected to boost the ball bearing market. Ball bearings play a crucial role in the automobile and were impacted in 2020 due to the pandemic, but showed demand rebound in 2021. The automotive segment dominated the market and held close to 50 percent  share in 2021. As the demand for vehicles with technologically advanced solutions is escalating, vehicle manufacturing is on a rise, in turn increasing demand for instrumented products such as ball bearings.