Tuesday, 24 October 2017

Schaeffler India to invest Rs.500-600 cr in expansion

24/10/2017

PUNE: Schaeffler India, which is now in the process of merging its two entities, INA Bearings and Luk India, with itself is drawing up major expansion plan to seize the emerging business opportunities.

The Indian arm of Germany’s automotive and industrial parts maker is planning to invest Rs. 250-300 crore per annum over the next two years. “We will invest this from next calendar year. This will be made in product, capacity and R&D expansion programmes. These will be only brownfield expansions,” said Dharmesh Arora, MD, Schaeffler India (formerly FAG Bearings India Ltd) The company will commence work for second plant at Pune site (INA Bearings’ unit) by December this year as the current capacity is full. Capacity expansion plans for other units are being finalised.

The combined entity Schaeffler India offers a full range of solutions in engine, transmission and chassis segments for automotive applications. In bearings segment, its range will expand to include needle roller bearings, linear roller bearings and precision spindle bearings.

The company, which will have total revenues in excess of Rs. 3600 crore with a staff strength of 3000 and four plants, will have about 53 per cent of revenues in automotive segment and 47 per cent in industrial category, said Arora.

He expects group’s automotive business to grow faster than industrial segment in the near term in view of new emission standards and other changing consumer behaviours in vehicle segment. “Due to change in emission norms, powertrains are being upgraded by all auto OEMs. There is a big opportunity for us here as the products we produce will help make engines more efficient and reduce emissions. Also, there are more opportunities in transmission automation,” said Arora. He expects that by 2025, about 15 per cent of all cars to have automatic transmissions.

Schaeffler, which has been present in India for more than 50 years, also sees bigger opportunities in buyer’s shift from A segment to B segment cars. “The contents per vehicle will be more and it will provide us good business,” he added.

On the industrial side, the business is stable and mature. Segments such as railways, metro, steel, mining and construction where the company has strong presence will continue to provide opportunities in view of Central government’s infrastructure and manufacturing push.
Schaeffler Group believes that under one strong Indian entity, there will be a diversified and high growth product offering both in auto and industrial segments besides significant revenue and cost synergy potential.

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