The current slowdown in the automotive market in India has triggered the delay of auto component major AB SKF's Rs 150 crore (Rs 1.5 billion) manufacturing facility at Haridwar. The company had earlier planned the 10 acres plant to go onstream by the end of this year. "We have decided to postpone work at the Haridwar plant due to a slowdown in market demand. We expect to commission the plant in the first quarter of 2010 although we are yet to take a final decision," AB SKF President and CEO Tom Johnstone said.
AB SKF, which operates in the country through its subsidiary SKF India, currently has three manufacturing facilities, two in Bangalore and one in Pune, with a third one being constructed in Ahmedabad. "We feel that the current market demand can be met with our facilities in Bangalore and Pune," he said, adding its new facility at Ahmedabad, being set up at an investment of Rs 300 crore (Rs 3 billion), was expected to be commissioned next year.
The current global meltdown has had an impact on the company because of which it also shut down one of its North American plants; the Indian operations could not escape the impact, Johnstone said. "In the third quarter of this year, we had parted ways with 100 temporary workers," he said. However, he added, the company did not see any major changes on employment pattern. "In fact, when our two facilities in Ahmedabad and Haridwar go on stream, our employment level will increase to 3,300 from the current 2,600," he said.
Johnstone said the slowdown in the automotive market has resulted in many of its major clients in India cutting down orders 'to the tune of over 10 per cent. The Indian auto industry had recorded a 14.42 per cent decline in total vehicle sales in October at 8,65,404 units as against 10,11,221 units last year.
Johnstone said the company would continue to invest regularly in India to ramp up its business. "On a regular basis we invest about Rs 100 crore (Rs 1 billion) for every 18 months," he said, adding that the company has bagged an order of over 300 million euro to supply bearings to wind energy major Suzlon in the country. It will start supplying the bearings to Suzlon from next year from its overseas plants till its Ahmedabad facility goes onstream in the second quarter of the next year. "Our agreement with Suzlon is for five-and-a-half years," Johnstone said.
Currently, SKF India's industrial segment accounts for 60 per cent of its total revenues with the rest coming from the automotive business. In the third quarter ended September, the company reported a net sales of Rs 430.4 crore (Rs 4.30 billion) with a profit after tax of Rs 37 crore (Rs 370 million). Approximately10 per cent of the company's total revenue comes from exports to Europe, the US and Brazil, according to Rakesh Makhija, managing director, SKF India.
