SKF India Ltd. aims to focus more on the emerging segments like electric vehicles and renewables after subdued financial results in the June quarter. There will be no change in long-term growth projections for the company despite a muted April–June period, according to Managing Director Mukund Vasudevan.
In the June quarter, SKF India reported a 4% increase in revenue to Rs 1,206 crore, while the net profit was up 3% to Rs 159 crore. The Ebitda grew 6% to Rs 194 crore, but the margin narrowed to 16.1% from 18.1%.
The growth in SKF India's top line was impacted in the first quarter of the current financial year due to an increased focus on pruning less-profitable customers and product lines. However, the impact on profit was mitigated by an increase in traded products, despite rising costs, Vasudevan told NDTV Profit in an interview.
"Looking at the long-term perspective, our trajectory remains unchanged, with a consistent 12% CAGR in top-line growth over the past four years. One quarter's performance does not alter this trajectory," he said.
The managing director pointed out that SKF India experienced a 25% growth in the heavy industry and metals sectors in the June quarter.
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SKF India is placing substantial emphasis on capital expenditure and infrastructure, particularly in railways. The company is also keeping a close watch on emerging markets like electric vehicles and renewables, though these sectors currently contribute a smaller portion to their overall business, according to Vasudevan
"We will invest in emerging sectors like EVs but at a pace aligned with their growth potential. We will implement some changes, particularly in the EV market, which is still relatively small," he said. "We'll allocate resources to develop this market and build a sales team, but not disproportionately compared to where we see more substantial growth."
The company's traditional markets, such as two-wheelers and four-wheelers, remain crucial, and it needs to protect its base while pursuing new opportunities, according to Vasudevan.
He underscored that SKF India was working on increasing localisation and refining its portfolio management in a bid to address the issue of margins. The company is constantly improving its manufacturing processes to enhance efficiency and have over 105 localised products in the market.
Vasudevan said SKF India effectively managed the impact of supply-chain challenges, particularly higher shipping costs and disruptions in west Asia.
"We manufacture 60% of our products locally and import 40%. This has allayed the effects of supply-chain disruptions," he said. "The primary impact has been on the availability of imported components, resulting in delayed deliveries rather than significant margin pressure."
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