SCHAEFFLERNSEFebruary 28, 2025

Schaeffler India Limited

8,187words
84turns
13analyst exchanges
3executives
Management on call
Harsha Kadam
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Hardevi Vazirani
DIRECTOR, FINANCE AND CHIEF FINANCIAL OFFICER
Gauri Kanikar
HEAD, INVESTOR RELATIONS PUBLIC
Key numbers — 40 extracted
6.8%
The Q4 estimates that are coming out is the India GDP growth rate would be in the range of about 6.8%. This is coming on the back of good manufacturing output in the last quarter, that has started to
4%
an see from the index of industrial production, you see an uptick in the last quarter going up to 4%. And this is, again, coming on the back of good movement that we have seen in the power generatio
3%
And as you can see over the preceding quarter, grew 4%, kicking the annual growth rate for almost 3% at an annualized level. One cause of concern, obviously, in the country, has always been the food
5.6%
as always been the food inflation. And as you can see, the consumer price index too creeped up to 5.6% in the last quarter, while the Reserve Bank of India has been trying to get its hands around and
rs,
he core sectoral performance. What you see here is the growth of each of the core industrial sectors, starting with cement production in the country. If you look at the last quarter, you will find the
4.5%
r same period. And overall, the cement production in the country has demonstrated growth of about 4.5% over the preceding year. Steel production, which has a pretty heavy weightage in terms of the e
17.9%
. Steel production, which has a pretty heavy weightage in terms of the economic contribution at 17.9%, also grew at 6.6%, especially in the last quarters you would have seen, you can see a consistent
6.6%
, which has a pretty heavy weightage in terms of the economic contribution at 17.9%, also grew at 6.6%, especially in the last quarters you would have seen, you can see a consistently strong better pr
10.3%
sector. Talk about coal, also we saw a strong uptick in the last quarter. And with coal adding to 10.3% weightage, grew about 7.4%. Truly enabling the industrial production what you saw earlier slide,
7.4%
o we saw a strong uptick in the last quarter. And with coal adding to 10.3% weightage, grew about 7.4%. Truly enabling the industrial production what you saw earlier slide, helping it to get it up to
20%
k about energy, electricity generation in the country wherein the contribution weightage is about 20%. Here, again, we have seen better performances month after month compared to the same period last
15.5%
g here is the two-wheelers, the first chart, which grew PUBLIC at 15.5%, a strong growth this year compared to last year. And what you see is a business cycle dip in the
Guidance — 19 items
Harsha Kadam
opening
“Here we had a project to digitally connect with the customer through electronic data interface to convert all transactions from a manual mode to a digital mode.”
Harsha Kadam
opening
“And we will continue to keep the focus on improving the cash flow going forward into this quarter as well.”
Harsha Kadam
opening
“And we are rightfully on track to be the leading motion technology company, as we claim.”
Harshit Patel
qa
“Sir firstly, could you give us an update on the e- axle project, have we started commercial production of this?”
Harshit Patel
qa
“So, I understand that we have incurred quite a lot of heavy capex in the past four to five years, so will we maintain the same run rate or now there will be a moderation in the overall capex that we will do?”
Hardevi Vazirani
qa
“So, we will be moderating it a little bit, but not so much that it will reduce significantly like to a 50% level or something.”
Hardevi Vazirani
qa
“It will be slightly lower than that like 10%, 20% lower than that per year.”
Harsha Kadam
qa
“Because this segment is the amalgamation of so many end user industries, so if you could give us some flavor on this, that will be very helpful.”
Hardevi Vazirani
qa
“So, INR 300 crores would be an achievable kind of target for us per quarter.”
Pramod
qa
“And the second one is with regard to KRSV, how much timeline you think will be required to turn it around on EBITDA or accelerate the momentum?”
Risks & concerns — 8 flagged
But before that, I would like to say that Q4 was quite a volatile quarter for us in terms of the business environment with a lot of uncertainties.
— Harsha Kadam
One cause of concern, obviously, in the country, has always been the food inflation.
— Harsha Kadam
And as you can see, the consumer price index too creeped up to 5.6% in the last quarter, while the Reserve Bank of India has been trying to get its hands around and contain it within the manageable levels, this is an area of concern.
— Harsha Kadam
And exports, which were a challenge in the first two quarters of last year also came back in the last quarter, delivering almost a 23.5% growth over the preceding quarter of last year, and what you see at a 12-month period, 11% growth.
— Harsha Kadam
In summary, in spite of a challenging and uncertain year in the market environment, we were still able to deliver a double-digit growth rate, which was broad-based across businesses.
— Harsha Kadam
And what you see is just a moderation or a course correction that was required because of the slowdown in demand from Europe, which is the main market for us.
— Harsha Kadam
So, we saw some weak situation there and we are hoping to see it improve now.
— Harsha Kadam
And while the segment is still weak, but we believe that we should continue to invest in better technologies, products for this segment as well.
— Harsha Kadam
Q&A — 13 exchanges
Q
Yes please.
Management
Q
Hi, thank you very much for the opportunity. Sir firstly, could you give us an update on the e- axle project, have we started commercial production of this? And where are we in the localization journey of this particular solution? PUBLIC
Harsha Kadam
Yes. Thank you for the question. And yes, rightfully we have started to localize the axle production. We have started to bring in machines in a phased manner. And we are staying the course when it comes to our investment plans towards localizing the product here in India. What we are waiting for is our customers also to now launch the products so that we will begin to see traction in the marketplace. And we are hopeful very soon we are going to see the products operate on the roads. Understood. Sure. Sir, secondly, you mentioned that you have been rationalizing the capex because of the slightl
Q
Hi. Good morning and thank you for the opportunity. My first question would be on the export side. So, while you did mention that exports are looking up and you are seeing some momentum, I just wanted to get some sense on which are the geographies you are seeing the pick-up happening? And while you look at it from a run rate standpoint, it's around INR 250 crores. We had touched about INR 300 crores per quarter revenue from exports a couple of quarters back. So, are you seeing a steady run rate of touching INR 300 crores as the first milestone, wherein which you will probably mention that expo
Hardevi Vazirani
Yes, if exports come back to normalcy, then we have capacity to cater the export market for INR 300 crores per quarter. And we are expecting that it is likely to return this year if the geopolitical situation is brought under control, and which is in the news also. So, INR 300 crores would be an achievable kind of target for us per quarter. And what you see is just a moderation or a course correction that was required because of the slowdown in demand from Europe, which is the main market for us. But however, that does not mean that we are going to keep the investments at these levels. We are
Q
Sorry, I want to make a small correction. I did mention our majority of the exports, 80% is to Europe, it is 60% and not 80%. I just want to stand corrected.
Management
Q
Yes. Thanks. So, coming to the export side where you talked about Europe war should be a tailwind for you. How do you look at the currency depreciation which has happened? How does it compare you versus the peer set of the Schaeffler? And does it give you a more scope for growth in the coming years?
Hardevi Vazirani
Okay. So yes, when it comes to it, 60% of our business with Europe is in Indian rupees, so it does not impact us for this part of the world that is Europe, where the export as well as import both is in Indian rupees. When it comes to USA, we have only close to INR 100 crores worth.. Less than INR 100 crores. Less than INR 100 crores, and I think appreciation or depreciation by 5%, 10% is not going to impact much. I would say the dollar strengthening is not making an impact on our export business. Sure. Thanks. And the second one is with regard to KRSV, how much timeline you think will be requi
Q
Yes. Hi. Thank you for the opportunity. And congratulations on the good set of numbers. Sir just wanted to understand on the aftermarket side. So, why did we see a decline? And how do you see the segment ramping up post your more focus on the BS-VI product portfolio?
Harsha Kadam
There are a couple of reasons for that. One obviously is this strong, we have seen a strong uptick coming from the OEM side of the business. So obviously the OEM market garners a lot of production capacity, that happened as well and gets a priority in terms of supply. This is something we want to redefine going forward, we are working on that. The second obviously is also, we see some shift in the market from the pure automotive aftermarket business to the OEM demands as well going up, is rightfully in the right direction. As more OEM vehicles come into the market, the OEM customers too are st
Q
Yes, hi. Good morning, sir, and thanks for taking my question and congrats on a good set of numbers. Sir, basically just wanted to understand, right, at a broader level, like for the full year we have done good growth, double digit growth in Automotive Technologies. So, if you could just sort of give us some idea of what have been the drivers because the industry volume growth has been relatively muted. So which categories, I mean, we did make a lot of investments in Hosur, so how are we ramping up there? And how do you see the prospects, assuming that even if the industry growth remains at si
Harsha Kadam
I suppose you are referring to the automotive space. And if I can break it up into the passenger vehicles segment wherein, we have made investments, and we will continue to make investments on the e-mobility side of the business. Since we are seeing the market gravitating towards electric vehicles already, and that's beginning to happen. So, we have rightfully made investments in the past, we will continue to do that going forward as well. Talk about the internal combustion engine, which is the main stay of the portfolio of products that our customers bring to the market, we do see with a coup
Q
Hi. Good morning, sir. Thanks, as always, for your time. Just on the industrial segment, if you could touch upon how are you seeing demand kind of shape up across all of your key verticals, wind, rail? And the context really is, are you seeing any there in any of these segments? I remember wind of course has started to do well for the last few quarters, yes, so that's my first question.
Harsha Kadam
First things first, we have seen our industrial business do very well in the last year. Almost all the industrial sectors have performed well for us compared to previous years, yes. Some of the strong performance obviously came in from the raw material sectors, as we call it, which is core processing or metal industries as such, and we are also seeing a good uptick coming from power transmission business. Our focus has been on the industrial distribution business. We have done some good work in the last year by launching new programs which are bringing in more organized and structured way of w
Q
Yes. Thank you, sir. My question is on the on the capex moderation, you mentioned that you want to kind of be more efficient with the capex already done, and maybe from a demand outlook point of view also it isn't as great as it earlier was.
Management
Q
Yes. So, my question was, so you earlier mentioned that you are moderating your capex so ahead due to the demand moderation on the domestic front or the export side, if you could give some color?
Hardevi Vazirani
No. So, on both sides we have registered double-digit growth, as you have seen. So, it is not that the demand is moderating. We are not focusing on capex and personnel efficiency because we PUBLIC have set up the buildings in Hosur, in Savli, in Talegaon. Now it will be only filling up them with the machines which are required for production. So, in fact, whatever capex we had up close to INR 1,500 crores, over INR 300 crores was into buildings and infrastructure. So that investment will not happen, but rest of the investment close to INR 400 crores will continue to happen per year. Got it. So
Q
Yes, hi. Sir just one thing on the localization side, so where would we be on the localization front as of now? And like what are your targets in terms of localizing your product portfolio in India?
Hardevi Vazirani
So, as of December 2024, we were at 76% of localization. The value of our own production and the sales from own production has significantly increased. However, our top line growth is even more than the production growth, so we are at 76%. In the mid-term we are aiming for 80% localization.
Q
Thank you everyone. Thank you for joining us today. If you have any further queries, please do reach out to me or drop me an e-mail at gauri.kanikar@schaeffler.com. We now close the call. Thank you and have a good day.
Management
Q
15th Floor, ASTP (Amar Sadanand Tech Park), Baner, Pune – 411045, Maharashtra
Contact Details
Investorsupport.IN@schaeffler.com www.schaeffler.co.in CIN: L29130PN1962PLC204515 PUBLIC PUBLIC
Speaking time
Harsha Kadam
19
Hardevi Vazirani
15
Moderator
14
Krupa Shankar
5
Sonal Gupta
5
Harshit Patel
4
Pramod
4
Himanshu Singh
4
Ankur
4
Gauri Kanikar
3
Opening remarks
Gauri Kanikar
Thank you. Good morning, everyone, and welcome to Schaeffler India Limited's earnings conference for fourth quarter and full year ended 31st December 2024. We have with us from the management today, Mr. Harsha Kadam – our Managing Director and Chief Executive Officer; and Ms. Hardevi Vazirani – our Director, Finance and Chief Financial Officer. As always, Mr. Kadam will first take us through a short presentation on the results, after which we will open the for questions. Thank you and over to you, Mr. Kadam.
Harsha Kadam
Hello. Good morning, and a warm welcome to all the investing partners to this earnings call of Q4 and the 12 months 2024. Let me take this opportunity to thank you briefly through the presentation. But before that, I would like to say that Q4 was quite a volatile quarter for us in terms of the business environment with a lot of uncertainties. Q4 was a challenging quarter in terms of the business environment and yet I am happy to share the results that we have been able to get through. But before that, let me start my presentation by moving to Slide #2, where I love to begin my presentations with recognitions from the most important stakeholders for us, the customers. What you see on the slide is three awards that we won in the quarter, Q4, from our customers. The first one from Daimler India Limited and this was for the resilient supply chain that we were able to maintain in the quarter and for the entire year. And particularly, the supply transmission products to the customers. And th
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