Smooth Operator
Outlook Business|May 24, 2019

With A Portfolio Spanning Across Automotive And Industrial Segments, Schaeffler India Is Driving In Top Gear Despite Adverse Macro Conditions.

Smooth Operator

Ask Dharmesh Arora, CEO of Schaeffler India, to name some of the company’s big customers, and the response is atypical. With a big smile, he candidly says, “Everyone”. It’s not exaggeration or hubris. Whether it’s the giants in the two-wheeler space such as Bajaj Auto, TVS Motor and Royal Enfield or the big vehicle manufacturers in the country such as Maruti Suzuki, Mahindra and Mahindra, Tata Motors, Hyundai Motor, Renault, Nissan and Kia Motors — the Germany-based Schaeffler Group’s India arm provides auto components to almost all the established brands.

But Schaeffler India is more than an auto component manufacturer. With 40,000 products, the Schaeffler Group makes components for steel, cement, power, renewable energy, railways and aerospace manufacturing factories. Currently, the industrial segment accounts for around 39% of the revenue and provides protection against the cyclicality of the automotive segment, which contributes 51% to the top line. In industrial segment, growth has been led by industrial distribution, raw material and railways.

“Our revenue is very evenly split between automotive and industrial segments (see: The perfect mix),” says Arora, who joined Schaeffler India in 2012.

While he agrees their business model doesn’t insulate the company from the ups and downs of the auto cycle, Arora says strong growth in the industrial segment in the past six months has helped them maintain their impressive growth. In that period, the auto industry faced a severe slowdown because of factors such as high crude prices, rise in insurance cost and credit crunch. Despite this, in 2018, the company registered sales growth of 11.27% to 45.61 billion. The automotive segment grew by 15% (YoY) and the industrial by 19%. The export segment, which comprises mainly of industrial products and contributes 9% of the top line, went up by 9%.

This story is from the May 24, 2019 edition of Outlook Business.

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This story is from the May 24, 2019 edition of Outlook Business.

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