SKF India Limited , a leading manufacturer of bearings and lubrication systems, has taken a significant step towards restructuring its operations. In a recent National Company Law Tribunal (NCLT) convened meeting, the company's equity shareholders approved a scheme of arrangement to demerge its industrial business into a separate entity, SKF India (Industrial) Limited.

Demerger Details

The approved scheme will result in the creation of two independent companies:

1. SKF India Limited - focusing on the automotive segment
2. SKF India (Industrial) Limited - dedicated to the industrial segment

Under the terms of the demerger, shareholders will receive one share in the new industrial company for every share held in SKF India Limited. This one-to-one share entitlement ratio was determined based on a report by PwC Business Consulting Services, registered valuers, and was deemed fair and reasonable by Saffron Capital Advisers Private Limited, an independent SEBI-registered merchant banker.

Timeline and Listing

The company expects to obtain NCLT approval by September-October 2025 and aims to complete the entire demerger process by Q4 2025. Upon effectiveness of the scheme and subject to necessary approvals, the equity shares of SKF India (Industrial) Limited will be listed on both BSE Limited and National Stock Exchange of India Limited.

Strategic Rationale

Mukund Vasudevan, Managing Director of SKF India, explained the rationale behind the demerger: "The purpose of this demerger is to create two fit-for-purpose companies, independently world-class companies. Both the automotive and industrial entities will be tuned to serve their respective market needs, with tailored business models, manufacturing processes, and innovation strategies."

Business Outlook

The demerger is expected to drive growth and profitability for both entities:

• Automotive Business: Currently 95% localized, with plans to expand product categories and align with industry trends such as electric vehicles and last-mile delivery.
• Industrial Business: Presently around 50% localized, with a target to increase localization to 70% over the next three years.

Increased Capital Expenditure

SKF India has significantly raised its capital expenditure guidance from about ₹150 crore to ₹350-400 crore per annum. This increase is attributed to:

1. Capacity expansion to meet growing demand in both automotive and industrial segments
2. Construction of a dedicated factory for the industrial business

Employee and Shareholder Considerations

The company assured that employees would be appropriately allocated between the two entities, maintaining SKF's commitment to employee welfare. For shareholders, the demerger aims to create more value by establishing two specialized, high-performing companies.

Conclusion

As SKF India moves forward with this strategic demerger, the company anticipates that the resulting fit-for-purpose entities will be better positioned to serve their respective markets, drive innovation, and ultimately deliver enhanced value to shareholders. The management remains focused on executing the demerger process efficiently while continuing to grow the business in India's dynamic market landscape.

SKF India Limited , a leading manufacturer of bearings and lubrication systems, has received shareholder approval for its proposed demerger plan. The decision was made during a special meeting convened as per the directions of the National Company Law Tribunal (NCLT), Mumbai Bench, held on July 14, 2025.

Demerger Details

The approved scheme involves the demerger of a part of SKF India's business into a new entity called SKF India (Industrial) Limited. This strategic move aims to streamline operations and potentially unlock value for shareholders.

Shareholder Meeting Highlights

• The meeting was conducted through video conferencing, in compliance with regulatory guidelines.
• A total of 59 shareholders, representing 2,60,96,069 shares, participated in the virtual meeting.
• The resolution to approve the Scheme of Arrangement was passed as a special resolution.

Voting Results

The voting results demonstrated overwhelming support for the demerger plan:

Management Commentary

Mr. Kuldeep Kumar Kareer, the NCLT-appointed chairperson for the meeting, explained the salient features and rationale behind the demerger scheme to the shareholders. The company's management, including Mr. Mukund Vasudevan, addressed queries from shareholders during a Q&A session.

Next Steps

With shareholder approval secured, SKF India will now proceed to seek final approval from the NCLT for implementing the demerger. The company will keep stakeholders informed of further developments through appropriate disclosures to the stock exchanges.

Investors and stakeholders are advised to monitor official company communications for updates on the demerger process.