Schaeffler India Limited , a key player in the mobility components sector, has reported robust financial results for the second quarter, building on its strong performance from the previous year. The company has also made significant changes to its auditing arrangements.

Q2 Financial Highlights

Schaeffler India delivered impressive quarterly results with consolidated net profit rising to ₹2.89 billion from ₹2.36 billion in the same quarter of the previous year, marking a 22.5% increase. Revenue showed strong growth, increasing to ₹24.35 billion compared to ₹21.16 billion in the same period last year, representing a 15.1% year-over-year growth.

The company's operational efficiency is evident in its EBITDA performance, which grew to ₹4.56 billion from ₹3.69 billion, a substantial increase of 23.6%. Additionally, the EBITDA margin improved to 18.73% from 17.43% year-over-year, indicating enhanced profitability.

Annual Performance (Previous Year)

These quarterly results build upon Schaeffler India's strong performance in the previous year:

Business Segments and Strategic Moves

Schaeffler India operates primarily in two segments:

1. Mobility components and related solutions (including Automotive Technologies, Vehicle Lifetime Solutions, and Bearings & Industrial Solutions)
2. Others

In a strategic move during the previous year, the company divested its Chain Drive business to CATENSYS India Private Limited through a slump sale arrangement, which generated an exceptional income of ₹149.80 million.

Corporate Governance Update

In a significant development, Schaeffler India's Board of Directors has approved the appointment of PriceWaterhouse, Chartered Accountants LLP as the company's statutory auditors. The appointment is for a term of five consecutive years, starting from the 63rd Annual General Meeting and continuing until the conclusion of the 68th AGM. This decision is subject to shareholder approval at the upcoming AGM.

The Board meeting where these decisions were made took place on October 31. The financial results presented were reviewed by Walker Chandiok & Co LLP and include both standalone and consolidated statements covering the holding company and its subsidiary KRSV Innovative Auto Solutions Private Limited.

Outlook

Schaeffler India's continued strong performance in the recent quarter, following an impressive previous year, demonstrates the company's resilience and strategic positioning in the mobility components sector. The substantial growth in profit, revenue, and key financial metrics indicates the company's ability to capitalize on market opportunities and effectively manage its operations in a dynamic economic environment.

The appointment of a new statutory auditor for a five-year term suggests a commitment to maintaining high standards of financial reporting and corporate governance.

Investors and industry observers will likely keep a close watch on Schaeffler India's performance in the coming quarters to see if this growth trajectory continues, as well as how the new auditing arrangement might impact the company's financial practices and reporting.

Schaeffler India , a leading industrial and automotive component manufacturer, has announced ambitious plans to invest INR 4,500 crore over the next five years until 2030. This strategic move aims to bolster the company's manufacturing capabilities and increase its localization efforts in the country.

Localization Drive and Capacity Expansion

Schaeffler India has already made significant strides in its localization journey, investing INR 1,700 crore over the past three years. This investment has yielded impressive results, with the company achieving a localization ratio of 79%, up from 74% previously. This means that 79% of Schaeffler India's sales now come from products manufactured in its Indian plants.

Hardevi Vazirani, Director of Finance and CFO at Schaeffler India, emphasized the positive impact of localization on the company's performance: "Due to localization, the EBITDA margin has gone up. Within those investments, we have backward integration, land and buildings, a lot of margin improvement projects and relevant investments."

Capital Expenditure Plans

For the current year, Schaeffler India has earmarked a capital expenditure of INR 400.00 crore, with similar amounts planned for the following year. This forms part of the larger INR 4,500.00 crore investment plan announced by the group CEO for the period up to 2030.

Product Portfolio and E-mobility Focus

Schaeffler India's product portfolio currently comprises 60% bearings and 40% non-bearings. While the non-bearing segment has achieved a localization ratio of nearly 90%, the company sees further opportunities to improve localization in the bearings segment.

In the rapidly evolving e-mobility sector, Schaeffler India has secured a significant business win with Tata Motors for the supply of e-axles for the Tata Harrier EV. The company is implementing a phased localization strategy for this technology, with plans to increase local content gradually.

Harsha Kadam, Managing Director and CEO of Schaeffler India, explained the company's approach to e-mobility: "We very well have it in our strategy to localize going forward. We have already started to localize some part of the production process. The phase two of the localization is underway and hopefully by mid next year, we are going to now bring in the parts to start the assembly of the e-axle."

Research and Development Capabilities

Schaeffler India has significantly enhanced its R&D capabilities, particularly in the e-mobility space, following the integration of Vitesco operations. The company now operates with 910 engineers at its Bangalore R&D center, focusing on developing solutions for both global and Indian markets.

Export Performance and Future Outlook

The company's export revenues peaked at INR 1,100.00 crore in 2022, with the current mix standing at 50% to Europe, 10% to the USA, and 40% to Asia. While export growth is expected to moderate, Schaeffler India anticipates increased demand from Southeast Asian countries and Korea.

Wind and Railway Segments

In the wind energy sector, Schaeffler India is preparing for the shift towards higher capacity turbines, beyond 4 megawatts. The company is strategically gearing up to manufacture larger diameter bearings for these applications.

For the railway segment, Schaeffler is well-positioned to cater to the Indian Railways' focus on safety, reliability, and comfort. The company is particularly strong in supplying components for electric locomotives and is prepared to meet the demand for higher-performance products in passenger locomotives.

As Schaeffler India continues to invest in localization and expand its product portfolio, the company is well-positioned to capitalize on the growing opportunities in both the automotive and industrial sectors in India.