SCHAEFFLER - Schaeffler India Limited Share Price

Q1: Can you elaborate on whether any OEMs are asking you to increase production capacity due to a demand surge following the GST reforms?

A1: Our discussions with OEM customers indicate they are optimistic about upcoming demand. The GST reforms serve as a catalyst for this, but immediate traction was limited since the reforms were announced in September. Thus, we haven't seen corresponding sales impacts yet. However, we do expect stronger demand in the automotive sector as customers plan their production schedules accordingly.

Q2: With margins improving over the quarters, do you see room for further margin enhancement as you capitalize on recent capacities?

A2: We're optimistic about sustaining and potentially enhancing our margins. We've invested in capacities and localized production to maximize our competitive advantage, particularly in the domestic market where 85% of our business resides. We will focus on leveraging these investments to improve profitability, while also exploring export opportunities when they arise.

Q3: There seems to be a decline in your Bearings and Industrial Solutions segment. Should we interpret this as structural weakness?

A3: The decline is not indicative of long-term structural issues but rather due to project-based timing in our industrial business. The fluctuations in demand, particularly in sectors like renewable energy, reflect executed projects rather than an overall market downturn. We believe that as projects ramp up, growth should stabilize across our industrial segments.

Q4: Can you provide insights into your future capital expenditure plans?

A4: For the upcoming years, we anticipate capital expenditures will increase as we continue to optimize operational efficiency and invest in localization and emerging sectors, including electric vehicles. There will be a considerable focus on elevating our capacity to ensure we meet domestic and export market needs appropriately.

Q5: How is the localization of your automotive products progressing, particularly in the context of your stated goal of 80% localization?

A5: As of Q3, our localization stands at 79%. We aim to surpass 80% as we expand our product portfolio, particularly focusing on automotive components where localization is crucial. The automotive sector typically enjoys higher localization rates, while our industrial products have varied levels due to specific project demands and lower volume requirements.

Q6: What are the major plans for your newly launched product in Savli, and what is the current utilization rate for that plant?

A6: The Savli plant, which produces large-sized spherical roller bearings, has a high utilization rate of around 90%. This indicates our commitment to maximizing asset efficiency. We're expanding this product offering to meet market demand, while also continuing to validate quality and performance standards required by our customers.

Q7: How do tariffs impact your export business, especially in light of your anticipated growth?

A7: Currently, tariffs haven't affected our exports significantly, as the order book from clients in markets like the U.S. remains robust. We do expect that as demands in the automotive sector grow, we will sustain our export levels, leveraging our existing capabilities without feeling the direct impact of tariff changes yet.

Q8: On margins, particularly in the industrial segment, how do you foresee overall growth and sustainability going forward?

A8: Our margins are improving due to fixed cost absorption from increased production capacity and a more robust domestic market. We remain focused on the distribution side of our business, which is vital for enhancing our profitability as it traditionally offers better margins compared to other segments. We aim to maintain this upward trajectory despite the ups and downs in specific sectors.