SCHAEFFLER INDIA 2024-25 Annual Report Analysis

Wed, 8 Apr

Financial and Operational Performance Highlights

In the recent reporting period, Schaeffler India demonstrated robust financial resilience, characterized by a double-digit growth trajectory. The management highlighted that the company achieved a total revenue from operations of INR 72,261 million, representing a growth of 5.2% over the previous year. This performance was underpinned by the "One Schaeffler" approach, which integrates various business segments to optimize cross-selling and operational efficiencies. The Automotive Technologies segment remained a primary driver, benefiting from the recovery in the domestic automotive market and a steady increase in content per vehicle, particularly in the passenger vehicle and heavy commercial vehicle categories.

From a profitability perspective, the company reported an EBITDA margin of 18.5%, reflecting disciplined cost management and a favorable product mix. The management emphasized that despite inflationary pressures on raw materials and logistics, the company successfully maintained its margins through value engineering and localized sourcing. The Profit After Tax (PAT) also saw a healthy increase, reaching INR 8,963 million, which the management attributed to higher operational leverage and improved realization from the industrial and aftermarket segments.

Strategic Pivot to Motion Technology

A central theme in the Management Discussion and Analysis was the organizational transition toward becoming a Motion Technology Company. Management highlighted that this shift is not merely a rebranding but a fundamental change in how the company approaches mobility and industrial applications. The recent performance reflects a strategic focus on three core pillars:

• Innovation: Investing in research and development to create high-precision components that reduce friction and improve energy efficiency.
• Agility: Adapting to the rapid electrification of the automotive industry and the digitalization of industrial maintenance.
• Efficiency: Leveraging the Schaeffler Production System to enhance shop-floor productivity across its plants in Pune, Hosur, and Savli.

New Business Ventures and E-Mobility

Regarding new business ventures, the management specifically highlighted the company's aggressive entry and expansion into the Electric Mobility (E-Mobility) space. Schaeffler India is positioning itself as a key supplier for 2-wheelers, 3-wheelers, and passenger electric vehicles. Significant milestones include:

• The development of Integrated Thermal Management systems and Electric Axles tailored for the Indian market conditions.
• The expansion of the E-Motors portfolio, where the company is securing new business wins with major domestic Original Equipment Manufacturers (OEMs).
• A focus on Green Hydrogen technology, where the company is exploring opportunities in electrolyzer components, aligning with India's National Green Hydrogen Mission.

Expansion through Acquisitions and the Circular Economy

The management emphasized the strategic importance of the acquisition of Koochie Remanufacturing Services (KRS). This venture marks Schaeffler’s entry into the organized remanufacturing sector in India, promoting a circular economy. By refurbishing and remanufacturing high-value bearings and components, the company aims to provide cost-effective and sustainable solutions to industrial customers, particularly in the railways and wind energy sectors. This new business stream is expected to enhance the Automotive Aftermarket and Industrial service portfolios significantly.

Market Outlook and Sectoral Trends

The MD&A section identified several tailwinds that are expected to sustain growth in the coming years. Management is particularly optimistic about the Railways sector, citing the government's push for high-speed trains (Vande Bharat) and dedicated freight corridors. Schaeffler India is well-positioned to supply high-performance axlebox bearings and drive systems for these projects. Additionally, the Wind Energy sector is highlighted as a high-growth area, with increasing demand for large-size bearings for multi-megawatt turbines, where Schaeffler maintains a dominant market share.

To support these new ventures, the company has committed to a significant Capital Expenditure (CAPEX) plan. This investment is directed toward expanding manufacturing capacities at the Savli and Hosur plants to cater to the growing export demand and to further the "Make in India" initiative, ensuring that a larger portion of the global supply chain is serviced from Indian facilities.

Source: Schaeffler India Investor Relations - Annual Reports