Q1 2027 SKF India (Industrial) Ltd Earnings Call
Speaker #1: 2026-27, earnings conference call. For the smooth conduct of the meeting, all participants are in listenerly mode. A brief question-and-answer session will follow the formal presentation.
Speaker #1: Should you need assistance during the conference call, please press star, then zero on your touchstone telephone. As a reminder, this conference is being recorded.
Speaker #1: I would now like to hand the conference over to Production Encore, from Corporate Communication Department of SKF India Industrial Limited. Thank you, and over to you, ma'am.
Speaker #2: Good morning, everyone. Thank you for joining us today. With us, we have SKF India Industrial's Managing Director, Mr. Mukund Vasudevan; our CFO, Mr. Ashish Saraf; and our Director of Operations, Mr. Sujeet Pai.
Speaker #2: The purpose of today's call is to share our Q1 FY 2026-27 results; please note that the financial information from 17 December 2024 through 31 March 2025, and from 1 April 2025 through 30 September 2025, as reported in the presentation, shared has been extracted and may involve some assumptions by the management from the financial information of SKF India Limited.
Speaker #2: Pertaining to the demerger industrial undertaking: these are prepared in accordance with the appendix C of IND-AS-103 Business Combinations, by using the financial information maintained by the SKF India Limited, the demerged company.
Speaker #2: Before I turn the call over to the management, I would like to remind you that in this call, some of the remarks contain forward-looking statements, which are subject to risk, and uncertainty, and actual results may differ materially.
Speaker #2: Such statements are based on the management belief, as well as the assumption made by and on the information currently available to the management. The audience is cautioned not to place undue reliance on these forward-looking statements and making any investment decision.
Speaker #2: The purpose of today's call is to purely educate and bring awareness about the company's fundamental business and the financial quarter under review. Let me turn the call over to Mr. Mukund Vasudevan now.
Speaker #2: Sir, please over to you.
Speaker #3: Thank you, Prof. Sharan. Just a quick voice check: can you hear me?
Speaker #2: Yes, sir.
Speaker #3: Okay. So welcome, everyone. One, 2026, and investor call. We are SKF India Industrial; this is the first investor call we're having. And we are very happy to share with you our results.
Speaker #3: Along with me are my CEO, our CFO, Ashish Saraf, and our Head of Operations, Sujeet Pai. In the quarter, they will support me. Whatever I need their help.
Speaker #3: I would also congratulate at this moment Mr. Sujeet Pai who will be taking over as Managing Director of SKF India Industrial, effective September 1, as you'll see the heavy announcement.
Speaker #3: As I step into a role to manage the larger region for I am now going to walk you through the presentation, which is shared with each one of you.
Speaker #3: I am now just the not to try to slide the slide with which has macro indicators, strategic growth drivers, highlight the summary. Let me first highlight five: as you all know, Indian economy is still pretty strong.
Speaker #3: Whereas the GDP may vary a bit, the GDP is in the range of 0.5 to 7.5 depending on who you talk to. Our inflation has crept up a bit.
Speaker #3: And you will see that it is primarily due to fuel prices and a bit due to food prices. We expect that to continue to be in the same range of maybe gets worse a little worse as the monsoons have been a bit weak.
Speaker #3: Industry has been a strong point. It has been rebounded. It has rebounded quite last quarter. Outlook both there and for exports due to be robust.
Speaker #3: If I move to the next slide, slide 6, which says which is specific sector, even with it still stick at a macro level, the spec sectors, if you could construction, the value added to GDP in billion INR is continuing to grow.
Speaker #3: At least each quarter. The electric tons of steel produced growing while it has a little bit of a dip Q1. The steel production is something which is continuing to be added in the country.
Speaker #3: And finally, on we are now the fourth largest wind capacity in the world. And hold on, I just got a note that my voice is breaking, so I'm going to my headset.
Speaker #3: All right. Can you confirm you can hear me?
Speaker #2: Yes, Mukund, if you could just come be a bit louder also.
Speaker #3: I am.
Speaker #2: Yeah.
Speaker #3: Okay. All right. I'm still on page 6, but I said that industry is doing well. Steel production is still going strong even though it has a dip in Q2.
Speaker #3: The capacity trend in the long term is to be significant. And wind addition wind capacity addition is the fastest growing in the world, and it is wind capacity in the world right now, growing at almost 10%.
Speaker #3: All these are macros which help business. They especially their India industrial business. If I slide 8, where I talk about the strategic growth drivers, as you know, industrial, we have built we are trying to build our focus agile company delivering value for industrial customers.
Speaker #3: And our strategy consists of four pillars: one, localization; funding our industrial focus manufacturing footprint in the region; innovation with empowering our customers through innovative and custom solutions; localization and reliability solutions, which is around predictive monitoring and maintenance and helping our customers reduce their downtime; and finally, which is developing our capability and talent.
Speaker #3: Go to the next page, page 9. I give a few examples of how we made growth on each one of these pillars of SKF India Industrial strategy.
Speaker #3: Localization, we have set up a tapered roller bearing line, which is used exclusively in several industries. It's used in gearboxes. It's used in highway equipment factors, etc.
Speaker #3: We have now set up a new line in Pune which is going to support not just India but also export markets. This will provide 3 million units annually to support future growth.
Speaker #3: And it will also help us deliver faster and reduce exposure to imports and also be more competitive. If I look at innovation, there's some very exciting innovation we have launched in the recent times, and we will continue to do this every quarter.
Speaker #3: For the railway market, we have launched railway wheel set bearings, which a wheel set bearing a wheel set is a bearing a housing a mounting block altogether integrated into one, which and a seal, which creates more rigidity and provides combination that this reduces the main well or increases the maintenance maintenance intervals by almost 20%.
Speaker #3: We've also developed developed for the food beverage industry we have which has capability to withstand 150 degrees centigrade. So in certain environments where we require good good rotational rotation with less friction, but also has to be food grade and has to be high temperature, this is one of a kind.
Speaker #3: We've also launched an a super efficient hybrid bearing, which is a ceramic which is specifically for motors and drives consumption significantly. Similarly, we have launched a cylindrical bearing for the agri OEMs agricultural OEMs for their harvester and tractors.
Speaker #3: Both for the India market and and the global market. And this reduces reduces the install, but also reduces contamination coming in any they operated.
Speaker #3: So significant amount of innovation which will contribute to growth not just now but in the future and also position us well for as the premier bearing company in in the country.
Speaker #3: I'll now talk about the financial highlights. So we spoke about strategic pillars, localization, digitalization, and people. Now we'll talk about the financial highlights, very before I go here, I just a comment as Prab Sharan the we did not have a in quarter previous year, same quarter, the industrial entity was not set up.
Speaker #3: There is no comparable. That said, we have made some assumptions to compare on sales. But we don't have a year-on-year comparison for the other metrics.
Speaker #3: But on sales, we have made a comparison. So our revenue from operations was 9,708 million on for the quarter. If you compare year-on-year, and this is where we some assumptions here, it was a 18.3% growth.
Speaker #3: We're exciting. To a quarter consumption comparison, which is from quarter sorry, the January to March to that is a 2.6% growth. Solid. Our PPT 6 860 million 9% to 9% margin primarily due to forex related loss.
Speaker #3: And one-time expenses related to the demerger. Primarily around IT. Our cash flow was still strong with a 63% cash conversion in this quarter. If I move to the next page, which is page number 13, which has a little more detail on the same, you can see that our revenue was up 2.6%.
Speaker #3: Margin quarter on quarter but this is primarily due to foreign exchange. And one-time expenses related to the so a slight drop in the profit before tax but nothing as a going concern significant.
Speaker #3: Networking capital was almost flat. And operating cash flow solid. The reason for the drop in operating cash flow was some charges we had to pay name change and land transfer.
Speaker #3: From SKF India limited to SKF India Industrial Limited. Again, a one-time one-time outflow. As we look at these the rest of this year, we still see a very solid base.
Speaker #3: We're continuing to win orders. If you compare quarter on quarter, our OEM distribution to exports and to SKF India Automotive where we're still mix is almost the same, not significant change.
Speaker #3: We are trying to bring down the the India Automotive sales through as the two we expect this mix as in the segments strong performance across most segments in this quarter.
Speaker #3: General machinery which is everything pumps gears well. That share of that has grown. The other sectors which have done well in this quarter are wind and in heavy and heavy.
Speaker #3: Rail also was solid. If you look at some of the wins we have won which are good orders for the which we will increase in the next few coming quarters.
Speaker #3: We just won a significant order with box master 140 crore order which we help us in in our help us our sales in the next few quarters.
Speaker #3: Continuing to next year. Similarly, cultural, we just won a 35 crore contract with a leading tractor OEM thanks to our innovative customized product. These are just a few examples of orders we have won, but this will continue and we're seeing good traction in both and the aftermarket distribution business.
Speaker #3: I will end with a summary summary and I'm now on page 16. Good revenue from operations both a year-on-year on quarter on quarter sequential quarter on quarter growth.
Speaker #3: Margin little below expectations but a lot of it driven and we expect to see that recover over the next few quarters. And but was a little lower than last quarter but we will but very soft cash generations which enables us to pay good dividends in the future.
Speaker #3: So I would say a great start for us industrial which is to be more agile industrial and allow upper cap allocation. The chopper capital allocation enables the investment plan making in terms of 900 to 950 with planning to invest to make the new Pune plant Pune plant that is pressing a plan and we start producing there from 2028.
Speaker #3: We have great tailwinds with the India growth story as sectors like wind, metals, heavy, cement, construction continue to buffet our growth. And last but not the least, we can't sit back and relax investments and the macros.
Speaker #3: We job in terms of manufacturing more efficiently. And building a strong aftermarket both with distribution but also through our digitalization and services business. With that, I will stop open it up for questions.
Speaker #3: Thank you.
Speaker #1: Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone.
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Speaker #1: Request each participant to limit their questions to one per participant. If you wish to ask more than one question, kindly join the queue again.
Speaker #1: We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Viraj Kacharya with SIMPL.
Speaker #1: Please go ahead.
Speaker #2: Yeah. Hi. Thanks for the opportunity. A couple of questions. First is, you know, in terms of new products, you know, in the annual report also we talked about there's a change in approach towards application focus selling.
Speaker #2: So you know, where do you see white spaces in terms of new products and where do you see biggest opportunity for growth? So any color you can give in terms of timeline you know in the new product pipeline and segments we are looking at.
Speaker #2: So that is one. And we also talked about in the AGM that we are looking at bringing parents robotics human robots and applic data center related product portfolio to India.
Speaker #2: So again, if we can give some more color in terms of time and the content we will be looking to kind of capture into.
Speaker #2: So that is one. And second is on the margin piece. If you can quantify the effects the demerger related expenses in the quarter gone by and in the AGM also you know we talked about and PBT margin guidance of 14 to 16%.
Speaker #2: This seems to be lower than the earlier guidance of 16 to 19%. So you know where is that you know what is really really driving a moderation in the margin structure.
Speaker #3: Okay. I will try and answer that to the best of my ability. I will of these questions. All right. Segments where we're seeing new product opportunities for I would say industry of the board.
Speaker #3: Some segments though are slower to adopt an innovation than others. I just because changes costly for them, right? Any risk they risk covers. But other segments are much more to it.
Speaker #3: I would say where we are seeing the most traction right now in terms of in would be in the general machinery which is the gear boxes we see a lot sir.
Speaker #3: We also okay. Yeah. Everybody having the same challenge?
Speaker #2: Yes.
Speaker #4: Yes. Your voice is breaking a bit here.
Speaker #3: Okay. Give me a second. All right. Is that better?
Speaker #2: Yes, sir.
Speaker #3: Hello. Okay. So I was saying that more traction in innovation. Yeah. And some of the sectors where the customers are more amenable to changes and products.
Speaker #3: We are seeing that in motors, pumps, gear boxes, we're seeing that. We are seeing innovation happen in some other sectors like S&B. I would the where we we do see innovation but those are more custom to specific customers would be in agriculture or that specific those are customized to a customer and where innovation is possible.
Speaker #3: We are continually innovating to bring down our costs that also is a form of innovation so that we are more in the market. That is a cross sectors.
Speaker #3: You asked about noise and data centers. Yes, that is exciting but it's early days for India. There's not much humanoid manufacturing happening in India right now.
Speaker #3: But we see if that to continue to improve and we will be able to supply and that opportunity. Have the product line now available.
Speaker #3: In data centers, data centers is in a it's it's an expected in the future. Right now, where we are seeing some traction is in generate pumps.
Speaker #3: Very basic things needed in any data center just see what hyperscalers or very large AI related data centers so we're seeing that already and them significantly or when you come to chillers part equipment used in some of the data centers movement one is very early in the sales cycle and most most OEMs who are outside the country and so the things are purchased there.
Speaker #3: We will continue to aftermarket and when the need arises but right now both these are exciting opportunities not significant in our business in SKF India.
Speaker #3: All right. On margin, I'll let Chief answer the major question. I will just broken up into how much is the impact of effects and demerger.
Speaker #3: I will just answer the long-term trend. 14 to 16 guidance. I would say we are we are being conservative. We are to our aspiration our ambition is try and get closer to 17, 18 or even 19.
Speaker #3: In the near term as we take investment investments we think that there will be a there will be a dip right beyond 28 we would start seeing this improvements but for the next couple of years at least because of the investments you're making there will as localization improve increases so make more products in India or in the region for more competitive and our margins improve and as our top line improves and our operational efficiency also improves we get more we can definitely pass to 14 to 16 beyond that we are we will try and get there but we don't want to make a commitment because that is beyond 2028.
Speaker #2: Thanks. So just to elaborate further on the on the margins for this quarter, right? So if you look at we came in at around 9%.
Speaker #2: We had a forex loss of around if you look at quarter of quarter because of the rupee depreciation which got impacted predominantly on account of the Middle East war.
Speaker #2: We had significant forex loss on the products that we imported, right? From predominantly from Europe and other markets. So that was to the tune of around around 147 million INR.
Speaker #2: If you compare it quarter over quarter. On top of that, we continue to incur expenses on on IT as we are separating the IT infrastructure of both automotive and industrial company.
Speaker #2: So this quarter we had an additional adverse impact of almost 150 million INR impacting our PNL predominantly coming on account of the IT cost IT infrastructure cost that we are incurring on account of the merger.
Speaker #2: This expense is expected to continue for for the next two quarters till the ABSKF separates globally with the automotive company of SKF and post that this cost would stop.
Speaker #2: So if you look at if you combine both the effects as well as this one time cost that we are incurring on account of demerger that itself is almost 3% on adverse impact on our margins.
Speaker #2: So if you kind of add that back we pretty much come to 12% and then the additional initiatives that we could talk about which is pretty much manufacturing efficiency and the the new investment on the in the Pune plant.
Speaker #2: I think both these initiatives will would help us drive the the the margins that we're aspiring to achieve. In mid to long term. Thank you.
Speaker #2: Good luck.
Speaker #1: Thank you. Our next question comes to the line of Varun Jain with Olet Capital. Please go ahead.
Speaker #3: Yeah. Hi. Good morning, sir. I have a couple of questions. Sir, firstly on this order when for wind and agri what is the supply period for 140 CR of this revenue in what period this will be realized and are these orders recurring in nature that we do expect recurring revenue from them and secondly on the customer mix so what is the difference in the margins we realize on distribution exports and OEM the order when which you spoke about which we highlight most of these the ones I highlighted were one time but they one year typically one two years the way box one is a one year order over it is spread through the year through the year and the one is also it's a it'll be a longer term one right but the annual we have shown there right that will be longer term that said there are other orders where we have services contracts or we have condition monitoring contracts which are slightly longer term when you come to certain so most of the OEM orders tend to be one time or one year not so book is wrote and we continue to see this order book develop and grow actually as we look at the for India and it has been sustained growth for the last few quarters at least in order book all right distributor OEM and export margins Ashish if you could take that
Speaker #2: Sure. So typically if you look at distribution distribution remains is our higher margin channel right it's it's a it's a since we are serving the aftermarket business we are able to command a better price compared to the products that we that we sell in the OEM market OEMs are also are relatively lower operating margin business but it's it's it's significant for SKF because it kind of helps drive the aftermarket business for SKF right it helps us grow our grow our market share in the aftermarket business at a faster pace so so it's it's a healthy mix if you look at our our OE business and I'm talking about total revenue split that we have for this quarter our distribution mix is around 34% and our OE mix is around 54% right so so overall it's a pretty healthy mix and as we grow our OE business it's going to help us improve our overall distribution mix and grow our overall operating margin as well
Speaker #3: So if you could quantify the margin difference in bits or in absolute percentages and also for the this new paper roller varying line I think we are adding 3 million units in capacity so which sector or which customers are we targeting with this line these two questions and
Speaker #2: Yeah. So if you talk about OE margins typically it would it would be relatively high single digit margins whereas distribution would be high double digits.
Speaker #2: And in terms of the taper roller bearing that we are we are we have inaugurated is basically going to serve and Mukund you can pitch in is is is going to serve the the agriculture market gearbox as well as some of our aftermarket business as well.
Speaker #3: Okay. I've got it. Thank you and all the best.
Speaker #1: Thank you. Our next question comes from the line of Gokul Maheshwari with Auriga Capital. Please go ahead.
Speaker #2: Yes. Thank you for the opportunity. Just two questions. So one on page 27 of the annual report in the MD's letter you had spoken about the solutions business.
Speaker #2: Can you quantify what is how big is that for us and what was the growth in FY26 and my second question is that in the same letter you mentioned about your aspiration to double the business with improved margins when you quantified the margins part on the on the the aspiration to double the business if it could indicate a timeline as well.
Speaker #3: Okay. Which includes our services business includes remanufacturing and it includes manufacturing things primarily in railways but also increasingly in other industries. Where we older bearings or used bearings and bring it back to almost.
Speaker #3: And then give a three year warranty on it again. That is significant in railway but it's also increasing in pulp and paper and metals now.
Speaker #3: We are that is one portion of the solutions business. The second is all the condition monitoring the predictive business predictive predictive maintenance reliability solutions to increase plant uptime or to increase their mean time between failure kind of solutions which we offer.
Speaker #3: Those are the digital solutions we offer. So a part of the solutions factory. And then we also offer certain where we offer take like a managing an entire shop in a steel mill.
Speaker #3: Where we essentially own them for them also maintaining bearings lubricating the bearings remanufacturing the bearings at so all of those contribute the solutions today is small but we see huge potential.
Speaker #3: It is less than 10% right now. It's around 6 to 7% of of the India we are seeing growth in for that business but as we are investing more both from a technology perspective condition monitoring technology etc and in go to market with additional sales people to actually go out and sell this concept direct to end users we are seeing additional traction impact that to grow even faster.
Speaker #3: Second part business right now going to put a tie on it that is aspiration I would say ideally in five years we would like to get right if it's possible we would like to do it quicker but that's an aspiration which we have and I would say five years on the outside is where we would like to get there.
Speaker #2: Okay. Great. Thank you so much and all the best. Thank you.
Speaker #1: The next question comes from the line of Ravi Purohit with security investment management. Please go ahead.
Speaker #3: Yeah. Hi. Thanks for the opportunity. We have a couple of questions. Ashish you mentioned about the margin difference being 3% right. So right now we are at 9% so that we set to 12%.
Speaker #3: How long are we going to incur these one off costs? I believe in the earlier calls we had mentioned that it will run for about a year or so.
Speaker #3: So does it mean that next quarter will be the last quarter and after that these expenses will stop? And second is I think you know Mr. Mukund had mentioned that you know our our near term goal is about 14 to 16%.
Speaker #3: So is it this this this 14 to 16 is up to 28 is the new factory kind of commissions or because this 12 should come immediately once the you know these one off costs kind of get adjusted.
Speaker #3: So if you could just kind of you know help us understand the nuances and also this new line that we have commissioned on taper roll is it being operated by SKF India Auto or is it being operated so is that like a demarcation or is it like so we are still not clear you know are we operating a running factory in Pune for SKF industrial on the new land that we have or how how are the operations kind of you know getting run.
Speaker #2: So so maybe I'll I'll answer the margin question and then I'll pass on to Mukund to to elaborate on more more on the factory operations.
Speaker #2: So so in terms of margin you're right we are currently operating at 9%. The the one time cost that we're getting on account of IT that we are expecting to taper down right.
Speaker #2: So we should see probably significant cost in this quarter and then it should start tapering down by by end of this year. And then probably from Q1 or Q4 next year we should not see these costs right.
Speaker #2: So that is one. And then the other aspect of the margin adverse impact on the margin was on account of the forex which really depends on how how how rupee performs vis a vis the other currencies.
Speaker #2: In terms of margins so so so 12% is a fair number in term in terms of current performance additionally as I said as as we are working on driving manufacturing efficiencies and reducing cost of of the products that we produce in our factories we expect our margins to improve further by a couple of percentage points.
Speaker #2: And on top of that once our new Pune plant is set up by by end of 2028 we expect further margin margin improvements going forward.
Speaker #2: Mukund you want to answer on the on the on the factory operations?
Speaker #3: Yeah. So the factory operations I think the question was on the ERB line that is in SKF industrial. It's not the SKF automotive line.
Speaker #2: Okay. And so in the past
Speaker #3: you know we had mentioned that we we we are looking to add you know about 15 20 lines here some will be moved from our associate companies globally right.
Speaker #3: And some will be set up afresh. So does it mean that the overall capex that we will have to incur will be significantly lower and the the setup time for these machines which are actually only shifting from one geography to another you know so so those can happen actually earlier than end of 28 that you're referring to or is it like part of that end of 28 commissioning?
Speaker #1: Yeah. Unfortunately the challenge the biggest challenge is actually space. So we will need a new factory while we are squeezing out as much as we can with the existing channels in the within the existing space.
Speaker #1: Demand right. So some of the new channels will require additional space. So the fact it is tied to the factory. Yeah. So I I would say majority of the new installments which will happen will happen with once the new factory is up and running.
Speaker #1: 28 and beyond. Until then we will upgrade our existing machinery to kind of drive more output out of it. And continue to drive additional efficiency more output to meet the demand.
Speaker #1: It's not that we are falling short of capacity right now. It's just that by 28 capacity.
Speaker #2: Yep. And just to add we are also again even though we are constrained by capacity we are still going to add one additional channel by early 27.
Speaker #2: One additional TRB channel by 27.
Speaker #3: Okay. And so you know one you know one precedent that we are seeing in in in India is that you know a lot of MNCs who had similar line businesses between listed entities and unlisted entities there has been a tendency to kind of merge everything into one uniform entity.
Speaker #3: From cost point of view and you know operations point of view and marketing and sales point of view. So example being you've seen 3M do it.
Speaker #3: We have seen the latest in the list is Bosch right. They have basically acquired the 100% subsidy of Bosch parent in India which is Bosch chassis right.
Speaker #3: So we have a large factory in Ahmedabad. We have some operations in Bangalore. So there is a loop business and a wind bearing bearing business which is outside of this company.
Speaker #3: We do kind of market and sale through the listed entity from via traded goods. But it's a suggestion I and I I don't know if you have any thoughts that you can share with investors at large now that industrial is a separate entity altogether and we have this regular platform to kind of you know discuss future plans.
Speaker #3: So if you could just kind of give some insights and if if Mr. Sujit can also kind of you know share a few words given that he's taking reins over from 1st of September as to how does he see you know SKF industrial over 20 to 5 years.
Speaker #1: Okay. Which we continuously evaluate so at this moment as I've mentioned before we're not looking at it mainly that we want this demo there's some stabilization required within India on this demerger and also as you saw there is some some some work to be done.
Speaker #1: So we're going to let this stabilize before we think about any other major such move but that is something we evaluate but right now we're not looking at the in terms of merging the end.
Speaker #1: In terms of Sujit why don't we that to the last maybe one other question and then if we have some time we'll tell Sujit speak.
Speaker #1: Just in the interest of taking as many questions as possible in the time if you don't mind.
Speaker #3: Sure. I'll get back in the queue. Thank you.
Speaker #1: We'll take one last question then Sujit and then Sujit can Sujit can say a few words.
Speaker #2: Thank you. The next question comes from the line of Dave Jim Punjabi. Advisors please go ahead.
Speaker #3: Yeah. Hi. Thanks for the opportunity. I had two questions. One is like you mentioned the ambition of doubling the business in five years. So can you talk about the key drivers or the key segments that will drive this growth and the other one is based on the capex plans of 800 to 950 crores what are the kind of asset turns that can be achieved over there once the demand comes through and we are operating at scale.
Speaker #1: Sorry can you repeat the second question again? What is the second question?
Speaker #3: Yeah. So so based on the capex.
Speaker #1: Asset turns on that.
Speaker #3: Yeah. Yeah. Like is it would align with what what we are seeing in FY26?
Speaker #1: Yeah. Okay. Since in the other investor wanted Sujit maybe Sujit you can take this question what are going to be the major growth drivers for their business for the India business which industries do you see?
Speaker #1: And and then kind of give a few words.
Speaker #3: All right. Sure. Thank you. Thank you Mukund. So I think I'll I'll start with a overview firstly I think we're in a great place in terms of pure tailwinds that we have.
Speaker #3: The great thing about SKF is we operate in pretty much all segments we don't have over reliance on any one segment and all of these segments are cyclical but if you just look at the overall trajectory and where the country is going purely from a infra perspective steel capacity addition perspective cement addition perspective we're in a great place where most major companies have plans to kind of double by 2030 and we'll add more capacity in the next five years than than we've added probably in the last 10 years.
Speaker #3: What this does is this also drives demand for all the other general machinery industries the motors the pumps the ancillaries the conveyors etc. So that's one part of the major industry where we're seeing great macro drivers and we see growth is going to come from there.
Speaker #3: The second big one of course is railways and railways again we continue to invest it's an area that keeps growing and and we see good headwinds from there as well and the last one will be on renewable energy we spoke about that a little bit yesterday 25% of the the renewable energy that's going to be added is going to come from wind and as we see wind growing again we see good potential for us to grow.
Speaker #3: So I think from where we are set up today in terms of how we structured the new industrial company we see opportunities across all of these segments we have structured well today to seize the opportunity in all of these different segments we also have all the investment secured and in place so that we get the capacity growth over the next three to four years so really for us it's about execution today we have the strategy right strategy in place we've got the investments in place and as long as we execute well we see where in a good place to get growth over the next five years.
Speaker #1: And Ashish if you could quickly take question.
Speaker #2: Sure Mukund. So again if you look at the investments that we are making of around 850 to 900 crores a significant part of the investment is to set up the new factory.
Speaker #2: Right. Which is which is basically the whole infrastructure of the factory and the whole the whole layout. Right. So from a payback perspective what we are looking at is around five to seven years right for the entire investments that we are making which is basically the new factory transfer of our existing channels from the automotive factory to this factory plus getting new channels from from other SKF companies as well as from third party.
Speaker #2: Right. So putting the entire investment together we are looking at a payback between five to seven years.
Speaker #3: Sure. That was very helpful. Thank you.
Speaker #2: Thank you. Ladies and gentlemen that was the last question for today. We will close the conference on behalf of SKF India Industrial Limited. That concludes this conference.
