Schaeffler lines up Rs 550 crore expansion plan

At a time when majority of Indian auto components companies are putting their investment plans on hold, Schaeffler Group, the euro 11-billion German auto component maker, is going ahead with its expansion plans. 

Global CEO of the Schaeffler Group Juergen M.Geissinger told ET that the current slowdown is temporary and once the market bounces back, the group should be in a position to meet the demand. 

"To act anti-cyclical at times is also part of our duty. Even in a weakening economy, all new technologies will be introduced in the next couple of years. Therefore, we are not just investing in present technologies, but we are investing in future systems, like start-stop technology, electronic clutch management systems, coding system, etc," said Geissinger Schaeffler Group has three entities in India — FAG Bearings, INA Bearings and LuK India Pvt Ltd — supplying whole host of bearings, clutches and precision products for everything that moves right from automotive, industrial engineering and aerospace sectors. 

FAG and INA together is the second largest supplier of rolling bearings in the world and among the leaders in India supplying to the likes of Maruti Suzuki, Hyundai India and others. The company has been growing at over 15% over the last few years and has already invested close to Rs 500 crore in 2012 when the others have been deferring investments in the country. 

The group has further lined up an additional investment of Rs 550 crore over the next couple of years to expand its product portfolio, R&D and production capacity. The maker of bearings and clutches will invest 60% of its investment into FAG Bearings, 30% into INA Bearings and the rest 10% will be made in LuK India's clutch business. 

It is also going for a restructuring exercise for a faster market response and to present a unified face to its customers. While all three entities (FAG, INA and LuK) will remain an independent legal entity, operationally the group has created a common vertical for automotive business and industrial business, headed by a president to offer wide product portfolio from a single window. 

"This is part of our customer-centric approach. We are reorganising ourselves to make it easier for our customers to deal with one customer contact," added Dharmesh Arora, president and CEO Schaeffler in India. The Indian operation currently makes up for just 4% of the group's annual turnover, but with the expanding portfolio, capacity and the R&D set-up, the global CEO of the company feels the share will more than double. 

"India will contribute more than 8-10% of its global turnover as the company intends to tap not only the growing domestic market, but use India as a significant hub for exports to the US, Europe and Asia," added Geissinger. 

India, which is the centre of R&D excellence for the group's motorcycle and tractor business, expects a larger R&D role in other areas of automotive and engineering business, going ahead. The company will invest close to Rs 50 crore on R&D for the group, and will be doubling the number of engineers to 400 in the next couple of years.

Also read: Schaeffler unveils the Efficient Future Mobility India vehicle