In an exclusive interview, SKF Group Global President & CEO Rickard Gustafson told ET that India is a large market and an important one for SKF. Given the group’s focus on increasing regionalization in Asia to more than 85% from about 60% as per its recently outlined strategic framework, there will be opportunities for investments in property, plant and equipment in the country, to support growth ambitions.
“I am optimistic about the Indian opportunities and the Indian economy. And in order to support those opportunities, we need to invest not just in our footprint but also in our supply chain,” Gustafson said, without sharing details of the investments earmarked for the local market mid-term.
He added the group has strong technical capabilities and there are a number of different industries, such as high speed machinery, agriculture, railways and electrical motors, which are of “high interest.”
The Rs 25,938-crore Production Linked Incentive (PLI) Scheme approved by the government to encourage indigenous manufacturing of eco-friendly vehicles and components with advanced auto technologies especially augurs well for the local industry.
He said, “If the Indian government incentivizes the shift toward a greener future, I think that is good not just for India, it is good for the globe, because you’re a big part of the globe. Of course, it will also drive demand. And that’s good news for SKF.”
Gustafon said the three global megatrends – electrification, automation, sustainability – will amplify growth opportunities in India. “Electrification – that’s part of the sustainability agenda. Renewable energy is going to be key. Renewable energies will require rotation, we play there. I truly believe that we’re going to see more focus on hydrogen to drive more and solve the energy crisis. To compress hydrogen, you need high speed rotation. We play there. Carbon Capture will be another tool that we need to use in order to really reduce our CO2 footprint globally. And that will require compression and rotation. So these are some areas where I think there are business opportunities,” said Gustafon.
Globally, SKF Group itself is targeting net zero emission at its manufacturing facilities by 2030 and across its suppliers by 2050.
Overall, given the growth prospects in the country, Gustafon expects India’s role in global operations to expand over the next few years. “We already have a very sizable operation here in India. which I hope will continue to evolve, grow and further excel. And over time, my ambition is to ensure that India becomes an even bigger and even more important part of our global portfolio,” he said.
SKF Group reported a turnover of Rs 69,811 crore in 2021. India currently accounts for about 5% of global revenues.
Separately, Gustafon said there would be challenges in the global supply chain on account of the conflict between Russia and Ukraine. However, the degree of impact will vary geographically.
“Inflation is on the rise, because of this (war). Energy prices are going up. Ukraine and Russia are big suppliers into the global food market, which of course will be impacted by this. It is not good news for the global economy. I think, though, that Europe will be probably more impacted by this than maybe Asia and other parts of the world,” he said.
SKF Group will work at securing its supply chains, improving cost productivity and increasing product prices to address inflationary pressures. “There are only a couple of levers that you can pull and we’re going to pull them all. First and foremost, we need to secure our supply chains, and have multiple sources. We need to drive our own productivity and effectiveness to compensate for this. And of course, we need to raise our prices. We also need to use the price mechanism in order to safeguard our business and our margins,” he said.
SKF is the world’s largest bearing manufacturer, employing 44,000 people across 108 manufacturing units.