Total income from operations of SKF India increased by 34% to Rs 508.71 crore for the quarter ended June 2010. The increase in sales and impressive expansion in operating profit margins by 210 bps to 15.1% led operating profit to increase by 55% to Rs 76.58 crore. Nil EO expenses compared to Rs 16.76 crore on the account of VRS in the corresponding previous period boosted net profit to increase by 174% to Rs 48.45 crore.

Commenting on financial performance of the company, Shishir Joshipura, Managing Director said The performance witnessed in the quarter has been in line with growth seen in the Indian economy and across both automotive and industrial sectors. We expect our future growth in line with market opportunities and expect to further strengthen our leadership position

SKF is a leading global supplier in the areas of bearings, seals, mechatronics, services and lubrication systems. The Group's service offer includes technical support, maintenance services, engineering consultancy and training. SKF is represented in more than 130 countries and has 15,000 distributor locations worldwide. The Group's annual sales 2009 were SEK 56,227 million. The number of employees was 41172.

In India, the SKF Group started trading operations in Kolkata in 1923 and since then the Group's operations have been consolidated into SKF India Limited. SKF India also has an associate company called SKF Technologies (India) Pvt. Ltd providing Sealing Solutions and Industrial Bearings. The company has manufacturing plants in Pune, Bangalore, and Haridwar.

Quarterly Performance

Total income from operation for the quarter ended June 2010 of SKF India posted impressive growth of 34% to Rs 508.71 crore. Operating profit margins expanded by 210 bps to 15.1% resulting operating profit to increase by 55% to Rs 76.58 crore. The rise in margins is on the back of decline in the employee cost and other expenditure as percentage to sales, net of stock adjustments. Employee cost declined by 200 bps to 7% and other expenditure fell by 50 bps to 13.7%, respectively. The margins would have been further improved but increase in the consumption cost by 100 bps to 64.6% restricted the growth in margins.

Interest income (net) increased from Rs 1.87 crore in Q2 CY'09 to Rs 4.38 crore in Q2 CY'10 led PBDT to increase by 58% to Rs 80.96 crore. Depreciation rose by 13% to Rs 8.46 crore during the quarter. Nil EO expenses during the quarter as compared to Rs 16.76 crore on the account of VRS to employee in the corresponding previous period boosted PBT after EO to increase by 167% to Rs 72.50 crore. The decline in the effective tax rate by 170 bps to 33.2% resulted net profit to increase by 174% to Rs 48.45 crore.

Half yearly Performance

Net sales for the half year ended June 2010 increased by 45% to Rs 1012.99 crore. Operating profit margins spurted by 370 bps to 14.4% resulting operating profit to increase by 95% to Rs 146.17 crore. Increase in the interest income by 31% to Rs 8.35 crore and marginal rise in the depreciation by 8% to Rs 15.96 crore in the corresponding previous period led PBT to increase by 108% to Rs 138.56 crore. Nil EO expenses as against Rs 16.76 crore in the corresponding pervious period on the account of VRS further boosted growth in PBT to 178% to Rs 138.56 crore. The dip in the effective tax rate by 180 bps to 33.6% led net profit up by 186% to Rs 92.02 crore.

Other information
The promoter holding and promoter group shareholding from Quarter ended March 2010 to quarter ended June 2010 remain unchanged at 53.6%.
The scrip closed at Rs 532.70 on BSE. The TTM EPS of SKF India is Rs 29.2 and discounting 18.2 times.

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