Schaeffler India lands over Rs 2,700 crore electric axle order

For the next seven years, the company will provide its first system-level solution offering in the electric vehicle space to an Indian EV customer.

By Shruti Mishra calendar 08 May 2023 Views icon25626 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

Automotive and industrial parts maker Schaeffler India, part of the Euro 16 billion Germany-based Schaeffler Group, has received a Rs 2700 (Euro 300 million) order for its two-in-one electric axles as the supplier transitions to electrification from internal combustion. 

The order, from an unnamed Indian automaker, is the company's first system-level solution offering in the electric vehicle space, Schaeffler India said over a recent earnings call.

According to Harsha Kadam, Managing Director and CEO of Schaeffler India, the electric axle order is for the electric passenger vehicle with this customer for the next seven years. 

“This is the pure electric solution that we are bringing to India now. The series production will start by the middle to second half of next year. In terms of volumes, it is going to be in the range of close to Euro 300 million,” he elaborated during the call. As per the company, the two-in one electric axle integrates an electric motor and gearbox along with power electronics, into one compact unit. 

He further said that the parent firm Schaeffler has a strong lineage of electric mobility components in Europe, where the company is into the series production of electric motors and electric axles. 

A number of automakers have been expressing their commitment to achieving carbon neutrality and accelerating the launch of environmentally friendly vehicles, which include electrified vehicles. Demand is expected to rise for e-axles that are not only lightweight, compact, and efficient but also more efficient to manufacture, and lower in cost through a reduced number of parts.

Business Strategy and Capex
In a bid to leverage the cost advantage, knowledge, and intellectual capabilities unique to India, the company has adopted the export relocation strategy and aims to actively invest in creating local capabilities. 

The company has lined up a capex of Rs 1,500 crore for relocations and capacity expansion for exports for the next three years. Out of the Rs 500 crore capex that the company plans to invest this year, about Rs 150 crore will be spent on the relocation of exports, Kadam said. At present, exports constitute about 17 percent of the overall company’s sales. 

“The competence that exists in Schaeffler India is going to drive the relocation of the export, for which we have earmarked about 30 percent of the capex,” Kadam added. As part of its strategy, Schaeffler India will shift the manufacturing of its large-size bearings and certain categories of midsize bearings from Europe to India. 

“We plan to make India the manufacturing hub for specific product lines by shifting production from our European plants. This allows us to make exports an integral part of our strategy and make our business even more resilient,” said Satish Patel, Director – Finance and CFO, Schaeffler India, in the company's recent Annual Report. 

Domestic Capabilities
With 75 percent localisation, Schaeffler India is carrying out its manufacturing activities from the four plants in India located at Talegaon (Pune), Maneja (Vadodara), Savli (Vadodara), and Hosur  (Tamil Nadu). The total sales mix of the company constitutes 39 percent automotive, 35 percent industrial, 9 percent automotive aftermarket, and the remainder from exports.

It is establishing a sustainable and future-ready plant at Hosur for the automotive business while the expansion of the Savli plant is being carried out for the industrial business. 

As Schaeffler India ramps up its domestic and international business, it plans to invest Rs 300 crore in Hosur over the next few years, with the first phase being operational by the end of this calendar year. This facility will manufacture transmission components and systems for both the automotive and tractor industries, sold under the brand of LuK. “We will also invest to enhance capacity for our export business,” Patel added.

The manufacturing plants in Maneja and Savli (Vadodara) have an array of ball bearings, cylindrical roller bearings, spherical roller bearings, and wheel bearings that are sold under the brand name FAG.

The plant at Talegaon, near Pune, manufactures engine and powertrain components for front accessory drive system, chain drive systems, valve train, gear shift systems, and a range of needle roller bearings and elements, under the brand INA. 

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