With the government and the industry pulling out all the stops to meet the wind energy target of 60 GW by 2022, the prospects for wind manufacturing and other auxiliary industries are looking up. One such segment is bearings, seals, gearboxes and lubricants.
In India, around five players control more than 82 per cent of the organised bearings market. Among them is SKF India, a company that manufactures bearings, seals and lubricants. Incorporated in 1961 as the result of a collaboration among AB SKF Group Sweden, Associated Bearing Company Limited and Investment Corporation of India Limited, the company provides a number of products for the wind segment. These include the main shaft of the wind turbine, gearboxes, generators and pitch and yaw bearings. It also provides extensive solutions and services in this area.
SKF India today has four manufacturing facilities (in Pune, Bengaluru, Haridwar and Ahmedabad), 11 sales offices and a supplier network of over 300 distributors and 20,000 retailers across the industrial and automotive sectors in India.
SKF India provides a number of diversified products and advanced technology solutions. It has an engineering consultancy services department that is dedicated to understanding the needs of developers and providing originally specified equipment and components. Its application development centre at Bengaluru, established in November 2004, helps customise the products and services to meet client needs. It also provides 3-D modelling software that simulates the interaction of machine components so that designers can explore alternative materials and geometries virtually, before actual prototyping.
Manufacturing and testing are the key services offered by the firm. A diversified player, SKF claims a 28 per cent market share in the automotive and industrial bearings segment. It supplies products like wind shafts, gearboxes, generators, and pitch and yaw bearings. For the Indian market, SKF recently introduced IMx-8, which is a compact device engineered to address the maintenance issues of wind turbines, and SKF roller bearings, which is a lightweight, high-performance solution designed to improve turbine reliability for sustainable wind energy production. The company also has a dedicated associate firm, SKF Technologies (India) Private Limited, for providing sealing solutions.
A key business function of SKF is the operations and monitoring of wind farms. The company offers advanced monitoring and diagnostic services for remote monitoring and failure analysis of wind farms. It has also invested in the asset efficiency optimisation process, which collects and analyses operating data and helps farm operators in understanding the need for turbine maintenance and optimum operating conditions, which will eventually bring down the total costs.
Although SKF has been able to sustain itself in a competitive market, there are certain challenges that the company faces. The first of these is the inherent dynamism in the bearings market. Each wind installation is different from the other and thus has specific requirements. There is also the issue of technology obsolescence. If the company fails to introduce new technologies or products, it could end up losing market share. In addition, import promotion measures and low-cost production in several countries result in heavy dumping from countries like China, which could act as a hindrance to the company growth.
Higher commodity prices also put pressure on margins. Steel and its alloys form the basic raw material for bearings. SKF is directly exposed to fluctuations in steel prices as it sources goods from outside. As the commodity cycle is on an upward trend with the impending introduction of the goods and services tax, it may put some pressure on the company’s margins.
Finally, the industrial bearings industry is characterised by low volumes, large variety and long gestation periods to become profitable. Many factors have to be
considered before setting up a product manufacturing unit. These include the availability of the requisite skill sets and a target market – domestic or global. To ensure that all the factors are in place is not easy. Moreover, the growth of the industrial bearings market is closely linked to the growth of the wind industry.
The way forward
As such, SKF Technologies has witnessed low-capacity utilisation owing to a sharp drop in demand from the wind power segment over the past five years. With capacity addition now accelerating, the market for industrial bearings too is looking up. SKF’s manufacturing unit in Ahmedabad, which started operations in 2009, accounts for 10 per cent of the company’s overall revenues and is expected to become profitable with the growth in the industry. The company’s flexibility in incorporating new models and keeping pace with the dynamic wind segment is an important factor that will lead to sustainable growth of the company.