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Earnings Call Analysis
Q3-2024 Analysis
Timken India Ltd
The company's recent financial performance revealed certain sector contributions to the total revenue in Q3 of '23/'24. Rail contributed 18%, mobile and off-highway/heavy truck segments made up 22%, distribution was 17%, process industry represented 21%, and exports accounted for 20%. In this period, the PBT margin faced a slight decline in comparison to Q2, with product mix and export impacting margins by 1%, and a further 2% attributed to suboptimal leverage in cost due to significant volume reduction, given the inflexibility of cost structures like labor in India.
The rail demand in India's domestic freight market is showing steady growth, with significant contributions from freight and passenger sectors. Brazilian freight demand also remains strong, offering good capacity utilization for the company's rail assets in Jamshedpur, India. Despite this, there has been a marked reduction in the overall export pie from 35% to 20%, as 50% of the export market that includes a significant truck market segment has seen a sharp decline. Meanwhile, the company remains optimistic about the metal side of the business, operating 25 shops within steel companies, offering services like bearing maintenance which improve yield and lifespan.
The company is actively participating in the growing renewable energy sector, especially with the Indian government's focus on solar and wind energy. They have begun producing components in Bharuch, India, that are instrumental for rotating solar panels, aligning with the direction of the sun. This initiative is still nascent, but it taps into a broader trend of governmental support for renewable energy, potentially opening up new markets for the company's products.
Expectations are high for the freight business, with India being the fourth largest market and market share in railways exceeding 50%. The localization of wheel sets used in railways, which are currently being imported, is a priority for the Indian government and could bring additional value to the railways through domestic wagon builders. This strategy could bolster the company's already strong market position and its close relationship with wagon builders.
A new plant is set to enhance the company's production capabilities, aiming to target the domestic material handling market and export opportunities in the ASEAN region, primarily for cylindrical bearings required by industries like palm oil. The plant, expected to be operational by the end of the year, is anticipated to be one of the most advanced in this sector within the region. Despite a 10% drop in 9-month exports, domestic organic growth remains positive, with specific segments like rail and process industries showing growth. However, concerns about a global decline, particularly in China, could affect future export dynamics.
With a current valuation at $2 billion, the Indian bearing industry is small compared to global counterparts but is growing at a double-digit CAGR. Prospects for growth remain robust, especially as the country’s economy continues to mature, necessitating a more even distribution between mobile and stationary bearings, the latter expected to grow significantly. Presently, mobile bearings dominate the market with a 65% share compared to 35% for stationary. Moreover, the freight business, forming roughly 60% of India's railway sector, is likely to bolster turnover, especially with the operationalization of new plants like Bharuch by '25-'26.
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Ladies and gentlemen, good day, and welcome to Timken India Q3 FY '24 Earnings Conference Call, hosted by Avendus Spark. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinion and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Mukesh Saraf from Avendus Spark. Thank you, and over to you, sir.
Thank you, [ Yousuf ]. Good afternoon, Mukesh Saraf here from Avendus Spark. Appreciate everybody logging in. I'm pleased to host Mr. Sanjay Koul, Chairman and Managing Director of Timken India; and Mr. Avishrant Keshava, CFO and Whole Time Director of Timken India. We'll start with some brief opening remarks from Mr. Koul, and then follow it up with the Q&A. Over to you, sir.
Okay. Thanks, Mukesh. So I will give a little bit of a commentary which might help with the questions itself. Our financial performance for the Q3, '23, '24 versus Q2, '23, '24, the immediate the previous quarter. And our sales was around INR 612 crores, which was almost down by 10% compared to the previous quarter. And this is only the operational sales, it does not have any other gains in it. So intercompany sales, actually the company is what we do, the exports that contracted by 6.6% compared to the previous quarter, and this was the external market conditions, global economic factors, et cetera. Domestic sales, though rail went up, but overall, there was a decline, which was in other FEUs, like trucks and in off-highway trucks. Our margin compared to the previous quarter was down by almost 3.2%, major reason was obviously unfavorable product mix. And then we could not leverage the volume. So the cost versus the volume leverage. So we lost almost 2.2% on that.
And EBITDA was at 18.5% compared to immediate previous quarter was down 2.8%, and this is in line with the same unfavorable mix and not leveraging the volume. And then if you come to Q3 '23, '24 compared to Q3 '22, '23. Our sales was slightly up in Q3 '22, '23, we did INR 609 crores, we did INR 612 crores sales, so up by almost 45 basis points, slightly up. However, the intercompany was a contraction during compared to the same quarter last year by 12%, and that is global economical factors. And domestic sales compared to that quarter last year were up by 13%. PBT was at 14.9%, which was around 70 basis points to the quarter last year. EBITDA was at 18.5%, down 90 basis points compared to the same time. And last year, compared to that quarter, we had some currency gains, other income. So that was not in this quarter.
And then if you see 9 months performance 2024 versus '22, '23, our sales are up slightly. We are at INR 2,011 crores, which is up by 38 basis points. However, the exports are down in this period of 9 months by 10%. So you can see that export down 10% and our domestic sales in this 9 to 9 month was up by 10%. PBT margin at 16.8%, down 2.5%. Last year, we got a currency gain and onetime Jharkhand incentive, which was not there. And then there was this a little bit of unfavorable product mix. And EBITDA stood 9 months to 9 months, [ 20% ] versus 22%. So that is, in general, the summation of these quarter comparison. And I'm now okay to take the questions.
[Operator Instructions]
We have our first question from the line of Mr. Mukesh Saraf from Avendus Spark.
Yes, sir as the questions you build, I'll just start off with some of the, I think, more high investment. So obviously, exports is one important area. And I think last quarter also, you have commented that things are weak. But I think the expectation was that things would start kind of showing some signs of improvement. But it seems like, again, sequential decline. So could you give us some more color how much is more of an inventory correction? How much is the actual end market demand weakness? And how should we look at exports going forward given that we have a lot of -- I mean, the parent as such as obviously continue to look at Timken India as very favorable, so could you kind of give us more sense there?
Yes. In general, because of this Red Sea issue, so there is a little bit of lower demand so because now more inventory will be on water. So there will be lower demand for some time, which is a short-term kind of correct the demand. But overall, in U.S., the markets are, especially the areas where we are working in export is the heavy truck market and other is rail.
The rail market is pretty much okay. The rail market, if you see today, Brazil is booming, really booming. And North America is also not that bad. Indian market is booming. Indonesia rail also, you have PT KAI, Angkasa companies like that are also not bad. So on one side, as you know, that 50% of our exports is rail and 50% is the smaller bearing, the rail is pretty much a robust condition. The demand in Brazil is very good and America is also pretty much okay.
But on the heavy truck, the market is not really up and running. So there is this discussion that the H2 in U.S. might look better. And there is also a camp saying that it might revised in '25, so that is [indiscernible]. But what I see currently is that the rail order books for exports, the markets are pretty much okay. India is also pretty much domestic side is pretty much okay. If not exactly the heavy truck market, the rest of the stock, including rail is okay. The wind market in China is down. So that is a piece, which also kind of connects to the global stuff. China is down. So it has an impact of global supply chain, if not directly to us, but there are impacts, et cetera.
So all said and done, I would say that export from rail pretty much okay, heavy truck still hazy. Hopefully, it comes back in the second half of this year, first half doesn't look to be okay. And Indian market is, I would say, pretty much okay.
Right. Got that, sir. I think we have questions in the queue. We will go to them and be back.
Next question is from the line of Mr. Chintan Chheda from Quest Investment Advisors Private Limited.
So sir, I have got one question. Basically, from this China Plus One kind of opportunity, right. So in the North American Railroad segment, what is the opportunity from a strategic point of view over the next 3 to 5 years, are we seeing?
So 1 thing I can tell you, I lived in China for 5-odd years, and we have the sister company, The Timken company has footprints in China. And we are a North American owned majority stake company. So all said and done, Americans are looking at China Plus One seriously. So this mitigation of global supply chains are heavily inward, but these supply chains were very much dependent on China. And this is a huge work. It is not an overnight thing, but we can already see that the impacts are slowly coming.
And now coming back to Timken. As you know that Timken has good footprints in China, and they are seriously looking at a strategic direction of risk mitigation of supply chains. And that is obviously not an overnight thing. We are putting the SRB plant, which I call the Phase 1 after company to a Phase 1 and then discuss and see what will happen to Phase 2.
So the work in progress is happening not only for Timken, but most of the companies, which I see also as part of the American Chamber of Commerce, China Plus One is seriously taking shape. Now the Chinese companies are also not sitting idle. Chinese companies are seeing that China Plus One is happening. So you see the Chinese companies are investing in ASEAN, they are investing in India, they are -- though, India they might not be major taken, but still they are trying hard to like I will say that Nanjing high-speed largest gear -- wind gear making company is setting up shop in India and Chennai. So Chinese companies are also going out and setting a shop in backyard your North America as well.
So while China Plus One is happening, China itself is risk mitigating themselves by putting investments outside China. And we have plants -- these days are not loaded. So they are doing their best to put plants in Indonesia, they're put in Vietnam. They are trying their best to risk mitigate themselves by spreading out their investments outside China. So this is an interesting juncture. What I can say is that India is sitting on a very nice point of time because of the fact that a: India -- investment India as investing is going to happen. The infra built up is happening. The rail has to go a long way. And similarly, the infrastructure connected to the marine, connected to airports, all this will keep on coming.
And then India is destined to take a nice pie a piece on this China Plus One. Obviously, Government of India will have to be the best that will become very tax friendly and all those things continue the way it has been happening in the last 10 years. I think India will see the next 10 years as the best period where nobody can stop that unless something catastrophic happens other ways. So Timken is also on the China Plus One. I can say that we have a heavy investment on China. We are committed to China that is the Timken company. It's a local market. It's a huge installed base. But at the same time, given the global supply change mitigation, so things and company is also working on that.
Next question is from the line of Abhishek from DSP.
Sir, just in terms of the revenue mix for the quarter, would you be able to give some light or maybe on an YTD basis in terms of railways, process, exports, mobile and distribution, any thoughts, sir?
Yes, sure. So if you see the breakup of her last quarter, which was Q3, '23/'24, or out of the total pie, 18% was rail, and mobile, as we call it, which covers both off-highway and heavy truck was 22%. Distribution is 17% and process industry is 21%, and our exports was 20%. So that was the percentage breakup.
Okay. So sir, 2 key segments, if I look at both exports and distribution, which inherently should be higher gross margin segment for you, both are down on a Q-on-Q basis. Is that the reason for lower profitability in the current quarter, any thoughts?
So the -- if I compare the PBT margin of Q3 versus Q2, same financial year, 1% was attributed to the product mix and export. That was certainly a 1% ground there and another 2% went to the when you kind of leverage your fixed cost and the plants are not loaded well. And in India, you can't flex the labor, you can't lay them off. So that 2% loss is due to the suboptimal leverage in cost for significant volume reduction.
Got it. That is very helpful. Just in terms of these 5 segments, Railways, you spoke about that there is a strong demand, which is kind of coming through both in India as well as overseas. So how should one look at this piece? Is it like more like a teens growth that 1 should expect in the domestic railway business, given the overall outlay that we are seeing and there's so much of new trends which are coming up. Any thoughts, sir, on that?
Yes, rail demand if you divide the rail demand domestic is freight. It is obviously freight is growing. The passenger is also growing, which is the Vande Bharat, the fast trains. And then the metros are also growing. Metro is a very small portion of it. So it is going up. Not that many locomotives, but still growing, but the major chunk of Indian railway domestic is freight followed by the passengers. So that is certainly growing.
So the consumption is growing there, though it is not at a very high CAGR, but it's growing. Every month is -- every year is better than the previous year if you would imagine way.
On the export side, the freight in Brazil is doing currently, as I said earlier. So obviously, they need freight bearings as well. So that gives a good capacity utilization for rail assets for us here in Jamshedpur, which means that you can leverage volume further. And as you guys know, the bearings are very CapEx intensive, fixed cost is there. We help with new lines. Depreciation is there. And if you can leverage these capacities well, they certainly help us greatly on the cost. And then the back end of the supply chain also, if you are sourcing more and more of the same part numbers, obviously, that helps a little bit more on the cost side.
So more consumption of the rail lines due to a cost advantage. And similarly, when you don't leverage them like on our truck side, if you don't do the same thing works the other way around is that you have assets which are dependent on volume. And you can't get the gain as the volume might be low and that also impacts the previous supply chain as forging is a heavy duty equipment making process where the setups are larger. And if you run smaller die sizes, the waste for a 5,000 piece run a 50,000 piece run is going similar for the back end of the supply chain has those impacts.
Okay. Sir, just in terms of exports, did mention briefly, but would it be fair to assume 50% is trucks and 50% would be railways for the exports piece?
Yes, roughly, that is -- that has been the rough time, sums on 45%, 55%, but overall, 50-50. And currently rail markets are tracking more we have installed 1 more double cup line, which is the outer line so that we can produce a little bit more. So we are working, as I speak, 6 days, 3 ships and also installing 1 more line on that.
Okay. So 50% of the export market is growing for you. It's the rest 50%, which has seen a sharp decline and the overall export pie has come down from 35% to 20%. That's the way to look at it.
That is right. That is absolutely right. And the truck market, there is a big time saying that H2 this year, that is American H2 that is calendar year should start picking up. So let us hope if it picks up and when that leverage our [ feedbacks ]. In the meantime, Indian truck market, you guys know better then me. So we'll have to see how the Indian truck market also picks up or not picks up as we come closer to the election time.
So sir, whenever this overseas CV, it will be largely classic trucks, which will drive growth for the export market...
Yes.
So your expectation is whenever it comes back, it should come back pretty sharp because the decline also...
That is the beauty of these part of the demand it falls like a rock and come back like Gujrati kite, Not the animal, cat.
Sir, the other aspect is also on the process part of it. Now what I understand is you're more on the heavier on the steel side of the business and that's a piece which we see a lot of capacity addition happening. So how should one look at this process part of the industry and [indiscernible]?
Yes. So largely process is connected to core sectors, so steel, which is metal making, cement and power generation. Now if we talk about steel, so steel is becoming more attractive. Last year also, obviously, when the capacity is announced, it is a 2-, 3-year term to get the installed base coming then it is getting installed. So this is happening as we talked pretty nicely, more steel installed, I mean more bearings and which means more steel getting produced and further more consumption of bearing taking place. And so we have a product offering in the metal industry, which is second to none. So obviously, that helps because as most of these application on papers have been designed generally around Timken technology. So we are looking pretty much bullish on the metal side.
And we are the only company in India which are running 25 shops inside the steel companies. You name the steelmaker in India, we're inside their shops. And what we do is that we ourselves mount the bearings, we choke, dechoke and maintain those so that the customers also get with better yield on the life of the bearing. So we know the trends. So we know the mills, and we are deeply influenced through the service model as well. So steel is pretty good.
On the ebergy side, as we are also part of [ Pulverizer ] business. But as the solar business is picking up in India, and now you see that in India, especially Tata, solar and FTH, now they are coming up with these solar panels, which will rotate. So Timken India has already started working on it through our company in U.S. Cone Drive, which also owns a company called [indiscernible] in China. So we have started producing some [ steel ] by ourselves in Bharuch, still at a very nascent stage these are small components. But these are effectively helping the solar panels to move around as per the direction of the sun.
And wind as the Government of India is really bullish on putting up wind mills, the target they have set for themselves is pretty heavy. And we see that local wind market. Currently, the wind market in India was more gear-boxes is getting exported out of Red Sea, et cetera. Now there is a very nice chance driven by Government of India and Adani Green and all these guys are putting up and in the process of putting a wind mills in Saurashtra, in Kutch area, et cetera. So our wind also looks pretty good. The metal looks also good.
And then on the cement side, we do have the product offerings, but they are all imported. So as soon as we complete our Bharuch plants by the end of this year, then we'll start producing certainly, it won't be the whole hog or CRB of the rain, which will start catering into the seaweed business or paper business or the sugar business as well. So we are looking very happy with the steel market currently with the investments coming up and with our knowledge of steel should help us on this shoulder, which is a new thing only Timekn is the bearing company will have this product offering. So we have started doing that. It is small, but it can become big as China Plus One issue of tariffs, so importing those [indiscernible] out of China into U.S. versus inputting them on in India is another fun ride market, we'll see as it comes into being, can't predict what will happen, but the direction is being set towards that area. And then in the local wind market of 3 megawatt, 5-megawatt, Adani Power and companies like that starts getting pretty good on that. So that would be another sunrise in coming months and years.
Sir, just 1 question on the solar part of it. You are developing the product for the rotating solar panels towards the sun and maybe those bearings and other things will be required. Does the -- does your peer already have a product or it is a new product innovation that will happen in these?
Per has this product for last 30 years.
Okay. So peers have the product, you have to develop it.
So let me qualify the statement. Peer has taken over a company called Cone Drive, which has this product for the last 30 years.
Okay. That's helpful. Sir, just lastly on the distribution part of the business. How are you focusing on that? Because that's again a very lucrative business in our understanding, how should one look at that aspect?
So if you see distribution now let us divide distribution into 2 cases. One is the industrial distribution and the other is the auto distribution. The auto distribution is the heavy truck bearing change, which is mostly largely we lend -- we lend bearing exchange gets a different premium generally get built on that change. So that is one piece of distribution, which has it's growth, but we see that our premium competitors are leveraging their brand, and they are using in the auto aftermarket. They are they are getting into windshield, wipers, oils and things like that. So that is one part of distribution, which we are limiting to bearing and wheels. We've been selling wheels in India under our chemistry [ collabs ] for last 20 years. So we are limiting that to our bearings and to wheels and adding a related party to that, but not going to be extreme of producing wheels, shields cleaners and things like that.
But on the industrial side, we've been growing CAGR double digit. Obviously, steel is an important piece of that, which is a strong MRO requirement. But beyond steel, we are now getting into MRO of the general industry, where we were lacking a; product offering, and b; the reach. So we are augmenting our reach and the product offering as well importing from our other companies of Timekn and enhancing our reach into towns and areas where we are getting consumed. So general industry is a summarized area for us, and we are investing heavily into our distribution channels to get into those areas.
Next question is from the line of Kunal Vora from White Whale Partners.
I'd love to get some more color on the railway side of things, in shield in the wagon manufacturers as well...
I'm sorry, I cannot hear you.
Is this better?
Little better, yes.
Yes. So I wanted to get some color on the railway side of the business. You see a lot of the wagon manufacturers as well as some of the competitors reported very robust kind of growth numbers here. So can you just give us some color on how you're seeing our business grow and whether we are losing any market share to them?
Yes. Okay. So on the rail side, so on the freight side, we are the leading player in the Indian rail freight market. And when we say freight this freight over the years have changed itself a little bit. One is that once upon a time, railway board used to buy it all themselves and then what they used to call it as a free supply given to the wagon builders. So they have changed it. Now they are asking the wagon builders who code for the wagon to buy everything themselves.
So this is a wagon builder now on 1 side, and they have heavy warranty guaranteed commitments to back to the Indian Railways. So that is 1 piece of it. And second is that.
These wagons when purchased by the Indian railways go into circulation, then every 4 years, they go through what we call as the PO et cetera. That means that the bearings will get stripped and then they will have to be -- if they're old, they started new bearing coming.
So there are 2 kind of buy on freight. One is we buy from the Indian workshops, which is done by the railway board after consolidation. And then there is also now the buy by the wagon builders. So wagon builders have to rely very, very well on very established players because of the fact that if they have one derailment, Government of India, Indian Railways will really wipe their pockets away because of the heavy warranty clause they have. So Timken is an established player. We do all our mountings on these wagons ourselves. We ensure high quality. We ensure mounting has done well, and we have a relationship with the leading wagon builders like [indiscernible] for a number of decades. Our teams are well interested. Timken has the right capacity in place, and we have developed the supply chains over the years. And we are building a new technology in terms of sealing solutions and [indiscernible]. And then Government of India on the freight side is also slowly working on dedicated freight corridors, craft phase, which is a little bit heavier bearing than the normal freight bearing.
So we are well entering in this game. We are the leading suppliers, and we had the [ combustion ] was always there. It is not that [ combustion ] was not there, it was there always and we remain always there. And we are using technology to make sure that we remain ahead of the game. We are also using special [indiscernible] practices, which ensure that Indian railways get better uptime on these bearing. And then we are also doing the refurbishment of bearings, which means that when they struck the bearing off, we will -- we do the refurbishment, and we are also looking at getting more nearer to the workshop, we already have a footprint in heavy footprint in Jamshedpur, and we are building in other cities in India as well.
So freight, we have a strong function and we intend to keep that portion using technology, using service, using our brand equity with these wagon builders and the relationship as well. So that is where the freight is and freight is obviously Government of India, Indian railways had 300,000 wagons on circulation. There is the rolling stock needs to get changed at some point of time, they need to put more wagons on dedicated freight corridor, which is Class K. And this market, as India produces more and more, so you can understand that with our roads being congested rail freight business should be better, though roads are coming up very well as well.
So I think freight business is going to remain nice and long. We are nowhere close to what China is consuming. The biggest market of rail freight is America followed by China, Russia, India is the fourth largest market of rail freight business. So if we have to if our economy becomes $10 trillion. So obviously, you can understand that $10 trillion and out of which, 25% is manufacturing. So $2.5 trillion worth of goods to be transported. So a lot of bearings will get consumed on the freight side.
What would be our market share railway side ?
More then 50% currently.
Sorry?
More than 50% currently.
Okay. And so fair to say that we're not losing any market share?
Sorry.
Is it fair to say that we're not losing any market share?
No, we are gaining market.
We're gaining market share?
That Is right.
So is there a lag now than it was before in terms of when the wagon manufacturers kind of win the orders?
We were in miniscule market share in the last 20 years from a miniscule market share. When we started Tata Timken, the first thing we started assembling was rail bearing, we had 0 market share in 1990. So only show we had 0 market share at Indian railway. Today, more than 50%. And the pie is growing. Obviously, the wagons build is going up. And this is an item which gets consumed. So right. .
But like you mentioned that the ordering is now done through the wagon manufacturers as well. So is the lag higher in terms of when they win the orders versus when you deliver to them versus what it had been earlier where you will deliver directly to the railways?
I would say earlier, the process was that the railway Board will buy the bearings, they will tender the wagon to different guys and then the free supply will go through CM and BI to them. That was a highly complicated and complex procedure. So by the time we got the order from railway board and then allocation from CMBI, supplies through wagon builder from wagon builder, we would get the GRM and put it at [ FMC S607 ] and get the payment, it was highly complicated, though we have mastered that. .
Currently, it is direct relation. They have the forecast. Once they win the tender, they make their production plans, they have the forecast in place and it is pretty much now more into kind of a symmetrical as soon as they get the order, they start to see somebody got 20,000 wagon, order of 10,000. So he plans it out, and then gives us the order end of forecast. So now it's more seamless as compared to before.
Sir, do you have strong visibility then on the order book as to how you see the railway sale business be?
We do have visibility of the order book at least for 6 to 9 months currently.
And so how do you expect this to -- this part of the business grow over the next, let's say, year or so?
Yes. So things are rolling, things are in motion, more tenders are coming up and things are shaping up well.
And when a tender is won by the wagon manufacturer, after how long do you actually supply the bearing?
So basically, what happens is every year, there's wagon orders every year, they are winning tenders and they take time to complete that. So if I call say, every month is supplies on. So they might themselves get delayed because of other reasons to complete a tender within a time span of 1 month, they might go into 14 or 15 months complete order by the time they have the new order. So for us now, it's a running machine. 3 years back, there were the slow -- the start bumps and all that. Now it is a complete running machine. So every wagon builder has -- if I say today has a slight backlog. So they need components, not only bearings, they need other components, bogeys, casting, things like that.
And when they have to deliver the wagons, do the bearings go on their last in terms of when you're actually supplying the bearing to wagon suppliers?
Bearing has to go first because [Foreign Language] is the first. So [Foreign Language] gets mounted on the [Foreign Language] and then the bearing gets, bogey [Foreign Language] fabrication [Foreign Language]
Understood. Fair enough. The other question was on wheel set localization and what sort of opportunity that would mean for us?
So, very good question. So there are 2 kinds of wheel sets which are used in India. One is the cast wheel, which is like old technology and other is the forge wheels. Now the forge wheel sets. As you make more wagons and you do not import them, wheel and axle factory here in Bangalore was the largest supplier once upon a time, and we used to import -- when I say we, Indian railways, we import from China, from Spain, [Foreign Language] So localization of wheel is on a very high priority of Government of India, Indian railways, obviously, because of the fact that they want more wagons and Make in India is part of it. So as you know, we have now Rama Krishna has already started that and a couple of other guys are also there. And I can't discuss now, but it is a good thing where there is some further technology further changes can happen as we localize more wheels and they can come as an assembly and things like that. So that localization is a good move, will help us certainly in bringing more value to the railways through the wagon builders.
How far are we from actually kind of realizing business on this front?
Sorry?
How far are we from actually supplying...
I cannot give you any further details on this yet, please.
But is it like a year phase, is it 2 years away, like is it...
I can't tell you anything on this.
Okay. the last question I had was regarding the Bharuch plant, right? And what -- can you just give us some color as to what we can expect from that going forward?
Sir, you were asking about the Bharuch plant?
Yes.
Yes. Okay. So as we speak, the pillars, columns are coming up. So we should be able to hit the time line, which is by the end of this year all the machines are already at the port. We are getting machines from different parts of the world. Obviously, these are going to be state of art, robotics and things like that. So machines are already either on the ship, some of them are now Nhava Sheva. So we should have most of the assets inside our buildings in Bharuch. We got a separate storage buildings available. They should be there from already -- some of them are in transit towards Bharuch. So between now and next 2, 3 months, all the assets will be there. The building shouldn't get completed by July. That means that when I say completely means that we can need the assets in position. And hopefully, by end of this year, we should be starting to see that.
So as soon as we are ready by the end of this year, the markets which we'll go after is connected to startover on cylindrical bearings, and we'll start producing for the domestic market, which is a material handling market like Metso, for example, and then also the [indiscernible] so there is a very nice area of export in the ASEAN region where people use a lot of cylindrical bearings in the palm oil business, et cetera. So hopefully, next year, by this time, we will be supplying to the Indian customers out of that plant, supplying to exports as well out of this plant. So that is -- that is how the time lines are. We are pretty much cleaned and hopefully, next year, when we inaugurate the plant, we will have the chance to get some of you to see the state of a plant. It will be 1 of the best in this part of the world. And we are pleased with the performance currently. We are going all hands on the deck building the plant.
Next question is from the line of Mayank Bhandari from Asian Market Securities.
Sir, my first question is on total revenue has been flattish in 9 months. Can you break it down in terms of volume de-growth or growth and then pricing?
So if you see our 9-month performance '23, '24 versus '22, '23 the intercompany, which is exports is down by 10%. We had a sale of sale of INR 2,011 crore, which was slightly up. And if you see -- if you want a little bit deeper color, our rail was 9 months to 9 months was up by 3%. And Mobile others were up by 1.6%. Distribution was up by 1.1%, process was up by 5%, intercompany, as I said, was down by 10%.
So against INR 1,989 crore sales in 2022, '23, we are at INR 2,007 crores roughly. So the breakup, as I said, rail, up, mobile up, distribution up, processor up, Obviously, rail was 3% and process was 5% have been, but the intercompany was down by 10%.
Sir, I'm taking on the organic growth. I mean, the volume growth, so you're taking this is all this volume growth?
I'm saying organic only.
Okay. Okay. See, because you see the parent's Timken parent's recent calls, they have highlighted that this year of CY '24 is going to be a decline, organic decline of 4% to 5% because they are expecting very bad.
Yes, I cannot comment on the parent. Obviously, we are looking at the globe. And in Globe, there is China. And China, everybody knows is a big time down. So obviously, that is connected to that. I did not hear the call, but I read it. So you must have seen the India piece from our global CEO there. So India organic export has declined, but organic is pretty much, okay.
And for global, China is definitely down, definitely down for all the companies. So that is a big piece, and China was obviously a big piece. And in China, wind was a big piece. So that is where it is coming from.
Because they are -- I think their expectation of a first half decline of 40% in China. I mean I think definitely, it impacts our business also is what I understand. So first 2 quarters or the next 2 quarters, how do you see the export?
I cannot comment on the global things, not afraid speak about that. But for India, as I said, the domestic organic growth is there very much. Our and our exports are down, which are connected to that global peace.
Okay. And secondly, the company -- the parent company has done almost 6 acquisitions last year. Just wanted to understand, does any of the acquisition impact or business anyway in India?
So none of these acquisition have been M&A, they don't have any factory per se in India. There is a company called GGB, which has some sales in India, I think around INR 50 crores sale in India, which is a Garlock Bearings GGB in India. And then there's another company called Des-Case, which is again in North America, they have a sale in India less than [ INR 1 million ]. So these takeovers roll on, for example, what they have taken over Nadella. Nadella has the sale in India. This is part of, obviously, global technology, global takeouts and things like that.
For us, it has certainly a long-term strategy. Has there been factory in India and we could have kind of been thought about it differently. But certainly, if you see globally, India is one of -- one is China plus one. The other is obviously the importance of India cost quality, delivering piece of it. So as -- and forget Indian, any big companies in the engineering space as they take over companies wherever they take them in the world and they have footprints in India. It is a matter of time those supply chain models will start from India. For example, Indians can make chains. Indian can make belts, Indian can make filters. And then if there is technology available at some point of time, those gaps will get bridged and will become a nice business case.
So to your obvious question, none of these 6 companies[indiscernible] globally, they don't have any manufacturing footprints in India. They do have in China. They do have in North America, centrally in Europe. But then India has a sweet spot for future of becoming part of the global supply chain. So if there's a technology, the manufacturing base can be created in India, which is, again, a nice work in progress for Timekn India Limited. How do we leverage this technology? How do we create the supply chain? And obviously, investment should be required or M&As would be required. So we are always continuously evaluating them. Even last week, I was around India looking at different companies, looking at possibilities, things like that, but nothing concrete yet, work in progress.
Okay. And also, I mean we have been -- if you understand that globally, there is a lot of consolidation, headcount reductions in some of the facilities being in consolidation. So is that kind of limited to global or not impacting Indian business?
Not impacting India. So there are 2 pieces of it. One is, obviously, the cost control with the global companies do and there is a chance of a recession. In India, we are currently running both our plants pretty well, and we are investing heavily in our distribution channels and things like that. So we are not looking at any contraction per se, but cost has to be efficiencies always required in manufacturing companies. So more robotics and more process automation, which can make things more better than this we do more jobs with less people. So that science keeps on volume in manufacturing companies. But per se, that reduction, we are not looking at in India at all.
Okay. And sir, just on this railway part, you highlighted North America railways is doing good, and Brazil, particularly is doing good. So within export, how much it is would have been grown in 9 months within exports?
For us, exports is rail and this both together. So they are down. As I said, they are down 9 months by 10%. As -- and now as a speak to the previous question, currently, the rail market in both North America and the Americas is going up. So that should impact our future manufacturing and export sales. So they were not 9 months -- in the last 9 months, it was not at that level.
Sorry, not.
Now past 9 months, those exports have railed compared to the forward-looking, the forward-looking is a lot bigger than the regression.
Okay. Okay. Forward looking is a lot better than regression. Yes. Sir, my..
Sorry to interrupt...
Just last question Sir, I just wanted to understand, how much last year, Indian bearings industry would have grown in your view the last 9 months or last year?
So Indian bearing industry is still a $2 billion industry. So it is not a very big industry compared to say China used to be $20 billion. So -- and out of this $2 billion industry, which is a bearing industry, half of which is ball bearing and half is industry. So industry is going at a double-digit CAGR. And we'll keep on growing because $2 billion is too small. And out of that $2 billion, half is ball bearing, which goes into 2-wheelers, 3-wheelers and or small passenger cars, et cetera. So as we become more mature as an economy, generally, the bearing distribution should be 50%, mobile, 50% stationary 50%. In India is still 65% is mobile and 35% is stationary. So the 35% has to become 50% and it is growing the industry growing double digit. Now the ball bearing, we don't track. So I cannot comment on that, please. But it is a small market, which has to grow a lot on the industrial side. Okay, we can go for the last question.
Okay, sir. We'll take a last question from the line of Vipul Kumar Shah from Sumangal Investments.
Sir, within rail, what is the freight contribution and so that figure I missed. So can you repeat it, please?
Yes, it's roughly 60% is freight.
And lastly, what additional turnover we can expect from our Bharuch plant in next financial year, '24, '25 or it will be in '25, '26 only?
Yes. So I would say that [ financial ] share it will be small. I think it is to be fair to the whole thing. '25, '26 will be really when the volumes and will be there. There will be a small one that INR 19 crores INR 20 crores, INR 30 crores or INR 50 crores. So we want to do faster, obviously. But it is real gain would be '25, '26.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management.
Ladies and gentlemen, on behalf of Avendus Spark, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.