NRB Reports Third Quarter 2006 Results

NRB Bearings Inc. (India; BSE: 530367) reported results for fiscal third quarter 2006, covering the period ended December 31, 2005. Sales in the quarter rose more than 18%, to Rs 647.0 million (USD $14.6 million) from 2005's Rs 547.2 million ($12.3 million). Net profit was up more than 25% in the quarter, reaching Rs 86.1 million ($1.9 million) from 2005's Rs 68.6 million ($1.5 million). Company President Harshbeena Zaveri said, "We want profit growth to be 30% plus. We definitely expect to maintain that top line growth." Founded in 1965 as a joint venture with French needle bearing manufacturer Nadella, NRB now has several facilities in India and 13% market share. NRB manufactures needle roller, thrust and cylindrical roller bearings; the majority of its output -- 85% -- goes to automobile and light truck manufacturers. In the Indian market, NRB is also a key supplier to the textile and rail industries. Some production is exported to European automakers such as Renault and Volvo, but exports currently account for only 8% of sales. Going forward, NRB has established a far more aggressive strategy aimed at building export sales. For example, it has nearly doubled the R&D budget, in large part to fund the work needed to capture additional European sales and market share. Domestically, its largest customer is heavy truck manufacturer Tata Motors Ltd., followed by two-wheeler producers Bajaj Auto and Hero Honda. NRB is also seeking type approval by GM, Volvo and others. Until mid-November, Timken owned 26% of NRB, a legacy of its acquisition of Torrington which had acquired Nadella. Timken divested that 2.5 million share ownership to two Sahney family-controlled entities for Rs 230 per share, or $13 million. The Sahney family now says it will gradually divest some of its NRB ownership, to reducing holdings from 85% to 75%, to comply with stock market requirements limiting ownership stakes.