Make in India - Innovative solutions generate strong growth

Freudenberg, the global family-owned company, continues on its successful trajectory in India. In 2014, the technology group generated overall sales of Rs. 1,497 crore (+ 32.8% vs. 2013) in India. As of December 31st, 2014, Freudenberg employed 2,800 full-time associates at around 50 locations in India - with four R&D centers and 14 production sites with state-of-the-art shop-floors. With that and various initiatives Freudenberg supports the national program of Prime Minister Narenda Modi, 'Make in India', which aims to turn the country into a global manufacturing hub.

Total global sales of the Freudenberg Group amounted to Rs. 56,860 crore or €7,039.1 million (2013: €6,662.5 million), representing growth of €416.6 million or 6.3 percent over the previous year, thus resulting in global record sales for the fifth consecutive year.

"India is a market of considerable potential for the Freudenberg Group," Dr. Jörg Matthias Grossmann, Regional Representative India, said today at the press conference in Bengaluru. "India makes a considerable contribution to the Freudenberg Group's innovative strength. We are therefore committed to systematic investment in this region over the long-term."  In 2014 the Group made local investments totaling to Rs. 97.6 crore in India.

Largest investments
One significant project is the new production site of Chem-Trend and Klüber Lubrication in Mysore, that will officially open in August 2015. For a total of around Rs. 135 crore, it is one of the largest investments in the Asia-Pacific region of the Freudenberg Group. This is where more than 20 products will be developed and manufactured for the customers in the South East Asia/Pacific region. The site at Mysore – buildings with a surface area of 17,000 m2 on a site of some 40,000 m2 – also hosts product development facilities and major tribology testing facilities with equipment such as an FZG test rig. FZG stands for Gear Research Centre. This is the only one within Klüber outside Munich and the only one in India until now. 

At the start of the year, Freudenberg Sealing Technologies massively expanded its commitment in India. The company has been involved with the Indian market through its joint venture Sigma Freudenberg NOK (SFN) in Mohali since 2001. In February 2015, SFN opened a second, completely new factory in Basma about 35 km away. The plant marks a new stage in Freudenberg's commitment to India. At a cost of more than Rs. 155 crore, a highly modern production facility has arisen on more than 23,000 square meters. For the most part, radial shaft sealing rings and O-rings will be produced at the site for the automotive sector and general industry. The growing demand in a number of segments – the auto industry, agricultural and construction machinery, mining, power stations, and the steel industry – made the construction of a second production facility essential.

Make in India
"Our R&D and manufacturing activities as well as various other initiatives foster our long-term commitment," said Grossmann. With that Freudenberg supports the national program of Prime Minister Narenda Modi, 'Make in India', which aims to turn the country into a global manufacturing hub: raising manufacturing from 15% to 25% of India's Gross Domestic Product within ten years, creating new jobs, making foreign investments easier and offering perspectives to young people. "Make in India has been our strategy for more than a decade," stressed Grossmann. Freudenberg's presence in India is founded on business ties spanning almost a century.

Steady growth leads to new jobs. At the new SFN factory in Basma for example, more than 2,000 employees – half of them women – will manufacture seals for the Indian market and for export.

Education is Key
The Freudenberg Group has a long-term commitment not only to the Indian market, but also to the Indian society. It takes responsibility as a good neighbor wherever it holds full management control – especially for environmental protection and educational prospects for children and young people. In the area of Nagapattinam, Freudenberg provides sustained support for the region affected by the tsunami in the form of a Training Center. In the meantime, about 350 young people have been given an opportunity to train in a technical vocation so that they can shape their own future and the future of their country.

Education is also key for Freudenberg as an employer. A few years ago, the company started its FIELD (Freudenberg India Entrepreneurial Leadership Development) program with the intention of training and developing Freudenberg's future managers in the areas of sales, operations and finance. The participants of the program are mainly recruited from the Indian Institutes of Management in Bangalore and Kozhikode, the Indian School of Business and the National Institute of Industrial Engineering. Freudenberg offers its graduates a global perspective from the beginning of their career and the opportunity to take on management positions. The Freudenberg Group also embarked on a journey of Talent Management and created opportunities for exchange of high potential employees between Business Groups by holding Talent Dialogues across the globe – in Germany, China, North and South America and India. The goal is to identify the top talents within the regions and open up opportunities for them to develop and apply their talent and skills. Besides, such an exercise also develops great focus among people leaders with regard to potential competencies and developmental needs of their team members.

Freudenberg financial performance in 2014 and outlook
On the basis of the pro-rata consolidation of joint ventures, the Freudenberg Group reported sales of €7,039.1 million (previous year: €6,662.5 million) in 2014, representing growth of €416.6 million or 6.3 percent over the previous year. Adjusted for the effects of acquisitions and disinvestments to the amount of €131.0 million and exchange rate effects, sales were 5.6 percent or €368.0 million higher than the previous year. Sales rose in all Business Groups. Consolidated profit ran at €478.3 million (previous year: €401.5 million), mainly as a result of market success and innovative products. As at December 31, 2014, the Freudenberg Group employed 40,456 people (previous year: 39,897 people). 

The financial data are based on the pro-rata consolidation method (including the activities of the 50:50 joint ventures) which Freudenberg continues to use for the management of its operating activities. Under IFRS financial reporting standards, 50:50 joint ventures are consolidated by the equity method. This means sales and employee figures are not taken into consideration. 

Overall, Freudenberg expects a successful year in 2015, with sales growth outpacing the market. The high quality of innovative products aimed specifically at meeting the needs of the Group`s customers, is expected to generate further growth in India.