Asia Overview

Rakesh Makhija

President, Asia

Presentation contents

1. SKF’s presence in Asia – History and presence

2. Asia direction and ambition

3. China highlights

4. India highlights

5. Opportunities and challenges

SKF in Asia – History and presence

1

SKF in Asia – Globalized from inception

Established: 1916-1991

Sales 2009: SEK 12.7 billion

Employees: About 9,000

Production sites: 19 manufacturing sites in 6

countries

SKF presence: All major Asian countries

Distributors/dealers: over 600 locations

Global certificates: ISO 14001

OHSAS 18001 certification

SwedenFranceGermanyUSAUKDenmarkBelgiumBrazilNetherlandsNorwayRussiaSouth AfricaArgentinaAustriaChileChinaCanadaUruguayPeruCzech RepublicIndonesia

19071908190819091910191319141914191419141914/1991 *)19141916191619161916/1988 *)19171917191819191919

ItalyAustralia MexicoSwitzerlandPolandYugoslaviaIndiaGreeceBulgariaRomaniaSpainBoliviaPortugalColombiaVenezuelaTurkeyHungaryNew ZealandJapanZimbabweZambia

191919201920192119221922192319241925192519251927192719271927192819281928193219541963

IranKenya MalaysiaSingaporeFinlandUnit. Arab EmiratesPhilippinesThailandKoreaTaiwanVietnamCroatiaLatviaSloveniaMacedoniaSlovak Rep.AlbaniaBosnia HerzegovinaKazakhstanUkraine

19701973 1973197319741988198819881988198919911922/1991*)19931922/1993*)1922/1994*)199519951922/1996*)199619961996

*) first and second establishment

Establishment of companies

0

2000

4000

6000

8000

10000

12000

14000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

SKF Sales development in Asia

13% annual growth in the last 10 years!

SKF Asia revenue of SKF Group, 2009

23%

SEKm

Net sales 2009

China

India

Rest of Asia

4932

19

Asia manufacturing footprint

Shanghai

Pinghu

Wuhu

Qingdao

Dalian

Wafangdian

Beijing

Taegu

Busan

Taipei

Nilai

Jakarta

Bangalore

Pune

Ahmedabad

Haridwar

DGBB

linear motions

Actuation & Motion Control

Hub units/auto prods.

Seals

Medium Size Bearings

DGBB

DGBB /TRB/HUB

Large Size Bearings

DGBB

Seals

SKF NankouTBU

SKF Wazhou

SealsLarge Size Bearings

Asia – Other activities

Shanghai

Pinghu

Wuhu

Qingdao

Dalian

WafangdianBeijin

g Seoul

Busan

Taipei

Nilai

Jakarta

Bangalore

Pune

Ahmedabad

Uttarkhand

Bangalore Application Development Center

Global Technical Center

Global Technical Center

• Technical Centers• International Warehouses• Solution Factories• SKF College Campus

Singapore

Singapore International Warehouse

Shanghai International Warehouse

Pune International Warehouse (Planned)

Shanghai Solution Factory

Pune Solution Factory

Tianjin

Tianjin Solution Factory

Taipei Solution Factory

Singapore Solution Factory (Planned)

Australia Solution Factory (Planned)

Japan Technical Center

SKF CollegeCampus

SKF College Campus

Asia Six Sigma

2009 status:• 70 Black Belts

• 570 Green Belts

• 780 projects closed

Hard savings

2006: SEK 19 m 2007: SEK 23 m 2008: SEK 69 m 2009: SEK 102 m

4 dimensions:”Standard” Six Sigma, Design for Six Sigma, Lean Six Sigma and Six Sigma for Growth

SKF Community engagement

India•SKF Sports Academy•Nachiket Balgram •Udyogdham•Rainwater harvesting

Malaysia, volunteer

China•Hope School•New Hope Foundation•ORBIS•Local orphanages

Asia – Direction and ambition2

SKF Competitive advantage

• SKF Brand

• SKF engineering knowledge

• Technology leadership

• Unmatched distribution channels

• Range of value added products/services and

solutions

• Excellent logistics

SKF in Asia – Overall ambition

• Clear leadership in Asia region

• Focus on building a strong Asian infrastructure:

- Competitive local technology and low cost manufacturing

- Account management & relationship skills

- High customer and distributor satisfaction

- Build high retention and CoMo levels among employees

- Grow non-bearing platforms

• Leverage the SKF brand

• SKF Care and Six Sigma/Business Excellence as guiding principles in all operations

The Asia mission

Create an environment to drive and nurture

• INNOVATION

• PERFORMANCE

• ATTRACTIVE EMPLOYER

• VALUE LEADERSHIP

• SUSTAINABLE PRACTICES

China highlights3

Net sales development - SKF China

0

1000

2000

3000

4000

5000

6000

7000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

SEKm

1999 – 2009

Net Sales +24% per

year

14 September 2009Sinovel Wind Co. Ltd and SKF have signed an Memorandum of understanding to strengthen the cooperation between the companies further!

Sinovel Wind Co. Ltd delivered wind turbines equipped with SKF advanced technology to Asia’s first off-shore wind farm at Shanghai Donghai Bridge.

Wind Energy - Partnership agreement Sinovel/SKF

Inauguration of ‘Wind Industry Service Centre’ in SKF Solution Factory, Shanghai on 14 April 2010

Show RoomWind Energy Solutions

Remote Diagnostic Room

India highlights4

Dun & Bradstreet – Rolta award 2009 Three years in a row – top company in bearings sector

Net sales development SKF India

SEKm

0

500

1000

1500

2000

2500

3000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1999 – 2009

Net sales +11% per

year

• Overall business growth 58% (y-o-y) and growth in profit is 200% The best quarter ever

• Haridwar and Ahmedabad factories commence commercial production in March

• SKF Class E Grease Seals manufactured at 3SI Bengaluru has been granted unconditional approval by AAR (Association of American Railroads). Order for 590 k pcs from Indian Railways – contract value SEK 20 m (INR 120 m)

• Agreement with Enercon India to supply slewing bearings for pitch and yaw applications. Contract value SEK 80 m (INR 480 m),2010 – 2012

1st Quarter highlights 2010

• Rocker arm and bearing for two-wheelers

• Rollers for clutch applications in two-wheelers

• Piston pins and crank pins for two-stroke engines in lawn mowers

Global two-wheeler centre, Bangaluru (ADC)

• Clutch lifter bearings for two-wheelers

• One way clutch for motorcycles

• Cam followers for diesel fuel injection pumps

Contract date:-

Contract duration:-

Sales revenue:-

Operating profit( %):-

Cairn India – Rajasthan Operations

Oil & Gas – Complete Condition Monitoring ServicesCustomer need:Several successful oil & gas discoveries in the area, CAIRN Energy is in the process of development of the Mangala Oil and Raageshwari Gas Fields.

SKF will manage Condition Monitoring & related services for the Rajasthan Assets.

SKF Solution:Single source service provider for a comprehensive range of Predictive Maintenance Practices covering Vibration Analysis, Motor Signature Current Analysis, Thermography, In-Situ Dynamic Balancing, Laser Alignment, NDT Services, Electrical Predictive Maintenance for Transformers, Breakers, Relays, etc..

Customer benefits: Single service provider for taking care of all condition monitoring requirements spanning mechanical, electrical and static equipments, including pipelines.

SKF benefits:The combination of services offered enables SKF to uniquely differentiate itself as a complete condition monitoring solutions provider for the industry.

Contract Month:February 2010

Contract duration:12 months

Order Value:INR 20 m/year

Asia – opportunities and challenges

5

Developing

China - Regional development

Emerging

Developed

Undeveloped

• The development will continue.• Development needs are dramatic and business opportunities tremendous. • Our task is to turn all challenges in China into business opportunities for SKF.

Strategic imperatives

• Intellectual workforce in Asia (primarily Asians)

• Local leadership

• Cost competitiveness

• Strong manufacturing footprint in Asia to support development.

• Value selling and account management skills

War for Talent - People strategy in Asia

• SKF Values & Code of Conduct - embedded in Asian organization

• Excellence in leadership capability – ‘SKF College’

• Growth, innovation and learning – key elements to employee retention

• Effective reward policies in Asia

• All possible sources for recruitment on global basis