FY21 will end around -30% compared to FY20: Bosch MD Soumitra Bhattacharya

Soumitra Bhattacharya, Managing Director, Bosch Ltd and President, Bosch Group, India, talks about demand recovery and margin outlook during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: It seems COVID has an impact on the numbers of the quarter and there was a substantial loss in profit and revenue. But let us know about the demand recovery that you foresee from the OEMs? 

A: First of all, I will like to provide an overview before moving to details. The first quarter of the financial year 2020-21 is a complete washed-out quarter for the whole industry. You would have seen that total reduction by the industry on vehicles was in the region of about 75% because there was nothing in April. Secondly, towards the end of the first quarter, we saw some green shoots and I will like to talk about it in detail. We posted a breakeven in the first quarter without exceptional items, which stood around Rs 197 crore. The press has asked us a lot about the exceptional items and the reason for keeping it for the last three quarters. So some three years ago, we started a transformational journey in which we have developed a Fit for the Future and three-hour programme. At the same time, I would like to provide the latest news that around 1,000 blue-collar workmen have taken an EVR but in a Bosch way, which is a caring way, ethical way. And we have given them a very handsome package including their future monthly income flows and we have also made the company linear by 1000 headcount. We are focusing a lot on roles and controls including re-skilling and re-competency building. 

You know that Bosch is very strongly present in many areas in the mobility sector. I would like to say that Bosch is a mobility solution provider. Tractors, for example, a very good run is going in the segment.  

Agri focus by the government, Atmanirbhar Bharat, good monsoon and Bosch is catering to all our customers for example in the tractor market in a very big way. In the case of two-wheelers, we have seen a good pick-up. We are seeing a good pick-up in the passenger cars segment, especially the compact, in the festive season. Before I conclude on the first part, I would like to say it is very important for us to understand that despite these green shoots 2020-21 will be approximate – (minus) 25 to -30% as compared to 2019-20.  

Q: You have restructured the company and now the work will happen linearly and in a cost-effective manner. But what is your margin outlook? Also, tell us about the kind of order you are expecting from the OEMs?

A: I have shared a piece of information at the auto expo and would like to repeat it here. Bosch limited, the only public listed company in the Bosch world is very strong in the powertrain and BSVI what has already kicked in and started from April 1. We have acquired 24,500 crores of business acquisition. The acquisition means a lifetime value between 2020 and 2025 and that was the pre-COVID volumes. Post-COVID, it looks like 18,500 crores. So, we had the highest acquisition level for BSVI and I think, we are very proud of it because we work with the customer from conception handholding including the research application right up to SOP. This is a small example. The second example is that we are very strongly involved with the customer on not just BSVI as well as CAFÉ norms.

We are also involved in improving fuel efficiency and we invest very strongly in research and development on diesel, gasoline. Most importantly, our parent in the last ten years has been investing around 400 million Euros per year on electric vehicles. Our portfolio is very strong on powertrain in both the diesel and gasoline as well as on electrification. Having said that I would like to say that we expect 2020-21 to bounce back even stronger and also the fact that all of us must understand the industry will require minimum four years to reach the peak level that was attained in 2018-19, i.e. four years later from 2018-19, we will be at the same levels.

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But Bosch Limited wants to come back to the level one or two years before this period in which the industry will come back. We have a granular plan for it on power train electrification, mobility solutions in which we have created a project house, top pool business and aftermarket business. So, we expect a good run from 2021-22 onwards where we will climb back to the original levels minimum one year, preferably two years before the industry comes back.