Bosch Limited incurs 0.3 percent loss before tax (before EI) in Q1 FY 2020-21

„  Total revenue from operations in Q1 of FY 2020–21 declined 64 percent year on year.

„  Loss after tax stood at 12.1 percent of total revenue from operations.

„  Making the company fit for the future with a 3R approach

„  Achieving carbon neutrality by investing in green energy

Bengaluru, India – Bosch Limited, a leading supplier of technology and services, posted total revenue from operations of INR 992 crores in Quarter 1 of FY 2020–21, a decline of 64 percent. The Covid-19 pandemic adversely impacted sales in all segments during the quarter.

Loss before tax without inclusion of exceptional items stood at INR 3.3 crores. This is 0.3 percent of total revenue from operations, and mainly reflects the effect of lockdown during the quarter.

The Indian automotive market continues to undergo structural changes. Bosch Limited has continued its investment in restructuring, reskilling, and other transformational projects. An additional provision of INR 197 crores has been disclosed as an exceptional item for the quarter ended June 30, 2020 for this purpose.

After allowing for this exceptional item, loss before tax stood at INR 200 crores,  and loss after tax at INR 120 crores.. PAT before exceptional items stood at 2.7 percent of total revenue from operations.

“As anticipated, the financial year 2020-21 began on an extremely challenging note. The Indian economy is expected to witness sharp contraction, with GDP projected to be between minus 4 percent and minus 6 percent in the current fiscal year. Multiple lockdowns in several states are adversely affecting the supply chain. With the ripple effect of this continuing to be felt in the coming years, we now have to do all we can to counter the business situation while exhibiting utmost care for our associates. We will continue our journey of transformation to make Bosch Limited stronger in the future,” said Soumitra Bhattacharya, the managing director of Bosch Ltd.  “The focus for the upcoming quarters will remain on the agriculture sector, particularly on tractor demand. However, the auto sector as a whole will take four to five years to return to the levels of 2018-19,”  he added.

Snapshot of performance in Quarter 1

The combination of the slowdown in the automotive industry and Covid-19 is affecting Bosch Limited’s sales. Sales decreased 68.2 percent in first quarter of FY2020–21, with the Powertrain Solutions division registering a decline of 78.3 percent. However, the Two-Wheeler and Powersports product unit witnessed good double-digit growth during the quarter. Outside the Mobility Solutions business sector, business recorded a decline of 59.9 percent. In June 2020, the company witnessed a recovery in sales volumes after the easing of nationwide lockdown restrictions.

Making the company “fit for the future” with a 3R approach

In response to the anticipated burdens as a result of the challenging situation, Bosch is taking measures to manage resources and costs. Agility and operational efficiencies will help optimize its core business with. To secure liquidity, extensive programs to adjust manufacturing capacity and cost structures are in place. At the same time, the company is preparing for a potential switch to electrified vehicles, which will lead to a significantly reduced demand for direct manpower as compared to 2018-19. Right-sizing the organization is therefore an urgent need. Here, the company is following a 3R approach (restructure, reskill, redeploy), in which it has invested INR 800 crores.

Committed to carbon neutrality, even in tough business situation

Bosch Limited has decided to buy solar power from AMP Solar Technology Private Limited and Hinduja Renewables Energy Private Limited for use in its facilities in Karnataka and Maharashtra respectively. In line with the captive power generation rules of the respective states, Bosch is taking a minority stake in these power projects. This acquisition will mean a substantial increase in the green energy procured by Bosch India, thus further supporting Bosch’s move toward carbon neutrality.