Hit hard by the slowdown blues in the Indian automotive sector, Bosch, a global major in the mobility solutions, said it would restructure its operations to remain competitive in the Indian market. Accordingly, the company has earmarked a provision of Rs 82 crore towards restructuring.
The Indian automotive market is undergoing major changes as a result of various economic, regulatory, technological and market factors, including opportunities arising in electromobility and mobility solutions segments. In light of this, the company has initiated several transformation projects, including restructuring, to remain competitive. The company has set up a provision of Rs 82 crore towards restructuring, reskilling and redeployment, that has been disclosed as an exceptional item for the quarter ended June 30, 2019, said a company’s press release on Tuesday.
Soumitra Bhattacharya, MD, Bosch, said: "The automotive industry in India is going through a paradigm shift. The slowdown is not cyclical, but structural. Shortage of liquidity accompanied with build-up of inventory, will pose a big challenge and the recovery will take longer than expected. With the outlook for this sector being extremely challenging, the impact on structures, including surplus manpower, is already visible."
"At Bosch too, we have been investing in restructuring, to enhance efficiencies and to be fit for the future. While every opportunity will be extended for reskilling and redeployment, to align with adjustment of portfolios and competencies, there will be manpower adjustments," he said in a statement.
"Bosch is deeply committed to the future growth of India. Key investments in future technologies and innovative solutions in the mobility and non-mobility segments will continue. While doing this, necessary course correction measures will be taken in order to remain competitive in these challenging times," Bhattacharya said.
It is to be noted that Bosch has recently announced production suspension across its plants in Tamil Nadu, Karnataka and Maharashtra for a number of days to avoid inventory pile-up.
Bosch further said that worldwide, the automotive industry is facing a downward trend. This is also affecting Bosch’s automotive sales, which decreased 17.5% in first quarter of 2019-20. Domestic sales decreased 18.2%, while export sales declined 8.6%. Though the power tools and security systems divisions disclose positive growth, the company’s non-automotive business posted a decline of 16%. This was primarily due to a drop in the energy services business.
Meanwhile, the company has reported a 35% drop in its net profit for the quarter ended June 2019 to Rs 280 crore compared to Rs 431 crore in the same quarter last fiscal. Revenue dropped 13.5% to Rs 2,779 crore compared to Rs 3,212 crore in the same quarter last fiscal. The noticeable drop has been mainly due to the automotive market slowdown during the quarter in all the segments.