Bosch India – Stock Buzz

Bosch India Limited (“Bosch” or the “Company”) is India’s leading supplier of technology and services in the areas of automotive and industrial technology, consumer goods and building technology. The Company is headquartered in Bangalore with manufacturing facilities at Bangalore, Nashik, Jaipur and Goa.

Bosch set up its first manufacturing plant in India in 1951. Over the years, Bosch has grown tremendously in India. In 2015, the Bosch Group in India had a turnover of about Rs.12,085 Cr. Bosch currently employs 26,000 people across 10 manufacturing locations and 7 research and development (R&D) facilities in the country. Since 2010, the group has invested ~ Rs. 5,400 Cr. in the expansion of manufacturing and research facilities, of which Rs. 1,200 Cr. was invested in 2014 alone.

The Company generates around 66% of its revenue from automobile technology and the balance (34%) comprises of consumer goods and industrial sectors. The Company has taken a notable step to expand its presence in the non-automotive portfolio by entering into eye screening and detection system. Also, infrastructure, energy; and particularly – conservation and efficiency and -food packaging offer maximum potential for growth.

Note – In FY 2015, the Company has changed its financial year period from January – December to April – March. As such, the figure for financial year ended March 2015 contains figures for last 15 months.

The Company has maintained an average dividend yield of 0.72 % over the last 5 financial years.

Liquidity and Credit Analysis

Bosch’s average current ratio over the last 5 financial years has been 2.54 times which indicates that the Company is comfortably placed to pay for its short term obligations.

Bosch’s average long term debt equity ratio over the 5 financial years has been 0.04 times which indicates that the Company operates with close to zero debt and is placed well to withstand economic slowdowns.

Bosch’s average interest coverage ratio over the last 5 financial years has been 162.04 times this indicates that the Company can meet its debt obligations without any difficulty.

Products specifically tailored to the Indian market

Bosch India provides customized solutions for the Indian market. The products and solutions are tailored to the needs of the local customers at affordable costs. As part of its – ‘local for local strategy’, Bosch believes in local manufacturing as well as local engineering. The company, for instance, has developed an electronic-hydraulic hitch control for the Indian tractor market. This was developed in collaboration with local farmers.

Another example is of Tata Nano – the cheapest four wheeler car in the world. Bosch India developed the two-cylinder Common Rail Direct Injection (CRDi) system for Tata Nano with an enhanced Electronic Control Unit (ECU). Bosch and Tata Motors have continued their collaboration and are now working on developing a 1.1-CRS (common-rail system) for Nano’s diesel version.

Continuous Expansion & Diversification 

Most of the automobile companies in India are looking to diversify. Bosch has also adopted this strategy and has entered into non automotive businesses. I believe that its future growth in the country will depend largely on its non-auto technology businesses.

Bosch India is increasingly diversifying its portfolio, adding products and services beyond the automotive side as a de-risking strategy.  In that sense, Bosch is no longer only about automotive components. The Company has started many businesses in the non-automotive side including:

• Power Tools such as drilling machines,
• Home Appliances such as refrigerators, washing machines, dishwashers and dryers.
• Diagnostic Tools for automotive applications, such as battery testers.
• Thermo Technology – In the Indian context, there are two verticals: (i) solar thermal connectors like roof top water heating applications, and (ii) boilers for industrial applications.

Innovations

Antilock Braking System (ABS) – Bosch is the only automotive supplier that manufactures ABS in India. The Company produces about 300,000 ABS systems per year at their facility in Chakan, Pune.

1. Motorcycle Stability Control – Improves safety when braking and accelerating. This is particularly important for India which is the largest two wheeler market in the world.
2. Electronically Controlled Fuel-Injection System – Helps in reducing fuel consumption by up to 16 %.
3. Eye Diagnostic Tool – Compact retina camera with special software that can detect conditions such as cataracts at an early stage.

Developing Emerging Technologies

In India, Robert Bosch Engineering and Business Solutions India (RBEI) are engaged in the development of emerging technologies called advanced driver assistance systems (ADAS) which results in driverless cars. Although Indian cars may not have these technologies for some time, engineers in India are developing it for European and American cars.

The Company is active on connected cars. For example: Maruti Suzuki’s luxury sedan Ciaz which sported the Linux-based operating system, which helps in connecting the car to smart phones was developed by Robert Bosch Engineering India (RBEI).

Bosh India is planning to invest Rs. 1,200 Cr. in connected car technology.

Developing Electric & Hybrid Cars

The Bosch Group in India, through its subsidiary Bosch Chassis Systems India Limited, provides solutions for electric and hybrid electric vehicles. The Company plans to invest Rs. 2,200 Cr. on increasing capacity, diversification and development of new electric and hybrid technologies over the next two years. Their development work would focus mainly on electronic control units for hybrid and electric vehicles.

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