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Bosch Ltd.

BSE: 500530 Sector: Auto
BSE 16:00 | 27 Mar 2018 Bosch Ltd
NSE 05:30 | 01 Jan 1970 Bosch Ltd
OPEN 17360.05
52-Week high 25245.20
52-Week low 17360.05
P/E 39.55
Mkt Cap.(Rs cr) 54,478
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 17360.05
CLOSE 17284.55
52-Week high 25245.20
52-Week low 17360.05
P/E 39.55
Mkt Cap.(Rs cr) 54,478
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bosch Ltd. (BOSCHLTD) - Director Report

Company director report

Directors’ Report including Management Discussion and Analysis

The Directors have pleasure in presenting the SIXTY FOURTH Annual Report together withthe Audited Financial Statements for the financial year ended March 31 2016.

The accounts for the year under review are for a period of 12 months from April 2015 toMarch 2016. Members may recall that the Company has migrated from January-December toApril-March as its financial year. Accordingly as a transitionary arrangement theprevious financial year was for a period of 15 months from January 2014 to March 2015.Hence the financial results for the year under review are not comparable with theprevious year.

In this report percentage change over previous reporting period i.e. for 15 months(January 01 2014 to March 31 2015) have been annualized to facilitate a like to likecomparison on standalone financial statements.

1. Financial Results

April 01 2015 to March 31 2016 January 01 2014 to March 31 2015
Net Sales (excluding recovery of duties and taxes) 102140 117414
Of which Export Sales 10947 14625
Profit Before Tax 18591 19559
Less: Provision for tax (6582) (7463)
Add: Deferred tax and tax adjustments relating to earlier years 450 1281
Profit After Tax 12459 13377
- Dividend recommended at ' 85 per share (previous period: ' 85 per share) (2669) (2669)
- Tax on Dividend (543) (543)
- General Reserve (1337)
Balance carried forward 9247 8828
Total 12459 13377

The provisions of the Companies Act 2013 (the Act) does not mandate any transfer ofprofits to General Reserve. Hence no transfer has been made to the General Reserve forthe year under review.

During the year under review the Company achieved a new sales milestone crossing MioINR 100000 for the first time. The Company registered a growth of 8.7 percent over theprevious year. Profit Before Tax (PBT) increased by 18.8 percent in the current year overthe previous year whereas Profit After Tax (PAT) increased by 16.4 percent over theprevious year.

The improved performance of the Company was mainly due to domestic sales which grew by10.9 percent and improved operational efficiencies.

2. Dividend

The Board of Directors recommend a dividend of INR 85 per share for the 12 monthsperiod ended March 31 2016 the same amount as in last year which was for a period of 15months ended March 31 2015. This dividend is subject to approval of shareholders at theforthcoming Annual General Meeting.

3. Management Discussion and Analysis

In order to avoid duplication between the Directors’ Report and ManagementDiscussion and Analysis a composite summary of the Company’s performance and variousbusiness segments is given below:

3.1 Economic Scenario

3.1.1 Global Economy

The global Gross Domestic Product (GDP) growth slowed down to 3.1 percent in 2015 ascompared to 3.4 percent in 2014. [Source: IMF]

The US Economy remained a bright spot in a weak global economy. There was moderateimprovement in growth momentum in the Eurozone and Japan. Growth in Emerging markets washowever slower in 2015 on account of a reduced growth in China Russia and Brazil. The runup to the rate hike by the US Federal reserve and uncertainty originating from theslowdown in the Chinese economy caused a fall in commodity prices and increased volatilityacross currencies. Oil prices declined by approximately 32 percent between August 2015 andFebruary 2016 on account of expectations of higher supply and concerns about theresilience of global demand.

3.1.2 Indian Economy

Compared to the global economy India did better.

The GDP growth for FY 2015-16 was 7.6 percent compared to 7.3 percent in FY 2014-15.One of the effective measures has been the continuing focus on containing inflation bothby the Government and the Reserve Bank of India. This has resulted in Consumer Price Index(CPI) inflation remaining around the 5 percent level throughout the year. As a consequenceof stable growth and low inflation the Indian currency has not depreciated as much asmost other currencies in emerging markets.

While exports continued to fall throughout the last year on weak global cues thecompensatory effect of a fall in commodity prices helped India to reduce the tradedeficit. This was supported by a fall in gold imports.

At the ground level the overall economic revival was below expectations. Whileconsumption improved which reflected in a modest increase in auto sales the rural economystill remained under stress on the back of 2 consecutive below-average monsoons in 2014and 2015. This also caused the Union Budget to focus on agriculture as large allocationswere made towards the farm sector and irrigation. The positives for the Indian economywere a fall in interest rates a moderate revival in the manufacturing sector andincreased Foreign Direct Investment flows into the economy. However on account ofprovisioning for non-performing assets in the banking sector and a delay in capitalexpenditure cycle the desired growth momentum was not achieved.

3.2 Industry Structure and Development Automotive:

In 2015-16 the domestic Indian automotive market excluding two-wheelers got a modestboost from improved market sentiments and gradual economic recovery. A combination offactors like low inflation levels favourable fuel prices reduced interest rates and newlaunches led to a 4 percent growth.

Passenger Vehicle production grew by 6 percent driven by improved market sentimentscontinued economic revival and new launches.

Heavy Commercial Vehicles (HCVs) production continued to develop strongly and grew by23 percent albeit on a low base driven by various economic factors such as replacementdemand and infrastructure and mining support.

The Light Commercial Vehicles (LCVs) market which suffered during first half of 2015-16due to constrained liquidity showed signs of revival in the second half leading to anoverall growth of 3 percent.

The Tractors market declined by 8 percent on a high base of previous year on the backof deficient monsoon for two consecutive years lower increase in minimum support pricesand negative farmer sentiments.

The Three-wheeler production declined by 2 percent due to muted domestic demand andweakening export demand.

Vehicle Production Growth Rates:

Production Segment FY 11-12 FY 12-13 FY 13-14 +/(-)PY FY 14-15 FY 15-16
HCV 12% -26% -20% 26% 23%
LCV 28% 5% -14% -10%
Car+UV’s 4% 3% -4% 6%
3 Wheeler 10% -4% -1% 14% -2%
Tractors 15% -8% 22% -13% -8%
TOTAL 9% -1% -3%
4% 4%


The Power Tools industry is dependent largely on the construction and infrastructuresectors which witnessed a muted year. Overall a weak credit scenario led to slow growthof the Power Tools industry.

There was consolidation in the Security Technology industry that had a single-digitgrowth over the previous year. This was driven by investments due to enhanced securityrequirements in vital installations and opening up of stalled and long-delayed projects.The credit position in the industry continues to be tight.

The Indian Packaging Industry which is growing fast is valued at approximately INR2112 billion. India’s retail growth increased consumption of consumer productslabour availability constraints and increased secondary packaging requirements are drivingthe growth for the Packaging Industry in the country.

The renewable energy sector and Solar PV industry gained impetus with the target of 100GW of Solar power by 2022 by the Government of India. India added a record capacity of 3.1GW in 2015-16 raising the current installed capacity to 5.7 GW. It is expected to addanother 12 GW in 2016-17.The Government’s push for large projects to ramp up capacityand proactive interest within the public sector airports and seaports are likely to drivethis growth.

3.3 Business and segment wise performance

Compared to the automotive market the overall performance of the Company was good witha growth of 8.7 percent as compared to the automotive market growth of 4 percent.Theautomotive sector posted a growth of 8.1 percent while the nonautomotive business grew by13.1 percent. Domestic sales witnessed an increase of 10.9 percent largely because ofrise in sale of diesel and gasoline products.

The Company predominantly operates in manufacturing and trading of automotive productswhich constituted 87.2 percent of total sales for 2015-16. The Company’snon-automotive business comprising of Industrial Technology Consumer Goods and Energy andBuilding Technology has a share of 12.8 percent. Hence ‘Automotive andNonAutomotive’ are together categorized as the Primary segment while ‘Revenuefrom various geographical locations of customers (domestic and export)’ is classifiedas the Secondary segment.

3.3.1 Primary Segment

This year the non-automotive segment growth was slightly better than the automotivesegment. The share of non-automotive products increased to 12.8 percent during the yearended March 31 2016 as compared to 12.3 percent during the previous year.


The automotive segment registered a sales growth of 8.1 percent and stood at Mio INR89030.

The Diesel Systems business grew by 3.9 percent over the previous year. Higher salesvolume of new generation Common Rail Systems (CRS) and distributor pumps led to thisincrease. The Diesel Systems business will continue to ride on new generation CRS in themajority of vehicle segments for future growth. The conventional products such as in-linepumps distributor pumps and conventional injectors are likely to continue growth withsteady demand but eventually will witness a slowdown with the country-wide implementationof BS VI.

The Company pursued a segment specific local-for- local approach with strong focus ontotal cost of ownership resulting in competitive advantage to improve its market share.It engaged in CO2 reduction measures with efficiency improvement packages for products inline with the expected BS VI emission norms and is geared up for an early implementationof these norms as announced by the Indian Government.

The Company’s Automotive Aftermarket division is the largest IndependentAftermarket (IAM) network in India. It achieved 8.6 percent growth over the previous yeardespite tough liquidity conditions. Its approach is ‘Parts Bytes &Services’ across vehicle segments.

K4000 the first and the largest-ever "Feet on street" sales campaign wasstarted in 2015. It covered over 4000 kms 270 major towns and reached out to more than10000 customers to improve the market connect with the Company’s sales and servicenetworks. 2015 also marked the beginning of "Connected Services (CoSe)Solutions" with successful pilot acquisitions in Original Equipment.

Starter Motors and Generators business has posted muted growth. Decent growth posted indomestic market was offset by fall in exports.

The Gasoline business grew by 46.9 percent over the previous year mainly because ofincreased market share in the domestic passenger car segment. The new plant atGangaikondan has been operational for one full year with a good safety and quality record.

New components such as ECU for two-wheelers and fuel supply modules for two-wheelersand four- wheelers went into series production last year.

Share of domestic sales in the total sales of the automotive segment increased by 2.6percentage points to 89.3 percent from 86.7 percent in the previous year.


The non-automotive business grew by 13.1 percent.

It was driven predominantly by domestic sales with a share of 89.3 percent whileexports contributed 10.7 percent.

Industrial Technology (Packaging Technology and Industrial Equipment):

The Industrial Technology segment expanded by 8.3 percent over the previous year.

Packaging Technology

Packaging Technology division witnessed a growth of 36.9 percent. There was goodresponse to Horizontal Form Fill and Seal (HFFS) packaging machines in both domestic andexport market.

Consumer Goods (Power Tools):

The Power Tools business comprising of Power tools and accessories witnessed a marginalgrowth in a muted market amidst severe liquidity constraints and under-performance of theconstruction sector. The growth remained muted largely due to the core Tools businessunderperforming though E-commerce and channel expansion focusing on the urban and homeusers supported the business. Large project orders accessories business emerging productlines of measuring tools and Dremel multi-tool systems performed well.

Energy and Building Technology (Security Technology Bosch Energy & BuildingSolutions and Thermotechnology):

The Energy and Building Technology segment witnessed an increase of 58.4 percent overthe previous year.

Security Technology

The Security Technology business achieved a growth of 26.6 percent driven by orders inTransportation Power and Steel Industry. Trend-setting products like new range of DigitalConference System Digital Voice announcement system wireless conference system andportable loudspeakers introduced during the year were well received.

Bosch Energy & Building Solutions (BEBS)

The division made a mark in the energy sector with the commissioning of a 12 MW solarpower plant at the Cochin International Airport the first airport to be completelypowered by solar energy. It also provided breakthrough solutions like waste heat recoveryfor steel re-rolling mills. The overall business grew by 86.5 percent albeit on a lowbase.

The Solar Photovoltaic Projects business has achieved considerable traction in themarket across diverse customer segments resulting in good order acquisitions. The EnergyEfficiency business which focuses on pioneering customized solutions has led to aconsiderable energy savings for key customers.


Overall the division tripled its sales on a low base with growth coming from SolarWater Heater business and Industrial Boiler business with key customer acquisitions.TheNon-Automotive segment was predominantly driven by domestic sales with a share of 93percent while exports contributed 7 percent.

3.3.2 Secondary Segment

Domestic sales of the Company registered a growth of 10.9 percent. Share of domesticsales in the total sales increased by 1.8 percentage points to 89.3 percent from 87.5percent in the previous year.

The Company’s exports bulk of which were to Germany China and Brazil fell by6.4 percent.

The share of exports in the total sales declined by 1.7 percentage points to 10.7percent over previous year. This is mainly due to reduction in the volumes of StarterMotors & Generators as well as Diesel products.

3.4 Financial Performance and Condition

Sale of products

Sale of products grew by 8.7 percent over previous year and stood at Mio INR 102140.

Sale of services

Sale of services registered a growth of 26.1 percent over previous year because ofhigher development activities catering to the requirements of domestic customer’sprojects.

Other operating revenue

Other operating income at Mio INR 1971 increased by 71.0 percent over the previousyear due to writeback of earlier years’ provision.

Other income

Other income declined by 15.4 percent over previous year.

Income from profit on sale of investments declined from Mio INR 1545 during 15 monthsperiod ended on March 31 2015 to Mio INR 119 in 2015-16 due to change in taxation in theBudget 2014.

Income from interest on non-trade investments loans and bank deposits increased by12.8 percent. It stood at Mio INR 3135 constituting 81.9 percent of other income.

Cost of materials consumed

The cost of materials consumed as a percentage of sales was constant at 55.0 percentdue to reduction in input price offset by unfavourable exchange rate movement.

Personnel cost

Personnel cost as a percentage of sales was lower at 13.6 percent as against 14.2percent during the previous year. This reduction was due to one-time restructuring costincluded in the previous year arising out of wage settlement in various plants.

The Company continues to focus on rationalizing its workforce while sustainingproductivity and competence.

Depreciation and amortization

The depreciation charge for the period under review was Mio INR 3950 as against MioINR 5484 during the fifteen months period ended on March 31 2015. The addition to fixedassets during the year were mainly in buildings at Adugodi and Bidadi.

Profit After Tax (PAT)

PAT for 2015-16 at Mio INR 12459 increased by 16.4 percent.

Earnings per Share (EPS)

EPS (basic and diluted) of the Company for financial year 2015-16 was INR 397 pershare.

Share capital

Currently the Company has one class of shares: Equity Shares with a face value of INR10 each. Authorized share capital is Mio INR 381 divided by 38051460 shares of INR 10each. Issued subscribed and fully paid-up capital as on March 31 2016 was 31398900shares of Mio INR 314.

Reserves and Surplus - Profit and Loss account

The balance retained in General Reserve and Profit & Loss account as on March 312016 is Mio INR 80469 which includes retained profit for the year under review of Mio INR9247 after considering a proposed dividend of INR 85 per share.

Shareholders’ fund

The total shareholder funds increased to Mio INR 82888 as on March 31 2016 from MioINR 73470 as on March 31 2015.

Fixed assets - capital expenditure

The gross fixed asset value as on March 31 2016 was Mio INR 52558 (tangible: Mio INR52491 and intangible Mio INR 67) compared to Mio INR 47908 (tangible: Mio INR 47841 andintangible Mio INR 67) as on March 31 2015.

The Company incurred a capital expenditure of Mio INR 4811 during the period underreview in addition to Mio INR 5030 invested during the fifteen months period ended March31 2015.

Major investments were made towards development of facilities in Bidadi developmentcenter at Adugodi and capacity expansion of products at other locations.


Surplus funds not required immediately were invested prudently in tax-effectivelow-risk instruments. The total investments (excluding investment in property) as on March31 2016 was Mio INR 35611 as against Mio INR 27498 as on March 31 2015.

Working capital Inventories

Inventory as on March 31 2016 decreased by 6.0 percent to Mio INR 11991 from Mio INR12762 as on March 31 2015 despite increase in sales reflecting reduction in inventorycoverage days.

Trade receivables

Commensurate with increase in top line Trade receivables as on March 31 2016increased to Mio INR 13162 as against Mio INR 11877 as on March 31 2015.

Cash and Bank balances

The total cash and bank balances as on March 31 2016 was Mio INR 18315 includingcash and cash equivalent of Mio INR 985 compared to Mio INR 18960 including cash andcash equivalent of Mio INR 1304 as on March 31 2015.

Ratio 2015-16 2014-15*
Return On Capital Employed (ROCE) (percent)** 19.6% 18.6%
Inventory Turnover ratio (in days) 44 48
Trade Receivable Turnover ratio (in days) 41 41
Current Ratio 2.1
Number of Days in Working Capital (days) 82 86
No. of Employees (average) 10717 11146


1) Average is the simple average of opening and closing balance.

2) * For 15 month period from January 1 2014 to March 31 2015

3) ** ROCE for 2014-15 has been calculated on an annualized basis

3.5 Human Resource Development and Industrial Relations

Human Resource Development

As the Company’s business evolves in volatile and uncertain environment HumanResources(HR) function is also transforming to cater to the Company’s requirements.

The year saw the transition of old HR tools into the new HR Global tools. HR played thecatalyst role in this structured process change to enable global synchronization andbetter focus on personnel planning for the mid and long term.

The Company’s continued efforts to foster and drive the younger generation towardsfuture leadership was yet again recognized at the National Competition for Young Managers2015 conducted by the All India Management Association with the Company bagging theNational-level and First runner-up positions.

The Company continued to develop through its Integrated Talent Management initiatives.It enables learning networking and collaboration apart from improving engagement ofleadership with key talents. The future would see more emphasis on cross-entity movementbetween different Bosch legal entities. This would focus on enabling youngsters toexperience roles in different entities and locations thereby enabling their holisticdevelopment while encouraging integration across different entities/locations.

The Bosch Diversity initiative under HR organized events such as Diversity DayWomen’s Day and Social Engagement Day communicating the core message "Diversityis our Advantage".

The Company had the honour and privilege of a joint visit of Dr. Angela Merkel theGerman Chancellor and Shri Narendra Modi the Hon’ble Prime Minister of India. Thevisit focused on the award-winning Bosch Vocational Center as well as CSR initiatives ofthe Company. The dignitaries interacted freely with the apprentices showing greatinterest in their skills and aspirations and appreciated the Company’s role in skilldevelopment.

Industrial Relations

Industrial Relations at all plants and other establishments remained generally cordial.Long-term settlement at the Jaipur plant was delayed because of very high demand for hikein already high wage levels. However a mutual agreement was arrived at and settled duringthe year. Focus was on sustainably introducing internationally accepted IndustrialEngineering Standards in all plants to enable the Company to be cost-competitive.

The Company’s associates who receive one of the most attractive salaries andwelfare benefits in the industry are key to our long-term business success. They arehighly skilled graduates of Industrial Training Institutes certified by the NationalCouncil for Vocational Training. Focus was also on skilling and reskilling workers toenable their transition from producing conventional products to new generation projects.

Employee engagement such as "Suggestion Scheme" "Point ContinuousImprovement Programme" "Samakshama" and others were continued to motivatethe workforce to be ‘fit for the future’ and to improve the Company’sprocesses. There was also good participation of associates in the global associatesatisfaction survey.

3.6 Audit and Internal Control System

The Company has an effective and reliable internal control system commensurate with thesize of its operations. The internal control system provides for well-documented policiesand procedures that are aligned with Bosch global standards and processes.

At the same time it adheres to local statutory requirements for orderly and efficientconduct of business safeguarding of assets the detection and prevention of frauds anderrors adequacy and completeness of accounting records and timely preparation of reliablefinancial information. The efficacy of the internal checks and control systems isvalidated by self-audits and internal as well as statutory auditors.

The Audit Committee reviews the internal audit plan adequacy and effectiveness of theinternal control system significant audit observations and monitors the sustainability ofremedial measures.

It also reviews functioning of the Whistle Blower mechanism and monitors the actiontaken on the cases reported.

3.7 Opportunities and Threats

The transition to BS VI emission norms will drive the need for low emission and fuelefficient sustainable technologies. Bosch supports the introduction of BS VI emissionnorms by 2020 and has the right technology products experience and testinginfrastructure. Bosch’s ambition is to make diesel engines into "air cleaningmachines" according to our slogan "Invented for life".

The transition to BS VI from BS IV skipping BS V is challenging and has associatedrisks. India will be the first country to skip one level of emission legislation and taketwo steps in four years a time typically taken for one step.

There are important boundary conditions to be met like availability of BS VI fuel(10-ppm Sulphur fuel coming from the Indian refineries) in India two years prior to theimplementation date for validation. Quality and safety are of utmost importance.

Due to the strong local development team supported by the international developmentnetwork the Company is ready to support OEMs for timely introduction of BS VI and isworking closely with customers to define the strategy to achieve BS VI norms.

In general the demand in the automotive sector may slow down in case of slackness inthe implementation of infrastructure projects. Apart from the intensified competitionwhich puts pressure on sales prices any increase in input costs may affect theprofitability of the Company.

As regards the non-automotive businesses the Company’s presence across multiplebusinesses (industrial technology consumer goods and energy and building technology)enables synergies for tapping the existing and prospective customer base with integratedsolutions.

3.8 Risks and Concerns

The Company follows a specific well-defined and comprehensive risk management processthat is integrated with operations for identification categorization and prioritizationof operational financial and strategic business risks. Across the organization there areteams responsible for these processes who report to the senior management.

The Risk Management Committee reviews the effectiveness of the process at regularintervals.

Following are the major risks and mitigation measures:

1. Negative Diesel image:

The Company has significant dependence on Diesel Systems. Risk has arisen from recentdevelopments such as the Supreme Court ban on registration of large diesel cars (>2000cc) in Delhi and National Capital Region. It is currently unclear how this is beingcontinued or even extended. These developments may lead to a shift from diesel to petrolor other fuels. Diesel is essential if India has to meet its commitment for CO2 reductionmade at 21st Annual Conference of Parties under United Nations FrameworkConvention on climate change.

The Company is closely monitoring the situation and continues to share insights andprovide advice (whenever requested) on "clean diesel" technologies. The Companyis working closely with various industrial bodies for promoting clean diesel.

2. Competition:

The Company operates in a highly competitive environment and some customers havestarted adopting de-risking strategies to maintain more than one source for a product.Further more competitors have entered the market with new or similar products.

Spurious parts and cheap imitations continue to put pressure on existing market shareprimarily for Automotive Aftermarket and Power Tools.

Respective business unit teams undertake competitor analysis to discusscompetitors’ strategies and related insights. Effective legal and administrativesteps have been taken and will continue to be taken to counter the spurious products.

3. Industrial Relations (IR):

IR-related risks continue. They include possible risks arising from stoppage ofproduction and the uncertain result of settlement negotiations leading to unpredictablecost structure.

IR-related issues continue to be dealt in a fair and firm manner. Initiatives such asstrengthening of the Front Line Managers are expected to reduce IR risks in the upcomingsettlements.

4. Heavily auto sector dependent:

Around 89 percent of the business is dependent on the auto sector. Performance of theCompany therefore is dependent on the sector’s growth.

5. Economic:

5.1 General economic condition:

The economy continues to be affected by delay in policy reforms decision-making highinterest rates and moderate GDP growth. Improvements is yet to be seen in domesticconsumption. Overall even though macro-economic factors have improved investor sentimentis yet not strong. All these factors could affect the growth and profitability of theCompany.

5.2 Liquidity:

Prevailing liquidity tightness could lead to rise in receivables. However the Companyis closely monitoring these risks and is continuously taking appropriate action.

5.3 Forex:

With significant import of raw materials the Company is always exposed to currencyfluctuations. However it has a well-defined forex hedging policy to mitigate the risks inthe short to mid-term.

Other risk mitigation measures

Following are some of the measures or initiatives taken by the management to mitigatethe risks other than those mentioned above:

a) Enhance local engineering development testing and sourcing capabilities to furtherdrive the "develop locally for the local market" concept.

b) Implement cost reduction through budgetary control of operating expenses.

c) Retain and motivate talent by focused employee development programs.

d) Process improvement projects in both manufacturing and administration to sustaingrowth for the future to increase business competence.

3.9 Outlook

The management continues to be cautiously optimistic on the Indian economy. Thepositive sentiment has been supported by the Indian Meteorological Department (IMD)forecasting a better monsoon for 2016. The key factors that may determine the level ofgrowth in 2016 would be a revival in consumer demand improvements in the services sectorand increased capital expenditure by the Government.

The Company expects a moderate growth in the automotive industry in 2016 with acontinued strong upward trend in commercial vehicles and moderate growth in passengercars. This is supported by improved market sentiments pickup in economic indicatorspent-up demand new launches relatively low fuel prices and political stability.

The Non-Automotive segment continues to be impacted by weak consumer demand andsuppressed liquidity in the market. The Company plans to expand its market share throughrevamping its distribution strategy and developing the retail and e-tail channel in thePower Tools business.

The Company will continue to invest to meet the demands of the market.

4. Manufacturing Facilities

4.1 Bengaluru (Karnataka)

The Bengaluru Plant established in 1953 is the pioneer in diesel system products. Itcaters to both domestic customers and export.

During the year under review the Plant has implemented major strategic initiativessuch as personnel restructuring layout optimization and productivity improvement tooptimize internal processes and inculcate lean manufacturing. In order to strengthen thejourney the Plant has rolled out a vision statement - "We shape the future" anda mission statement - "Benchmark Bosch Production System (BPS) Plant" which willhelp in improving the material and information flow resulting in elimination of non-valueadded activities in the supply chain. This will enable the Plant to become a"Benchmark" by 2018 in the Global Bosch group.

4.2 Bidadi (Karnataka)

Manufacturing of new generation Diesel products along with Glow Plugs and DeliveryValves were relocated from the Bengaluru Plant to Bidadi during phase 1 of the shiftingwhich took place towards the end of 2015. About 72 Production Part Approval Processes(PPAP) 32 customer audits and 3 International Production Network audits were completedduring this process. Currently more than 500 employees work out of Bidadi plant.

4.3 Nashik (Maharashtra)

The Nashik Plant which manufactures diesel injectors and components successfullymanaged the unfavourable market situation and was prompt in meeting customer demands.Additionally the Plant demonstrated competitive manufacturing to export to theinternational production network despite challenges like retirements of skilled workforceend- of-life products and complexity in manufacturing. This is achieved by processinnovation and continuous improvement.

Productivity and value engineering projects were undertaken to maintain costcompetiveness.

During the year under review investments were made for capacity expansion of newgeneration products and installation of new coating equipment.

During the year under review a 2.1 MW solar energy plant was commissioned. This hasled to a CO2 reduction of over 2900 tons in the last one year of operation.The Plant also devised innovative solutions to optimize and sustain energy output overtime.

4.4 Jaipur (Rajasthan)

The Jaipur Plant produces Distributor (VE)

Mechanical and Electronic Diesel Control Pumps which are used in Light and HeavyCommercial Vehicles Sports and Multi-Utility Vehicles (MUV) and tractors.

Growth in the domestic LCV and MUV markets resulted in high turnover despite exportcontraction. The Plant focusing on ‘Fit for Future’ programme implementedvarious cost-reduction measures across the value chain.

The Plant won the Rajasthan Energy Conservation Award - 2015 from the State Governmentof Rajasthan.

Manufacturing facilities at Bengaluru Nashik

Jaipur and Bidadi have adopted the ‘Fit for Future’ programme for ensuringsustainable growth.

4.5 Naganathapura (Karnataka)

The Naganathapura Plant is the third-oldest plant and produces Spark plugs StarterMotors and Generators. The Plant improved its competitiveness by adopting leanmanufacturing systems improving productivity and optimizing resources across the valuechain.

The sale and transfer of the Starter Motors and Generators business to a group companyreceived an overwhelming consent of the shareholders. Necessary steps for completion ofsale and transfer subject to regulatory approvals is underway.

4.6 Verna (Goa)

During the period under review Bosch Packaging Technology division completed twentyyears in India and three years in its state-of-the-art facility at Verna. The Plant issuccessfully catering to Indian as well as global markets with its standalone machines andsystem solutions. During the year under review the plant ventured into SecondaryPackaging solutions by adding a new product line.

4.7 Gangaikondan (Tamil Nadu)

Commercial operations at the Company’s manufacturing unit set up at the StateIndustrial Promotion Corporation of Tamil Nadu Gangaikondan commenced during 2015. Itfocuses on manufacturing of Gasoline system products especially for domestic four andtwo-wheelers. The growing two-wheeler market in India and the proposed emissionlegislations (BS VI) provides positive growth prospects.

4.8 Chennai (Tamil Nadu)

The Power Tools facility built over 8500 in Indospace Industrial Park OrgadamTamil Nadu was formally inaugurated on November 20 2015. It has a state-of-the-artmanufacturing facility initially catering to the Indian and SAARC markets. It mainlyproduces Small Angle grinders Large Angle grinders Marble cutters Blowers Drills andtwo-kg Hammers along with their motors.

5. Information Technology (IT)

In order to make IT workplaces attractive and with the concept of ‘work anywheremore efficiently’ Project NGW ("Next Generation Workplace") was launchedin 2015 in line with Bosch’s worldwide roadmap. This solution will make it easier forIT users to collaborate and communicate while streamlining the IT landscape. In view ofthe impending roll out of GST the Bosch region India SAP Systems are being upgraded andis planned to be completed by July 2016.

6. Change Initiatives

6.1 Continuous Improvement Process (CIP)

During the year under review involvement of associates in CIP activities improvedconsiderably through participation in Shop-Floor CIP suggestion schemes weeklypresentations etc. A new initiative "Daily CIP" with a target of onesuggestion per day was introduced in one value stream. Improvements are being made in theprocessing of employee suggestions to reduce the time taken to work on them.

6.2 Bosch Production System (BPS)

BPS Maturity Assessment methodology is being used to improve the maturity level in BPSimplementation in the plants. System CIP review cycles flow-oriented layout levellingupstream pull internal milk run and 5S are being addressed within this methodology.Improvements in warehouse activities have been initiated to streamline these activitiesand enhance productivity.

7. Business Excellence

The Diesel Systems division has adopted the ‘European Foundation for QualityManagement’ model for business excellence at its manufacturing locations inBengaluru Nashik Jaipur and Bidadi. Development and deployment of structured processessuch as strategy and risk management under the model have yielded sustained results. Oneof the ‘Strategic focal points’ of the new Bosch mission statement - ‘Weare Bosch’ is ‘Striving for Excellence’. To live this in spirit BusinessExcellence is now being used across other business divisions.

8. Awards and Recognition

During the period under review the Company won several awards for excellence. Few suchexamples are:

- Supplier Excellence Award from Mahindra & Mahindra for Best Cost ManagementPerformance

- Best Supplier award in the category of spares quality and reliability of originalequipment services at Tractors and Farm Equipment Limited’s Global Suppliers’Meet.

- Award for delivery from Tata Motors

- Winner in the ‘Delivery and Performance’ category at the Escorts PartnerMeet.

- Quality award from Ford

- Dun & Bradstreet Corporate Award 2015 for the Auto Components sector

- ‘Product Upgradation through Innovation’ by SML Isuzu Ltd.

- For the second consecutive year the Company won the Best Solar Project in Indiaaward in the category of Industrial & Commercial use for excellence in engineering andexecution of commissioning of Solar Plant at Cochin International Airport.

- Teams from the Company’s Jaipur and Bengaluru plants were adjudged as winnersand runners-up respectively at AIMA Young Professional awards.

9. Corporate Social Responsibility (CSR) Policy and


The CSR Committee comprises of four members.

Mr. Prasad Chandran Independent Director is the Chairman of the Committee. The othermembers are Mr. Bhaskar Bhat Independent Director Dr. Steffen Berns Managing Directorand Mr Soumitra Bhattacharya Joint Managing Director. The CSR Committee oversees theCompany’s CSR initiatives.

The Board of Directors has adopted a CSR policy in line with the provisions of theCompanies Act 2013. The CSR policy inter-alia deals with the objectives of theCompany’s CSR initiatives its guiding principles thrust areas responsibilities ofthe CSR Committee implementation plan and reporting framework.

The thrust areas of the Company’s CSR activities and some of the key initiativesduring the year under review are as under:

(i) Child health hygiene and education: Medical camps for several Government Schooletc.

(ii) Vocational training focused on employable skills : Short term skill developmentand training programme for school dropouts ; and

(iii) Neighbourhood projects as per the local needs identified by Company’sPlants: Setting up Reverse Osmosis Plant in villages near Jaipur Village developmentprogrammes near Nashik etc.

Details of the meetings and attendance thereat forms part of the Corporate GovernanceReport.

Annual Report on Corporate Social Responsibility Activities of the Company is enclosedas Annexure ‘A’ and forms a part of this report.

10. Subsidiary and Associate Companies

10.1 Subsidiary

MICO Trading Private Limited (MTPL)

The Company has only one subsidiary viz. MICO Trading Private Limited. The financialperformance of the Company is as under:-

(Amount in TINR)

2015-16 2014-15
Total Revenue 86 113
Profit/(Loss) Before Tax (20) 4
Profit/(Loss) After Tax (20) 6

The Directors’ Report along with the Audited Statement of Accounts of MTPL hasbeen uploaded on the website of the Company at under the "Shareholder Information" section.

10.2 Associate Company

NewTech Filters India Private Limited (NTFI)

NewTech Filter India Private Limited (NTFI) (formerly known as MHB Filter India PrivateLimited) was incorporated as a Joint venture of Bosch Group and Mann and Hummel FilterIndia Private Limited (MHIN) in 2006. In Dec 2014 Robert Bosch Investment Nederland BVacquired the remaining 50 percent shares from MHIN. Presently the Company holds 25 percentand Robert Bosch Investment Nederland BV holds 75 percent of the paid-up share capital ofNTFI. During the year under review the registered office of NTFI was moved from the Stateof Karnataka to Himachal Pradesh with effect from November 09 2015.

NTFI is the manufacturer of automotive filters selling their products to the Companywhich further sells the same to end customers. Aftermarket contributed to 76 percent ofthe product sales while 24 percent were attributed to OEM and OES channels in 2015-16.

The turnover and results of NTFI are as follows:

(Mio INR)

2015-16 2014-15 % Growth
Turnover 654 539 21.3
Profit/(Loss) Before Tax 15 (5) NA
PBT % on Turnover 2.3 (1) NA

The numbers given above are for April to March period.

A separate statement containing the salient features of the financial statement of theaforementioned subsidiary and associate is enclosed as Annexure ‘B’ to thisreport.

11. Directors

There was no change in the composition of the Board during the year under review.

Mr. Soumitra Bhattacharya is liable to retire by rotation and being eligible offershimself for re-election.

Dr. Steffen Berns and Mr. Soumitra Bhattacharya were appointed as Managing and JointManaging Director respectively at the 61st Annual General Meeting held on June05 2013 for a period of four years ending December 31 2016. The Board on therecommendation of Nomination & Remuneration Committee approved re-appointment of Dr.Berns for a term of two years and Mr. Bhattacharya for a term of 3 years and 6 monthseffective January 01 2017. Approval of the members for the aforementionedre-appointment(s) is being sought at the forthcoming Annual General Meeting. Briefprofiles of Dr. Berns and Mr. Bhattacharya form part of the Notice convening the 64thAnnual General Meeting.

12. Board Meetings

During the year under review five meetings of the Board of Directors were held.

The particulars of the meetings and attendance thereat are mentioned in the CorporateGovernance Report.

13. Audit Committee

The Audit Committee comprises of five members.

Mrs. Renu S Karnad Independent Director is the Chairperson of the Committee. Theother members are Mr. V. K. Viswanathan Non-Executive Non-Independent Director Mr.Bernhard Steinruecke Mr. Prasad Chandran and Mr. Bhaskar Bhat Independent Directors.

During the year under review the Board accepted all the recommendations of the AuditCommittee.

The particulars of the meetings and attendance thereat are mentioned in the CorporateGovernance Report.

14. Key Managerial Personnel

The following are the Key Managerial Personnel of the Company as on the date of thisReport:

Dr. Steffen Berns (Managing Director)

Mr. Soumitra Bhattacharya (Joint Managing Director & Chief Financial Officer)

Dr. Andreas Wolf (Whole-time Director)

Mr. S Karthik (Company Secretary)

15. Remuneration Policy

The Nomination and Remuneration Policy inter-alia provides for criteria andqualifications for appointment of Director Key Managerial Personnel and SeniorManagement Board diversity remuneration to directors key managerial personnel etc. Thepolicy is enclosed as Annexure ‘C’ to this Report. The policy can also beaccessed at the following link: company 1/shareholder information 1/2015/ Nomination and Remuneration Policy.pdf

16. Declaration as to Independence

The Independent Directors have given a declaration to the Company that they meet thecriteria of independence prescribed under section 149(6) of the Companies Act 2013 (theAct) and SEBI (Listing Obligations and Disclosure Requirments) Regulations 2015.

17. Performance Evaluation of Directors

In line with the provisions of the Companies Act 2013 and the Listing Regulations theBoard has carried out the annual performance evaluation of the Board as a whole itsCommittees the Chairman and the Directors.

A structured questionnaire was circulated to the Board Members in this connection. Thefeedback from the Directors was summarized and ideas for further improving effectivenessof the Board processes etc. were discussed.

18. Particulars of Employees

Disclosures pertaining to remuneration of employees and other details as requiredunder Section 197(12) of the Act and rules framed thereunder is enclosed as Annexure‘D’ to this Report.

Details of employees with annual remuneration of not less than INR 60 lakh or INR 5lakh per month during the year under review forms a part of this report.

In terms of Section 136 of the Act the Reports and Accounts are being sent to theMembers and others entitled thereto excluding the aforementioned particulars of employeeswhich is available for inspection by the Members at the Registered Office of the Companyduring business hours on any working day. Any member desirous of obtaining a copy of thesame may write to the Company at

19. Corporate Governance

A report on Corporate Governance in terms of the requirements of the ListingRegulations and a certificate from the Practicing Company Secretary forms part of thisAnnual Report. The Company has fully complied with the Corporate Governance practicesspecified under the said Regulations.

20. Risk Management

The Company has a well-defined Risk Management policy. The policy has been developedafter taking cognizance of the relevant statutory guidelines Bosch Guidelines on riskmanagement empirical evidences stakeholder feedback forecast and expert judgment.

The policy inter-alia provides for the following:

1. Risk Management framework;

2. In-built pro-active processes within the Risk Management Manual for reportingevaluating and resolving risks;

3. Identifying and assessing risks associated with various business decisions beforethey materialize. Take informed decisions at all levels of the organization in line withthe Company’s risk appetite;

4. Ensuring protection of shareholder’s stake by establishing an integrated RiskManagement Framework for identifying assessing mitigating monitoring evaluating andreporting all risks;

5. Strengthening Risk Management through constant learning and improvement;

6. Adoption and implementation of risk mitigation measures at every level in order toachieve long-term goals effectively and sustainably;

7. Regularly review Risk Tolerance levels of the Company as they may vary with changein the Company’s strategy; and

8. Ensuring sustainable business growth with stability.

In the opinion of the Board there are no risks that may threaten the existence of theCompany.

21. Whistle Blower Policy

The Company has a Whistle Blower Policy which provides a vigil mechanism for dealingwith instances of fraud and mismanagement.

Details of the Whistle Blower Policy have been mentioned in the Corporate GovernanceReport. The Whistle Blower Policy has also been uploaded on the website of the Company at under the "ShareholderInformation" section.

22. Business Responsibility

In terms of the requirements of Regulation 34(2)(f) of the Listing Regulations a reporton Business Responsibility forms part of this Annual Report in the format prescribed bySecurities and Exchange Board of India.

23. Related Party Transactions

The Audit Committee and Board at their meeting held on February 05 2016 approved thesale and transfer of the Starter Motors and Generators business of the Company to a groupcompany. The said sale and transfer was approved by the shareholders through a PostalBallot on April 02 2016. The details of the aforementioned transaction with related partyis enclosed as Annexure ‘E’ to this report.

24. Energy Conservation Technology Absorption Foreign Exchange Earnings & Outgo

The report in respect of conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 of the Companies Act 2013 readwith Rule 8 of Companies (Accounts) Rules 2014 is enclosed as Annexure ‘F’ tothis Report.

25. Auditors

25.1 Statutory Auditors

The Shareholders at the 63rd Annual General Meeting of the Company held onAugust 28 2015 appointed Price Waterhouse & Co Bangalore LLP as Statutory Auditors ofthe Company for a period of two years until the conclusion of the 65th AnnualGeneral Meeting of the Company.

Pursuant to the provisions of the Companies Act 2013 the resolution ratifyingappointment of Price Waterhouse & Co Bangalore LLP as Auditors to hold office untilthe conclusion of the 65th Annual General Meeting forms a part of the Noticeconvening the 64th Annual General Meeting dated May 25 2016.

The Auditors’ Report is unmodified i.e. it does not contain any qualificationreservation or adverse remark.

25.2 Cost Audit & Cost Auditors

The Board of Directors on recommendation of the Audit Committee appointed Messrs RaoMurthy & Associates Cost Accountants Bengaluru (Regn. No.000065 PAN: AAAFR8892D) asCost Auditors to audit the cost accounts of the Company for the financial year 2016-17 interms of the provisions of Section 148 of the Companies Act 2013. As per the requirementsof the said section remuneration payable to the Cost Auditors is required to be ratifiedby the shareholders at the General Meeting. Accordingly resolution ratifying theremuneration payable to Messrs Rao Murthy & Associates forms a part of the Noticeconvening the 64th Annual General Meeting dated May 25 2016.

25.3. Secretarial Audit

The Company appointed Mr. Sachin Bhagwat Practicing Company Secretary to conductSecretarial Audit as per the provisions of Companies Act 2013 for the Financial Year2015-16. The report of the Secretarial Audit is enclosed as Annexure ‘G’ to thisreport.

There was no qualification reservation or adverse remark in the Report of theSecretarial Auditor.

25.4 Reporting of Fraud

There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Act and Rules framed thereunder either to the Company or to the CentralGovernment.

26. Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors reportthat:

a. during the preparation of the annual accounts the applicable accounting standardswere followed along with proper explanation relating to material departures;

b. they have selected and consistently applied accounting policies that are reasonableand prudent to give a true and fair view of the state of affairs of the Company at the endof the financial year and the profit of the Company for that period;

c. proper and sufficient care has been taken to maintain accounting records followingthe provisions of this Act which specifies necessary action to safeguard theCompany’s assets and preventing as well as detecting fraud and other irregularities;

d. they have prepared the annual accounts on a ‘going concern’ basis;

e. proper internal financial controls are in place and that they are adequate and areoperating effectively; and

f. systems to ensure compliance with the provisions of all applicable laws were inplace and that such systems were adequate and operating effectively.

27. Details of Loans Guarantee and Investments

Details of loans guarantee and investments covered under section 186 of the Act aregiven in the Notes to the Financial Statements.

28. Deposits

During the year under review there were no deposits as per the provisions of CompaniesAct 2013.

29. Material Changes and Commitments

There were no material changes and commitments between the end of the year under reviewand the date of this report which could have an impact on the Company’s operation inthe future or its status as a "going concern".

30. Significant and Material Orders passed by the Regulators or Courts

There are no significant or material orders passed by the Regulators/Courts whichwould impact the ‘going concern’ status of the Company and its futureoperations.

31. Extract of Annual Return

In terms of the requirements of Section 134(3)(a) of the Act an Extract of AnnualReturn as provided under Section 92(3) of the Act is enclosed as Annexure ‘H’ tothis Report.

32. Acknowledgements

The Directors express their gratitude to the various Central and State GovernmentDepartments for their continued cooperation extended to the Company. The Directors alsothank all customers dealers suppliers banks members and business partners for theexcellent support received from them. The Directors would also like to acknowledge theexceptional contribution and commitment from the employees of the Company during theperiod under review.

33. Cautionary Statement

Statements in the Board’s Report and the Management Discussion & Analysisdescribing the Company’s objective expectations or forecasts may be forward lookingwithin the meaning of applicable laws and regulations. Actual results may differmaterially from those expressed in the statement.

For and on behalf of the Board of Directors

V. K. Viswanathan


Date: May 25 2016