Interview with Managing Director, Bosch Ltd
Having fared comparatively better than the Indian automobilemarket in 2013, which declined by 3 per cent on the production volume (without two-wheeler segment), the automotive business of Bosch Limited registered a marginal decline of 0.7 per cent.
Steffen Berns, managing director, Bosch, explains, in an interview with Mahesh Kulkarni, how the company managed to perform better than the industry. Edited excerpts:
Bosch has ended the fourth quarter of FY13 with flat sales and 19 per cent lower net profit. What are the reasons?
It is mainly because of rupee depreciation and a rise in the cost of materials during the fourth quarter. The rupee fell 15 per cent in the quarter. Year-on-year deterioration was three per cent. Our material cost increased by 2.5 percentage points. The prolonged slowdown in the automotive industry in 2013, coupled with weak consumer demand, has impacted the overall industry as well as our growth. However, our cumulative measures on cost control throughout the year helped us limit the decline in profits despite unused capacity.
You have shown a huge inventory in the quarter. How was the pick-up from customers?
We had no problem with the customers picking their orders. We have increased the production in the fourth quarter.
Your automotive business has come down from 89 to 87 per cent of total business. Is there any shift in the business?
Our automotive business has remained constant in the difficult market. But our strategic target is to increase our non-automotive market share and we have been successful on this front. The non-automotive business grew by 19 per cent
in 2013, which is a big success. Our non-automotive business has been doing well, with its share increasing steadily as we continue to expand our operations in this area. The power tools and packaging technology division registered double-digit growth for the year 2013.
So, it was a strategic decision to grow the non-core segment?
Yes, we would have also liked to grow fast in the automotive business. The strategic target to grow faster in the segment had been defined. We have been successful in doing so.
Of course, the automotive business is market-driven and if the market goes down three per cent, then it is difficult to grow fast. I would not call it a non-core business. We do have four business segments. Worldwide, for Bosch, the automotive segment has a share of 66 per cent and in India, we had a share of 87 per cent in 2013.
If you look at the potential, we can increase the non-automotive business much more and this is what we want to do. But this does not mean we go slow on the automotive business. We do both in parallel. But we have higher growth potential in the non-automotive business.