Bosch Ltd:Annual Report 2023-24 Analysis

Bosch Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

• Bosch’s operations in India commenced in 1922, initially as a sales office of Robert Bosch AG.
• The company’s manufacturing presence in India began in 1951.

Headquarters Location and Global Presence:

• Headquarters: Bengaluru, India
• Global Presence: Bosch is a multinational engineering and technology company with a presence in over 60 countries. While Bosch Ltd. focuses on India, the parent company, Robert Bosch GmbH, has a global footprint.

Company Vision and Mission:

• While Bosch Ltd. doesn’t explicitly state a standalone vision and mission, the core principles of Robert Bosch GmbH, which guide the Indian subsidiary, are innovation, quality, and customer satisfaction.

Key Milestones in Their Growth Journey:

• 1951: Establishment of the first manufacturing plant in India.
• 1953: Started manufacturing spark plugs.
• 1961: Became a public limited company.
• Further expansion through acquisitions and partnerships.
• Significant investments in R&D and technological advancements.

Stock Exchange Listing Details and Market Capitalization:

• Listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
• Market capitalization fluctuates based on market conditions; refer to current financial data sources for the latest information.

Recent Financial Performance Highlights:

• Refer to Bosch Ltd.’s latest annual reports and financial releases for up-to-date details.

Management Team and Leadership Structure:

• The leadership structure includes a Board of Directors and a management team responsible for different functional areas.

Notable Awards or Recognitions:

• Bosch Ltd. has received various awards and recognitions for its contributions to innovation, quality, sustainability, and corporate governance.

Their Products #

Complete Product Portfolio with Categories:

• Automotive Technology: Diesel systems, gasoline systems, chassis systems control, electrical drives, starter motors and generators, car multimedia, automotive electronics.
• Industrial Technology: Drive and control technology (hydraulics, automation), packaging technology.
• Consumer Goods: Power tools, home appliances.
• Energy and Building Technology: Security systems, thermotechnology.

Flagship or Signature Product Lines:

• Diesel fuel injection systems
• Gasoline systems
• Automotive aftermarket products
• Power tools

Key Technological Innovations or Patents:

• Innovations in fuel injection technology for diesel and gasoline engines.
• Advanced driver-assistance systems (ADAS).
• Connectivity solutions for automotive and industrial applications.
• Electric vehicle (EV) components.

Manufacturing Facilities and Production Capacity:

• Bosch Ltd. has multiple manufacturing facilities across India.

Quality Certifications and Standards:

• ISO 9001 (Quality Management System)
• ISO 14001 (Environmental Management System)
• IATF 16949 (Automotive Quality Management System)

Unique Selling Propositions or Technological Advantages:

• Technological leadership in automotive and industrial technology.
• Focus on quality, reliability, and innovation.
• Strong brand reputation.

Recent Product Launches or R&D Initiatives:

• Launch of new automotive components for electric vehicles.
• Development of advanced driver-assistance systems.
• Research and development in areas such as artificial intelligence and the Internet of Things (IoT).

Primary Customers #

Target Industries and Sectors:

• Automotive (OEMs and aftermarket)
• Industrial
• Construction
• Energy
• Consumer

Geographic Markets (Domestic vs. International):

• Primarily focused on the Indian market.
• Exports to other countries.

Major Client Segments (Agricultural, Industrial, Residential, etc.):

• Automotive manufacturers
• Industrial equipment manufacturers
• Construction companies
• Power generation companies
• Consumers

Distribution Network and Sales Channels:

• Direct sales to OEMs.
• Distribution network of dealers and distributors.
• Online sales channels.

Major Competitors #

Direct Competitors in India and Globally:

• Automotive: Denso, Continental, Magna International, Delphi Technologies (BorgWarner), Valeo
• Power Tools: Stanley Black & Decker, Techtronic Industries (TTI), Makita
• Industrial Automation: Siemens, ABB, Schneider Electric

Competitive Advantages and Disadvantages:

• Advantages: Strong brand reputation, technological leadership, high-quality products.
• Disadvantages: Higher price point compared to some competitors.

How They Differentiate from Competitors:

• Focus on innovation and technological advancements.
• Emphasis on quality and reliability.
• Strong customer relationships.

Industry Challenges and Opportunities:

• Challenges: Increasing competition, technological disruption, changing regulatory landscape.
• Opportunities: Growth in the automotive and industrial sectors, increasing adoption of electric vehicles, rising demand for automation and connectivity solutions.

Market Positioning Strategy:

• Positioned as a premium brand offering high-quality, technologically advanced products.

Future Outlook #

Expansion Plans or Growth Strategy:

• Focus on expanding its presence in key growth areas such as electric vehicles, automation, and connectivity.
• Investments in R&D and innovation.
• Strategic partnerships and acquisitions.

Upcoming Products or Innovations:

• Development of new electric vehicle components.
• Advancements in driver-assistance systems and autonomous driving technology.
• Introduction of new automation and connectivity solutions for industrial applications.

Sustainability Initiatives or ESG Commitments:

• Focus on reducing its environmental footprint through energy efficiency, waste reduction, and sustainable sourcing.
• Commitment to social responsibility and ethical business practices.

Industry Trends Affecting Their Business:

• Electrification of vehicles
• Automation and digitalization
• Connectivity and the Internet of Things (IoT)
• Increasing focus on sustainability

Long-Term Vision and Strategic Goals:

• To be a leading provider of innovative and sustainable solutions in the automotive, industrial, and consumer goods sectors.
• To contribute to a more connected, efficient, and sustainable future.

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue: Total revenue from operations showed a consistent upward trend, with a 12% increase in 2023-24 (₹16,727 Crores) compared to the previous year and a larger increase compared with two years earlier.
• **Profit Before Tax (PBT) without exceptional item:**Increased by 24.2%, showing growth, and PBT as percentage of operation revenue increase from 9.5% two year ago to 14.0% this year.
• Profit After Tax (PAT): Increased by 74.8% to ₹24,905 Crores in 2023-24, up from ₹14,245 Crores in the prior year, driven by increase in operation revenue and exceptional items.
• Earnings Per Share (EPS): Mirrored the PAT trend, with a significant increase of 75% to ₹844 in 2023-24.
• Return on Net Worth (RONW): Increased from 12.9% to 20.7%.
• Return on Capital Employed (ROCE): Increase to 26.3% before tax and exceptional items and excluding discontinue operations.
• Export Sales: Increased, rising from ₹12,371 Million to 12,790 million.
• Capital Expenditure: Decrease in capital expenditure as percentage of net sale to 1.7%
• Debt-Equity Ratio: Remained at 0.00 due to the Company not having borrowings.

Business Segment Performance #

• Mobility Business:
  • Revenue increased by 11.1% in 2023-24, primarily driven by a 4.8% growth in the overall automotive sector.
  • Power Solutions division reported a 10.9% sales rise.
  • Mobility Aftermarket division saw a 10.2% increase.
  • Two-Wheeler and Powersports division reached a milestone, exceeding ₹2,000 Crores in sales.
• Business Beyond Mobility:
  • Sales increased by 17.7%, driven by growth in Power Tools (+15.8%) and Building Technology (+26.7%) segments.
  • Power Tools achieved double-digit growth of 16%, and EBIT reached 10.8%.
  • Building Technologies is strengthening its India-made offerings.

Major Strategic Initiatives and Their Progress #

• Localization: Focused on localizing advanced automotive technologies to support India’s self-reliance vision.
• Hydrogen Engine Technology Development: Active development with Bosch Germany, focusing on engineering and testing infrastructure for the Indian market.
• Digital Transformation: Implemented Industry 4.0 solutions, advanced analytics, and enhanced visualization in operations.
• Sustainability: Continued CO2 and water-neutral endeavors, achieved a 95% waste-to-landfill diversion rate at Bidadi Plant, and expanded green energy use.
• Value Chain Strategy: Launched VCS.NXT in January 2024, aiming to foster impactful growth by prioritizing customer satisfaction, excellence in people management, innovative industrial practices, and operational efficiency.
• Work Safety: Reduce the accident rate to 1.45 accidents per 1 million hours worked or less by 2025.

Risk Landscape Changes #

• Supply Chain Risks: Ongoing geopolitical tensions and restricted shipping lines continue to pose challenges, though bottlenecks are improving. Mitigation measures include maintaining strong partnerships with key suppliers.
• Geopolitical Risks: Increased focus on managing risks associated with global conflicts and trade tensions.
• Disruptive Norms: Shift towards electrification and alternate fuels in the automotive sector necessitates investment in new technologies and adaptation to changing market demands.
• Industrial Relations: Continuous focus and enhancements in management of potential risks associated with labor relations.
• IT Infrastructure and Data Security: Addressed through continuous upgrades and cybersecurity measures.

ESG Initiatives and Metrics #

• Environmental:
  • Achieved carbon neutrality (Scope 1 & 2) across 400+ global locations since 2020.
  • Reduced Scope 3 emissions by approximately 23% since 2018.
  • 18% of total energy demand met through in-house solar power, 69% through purchased green electricity, and 13% compensated with carbon credits.
  • Rainwater harvesting capacity increased by 50% in 2023.
  • Smart evaporator installed at Jaipur plant reduced Scope 1 emissions by 30%.
  • Zero liquid discharge achieved at the Naganathapura Plant.
  • Waste recycled, reused, or recovered: 5,864 tons out of 6,484 tons generated.
• Social:
  • Certified as a ‘Great Place to Work’ for the fourth consecutive year.
  • CSR initiatives reached 20,694 youths through skill development programs, with a 60% placement rate.
  • Mobile Medical Units served over 17,800 beneficiaries.
  • Supported education infrastructure improvements, reaching over 6,200 beneficiaries.
• Governance:
  • ESG issues are overseen by board of directiors.
  • Compliance with the principle of legality as well as responsible and fair business practice as a top priority.
• Diversity, Equity & Inclusion :
  • As of January 2023, 7 percent of executives were female.
• Human Right
  • Around 85% percent of direct suppliers were assesed using self-declarations by suppliers and third-party audits, quick scans and in-depth assessments conducted by Bosch.

Management Outlook #

• India is expected to sustain a robust GDP growth rate of 6.8% for 2024-25.
• Bosch Limited is well-placed to capitalize on growth opportunities from India’s infrastructure development.
• The mobility industry is undergoing a transformation, with a focus on software and service solutions.
• Continued investment in R&D, new products, adaptation to technology changes, and skill development will be prioritized.
• Sustainability remains a core commitment, with efforts in water conservation, renewable energy, and circular economy.
• The overall demand momentum is expected to continue in fiscal year 2024-25.
• The company is working towards a goal of achieving a 25 percent reduction in absolute water withdrawal.

Detailed Analysis #

Financial Analysis of Bosch Limited #

3-Year Comparative Analysis of Assets, Liabilities, and Equity #

Assets (Mio INR)

Liabilities (Mio INR)

Equity (Mio INR)

Significant Changes in Major Line Items (>10% YoY) #

• Capital Work in Progress: Decreased significantly by 87.70%, indicating substantial completion and capitalization of projects into fixed assets.
• Current Investments: Increased by 15.48%, reflecting changes in the Group’s short-term investment strategy.
• Loans (Current): Increased by 40.38%, likely due to higher loans given to related parties.
• Trade Receivables: Increased by 14.66%, reflecting higher sales towards the end of the year.

Working Capital Trends #

The increase in current assets and the slight reduction of the current liabilities indicate an increase in working capital levels.

Debt Structure and Maturity Profile #

The Company has the following financial liabilities:

• Financial lease liabilities: 393 Mio INR, current is 178, non-current 215
• Other financial liabilities: 5329 Mio INR, current is 5012 and non-current 585

The maturity profile of the financial lease liabilities:

• Within 1 year: 200
• Between 1-5 years: 241

Off-Balance Sheet Items #

No information regarding off-balance sheet items like Guarantees, Commitments, was available in the provided document.

Bosch Limited Financial Analysis - FY23-24 #

Revenue Breakdown by Segment/Geography #

• Mobility Solutions: FY23-24 revenue of ₹ 137,089 million, grew 11.1% year-over-year, driven by a 10.9% sales increase in the Power Solutions division and 19.2% sales increase for the 2-Wheeler division, with growth in the overall automotive market.
• Business Beyond Mobility: FY23-24 Revenue grew by 17.7%, Power Tools grew 15.8%. Building Technologies grew by 26.7%.
• Geographic Breakdown: Domestic sales account for approximately 91.9% of total sales. Exports, at ₹ 12,790 million, represent 8.1% of total sales in FY23-24.

Cost Structure Analysis #

• Cost of materials consumed as a percentage of total revenue from operations increased to 64.8% in FY23-24 from 63.4% in FY22-23.
• Employee benefit expenses were 8.0% of total revenue in FY23-24, compared to 7.7% in FY22-23.
• Other expenses were 14.7% of total revenue in FY23-24, decreasing from 16.8% in FY22-23.

Margin Analysis #

• Net Profit Margin: Increased to 14.9% in FY23-24 from 9.5% in FY22-23.
• Operating Profit Margin: 14.0% of total revenue from operations in FY 2023-24. Increased to 14% before exceptional items from 9.5% before exceptional item in previous year.

Non-Recurring Items #

• Exceptional item in FY23-24: Gain on sale of Mobility business of ₹ 7,850 million and write-back of restructuring provision of ₹ 588 million, totaling ₹ 8,438 million.
• No exceptional items were reported for FY22-23.

EPS Analysis #

• EPS (Basic and Diluted): Increased by 75% to ₹ 844.40 per share in FY23-24, from ₹ 482.99 per share in FY22-23.

Cash Management: Financial Analysis #

Cash Flow and Liquidity Analysis #

OCF, ICF, FCF Components (Consolidated) #

• OCF (Operating Cash Flow): Increased to ₹12,528 million in FY 2023-24 from ₹12,136 million in FY 2022-23. Profit before tax, adjusted for non-cash items (depreciation, provisions, etc.) and working capital changes, forms the basis.
• ICF (Investing Cash Flow): Showed a net inflow of ₹2,828 million in FY 2023-24, compared to ₹2,618 million in FY 2022-23. Major components include purchase and sale of property, plant, and equipment, purchase and sale of investments and proceed from sale of the specified business.
• FCF (Financing Cash Flow): Saw a net outflow was ₹14,516 million in FY 2023-24, higher than ₹12,394 million outflow in FY 2022-23. This predominantly reflects dividend payments.

Working Capital Management Efficiency #

• Inventory Turnover Ratio: Improved from 7.45 times to 8.39 times during the year due to cost efficiencies.
• Trade Receivable Days: Increased from 40 days to 45 days, indicating a slightly longer collection period.
• Working Capital days: Increased from 93 days to 105 days.
• Trade payables days: 87 days for year ended 2024.

Capex Analysis by Segment #

• Power Solutions (PS): The Nashik plant’s ‘Reboot.NxT’ vision aligns with the parent division, aiming to become the preferred choice for mobility products globally. The Jaipur Plant is transforming into a cost-competitive smart manufacturing location, focusing on 3D printing technology. The Naganathapura Plant achieved its highest-ever production volumes in 2023.
• Power Tools: The Chennai Plant (ChiP) is the leading Power Tools manufacturer in India. ChiP’s relocation to Bosch-owned premises is set to enhance output. A Local Engineering Center was established in 2023 for the engineering and development of power tools.
• Building Technologies: Increased localization with the “Made in India” FLEXIDOME IP Starlight 5000i Camera, CCS 1000 D Digital Flush Mount Discussion System, and AVENAR Fire Detector.
• Bidadi Plant (BidP): Significant progress in safety, quality, sustainability, digitalization, and employee engagement.

Dividend and Share Buyback Trends #

• Dividend: A final dividend of ₹170 per share was declared for FY 2023-24, and an interim dividend of ₹205 per share was paid, for a total of ₹375. Total Dividend Payout Ratio is approximately 44% for FY2023-24. The previous year (FY 2022-23), the total dividend was ₹480 per share (interim and final).
• Share Buyback: No share buyback activity reported.

Liquidity Position #

• Liquidity Position: The Group maintains a strong liquidity position.
• Cash and Cash Equivalents: Increased to ₹4,634 million at the end of FY 2023-24, up from ₹3,793 million in the previous year.
• Total current assets: 99,234

Strategic Analysis of Bosch India - FY 2023-24 #

Mobility Solutions #

Long-Term Strategic Goals and Progress #

Bosch aims to be the preferred partner for vehicle systems (software and hardware) and a leading technology provider for mobility solutions. In FY 2023-24, the Mobility Solutions business sector experienced an 11.1% increase. The Power Solutions division saw a 10.9% sales increase, and the Mobility Aftermarket division rose by 10.2%. The Two-Wheeler and Powersports division exceeded ’ 2000 Crores in sales. Focus remains on ICE components while developing hydrogen and biofuel systems.

Competitive Advantages and Market Positioning #

Bosch is a reliable partner for passenger and commercial vehicle manufacturers in India, offering a comprehensive product range for multiple drivetrain types. A strong presence with major two-wheeler OEMs indicates a solidified market advantage.

Innovation Initiatives and R&D Effectiveness #

Development of cloud-based services to improve electric vehicle battery performance demonstrates proactive adaptation. The company is also actively developing hydrogen engine technology and shaping safety regulations. Investment in R&D in relation to reliability and a broad, diversified portfolio show innovation inititiatives.

Management’s Track Record in Execution #

Strong revenue growth across multiple segments and surpassing milestones in the Two-Wheeler and Powersports division indicates management effectiveness. Successful navigation of market challenges, including changes in emission norms and policy changes, combined with securing new projects, underscores their strong execution.

Organizational Changes and Their Impact #

Realignment of the mobility business aims to better deliver regional growth and customer centricity, with a stronger focus on software.

Beyond Mobility (Consumer Goods - Power Tools) #

Long-Term Strategic Goals and Progress #

The focus is on enhancing user experiences and expanding reach to Tier 3 & 4 cities, SMEs, and digital platforms. A 15.8% business growth in 2023-24 indicates significant progress toward these goals.

Competitive Advantages and Market Positioning #

The Power Tools segment holds a leadership position, with a focus on user experience with world-class products, user health, and safety.

Innovation Initiatives and R&D Effectiveness #

Introduction of new products (e.g., angle grinders - GWS 800, GCO 230, GSB 183 li and GWS 12-125) and a state-of-the-art engineering center at the Chennai Plant demonstrate commitment to innovation. The company is also focused on product expansion, contributing ~11 cordless products.

Management’s Track Record in Execution #

Achieved double-digit growth (16%) and EBIT of 10.8% with strong manufacturing contributions. The successful onboarding of 10,000 outlets and 220 new dealers using the ‘BeConnected’ Digital tool reflects strong execution capabilities.

Organizational Changes and Their Impact #

The Chennai Plant (ChiP) will be recognized as a distinct region, enabling the plant to consolidate local, SAARC, and Rest of the World (RoW) volumes for its global strategy.

Beyond Mobility (Energy and Building Technology) #

Long-Term Strategic Goals and Progress #

The focus is on creating safe, secure, and enjoyable spaces in various vertical segments. The division is growing its India-made product offerings. A 17.0% business growth in 2023-24 reflects progress.

Competitive Advantages and Market Positioning #

Bosch offers comprehensive, multi-domain solutions for buildings, creating intelligent spaces. It is positioned as a one-stop shop for building technology applications, covering video surveillance, intrusion and fire detection, voice evacuation, access control, and communication systems.

Innovation Initiatives and R&D Effectiveness #

Implementation of state-of-the-art solutions across various segments (metro, airports, city surveillance, etc.) signifies innovation. Localization initiatives, like the FLEXIDOME IP Starlight 5000i Camera and AVENAR Fire Detector, highlight a focus on adapting to local market needs.

Management’s Track Record in Execution #

Business growth of 17.7% and a strategic move to enhance production capabilities and support local economies through localization demonstrate effective execution.

Organizational Changes and Their Impact #

The Building Technologies division is expanding its localization efforts, with 7 variants of AVENAR detectors being manufactured in India.

ESG Framework: A Deep Dive #

Environmental Metrics and Targets #

• Climate Action: Carbon neutrality (Scope 1 & 2) achieved across 400+ locations worldwide since 2020.
• 2023 Emission Offsetting: 581,000 metric tons of CO2 offset through carbon credits, a 19% reduction from the previous year.
• Scope 3 emissions reduction of around 23% since 2018.
• Energy Efficiency: Since 2019, around 6,000 energy-efficient projects have been launched worldwide, including 1,300 in 2023. Total savings potential of 984 GWh identified, and 58% of the goal has been achieved.
• Renewable Energy: In 2023, 149 GWh of renewable power was generated in-house, achieving 37% of the set target.
• Water Withdrawal: A target of 25% reduction in absolute water withdrawal at locations in water-scarce regions by 2025 (compared to 2017).
• Rainwater Harvesting: Total rainwater harvesting capacity at Bosch Limited locations is 21,000 m³. In 2023-24, a total of 68,416.45 m³ of rainwater was harvested.
• Zero Waste to Landfill (ZWL): A program is in place since 2019. In 2023-24, 5,864 tons out of 6,484 tons of total waste generated were recycled, reused, or recovered.
• Plant-Specific Emission Reductions:
  • Nashik Plant: Scope 1 emissions were reduced by 30%, avoiding 58 tons of Co2 emissions. Expanded share of green energy to 40%.
  • Jaipur Plant: Scope 1 emissions were reduced by 30%, avoiding 58 tons of CO2.
  • Bidadi Plant: Achieved 95 percent waste-to-landfill diversion rate through Project Vasundhara.

Social Responsibility Programs #

• Skill Development (BRIDGE): In 2023-24, 15,947 youths were trained across 19 states, with 60% placement and 58% female beneficiaries.
• Persons with Disabilities (PWDs) Skill Development: 150 youths with disabilities were trained, with a 68% placement rate.
• Train the Trainers (TTT): 1,205 trainers were trained in 2023-24.
• Caregiver Skill Development: 2,029 youths were trained, with 70% placement.
• Automotive Sales and Services Skill Development: 2,718 youths were trained.
• Capacity Building of NGOs: 46 NGO representatives were trained in skill development.
• Lake Rejuvenation: Shanumangala Lake supports over 6,500 people and 600 cattle. Sheshagirihalli Lake is expected to benefit over 11,200 people and 600 cattle.
• Afforestation: 42,000 saplings were planted in Nashik and Jaipur in 2023-24, impacting over 111,500 community members.
• Healthcare: 3,226 individuals benefited from eye check-ups and cataract surgeries.
• RO Plants: 33 RO plants provide clean drinking water to over 23,500 households.
• Mobile Medical Units: Served over 17,800 beneficiaries and facilitated 312 referrals.
• Education: Infrastructure improvements and STEM kits reached over 6,200 beneficiaries.
• Integrated Community Development: Five Community Development Centers (CDCs) benefited 13,589 individuals.
• Disaster Relief: Support was provided to 920 families affected by floods/cyclones.
• Employee Engagement: ‘Act of Kindness’ initiative saw 861 volunteers contribute over 10,500 hours, benefiting over 60,000 beneficiaries.

Governance Structure and Effectiveness #

• Board Composition: As of March 31, 2024, the Board had ten (10) directors, with a majority (6) being Independent Directors, ensuring robust independent oversight.
• Board Committees: Key committees such as Audit, Nomination and Remuneration, Stakeholders’ Relationship, Corporate Social Responsibility, and Risk Management are in place.
• Compliance Management System: A global compliance management system (CMS) based on IDW PS 980 is implemented, focusing on early identification and response to compliance risks.
• Code of Business Conduct: Provides guidance on values-based, ethical, and legally compliant conduct.
• Risk Management: Complies with ISO 31000 and COSO III (ERM) standards, with oversight by a Risk Management Committee.
• Great place to work certified for the fourth consecutive year.

Sustainability Investments and ROI #

• Bidadi plant saved 25 million INR via Shainin projects.
• Nashik Plant installed a 32nd Reverse Osmosis (RO) Plant in a nearby village, providing safe drinking water to close to 1 million people. Increased its green energy share to 40%.
• Jaipur Plant saved more than 100MWh of energy by using artificial intelligence in managing Air Compressors.
• Investment in renewable energy generation, waste reduction initiatives (Project Vasundhara), and water conservation projects (rainwater harvesting) have yielded positive outcomes in environmental sustainability.

ESG Ratings and Peer Comparison #

• Sustainalytics ESG Risk Rating: Improved from 8.5 in 2022 to 6.5 in 2024, indicating a ’low-risk’ rating.
• Awards and Recognition: Received multiple awards for environmental and social initiatives, including the CII and TRIVENI Water Institute award for water conservation.

Regulatory Compliance and Future Preparations #

• Compliance Management System: A global system is in place to ensure adherence to legal and internal regulations.
• Whistleblower Policy: Implemented to report potential misconduct.
• Data Protection: Adherence to the General Data Protection Regulation (GDPR) and local data protection laws.
• SEBI LODR Compliance: Resolved non-compliance with Regulation 23(4) through a settlement with SEBI.
• Future Preparedness: Actions include using accounting software with an audit trail, maintaining data backup servers, and developing skills to comply with new regulations.

Future Projections and Guidance #

Management Guidance and Assumptions #

• Overall: The Indian economy is expected to grow at 6.8% in the medium term, driven by public investment, despite global economic uncertainties. A focus on “Make in India” will be critical.
• Mobility Business: Management is transforming to meet industry changes, focusing on software and regional market requirements. A broad outlook is needed.
• Power Solutions: The focus is on the Hydrogen engine for long-haul vehicles.
• Consumer Goods: Management’s commitment to the ‘BeConnected’ user and trade engagement program, along with e-commerce, will drive growth.
• Sustainability: Since 2018 Scope 3 emissions were cut.

Market Growth Forecasts #

• Global Economy: Projected to grow at 3.2% in 2024 and 2025, with minimal momentum until 2025-26.
• Indian Economy: Expected to sustain a robust GDP growth rate of 6.8% for 2024-25, making it the fastest-growing major economy.
• Automotive Market: Overall growth in FY 2023-24 was led by Passenger Cars and 2-Wheelers. Tractor production declined by -11.7% over the Previous Year (PY). Commercial Vehicles saw modest growth of +4.0%. 2-Wheelers surpassed pre-COVID levels.
• Power Tools Market: The total size of the Power tools market in India is estimated at around ‘348 billion, to grow at rate of 8% in the coming years.
• Building technology: The outlook is positive with an expected growth with the overall economy.

Planned Strategic Initiatives #

• Mobility Solutions: Realignment of business to meet evolving market and customer needs, with a stronger focus on software.
• Power Solutions: Development of components and systems for fuel cell drivetrains, including hydrogen engines (port fuel and direct injection). Expect debut in production vehicles in 2025. Actively engaged in biofuel partnerships.
• Mobility Aftermarket: Leap to venture into the domestic space by now powering homes with all-new Tall Tubular Inverter batteries.
• Two-Wheeler & Powersports: Focus on rider needs and latest technologies in assistance, powertrain & electrification. Development of solutions for BS6 OBD II Stage B regulation (effective April 2025).
• Building Technologies: Strengthening India-made offerings, including the FLEXIDOME IP Starlight 5000i Camera, CCS 1000 D Digital Flush Mount Discussion System, and AVENAR Fire Detector.
• Power Tools: Accelerate omnichannel and Go-To-Market approach, extending reach to Tier 3 & 4 cities. Enhance local engineering and production at the Chennai plant.
• Value Chain Strategy (Manufacturing): Emphasis is given to manufacturing.
• Smart Campus: Remodeling of existing buildings, creating inspiring workspaces like T-Hub for future entrepreneurs.
• People Update: Talent strategy, strategic workforce planning, a new People Dialogue Process, talent development, learning and development.

Capital Expenditure Plans #

• Bidadi Plant (BidP): Focused on digital transformation, Industry 4.0 solutions, and waste reduction.
• Nashik Plant (NaP): Expansion of green energy to 40% through solar, implementation of smart evaporator system, and water conservation efforts.
• Jaipur Plant (JaP): Consolidating VE IPN business by 2025, becoming the sole Bosch location for this product. Developing 3D printing technology.
• Naganathapura Plant (NhP): Implementation of productivity, safety, and quality enhancement programs.
• Chennai Plant: Implementation of local engineering center.

Efficiency Improvement Targets #

• Bidadi Plant (BidP): Targeting 95% waste-to-landfill diversion rate.
• Nashik Plant (NaP): Smart evaporator system reduced Scope1 emissions by 30%.
• Jaipur Plant (JaP): Aiming to consolidate VE IPN business by 2025, leveraging digitalization and 3D printing for efficiency.
• Gangaikondan Plant (GanP): Rainwater harvesting pond to reduce freshwater consumption by 13%. Aim for ~85% usage of green energy.
• Power tools plant (ChiP): Achieved over 66% local share on value at the component level, and a 72% localization rate at volume for global tools at the finished goods.
• Smart Campus: Increased rainwater harvesting capacity by 50% in 2023, potentially fulfilling 65% of annual freshwater needs.
• Overall: Commitment to carbon neutrality (Scope 1 & 2) across 400+ global locations. Aim to reduce Scope 3 emissions by 15% by 2030 (baseline 2018). Aim to save 1.7 TWh through increased energy efficiency by 2030.

Potential Challenges and Opportunities #

• Challenges:
  • Global economic slowdown and minimal growth momentum until 2025-26.
  • Political instability due to ongoing conflicts and global elections.
  • Changing diesel market dynamics and policy changes.
  • Supply chain risks due to geopolitical tensions and other disruptions.
• Opportunities:
  • India’s strong GDP growth, rising consumer spending, and infrastructure development.
  • Growing alignment between aspirations and opportunities in India.
  • “Make in India” initiative and potential for localization of advanced technologies.
  • The transformation in mobility (electrification, hydrogen, biofuels).
  • Growing demand for security, safety, and communication systems in India.

Scenario Analysis and Sensitivity to Key Assumptions #

• Sensitivity to Economic Growth: A slowdown in global or Indian economic growth could negatively impact the demand for Bosch’s products and services, particularly in the automotive sector.
• Sensitivity to Regulatory Changes: Changes in emission norms (BS6), adoption of electric vehicles, and policies related to hydrogen and biofuels create both challenges and opportunities. The speed and nature of these changes will impact Bosch’s investments and product portfolio.
• Sensitivity to Technology Adoption: The rate of adoption of new technologies (electrification, hydrogen engines, connected vehicles) will significantly affect Bosch’s growth prospects.
• Sensitivity to Competition: The power tools market, for instance, is experiencing increased competition from Chinese companies, impacting market share and pricing.
• Sensitivity to Geopolitical Risks: Dependence on imports in Power Solution for example, could increase dependence.
• Sensitivity to Interest Rate Risk: The company’s investment in tax-free bonds makes it sensitive to changes in interest rates. A 100 basis point increase would negatively impact profit, while a decrease would have a positive impact.
• Sensitivity to ESG: The company plans to be carbon neutral.

Audit and Regulatory Analysis #

Auditor’s Opinion and Qualifications #

• Auditor’s Opinion: Unmodified opinion on the standalone and consolidated financial statements.
• Qualifications:
  • The Company did not maintain the backup of the books of account and other books and papers in electronic mode on servers physically located in India, on a daily basis, for most of the period under review, as required by rule 3 of the Companies (Accounts) Rules, 2014.
  • The meeting of the risk management committee was delayed by 5 days.
  • Audit trail feature not enabled for changes that may be made using privileged/ administrative access at the database level, in the jointly controlled entity, Newtech Filter India Private Limited’s accounting software.

Key Accounting Policies and Changes #

• Key Accounting Policies: The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013. Historical cost basis is used, except for certain financial assets and liabilities, and derivative financial instruments which are measured at fair value.
• Changes in Accounting Policies:
  • The amendments to Ind AS 8 clarified the distinction between changes in accounting estimates, changes in accounting policies, and the correction of errors.
  • As per amendments to Ind AS 1, ‘material’ accounting policies are disclosed instead of ‘significant’ accounting policies.
  • Amendments to Ind AS 12 narrowed the scope of the initial recognition exception; therefore, deferred tax asset and liabilities are recognized separately for the leases.

Internal Control Effectiveness #

• The Company maintains adequate internal financial controls over financial reporting that operated effectively.
• The Company has an internal audit function that provides assurance on the design and effectiveness of internal controls.
• Audit trail implemented except for an associate.

Regulatory Compliance Status #

• The Company has generally complied with the provisions of the Companies Act, 2013, SEBI Regulations, and other applicable laws.
• Non-compliance observed in respect of exceeding the materiality threshold for related party transactions without prior approval from the shareholders, which was later rectified and settled with SEBI.
• Non-compliance regarding the timing of Risk Management Committee meetings, delayed by 5 days.
• Non-compliance regarding daily server backup, not physically located in India until April 2024.

Legal Proceedings and Their Potential Impact #

• The Company disclosed the impact of pending litigations on its financial position.
• There are outstanding demands related to income tax, customs duty, excise duty, sales tax, and GST under dispute.

Related Party Transactions #

• The Company entered into material related party transactions with Robert Bosch GmbH, Bosch Automotive Electronics India Private Limited, and Bosch Global Software Technologies Private Limited, exceeding the materiality threshold. Shareholders’ approval was obtained post-facto, and the matter was settled with SEBI.
• The Company transacts with related parties for the sale and purchase of goods and services in the ordinary course of business and at arm’s length basis.
• Approval of the Audit Committee and the shareholders have been obtained for Material Related party transactions with Robert Bosch GmbH, Bosch Automotive Electronics India Private Limited and Bosch Global Software Technologies Private Limited.

Subsequent Events #

• The Company evaluated all events and transactions that occurred after March 31, 2024, up to May 24, 2024. No events or transactions were identified that would require recognition or disclosure.

Analysis of Accounting Quality and Regulatory Risk Assessment #

• Accounting Quality: The unmodified audit opinion suggests high accounting quality. However, the qualification related to accounting records indicates an area for improvement in physical maintenance of books. The Company’s use of a recognized framework (Ind AS) and detailed accounting policies indicate a commitment to transparent and reliable financial reporting.
• Regulatory Risk Assessment: While the Company is generally compliant, the noted non-compliances related to related party transactions and risk management committee meetings, as well as servers located outside India and delay in taking timely actions highlight a moderate regulatory risk. The proactive resolution with SEBI and obtaining post-facto shareholder approval demonstrates the Company’s willingness to address compliance issues. However, the recurrence of such issues suggests a need for enhanced internal processes.