BOSCH LIMITED
ANNUAL REPORT 2011
DIRECTOR`S REPORT
The Directors have pleasure in presenting their SIXTIETH Annual Report
together with the Audited Statement of Accounts for the year ended 31st
December, 2011.
Financial Results
The following are the financial results: (Rs. Million)
2011 2010
Net Sales (excluding recovery of duties and taxes) 79,294.7 66,305.0
Of which Export Sales 10,344.1 8,460.7
Profit before tax 15,739.9 12,027.9
Less: Provision for tax 4,710.0 3,660.0
Add: Deferred tax and tax adjustments
relating to earlier years 195.7 221.1
Profit after tax 11,225.6 8,589.0
Appropriations:
Dividend:
- Dividend recommended at Rs.50 per share
(previous year: Rs. 40 per share) 1,569.9 1,255.9
- Special dividend at Rs. 85 per share 2,668.9 -
Tax on Dividend 254.7 208.6
Tax on Special Dividend 432.9 -
General Reserve 5,000.0 3,750.0
Capital Reserve - 0.6
Reversal of Dividend
Distribution Tax (4.8) (3.6)
Balance carried forward 1,304.0 3,377.5
Total 11,225.6 8,589.0
Net sales for the year 2011 grew by 19.6%. The Profit Before Tax (PBT) in
2011 as a percentage of net sales was at 19.8% as compared to 18.1% in
2010. The Profit After Tax (PAT) as a percentage of net sales was 14.1% in
2011 as against 13.0% in 2010.
Material costs as a percentage to sales increased to 56% in 2011 as
compared to 54.3% in 2010.
Overall, the Profit Before Interest, Depreciation and Taxes, for the year
shows an increase of 22.7% over the previous year.
Investments
Capital investment during 2011 was higher than previous year, at Rs.6,587
mio. as against Rs.3,021 mio. in 2010.
Dividend
The Board of Directors recommends a dividend of Rs.50 per equity share for
the year 2011 as against a dividend of Rs.40 per equity share in 2010. This
dividend is subject to the approval of the shareholders at the forthcoming
Annual General Meeting.
A special dividend of Rs.85 per equity share was paid to the shareholders
in 2011, on the occasion of 125th anniversary of Bosch and to commemorate
60 years of the Company since its incorporation in the year 1951. The total
dividend payout for the year 2011 is at Rs.135 per equity share.
Business Situation
The automotive market was upbeat in the first half of the year 2011,
continuing the growth momentum from the previous year. However, poor market
sentiments, increased food & fuel prices and interest rates took their
toll, what with the sale of passenger cars in October 2011 falling to the
lowest in two years forcing the industry to slash forward looking
forecasts. The widening price differential between petrol and diesel has
further favoured the demand for diesel cars. This notwithstanding, OEMs
continued to launch new models in all market segments especially passenger
cars. Overall, the automotive sector was able to sustain double digit
growth aided by a solid performance in the first half of the year 2011 and
partially aided by stable rural demand.
Segment-wise, the commercial vehicle sector leads the pack with a strong
22% growth in 2011 over the previous year. Within this, Light Commercial
Vehicle (LCV) segment grew by 30% driven by robust demand for sub 3.5 ton
LCVs. Tractor segment continued to grow strongly with a 24% growth over
2010 backed by a bumper agricultural output. Two Wheeler and Three Wheeler
segments registered a growth of 18% and 15% respectively.
In view of the above scenario, the Company outperformed expectations with
sales from the automotive segment growing by 19.1% and exports breaking
previously achieved records and clocking the best ever performance at
Rs.10,344 mio. with a growth of 22.3% over 2010.
Our non-automotive business grew by 28.5% in 2011
as compared to 2010. This growth is mainly attributed to strong performance
in the Power Tools, Packaging and Machine Building divisions.
Automotive Technology
Diesel Systems business grew by 19.2% in the year 2011 despite the ups and
downs witnessed by the automotive market in 2011. The Diesel Systems
business continued to drive focused innovation on the value line Common
Rail System (CRS) for Light Commercial Vehicles as also simplification of
the CRS for small engines to create value propositions for our customers.
These value offerings have helped the Company bag significant orders from
key OEMs amidst stiff competition. The growth would have been much higher
for the Diesel Systems business, but for the sluggishness experienced in
the second half of the year mainly in the passenger car segment which grew
by just 7% over previous year. Within this, there was a clear shift in the
market from Gasoline to Diesel passenger cars owing to the high price
differential between the two fuels.
Gasoline Systems business suffered a slowdown in 2011 and posted a de-
growth of 6.4% due to reduction in passenger car sales consequent to
gasoline price increase. The division introduced the first 2 Wheeler Engine
Management Systems (EMS) in series production for a customer project. Focus
on system engineering in Low Price Vehicle and 2 Wheeler systems for
innovative and cost effective solutions to the Indian market, were the
other highlights of the division.
Starter Motors and Generators business witnessed a strong growth of 63.1%
in the year 2011 powered by New Base Line Generators both in the domestic
and export market. The division also achieved overall productivity
improvement over previous year.
In the year 2011, the division introduced "Thermal Protected Starters" for
Commercial Vehicle applications, which is an Indian platform project going
global. The division added renowned global OEMs to its portfolio of
customers like Renault, Volkswagen and Ford in 2011. The division bagged
"Best Supplier" award from the customer JCB India for delivery and quality.
The Automotive Aftermarket division registered an impressive growth of
15.2% in the year 2011. This continuous growth over the years is made
possible owing to the division`s expanded footprint in the market through
roll-out of new concepts/ modules such as Express Bike Service (EBS),
Tractor Points(TP) as well as extension of existing service networks at
both 1st and 2nd Trade Level. The IT tools and systems (e.g. eFOCuS, FR
Portal {for Field Representatives}) were also introduced for better sales
and dealer management. Customer binding and brand building initiatives
further boosted our market competitiveness. Infrastructure projects
including new sales offices and warehouses successfully completed in the
year 2011, for better customer responsiveness.
The OE filters, spark plugs and OE service blocks recorded highest ever
sales and acquired new customers. New products from the Diagnostics Centre
of Competence were successfully launched in line with `local-for-local`
strategy. With one new part number released per working day, the market
coverage of all the Company`s products further increased across vehicle
segments.
Industrial Technology
Packaging Technology (Verna (Goa) Plant)
The year 2011 was the most defining year for the Packaging Technology
division as it achieved the highest turnover with 40% growth over 2010. At
the end of the first quarter of 2011, the division bagged the single
largest export order for a record number of 60 machines. This project was
successfully executed and the machines delivered within the time frame.
The division expanded its product portfolio with the development of a low
cost candy wrapping machine. This machine was also exhibited at Interpack,
Germany, for business promotion and was well received. On the vertical
baggers, it had a very successful launch of SVI 2600 B, at the India
Packaging Show in Delhi. A host of features like low height, high output
and easy accessibility allow for improved packaging efficiency. During the
same occasion, the Belt weigher FBW4021B was previewed, which offers high
output and accuracy.
The division continued its success with the horizontal form fill and seal
machines bagging orders from some of the most prestigious customers in
India. It also executed first local order for pharmaceutical machines of
MLF and FLC lines.
The year 2011 was also the year the division took up construction
activities for its new Plant. The enhanced capacity will provide the
division with the right platform to scale higher growth levels.
Industrial Equipment
The Industrial Equipment division registered a good growth of 53.1% in the
year 2011. Business with the Company`s customers grew by 23% in a highly
competitive market.
New and prestigious customers from the Auto and Electrical equipment
sectors were added to the Company`s customer list. The division witnessed a
substantial growth in Tool Room activities during the year 2011. Exports to
Europe were also an important achievement. The division focused on building
up of skills for the manufacture of machines and equipments to meet
international standards.
Consumer Goods and Building Technology Power tools
The Power Tools division achieved an impressive growth of 22% in the year
2011 making `PT India` one of the few countries to register a consistently
strong growth in the last 4 years.
In 2011, the division launched its new state-of-the-art training center in
Bangalore created with an investment of Rs.50 mio. making it one among the
largest training centres in the Bosch PT world. With this initiative, Bosch
PT India becomes the first Power Tool player in the country to offer
advanced training programmes to its customers and end users.
Also launched in the year was the Fischer Exclusive Store at Kolkata to
provide anchoring solutions to meet the growing demand in the region. The
division inaugurated `Bosch System Specialist` stores in nine cities across
the country including one at Goa which is the largest of its kind in the
world. In the year 2011,
Bosch Power Tools India marked the 125th anniversary of Bosch through an
innovative campaign called `Power Drive 125` spread across 20 different
locations in the country.
The division continued to supply tightening and pneumatic system solutions
to major automotive OEMs such as Volkswagen, General Motors, BMW and
Mercedes Benz in India. Localization was one of the core focus areas of the
division. Manufacturing of a 2kg Hammer began at the Bosch Power Tools
Plant in Bangalore making it only the third Plant in the Bosch Power Tool
World to do so. Bosch Accessories showcased tremendous growth by crossing
Rs.100 crores turnover mark in 2011 doubling the turnover in two years,
rising to No.3 position. The division
bagged the Gold and Silver medals at the prestigious `TOOLYMPICS` contest-
2011, in recognition of the various innovative market oriented activities.
Security Technology
The Security Technology division achieved 18.4% growth in the year 2011
compared to 2010. The division launched its distribution business for Video
System Products under the Brand name of `Advantage Line`. It established a
new business -`Engineering Solutions & Software`, catering to large
integrated projects.
There were numerous key projects for the year 2011. To mention a few - a
prominent racing circuit, various state assemblies, a major airport, steel
plant and power plant.
The division participated in IFSEC 2011, lauded as one of the most
important trade exhibitions for Commercial & Homeland Security. A full
range of security, safety, and communications products from Bosch were
showcased at this important platform.
Solar Energy
In the year 2011, the Solar Energy division launched solar energy products
and services in India. To capitalize on the potential of the nascent Indian
solar photovoltaic market, the division introduced 60 cell mono-crystalline
silicon module and Micromorph thin film modules. Along with photovoltaic
modules, the division also offered project development services including
engineering, procurement and construction of solar power plants. Since June
2011, the division delivered 1000 kWp of thin film modules.
Thermo Technology
The Thermo Technology division started its activities in 2011. It ventured
into sales and service of industrial boilers coming from Germany and China.
The series manufacture of solar flat plate collector, storage tank and
mounting structure for domestic and commercial hot water applications are
planned in 2012.
Competition and challenges in our business sectors
As in other regions of the world, the year 2011 was a testing year for the
Indian automotive industry. In addition to the demand fluctuation from
customers owing to the recession, volatile raw material prices aggravated
the cost pressures of manufacturers. High inflation and labour issues made
it one of the most challenging years to do business in.
However, the Company was among the very few organizations that were able to
convert this apparent downside into an opportunity. With efficient
processes and systems, the Company ensured that it remained cost
competitive, delivering innovation and value to our customers, thereby
maintaining its market share.
The Company`s aggressive engineering, manufacturing, marketing and sales
initiatives will continue into 2012 with renewed vigor, to expand our reach
and strengthen the leadership position. Further, our clear long-term focus
and sustained investments in future technologies, prepares us for the
uncertainities that lie ahead and helps us enhance the Company`s value
proposition to all stakeholders.
Plants Bangalore
Bangalore Plant attained the highest production level in all its products
viz., Inline Pumps, Elements, Delivery Valves, Common Rail Pumps, Glow
Plugs and Single Cylinder Pumps in the year 2011.
The Plant invested Rs.185 mio. in 2011 towards expansion projects for
meeting increased demand for the products manufactured. A milestone of
producing 1 million `Common Rail Pumps` and 15 million `A pumps` was
reached in the year 2011.
After being awarded the CII-Exim Bank award for Business Excellence at the
national level in the year 2009, the Bangalore Plant sustained and further
improved on living business excellence through the assessment carried out
internally.
Nashik
During the year 2011, the Nashik Plant achieved the highest production
levels of Nozzle holder assembly, DSLA Nozzle and Common Rail Injectors.
The Plant manufactured the 100 mio. NHA-Injector, which was a new milestone
achieved. To keep pace with the growing demand, the Plant made an
investment of Rs.2,715 mio. in its production facilities.
The Plant was honored with CII-EXIM Bank`s `Commendation for Significant
Achievements in Business Excellence` for the year 2011 as well as the
`Golden Peacock Environment Management Award` from the Maharashtra State
Government.
Jaipur
In 2011, the Jaipur Plant achieved its highest production since its
inception in the year 1999. The Plant realized the highest ever single
investment of Rs.753 mio. towards enhancing the capacities and further
expansion.
The year 2011 has also been a year of awards and accolades for the Plant.
It received the Best Supplier Award from Tata Cummins, Supply Linearity
Award from Ashok Leyland, the National Award for Excellence in Water
Management by CII and the Best Employer Certificate by the Rajasthan
Government.
Naganathapura
In the year 2011, substantial ramp ups in New Base Line generator and Hx
Starter business were resorted to by the Plant. The Plant achieved a record
production of 32 mio. units of Spark Plugs in the year 2011.
Lean Concepts were implemented vigorously in the Plant. Energy conservation
measures were put in place during the year. The Plant maintained cordial
Industrial relations and the employees of the Plant worked as a team
towards achieving better results.
Information Technology (IT)
The maturity of IT-enabled business processes using SAP were assessed and
showed improvements over the previous year. A focused effort on improving
the usage of planning tools within SAP is in progress. A new Business
Intelligence Platform has been put in place to support business reporting
requirements and tracking of Key Performance Indicators.
Improvements were achieved in Information Security, Data protection and
Control of Authorizations. Formal processes exist to periodically audit and
report results.
Change Initiatives
Continuous Improvement Process (CIP)
The year 2011 was a year which had good balance between CIP in Direct areas
and Indirect areas. Direct areas showcased their strength with Conventional
CIP and LeaderCIP which laid the platform to make improvements in Quality,
Cost and Delivery. Conventional CIP enabled all value streams to achieve
system CIP targets and Leader CIP enabled leaders to lay more focus and
guide their respective teams in meeting organizational targets. Value
Stream Design in Indirect Areas (VSDiA) took a front stage in eliminating
waste and in reducing lead time which directly acted as a backbone for
direct areas. VSDiA Improvements were effective in Plants as well as in
corporate departments within the Company.
Team Oriented Production (TOP), Voluntary Lernstatt Team and Shop Floor CIP
increased the involvement in CIP activities in 2011 compared to 2010.
LeaderCIP trainings were launched in 2011 across all managerial levels to
follow the PDCA-Guided process approach in CIP. The yearly "GLS CIP 2011"
was held in order to share good CIP practices across the Company with the
participation of Executive Directors. CIP teams received accolades in
regional, national and international competitions organised by recognized
quality circle forums.
Bosch Production System (BPS)
BPS in 2011 played a very prominent role focusing on a set of guided
principles that were implemented in order to achieve business targets of
the Company. The focus in 2011 was to improve in three areas viz. "Source,
Make and Deliver". The Company won the BPS award in the `Source` category
by establishing good BPS Compliant suppliers. BPS Knowledge training was
extended across all Plants with a view to have a common understanding in
all areas and to measure the effectiveness within the Company. It was found
that value stream managers were orienting / aligning themselves to attain
system maturity and business Key Performance Indicator (KPI) targets.
Standardized and Reusable packaging of raw materials and finished goods
initiatives helped business divisions to eliminate waste in transportation
and adopt environment friendly concepts. In order to reduce lead time, the
entire value chain was focused on many localization, cost reduction (RPP)
projects, inventory reduction projects were initiated. Shop Floor
Management Cycle (SFMC) and TPM models were implemented successfully in
many locations.
Diesel Systems Business Excellence
The Diesel Systems Business Excellence (DBE) integrates the various cross
functions in the Plants and aligns them towards meeting the INDS (Diesel
Systems India) Vision and Mission. DBE was started in 2005 at the Diesel
System manufacturing Plants in India (Bangalore, Nashik and Jaipur) and
have adopted the European Foundation for Quality Management (EFQM) model of
Business Excellence to improve the organization effectiveness in a holistic
manner. Regular assessments are conducted at all Plants as a health check
to identify strengths and focus areas to work upon. The RADAR approach is
used extensively at INDS where we know the Results that we have to achieve,
a clear cut Approach is defined and they are Deployed. Assessment and
Refinement help us to continuously improve the systems and processes in our
journey towards Business Excellence by enabling maturity of the
organisation and its people. Key performance indicators are measured to
enable the achievement of required results as a cause and effect with
respect to all the key stakeholders.
INDS is striving towards institutionalizing a culture of `Living Business
Excellence` as `Business Excellence at work` by incorporating the same in
the INDS Vision & Mission. To deploy this vision theme, INDS long term
strategy map has one of the bubbles as `living BE`. The strategic measures
/ targets are deployed across Plants and connected corporate functions
through Policy Deployment process.
The INDS have won many accolades in this exciting journey. Bangalore Plant
won the coveted CII-EXIM Bank award for business excellence in 2009, Nashik
Plant won the CII -EXIM Bank Commendation for significant achievements in
Business Excellence` for the years 2010 and 2011 and Jaipur Plant was
recognized with Commitment to Business Excellence in 2008.
First Strategic Assessment was conducted at INDS in January 2012.
Structured assessment document as a description of entire INDS was prepared
by strategy/change teams with respect to 15 key business related topics
such as innovative products, cost competitiveness etc. A team of senior
business leaders from Diesel Systems India and Diesel Systems Bosch lead by
an external Assessor from EFQM carried out the assessment and presented the
key findings to INDS management. The maturity level of INDS in terms of
Business Excellence is currently at a level of `Recognized for Excellence`
based on the band of results achieved. Based on key areas of improvements
identified during the assessment, teams have initiated projects / measures
to further enhance the organizational effectiveness.
Bosch Vocational Centre
The year 2011 is indeed a special year for Bosch Vocational Centre (BVC)
since it marked the celebration of Golden Jubilee year for having completed
the 50 years of its establishment of the Centre. The BVC was functional as
early as 1960. The BVC`s valuable services over the past fifty years in
imparting technical education and training have benefited many talented
young people. Bosch Vocational Centre has the fame of producing young
skilled work force meeting the present day requirements of Industries.
BVC won five gold medals for all the five trades participated at the 86th
All India Skill Competition for Apprentices organized by the Directorate
General of Employment and Training (DGE&T), Ministry of Labour and
employment, Government of India in May 2011.
BVC being the "Best in Class" in the country also sustained excellence in
the field of Vocational Training by increasing tally of Gold medal winners
to 191. BVC received the `Best Establishment` Award for the 42nd time. BVC
also continuously invests in upgrading facilities and infrastructure to
maintain high standards of training.
Awards and Recognition
The Company won several awards, as recognition of the efforts put in by the
Company:
* Award for achieving targets in delivery year 2010 by Toyota in April 2011
in the area of "Localization for Etios Project".
* Award from Cummins for the best supplier in the category "Assemblies" at
the regional Cummins supplier conference held in Pune in June 2011.
* "Overall Performance of the Year 2010" award from the John Deere at their
Supplier meet held in June 2011.
* Tata Motors award for excellence in "Technology and Innovation" at the
Tata Motors National Vendor Meet 2011, held in Mumbai in July 2011.
* Bosch Group was awarded the `Presidents Award` given by Mahindra &
Mahindra for overall performance of the Company in streams such as
supplies, quality, development and cost effectiveness.
* Recognition certificate from Maruti Suzuki for superior performance in
the field of timely capacity enhancement for the year 2010-2011.
* Subros Car & Bike award 2012 in the `Best Automotive Component
Manufacturer` category.
Bosch India Foundation
Bosch India Foundation, with its vision "Enabling Lives and Livelihood",
increased its reach to seven locations in India. By the end of its 3rd year
of its functioning, the Foundation had benefited 3,515 youth of various
underprivileged communities through support of skill trainings and medical
projects.
In 2011, vocational trainings were introduced in eight new trades such as
automobile service mechanic, tractor mechanic, motor winding, AC mechanic,
masonry, carpentry etc., through partnership with 20 committed NGOs who are
in close contact with the community and its needs. Yet another highlight
was the vocational training support extended to 84 mentally challenged and
spastics youth across three locations in India.
The Foundation supported 20 surgeries for young children with complex
orthopedic problems and helped them to walk. The surgeries are conducted by
Sparsh Vachana to a select set of 200 underprivileged children every year.
The Foundation also continued its support to the Gujarat Cleft and
Craniofacial Research Institute (GCCRI) which conducts free corrective
surgeries for those born with facial deformity.
Industrial Relations
Industrial relations at all Plants and other establishments continued to be
cordial excepting Bangalore Plant where the Union and Workmen went on a
sudden Tool Down Strike from September 28, 2011, demanding that all
outsourcing and ancillarization activities must be stopped. The
unreasonable demand was rejected outright by the management and taking note
of facts by the State Government of Karnataka, in exercise of powers vested
in them vide section 10(3) of Industrial Disputes Act (amendment) 1947,
issued orders on October 12, 2011 prohibiting the strike forthwith. The
Union called off their strike unconditionally on October 13, 2011. Normal
Plant operations had been restored for all workmen from October 14,
2011.The Directors place on record their deep appreciation of the sincere
and dedicated teamwork by employees at all levels to meet the quality, cost
and delivery expectations of our customers.
Subsidiary Company
As the aggregate assets and income of MICO Trading Pvt. Ltd., as on
December 31, 2011 is not material, no consolidated financial statements
under Accounting Standard 21 "Consolidated Financial Statements" as
notified under section 211(3C) of the Companies Act, 1956, has been
prepared.
As required under Section 212 of the Companies Act, 1956, annexed hereto
are the Audited Statement of Accounts, the Report of the Board of Directors
and Auditors` Report for the year ended 31st December 2011 of MICO Trading
Pvt. Ltd.
Directors
Dr. Manfred Duernholz has been re-appointed by the Board as Joint Managing
Director of the Company for a further period of one year with effect from
January 01, 2012. The Board also appointed Mr. Soumitra Bhattacharya,
Executive Vice President of the Company as Alternate Director to Dr. B.
Bohr with effect from July 1, 2011.
Names of companies/firms in which Directors of the Company hold/held office
as Director/Partner are given below:
- MindTree Ltd. (Chairman)
- Bosch Rexroth AG (Member of the Board)
- Robert Bosch GmbH (Member of the Board)
- ZF Lenksysteme GmbH (Member of Supervisory Board)
- Indo German Chamber of Commerce. (Director General)
- FAG Bearings India Ltd.
- Zodiac Clothing Company Ltd.
- HDFC ERGO General Insurance Company Ltd.
- Apollo Munich Health Insurance Company Ltd.
- Tata Steel Ltd. (Vice Chairman)
- Tata International Ltd.(Chairman)
- Tata Industries Ltd.
- Tata Steel Europe Ltd.
- Tulip UK Holdings No.2 Ltd.
- Tulip UK Holdings No.3 Ltd.
- Tata Incorporated, New York.
- Tata Africa Holdings (SA) (Pty) Ltd.
- Strategic Energy Technology Systems Ltd.
- Confederation of Indian Industry (President)
- Housing Development Finance Corporation Ltd. (Managing Director)
- Credit Information Bureau (India) Ltd.
- GRUH Finance Ltd.
- HDFC Asset Management Co. Ltd.
- HDFC ERGO General Insurance Co. Ltd.
- HDFC Property Ventures Ltd. (Chairperson)
- HDFC Standard Life Insurance Co. Ltd.
- Indraprastha Medical Corporation Ltd.
- HDFC Bank Ltd.
- AKZO Nobel India Ltd.
- EIH Ltd.
- HDFC Sales Pvt. Ltd. (Chairperson)
- Feedback Infrastructure Services Pvt. Ltd.
- G4S Corporate Services (India) Pvt. Ltd.
- Value and Budget Housing Corporation (India) Pvt. Ltd.
- Credila Financial Services Pvt. Ltd. (Chairperson)
- Lafarge India Pvt. Ltd.
- HDFC Education and Development Services Pvt. Ltd. (Chairperson)
- Transunion LLC, Chicago.
- HDFC PLC, Maldives.
- BASF India Ltd. (Chairman and Managing Director)
- BASF Asia Pacific (India) Pvt. Ltd. (Chairman)
- BASF Catalysts (India) Pvt. Ltd.
- BASF Lanka Private Ltd.
- BASF Bangladesh Ltd.
- BASF Grameen Ltd.
- Indo German Chamber of Commerce. (Committee Member)
- Federation of Indian Chamber of Commerce. (Executive Committee Member)
- Bombay Chamber of Commerce and Industry. (Managing Committee Member)
- The Energy and Resource Institute (Committee Member)
- Robert Bosch Engineering and Business Solutions Ltd. (Chairman)
- Bosch Rexroth (India) Ltd. (Chairman)
- Bosch Chassis Systems India Ltd.
- MICO Trading Pvt. Ltd.
- Foundation Brake Manufacturing Ltd.
- Bosch Electrical Drives India Pvt. Ltd.
- Bosch Automotive Electronics India Pvt. Ltd. (Chairman)
- BSH Home Appliances Pvt. Ltd.
- Hagglunds Drives (India) Pvt. Ltd.
- FLSmidth Pvt. Ltd.
- Indo German Chamber of Commerce. (Vice President)
- Confederation of Indian Industry (Committee Member)
- MICO Trading Pvt. Ltd.
Mrs. Renu S Karnad, Mr. Prasad Chandran and Mr. V.K. Viswanathan are liable
to retire by rotation and offer themselves for re-election.
Mrs. Renu S Karnad, 59, holds a Bachelor Degree in Law from the University
of Bombay and Masters Degree in Economics from Delhi School of Economics.
She joined HDFC Ltd in 1978 in the legal and credit department and grew to
become the head of lending business of HDFC Ltd. She is responsible for the
lending operations of HDFC, both retail as well as corporate, framing
policies and strategies for mortgage lending by HDFC, development of new
retail products, expansion of branch network and other channels of
distribution, budgeting and management information system, for setting
goals and targets at the national, regional and branch levels, monitoring
performance vis-a-vis the budgets, development of new asset and liability
products, introduction of innovative and structured products, coordinating
resource raising from domestic and international markets, negotiating and
finalizing financing facilities from multilateral agencies such as World
Bank, Asian Development Bank, Commonwealth Development Corporation (CDC)
and KfW, communicating with equity analysts and international investors
besides also coordinating with regulators such as the National Housing Bank
and liaising on behalf of HDFC with the Government of India and the State
Governments and Housing Industry etc. As a member of the Investment
Committee of HDFC, she partakes in the decision making for investments by
HDFC in debt, equity and other related treasury products. She is currently
functioning as Managing Director in HDFC Ltd.
In 1984, she was awarded Pravin Fellow - Woodrow Wilson School of
International Affairs, Princeton University, Princeton, NJ. She has
attended several senior management programs on financial management, urban
planning, political science and women`s studies. Mrs. Renu S Karnad is an
Independent Director of the Company (appointed on 01.04.2007). She is the
Chairperson of the Audit Committee, member of Shareholders` / Investors`
Grievance Committee, Investment Committee and Property Committee of the
Company. She does not hold any shares in the Company.
Mr. Prasad Chandran, 59, is a post-graduate in Chemistry and has a Masters
degree in Business Administration. He has also received Advanced Management
Education from Institutes in the US, UK and Japan. He is the Past President
of the Indo German Chamber of Commerce (IGCC). He is also the co-chairman
of the National Committee on Chemicals and Petrochemicals of the
Confederation of Indian Industries (CII), Member of the Executive Committee
of Federation of Indian Chambers of Commerce & Industry (FICCI) and
Managing Committee Member of the Bombay Chamber of Commerce and Industry.
He is also an active participant in a number of trade/industry delegations
of the Government of India.
Mr. Chandran heads the "Million Minds" Project. This is conceptualized by
him to improve governance and fight corruption. Whilst implementing the
BASF Global values and principles, he addresses policy issues on corruption
to raise the standards of governance in India. The "Million Minds" project
sensitizes stakeholders and creates voluntary action groups in different
parts of the country. He is associated with NGOs like Public Concern for
Governance Trust (PCGT) and Coalition Against Corruption (CAC) etc.
Mr. Chandran is the Chairman and Managing Director of BASF India Limited.
In addition to his direct responsibilities, he is a member of the BASF
Human Resources Council, which oversees the personnel policies and the
Sustainability Development Council, which oversees the sustainability
issues of the BASF Group in the Asia Pacific Region. Mr. Chandran is an
independent Director of the Company (appointed on 01.01.2009). He is the
member of Audit Committee, Shareholders` / Investors` Grievance Committee,
Remuneration Committee and Share Transfer Committee of the Board. He does
not hold any shares in the Company.
Mr. V. K. Viswanathan, 61, is a Bachelor of Commerce from Madras University
and a Chartered Accountant. Prior to joining the Company, he was the Group
Treasurer & Head of Mergers and Acquisitions with Hindustan Unilever
Limited with which group he was associated in various capacities for 17
years.
Mr. Viswanathan joined the Company as Chief General Manager in August 1998.
After a brief orientation in the Company, he took up an assignment in the
Diesel Systems Division of Robert Bosch GmbH, Germany from September 1998.
Upon completion of the assignment, he returned to the Company in November
2000. Mr. Viswanathan joined the Board as Additional Director and Joint
Managing Director on 01.01.2001, responsible for Finance, Administration
and IT Coordination. Upon assuming new responsibilities in Robert Bosch
Corporation, Farmington Hills, USA (Robert Bosch North America), Mr.
Viswanathan ceased to be a Director and Joint Managing Director of the
Company from February 28, 2006.
Upon completion of his assignment with Robert Bosch Corporation, Farmington
Hills, USA (Robert Bosch North America), he was appointed as Additional
Director and Joint Managing Director with effect from 01.11.2007 and from
01.02.2008 as Managing Director responsible for Automotive Aftermarket,
Starters and Generators, Packaging Machine, Power Tools and Security
Technology. Mr. Viswanathan is a member of Shareholders`/ Investors`
Grievance Committee, Share Transfer Committee, Investment Committee and
Property Committee of the Company. He does not hold any shares in the
Company.
Particulars of Employees
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with Companies (Particulars of Employees) Rules,
1975, as amended, forms part of this Report. However, as per provisions of
Section 219(1)(b)(iv) of the Companies Act, 1956, this Report and Accounts
are being sent to the Shareholders of the Company excluding the Statement
of Particulars of Employees under Section 217(2A) of the Companies Act,
1956. Any shareholder interested in obtaining a copy of the said Statement
may write to the Company Secretary at the Registered Office of the Company
and the same will be sent by post.
Corporate Governance
A Report on Corporate Governance approved by the Board of Directors of the
Company and a certificate from the Practicing Company Secretary is set out
in the Annexure to the Directors` Report. The Company has fully complied
with the Corporate Governance practices specified under the Companies Act,
1956, and the listing agreement with the Stock Exchanges.
A Code of Conduct for Directors and Senior Management, Code of Conduct for
Prevention of Insider Trading, Whistle Blower Policy, Rules and Regulations
of Service Conduct for Managerial and Superintending Staff, Code of
Business Conduct etc., effectively support the Corporate Governance
processes.
A Management Discussion and Analysis Report also accompany this report.
Energy, Technology, Foreign Exchange, etc.
The report in respect of conservation of energy, technology absorption,
foreign exchange earnings and outgo, as required under Section 217(1)(e)
read with The Company`s (Disclosure of Particulars in the Report of Board
of Directors) Rules, 1988, is set out in the Annexure to the Directors`
Report.
Auditors
M/s. Price Waterhouse & Co., Chartered Accountants, the retiring auditors,
are eligible for re-appointment.
Directors` Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of
Directors report that:
* In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures, if any.
* Accounting policies have been selected and applied consistently and the
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of the
financial year and of the profit or loss of the Company for that period.
* Proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act,
1956, for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities.
* The annual accounts have been prepared on a going concern basis.
Acknowledgements
The Directors express their gratitude to the Central Government and the
State Governments of Karnataka, Maharashtra, Rajasthan and Goa for the
support given to the Company. The Directors also thank all customers,
dealers, suppliers, financial institutions and banks, members and others
connected with the business of the Company for their co-operation.
For and on behalf of the Board of Directors
Bangalore Albert Hieronimus
28th February 2012 Chairman
Annexure to the Report of the Directors
[Particulars required under the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988]
A. Conservation of energy
Energy conservation initiatives received highest priority across all
locations of the Company during the year 2011. The measures are not only
driven by cost reasons but also because of Company`s strong commitment
towards reducing CO2 emissions. Along with conservation initiatives within
the Plant, the Company is looking at harnessing solar power. Two projects
viz., installation of photovoltaic`s and light tube to harness solar power,
have yielded very good results.
a) Measures taken during the year 2011
- Optimization of Heat Treatment (HT) processes.
- "Sleep Mode" of operation for Sealed Quench Furnaces in Heat Treatment
operations.
- Change over to new energy-efficient cleaning machines.
- Introduction of "Induction Lamps" for production hangars.
- Introduction of "Turbo Vent" fans in place of exhaust fans.
- Reduction in fan power by replacing heat exchangers of ventilation Plant.
- Removal of air cooled chiller on HTF (High Tension Flow) bench.
- Installation of Variable Frequency Drives (VFD).
- Modification on chilling unit, increase in chilled water temperature by
2xC.
- Change over to high energy efficient air drier and water pumps.
- Auto switch off of refrigeration.
- Air leakage corrections.
- Harnessing solar energy.
b) Additional proposals being implemented:
- Optimization of cleaning media temperature in washing machines.
- Reduction in fan power by replacing heat exchangers of ventilation Plant.
- Introduction of "Turbo Vent" fans.
- Elimination of heaters and pumps in HWG system.
- Introduction of low pressure air line.
- Replacement of air operated pump by electrical pump.
- Optimization in usage of compressed air, HVAC (heating, ventilation, and
air conditioning) system.
c) Impact of the above measures
During the last year 2011, the implementation of energy conversation
measures has resulted in net electrical energy savings of 3.47 Mio. KWh
annually.
B. Technology absorption
(a) Research and Development
1. Specific areas in which R&D was carried out.
Fuel Injection Equipment (FIE): Diesel
- Fuel efficient Common Rail system was developed for the Low Price Vehicle
segment. With focus on single cylinder engines, development of fuel
injection system for the forthcoming emission norms for this price
sensitive market segment is in progress.
- With advance engineering department testing new concepts for FIE and
Diesel powertrain is the focus for the domestic single cylinder, commercial
vehicle and off-highway segments.
- To evaluate the upcoming Bharath Stage 5 norms, additional infrastructure
have been invested for Exhaust Gas Treatment and FIE development.
Gasoline Systems:
- Development of Engine Management Systems (EMS) for port fuel injection
(Gasoline, CNG) and all related components: Air Management, Sensors &
Ignition, Fuel Supply and Fuel Injection.
- System engineering and component development capability, especially for
two wheeler segment, with corporate support and local expertise for
specific market requirements.
- Technical Center and Component Laboratory with state-of-the-art
infrastructure and equipment.
Starters and Generators:
- Starter Motor with thermal protection for overload/abuse operations in
field.
- Starter Motor and Generator for the Low Priced Vehicles.
- Gear reduction Starter Motor for the HCV and Off-highway applications.
- High efficiency Compact Generator with vacuum pump for SUVs.
Spark Plugs:
- Launch of new generation Spark Plugs: `V` type extra long thread reach
spark plugs for compact new generation engine.
- `Y` type extra long thread reach Spark plugs: For new generation engine
as primary spark plug along with two secondary spark plugs (3 wheeler spark
plugs/cylinder, 2 wheeler application).
Glow Plug & Glow Control Units:
- Development of new platform Glow Plugs with higher length and reduced tip
diameter.
- Development of Glow Plugs for European and American aftermarket through
reverse engineering.
- Development of Glow Control Units for BS4 engine applications
2. Benefits derived
The initiatives have resulted in benefiting our customers and the end
users, as enumerated below.
- The `Value Line` Common Rail system developed for light and medium duty
commercial vehicles provides injection pressure upto 1600 bar and this low
cost system meets Bharat Stage 3 and Bharat Stage 4 emission norms in
compliance with latest emission and legislative regulations.
- OE manufacturers are provided with the Company`s products that suit the
Indian requirements in order to reduce fuel consumption.
- High performance segment spark plugs.
- Design solutions for customer specific requirement for spark plugs and
improvement in the business thereby.
3. Future plan of action
- Projects on energy conservation to enable reduced carbon-dioxide
emissions from our Plant locations thereby reducing the carbon foot print.
- Extend the product portfolio relevant to the low price vehicle segment.
- Increase the depth of localisation.
- Increase in competencies across business sectors to take advantage of the
potential in the Indian market through efficient processes and systems.
- Improve performance levels of spark plugs in terms of
acceleration/drivability.
4. Expenditure on R&D Rs. Million
a) Capital 341
b) Revenue 804
c) Total 1145
d) Total R & D expenditure as a
percentage of total turnover 1.44%
(b)Technology absorption, adaptation and innovation
1. Efforts made
The Company faced considerable challenges in the year 2011 went past. With
the efficient processes and systems, Company ensured that it remained cost
competitive to its customers.
The Company in its efforts to keep updated with the latest technology, made
continuous exchange of information with member companies of the Bosch Group
worldwide. This has enabled the Company to keep abreast with the latest
developments in product technology, manufacturing process and methods,
quality assurance and improvement, marketing, management systems and
benefit out of mutual experience.
The Company has, over the years built the requisite infrastructure and
technically competent engineers to translate the latest technical know-how
into products that meet the requirements of local and international
customers and will continue to do this in future.
2. Benefits derived
The benefits are the same as enumerated in B (a) 2 above.
3. Technology imported during the last 6 years In addition to the existing
technical collaborations for products in the field of Fuel Injection
Equipment, Spark Plugs, Auto Electrical, Power Tools, Compact Alternators,
etc., the Company has entered into technical collaborations for the
following products:
Common Rail Diesel Fuel Injection system 2006
Baseline Generators 2008
Throttle Position Sensor and Assembly Lines (ATMO) 2009
Manufacturing of
i) Packaging Machines,
ii) Electronic Control Units 2010
Manufacturing of
i) Compact Direct Starter Motor,
Start-Stop Motor-SSM1, SSM-Eco,
ii) Common rail Electronic control
Units-EDC17,
iii) Temperature Sensor TF-W and
iv) VP37, product sub-class VE-EDC. 2011
4. Technology absorption
The Company`s membership in the Bosch Group gives it access to the future
technologies. The Company is, as a result, able to offer at any point of
time state-of-the-art technology to meet the requirements of its national
and international customers.
C. Foreign exchange earnings and outgo
a) Export activities: Rs. Million
Exports 10,344
b) Total foreign exchange used and earned:
Foreign exchange used (including for
capital assets) 33,786
Foreign exchange earned 10,801
Management Discussion and Analysis Report
A. Economic Overview
Global growth prospects dimmed and risks sharply escalated during the
fourth quarter of 2011, as the euro zone crisis entered a perilous new
phase. The global economy growth for 2010 and 2011 was 5.2% and 3.8%
respectively. Forecasted growth for 2012 and 2013 is 3.3% and 3.9%
respectively. Growth in emerging and developing economies is also expected
to be slow due to worsening external environment and a weakening of
internal demand. The emerging and developing economies growth for 2010 and
2011 was 7.3% and 6.2% respectively. Forecasted growth for 2012 and 2013 is
5.4% and 5.9% respectively. (Source: IMF)
Growth in India is moderating more than was expected earlier. The baseline
projection of GDP growth for 2011-12 has been downward revised to 6.9% on
the basis of the macro-economic situation prevailing. It is likely to be
below potential during 2011-12, but is expected to recover at a modest pace
in 2012-13. The slack in investment due to delay in implementation of key
policies and reforms may keep the pace of recovery low. Inflation has
started to fall, broadly in line with the projected trajectory.
Nonetheless, price pressures remain, with risks emanating from suppressed
domestic energy prices, the rupee depreciated over 16% in 2011,
accelerating prices of imported goods & services and slippage in fiscal
deficit. (Source: RBI)
Inflation, rupee depreciation, high commodity prices and hardening interest
rates remain key challenges needing focused attention.
B. Industry Structure and Development
The automotive market was buoyant in the first half of the year 2011,
continuing the growth saga of previous year 2010. In second half there was
a decline in growth due to poor market sentiments, high fuel prices and
high inflation leading to costlier loans.
Indian Automotive Industry witnessed an overall growth of 14% in 2011 over
and above the high growth achieved in 2010. The first half of 2011
witnessed a healthy growth of 22% and the second half witnessed reduction
in growth to 6%.
Across segments, LCV leads the pack by growing strongly at 30% in the year
2011 driven by retail sector growth and robust demand for sub 3.5tonne
LCVs. Growth rate for first half and second half was 26% and 35%
respectively in 2011 in comparison with 2010.
The growth in HCV segment for the first and second half of 2011 was 14% and
11% respectively in comparison with 2010.
Growth in the Passenger Cars and Utility Vehicle segment was 22% in the
first half of 2011 and a negative growth of 3% in the second half of 2011
compared to 2010. The widening price differential between petrol and diesel
had distorted the demand in this segment with Diesel share in Passenger
cars and Utility Vehicles increasing to 37% in 2011 against 30% in 2010.
The Tractor segment continued to grow steadily with a 24% growth over 2010
backed by bumper agricultural produce registering 27% and 22% growths in
first half & second half respectively.
The growth in the 3 wheeler segment for first half and second half were 22%
and 10% respectively in the current year 2011 in comparison with previous
year 2010.
The table below depicts the extent of growth in 2011 across various sectors
in automotive segments.
Vehicle production growth rates:
+/- PY
Segments 2007 2008 2009 2010 2011
HCV 4% -15% -20% 70% 13%
LCV 20% -4% 13% 44% 30%
Cars 16% 9% 18% 29% 8%
UV`s 17% -3% 18% 35% 13%
Tractors -1% 2% 10% 31% 24%
3 Wheelers -1% -6% 12% 37% 15%
Total 10% 1% 13% 34% 14%
C. Operational Highlights
The Company witnessed a good growth of 19.6% YoY in sales for the current
year 2011. This is over and above the phenomenal growth in sales achieved
in 2010.
The profit before tax for the year grew by 30.9% YoY. The Company was able
to achieve an increase of 170 basis points in terms of profit before tax
percentage and stood at 19.8%, in-spite of challenging environment.
The Automotive Aftermarket business has registered a double digit growth
for the sixth consecutive year. It grew by 15.2%. The growth was driven
primarily by domestic spare market.
Diesel system business grew by 19.2%. The Diesel Systems business continued
to drive focused innovation on the value line CRS (for Light Commercial
Vehicles) and the simplification of the CRS1-14 (for small engines). This
was achieved through capacity expansion at Nashik and Bangalore Plant.
Starter Motor and Generator business witnessed a growth of 63.1% over
previous year. The robust growth primarily driven by New Base Line
Generator both in domestic and export market.
Packaging Technology system business grew by 40.0%. The growth was driven
primarily by demand from a single largest export order. All machines were
delivered in time through process improvements at the division.
Security Technology business grew by 18.4%. New projects received by the
division in 2011 contributed for growth.
Power Tools business registered a growth of 22.0% with high contributions
from its major business segments like Power Tools, Accessories, Spares,
Fischer Fixings, etc.
Power Tools business also increased its market share in a competitive
environment and received `5 Diamond Award` for consecutive years of double
digit growth at the Bosch Power Tools World Convention (WoCo) 2012 in
Germany.
Power Tools business launched over 100 new innovative products / variants
and launched its new initiative called `I&I` (Industrial & Institutional)
supported by new marketing initiatives. The year also saw the launch of new
range of Measuring Tools & Surveying Equipment under the brand name of
"CST/berger"
New Division "Solar Energy" and "Thermo Technology" launched their Product
and Services in 2011.
D. Results of operation
1. Sales
The sales for the year 2011 grew at the rate of 19.6% YoY and stood at TINR
79,294,704 as against sales of TINR 66,305,034 in the previous year 2010.
1.1 Segment results
The Company predominantly operates in manufacturing and trading of
automotive products and also manufactures non-automotive products
(Consisting - Industrial Technology and Consumer goods & Building
Technology). Hence the operations of the company can be classified as
Automotive and Other segments (Primary Segment).
The share of automotive products has marginally decreased from 91% in the
previous year 2010 to 90% for the year 2011.
1.2 Automotive Products
The automotive segment saw a robust growth in sales by 19.1% and stood at
TINR 71,566,292 for the current year 2011.
In the automotive segment 86.1% of the sales were derived from domestic
sales. The share of export sales in the total sales of the segment has
marginally gone up to 13.9% for the current year 2011 from 13.8% of
previous year 2010.
1.3 Others
The other segment (Consisting - Industrial Technology and Consumer Goods &
Building Technology) saw a healthy growth of 24.2% in sales and stood at
TINR 7,728,412 as against TINR 6,222,023 of the previous year 2010.
Within the other segment, the Industrial Technology business grew by 45.5%
YoY and Consumer Goods and Building Technology business grew by 21.3% YoY.
The other (Non-Automotive) segment is predominantly driven by domestic
sales and accounts for 95.1% of the total sales of the segment. The export
sales for other segment increased from 2.4% in the previous year 2010 to
4.9% in the current year 2011.
Below is the breakup of export and domestic sales (Secondary Segment).
The export sales for the Company grew at a healthy rate of 22.3% YoY and
improved its share in overall revenue by 0.2% and stood at 13.0% for the
current year 2011. The domestic sales also recorded a growth of 19.2%.
2. Interest and Other Income
For the year the income from interest on non-trade investments and deposits
in banks has increased by 61.0% to TINR 1,842,460 from TINR 1,144,279 of
previous year 2010. The increase in interest income is due to higher
interest rates in FD which prevailed during the year and higher ICD.
Income from services increased by 32.1% to TINR
677,136 in the current year 2011 from TINR 512,449 of previous year 2010.
This growth is on account of higher development receipt from third parties
and rate revision with parent company for development.
The other income has increased by 3.0% YoY to TINR 2,977,884 in the current
year 2011 from TINR 2,892,518 of previous year 2010. The increase is on
account of sale of long term investments which is partially set off with
lower provision reversal of earlier years in 2011 in comparison with 2010.
3. Cost of materials consumed
The percentage of cost of material consumed as against sales for the year
2011 has gone up by 177 basis points to 56.0% as against 54.3% of the
previous year 2010. The increase in percentage is mainly due to
depreciation in rupee and increasing input prices during the year basically
on steel, alloys and other materials.
4. Personnel cost
Personnel cost as a percentage of sales for the year 2011 stood at 11.3%,
which has come down by 80 basis points in comparison to 12.1% of previous
year 2010. Sales per employee have improved by 12.9% from TINR 5,836 in the
previous year 2010 to TINR 6,588 for the current year 2011.
5. Depreciation
The depreciation charge for the current year is marginally higher at TINR
2,578,404 as against a charge of TINR 2,539,651 of previous year 2010 due
to additional capital investment during 2011.
6. Profit
The profit after tax for the year 2011 is TINR 11,225,584 as compared to a
profit after tax of TINR 8,589,050 of the previous year 2010, an impressive
increase of 30.7% YoY.
The effective tax percentage for the current year 2011 has gone up slightly
compared to previous year 2010. The tax benefit on sale of marketable
securities partially offset with Nashik EOU de-bonding and lower R&D
claims.
7. Earnings per Share (EPS)
The EPS (Basic and Diluted) of the Company for the year 2011 has increased
impressively by 30.7% to a record INR 358 per share from INR 274 per share
in the previous year 2010.
The EPS for the Company has been growing consistently at a healthy rate
over the years except for a small reduction during the slowdown period of
2009.
E. Financial Condition
1. Share Capital
The Company has only one class of share equity share, with a face value of
INR 10 each. Authorized share capital is TINR 380,515 divided into
38,051,460 shares of INR 10 each. Issued, subscribed and fully paid-up
capital as at December 31, 2011 was TINR 313,989.
2. Reserves and Surplus - Profit and Loss account The balance retained in
profit and loss account as at December 31, 2011 is TINR 7,972,765 which
includes retained profit for the year 2011 TINR 1,303,936 after a proposed
dividend of INR 50 per share.
3. Shareholders funds
The total shareholder`s funds increased to TINR 47,284,350 as at December
31, 2011 from TINR 40,980,414 as of the previous year 2010 end representing
a growth of 15.4%, mainly because of retained profits.
4. Fixed Assets - Capital Expenditure
The gross fixed assets as at December 31, 2011 was TINR 34,301,409 as
compared to TINR 30,237,959 of previous year 2010.
The Company has incurred a capital expenditure of TINR 6,587,236 during the
year 2011, an increase of 118.0% YoY. The following graph shows the trend
of capital expenditure and the trend of percentage of capital expenditure
to sales.
In 2010 Company had 4.6% of its sales invested in facilities. In 2011 the
investment has been scaled up and 8.3% of sales have been invested in
various facilities across India.
The Plant wise capital expenditure for the year 2010 is as follows:
5. Investments
The surplus funds of the Company which are not required for immediate use
are invested mainly in tax effective and low risk bearing instruments. The
total investment as at December 31, 2011 amounted to TINR 16,063,646 as
against TINR 16,073,030 for the previous year 2010.
6. Working Capital
6.1 Inventories
Inventory as at December 31, 2011 amounted to TINR 11,830,574 as against
TINR 8,092,812 of previous year 2010. The inventory turnover ratio has
increased to 46 days as at December 31, 2011 from 37 days of previous year
2010. The increase in inventory is mainly due to change in product mix
(increase in sales of new generation products having higher import content)
and also due to increase in sales of imported trade goods having high lead
time.
6.2 Sundry Debtors
Sundry Debtors as at December 31, 2011 amounted to TINR 9,492,112 as
against TINR 7,209,659 of previous year 2010. The debtors turnover ratio
has increased to 38 days as at December 31, 2011 from 36 days of previous
year 2010. Increase in debtors is mainly on account of tightened credit
term in the market due to increase in interest rates, higher sales to OE
segments where the change in credit term is between 45 to 60 days.
6.3 Cash and Cash Equivalents
Majority of the cash balance is held in the short term deposits with
scheduled banks. The total balance of cash and cash equivalents as at
December 31, 2011 was TINR 9,514,538 as compared to TINR 13,258,674 for the
previous year 2010.
6.4 Net working capital (Net Current Asset)
Net working capital as a percentage of sales of the company stood at 27.0%,
which in the previous year 2010 was 28.5%. The Company took 93 days to
convert its working capital to sales revenue against 92 days in the
previous year 2010.
F. Key Ratios
Ratio 2010 2011
Return On Capital Employed (%) 27.1% 29.5%
Inventory Turnover ratio (In Days)* 37 46
Debtors Turnover ratio (In Days) * 36 38
Current Ratio 2.01 2.02
Number of Days In Working
Capital (Days) 92 93
No. of Employee (Average) 11,360 12,171
*Average is the simple average of opening and closing balance.
G. Human Resource Development
Emphasis on enhancement of employee`s skill and competence in the Company
continued as in the previous years. Special emphasis was laid on
development of Leadership capabilities at the Middle and Senior Management
levels.
Significant efforts and measures have been taken to integrate more women in
the organization and to create an inclusive environment for them.
In constant endeavors to make the Company a better place to work for,
necessary changes have been incorporated in the existing HR policies.
Attrition continues to be well below market levels due to the measures
taken by the Company. The Company has the strength of 12,232 employees as
at the close of the year 2011.
Introduction of Low Performance Monitoring policy was a key step towards
employee development and ensuring retention of the competence edge of the
Company.
Achievement of "Significant Achievement Award" for the Company in HR-
Excellence Assessment conducted by Confederation of Indian Industry (CII)
is a major recognition at National level.
H. Internal Control System
The Company has an effective and reliable internal control system which is
complimented by a Code of Business Conduct binding all its employees to
achieve high standards in Corporate Governance. The internal control system
is designed to ensure quality and reliability of underlying processes in
achieving operational efficiency, reliability of financial data and safe-
guarding of assets. The efficacy of internal checks and control systems are
validated by self audits, verified during internal audits and reviewed by
the Audit Committee. The scope of internal audit is oriented towards
mitigating or eliminating risks in business processes.
The Audit Committee reviews the internal audit plan, significant audit
findings and sustainability of measures for corrective actions. The
internal Audit Plan is also aimed at addressing concerns, if any of
Statutory Auditors of the Company.
I. Opportunities and Threats
The Company is all set to leverage the demand in the automotive sector
specifically commercial vehicles and tractors. However, the passenger
vehicle segment will see a moderate growth. Increased demand for safe
personal mobility and increased consumer spending capability are key
drivers that will boost sales in this segment.
Non-Automotive businesses are also pitched to grow in the backdrop of
committed focus and spending in infrastructure related projects. The rising
gap between demand and generation/supply of electricity will continue to
create additional demand for auxiliary power units powered by diesel as
well as other sources of energy viz. solar. Also the change in awareness in
the use of renewable source of energy provides scope for new business e.g.
Solar Energy, Thermo Technology, etc.
J. Risks and Concerns
1. Regulatory risk:
The changes in the tax laws, Government policies and regulatory requirement
might affect the Company`s business.
2. Input Costs and Inflation:
Prices of inputs are expected to rise significantly. Whilst the Company
continues to pursue cost reduction initiatives, increase in price of input
materials and rupee depreciation could impact the Company`s profitability
to the extent that the same are not absorbed by the market through price
increases and/or could have a negative impact on the demand in the domestic
market.
3. Currency Risk:
The operations are subject to risk arising from fluctuations in exchange
rates with reference to currencies in which the Company transacts. These
risks primarily relate to fluctuations of Euro and USD to INR, the
management will take appropriate decisions to mitigate the risk.
4. Competition:
The Company is operating in a highly competitive market which may exerts
pressure both on the top line as well as the bottom line of the Company.
5. Other Risks:
There is no credit and liquidity risk foreseen by the company due to its
strong financial position.
The following are the few initiatives taken by the management for
mitigating the above mentioned risks;
- Continuous improvement activities and implementing lean
practices/processes through the Bosch Production System (BPS).
- Retain and motivate talent by focused employee development programs.
- Enhance local engineering, development and testing capabilities to
further drive the "develop locally for the local market" concept.
- Focus on cost reduction, productivity improvement and import substitution
projects.
K. Outlook
The Primary outlook for 2012 shows a moderate growth of around 10% mainly
due to continued poor market sentiments coupled with high interest rates
and global economic concerns. The slow down seen in second half of 2011 is
likely to continue into the first half of 2012 also. Slow growth is mainly
attributed by poor market sentiment, high level of inflation leading to
higher interest rates, external conditions, dampened investment demand and
rupee depreciation. Growth outlook will depend on global conditions and
domestic policy reforms.
Government spending on infrastructure projects is likely to continue at a
similar pace with more focus on urban transportation, major highway
projects and electricity generation, both with conventional and non-
conventional sources. Increased per capita income, increased liquid fund in
market, higher discretionary spending, growing aspirations of the Indian
middle class, growth of retail credit are the other key drivers of the
economy this year.
Disclaimer
The information and opinion expressed in this section of the Annual report
consists of certain `forward looking statements` which management believes
are true to the best of its information at the time of its preparation. The
company shall not be liable for any loss, which may arise as a result of
any action taken on the basis of the information contained herein. The
information contained herein may not be disclosed, reproduced or used in
whole or in part for any purpose or furnished to any other person without
the express prior written permission of the Company.
Report on Corporate Social Responsibility
The Company`s responsibility towards Society and Environment is guided by
Bosch values, Bosch principles of social responsibility, work safety and
environment protection. The Bosch principles of social responsibility
includes - human rights, equal opportunities, integration of handicapped
people, free choice of jobs, rights of children, relations with associate
representatives and their institutions, fair working conditions,
occupational health and safety, clean and safe environment with social
engagement.
The Company is promoting the interests of underprivileged and impaired
sections of society through its contributions for the social work carried
out by charitable organizations, old age homes and schools, and
participates in women empowerment programs. The Company shares its best
practices through information sharing sessions with other companies, Non
Governmental Organizations (NGO) and professional bodies. To sustain
cultural values, the Company supports cultural activities through its fine
arts club. During the times of natural calamities like floods, cyclone,
tsunami, earthquake etc., the Company actively supports the affected people
through voluntary participation and donations.
The Company has four thrust areas focusing on the Health & Hygiene,
Environment Education,
Community Development and Vocational Training. These are deployed through
the social responsibility model that is communicated across the Plants
through posters, visual boards and handouts and guides. This aid in
generating large number of volunteers willing to do their best towards the
betterment of the society that people live in. In the spirit of our founder
Robert Bosch, the Company demonstrates social and environment
responsibility wherever it does business.
Some of the CSR initiatives undertaken by the respective Plants during the
year 2011 are summarized below.
Bangalore Plant:
Under the Child Health Development Program, the Plant organized a health
check up camp for the Munichinappa Government School, Adugodi, based on
need analysis of underprivileged society around the Bangalore Plant,
wherein the healthy children ratio improved to 93% from 7% in 2011. The
Diesel Systems Management of Bosch at Stuttgart, Germany, recognized the
above project as Business Excellence examples and gave a `Humanity Award`
to the team.
In 2011, the Plant adopted 8 more Government schools covering 1,080
children within a radius of 3 kms around the Company`s Plant location.
The health camp report revealed that there were 1,300 cases to be treated.
Further referrals to the specialist doctors were resorted for chronic cases
for treatment of various ailments/surgeries.
The Plant collaborated with a Government recognized NGO to implement
environment education program in schools in the neighborhood. As a new
initiative in 2011, awareness on four themes on water, waste segregation,
noise and air pollution is given to the school children every month and at
the end of each theme session, a competition was held on the above themes
like drawing, painting, story writing, debate, etc and prizes were
distributed. Around 1,100 children from the Government school have been
covered.
The Plant which is supporting the differently abled people through the
organization called `Ability in disability Foundation (AID)` since 2009,
has increased the strength of the differently abled people to 62 inside the
Plant and also gave employment to 34 off-site. The work related problems of
the differently abled people had been addressed by way of providing them
appropriate toilet facilities and canteen facilities.
`Manasi` a social service initiative by the lady employees of Bangalore
Plant was recognized for appreciation award for CSR activities by the
corporate Diesel Systems. `Manasi` works for the upliftment of the
underprivileged in the neighborhood with a focus on women & children, which
continues its activities for the 8th consecutive year.
The Plant in association with Art of Living Foundation, which has involved
in constructing 143 houses for the homeless in Gulbarga District of the
Karnataka State, handed over officially the houses to the villagers in
Kairwadgi that was hit by the North Karnataka flood.
The various activities of `Clean Air` campaign continued in full swing and
have now been spread to the Company`s Nashik Plant as well. The `Clean Air`
campaign has multiplied in Bangalore which is being well appreciated by the
various stakeholders like the students in colleges & schools, auto, cab &
bus drivers and general public. This is mainly to bring awareness on
environment pollution and various measures to reduce the same.
The Plant organized a `Society Day` for the stakeholders on 28th November
2011. The Plant Management made a presentation to the stakeholders from
officials of State Government, members representing charitable
institutions,
NGO`s etc., about the community development projects and other related
activities taken up by the Plant during the year 2011. The stakeholders
appreciated the efforts taken up by the Plant. The suggestions offered by
the participants were recorded for future action.
The Company always emphasized on skill development and has believed in
keeping in tune with the latest technology in the market. In the pursuit of
improving the skill set and thereby improving the demographic dividend of
India, the Company continues to offer comprehensive and exhaustive skill
based training programs under the aegis of `Bosch Vocational Centre (BVC)".
The Company imparts training to students under `Apprentices` scheme and to
students under `engineering stream` besides imparting training to its own
employees at BVC. The BVC also conducts training programs for business
partners, other business units and employees` children.
As a new initiative under the focus area of vocational training, CNC
training and training on Power Tools was imparted to the instructors of
Government ITI s. The students of these institutes were given practical
training on Diesel engines by our Bosch Technical Centre and also training
at Maruti Solar Automobiles. Also, computer courses were conducted by
BanP/BVC for the underprivileged youth from the neighborhood.
Nashik Plant:
The Plant organised annual health camp in which around 800 people from
Dahalewadi and surrounding villages were diagnosed and treated for ailments
and free medicines were provided. Eminent Specialists from different fields
lent their expertise for this social cause. Further, provisions of
nutritious diet to the needy and the dental health check-ups have improved
the health condition. Also, health and hygiene awareness sessions were
conducted on regular basis especially for girls and women not only in
adopted village but also in other schools in tribal area. Guidance and help
was extended to patients to take advantage of Government medical schemes.
An ENT camp was conducted in a school for hearing impaired children. 132
children attended the camp. Free medicines were issued to needy.
In continuation with Income generating programs for Economic empowerment of
the underprivileged in the neighborhood villages, more Self Help Groups
(SHG) were formed, youngsters were trained for motor driving skills. About
300 fruit bearing trees were planted in the village to generate additional
income. Renovation of Anganwadi School carried out in previous years, has
resulted in 100 percent increase in attendance of children. The
supplementary nutritious diet organized by the Plant has resulted in
improved health in 2011.
Solar street lamps were provided in the neighboring villages to overcome
hardships due to power shortages. Drinking water was made available to the
villagers by reinstating the pumping system. The Plant undertakes tree
plantation every year, across Nashik City along with Municipal Corporation.
Till date a stretch of about 15 kms of roads are covered with greenery. To
generate awareness about vehicular pollution and measures to reduce the
same, "Clean air campaign" was started from the year 2011.
The 10th year of the well-known `Nashik Run" was conducted by the Plant
along with its neighboring corporates which had attracted 19000
participants. The funds collected and disbursed for social causes in last
10 years amounts to more than 60 million Rupees. The Nashik Run Charitable
Trust works for the benefit of underprivileged members/groups such as
physically and mentally challenged, old age people, orphan children,
destitute ladies and adivasis of the region.
Jaipur Plant
The RO plant set up Jaipur Plant provided drinking water to 513 families in
and around the Goner village. The plant`s operating expenses were met with
selling of water and the sale was about 8,000 liters a day. This volume has
ensured the sustenance of the plant.
The Plant has also adopted an Industrial Training Institute and has got it
shifted to Sanganer, which has enabled the ITI to get the much awaited NCVT
accreditation. Necessary infrastructure in class rooms has been provided
and the campus is being maintained by the inmates. A grant of Rs. 25 mio.
has been approved by the State Government, for the development of the ITI.
The necessary improvement in the class rooms and providing furniture and
black boards (glass base) was done in 2011, in 5 schools. Computer
laboratory was set up in one school.
With respect to one of our key focus area of health and hygiene, a health
camp covering about 300 children and 16 mothers and teachers was organized
for dental health. About 95% were detected to be suffering from various
levels of Fluorosis. The treatment has also been started and 65 children
and 7 teachers have already been treated in 2011.Toilets in two schools
have been improved for good hygiene.
Rain water harvesting model was displayed in the Plant premises as `CSR
corner` to demonstrate the system to all the employees. Free consultation
was arranged and awareness to employ the scheme in the houses was given.
Energy day was organized in the Plant to help neighboring industries to
conserve energy. 200 trees were planted outside the Plant premises.
Verna Plant, Goa:
The Plant continued in 2011 the project `Prerna` with the aim to serve the
needy and those neglected by their own kith and kin. The activities of
Prerna are sponsored by the contributions made by the employees of the
Plant with additional support from the management. The Plant organised
visit to a neighboring village in June 2011 and distributed school bags and
note books to the needy students from Class I to Class VII. The Plant
associates were accorded a warm welcome by the school management for the
efforts taken up.
Bosch India Foundation:
With the vision of "Enabling Lives and Livelihood", in 2011, Bosch India
Foundation (BIF) (www.boschindia.com/foundation) increased its reach to 7
locations in India. By the end of its 3rd year of functioning, the
Foundation had benefited 3,515 youth of various underprivileged communities
through support of skill trainings and medical projects.
Enabling lives and livelihood...
In order to enable people to live life with dignity, it is important for
them to become productive members of society. This will create sustainable
development in the long run. Hence the vision of the Foundation created by
the Bosch subsidiaries in India includes the quality of life and the
importance of livelihood in sustaining life.
Enabling Lives....
BIF supports two major health projects which are aimed at correcting
disabling physiological abnormalities of those children whose parents
cannot afford treatment.
For the third year, the Foundation supported 20 surgeries for young
children with complex orthopedic problems and helped them walk. Surgeries
are conducted by Sparsh Vachana to a select set of 200 underprivileged
children every year.
The Foundation also continued its support to the Gujarat Cleft and
Craniofacial Research Institute (GCCRI) which conducts free corrective
surgeries for those born with facial deformity. Over 800 children mainly
from poor rural localities have benefited from the support of BIF and been
restored dignity.
Change starts with awareness. Health awareness and check up camps were
conducted along with partners and doctors in four rural and urban slum
areas to promote health and hygiene.
Enabling Livelihood......
Over 40% of Indian youth drop out from school mainly due to financial
liabilities. BIF through NGO partners provide these youth with skill
trainings to become productive members of India`s work-force. To ensure
that the skill trainings are accessible and helpful to these
underprivileged youth; they are offered free of cost, of short duration (2-
6 months), high on hands-on learning, flexi-timed and market relevant.
In 2011, vocational trainings were introduced in eight new trades such as
automobile service mechanic, tractor mechanic, motor winding, AC mechanic,
masonry, carpentry, tally accounting and DTP through partnership with 20
committed NGOs who are in close contact with the community and its needs.
The highlight of the year was the free Automobile Mechanic training offered
through the Bosch Training Centre in Ahmedabad for underprivileged youth.
More such trainings using Bosch competence for social good is being
planned. Yet another highlight was the vocational training support extended
to 84 mentally challenged and spastics` youth across three locations in
India. These trainings would help these youth to earn a livelihood through
sheltered workshops.
BIF presently supports about 37 batches of students (1,588 youth) in 22
trades across 7 locations in India. BIF does its activities along with the
active support and involvement of Bosch volunteers in the various
locations. |