Bosch Limited on Tuesday registered 35% decline in net profit at Rs 279.95 crore for the first quarter ended June 30, 2019, compared to Rs 430.98 crore in the corresponding quarter of the previous year.
It posted total revenue from operations at Rs 2,779 crore in the first quarter, a decline of 13.5% from the corresponding quarter of the last fiscal. The company’s revenue from operations stood at Rs 3,212 crore in the corresponding quarter. Bosch said the noticeable drop is mainly due to the automotive market slowdown during the quarter in all the segments.
The company’s profit before tax before exceptional items stood at Rs 504 crore. This is 18.1% of total revenue from operations, and a year-on-year drop of 22.3%, mainly affected due to lower turnover, commodity price increase and unfavorable forex. Profit after tax (PAT) before exceptional item stood at Rs 334 crore, which is 12% of total revenue from operations.
The Indian automotive market is undergoing major changes as a result of various economic, regulatory, technological, and market factors, including opportunities arising in electromobility and mobility solutions segments. In light of this, the company has initiated several transformation projects, including restructuring, to remain competitive, the company said in a BSE filing.
The company has set up a provision of Rs 82 crore towards restructuring, reskilling and redeployment, that has been disclosed as an exceptional item for the quarter ended June 30, 2019.
“The automotive industry in India is going through a paradigm shift. The slowdown is not cyclical, but structural. Shortage of liquidity accompanied with build-up of inventory, will pose a big challenge and the recovery will take longer than expected. With the outlook for this sector being extremely challenging, the impact on structures, including surplus manpower, is already visible. At Bosch too, we have been investing in restructuring, to enhance efficiencies and to be fit for the future. While every opportunity will be extended for reskilling and redeployment, to align with adjustment of portfolios and competencies, there will be manpower adjustments,” said Soumitra Bhattacharya, MD of Bosch Ltd.
Worldwide, the automotive industry is facing a downward trend. This is also affecting Bosch Limited’s automotive sales, which decreased 17.5% in first quarter of 2019–20. Domestic sales decreased 18.2%, while export sales declined 8.6%.
Though the Power Tools and Security Systems divisions disclose positive growth, the company’s non-automotive business posted a decline of 16%. This was primarily due to a drop in the energy services business.
Shares of Bosch closed at Rs 13,404.60 apiece on Tuesday, down 6.22% from the previous close on the BSE.