Leading auto parts’ maker Bosch expects to invest around ₹1,000 crore on a yearly basis for the next few years on plant and machinery, including the transition from BS-IV to BS-VI emission standards.

Bosch Ltd Managing Director Soumitra Bhattacharya told BusinessLine that production of some of the mechanical products will be reduced because of the transition. He also said around 3,000 will be hired this fiscal.

“For instance, the line pump which we produce here are important for tractor makers, while for buses and trucks, it is not. The tractor production peaked at 6.9 lakh units in 2013 and it is still at around 6 lakh units which is not a small volume,” Bhattacharya said.

The government has announced its plans to skip BS-V norms and has asked the industry to comply with BS-VI emission norms by 2020.

Bhattacharya, who took over as the Managing Director of Bosch in January, said some of the products will be imported and they will be localised.

“Bosch always had an intelligent and phased manner of localisation. It doesn't make sense to have a 100 per cent localisation. As we develop our vendor base, the components will be localised in agreement with our customers.”

An analyst report from ICICI Securities said Bosch being the leader and with technological (R&D) support from its parent is well prepared to cater to the industry.

“The advancement of emission norms would, however, require Bosch to have higher-than-expected investment and higher import content from its parent, which could increase its cost thereby impacting the margins.”

The report also said BS-VI norms in 2020 will bring revenue opportunity from the two-wheeler space (where traditional carburettor will be replaced by injection systems) that could further drive its growth. It currently caters to four two-wheeler OEMs and its systems are fitted in premium bikes.

Bhattacharya also said the scrappage policy if implemented will be good for the industry. He said the government was well aware of the muted growth of the automotive industry and will probably take that into consideration while framing further policies.

He said his company is working with a few consortiums on smart city projects.

The ICICI Securities report said Bosch with its strong technology leadership and market share of 70 per cent will benefit from good harvest season and higher MSP prices will continue to have strong traction in the tractor volume.

The growth in commercial vehicles (scrappage policy and pre-buying due to emission norms) and passenger vehicles (positive impact of pay commission and new launches) will benefit Bosch.

Related Topics