It has perhaps been V.K. Viswanathan’s most challenging year thanks to the economic slowdown in India which has hit the auto industry. Yet, the Managing Director of Bosch, who retires by the end of this month, believes better days are ahead.
“Though this calendar will only see a marginal growth in turnover for Bosch, we will revert to reasonable double-digit growth in 2013. We have always maintained that emerging markets like India are the growth engines for Bosch,” he told Business Line in a recent interview.
Over the last decade since 2001, India has been a happy hunting ground for the German auto component manufacturer. Its turnover has doubled every four years during this period. It is only this year where growth will be a more modest seven per cent “but it is not too far away before we get back to the 17-18 per cent levels”.
Viswanathan’s optimism is based on the fact that potential for car penetration in India is immense considering it is barely 15 per thousand people. Likewise, movement of goods will call for more forms of road transport which means medium and heavy commercial vehicles will be sought after. “Increasing levels of urbanisation and traffic conditions will entail last mile connectivity through cargo three-wheelers and light CVs,” he says.
Weighing down
The July-September quarter was particularly sluggish for Bosch with all its user segments seeing lower growth. While M & HCV sales were down 13 per cent, tractors fell by seven per cent. LCVs, which are up generally by 20 per cent every quarter, grew just one per cent as did passenger cars and utility-vehicles. Things got even more difficult with costlier imports as the rupee nosedived against the US dollar and material costs shot up as a result.
Tractors, which are also a key business for Bosch, had a bumper year last year with sales (including exports) totalling 6.5 lakh units. This year, numbers are expected to be down by around 50,000 units.
“There are higher powered tractors coming in which is a good sign for higher value. I am confident that next year will reflect the buoyancy of 2011 and India can position itself as a leading tractor supplier to the world,” Viswanathan says.
Manufacturing model
Bosch is also effecting changes in its manufacturing model to keep pace with changing market dynamics.
While hi-tech products such as fuel injection pumps will continue to be made in existing facilities, more satellite activities are being put in place for commoditised products.
For instance, starters and generators were concentrated in Bangalore but a third party plant in Chennai also meets this requirement now.
“Obviously, this cannot be done for a fuel injection system because it is not easy. We are trying to leverage the logistics and supply chain network both for increased customer satisfaction as well as cost optimisation and efficiency,” Viswanathan says.