Modi Govt’s Rs. 20 Lakh Crore-Bailout To Have No Impact On Auto Industry: Bosch India
German multinational engineering and technology company maintained that the industry is unlikely to revive in the medium term unless there are some tax cuts along with some incentives under the vehicle scrappage policy.
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The recently announced Rs. 20 lakh crore-lifeline may have come as a booster shot for many ailing sectors which have borne the brunt of Covid-induce lockdown. However, there are a handful of industries which have been sidelined like the beleaguered Indian automotive Industry, which supports employment of more than 3.7 crore people and contributes to 15% of GST amounting to Rs 1,50,000 crore every year. While the industry has already expressed its disappointment, Bosch India reiterated the same concerns while interacting with reporters in an e-conference recently. The Indian arm of the German multinational engineering and technology company maintained that the industry is unlikely to revive in the medium term unless there are some tax cuts along with some incentives under the vehicle scrappage policy.
Soumitra Bhattacharya, Managing Director of Bosch Limited maintained, “On one hand, the entire country has been very positive and euphoric about the announcement of this package. While the package has addressed many sectors of the society including migrant labour, MSMEs, Agriculture. etc. These are very strong points of this package, it has not impacted with direct stimulus for the auto industry.”
Talking about the expectations from the government on behalf of Bosch India’s industry association, he maintained, “There was a request from the auto industry, whether we could look into the possibility of GST reduction for x no of months ( on automobiles) from 28 to 18 (%) There was also a long request to the government of India on the introduction of scrappage policy. And on behalf of the auto industry, I would look forward that the government of India would be able to give a direct stimulus package in to the auto industry in the near term.”
Commenting on the impact of lockdown, Bhattacharya said the month of April was a total wipe out for the entire industry in India. When asked how the company sees recovery from the current situation, Bhattacharya said it would be a slow start in May and June, with auto sector activity at around 20-25 per cent. On resumption of activities, he stated that all of the company’s 16 manufacturing plants have started production at around 10- 20 per cent level and would be ramped up in phases after taking into account safety of its employees and depending on customer demand to avert any inventory build-up.
When queried if the company has scaled back its capex for the current fiscal, he said the company’s capex in the last four to five years earmarked at Rs 350-Rs 500 crore, but ths year it would be trimmed significantly with all non-essential expenditures being cut.
''We will continue our investments in future business viz. electrification, mobility services and revamping of our Adugodi campus as a technology hub'' He also said the company has not cut jobs or salaries of its employees due to the coronavirus pandemic. When asked if migration of labourers has impacted the company’s plant operations, he said that as the company does not employ contract labours and not been affected much.
However, with its suppliers relying on such contract workers, there could be supply chain bottlenecks in the immediate phase.
Meanwhile, Bosch Limited’s total revenue from operations of Rs. 9,842 crores (1.25 billion euros), thus registering a decline of 18.6 percent compared to the previous fiscal year. Profit Before Tax (PBT) from continuing operations and before exceptional items declined by 29.9 percent to Rs. 1,636 crores. PBT in FY 2019-20 thus amounted to 16.6 percent of total revenue from operations.
“The financial figures reported are in-line with the downward trend in the automotive industry which has been going through a challenging phase for some time and is now having to deal with the impact of the coronavirus. More than ever, it is now important to stay connected with associates and customers and assess ground-level activities. We have to prepare ourselves for a prolonged slowdown in the market in FY 2020-21”, said Soumitra Bhattacharya, adding, “Following directives from the Center and State, Bosch Limited gradually ramped up its production in the country. We have taken multiple safety measures for our associates and we are making every effort to ensure sustained and stable supplies to support our customers.”