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| Bosch lowers capex 29% |
| Mahesh Kulkarni & Ravi Menon / Bangalore Aug 03, 2009, 21:18 IST |
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To cope with the sluggish demand conditions prevailing in the key commercial vehicles segment as well as export volume slowdown of 23 per cent in the first six months of the year, automotive ancillaries manufacturer Bosch India has scaled down its capital expenditure plan for calendar 2009 by about 29 per cent over the previous year.
Bosch India is scaling down its capex spending plans to about Rs 300 crore, according to V K Viswanathan, managing director, Bosch India. In 2008, Bosch India had invested Rs 425 crore in the business, up 45 per cent from 2007. The capex scaledown has also been necessitated by heavy investment spends incurred last year, and is in keeping with the company's cautious outlook for the year ahead.
The proposed capex is to be invested in diesel and gasoline injection systems and capacity expansion at various manufacturing facilities of the company in Bangalore, Naganathapura, Nashik and Jaipur, Viswanathan said, adding that the investment programme has been aligned to current market conditions.
Part of the capex will be spent in developing a common rail system and a gasoline injection system, which is slated for commercial launch in the first half of 2010, he said.
“We have already invested around Rs 50 crore in the current year and another Rs 220 crore is to be spent in the remaining months. We are investing a substantial amount to introduce gasoline injection systems in the country, and have already developed a new injection system for petrol-driven passenger cars. This was successfully incorporated in the Tata Nano and we propose to take this to other customers as well,” Viswanathan said.
In addition to the current year’s capex, Bosch has set aside Rs 640 crore towards its share buyback program till October this year via an open offer. Rs 172.75 crore was spent towards buying back shares in the January-June 2009 period.
Viswanathan said the company expects to see a semblance of recovery in the economy sometime in the fourth quarter of fiscal 2010. “We have already seen a pick-up in demand for passenger cars and utility vehicles. We expect the same trend with commercial vehicles towards the end of the year,” he added.
Bosch India is a supplier of automotive components to OEMs, diesel and gasoline fuel injection systems, industrial and other special purpose machines. In 2005, Bosch had announced investments of Rs 2,650 crore for the Indian market between 2005 and 2010. The Bosch group holds close to 70 per cent stake in Bosch India.
For the second quarter of calendar 2009 ended June 30, the company reported flat performance, with 0.05 per cent year-on-year growth in net sales to Rs 1,221.7 crore. Sales in the auto segment showed a minor 1.6 per cent decline, while other businesses posted 15.5 per cent year-on-year growth. However, EBIT margins in the automotive business declined 109 basis points while other lines of business declined 797 basis points. The company’s bottomline declined 14.3 per cent year-on-year to Rs 188.3 crore from Rs 219.7 crore last year.
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