Bosch Siemens bets big on India with ramped up localisation plan

German home appliances maker to increased localisation at Chennai plant to 70% in two years

Leading German home appliances maker, BSH Household Appliances, is planning to increase localisation at its Chennai plant, which currently makes washing machines, to 70% from around 40% currently, in the next couple of years or so. 

The company has also drawn up plans to invest around euro 100 million in the Indian market over the next five years that would go into research and development (R&D), augmenting manufacturing and marketing initiatives.

BSH is a Trademark Licensee of Robert Bosch GmbH and Siemens AG for the brands Bosch and Siemens.

Elaborating the company's future plans, Gunjan Srivastava, managing director and chief executive officer of BSH Household Appliances Manufacturing said, “We currently make the front load washing machines in India at our plant near Chennai, and have a mix of local and global suppliers. The localisation level is around 40% and we have set a target to take that up to 70% in the coming few years." 

The Chennai plant has a capacity to make 300,000 units of front load washing machines per annum and the company is currently utilising less than 50% of the capacity.

The remaining home appliances product range, which includes refrigerators, dishwashers, kitchen chimneys, ovens etc are imported from other geographies. Srivastava highlighted that BSH is actively considering what new categories it could enter in the Rs 30,000 crore home appliances market in the coming years. Some of these products could also be manufactured locally if the scale permits.

As such the Indian home appliances market is clocking an 8-10% growth rate and is expected to double in size over the next ten years, and is one of the key markets for BSH globally.

Plans are afoot to design and develop specifically for India, and the company is in the process of setting up an R&D center in the country for the purpose. It could come up near Pune and could focus on refrigerators as a category.

BSH had entered India in 2010 as a wholly-owned subsidiary of the German home appliances manufacturer BSH Hausgerate GmBH, and has grown by 50 % in 2015 over 2014 calendar year. BSH' global turnover in 2014 was euro 11 billion, and India's share was negligible.

As a part of its brand strategy globally, the company decided to position the Siemens brand as the upscale premium one, while Bosch branded products were targeted at the mid-range of the market. The Chennai plant makes products of both the brands. In terms of share in sale, Bosch and Siemens brands currently have 50:50 share, which is expected to grow in favour of the Bosch brand (about two-thirds expected from sale of Bosch products) in the coming years.