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Bosch Ltd.

BSE: 500530 Sector: Auto
NSE: BOSCHLTD ISIN Code: INE323A01026
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NSE 09:44 | 25 Feb 15004.45 38.45
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OPEN 15170.95
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VOLUME 601
52-Week high 16900.00
52-Week low 7874.00
P/E 76.40
Mkt Cap.(Rs cr) 44,449
Buy Price 15040.50
Buy Qty 1.00
Sell Price 15057.65
Sell Qty 4.00
OPEN 15170.95
CLOSE 14988.75
VOLUME 601
52-Week high 16900.00
52-Week low 7874.00
P/E 76.40
Mkt Cap.(Rs cr) 44,449
Buy Price 15040.50
Buy Qty 1.00
Sell Price 15057.65
Sell Qty 4.00

Bosch Ltd. (BOSCHLTD) - Director Report

Company director report

The Directors have pleasure in presenting the SIXTY EIGHTH AnnualReport together with the Audited Financial Statements for the Financial Year ended March31 2020.

1. Financial Results

The following are the financial highlights for the Financial Year2019-20:

[Mio INR]

Particulars 2019-20 2018-19
Sale of Products 89441 116150
Of which Export Sales 7869 8999
Profit before exceptional item and tax 16364 23340
Exceptional items 7167 -
Profit Before Tax 9197 23340
Provision for tax 3349 7406
Profit After Tax from continuing operations 5848 15934
From discontinued operations 650 46
Profit for the year 6498 15980
Other Comprehensive income (Net of tax) (1333) 997
Total Comprehensive income 5165 16977

The Company does not propose to transfer any amount to its Reserves forthe year under review.

2. Dividend

Pursuant to the requirements of Regulation 43A of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Company has adopted aDividend Distribution Policy (DDT Policy).

In order to have flexibility in declaring dividend the DDT Policy wasamended by the Board of Directors at their meeting held on February 05 2020 to eliminatethe maximum cap on payment of dividend. This Policy is uploaded on the website of theCompany and can be accessed at https://www.bosch.in/media/our company/shareholderinformation/2017 2/dividend distribution policy 2017.pdf. This policy is enclosed asAnnexure ‘A' to this Report.

In line with the DDT Policy the Board has recommended a Dividend ofINR 105 per share for the Financial Year 2019-20 aggregating to Mio INR 3097. Thedividend payout ratio is approximately 47.6 percent. The Dividend is subject to theapproval of the shareholders at the forthcoming Annual General Meeting.

3. Management Discussion and Analysis

In order to avoid duplication between the Directors' Report andManagement Discussion and Analysis a composite summary of the Company's performanceand its various business segments is given below:

3.1 Economic Scenario

3.1.1 Global Economy

The year 2019 ended on a positive tone with improving data and promiseof easing of political risks with an apparent “Phase 1” agreement between Chinaand the US and a Conservative Party victory in the UK elections setting the stage forBrexit. At the beginning of the year 2020 Global GDP was expected to grow by 3.3%.

The COVID-19 pandemic is inflicting high and rising human costsworldwide and the necessary protection measures are severely impacting economic activity.The global GDP forecasts are evolving with most economist developing scenarios (Bull Bearand Base case) primarily because of the greater depths to which the activity has plummetedearly in Q2 and partly because rising risks of setbacks from further spread of the virusin some regions of the world. The base and bear case scenarios project the global GDP tocontract sharply between 5.9-8.7% in CY 2020 and to recover sharply by 5.3-2% in CY 2021.

When the world economy last faced a crisis of this magnitude it was inthe 1930s. Amongst the advanced economies Euro area is expected to have a substantialdecline in GDP (greater than global average) followed by US (larger fiscal support andpossibly weaker social distancing) Canada Japan and Australia (success in actingrelatively swiftly and effectively to contain the virus).

Emerging Markets are hit smaller. Especially the Asian economiesprimarily driven by China and Korea reflecting relative success in managing the virusare expected to bounce back relatively stronger.

3.1.2 Indian Economy

Indian economy continued to decelerate through 2019-20. Quarterly GDPgrowth which was above 5.7% for Q1 2019-20 dipped to 4.1% for Q4 2019-20. Growth waslargely held up higher with government spending and a positive contribution from netexports (reflecting weak imports) while private consumption fixed investment contractedat a faster pace and the slump in imports worsened - suggesting weak quality of growth.

On March 24 2020 Prime Minister Narendra Modi announced a nationwidelockdown to contain the COVID-19 outbreak. Initial estimates suggest that ~75% of theeconomy has been shut down resulting in a severe loss of output and the reopening isexpected to happen in phases (to avoid relapse). GDP is expected to contract materiallyfor the Q1 and Q2

of 2020-21 and is expected to recover only in Q2 of 2020-21.

Government in-turn has announced stimulus package of INR 20.9 T (10.5%of GDP) focused on the most vulnerable sections in the informal sector (MSMEs daily wagelaborers farmers) and to elevate the liquidity pinch of borrowers considered high risk(MSMEs Shadow banks) while the support for the formal sector has been limited (toemployee provident fund contribution). Government has also announced certain key reformsfor agriculture and industrial sectors. Most of the measures have been to address the cashflow shock and growth measures are expected once economy returns to the new normal.

Overall RBI's liquidity measures (like reducing Cash ReserveRatio for banks increase in Marginal Standing Facility Targeted Long Term RepoOperations and Moratorium on Term /Working Capital Loans etc.) account to 4% of GDP whilefiscal financial and support measures account to 6.5% of GDP. Since bulk of the fiscalsupport emanates from higher financial support impact to Central fiscal deficit isexpected to be ~0.8%. Despite this cumulative fiscal deficit (central and state combined)is expected to rise sharply to 10.5-11% of GDP primarily driven by revenue slippages.

USD has appreciated against INR by ~7% (mid-April 2020) from lateFebruary 2020. INR has fared well compared to 2008 GFC crisis and 2013 taper tantrumprimarily driven by lower crude prices resulting in balancing of current account deficit.

3.2 Industry Structure and Development

Automotive:

The auto industry faced a severe demand slowdown coupled with stagnantwages and liquidity constraints. Vehicle sales and production plunged leading to joblosses dealership closures and reduction in production capacity utilization acrossautomobile and auto ancillary manufacturers. Sagging vehicle sales showed signs of revivalduring third quarter of 2019-20 for the auspicious festive season. New model introductionswere instrumental for the slight recovery in passenger car & two-wheeler sales throughthis period. Auto industry continued to struggle with high inventory levels. Fourthquarter of 2019-20 witnessed timely start of production transition from BSIV to BSVI forOn-Road vehicles.

Freight capacity was freed-up with implementation of axle norms in thecommercial vehicle segment. Transportation efficiency improved with implementation ofGoods & Service Tax and E-Way bill creating an excess freight capacity ofapproximately 20%. Subdued freight rates and low freight movement due to slow-down exertedpressure on the fleet operators holding them from making new vehicle purchases. Reducedresale value of trucks affected replacement demand. Electric Three wheelers cargoapplications grew but fast depreciation of electric Three Wheelers curtailed financeoptions. Overall the segment's high dependency on Non-Banking Financial Companiesfurther led to production decline of 47% in Heavy Commercial Vehicle 21% in LightCommercial Vehicle and 10% in three wheeler segments.

Legislative norms paved way for superior vehicle technology withintroduction of frontal airbag parking sensors. Infotainment in cars are increasinglybecoming an extension of the smartphone with new- age connectivity features and cloudbased services. Retail sales were higher led mostly by Utility Vehicle segment thatjumped more than 20% during the festive period. With a weak consumer sentiment and highvehicle price Passenger Cars and Utility Vehicle production declined by 15%.

Tractor segment continued on TREM III norms although with highinventory levels and muted demand in rural and construction segments. Uneven spread ofrainfall damaged crop output hampering cash flow in the rural market. High discounts andattractive finance schemes improved retail sales during the festive season. Tractorsegment production declined by 15%.

Subdued consumer sentiment higher inventory of motorcycles compared toscooters and postponement of buying decisions led to decline in Two Wheeler segment.Retail sales was better off during the festive season influenced by cash discountsloyalty and exchange programs. Electric Two Wheeler sales grew with FAME II impetusenabling battery technology transition from lead acid to lithium ion. Overall Two Wheelerproduction declined by 14%.

Vehicle Production Growth Rates:

Vehicle production growth over previous Fiscal Year (+ / -)

Segment FY 1314 FY 1415 FY 1516 FY 1617 FY 1718 FY 18 -19 FY 1920
HCV -20% 26% 24% 2% 3% 28% -47%
LCV -14% -10% 3% 6% 18% 22% -21%
Car + UV -4% 6% 6% 11% 6% 0% -15%
3 Wheeler -1% 14% -2% -16% 31% 24% -10%
Tractor 22% -13% -7% 21% 14% 14% -15%
2 Wheeler 7% 10% 2% 6% 16% 6% -14%
TOTAL -2% 5% 2% 6% 15% 7% -14%

Non-Automotive:

The Indian Professional Tools market is estimated to be around INR 18billion by value in year 2019 (without factoring COVID-19 impact) and is expected to growat a CAGR of 6%. This is in line with the estimated rise of the infrastructural projectsand expansion of the manufacturing industry to drive the market. The market trend clearlypoints to increasing sales of professional power tools the move from corded tools tocordless tools and shift from nickel cadmium to lithium ion powered tools within cordlesstools.

The Building technology (Security technology) market in India isgrowing at 5% driven by the need to secure Critical Infrastructure Government BuildingsPublic and Private Spaces. The technology trends in this space are the evolution andmaturity of IP Convergence analytics and seamless integration.

The market is also preparing itself to deal with the challengingthreats and changes driven by fast changing hardware and software. The industry is alsomaturing driven by the renewed scope in Regulation and Bottoms-up desire to feel safe andsecure.

The overall slowdown in the economy has resulted in slowing demand forSolar PV EPC projects and Energy Efficiency solutions from commercial and industrialsegment customers. Solar PV projects has seen an upward trend mainly in the Opex modelduring this period. Energy Efficiency solutions demand is supported by pollution controland energy savings measures adopted by the government agencies and many corporations.

3.3. Business and segment wise performance

The overall performance of the Company witnessed a decline of 18.6%.Mobility business (Automotive) revenue declined by 19.7% while the Business beyondmobility (Others) reduced by 12.3%.

Domestic mobility business witnessed decline of 25.9% mainly driven byPowertrain Solutions due to various structural and cyclical factors driving the autoindustry.

As the Company predominantly operates in manufacturing and trading ofmobility solutions this constituted 82.9% of total sales for the Financial Year 2019-20.The Business beyond mobility comprising of Industrial Technology Consumer Goods andEnergy and Building Technology had a share of 17.1%.

Thus the operating segment is broadly classified into “MobilityBusiness” (Automotive Products) and “Business beyond mobility” (Others).

3.3.1 Operating Segment Mobility Business:

Powertrain Solutions

The division Powertrain Solutions (PS) combines the strengths of thesmart diversified and sustainable

powertrain under the vision PASSION TO MOVE. PS offers integratedsolutions in the market segments - Electric Vehicles (EL) Passenger Cars (PC) andCommercial Vehicles / Off-Road (CV/OR) and aims at becoming the No. 1 provider of productsand solutions in the diversified powertrain sector ranging from gasoline and dieselinjection to electrified drives with battery and fuel cell technologies. PS is pushingahead with further development of innovative ecofriendly technologies and systems basedon diesel and gasoline. They include engine management systems fuel supply modules fuelinjectors pumps and ignition systems. For diesel systems the division is developingeven more fuel-efficient and eco-friendly injection systems for applications ranging frompassenger cars and commercial vehicles of all kinds to industrial power-generation units.

During the year successful migration to BSVI projects in recorddevelopment time in collaboration with OEMs to meet stringent BSVI emission norms is asignificant milestone.

Overall Automotive Market during 2019-20 was subdued mainly due tounfavorable economic conditions. Powertrain Solutions witnessed a 30.2% decline in salescompared to the preceding Financial Year. Within PS division the Diesel segment witnessed33.1% decline in sales as compared to last year. Further the full potential of the BSVIramp up which was expected from April 2020 is expected to be delayed due to the ongoingCOVID-19 pandemic which has affected supply chains created liquidity problems acrosscustomers and also led to manpower constraints.

The exhaust gas sensors are in demand across customers owing to thestricter emission norms laid down by the government.

The Gasoline Systems division registered a moderate growth of 1.8% overthe previous Financial Year. This growth is mainly due to growth in demand in thetwowheeler segment which is expected to continue over the next couple of years. Furthergood demand was also seen for ECUs sensors connectors and battery products.

In future the growing working population and expanding middle classwill remain the key drivers of growth for the automobile industry as we look to recoverfrom the slump in the economy created by the COVID-19 pandemic.

Automotive Aftermarket

The Automotive Aftermarket division provides the aftermarket and repairshops across India with a complete range of technology and solutions related to autodiagnosis and repairs as well as a wide range of spare parts for vehicles and repairsolutions especially for passenger cars and two wheelers. The product portfolio consistsof Bosch manufactured products like Fuel Injection Equipment & Spares Spark PlugBraking Parts and Filter as well as products & services like Battery StarterGenerators Lubricants Comfort Electronics Wiper Blades and Lubricant developed andmanufactured by other manufacturers. The Automotive Aftermarket division is the largestIndependent Aftermarket (IAM) network in India.

During the year under review the division witnessed a decline inrevenue by of 5.4% amidst of economic slowdown and weak performance of automotive market.However there were many positive developments in the areas critical for its long-termgrowth. The division grew in two-wheeler segment of independent aftermarket as itregistered the highest ever double-digit growth in exports and saw a steep increase inrevenue and volume of cars serviced at our COCO (Company owned Company operated) workshop.As a technology leader in this space the division acquired multiple BSVI OE projects. Thedivision also implemented significant cost reduction projects at its manufacturinglocations which helped the division to retain its margin during these challenging times.During the year the division developed an aftermarket sales strategy of demand generationthrough increased focus on workshops and pull for Bosch products & services in themarket. The division also played an important role in the industry's transition toBSVI emission norms by facilitating the vehicle manufacturers in smooth execution of allthe new emission projects.

Business beyond Mobility:

The Business beyond mobility sales have declined by 12.3% which wasdriven predominantly by Power Tool and Bosch Energy & Building Solution Division indomestic market; which contributed to 81.7% of total business beyond mobility during theyear under review as compared to 91.3% during the previous Financial Year. Howeverexports sales of total business beyond mobility decreased by 21.8% as compared to theprevious Financial Year.

Consumer Goods - Power Tools

The Power Tools division supplies power tools power-tool accessoriesand measuring technology. The division has an extensive product range aimed atprofessional users in trade and industry the DIY market and amateur crafters. One of thedivision's focal points is convenient high-performance cordless tools and greatengineering progress.

During the year under review the division's revenue had a declineof 3.9% which is mainly driven by slowdown in economic activities and also onetime orderexecuted in the previous year for Government of Andhra Pradesh for Aadharna Project. TheDivision aims at reducing the distance to its users and will continue to focus onimproving their lives by providing affordable solutions. Its focus on the loyalty programand e-commerce channels for business would also continue to be essential contributors tothe overall business growth.

Energy and Building Technology (Building Technology & Bosch Energy& Building Solutions)

Building Technology and (Security Technology)

The Building Technology division manufactures innovative products andsolutions in the field of security safety and communications primarily for infrastructureand commercial applications.

The product portfolio includes video surveillance intrusion detectionfire detection and voice evacuation systems as well as access control and managementsystems. Critical Communication Systems Professional audio and conference systems forcommunication of voice sound and music complete the range. Bosch security division offerswide range of security solutions for every application to minimize risks and maximizesecurity irrespective of the nature of security risk.

The business saw a decline in revenue over the previous year by 7.1%with the slowdown in the economic activities. However verticals of TransportationGovernment Energy and Commercial sector contributed for the business growth. Futuristicproducts like the new Mega-Pixel 4K Cameras with user Interface IP based Public Audiosystem Professional Audio speakers and Amplifiers which were introduced during thisperiod were well received.

Bosch Energy & Building Solutions During this year overalldemand for solar PV

EPC and Energy Efficiency solutions were muted.

This has resulted in overall Energy Division's degrowth comparedto last financial year. Division will concentrate on the business of energy efficiencyprojects with the end objective of enabling its customers in achieving energy cost savingand CO2 footprint reduction. The division continues to focus on sectors like Pharma FMCGand Healthcare as a strategic measure.

In accordance with the approvals received from the Board of Directorson May 21 2019 and from the shareholders on August 23 2019 the Company has executed theBusiness Transfer Agreement on October 1 2019 and transferred the business of Packagingunder the non-automotive products segment of the Company on a going concern basis by wayof slump sale to Robert Bosch Packaging Technology India Private Limited (subsidiary ofRobert Bosch Packaging Technology GmbH Germany). Consequently profit before tax andprofit after tax for the Packaging business have been disclosed separately as discontinuedoperation under the above results.

3.3.2 Revenue by geographical area

Contribution of export sales to the total sales increased to 9.1% forthe year under review as compared to 7.7% during the previous Financial Year. TheCompany's exports bulk of which were to Germany China Turkey Brazil Bangladeshand UAE decreased by 3.6% as compared to previous year majorly in Powertrain SolutionsPower Tools and Building Technology.

3.4 Financial Performance and Condition Sale of products

Sale of products declined by 23% over previous year on a comparablebasis and stood at Mio INR 89441. The decrease is influenced by the turbulent automotivemarket with various structural and cyclical factors driving the industry.

Sale of services

Sale of services doubled with 120.6% increase over previous year mainlydue to the Recognition of income on R&D contracts relating to BSVI projects completedduring the year.

Other operating revenue

Other operating revenue stood at 3270 Mio INR increased by 54.7% overthe previous year. This increase is mainly contributed by Government Grant on theinvestments in Company's Nashik Plant under Package Scheme of Incentives.

Other income

Other income which mainly comprises of mark-to- market gains profiton sale of marketable securities and dividend income declined by 31.2% over the previousyear. Income from net gain on financial assets measured at Fair Value through Profit andLoss (FVTPL) was Mio INR. 2054 for the year under review as against Mio INR 3093 inprevious year.

Income from interest on bank and inter-company deposits increased by18.1% due to incremental investments and shift of investments from low return funds tofixed deposits.

Cost of materials consumed

The cost of materials consumed as a percentage of total revenuedeclined from 55.2% to 53.9% during the year under review. The reduction is contributedthrough continuing cost reduction measures across the value chain including withsuppliers freight cost optimization and higher service income.

Personnel cost

Personnel cost for the year under review was Mio INR 12685 as againstMio INR 13507 of the previous year. The reduction is mainly due to transformationprojects and EVR schemes.

The Company continues to focus on restructuring redeploying andre-skilling its workforce based on its business needs in a fair manner while sustainingproductivity and competence.

Depreciation and amortization

The depreciation charge for the year under review was Mio INR 3833 asagainst Mio INR 4022 during the previous year ended on March 31 2019. This is mainlycontributed by reduction in new investments including R&D assets partly offset bythe depreciation on leased assets with the change in accounting standard on Leases (IndAS 116).

Exceptionalitem

During the year the Company has made a provision of Mio INR. 7167towards various restructuring reskilling redeployment initiatives and asset impairments.These provisions are in line with the Company's transformation initiatives and tocapitalize on opportunities emerging in electro mobility and other mobility solutionbusinesses.

Provision for Tax

Tax Expense represents a net charge of Mio INR 1901 in the year underreview as compared to Mio INR 7406 in the previous year. The effective tax rate for theyear under review was 20.7% as compared to 31.7% in previous year. The Company has adoptedthe benefit of lower tax rate of 25.2% including surcharge offered in the finance bill forthe Financial Year 201920. The impact of this on the deferred tax asset is recognized inthe P&L as a separate item.

Profit After Tax (PAT)

Profit after tax declined by 59.3% to Mio INR 6498.2 (excludingdiscontinued operation the PAT is Mio INR 5848) in the period under review from Mio INR15980 in previous financial year.

Other Comprehensive Income

The investment in equity securities is classified as financial assetsthrough other comprehensive income as per the requirements of Ind AS 109. The changes infair value of equity securities is recognized under other comprehensive income.Accordingly the impact of Mio INR 1333 (net of taxes) during the year under review ismainly due to decrease in the fair value of those Investments.

Earnings per Share (EPS)

EPS (basic and diluted) of the Company for Financial Year 2019-20 wasINR 220 per share as against INR 525 in FY 2018-19.

Share capital

As on March 31 2020 the Authorized Share Capital comprises of38051460 Equity Shares of INR 10 each. The issued subscribed and paid-up capital is MioINR 294.94 divided into 29493640 equity shares of INR 10 each.

Reserves & Surplus

Reserves & Surplus as on March 31 2020 stood at Mio INR 85763which includes retained profits of Mio INR 85337.

Other Reserve

Other Reserve reduced from Mio INR 8050 to Mio

INR 6636 mainly due to change in the fair value of equity investmentsvalued in line with Ind AS.

Shareholders' fund

The total Shareholders' fund increased to Mio INR 92694 as onMarch 31 2020 from Mio INR 91262 as on March 31 2019 contributed from the retainedearnings for the year.

Fixed assets - capital expenditure

The gross fixed asset value (including Capital Work-InProgress) as onMarch 31 2020 was Mio INR 35100 compared to Mio INR 33269 as on March 31 2019.

The Company made capital investments of Mio INR 3994 during the yearunder review in addition to Mio INR 5975 invested during previous year. Major investmentswere made towards development of Bidadi Phase II and Adugodi Phase II Bengaluru inKarnataka.

Investments

The total investments (excluding investment in property) as on March31 2020 was Mio INR 40207 as against Mio INR 40361 as on March 31 2019.

Working capital Inventories

Inventory as on March 31 2020 decreased by 22.7% to Mio INR 11159from Mio INR 14443 as on March 31 2019. This is mainly contributed by the continuouseffort by the Company to reduce the slow moving inventory in the value chain and alsothrough practice of lean production systems in its manufacturing locations and supplychain considering the current slowdown in the market.

Trade receivables

Trade receivables as on March 31 2020 decreased to Mio INR 14130 asagainst Mio INR 15675 as on March 31 2019 mainly due to reduction in turnover during thelast quarter of the year under review. This is supported by improved collections againstoverdue receivables in retail market customers of other divisions.

Cash and Bank balances

The total cash and bank balances as on March 31 2020 was Mio INR22560 (including cash and cash equivalent of Mio INR 2552) compared to Mio INR 12527(including cash and cash equivalent of Mio INR 1910) as on March 31 2019.

Key Ratios:

Ratio 2019-20 2018-19
Debtor Turnover Ratio (in days) 61 49
Inventory to Sales Turnover Ratio (in days) 52 41
Interest Coverage Ratio (percent) 1 NA NA
Current Ratio 2 1.5 1.6
Debt Equity Ratio (percent) 1 NA NA
Operating Profit Margin (percent) 11.2% 14.3%
Net Profit Margin (percent) 6.6% 13.0%
Return On Capital Employed (ROCE) (percent) 11.4% 18.2%
Return On Net Worth (RONW) (percent) 7.7% 15.6%
Working Capital (No. of days) 81 72
No. of Employees (average) 8986 9410

1 The Company does not have any interest bearing debtsborrowings or long term liabilities.

2 Without current investments

3.5 Human Resource Development and Industrial Relations

Human Resource Development

During the year under review Human Resources (HR) continued itstransformation initiatives in a volatile and uncertain business environment to cater tothe organizational requirements. Initiatives like PARINATI & 3R (Restructure ReskillRedeploy) in a SCRUMM approach has supported us in having a continuous focus on thetransformation journey at Bosch Limited.

In collaboration we are working on enhancing the employee experiencethrough our EX initiative which is aimed at retaining and harnessing talent while we areon the journey of transformation.

The Company continued its efforts to foster and drive youngergeneration towards future leadership through participations at the National Competitionfor Young Managers 2019 conducted by the All India Management Association. The Companythrough its Integrated Talent Management initiatives continued to enable learningnetworking and collaboration by emphasizing on cross entity movement between differentBosch legal entities enabling holistic development and encouraging integration acrossdifferent entities/locations.

Industrial Relations (Employee Relations)

Industrial Relations in all plants generally remained cordial duringthe year under review. Transition journey from ‘Industrial Relations' to‘Employee Relations' continued with a more focused approach on increasedEmployee Engagement and increased collaboration between various plants corporatedepartments and amongst all level of employees.

The Long Term Wage Settlement for the manufacturing facility atBengaluru (Bidadi) was concluded with a bipartite settlement on June 17 2019. The longpending settlement was closed after long-drawn negotiations of 29 months with manypositive changes in productivity and cost ensuring that the facility remains “Fit forFuture”.

It is also noteworthy to mention that 2018-19 approximately 2000unionized associates and 500 Management Staff were shifted from 60+ year old manufacturingfacility in the heart of Bengaluru to a new one at Bidadi peacefully in a benchmark time.The workmen showed great maturity and collaboration in relocating to the new location. Theshifting of plant personnel and assets was carried out without any problem in customerorder fulfillment.

As on the date of this report negotiations over the longtermsettlements at the manufacturing facilities situated at Nashik and Naganathapura areongoing. The Company continues to deal with the said matters in a fair and firm manner ina journey towards “Fit for Future”.

A number of restructuring initiatives have been announced company-widein 2019. As the automotive market slowdown continues the Company will have to makecorrect decisions to ensure the business is sustainable in the long-term. One of those isrightsizing the Company which is the absolute need of the hour. A total of around 350blue-collar associates have availed the attractive early voluntary retirement scheme in FY2019-20.

The year saw increased connect with Government and statutory bodiesstructured engagement calendar stringent compliance monitoring through self-audits andcross audits etc. to strengthen Employee Relations.

The Company received appreciations from various stakeholders for itsexcellent practices and approach in the domain of Employee relations focusing onengagement and trust building.

3.6 Internal Audit and Internal Financial Controls

The Company has an Internal Audit function. The Internal Auditdepartment provides an appropriate level of assurance on the design and effectiveness ofinternal controls its compliance with operating systems and policies of the Company atall locations. Based on the internal audit report process owners undertake correctiveactions in their respective areas and thereby strengthen the controls. Significant auditobservations and corrective measures thereon are presented to the Audit Committee.

The Company has an effective and reliable internal financial controlsystem commensurate with the nature of its business size and complexity of itsoperations.

The internal financial control system provides for well-documentedpolicies and procedures that are aligned with Bosch global standards and processes adhereto local statutory requirements for orderly and efficient conduct of businesssafeguarding of assets detection and prevention of frauds and errors adequacy andcompleteness of accounting records and timely preparation of reliable financialinformation. This also identifies opportunities for improvement and ensures that goodpractices are imbibed in the processes that develop and strengthen the internal financialcontrol system and enhances the reliability of the Company's financial statements.

The Audit Committee reviews the internal audit plan adequacy andeffectiveness of the internal control system significant audit observations and monitorsthe sustainability of remedial measures. It also reviews functioning of the Whistle Blowermechanism and reviews the action taken on the cases reported.

The efficacy of the internal checks and control systems is validated byself-audits and verified by internal as well as statutory auditors.

3.7 Opportunities and Threats

The world remains in the grip of COVID-19 but this will not lastforever. At some point in the not too distant future the fear of this pandemic will mostprobably dissipate through some combination of effective treatments vaccines and herdimmunity. But like past infectious diseases that remain present today the ingenuity ofhumankind has successfully contained them and learned how to live with them. On one handCOVID-19 has been an extraordinary economic shock.

It has been so abrupt many economies shrank by an annualized 25-40% ina single quarter. It has caused the deepest global recession in peacetime since the GreatDepression even with unprecedented macroeconomic policy support and it has had profoundreach: the World Bank forecasts that GDP per capita will fall in over 90% of countries inthe world the highest share in 150 years. COVID-19 is sure to leave long-lasting scarsthrough multiple channels including through unemployment bankruptcies and debt. On theother hand COVID-19 presents a once-in-a-lifetime opportunity for change. The Indianautomotive market was already in a slowdown since last quarter of 2018. This resultanthigh inventory at the OEMs and dealers was liquidated over almost 1.5 years.

After this long slowdown it is an opportunity for the Company totransform itself in its ways of working and diversify itself in areas of growth. Digitaltechnologies will play an important part and adoption will be fast tracked in every sphereof work. Government too will push for the fast adoption of technology in India tocapitalize of opportunities emerging in the new world order. Company's mobilitydivision will gain in this aspect from brining newer technologies includingelectrification and digital services.

Upgradation of infrastructure and e-commerce will play a big role toopost COVID-19. Building and workplaces need to become smarter. Security and analytics ontop of existing products will play an important role. This will bring opportunity for theCompany's Beyond Mobility divisions dealing in domains like Building Technology andConsumer Goods (Power Tools).

From the various pronouncements of the government and its agencies itis clear that reducing the oil bill is of paramount importance and thus electrification inmobility is the way forward. While we have worked closely with OEMs in various concurrentprojects to deliver the BSVI mandate electrification also opens up new opportunities andchallenges in the mobility space. FAME II (Faster Adoption for Manufacturing of Electricand Hybrid Vehicles) has been announced providing incentives for all EVs and promoting EVinfrastructure. These steps clearly show the impetus given to create a demand for EVs inthe country.

Two and three-wheelers will be the early adopters of electrification.This will gradually move towards fleet passenger cars but the Internal Combustion Engine(ICE) will continue to be the dominant technology in the remaining segments. Bosch withits focus on environment continues research and improvements in conventional ICEtechnology and applications and has been able to achieve even lower emissions than what ismandated. Other key areas of focus emerging is around Asset Utilization and use ofAnalytics in Mobility. To cater to these new age businesses we have created agile projecthouses both on Electrification and Mobility Services to understand the local requirementsand use the global expertise to provide localized solutions for the Indian market. Theseproject houses being a step towards future-proofing of the Company will need time totranslate to mature businesses.

3.8 Risks and Concerns

The Company follows a specific well-defined risk management processwhich is integrated with its operations for identification categorization andprioritization of operational financial and strategic business risks. Across theorganization there are teams responsible for the previously mentioned processes whoreport to the Senior Management.

The Risk Management Committee headed by Mr. Soumitra BhattacharyaManaging Director reviews the effectiveness of the process at regular intervals.

Following are the major risks and mitigation measures:

1. Economy/Industry: The automotive industry is going throughturbulent times not seen in the recent past. To add to the worries of general economicslowdown lower demand tight liquidity crunch the impact of COVID-19 pandemiccompletely took everyone off-guard. Even though most of these are likely to be temporaryconsidering the widespread impact of the nation-wide lockdown economic revival isexpected to be prolonged and coming back to normalcy will take time. It may be even longerin automotive sector. This will have a deep impact on the financial performance of theCompany.

2. Disruptive norms:

Automotive industry is in the midst of changes like BSVI andElectrification. These are considered by the Company as one of the major risks.

(a) Shift to BSVI: The jump from BSIV to BSVI in a short span of about3 years the pace of change and the short duration for preparedness are challenging.

Shift to BSVI products which are largely based on imports in theinitial years and have low replacement requirements in the Aftermarket may have anadverse financial impact on the Company. The Company has rolled out products in line withmajor OEM's requirement. Even though the products are successfully launched thepicking up of demand is a major concern.

(b) Electrification: There has been a lot of discussion onelectrification by various stakeholders including the Government OEMs and auto componentmanufacturers. The technological dominance which the Company currently has in the autocomponent industry might not be available once electrification has its way into theindustry. However the Company being a global end-to-end solution provider has its ownadvantage and is working closely with some of the top customers in the industry.

3. Competition: The Company operates in a highly competitiveenvironment due to which there are risks of pressure on pricing loss of market share dueto de-risking from some customers judicial changes and increased import content. Spuriousparts and cheap imitations continue to put pressure on existing market share primarilyfor Automotive Aftermarket and Power Tools divisions.

The Company as a strategy localizes products over a period resultingin reduction of price of the products and consequent increase in the market share.Respective business unit teams undertake a comprehensive competitor analysis periodicallyto evaluate competitors' strategies vis-a-vis our own products and services anddefine our counter strategic and marketing plans.

4. Industrial Relations (IR): IR-related risks continue on accountof surplus capacity at the Company's Powertrain systems plants and high lead time forwage settlement. These include possible risks arising from stoppage of production and/orleading to unpredictable cost structure and/or possible lay-off.

The Company adopts more focused continuous action plan for wagesettlement offers attractive voluntary retirement schemes Firm and Fair approach forsettlement with contract labour and implement “selected” industry bestpractices. As continued process in building capability initiative special trainings wereconducted on Employee Relations and adding value to Front line leadership development inthe plant.

5. Heavily auto sector dependent: About 85 percent of the businessis dependent on the auto sector. Performance of the Company therefore is dependent onthis sector's growth.

3.9 Outlook

Automobile industry which was reeling under pressure in 2019 has beendeeply impacted by COVID-19.

Vehicle production was down by 17% in FY 2019-20 and COVID-19 impact isprojected to push back the auto industry to 2008 - 2010 levels. Rural is expected to leadthe demand recovery driven by better MSPs for the upcoming kharif harvest increasedMNREGA spends in allied business activities and as most of the COVID-19 impact till datehas been largely in urban areas. Hence tractors and two wheelers are expected lead thedemand recovery. PV segment is deeply impacted considering the discretionary nature ofconsumption and recovery will largely be expected to benefit from shift in preferencetowards personal over public mobility. CV segment which experienced the maximumcontraction in 2019 is expected to be under significant pressure driven by fall inindustrial activity. This segment will benefit if government introduces the scrappagepolicy. Thus FY 2020-21 is expected to be one of most challenging years for the industry.

4. Manufacturing Facilities

4.1 Bidadi (Karnataka)

It was the biggest relocation of manufacturing facility in the Boschworld which created this youngest manufacturing Plant in India. Inaugurated by Dr. VolkmarDenner Chairman Robert Bosch GmbH in 2019 Bidadi is a strategic Plant for PowertrainSolutions business with a heady mix of BSIV and BSVI diesel products. Productsmanufactured at Bidadi Plant include MultiCylinder pump Single Cylinder pump Common railpumps of various varieties Common rail and the latest addition to our product family CBxpumps.

The Plant is continuously improving its operational excellence throughstructured implementation of Bosch Production System (BPS) productivity improvementmeasures and focus on low cost automations. In order to improve efficiency of indirectareas the Plant implemented LEAN in several areas and focused on fixed costs. Throughsuch measures we are able to restructure our machinery and equipment and improve our costcompetitiveness.

In order to give a higher fillip to transformation the Plant hasrolled a new Vision-2021 “We LEAD”. Enabled by this vision the Plant isaggressively pursuing new products and Digital Transformation. Due to a strong penchantfor operational excellence and customer focus the Plant is working on attracting newbusiness even beyond the diesel products.

Digital Transformation is a strategic focus area and the Plant ismoving towards becoming a Centre of Competence for Industry 4.0 amongst all the Plants inIndia. Bidadi has partnered with Robert Bosch Engineering & Business Solutions PrivateLimited to drive Industry 4.0 projects.

The Plant is extensively using Collaborative Robots (Cobots) in severalof our products towards improving its operational excellence. Owing to such effortsBidadi conducted the prestigious “World Industry 4.0 Conference” which attractedparticipants from across Bosch worldwide and India.

As a socially responsible citizen the Plant will be Carbon Neutral in2020 as a result of energy conservation measures and effectively using the energy from theown Solar Park. As a special gesture during the recent COVID-19 pandemic we distributedmore than 75000 meals to the needy.

We have continuously worked on customer issues through our focus onShainin Projects and customer response. Such efforts have led to good appreciation fromour customers in the form of various awards including those from Ashok Leyland and ISUZU.

Looking into the future the Plant is growing steadily by attractingnew products even as we are steadfastly working on creating a great place to work for allour present and future employees.

4.2 Nashik (Maharashtra)

Nashik Plant manufactures Common Rail Injectors (CRI) and componentsincluding nozzles for both common rail and conventional diesel injectors. During the yearunder review the Plant diversified its product lineup form passenger cars until off highway applications. A new generation CR1-18 was launched successfully equipping the Plantwith BSVI compliant products. In addition the Plant is also certified IATF: 16949.

The Plant continued its endeavor to use renewable source of energy andgreen initiatives. The Plant has an overall capacity of 13.6 MWp of solar energygeneration. The plant is the first Bosch Plant in India and fifth worldwide to receive ISO50001:2001 certification for Energy Management. Globally in the Bosch Group Nashik Plantwas awarded the best in “Energy Efficiency & Environment Category”.

The Plant has been focusing on behavior-based safety reduction offirst aid cases and capturing & working on near miss incidents digitally. It wasawarded by “Energy and Environment Foundation Global Safety Awards 2019”. ThePlant was also awarded by many OEMs for the quality standards like AL VECV etc.

4.3 Jaipur (Rajasthan)

The Jaipur Plant produces Distributor (VE) Mechanical and ElectronicDiesel Control Pumps and Conventional Injectors (NHA) used in Light and Heavy CommercialVehicles Sports and Multi-Utility Vehicles tractors and off-highway applications. JaipurPlant celebrated the production of 10th million NHA in 2019 after successful relocation ofNHA production from Nashik Plant in 2017.

The Plant took various initiatives in the field of Water Conservationwhich were appreciated by IGBC (Indian Green Building Council) which is an integral partof Confederation of India Industry (CII) and hence the Plant was presented 1st WaterConservation award 2019. The Plant has also secured 3rd position in “Bosch EHS award2019” announced by Bosch Corporate Safety under the category of “ResourceEfficiency” for taking water conservation initiatives.

Jaipur Plant is always known for employee involvement in improvementactivities and has secured 1st position in “Suggestion per Employee” and“Employee Involvement” across all Bosch Powertrain Solutions plants worldwide.Jaipur Plant was also rated highest across all Bosch Plants in India for the Trust Indexsurvey which is one of the key indicators of “Great Place to Work” initiative.

Jaipur Plant is always committed towards “Zero Accident”approach and has won the “Rajasthan State factory Safety award-2019” under thecategory of Best Industry of Rajasthan in Engineering.

4.4 Naganathapura (Karnataka)

The Naganathapura Plant produces Spark Plugs a product produced by theBosch group for over a century. The Plant won the CII EHS Excellence award in 2019 for theSouthern region. The Plant became a zero liquid discharge plant with installation of anevaporator along with a boiler in 2019 and thereby exceeds the requirements specified theKarnataka State Pollution Control Board and has become a benchmark for the same. Focusingon improving cost competitiveness productivity improvement projects were implemented inaddition to safety and quality improvement programs.

4.5 Gangaikondan (Tamil Nadu)

Gangaikondan Plant in Tamil Nadu is a proven strategic low costlocation in Asia and has made its presence felt with the competitive labor cost andquality levels that meet IPN standards. The Plant continues to have product portfoliowhich comprises of mainly gasoline power train sensors Fuel Supply modules and airmanagement products. Business Units like Sensor Division (SD) and Air Management (AM) arefurther trying to enhance inhouse manufacturing by way of relocation of lines from otheroverseas locations to support the “Local for Local” strategy.

The Plant has been recognized for its Manufacturing Excellence byFrost & Sullivan India Manufacturing Excellence Award (IMEA) under “GoldCategory” during 2018. Also the Plant has won the “Best New Comer” awardin 2019 for its Lean Manufacturing Practices among Bosch India Locations.

4.6 Chennai (Tamil Nadu)

The Power Tools facility admeasuring approximately 8500 sq. meters islocated at Indospace Industrial Park Orgadam Tamil Nadu. At present the facility catersmainly to the Indian and SAARC markets. It primarily manufactures Small Angle grindersLarge Angle grinders Marble cutters Blowers Drills and two-kg Hammers along with theirmotors. The Plant produces Blowers for the entire global market.

The main highlight of the Plant is that 100% of associates on theAssembly lines at the shop floor are women. The Plant celebrated production of 5 MillionthPower Tool in December 2019.

The Plant is certified for ISO14001:2015 and OHSAS 18001:2007. Fiftypercent of consumption in 2019 was green energy.

The Plant was accredited with Power Tools Plant excellence award forthree consecutive year since 2016 and awarded 2nd Best Plant during 2019 within PowerTools international network. Also the Plant has been accredited with the best improvingPlant twice within the Power Tools world.

5. Information Technology (IT)

Lean IT Organization is implemented for quick response to addressbusiness IT needs towards improvement of efficiency and productivity of the Company. TheCompany drives implementation of IT solutions and cost control to enhance the competitiveedge of the plants.

The Company is moving towards digitalized solutions in manufacturing byconnecting machines and implementing innovative I4.0 solutions to enhance visualizationtransparency quick response for process deviation and course correction. These solutionsin the long run ensure automation and improvement of productivity.

In line with worldwide movement of Digitalization of supply chains theCompany has started various initiatives like digital tracking of consignments from thetime it leaves the source to the time it reaches the customer destination.

Pilot Initiatives on decision-support tools like Digital Control Towerto bring in visibility of live data of various logistics stages of material andinformation movement to ensure shift from function-driven KPIs to business-driven KPIs.

The overall IT cost is optimized with various initiatives like leasedassets for laptops & desktops effective printer management elimination of localreporting system by aligning to central system user license reduction etc.

Process harmonization is performed on the ERP systems by identifyinggaps and standardizing as per Bosch Mobility benchmark to enhance process maturity andreduce support costs.

Video conferencing facility is established at 21 key locations in theCompany thus reducing travel related expenses and saving time. It will cover all majorlocations and help our business for all face-to-face communications via videoconferencing.

Strengthening of IT Security by deploying firewalls redundancyupgradation of networks operating systems effective access management and awarenessbuilding by conducting campaigns across locations are also some of the measures taken bythe Company.

6. Change Initiatives

6.1 Continuous Improvement Process (CIP)

Continued guidance from Senior Leadership in 2019 to strengthen CIPculture has significantly improved CIP events (up ~8%) and number of suggestions peremployee (up ~30%). Higher focus on improvements has made it possible to successfullylaunch a special drive to realize cost saving improvements with ambitious target.Digitization of CIP related practices like Suggestions/ Ideas Management Scheme 5Spractices started gaining importance.

For 2020 emphasis is being given to strengthen CIP Network throughinfo sharing sessions and intranet communication for further strengthening CIP culture inthe organization. Idea Management is being promoted to encourage more number of ideas fromemployees not only to bring down cost but also to improve business opportunities.

6.2 Bosch Production System (BPS)

To increase speed in execution of business projects through System CIPapproach Speed Week has been rolled out in Bidadi Plant in March 2019. The feature ofthis initiative is that the project deliverables are to be achieved within five days. Toreduce inventories and lead time projects are taken with a focus to improve OEE ofmachines quick change over time between variants and shorten material flow. Similarlymany plants have rolled out these initiatives in addition to swift approach and speedjishuken. This has been a key enabler in achieving our business targets.

Qualification with future focus - BPS Boot camp for Assessors: Thiswas conducted with BPS Coach from Germany in May 2019 to qualify the assessors in India.More than 15 participants from Bosch Plants in India got benefitted from this session. Thehighlight is that simple HandsOn Lean games Lean riddles and also assessment at the shopfloor enabled the participants to get more insights on BPS topics. These participants canlead BPS initiatives in their Plants and also assess the Plants by asking the rightquestions thereby bringing in the “Culture of Continuous improvement” amongassociates.

Collaborative working: To negate the myth that BPS is formanufacturing only a two day HandsOn workshop was organized for sales and logisticscolleagues to bring in collaboration and synergy in entire value stream. This has helpedto understand each other on the business challenges and work more swiftly on informationflow and providing need based inputs at the right time.

BPS Day 2019: This event was organized across Bosch Plants wherethey can exhibit their BPS approach to achieve business objectives. In this competitionall Bosch Plants participated in different categories of BPS elements and the best Plantwas awarded. This was arranged through video conference to keep travel costs down to zero.The main theme was to “Learn from each other the best practice” and executethese best practices in their Plants within a short time.

National Recognition: Lean competition organized by CII was held atNational level. Two of our teams from Bidadi Plant showcased our Lean initiatives journeyand achieving results in two different categories. One team won first position and theother second position in their respective categories.

International Recognition - BPS Day at Germany: This was aworldwide event organized in Germany. For the first time 7 Plants from India wereselected and moved to the final league.

6.3 Carbon neutrality

Bosch adopted an ambitious CO2 strategy to become climate neutralworldwide as of beginning of 2020. To align with this strategy Bosch India is workingthrough four levers of carbon neutrality - energy efficiency new clean power greenelectricity and carbon offsets. Through energy efficiency projects year on year there isa reduction of 2% of energy requirement. Bosch India has installed cumulative capacity of27 MW Solar photo voltaic power plants across different locations.

Bosch India is carbon neutral from the beginning of 2020 with 41%contributed through green electricity and new clean power. The rest 59% is compensatedthrough measures like carbon credits and international renewable energy certificates.Further the share of new clean power would go up by 25% in the year 2021 through signingof long term power purchase agreements under “Group Captive” model.

6.4 Safety

At Bosch India health and safety of associates have the highestpriority. Bosch takes responsibility of its associates to promote and safeguard theirhealth and working environment. The target is to realize “Zero Accidents”. BoschIndia is one among the best regions in terms of safety performance. During the currentyear the focus will be on deploying “Safety Basics” phase II and campaign on“Safe Hands”.

Near miss capturing will continue to be the focus across all locations.During the year 2019 more than 12200 near misses were captured. More than 6300improvement measures were taken up across locations to realize next level of maturity interms of work safety. Accident rate of 0.14 during the year 2019 is an outcome ofsystematic approach at all locations.

6.5 Quality Management

Keeping in mind the increasing customer expectations year on year“Zero defect” drive was launched in Bosch India.

Structured quality campaign and active participation by seniorleadership brought in a very good focus for quality in Bosch India locations. Tostrengthen competency and skill quality academy has been established across variouslocations at Bosch India.

In 2019 14Q basics was taken as a drive across Bosch India locations.Majority of the workstations were reviewed and improved. There was a 20% reduction in‘0' km customer incidences in 2019. Logistics incidences were reduced to thetune of 45%. Internal defect cost was reduced by 16%.

Bosch India received five customer awards one Bosch Quality Award forbest product launch and one Golden peacock national quality award in 2019.

7. Business Excellence

Striving for excellence has been the Company's strategic focalpoint. With changing times and increased volatility the need for Agility empowerment anda winning spirit is a must. With efficient processes lean structures and highproductivity we intend to secure and increase the value of the Company. Through businessexcellence we are aiming at increasing our overall organizational efficiency to fuel ourfuture growth.

8. Awards and Recognition

During the year under review the Company won several awards forexcellence. Few such awards are:

1. CII Industrial Innovation Awards 2019 - Top 25 Innovative Companies

2. Ashok Leyland Supplier SAMRAT Competition at National Level - NashikPlant

3. Gold Award in “11th Kirloskar Oil Engine Limited SQIC2019” - Jaipur Plant

4. ‘Outstanding Contribution to Overall Quality Excellence'from Volvo Eicher Commercial Vehicles Ltd for the year 2018-2019

5. Mahindra - Business Partner of the Year - Farm Division

6. Best Delivery Performance award from Isuzu India

7. Ashok Leyland - South Zone Supplier Samrat Award Quality Gold Awardfor 2-Wheelers and Quality Silver Award for Glow Plugs

8. BML Munjal Award

9. CII - Prize for Leadership in HR Excellence

10. CSR Project of the Year - BRIDGE

11. Quality Award - Best product launch - Motorcycle ABS

12. Golden Peacock National Quality Award

9. Directors and Key Managerial Personnel

9.1 Directors Retiring by Rotation

In accordance with the provisions of the Companies Act 2013 andArticles of Association of the Company Mr. Peter Tyroller (DIN: 06600928) retires byrotation at the forthcoming Annual General Meeting and being eligible offers himself forre-election at the said Meeting.

Brief profile of Mr. Peter Tyroller forms part of the Notice conveningthe 68th Annual General Meeting of the Company.

9.2 Changes in the Board and Key Managerial Personnel 9.2.1 Board ofDirectors

Mr. V.K. Viswanathan resigned as Chairman & NonExecutive Directorof the Company with effect from August 23 2019 due to succession planning. The Boardplaces on record its sincere appreciation for the valuable guidance provided by Mr.Viswanathan during his tenure as Chairman & Non-Executive Director of the Company.

The Board of Directors on recommendation of the Nomination &Remuneration Committee and subject to the approval of the shareholders appointed Dr.Bernhard Straub as an Additional Director designated as NonExecutive Director &Chairman of the Company with effect from August 24 2019.

The existing tenure of Mr. Soumitra Bhattacharya as a Managing Directorof the Company expires on June 30 2020. On recommendation of the Nomination &Remuneration Committee the Board of Directors at their meeting held on February 052020 re-appointed Mr. Soumitra Bhattacharya as Managing Director for a period of twoyears with effect from July 01 2020 till June 30 2022 subject to the approval of theshareholders.

At their meeting held on November 06 2019 the Board of Directorsre-designated Mr. Jan-Oliver Roehrl as a Joint Managing Director with effect from January01 2020 till December 31 2020.

Mr. S.C. Srinivasan ceased to be an Alternate Director to Mr. PeterTyroller with effect from December 31 2019.

On recommendation of the Nomination & Remuneration Committee theBoard of Directors at their meeting held on November 06 2019 appointed Mr. Srinivasanas an Additional Director designated as an Executive Director with effect from January 012020 till June 30 2021 subject to the approval of the shareholders.

The Board of Directors on recommendation of the Nomination &Remuneration Committee and subject to the approval of the shareholders appointed Mr.Sandeep Nelamangala as an Alternate Director to Mr. Peter Tyroller designated as aWhole-time Director with effect from January 01 2020 till December 31 2022.

The Company has received notices from Members under section 160 of theCompanies Act 2013 proposing candidatures of Dr. Bernhard Straub Mr. S.C. Srinivasanand Mr. Sandeep Nelamangala for the office of Director(s) of the Company at theforthcoming Annual General Meeting.

In addition to re-appointment of Mr. Peter Tyroller who retires byrotation the following resolutions will form part of the Notice convening the 68th AnnualGeneral Meeting of the Company:

i. Appointment of Dr. Bernhard Straub as a NonExecutive Director of theCompany with effect from August 24 2019;

ii. Re-appointment of Mr. Soumitra Bhattacharya as Managing Directorwith effect from July 01 2020;

iii. Re-designation of Mr. Jan-Oliver Roehrl as a Joint ManagingDirector with effect from January 01 2020;

iv. Appointment of Mr. S.C. Srinivasan as an Executive Director witheffect from January 01 2020; and

v. Appointment of Mr. Sandeep Nelamangala as an Alternate Directordesignated as a Whole-time Director with effect from January 01 2020

Brief profiles of Dr. Bernhard Straub Mr. Soumitra Bhattacharya Mr.Jan-Oliver Roehrl Mr. S.C. Srinivasan and Mr. Sandeep Nelamangala form part of the Noticeconvening the 68th Annual General Meeting of the Company.

9.2.2 Key Managerial Personnel

As on the date of this report the following persons have beendesignated as the Key Managerial Personnel of the Company pursuant to Section 2 (51) and203 of the Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014:

• Mr. Soumitra Bhattacharya - Managing Director

• Mr. Jan-Oliver Roehrl - Joint Managing Director

• Mr. S.C. Srinivasan - Executive Director & Chief FinancialOfficer

• Mr. Sandeep Nelamangala - Alternate Director designated as aWhole-time Director

• Mr. Rajesh Parte - Company Secretary & Compliance Officer

9.3 Independent Directors

All the Independent Directors have given a declaration to the Companythat they meet the criteria of independence prescribed under section 149 (6) of theCompanies Act 2013 (the Act) and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (Listing Regulations).

The Board is of the opinion that all the Independent Directors meet thecriteria regarding integrity expertise experience and proficiency.

9.3.1. Familiarization Programme for IndependentDirectors

For details of programmes of familiarization of the IndependentDirectors with the Company their roles rights responsibilities in the Company natureof industry in which the Company operates business model of the Company and number ofhours please refer to the Corporate Governance Report.

9.4 Performance Evaluation of Directors

In line with the provisions of the Act and the Listing Regulations theNomination & Remuneration Committee and the Board have carried out an annualperformance evaluation of its own performance Committees and individual Directors.

For details of the performance evaluation including evaluation criteriafor Independent Directors please refer to the Corporate Governance Report.

10. Board Meetings

During the year under review six meetings of the Board of Directorswere held. The particulars of the meetings and attendance thereat are mentioned in theCorporate Governance Report.

11. Corporate Social Responsibility (CSR) Committee and Initiatives

Consequent to changes in the Board of Directors during the year underreview the CSR Committee was re-constituted by inducting Mr. Jan-Oliver Roehrl as amember. As on the date of this report the CSR Committee comprises of Mr. Bhaskar Bhat(Independent Director) as its Chairman and Ms. Hema Ravichandar (Independent Director)Mr. S.V. Ranganath (Independent Director) Dr. Gopichand Katragadda (IndependentDirector) Mr. Soumitra Bhattacharya (Managing

Director) & Mr. Jan-Oliver Roehrl (Joint Managing Director) as itsmembers.

The CSR Committee oversees the Company's CSR initiatives.

The Board of Directors have adopted a CSR policy in line with theprovisions of the Companies Act 2013.

The CSR policy inter-alia deals with the objectives of theCompany's CSR initiatives its guiding principles thrust areas responsibilities ofthe CSR Committee implementation plan and reporting framework.

Some of the key CSR initiatives during the year under review includethe following:

New projects:

• Bosch has developed a model ITI in Public- Private Partnership(PPP) with Government of Karnataka and Government of India. This is operational and otherindustry partners are being supported to replicate the model.

• A Model Plumbing Training center has been developed in Pune andhas completed its first batch of training high-quality plumbers.

• Inauguration of the rejuvenated Shanumangala Lake in Bidadi.

• NGO Capacity Building Workshops were held in Bengaluru andNashik.

• Contribution to PM CARES Fund.

• COVID-19 combating activities and support especially to migrantworkers.

Sustainability and scalability of existing projects:

• BRIDGE: 30000 less-educated youth trained and placed through466 BRIDGE Centers across India (since 2013)

• 29 RO Plants in Jaipur (since 2009)

• 17 Check Dams in Nashik (since 2014)

• Bosch-Akshaya Patra Kitchen now reaches out to more than 25000children and serves hot and nutritious meals in and around Jigani and Anekal Bengaluru

• Child Health Development Program intervention: supports morethan 70000 children in 300 Government schools around Bosch plants every year

Collaboration and Partnerships:

Government schools around Bosch plants every year

Industry-Academia Collaboration model for Skill Development has beendeveloped by Bosch and is being pilot-tested with few Universities

Government schools around Bosch plants every year

In 2019 Bosch scaled up BRIDGE through the Government fundedschemes/centres providing value-added support on Training the Trainers and Job PlacementAssistance to the skilled youth

During the year Bosch conducted 1 Batch of ‘Train theTrainer' / ‘Training of Master Trainer' with Management &Entrepreneurship and Professional Skills Council (MEPSC) under a joint certificationagreement. 13 Master Trainers were trained through this program. Besides 4 batches for‘Office Assistant' were completed with MEPSC joint certification for 57 BRIDGEstudents at Vishakhapatnam.

Details of the CSR Committee meetings and attendance thereat forms apart of the Corporate Governance Report.

Annual Report on Corporate Social Responsibility Activities of theCompany is enclosed as Annexure ‘B' to this Report.

12. Audit Committee

Consequent to changes in the Board of Directors during the year underreview the Audit Committee was re-constituted by appointing Dr. Bernhard Straub(Non-Executive Director & Chairman of the Board) as a member. As on the date of thisreport the Audit Committee comprises of Mr. S.V. Ranganath (Independent Director) as itsChairman and Dr. Bernhard Straub Mr. Bernhard Steinruecke (Independent Director) Mr.Bhaskar Bhat (Independent Director) & Ms. Hema Ravichandar (Independent Director) asits members.

The Members of the Committee possess Accounting and FinancialManagement knowledge. The Company Secretary of the Company is the Secretary of theCommittee.

During the year under review the Board accepted all therecommendations of the Audit Committee.

Details of the roles and responsibilities particulars of meetings andattendance thereat are mentioned in the Corporate Governance Report.

13. Subsidiary Associate and Joint Venture Companies 13.1Subsidiary Company

MICO Trading Private Limited (MTPL)

The Company has a subsidiary viz. MICO Trading Private Limited. Thefinancial performance of MTPL is as under:-

[TINR]

Particulars FY 2019-20 FY 2018-19
Total Revenue 69 67
Profit/(Loss) before tax (26) 6

 

Particulars FY 2019-20 FY 2018-19
Profit/(Loss) after tax (26) 6

The Directors' Report along with the Audited Statement of Accountsof MTPL have been uploaded on the website of the Company at www.bosch.in under the“Shareholder Information” section.

13.2 Associate Company

Newtech Filter India Private Limited (NTFI)

The Company has one Associate Company viz. Newtech Filter IndiaPrivate Limited. The Company holds 25 percent and Robert Bosch Investment Nederland B.V.holds 75 percent of the paid-up share capital of NTFI.

NTFI is the manufacturer of automotive filters selling their productsto the Company which further sells the same to end customers.

The financial performance of NTFI is as under:

Particulars 2019-20 2018-19 % Growth
Turnover 568 673 -19%
Profit/(l_oss) before tax 15 16 0%
PBT % on Turnover 3 4 0%

13.3 Joint Venture Company

PreBo Automotive Private Limited

PreBo Automotive Private Limited (PreBo) was incorporated on May 082019 with its registered office at Bengaluru for the purpose of carrying out the businessof manufacturing/assembly and supply of mechanical and electromechanical components andassemblies for automobile and non-automobile industry.

The financial performance of PreBo is as under:

Particulars FY 2019-20
Total Revenue 51011
Profit/(Loss) before tax (19908)
Profit/(Loss) after tax (19908)

A separate statement containing the salient features of the financialstatement of the aforementioned Subsidiary Associate and Joint Venture is enclosed asAnnexure ‘C' to this Report.

14. Remuneration Policy

The Nomination and Remuneration Policy inter-alia provides forcriteria and qualifications for appointment of Director Key Managerial Personnel andSenior Management Board diversity remuneration to Directors Key Managerial Personneletc. The policy can be accessed at the following link: https://www.bosch.in/ media/ourcompany/shareholder information/2015/ nomination and remuneration policy.pdf

15. Particulars of Employees

Disclosures pertaining to remuneration of employees and other detailsas required under Section 197(12) of the Act and rules framed thereunder is enclosed asAnnexure ‘D' to this Report.

The information in respect of employees of the Company requiredpursuant to Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 as amended will be provided on request. In terms of Section 136 of the Actthe Reports and Accounts are being sent to the Members and others entitled theretoexcluding the aforementioned particulars of employees which is available for inspectionby the Members at the Registered Office of the Company during business hours on anyworking day. Any member desirous of obtaining a copy of the same may write to the Companyat investor@in.bosch.com.

16. Corporate Governance

A report on Corporate Governance in terms of the requirements of theListing Regulations and a certificate from the Practicing Company Secretary forms part ofthis Annual Report.

17. Risk Management

The Company has a well-defined Risk Management Policy. The Policy hasbeen developed after taking cognizance of the relevant statutory guidelines BoschGuidelines on risk management empirical evidences stakeholders' feedback forecastand expert judgment.

The Policy inter-alia provides for the following:

Risk Management framework;

(i) In-built pro-active processes within the Risk Management Manual forreporting evaluating and resolving risks;

(ii) Identifying and assessing risks associated with various businessdecisions before they materialize. Take informed decisions at all levels of theorganization in line with the Company's risk appetite;

(iii) Ensuring protection of shareholders' stake by establishingan integrated Risk Management Framework for identifying assessing mitigatingmonitoring evaluating and reporting all risks;

(iv) Strengthening Risk Management through constant learning andimprovement;

(v) Adoption and implementation of risk mitigation measures at everylevel in order to achieve longterm goals effectively and sustainably;

(vi) Regularly review Risk Tolerance levels of the Company as they mayvary with change in the Company's strategy; and

(vii) Ensuring sustainable business growth with stability.

In the opinion of the Board there are no risks that may threaten theexistence of the Company.

18. Whistle Blower Policy/Vigil Mechanism

The Company has a Whistle Blower Policy which includes vigil mechanismfor dealing with instances of fraud and mismanagement.

Details of the Whistle Blower Policy have been mentioned in theCorporate Governance Report. The Whistle Blower Policy has also been uploaded on thewebsite of the Company and can be accessed at the following link:https://www.bosch.in/media/our company/shareholder information/2018/whistle blowerpolicy-3.pdf

19. Business Responsibility Report

In terms of the requirements of Regulation 34 (2)

(f) of the Listing Regulations a report on Business Responsibility inthe prescribed format forms a part of this Annual Report.

20. Related Party Transactions

The Audit Committee accords omnibus approval for Related PartyTransactions which are in ordinary course of business foreseen repetitive in nature andsatisfy the arm's length principles. The Audit Committee reviews on a quarterlybasis the details of the Related Party Transactions entered pursuant to theaforementioned omnibus approval. Additionally the Company obtains a half yearlycertificate from a Chartered Accountant in Practice confirming that the related partytransactions during the said period were in ordinary course of business repetitive innature and satisfy the arm's length principles.

The details of Related Party Transactions under Section 188(1) of theAct required to be disclosed under Form AOC - 2 pursuant to Section 134(3) of the Act isenclosed as Annexure ‘E' to this Report.

The Company has framed a Policy for determining materiality of RelatedParty Transactions and dealing with Related Party Transactions. The said Policy is hostedon the website of the Company and can be accessed at the following link:https://www.bosch.in/ media/our company/shareholder information/2020/ related partytransaction policy.pdf

21. Energy Conservation Technology Absorption Foreign ExchangeEarnings & Outgo

The report in respect of conservation of energy technology absorptionforeign exchange earnings and outgo as required under Section 134 of the Act read withRule 8 of Companies (Accounts) Rules 2014 is enclosed as Annexure ‘F' to thisReport.

22. Auditors

22.1 Statutory Auditor

The shareholders at the 65th Annual General Meeting of the Company heldon September 01 2017 appointed M/s. Deloitte Haskins & Sells LLP (Firm RegistrationNo. 117366W/W-100018) as Statutory Auditors of the Company for a period of 5 years untilthe conclusion of the 70th Annual General Meeting.

The Auditors' Report on the Standalone as well as ConsolidatedFinancial Statements for the Financial Year 2019-20 is unmodified i.e. it does not containany qualification reservation or adverse remark.

22.2 Cost Audit & Cost Auditors

The Board of Directors on recommendation of the Audit Committeeappointed M/s. Rao Murthy & Associates Cost Accountants Bengaluru (RegistrationNo.000065) as Cost Auditors to audit the cost accounts of the Company for the FinancialYear 2020-21 in terms of the provisions of Section 148 of the Companies Act 2013.

The Audit Committee has also received a Certificate from the CostAuditors certifying their independence and arm's length relationship with theCompany.

In terms of the requirements of the said section the members arerequired to ratify remuneration payable to the Cost Auditors. Accordingly resolutionratifying the remuneration payable to M/s. Rao Murthy & Associates will form a partof the Notice convening the 68th Annual General Meeting.

As per Section 148 (1) of the Companies Act 2013 the Company isrequired to maintain Cost Records. Accordingly Cost Records and Cost Accounts are dulymaintained by the Company.

22.3 Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed Mr. Sachin Bhagwat Practicing Company Secretary (Certificate ofPractice No. 6029) to undertake Secretarial Audit of the Company for the Financial Year2019-20. The Report of the Secretarial Auditor is enclosed as Annexure ‘G' tothis Report.

The Secretarial Auditor was informed that during the FY 2019-20 tradingin 2 (two) equity shares of the Company by a designated person during the window closureperiod from April 03 2019 to May 23 2019 is yet to be reported to the Securities andExchange Board of India as mandated by the Company's Code of Conduct to regulatemonitor and report trading by insiders.

The aforesaid violation was informed to the Audit Committee and theBoard at their meetings held on May 21 and 22 2020 respectively and shall also beinformed to Securities and Exchange Board of India.

22.4 Reporting of Fraud

During the year under review the Statutory Auditors Cost Auditors andSecretarial Auditor have not reported any instances of fraud committed in the Company byits Officers or Employees to the Audit Committee under Section 143 (12) of the Actdetails of which needs to be mentioned in this Report.

23. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors report that:

(i) in the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;

(ii) they have selected and consistently applied accounting policiesand have made judgements and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at the end of the financial yearand the profit of the Company for that period;

(iii) proper and sufficient care has been taken for maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a ‘goingconcern' basis;

(v) proper internal financial controls are in place and that suchcontrols are adequate and are operating effectively; and

(vi) proper systems to ensure compliance with the provisions of allapplicable laws were in place and that such systems were adequate and operatingeffectively.

24. Details of Loans Guarantees or Investments

Particulars of loans given investment made or guarantee given orsecurity provided and the purpose for which the loan or guarantee or security is proposedto be utilized by the recipient of the loan or guarantee or security are provided in NoteNos. 6 & 7 to the Financial Statements.

The particulars of loans/advances etc. required to be disclosed inthe Annual Accounts of the Company pursuant to Para A of Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 are furnished separately.

25. Deposits

During the year under review there were no deposits accepted by theCompany as per the provisions of Companies Act 2013.

26. Material Changes and Commitments

There were no material changes and commitments between the end of theyear under review and the date of this report affecting the financial position of theCompany.

27. Extract of Annual Return

The Extract of Annual Return as provided under Section 92(3) of the Actand as prescribed in Form MGT-9 under the Companies (Management and Administration) Rules2014 is enclosed as Annexure ‘H' to this Report. In terms of the requirements ofSection 134(3)(a) of the Act the complete Annual Return is available on theCompany's website: www.bosch.in

28. Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

The company has complied with provisions relating to the constitutionof Internal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. The information as regards the numberof cases filed and their disposal under this Act is given in the Business ResponsibilityReport.

29. Secretarial Standards

The applicable Secretarial Standards i.e. SS - 1 and SS - 2 relatingto “Meeting of the Board of Directors” and “General Meetings”respectively have been duly complied by the Company.

30. Cautionary Statement

Statements in the Board's Report and the Management Discussion& Analysis describing the Company's objective expectations or forecasts may beforward looking within the meaning of applicable laws and regulations. Actual results maydiffer materially from those expressed in the statement.

32. General

Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions/events on these items duringthe year under review:

i. Issue of Equity Shares with differential rights as to Dividendvoting or otherwise.

ii. Issue of Shares (including Sweat Equity Shares) to employees of theCompany under any scheme.

iii. Significant or material orders passed by the Regulators or Courtsor Tribunals which impact the going concern status and the Company's operations infuture.

iv. Voting rights which are not directly exercised by the employees inrespect of Shares for the subscription/purchase of which loan was given by the Company (asthere is no scheme pursuant to which such persons can beneficially hold shares asenvisaged under Section 67 (3) (c) of the Act).

33. Acknowledgements

The Directors express their gratitude to the various Central and StateGovernment Departments for their continued cooperation extended to the Company. TheDirectors also thank all customers dealers suppliers banks members and businesspartners for the excellent support received from them. The Directors would also like toacknowledge the exceptional contribution and commitment of the employees of the Companyduring the year under review.

For and on behalf of the Board of Directors
Soumitra Bhattacharya Jan-Oliver Rohrl
DIN: 02783243 DIN:07706011
Managing Director Joint Managing Director
Date: May 22 2020
Place: Bengaluru

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