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Bosch Ltd.

BSE: 500530 Sector: Auto
NSE: BOSCHLTD ISIN Code: INE323A01026
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VOLUME 239
52-Week high 19422.55
52-Week low 12698.80
P/E 34.53
Mkt Cap.(Rs cr) 43,163
Buy Price 14615.30
Buy Qty 1.00
Sell Price 14642.20
Sell Qty 1.00
OPEN 14700.00
CLOSE 14561.25
VOLUME 239
52-Week high 19422.55
52-Week low 12698.80
P/E 34.53
Mkt Cap.(Rs cr) 43,163
Buy Price 14615.30
Buy Qty 1.00
Sell Price 14642.20
Sell Qty 1.00

Bosch Ltd. (BOSCHLTD) - Director Report

Company director report

The Directors have pleasure in presenting the SIXTY SEVENTH Annual Report together withthe Audited Financial Statements for the Financial Year ended March 31 2019.

1. Financial Results

The following are the financial highlights for the Financial Year 2018-19:

[Mio INR]

Particulars 2018-19 2017-18
Sale of Products (including excise duty) 117818 113929
Of which Export Sales 8999 10346
Profit Before Tax 23410 20406
Provision for tax 7430 6698
Profit After Tax 15980 13708
Other Comprehensive income (Net of tax) 997 1415
Total Comprehensive income 16977 15123

The Company does not propose to transfer any amount to its Reserves for the year underreview.

2. Dividend

Pursuant to the requirements of regulation 43A of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has adopted a DividendDistribution Policy. This Policy is uploaded on website of the Company and can be accessedat https://www.bosch.in/media/our company/shareholder information/2017 2/dividenddistribution policy 2017.pdf. This Policy is enclosed as Annexure ‘A' (Page No. 59)to this Report.

In line with the Dividend Distribution Policy the Board has recommended a Dividend ofINR 105 per share for the Financial Year 2018-19 aggregating to Mio INR 3733.39including Dividend Distribution Tax. The dividend payout ratio is approximately 23.4percent. The Dividend is subject to the approval of the shareholders at the forthcomingAnnual General Meeting.

3. Management Discussion and Analysis

In order to avoid duplication between the Directors' Report and Management Discussionand Analysis a composite summary of the Company's performance and its various businesssegments is given below:

3.1 Economic Scenario

3.1.1 Global Economy

The global economy is expected to slow down to

3.3 percent in 2019 from 3.6 percent in 2018 as per

IMF estimates. The downward revision is primarily on account of the negative effects oftariff increases enacted in the United States and China.

Risks to the global GDP tilt towards the downside on trade tensions and risks in theEurozone. The effect of the same has been that central banks across the world have adoptedan easing policy as growth concerns. However given the stretched balance sheets of manycentral banks there is limited bandwidth for the same.

3.1.2 Indian Economy

Though 2018-19 started out on a promising note there was a dip seen towards the end.Quarterly GDP growth which was above 8 percent for Q1 201819 dipped to 5.8 percent for Q42018-19 primarily attributed to the liquidity crisis in the second half of the financialyear.

While the industrial production and credit growth moderated Government capitalexpenditure continued to hold up the economy. At the same time since inflation was undercontrol the focus of the RBI has changed to accommodate growth. But delay in shortfall ofmonsoon is likely to negatively effect the economy.

Towards the end of 2018-19 we saw liquidity constrained on account of the NBFC(Non-Banking Financial Company) crisis and rising crude oil prices. This has affectedautomotive sales among other things. Though banking liquidity shows signs of improvementit remains to be seen if this crisis will continue for a few more quarters.

On the other hand one key positive is the political stability after a clear mandate inthe elections and signs that the NPA situation in banks is improving. This could mean thatbanks would be in a better position to facilitate credit required by industry as ReserveBank of India has also taken additional steps to improve liquidity.

The key factors to watch out for would be reforms by the Government chances of anygeo-political risks in the region and heightened chances of a global slow down.

3.2 industry Structure and Development Automotive:

Heavy Commercial Vehicles (HCVs) production posted a strong growth of 28 percent due totenders and contracts on road and infrastructure projects. Other projects such as buildingof irrigation and affordable housing contributed to the growth of domestic market.Additionally there has been strong acceptance of SCR technology aiding the growth.

The Light Commercial Vehicles (LCVs) market grew by 22 percent due to increased thrustin FMCG ecommerce sales and agriculture output. The current trend of warehouseconsolidation has resulted in a segment shift for >2T<3.5T segment the demand forcity trucking drives the growth of LCV.

During the year under review Passenger Car production witnessed a muted growth.Domestic market witnessed new launches especially in the Compact UV and premium hatchbacksegment.

There were some market challenges such as higher insurance cost higher fuel prices andhigher interest rates which has resulted in low growth.

Three-wheelers production increased by 24 percent due to higher demand driven by grantof additional permits in Delhi Maharashtra Kerala and Karnataka. Strong export demandsfrom African and SAARC countries (except Sri Lanka) for last mile connectivity has driventhree-wheeler market with export contribution of 45 percent.

The Tractor market grew by 14 percent driven by a good monsoon farm loan waiver goodMSP (minimum selling price) for crops and positive farmer sentiments. The trend is movingtowards farm mechanization and tractor sharing.

Two-wheeler market witnessed a growth of 6 percent during the year under review mainlydue to growing export sales demands. Various OEM campaigns throughout the year have strucka good chord with the consumers driving the sales of two wheelers in India.

The Automotive Aftermarket industry grew by ~7 percent during year under review drivenpredominantly by Heavy Commercial Vehicle Light Commercial Vehicle and Three-wheelersegments.

Vehicle Production Growth Rates:

Production

+/(-) PY

Segment FY 1314 FY 1415 FY 1516 FY 1617 FY 1718 FY 18 -19
HCV -20% 26% 23% 2% 3% 28%
LCV -14% -10% 3% 6% 18% 22%
Car + UV -4% 6% 6% 11% 6% 0%
3 Wheeler -1% 14% -2% -16% 31% 24%

 

Production

+/(-) PY

Segment FY 1314 FY 1415 FY 1516 FY 1617 FY 1718 FY 18 -19
Tractor 22% -13% -8% 21% 14% 14%
2 Wheeler 7% 10% 2% 6% 16% 6%
TOTAL -2% 5% 2% 6% 15% 7%

Non-Automotive:

The Indian Professional Tools market is estimated to be around INR 18 billion by valuein the year 2018 and is expected to grow at 7 percent. This is in line with the estimatedgrowth of the construction sector which is its biggest customer. The market trend isshifting towards the mid-price category indicating that the users are steadily upgradingfrom hand tools to power tools.

The Building technology (Security technology) market in India is growing at 5 percentdriven by the need to secure Critical Infrastructure Government Buildings Public andPrivate Spaces. The Technology trends in this space are evolution and maturity of IPConvergence analytics and seamless integration. The market is also preparing itself todeal with the challenging threats and changes driven by fast changing hardware andsoftware. The Industry is also maturing driven by the renewed scope in Regulation andBottoms-up desire to feel safe and secure.

The solar energy sector in India stabilized since the start of the year under reviewwith solar PV panel prices settling and clarity in applicable GST rates coming in. As ofDecember 2018 the total installed capacity stood at 27.9 GW making India the thirdlargest solar market globally. Of the total installed capacity rooftop solar capacityaccounted for 3.3 GW indicating a strong 66 percent growth over the previous year. Theenergy efficiency market continued to grow with government-led initiatives like thePartial Risk Sharing Facility for Energy Efficiency and Perform-Achieve-Trade scheme.

With India's commitments to the Paris Climate Agreement the energy efficiency marketis expected to pick up further pace in the current financial year and drive adoption inenergy-intensive industrial and commercial sectors. The solar energy market is anticipatedto grow further and achieve the government target of 10 GW capacity addition for the yearwith 2.5 GW capacity addition coming from rooftop solar.

3.3. Business and segment wise performance

The overall performance of the Company witnessed a growth of 4.9 percent. Mobilitybusiness (Automotive) posted a growth of 2.8 percent while the Business beyond mobility(Others) grew by 17.9 percent. Domestic mobility business witnessed an increase of

3.4 percent mainly driven by Powertrain Solutions with increased demand fromCommercial Vehicle segment due to infrastructural projects growth in FMCG and e-commerceand demand in 3-Wheeler segment towards last mile connectivity solutions.

As the Company predominantly operates in manufacturing and trading of mobilitysolutions this constituted 84.8 percent of total sales for the Financial Year 2018-19.The Business beyond mobility comprising of Industrial Technology Consumer Goods andEnergy and Building Technology had a share of

15.2 percent. Hence the operating segment consists of "Mobility Business"(Automotive Products) and "Business beyond mobility" (Others).

3.3.1 Operating Segment Mobility Business:

Powertrain Solutions

The successful merger of the former Diesel Systems and Gasoline Systems in early 2018has given rise to Powertrain Solutions with the aim to develop and provide unmatchedsolutions to Automobile industry regardless of the energy source. This also helped inbringing synergy among two divisions and helped in standardization of processes anddeployment of resources in a more productive manner.

The Powertrain Systems division offers an extensive range of energy efficient eco -friendly fuel injection systems for applications ranging from passenger cars and all kindsof commercial vehicles and agricultural equipment to large - scale industrial power -generation units. It focuses primarily on the common- rail system which comprises of ahigh - pressure injection pump rail and various injectors.

The general market sentiment was buoyant in CV segment due to growth in infrastructureand higher sales in tractor segment driven by good monsoon and new launches havingtargeted products manufactured by the Company led to the growth of Powertrain Systemsbusiness by 2.4 percent over the previous year. In future the growing working populationand expanding middle class will remain the key drivers of growth for automobile industry.

The Distributor pump injection system has seen a considerable reduction postimplementation of BSIV emission norms. The In-line pump system continues to be stable onaccount of demand from Tractor and Genset segments. Bosch is continuously gearing up tohandle the customer requirements for the upcoming BSVI emission norms implementation from01.04.2020.

2 Wheeler business grew by 2.3 percent aided through targeted product launches. Duringthe year the Company has started engineering activities for BSVI projects which are dueto be delivered by late 2019 for smooth transition into new emission norms. With thetailored product portfolio for the Indian market we are providing vehicle manufacturerswith local engineering competence - aiming towards realizing the vision of nearlyemissions - free mobility.

Further during the year we also embarked upon challenging electrification programswhich will be delivered to our customers in 2019. This will open up new stream of businessfor 2 Wheeler products in India.

Automotive Aftermarket

The Automotive Aftermarket division (AA) offers a comprehensive range of spare partsfor passenger cars commercial vehicles and 2-Wheelers for the aftersales-market & OES(Original Equipment - Spares). Automotive Aftermarket Division also offers unit repairsolutions as well as vehicle repair solutions especially for Passenger Cars &2-Wheelers including diagnostic for independent aftermarket. The product portfolioconsists of Bosch manufactured products like Fuel Injection Equipment & Spares SparkPlug Braking 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 largest Independent Aftermarket (IAM)network in India. During the year under review the Division grew by 6.5 percent.

The division released simplified business development policy in 2018 towards customercentric initiative which was very much acknowledged by distributors. The division has morethan 87000 customers in BRO (Bosch Rewards On Orders) a retailer binding program andmore than 55000 customers in Bosch UKU (Ustadon Ke Ustaad) Program a program forIndependent Repair workshop for Commercial Vehicle segment which creates demand for Boschrange of parts across all vehicle segments. The division also worked in transparent anddigital reimbursement of eligible 2nd Trade Level customers (Retailer & Bosch ServicePartners) incentives directly to the customer's account through NEFT.

Business beyond Mobility:

The Business beyond Mobility has grown by 17.9 percent; which was driven predominantlyby Power Tool and Bosch Energy & Building Solution Division in domestic market; whichcontributed to 91.3 percent of total business beyond mobility during the year under reviewas compared to 83.4 percent during the previous financial year. However export sales oftotal business beyond mobility decreased by 39.2 percent as compared to previous financialyear.

Industrial Technology - Packaging Technology

The Packaging Technology Division is a provider of packaging solutions for the food andconfectionery industries. The range includes individual machines end-to-end packagingsystem solutions and a comprehensive service portfolio.

Robert Bosch GmbH the holding company vide its press release dated June 29 2018informed that it intends to realign its Packaging Machinery Business (PA). The proposedslump sale of the India business is a pre-requisite to be a part of the globalre-alignment.

The Board of Directors of the Company at their meeting held on May 21 2019 haveapproved the sale of Packaging Business subject to the approval of the shareholders.

PA Business globally is characterized by tough competition and cost pressure. Packagingtechnology is not a core Bosch business. Due to dependence on PA global for technology andIntellectual Properties (IP) local business cannot be run profitably on standalone basis.Packaging division in India operates in a very competitive environment competing withSmall and Medium Enterprise (SMEs) with structural advantages. Even the margins in thisbusiness are very low. Hence it has been thought fit to globally re-align the saidbusiness by seeking a joint venture partner or a buyer for opening up additional growthpotential and enabling further expansion of international presence. The proposedre-alignment would enable the global PA business additional growth opportunities.

The PA Business in India ("PA-IN") constitutes approximately 1.4 percent ofthe total business of the Company. The sale of PA-IN will allow the Company to sharpen itsfocus on transformation of the Bosch Group and its future digitalization strategyincluding the internet of things and to pool its resources accordingly. The sale of PA-INbusiness may enable the Company to increase the overall profit margin.

Consumer Goods - Power Tools The Power Tools business comprising corded and cordlesspower tools spares accessories digital measuring tools and high pressure washerswitnessed a growth of 13.8 percent.

The Division achieved 100 percent growth in terms of Channel expansion to Tier 3 andTier 4 markets.

It aims at reducing the distance to its users and will continue to focus on improvingtheir lives by providing affordable solutions. Its focus on the loyalty program ande-commerce channels for business would also continue to be essential contributors to theoverall business.

Energy and Building Technology (Building Technology Bosch Energy & BuildingSolutions and Thermo-technology)

Building Technology (Security Technology)

The Building Technology division manufactures innovative products and solutions in thefield of security safety and communications primarily for infrastructure and commercialapplications. The portfolio includes video-surveillance intrusion- detectionfire-detection public address and voice- alarm systems access-control buildingmanagement systems professional audio and conference systems.

The business achieved a growth of 8.8 percent over the previous year driven by ordersin the verticals of Transportation Government Oil and Gas. Futuristic products like thenew high Mega-Pixel Cameras Professional Audio speakers and Amplifiers and localizedConference Systems that were introduced were well received. During the year under reviewthe exports continued to increase due to rise in demand of Fire Alarm Systems from SAARCcustomers.

Bosch Energy & Building Solutions

The division implements customized energy solutions in the solar energy and energyefficiency space for commercial and industrial clients for reduction of energyconsumption costs and carbon footprint.

The division achieved substantial growth of 63.6 percent over the previous year due totailwinds from stable market conditions and resumption in demand compared to the previousyear combined with 2 large solar project orders. The year under review saw projectcompletions for key clients (like Honda Motorcycle and Scooter India BangaloreInternational Airport Bagmane Tech Park Nilons' Enterprises and Mysore Polymers &Rubber Products) for solar energy and energy efficiency solutions.

In the current fiscal year the division is focusing on consolidating the solar energybusiness with implementations for captive power consumers and scaling up the energyefficiency business with deeper penetration of its established solutions in focus customersectors.

Thermo-technology

At the meeting of the Board of Directors held on May 21 2019 the Board has decided toclose the "Thermo-technology Business".

This business was established in 2011 and has not been profitable since the beginningin India. The overall revenue from this business is small and not material. Consideringthe business competitiveness and market attractiveness the Company does not find thisbusiness viable. Overall it is a highly fragmented market with very high competition fromunorganized players. The Company will continue to provide spare parts and service forThermo-technology Business offerings for the next 5 years.

3.3.2 Revenue by geographical area

The export sales of the Company decreased to 7.6 percent to the total sales for theyear under review as compared to 9.2 percent during the previous financial year. TheCompany's exports bulk of which were to Germany China Turkey Brazil Bangladesh andUAE decreased by ~12.0 percent as compared to previous year majorly in Packaging DivisionPowertrain Solutions Building Technology and Thermo Technology Divisions.

3.4 Financial Performance and Condition Sale of products

Sale of products grew by 5.1 percent over previous year on a comparable basis and stoodat Mio INR 117818. The increase is attributable to better sales volumes in PowertrainSolutions division consisting of Diesel and Gasoline powertrain products.

Sale of services

Sale of services is marginally decreased by 1.7 percent over previous year mainly dueto deferral of revenues as per Ind AS 115 - "Revenue from contracts withcustomers".

Other operating revenue

Other operating revenue stood at Mio INR 2120 increased by 0.6 percent over theprevious year.

Other income

Other income which mainly comprises of mark-to- market gains profit on sale ofmarketable securities dividend and interest income increased by 16.3 percent over theprevious year. Income from net gain on financial assets measured at Fair Value throughProfit and Loss (FVTPL) was Mio INR 3093 for the year under review as against Mio INR2185 in previous year.

Income from interest on bank and inter-company deposits increased by 6.2 percent due toimproved interest rates yielding higher returns.

Cost of materials consumed

The cost of materials consumed as a percentage of revenue increased from 53.9 percentto 55.3 percent during the year under review. The increase is mainly driven by commodityprice and foreign exchange impact offset by various cost reduction measures undertaken bythe across value chain including with suppliers.

Personnel cost

Personnel cost as a percentage of revenue decreased from 11.6 percent to 11.2 percentduring the year under review. This is attributed to continuous productivity improvementmeasures and reduced depth of production of new generation products.

The Company continues to focus on rationalizing its workforce based on its businessneeds in a fair manner while sustaining productivity and competence.

Depreciation and amortization

The depreciation charge for the year under review was Mio INR 4045 as against Mio INR4672 during the previous year ended March 31 2018. The higher depreciation in previousyear is attributable to new investments for expansion of new generation products atfacilities situated in Bidadi (Karnataka) and Nashik (Maharashtra).

Provision for Tax

Tax Expense represents a net charge of Mio INR 7430 in the year under review ascompared to Mio INR 6698 in the previous year. The effective tax rate for the year underreview was 31.7 percent as compared to 32.8 percent in the previous year due to tax refundrelating to earlier years.

Profit After Tax (PAT)

Profit after tax increased by 16.6 percent to Mio INR 15980 in the period under reviewfrom Mio INR 13708 in previous financial year.

Other Comprehensive Income

The investment in equity securities is classified as financial assets through othercomprehensive income as per the requirements of Ind AS 109. The changes in fair value ofequity securities is recognized under other comprehensive income. Accordingly the impactof Mio INR 997 (net of taxes) during the year under review is mainly contributed byincrease in fair value of those investments.

Earnings per Share (EPS)

EPS (basic and diluted) of the Company for Financial Year 2018-19 was INR 525 per shareas against INR 449 in FY 2017-18.

Share capital

As on March 31 2019 the Authorized Share Capital comprises of 38051460 EquityShares of INR 10 each. The issued subscribed and paid-up capital is Mio INR 294.94divided into 29493640 equity shares of INR 10 each. During the year under review theCompany had a buyback of 1027100 equity shares of INR 10 each.

Reserves & Surplus

Reserves & Surplus as on March 31 2019 stood at Mio INR 82917 which includesretained profits of Mio INR 82491. During the year under review Mio

INR 21569 was utilized for the purpose of buyback of equity shares.

Other Reserve

Other Reserve increased from Mio INR 7210 to Mio INR 8050 mainly due to change in thefair value of equity investments valued in line with Ind AS.

Shareholders' fund

The total Shareholders' fund decreased to Mio INR 91262 as on March 31 2019 from MioINR 99813 as on March 31 2018 mainly due to utilization of general reserves for thepurpose of buyback during the year under review; which is further offset by profits duringthe year under review.

Fixed assets - capital expenditure

The gross fixed asset value (including Capital Work-InProgress) as on March 31 2019was Mio INR 33269 compared to Mio INR 27629 as on March 31 2018.

The Company made capital investments of Mio INR 5975 during the year under review inaddition to Mio INR 4600 invested during previous year. Major investments were madetowards development of Bidadi Phase II and Adugodi Phase II in Karnataka.

Investments

The total investments (excluding investment in property) as on March 31 2019 decreasedto Mio INR 40361 as against Mio INR 52228 as on March 31 2018 mainly for the purposefor funding the buyback of the equity shares during the year under review.

Working capital Inventories

Inventory as on March 31 2019 increased by 17.8 percent to Mio INR 14443 from Mio INR12258 as on March 31 2018 mainly due to lower inwarding from OEMs (Original EquipmentManufacturer) in Automotive segment; as an effect of production cuts in order to liquidatedealer inventory in the last quarter of the year under review.

Trade receivables

Trade receivables as on March 31 2019 decreased to Mio INR 15675 as against Mio INR16156 as on March 31 2018 mainly due to reduction in turnover during the last quarter ofthe year under review. This is further supported by improved collections against overduereceivables in retail market customers of other divisions.

However there is an increase of 4 days in Debtor Turnover Ratio due to delay incollections from export customers (SAARC countries) higher project billings with longcollection period to infrastructure projects from building technology division and Machinebuilding projects in packaging division.

Cash and Bank balances

The total cash and bank balances as on March 31 2019 was Mio INR 12527 (includingcash and cash equivalent of Mio INR 2032) compared to Mio INR 18878 (including cash andcash equivalent of Mio INR 3633) as on March 31 2018.

Key Ratios:
Ratio 2018-19 2017-18
Debtor Turnover Ratio (in days) 49 45
Inventory to Sales Turnover Ratio (in days) 41 39
Interest Coverage Ratio (percent) 1 NA NA
Current Ratio 1.6 1.8
Debt Equity Ratio (percent) 1 NA NA
Operating Profit Margin (percent) 14.3% 13.7%
Net Profit Margin (percent) 13.0% 11.5%
Return On Capital Employed (ROCE) (percent) 18.2% 17.0%
Return On Net Worth (RONW) (percent)2 15.6% 14.8%
Working Capital (No. of days) 72 79
No. of Employees (average) 9410 9517

The Company does not have any interest bearing debts borrowings or long termliabilities.

2RONWincreased due to higher PAT contributed by increase in turnover cost efficiencymeasures and one time Gratuity impact in the previous year

3.5 Human Resource Development and Industrial Relations

Human Resource Development

During the year under review Human Resources (HR) continued its transformationinitiatives in a volatile and uncertain business environment to cater to theorganizational requirements.

The Company has collaborated with the global organization ‘Great Place to Work'in its endeavor to become a great place to work. The objective is to bring about a HighPerformance Culture and Ownership and build a High Trust Culture of collaboration andthereby achieve Organizational Objectives.

The Company continued its efforts to foster and drive younger generation towards futureleadership.

The Company was again recognized at the National Competition for Young Managers 2018conducted by the All India Management Association with the Company bagging the nationallevel award.

The Company through its Integrated Talent Management initiatives continued to enablelearning networking and collaboration by emphasizing on cross entity movement betweendifferent Bosch legal entities enabling holistic development and encouraging integrationacross different entities/locations.

Industrial Relations (Employee Relations)

Industrial Relations in all plants generally remained cordial during the year underreview. Transitioning from ‘Industrial Relations' to ‘Employee Relations' amore focused approach on increased Employee Engagement and increased collaboration betweenvarious plants corporate departments and amongst all level of employees was continued.The Company continues to deal with the said matters in a fair and firm manner in a journeytowards "Fit for Future".

During the year under review increased connect with Government and statutory bodiesEngagement calendar Compliance checklist self-audits and cross audits etc. werecontinued to strengthen Employee Relations.

The Company has received appreciations from its various customers for its bestpractices and approach in Employee relations with a clear focus on engagement and trustbuilding.

3.6 Internal Audit and Internal Financial Controls

The Company has an Internal Audit function. The Internal Audit department provides anappropriate level of assurance on the design and effectiveness of internal controls itscompliance with operating systems and policies of the Company at all locations. Based onthe internal audit report process owners undertake corrective actions in their respectiveareas and thereby strengthen the controls. Significant audit observations and correctivemeasures thereon are presented to the Audit Committee.

The Company has an effective and reliable internal financial control systemcommensurate with the nature of its business size and complexity of its operations.

The internal financial control system provides for well-documented policies andprocedures that are aligned with Bosch global standards and processes adhere to localstatutory requirements for orderly and efficient conduct of business safeguarding ofassets detection and prevention of frauds and errors adequacy and completeness ofaccounting records and timely preparation of reliable financial information. This alsoidentifies opportunities for improvement and ensures that good practices are imbibed inthe processes that develop and strengthen the Internal financial control system andenhances the reliability of the Company's financial statements.

The Audit Committee reviews the internal audit plan adequacy and effectiveness of theinternal control system significant audit observations and monitors the sustainability ofremedial measures. It also reviews functioning of the Whistle Blower mechanism and reviewsthe action taken on the cases reported.

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

3.7 Opportunities and Threats

The Indian economy saw a slowdown in the last quarter of 2018 and first quarter of 2019-due to uncertainty in the market mainly due to the impending general elections coupledwith the liquidity crisis. This resulted in high inventory at the OEMs and dealers. Nowwith a stable pro-reform government back in power pursuing a fiscal consolidation paththe pickup in growth is expected to be gradual. But the overall direction is cleardevelopment being the top priority the opportunities for the fast adoption of technologyin India is certain. Upgradation of infrastructure being the fundamental foundation fordevelopment this is an opportunity for the company's Beyond Mobility divisions dealing indomains like Building Technology and Consumer Goods (Power Tools).

In the mobility scenario the various initiatives of NITI Aayog and Ministry of RoadTransport and Highways e.g. MOVE - the Global Mobility Summit where stakeholders fromacross the sectors of mobility and transportation gathered to co-create a public interestframework to revolutionize transport - shows the importance of Mobility as a topic forIndia.

From the various pronouncements of the government and its agencies it is clear thatreducing the oil bill is of paramount importance and thus electrification in mobility isthe way forward. While we are working closely with OEMs in various concurrent projects todeliver the BSVI mandate electrification also opens up new opportunities and challengesin the mobility space. FAME 2 (Faster Adoption for Manufacturing of Electric and HybridVehicles) has been announced providing incentives for all EVs and promoting EVinfrastructure. Also there are indications that GST for EV will be reduced to 5% from12%. These steps clearly show the impetus given to create a demand for EVs in the country.

Two and three-wheelers will be the early adopters of electrification. This willgradually move towards fleet passenger cars but the Internal Combustion Engine (ICE) willcontinue to be the dominant technology in the remaining segments. Bosch with its focus onenvironment continues research and improvements in diesel technology and applications;and has been able to achieve even lower emissions than what is mandated.

Other key areas of focus emerging from MOVE Summit was Asset Utilization and use ofAnalytics in Mobility.

To cater to these new age businesses we have created agile project houses both onElectrification and Mobility Services to understand the local requirements and use theglobal expertise to provide localized solutions for the Indian market. These projecthouses being a step towards future-proofing of the Company will need time to translate tomature businesses.

3.8 Risks and Concerns

The Company follows a specific well-defined risk management process which isintegrated with its operations for identification categorization and prioritization ofoperational financial and strategic business risks. Across the organization there areteams responsible for the previously mentioned processes who report to the SeniorManagement.

The Risk Management Committee headed by Mr. Soumitra Bhattacharya Managing Directorreviews the effectiveness of the process at regular intervals.

Following are the major risks and mitigation measures:

1. Disruptive norms:

Automotive industry is in the midst of changes like BSVI and Electrification. Theseare considered by the Company as one of the major risk.

(a) Shift to BSVI: The jump from BSIV to BSVI in a short span of about 3 years thepace of change and the short time duration for preparedness are challenging. Shift to BSVIproducts which are largely based on imports in the initial years and have lowreplacement requirements in the Aftermarket may have an adverse financial impact on theCompany. The Company is currently working on customer project acquisitions and measuresare being enforced to minimize the financial impact.

(b) Electrification: There has been a lot of discussion on electrification by variousstakeholders including the Government OEMs and auto component manufacturers. Thetechnological dominance which the Company currently has in the auto component industrymight not be available once electrification has its way into the industry. However theCompany being a global end-to-end solution provider has its own advantage and is workingclosely with some of the top customers in the industry.

2. Competition: The Company operates in a highly competitive environment due to whichthere are risks of pressure on pricing loss of market share due to de-risking from somecustomers judicial changes and increased import content. Spurious parts and cheapimitations continue to put pressure on existing market share primarily for AutomotiveAftermarket and Power Tools divisions.

The Company as a strategy localizes products over a period resulting in reduction ofprice of the products and consequent increase in the market share. Respective businessunit teams undertake a comprehensive competitor analysis periodically to evaluatecompetitors' strategies vis-a-vis our own products and services and define our counterstrategic and marketing plans.

3. Industrial Relations (IR): IR-related risks continue on account of surplus capacityat the Company's Powertrain systems plants and high lead time for wage settlement. Theseinclude possible risks arising from stoppage of production and/or leading to unpredictablecost structure and/or possible lay-off.

The Company adopts more focused continuous action plan for wage settlement offersattractive voluntary retirement schemes Firm and Fair approach for settlement withcontract labour and implement "selected" industry best practices. As continuedprocess in building capability initiative special trainings were conducted on EmployeeRelations and adding value to Front line leadership development in the plant.

4. Heavily auto sector dependent: About 85 percent of the business is dependent on theauto sector. Performance of the Company therefore is dependent on this sector's growth.

5. Economy/Industry: The automotive industry is going through a rough patch currentlydue to various issues like lower demand tight liquidity crunch high fluctuations incustomer demand and in general slowdown due to general elections. Even though most ofthese are likely to be temporary it could impact the Company in short and mid-term.

3.9 Outlook

In the near term the downtrend in the automotive market with high inventory built-upin the pipeline is a definitive threat. With the ongoing slowdown in the market andmultiple manufacturers regulating their production we perceive a very conservativeoutlook of this sector. Though empirical evidence in the past suggests a pre-buy in themarket before implementation of regulatory changes like the BSVI changeover. However inthe current market scenario there is a high uncertainty on a pre-buy. With a definitivedeadline in place for BSVI implementation the OEMs will be looking forward to exhaustingtheir complete inventory and not carrying over inventory of obsolete technology.Furthermore the implementation of safety and emission norms will also lead to increase inthe cost of the vehicle resulting in higher TCO (total cost of ownership). Increase infuel prices rise in third party insurance charges coupled with NBFC financial crisis andlow employment rate would lead to poor market sentiments. Thus FY2019-20 looks to be ofmuted growth at best if not negative.

4. Manufacturing Facilities

4.1 Bengaluru (Karnataka)

The 68 year old Bengaluru plant transforming itself into a lean and agile plant withthe vision statement of ‘We Shape the Future' is now looking beyond at being a marketleader with technology & digitalization as the pillar. The new vision to aid thisstrategy is ‘WE LEAD' which was launched as the direction until 2021. This Plant hasthe manufacturing facility for the 93 year old product ‘A Pump' which is still goingstrong in the tractor and diesel genset segments of Automotive Market & the SingleCylinder PF Pumps. During the year under review the plant achieved a milestone ofmanufacturing its 20th million A-pump & marked the highest sales number of 1.05million in 2018.

The plant has implemented an intensive System Continuous Improvement Process forimproving and sustaining quality and remaining cost competitive. With this as a blueprintthe restructuring of machinery and equipment together with focus on increasing operationalefficiency on the shop floor have made value streams even leaner. Additionally the plantis using low cost automation solutions for process optimization and reduction of manualeffort resulting in better quality and speed in the value chain. With all theserestructuring measures the plant with its men & machines will get shifted to Bidadi(Phase II) by Q2 2019.

4.2 Bidadi (Karnataka)

Being one of the youngest manufacturing plants

Bidadi is progressing towards being a pioneer in I4.0 Solutions & low costautomation solution. House to the common rail pumps high-pressure rails & common railsingle cylinder pumps the strategy is to be a benchmark manufacturer in terms of quality& cost which is driven by the new vision ‘WE LEAD'. Many COBOTS (CollaborativeRobots) in manufacturing aid in simultaneously achieving two targets: significant costreduction & improving quality by eliminating human errors.

The plant also has a ‘Carbon Neutral-2030' strategy to reduce the carbonfootprint. The solar power capacity has been upgraded to 8.7 MWp in the year under review.Apart from which numerous tree plantation and usage of LNG are in place to make the plantgreener.

The plant has commenced lake rejuvenation project in the area adjacent to itsfacilities.

With the manufacturing facilities and people getting shifted from Bangalore plant toBidadi plant by Q2'2019 Bidadi will become the single plant for Powertrain systemproducts in Karnataka.

4.3 Nashik (Maharashtra)

Nashik plant manufactures the Common Rail Injectors (CRI) and components includingnozzles for both common rail and conventional diesel injectors. During the year underreview the plant successfully transferred the production facility of ConventionalInjectors (NHA) to Jaipur plant. Additional capacity was added for CRI product byrelocation of a high volume line from Bosch Turkey plant. Nashik plant celebrated theproduction of 25th million CRI and became the second largest manufacturer of CRI 2-16injectors in the Bosch group globally.

During the year under review the Nashik plant continued its endeavor to use renewablesource of energy. The plant has an overall capacity of 13 MWp of solar energy generation.The plant is the first Bosch plant in India and fifth worldwide to receive ISO 50001:2001certification for Energy Management.

Focusing on behavior based safety reduction of first aid cases and capturing andworking on near miss incidents the plant recorded a "zero accident" year. Theplant was awarded by CII for the Manufacturing excellence practices of Industry 4.0.

4.4 Jaipur (Rajasthan)

The Jaipur plant produces Distributor (VE) Mechanical and Electronic Diesel ControlPumps used in Light and Heavy Commercial Vehicles Sports and Multi-Utility Vehicles andtractors. Relocation of manufacturing of Conventional Injectors from Nashik to Jaipur wassuccessfully completed during the year under review. These are used in both on-highway andoff-highway applications including Light and Heavy Commercial Vehicles LocomotivesTractors and Gensets.

Growth in the domestic LCV and tractor markets resulted in good turnover in spite ofreduction in other OE volumes due to implementation of BSIV Emission Norms with effectfrom April 01 2017.

The plant is the first Bosch plant in India to win the "National SafetyAward" in two categories ‘Accident free year' and ‘Lowest AverageFrequency Rate' from the Government of India in September 2017. The plant also won otherawards including CII Lean Award for lean manufacturing.

4.5 Naganathapura (Karnataka)

The Naganathapura plant produces Spark Plugs a product produced by the Bosch group forover a century.

The year under review witnessed an increase in the turnover mainly due to higher demandfrom OE and Independent Aftermarket segments.

Focusing on improving cost competitiveness productivity improvement projects wereimplemented in addition to safety and quality improvement programs.

During the year under review Machine building division and manufacturing of automotiveservice solutions were relocated from the Bengaluru plant to Naganathapura plant.

4.6 Verna (Goa)

The Verna plant provides a variety of applications and solutions relating to packagingmarket in India and SAARC countries. The products and solutions of the plant also havegood presence in Africa.

During the year under review Verna plant executed many challenging projects madesuccessful product transfers and took big steps in Horizontal Form Fill & Sealproduct line. The plant also introduced new products like SVI 4000WR and BVK 1200 in themarket.

4.7 Gangaikondan (Tamil Nadu)

Situated at Tirunelveli Tamil Nadu with a 6200 sq. meters of built-up area thestate-of-the-art Gangaikondan plant is the Powertrain Solutions plant in India catering tothe needs of growing Gasoline automobile market (both four and two-wheelers) in India.This plant was inaugurated in 2015 and achieved a break-even during the year under review.

The plant mainly produces Powertrain Sensor products Air Management products Fuelsupply Modules Fuel Injection products for Gasoline vehicles. Year on year the plant hasincreased its output by 30 percent and is ready to face the market demands.

4.8 Chennai (Tamil Nadu)

The Power Tools facility admeasuring approximately 8500 sq. meters is located atIndospace Industrial Park Orgadam Tamil Nadu. At present the facility cater mainly tothe Indian and SAARC markets. It primarily manufactures Small Angle grinders Large Anglegrinders Marble cutters Blowers Drills and two-kg Hammers along with their motors. Theplant produces Blowers for the entire global market.

The plant was accredited with Power Tools plant excellence award for the secondconsecutive year as well as best improving plant within the Power Tools internationalnetwork.

5. Information Technology (IT)

The Company is working towards making the IT system robust to support operationalefficiency quick decision making and ensuring quality customer experience.

During the year the Company continued to enhance its IT infrastructure to facilitatebetter internal as well as external communication by introducing various IT tools.

After the smooth rollout of GST last year during the year under review the Companyhas further upgraded its IT systems for centralized tax returns (GSTR1 and GSTR2) apartfrom incorporating changes based on the GST notifications on ongoing basis.

The Company is already using industrial IoT (Internet of Things) and Industry 4.0concepts and now plans to scale up this initiative to improve efficiency and quality.

In order to ensure our competitive edge and leverage market opportunity with emergingbusiness models Digital Transformation initiative was launched. This will lay thrust onvarious digital solutions and technology thereby generating revenue through new businesschannels drive competitiveness through process automation and focus on transformation ofthe workforce from ‘Digital Naive' to ‘Digital Native'.

The Company is providing topmost priority for information security to insulate theCompany and its operations from external threats including cyber attacks. The Company hasput in place comprehensive measures to provide organizational and technical protectionagainst system outages data loss and data manipulation. In expanding our privacy and ITsecurity organization we are equipping ourselves for the growing requirements of theNational Privacy Regulation and EU's General Data Protection Regulation.

The implemented measures include mandatory documentation awareness campaigns and riskbased security audits.

6. Change Initiatives

6.1 Continuous Improvement Process (CIP)

Structured CIP deployment and review by Senior Leadership in 2018 helped in theincrease of number of suggestions per employee by 19 percent and number of Shop Floor CIPs/ Lernstatt's by 12 percent over 2017 leading to CIP savings increase by 40 percent.

For 2019 emphasis has been laid for making CIP as part of Corporate Culture and thesame has been addressed by rolling-out CIP approach from 2019 onwards. This will supportin addressing various important cultural aspects of CIP viz. regular review by Leadershipenabling associates at different levels by means of

trainings and support building the competent pool of CIP Coordinators and recognitionof outstanding contributors.

6.2 Bosch Production System (BPS)

One of the Strategic focus points from the "We are Bosch" statement isefficient processes lean structure high productivity secure and increase in value ofthe Company. To augment Operational excellence

People competency on Lean has been given adequate attention. Technical and CommercialPlant Managers were given insights on Improvable System approach so that Business KPR'scan be achieved on a sustainable basis. "Learn by doing" workshops for Valuestream Managers were conducted at Gemba to bring "Stability in processes". Bootcamps to qualify BPS Assessors and Cross assessments have improved the understanding ofLean concepts. At the same time Learning and Sharing among plants has become the norm. BPSday for RO-IN plant was conducted in Bangalore in May 2018.

All these activities have supported us in moving swiftly up the ladder of Excellence.KPR's on Lead time inventory productivity and delivery performance have improvedsignificantly over the previous year.

Bosch had also been adjudged the Winner in 3 categories organized by CII on "Leanimplementation at Value streams" in Bengaluru in May 2018.

7. Business Excellence

Striving for excellence has been the Company's strategic focal point which will helpto succeed. We measure ourselves against our strongest competitors we are Agile andaccurate. With efficient processes lean structures and high productivity we intend tosecure and increase the value of the Company. Through Business excellence we are aiming atincreasing our overall organizational efficiency to fuel our future growth.

8. Awards and Recognition

During the year under review the Company won several awards for excellence. Few suchawards are:

• Supplier Support Award from Mahindra Swaraj

• Customer Driven Six Sigma Project recognized by Ford India - Nashik Plant

• "Growth Through Comprehensive Excellence" at the Maruti Suzuki VendorConference

• "Best Supplier Award" by VECV at the Annual Supplier Conference 2018

• Landmark Purchase Agreement with Hero MotoCorp Ltd (HMCL)

• TKML 0 PPM Award for 2017

• "Best Supplier Award" by TMTL at the Annual Supplier Conference 2018

• Leading EPC - Solar Rooftop Award

• National Safety Award from Govt. of India - Jaipur Plant

• "GOLD Award" in ICQCC-2018 Singapore

• Bajaj Quality Award - Gangaikondan Plant

• Ashok Leyland Supplier SAMRAT Competition - Nashik Plant

• Quality Excellence Award from SMLI

• Best Tech Award Supporting Energy Efficiency 2018

• "Gold Award" from Greaves Cotton Limited

• CII-SR EHS Excellence Awards 2018 - Bidadi Plant

• CO2 Energy Efficiency at Bosch EHS Award 2018 - Nashik Plant

• Global Safety Award 2019: Gold category - Nashik Plant

• NSCI Safety Award 2018 - Jaipur Plant

• Gold Award from Greaves Cotton Limited

• John Deere Award for New Product Development

• John Deere Award for Commendable Performance for India Business

9. Directors and Key Managerial Personnel

9.1 Directors Retiring by Rotation

In accordance with the provisions of the Companies Act 2013 and Articles ofAssociation of the Company

Mr. Soumitra Bhattacharya (DIN: 02783243) and Mr.

Peter Tyroller (DIN: 06600928) retire by rotation at the forthcoming Annual GeneralMeeting and being eligible offer themselves for re-election at the said Meeting.

Brief profiles of Mr. Soumitra Bhattacharya and Mr. Peter Tyroller form part of theNotice convening the 67th Annual General Meeting of the Company.

9.2 Changes in the Key Managerial Personnel and Board

9.2.1 Board of Directors

Ms. Renu S. Karnad resigned from the Directorship of the Company due to othercommitments and limitation of time with effect from September 25 2018. The Board placeson record its sincere appreciation for the valuable guidance provided by Ms. Karnad duringher tenure as Director of the Company.

The Board of Directors on recommendation of the Nomination & RemunerationCommittee and subject to the approval of the shareholders appointed Dr. GopichandKatragadda as an Additional Director designated as an Independent Director for a term of 5years with effect from December 04 2018.

Mr. Bernhard Steinruecke and Mr. Bhaskar Bhat were appointed as Independent Directorsof the Company for a period of 5 years with effect from April 01 2014 to hold office uptoMarch 31 2019.

The Nomination & Remuneration Committee on the basis of performance evaluation ofIndependent Directors and taking into account the external business environment thebusiness knowledge acumen experience and the substantial contribution made by Mr.Bernhard Steinruecke and Mr. Bhaskar Bhat during their tenure has recommended to theBoard that continued association of Mr. Bernhard Steinruecke and Mr. Bhaskar Bhat asIndependent Directors of the Company would be beneficial to the Company. Based on theabove and performance evaluation of Independent Directors the Board of Directorsrecommend re-appointment of Mr. Bernhard Steinruecke and Mr. Bhaskar Bhat as AdditionalDirectors designated as Independent Directors of the Company not liable to retire byrotation to hold office for a second term of 5 consecutive years with effect from April01 2019 till March 31 2024 subject to the approval of the shareholders.

Dr. Andreas Wolf was appointed as a Joint Managing Director of the Company for a periodfrom January 01 2017 to February 28 2019.

On recommendation of the Nomination & Remuneration Committee the Board ofDirectors at their meeting held on February 13 2019 re-appointed Dr. Andreas Wolf asJoint Managing Director for a period of three years with effect from March 01 2019 tillFebruary 28 2022 subject to the approval of the shareholders.

The Company has received notice from Member under section 160 of the Companies Act2013 proposing candidature of Dr. Gopichand Katragadda Mr. Bernhard Steinruecke and Mr.Bhaskar Bhat for the office of Director(s) of the Company at the forthcoming AnnualGeneral Meeting.

The following resolutions in addition to re-appointment of Mr. Soumitra Bhattacharyaand Mr. Peter Tyroller who retire by rotation relating to the aforementionedre-constitution of the Board of Directors of the Company will form part of the Noticeconvening the 67th Annual General Meeting of the Company:

i. Appointment of Dr. Gopichand Katragadda as an Independent Director for a period of 5consecutive years with effect from December 04 2018.

ii. Appointment of Mr. Bernhard Steinruecke as an Independent Director for a secondterm of 5 consecutive years with effect from April 01 2019.

iii. Appointment of Mr. Bhaskar Bhat as an Independent Director for a second term of 5consecutive years with effect from April 01 2019.

iv. Re-appointment of Dr. Andreas Wolf as Joint Managing Director for a period of 3years with effect from March 01 2019.

Brief profiles of Dr. Gopichand Katragadda Mr. Bernhard Steinruecke Mr. Bhaskar Bhatand Dr. Andreas Wolf form part of the Notice convening the 67th Annual General Meeting ofthe Company.

9.2.2 Key Managerial Personnel

Mr. Anuj Sharma resigned as Compliance Officer (interim) with effect from November 042018. The Board of Directors on the recommendation of the Nomination & RemunerationCommittee appointed Mr. Rajesh Parte (ACS 10700) as the Company Secretary and ComplianceOfficer with effect from November 05 2018.

As on the date of this report the following have been designated as the Key ManagerialPersonnel of the Company pursuant to Section 2(51) and 203 of the Companies Act 2013 readwith the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014:

• Mr. Soumitra Bhattacharya - Managing Director

• Dr. Andreas Wolf - Joint Managing Director

• Mr. Jan-Oliver Rohrl - Executive Director

• Mr. S.C. Srinivasan - Chief Financial Officer & Alternate Directordesignated as a Whole-time Director

• Mr. Rajesh Parte - Company Secretary & Compliance Officer

9.3 Independent Directors

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

9.3.1. Familiarization Programme for Independent Directors

For details of programmes of familiarization of the Independent Directors with theCompany their roles rights responsibilities in the Company nature of industry in whichthe Company operates business model of the Company and number of hours please refer tothe Corporate Governance Report.

9.4 Performance Evaluation of Directors

In line with the provisions of the Act and the Listing Regulations the Board hascarried out an annual performance evaluation of its own performance its Committees andindividual Directors.

For details of the performance evaluation including evaluation criteria for IndependentDirectors please refer the Corporate Governance Report.

10. Board Meetings

During the year under review five meetings of the Board of Directors were held. Theparticulars of the meetings and attendance thereat are mentioned in the CorporateGovernance Report.

11. Corporate Social Responsibility (CSR) Committee and Initiatives

Consequent to changes in the Board of Directors during the year under review the CSRCommittee was re-constituted by inducting Mr. S.V. Ranganath and Dr. Gopichand Katragaddaas members. 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 (Independent Director)

Mr. Soumitra Bhattacharya (Managing Director) & Dr. Andreas Wolf (Joint ManagingDirector) as its members.

The CSR Committee oversees the Company's CSR initiatives.

The Board of Directors have adopted a CSR Policy in line with the provisions of theAct. The CSR Policy inter-alia deals with the objectives of the Company's CSRinitiatives its guiding principles thrust areas responsibilities of the CSR Committeeimplementation plan and reporting framework.

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

New projects:

• Bosch's support for Lalbagh Botanical Garden in Bengaluru began including theinstallation of Smart

Parking facility 8 Aerators in the Lalbagh Lake 200 waste bins for dry and wetsegregation at source and Solar Power Plants saving 20 tons of CO2 every year.

• Rejuvenation of the Shanumangala Lake in Bidadi.

• Development of Model I.T.I. (Skill Development Center) in Government ITI DiaryCircle Bengaluru

Sustainability and scalability of existing projects:

• BRIDGE: 20000 less-educated youth trained and placed through 250 BRIDGE Centersacross India.

• 25 RO Plants in Jaipur.

• 14 Check Dams in Nashik.

• Akshaya Patra Kitchen in Jigani: 25000 meals cooked per day (from 15000 lastyear).

• CHDP interventions in 300 Government schools. Collaboration and Partnerships:

• Partnership with Tata Steel and Indian Oil-led Skill Center to run the BRIDGEprogram in Jamshedpur and Hyderabad respectively.

• Bosch is now a non-funded Industry partner of National Skill DevelopmentCorporation (NSDC) through which the BRIDGE program is scaled up at NSDC Centers.

• Bosch has also partnered with MEPSC (Management Entrepreneurship andProfessional Skills Council) for assessing the ‘Train the Trainer' program.

Details of the CSR Committee meetings and attendance thereat forms a part of theCorporate Governance Report.

Annual Report on Corporate Social Responsibility Activities of the Company is enclosedas Annexure ‘B' (Page No. 61) to this Report.

12. Audit Committee

Consequent to changes in the Board of Directors during the year under review the AuditCommittee was re-constituted by appointing Mr. S.V. Ranganath (Independent Director) asthe Chairman with effect from November 05 2018. As on the date of this report the AuditCommittee comprises of Mr. S.V. Ranganath (Independent Director) as its Chairman and Mr.V.K. Viswanathan (Non-Executive and Non-Independent Director) Mr. Bernhard Steinruecke(Independent Director) Mr. Bhaskar Bhat (Independent Director) &

Ms. Hema Ravichandar (Independent Director) as its members.

The Members of the Committee possess strong Accounting and Financial Managementknowledge. The

Company Secretary of the Company is the Secretary of the Committee.

During the year under review the Board accepted all the recommendations of the AuditCommittee.

Details of the roles and responsibilities particulars of meeting and attendancethereat are mentioned in the Corporate Governance Report.

13. Subsidiary Associate and Joint Venture Companies

13.1 Subsidiary Company

MICO Trading Private Limited (MTPL)

The Company has only one subsidiary viz. MICO Trading Private Limited. The financialperformance of MTPL is as under:-

[TINR]
Particulars FY 2018-19 FY 2017-18
Total Revenue 67 68
Profit/(Loss) before tax 6 (51)
Profit/(Loss) after tax 6 (51)

The Directors' Report along with the Audited Statement of Accounts of MTPL has beenuploaded on the website of the Company at www.bosch.in under the "ShareholderInformation" section.

13.2 Associate Company

Newtech Filter India Private Limited (NTFI)

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

NTFI is the manufacturer of automotive filters selling their products to the Companywhich further sells the same to end customers.

Aftermarket contributed to 72 percent of the product sales while 28 percent wereattributed to OEM and OES channels in 2018-19.

The financial performance of NTFI is as under:

[Mio INR]
Particulars 2018-19 2017-18 % Growth
Turnover 673 666 1%
Profit/(Loss) before tax 16 16 0%
PBT % on Turnover 2.4 2.4 0%

A separate statement containing the salient features of the financial statement of theaforementioned Subsidiary

and Associate is enclosed as Annexure ‘C' (Page No. 66) to this Report.

13.3 Joint Venture Company

The Company has executed a Joint Venture Agreement dated March 20 2019 with PrettlIndia Private Limited its Joint Venture partner for incorporation of the new jointventure company for the purpose of carrying out the business of manufacturing/assembly andsupply of mechanical and electromechanical components and assemblies for automobile andnon-automobile industry. Accordingly PreBo Automotive Private Limited was incorporated onMay 18 2019 with its registered office at Bengaluru. This Company is yet to commence itsbusiness.

14. Remuneration Policy

The Nomination & Remuneration Policy inter-alia provides for criteria andqualifications for appointment of Director Key Managerial Personnel & SeniorManagement Board diversity remuneration to Directors Key Managerial Personnel etc.This Policy was amended at the Board Meeting held on February 13 2019 to amend thedefinition of Senior Management Personnel and to provide that the remuneration payable tothe Senior Management shall be placed before the Committee for recommending the same forapproval of the Board. The Policy can also be accessed at the following link:https://www.bosch.in/media/ our company/shareholder information/2015/nomination andremuneration policy.pdf

15. Particulars of Employees

Disclosures pertaining to remuneration of employees and other details as requiredunder Section 197(12) of the Act and rules framed thereunder is enclosed as Annexure‘D' (Page No. 67) to this Report.

The information in respect of employees of the Company required pursuant to Rule 5 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedwill be provided on request. In terms of Section 136 of the Act the Reports and Accountsare being sent to the Members and others entitled thereto excluding the aforementionedparticulars of employees which is available for inspection by the Members at theRegistered Office of the Company during business hours on any working day. Any memberdesirous of obtaining a copy of the same may write to the Company at investor@in.bosch.com.

16. Corporate Governance

A report on Corporate Governance in terms of the requirements of the ListingRegulations and a certificate from the Practicing Company Secretary forms part of thisAnnual Report (Page No. 182).

17. Risk Management

The Company has a well-defined Risk Management Policy. The Policy has been developedafter taking cognizance of the relevant statutory guidelines Bosch Guidelines on riskmanagement empirical evidences stakeholders' feedback forecast and expert judgment.

The Policy inter-alia provides for the following:

Risk Management framework;

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

(ii) Identifying and assessing risks associated with various business decisions beforethey materialize. Take informed decisions at all levels of the organization in line withthe Company's risk appetite;

(iii) Ensuring protection of shareholders' stake by establishing an integrated RiskManagement Framework for identifying assessing mitigating monitoring evaluating andreporting all risks;

(iv) Strengthening Risk Management through constant learning and improvement;

(v) Adoption and implementation of risk mitigation measures at every level in order toachieve longterm goals effectively and sustainably;

(vi) Regularly review Risk Tolerance levels of the Company as they may vary with changein 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 the existence of theCompany.

18. Whistle Blower Policy/Vigil Mechanism

The Company has a Whistle Blower Policy which includes vigil mechanism for dealingwith instances of fraud and mismanagement.

Details of the Whistle Blower Policy have been mentioned in the Corporate GovernanceReport. The Whistle Blower Policy has also been uploaded on the website of the Company andcan be accessed at the following link: https://www.bosch.in/media/our company/shareholderinformation/2018/whistle blower policy-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 in the prescribedformat forms a part of this Annual Report (Page No. 198).

20. Related Party Transactions

The Audit Committee accords omnibus approval to Related Party Transactions which are inordinary course of business foreseen repetitive in nature and satisfy the arm's lengthprinciples. The Audit Committee reviews on a quarterly basis the details of the RelatedParty Transactions entered pursuant to the aforementioned omnibus approval. Additionallythe Company obtains a half yearly certificate from a Chartered Accountant in Practiceconfirming that the related party transactions during the said period were in ordinarycourse of business repetitive in nature and satisfy the arm's length principles.

The details of Related Party Transactions under Section 188(1) of the Act required tobe disclosed under Form AOC - 2 pursuant to Section 134(3) of the Act is enclosed asAnnexure ‘E' (Page No. 69) to this Report.

The Company has framed a Policy for determining materiality of Related PartyTransactions and dealing with Related Party Transactions. The Policy has been revised bythe Board of Directors at their meeting held on February 13 2019. The said Policy ishosted on the website of the Company and can be accessed at the following link:https://www.bosch.in/media/ our company/shareholder information/2019/rpt policyamended.pdf

21. Energy Conservation Technology Absorption Foreign Exchange Earnings & Outgo

The report in respect of conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 of the Act read with Rule 8 ofCompanies (Accounts) Rules 2014 as amended is enclosed as Annexure ‘F' (Page No.70) to this Report.

22. Auditors

22.1 Statutory Auditor

The shareholders at the 65th Annual General Meeting of the Company held on September01 2017 appointed M/s. Deloitte Haskins & Sells LLP (Firm Registration No.117366W/W-100018) as Statutory Auditors of the Company for a period of 5 years until theconclusion of the 70th Annual General Meeting.

The Auditors' Report on the Standalone as well as Consolidated Financial Statements forthe Financial Year 2018-19 is unmodified i.e. it does not contain any qualificationreservation or adverse remark.

22.2 Cost Audit & Cost Auditors

The Board of Directors on recommendation of the Audit Committee appointed M/s. RaoMurthy & Associates Cost Accountants Bengaluru (Registration No. 000065) as CostAuditors to audit the cost accounts of the Company for the Financial Year 2019-20 in termsof the provisions of Section 148 of the Act.

The Audit Committee has also received a Certificate from the Cost Auditors certifyingtheir independence and arm's length relationship with the Company.

In terms of the requirements of the said section the members are required to ratifyremuneration payable to the Cost Auditors. Accordingly resolution ratifying theremuneration payable to M/s. Rao Murthy & Associates will form a part of the Noticeconvening the 67th Annual General Meeting.

As per Section 148(1) of the Act the Company is required to maintain Cost Records.Accordingly Cost Records and Cost Accounts are duly maintained by the Company.

22.3 Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company has appointed Mr.Sachin Bhagwat Practicing Company Secretary (Certificate of Practice No. 6029) toundertake Secretarial Audit of the Company for the Financial Year 2018-19. The Report ofthe Secretarial Auditor is enclosed as Annexure ‘G' (Page No. 72) to this Report.

The Secretarial Audit Report does not contain any qualifications reservations oradverse remarks or disclaimer.

22.4 Reporting of Fraud

During the year under review the Statutory Auditors Cost Auditors and SecretarialAuditor have not reported any instances of fraud committed in the Company by its Officersor Employees to the Audit Committee under Section 143(12) of the Act details of whichneeds to be mentioned in this Report.

23. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Act the Board of Directors report that:

(i) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(ii) they have selected and consistently applied accounting policies and have madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and theprofit of the Company for that period;

(iii) proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

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

(v) proper internal financial controls are in place and that such controls are adequateand are operating effectively; and

(vi) proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively.

24. Details of Loans Guarantees or Investments

Particulars of loans given investment made or guarantee given or security provided andthe purpose for which the loan or guarantee or security is proposed to be utilized by therecipient of the loan or guarantee or security are provided in Note Nos. 6 7 and 34 tothe Financial Statements.

The particulars of loans/advances etc. required to be disclosed in the AnnualAccounts of the Company pursuant to Para A of Schedule V of the Listing Regulations arefurnished separately.

25. Deposits

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

26. Material Changes and Commitments

There were no material changes and commitments between the end of the year under reviewand the date of this report affecting the financial position of the Company.

27. Buyback

During the year under review the Company bought back 1027100 Equity Shares of facevalue INR 10 each representing 3.365 percent of the pre-buyback paid up share capital ofthe Company for an aggregate of INR 21569100000 (representing 24.999 percent of thepaid up share capital and free reserves of the Company on a consolidated basis). RobertBosch GmbH the holding company also participated in the Buyback.

The post capital of the Company is Mio INR 294.94 consisting of 29493640 EquityShares of INR 10 each. The present shareholding pattern is as under:

Particulars No. of Shares % of the paid-up share capital
Promoter and Promoter Group 20805224 70.54
Others/ Public 8688416 29.46

28. Extract of Annual Return

The Extract of Annual Return as provided under Section 92(3) of the Act and asprescribed in Form MGT-9 under the Companies (Management and Administration) Rules 2014is enclosed as Annexure ‘H' (Page No. 74) to this Report. In terms of therequirements of Section 134(3) (a) of the Act the complete Annual Return is available onthe Company's website and can be accessed at the following link:https://www.bosch.in/media/our company/shareholder information/2019/mgt 7 website- pdf

29. Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013

The Company has complied with provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. The information as regards the number of cases filedand their disposal under this Act is given in the Business Responsibility Report.

30. Secretarial Standards

The applicable Secretarial Standards i.e. SS - 1 and SS - 2 relating to "Meetingsof the Board of Directors" and "General Meetings" respectively have beenduly complied by the Company.

31. Cautionary Statement

Statements in the Board's Report and the Management Discussion & Analysisdescribing the Company's objective expectations or forecasts may be forward lookingwithin the meaning of applicable laws and regulations. Actual results may differmaterially from those expressed in the statement.

32. General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions/events on these items during the year underreview:

i. Issue of Equity Shares with differential rights as to Dividend voting or otherwise;

ii. Issue of Shares (including Sweat Equity Shares) to employees of the Company underany scheme;

iii. Significant or material orders passed by the Regulators or Courts or Tribunalswhich impact the going concern status and the Company's operations in future;

iv. Voting rights which are not directly exercised by the employees in respect ofShares for the subscription/purchase of which loan was given by the Company (as there isno scheme pursuant o which such persons can beneficially hold shares as envisaged underSection 67(3)(c) of the Act).

33. Acknowledgements

The Directors express their gratitude to the various Central and State GovernmentDepartments for their continued cooperation extended to the Company. The Directors alsothank all customers dealers suppliers banks members and business partners for theexcellent support received from them. The Directors would also like to acknowledge theexceptional contribution and commitment of the employees of the Company during the yearunder review.

For and on behalf of the Board of Directors

V. K. Viswanathan

DIN: 01782934 Chairman

Date: May 21 2019