Bosch Ltd - Invested (to remain) for life?

Bosch is a leading supplier of technology and services in the areas of Mobility Solutions, Industrial Technology, Consumer Goods, Energy, and Building Technology. Additionally, Bosch has in India the largest development center outside Germany, for end-to-end engineering and technology solutions.

Business Divisions
Mobility Solutions: (85% of revenue)
a) Powertrain Solutions (diversified powertrain sector ranging from gasoline and diesel injection to electrified drives with battery and fuel cell technologies)
b) Automotive Aftermarket
Business beyond Mobility: (15% of revenue)
a) Consumer Goods (Power tools, accessories and measuring technology)
Energy and Building Technology
b) Building Technology (Video Surveillance, Intrusion detection, fire detection, access control, etc.,)
c) Energy and Building Solutions

Group Companies

Robert Bosch group has several entities in India and it can become quite challenging to see how the synergies within the various group companies work.

Non listed group companies:

  1. Bosch Chassis Systems India Private Limited
  2. Bosch Rexroth (India) Private Limited
  3. Robert Bosch Engineering and Business Solutions Private Limited
  4. Bosch Automotive Electronics India Private Limited
  5. Bosch Electrical Drives India Private Limited
  6. BSH Home Appliances Private Limited
  7. ETAS Automotive India Private Limited
  8. Robert Bosch Automotive Steering Private Limited
  9. Automobility Services and Solutions Private Limited
  10. Newtech Filter India Private Limited
  11. Mivin Engg. Technologies Private Limited
  12. PreBo Automotive Private Limited
  13. Precision Seals

Subsidiaries/Associate/JV Companies:

  1. MICO Trading Private Limited (MTPL) [100%]
  2. Newtech Filter India Private Limited (NTFI) [25%]
  3. PreBo Automotive Private Limited [40%]

Note:
a) The recent 26% stake in Sun Mobility, an Energy as a Service/Battery swapping company is through Robert Bosch Investment Nederlands.
b) Robert Bosch Center for Data Science and AI at IIT Madras is also a collaboration with the Bosch foreign/parent entity and has nothing to do with the listed entity.

Notes from recent annual report and conference call transcripts:

  • Exceptional items w.r.t workforce reduction/reskilling/redeployment is now complete
  • Cash reserve much stronger than pre-covid
  • Directionally looking towards more localization and thereby implied margin expansion
  • Clean balance sheet and focus on free cash flow
  • Have embarked on zero based organization
  • Semiconductor/micro controller shortage does not originate at Bosch but in the global supply chain; Bosch is facing supply shortages on the imports side and is consequently finding it difficult to service some of the automotive demand. The situation is set to drag on for some months
  • Bosch has been an early adopter of BS 6 emission norms and is ahead of game in the space

Financials

Annual:

Quarterly:
One can see that employee cost is coming down as a result of restructuring exercise and thereby OPM improving.

Growth: One can see that sales have almost doubled in the last ten years while earnings and PAT have come back to 2008 levels.

Risks:

  1. Too many subsidiaries and the risk of lucrative opportunities getting diverted to unlisted group companies. Bosch’s consumer durable goods being privately held, AI and ML related research work and the recent purchase of the stake in Sun Mobility are examples.
  2. Faster than anticipated growth of electric vehicles can upset the financial numbers of the company which expects ICE to continue to have an 80% market share by 2030
  3. Global semiconductor shortage that is now beginning to affect the auto industry. Major auto manufactures such as GM, Mazda, Subaru, Audi and Honda have all either issued warnings or have cut/delayed production owing to this. Bosch India has also acknowledged the same.

Discolusure: I do not own shares of Bosch Ltd.

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Appliances like Washing machine air conditioning dishwasher etc come under bosch india listed entity?

No that does not come under listed entity

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Watch from 1 hr 03 mins for EA Sundaram’s view on Bosch Ltd covering the impact of electrification, profitability, business prospects and understanding of their business domain/technology.

Disclosure: After tracking for more than 6 months, finally bought some shares as part of portfolio churning.

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Thanks for sharing.

What are the levers to increase the Topline - almost stagnant from FY16 onwards? I could not locate anything in the AR of FY21.

Based on AR from 19,20 and 21

  • Company working actively on EV to bring parent company technology in the Indian market with the present focus of 2W and LCV and after-sale or maintenance system.
  • The company is restructuring to the next stage with trends in EV and autonomous cars. This has incorporated re-skilling and org restructuring.
  • They are working on the traditional engine to be more energy efficient to help the Indian gov expectation to reduce oil imports. Bosh expects by 2030 70% of the automobile in India will still use ICE engines.

With the underlying Auto industry going through a sluggish time period Bosch may not see the benefit but once the industry has started picking up company has positioned itself to serve modern EV or traditional ICE engines to market.

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Significant investment planned by BOSCH

Disc: Invested

Bosch has quite a few subsidiaries which are directly linked to the parent. Do not understand the linkages which will give an idea on how much will accrue to the listed entity and how much will be outside it. Even in the latest concall, I felt the management was very cagey in clarifying this

@Muralidhar_Srinivasa I tried to compile them in my original post. All interesting businesses are privately held and do not come under the listed entity.

BOSCH has publicly stated that EV and Hydrogen business will be under listed company. Also, BOSCH India’s investor release has mention of Rs.2000 crore investment. I did not attend concall. Please correct me if I’m wrong.

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You are right ,actually you can add one more to the list of Subsidiaries/Associates/JV which finds a mention in their latest AR which is Robert Bosch India Manufacturing and Technology Private Limited all the others seem to be invested into by the overseas parent Bosch

They didn’t quantify a number but said in the past 50% investment has happened through listed company and out of this 2000cr major will be under listed company. I assume it will be in the similar range 50 or 60% max.

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This is what I was referring when I said seemed a cagey response

" Ravi Purohit: Sir, I was not clear about when we mentioned this Rs. 2,000 crores CAPEX, are we talking from Bosch Limited, the listed company doing this Rs. 2,000 crores CAPEX because, you know, in the call there is always confusion when we are never clear on the management’s answers whether the management is answering on behalf of Bosch Limited or it is representing Bosch Group as a whole.
So, it will help us as investors because we are investors of Bosch Limited, we are not really investors in the other Bosch group companies, right? So, it will just kind of become very, very clear for us to understand whether all of these investments are going through a listed company, or some of them are going through the other associate companies?
Soumitra Bhattacharya: Thank you, Ravi for the question. So, I have to tell you from your question what you stated is partly correct and partly perhaps needs a little bit of a revision. So, you are absolutely right that as members in the con call you are absolutely focused towards the flagship company called Bosch Limited. Bosch Limited February 9, 2022 Page 10 of 17 However, please remember when we talk about Bosch Group in India, many of the other companies outside the listed companies what we call as sister companies. Yes, whether it is Robert Bosch, Boss Chassis or Robert Bosch Automotive Electronics, they feed their services and products many times through this company. For example, all the ECUs from Bosch Electronics come in through Bosch Limited Yes, when we provide the Powertrain solutions as a system. So, you must understand when we invest in those companies also, Bosch Limited has both a direct as well as indirect benefit. Having said that, ballpark of the number that we talked on total investments over a period of 10 years you can say around 50% goes to the CAPEX of Bosch Limited, ballpark and sometimes even more. And so the Rs. 9,000 crores that we talked every year we are investing in Bosch India Rs. 900 crores approximately to Rs. 1,000 cores and then about 50%, sometimes 60% goes through Bosch Limited. Secondly, we have now announced not a comprehensive CAPEX policy. We have given two buckets of CAPEX. So, this may exclude some other CAPEX that we will bring in. We just focus saying in our Bosch’s 100 years we want to tell you that we are investing in advanced technologies and that amounts to Rs. 1,000 crores, greatly driven by Bosch Limited but also by Bosch Automotive Electronics and Bosch Chassis. Because we made it very clear it is Bosch Group in India and another Rs. 1,000 crores, which is driven for the digital mobility platform and we also made an announcement on the mobility cloud platform in the marketplace launch on 3rd of this month by Bosch global member. And this mobility cloud platform I told you is located inside Bosch Limited. So, I hope I am clear enough? "

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