Bosch Limited analyst Q&A

A couple of questions from my side. One is, given that the TREM V norms as of now are to be implemented from April 2026, can you talk about how do we plan to localize components for TREM V norms? Would it be in sync with what we have done in the past, as volume ramps up, we localize that? Or are we thinking differently this time?

We are quite well prepared to handle TREM V localization and we can expect a much higher level of localization for TREM V starting from the beginning itself. We are really hoping that there is no further postponement or change in the days of TREM V rollout . But assuming everything goes on time, we are on our side ready to meet the demands of the industry.

Got it, got it. And secondly, in this quarter, we have seen a good decline in share of traded goods. Is it because of the full benefit of localization is now reflecting in 2Q numbers? Or it's also to do with lower contribution of CVs in this quarter becaus e of volume decline that CV industry saw?

Yes. I'll take this question. Of course, it's a mix. It depends entirely what product mix we have. This month we had a favourable product mix on the one side. But of course, we are going ahead with the localization, and step by step, we see what we implement here in India. So I would not say it's black and white. It's a mix. And yes, we had, therefore, a quite favourable mix, but see also that we're going ahead with sort of localization.

Okay. But would it be fair to say that the ramp-up of localization is now totally done? Or there will be some more benefit to come in as volumes go up as well?

Yes. So not only volumes going up, but of course, products coming in, new generations coming in. We have -- for example, 3 years ago, we have implemented our injector line for the commercial vehicles, that we are on a good track already for the components. But this is not finished up to now. So actually, it is an ongoing process. We are looking all the time into our portfolio where can we localize, what can we localize. So it is not finished and done. It's an ongoing process.

Got it. And last question from my side is on capex. So first half capex was roughly about INR100 crores. Any guidance for full year capex? Usually, we spend between INR500 crores to INR600 crores. So just wanted to clarify what it will be for FY '25.

Yes. So we have also this year a decent amount, roughly INR4,000 million. And it is a little bit lower compared to last year because the Adugodi campus is now finished. And this is mainly plant and machinery. And traditionally, in the first half year, we are starting to implement machines accounting. But until we really go into the SOPs and -- that we are capitalizing this capex is then in the third and fourth quarter.

Next in line will be Atman Shah? He has logged out. Next in the line is Mr. Pramod Amthe. Please unmute and ask your question.

So the first question is with regard to the tractor supplies. I wanted to know your preparedness as the industry on a high base looking for a double -digit growth in the second half. And also looking at if the pre -buying comes through, again, there can be a sustenance of double digit. How are you prepared to handle this on a high base the double-digit volumes, one? Second, at the end of it, again, you have to transition to the TREM V. Isn't -- then the volatility of volumes, how will you be prepared to handle in the short term? Can the CVs be -- capacity be fungible to tractors? Or how does it actually play out?

Yes. So if I understand your question right, you are hinting that there will be some pre-buy effect before TREM V came, and are we prepared to handle those additional volumes. And post TREM V comes in, how are we equipped to handle those volumes. That's the question, right?

Correct, correct.

Okay. I mean, we are certainly equipped very well to handle the pre-buy effects. We've had -- we always have discussions on topics like this together with our OEMs. And we anticipate -- if they anticipate any pre-buy which has happened in several occasions in the past, like, for example, BS-IV to BS-VI and other norm transitions, we work with them very closely and ensure that we are fully prepared and we are ready to support on any capacity increase that we need to cater to these demands. So on pre-buy effects, we certainly can handle it. On TREM V, I think I've already answered it. We are well prepared to handle the transition, and we look forward.

The second question is with regard to the car segment. There seems to be some policy favorism for hybrids. I wanted to know how does Bosch play a role in terms of content per vehicle when the existing ICE engines go for hybrid? What parts you really supply and how you handle the customer? Any case studies for India already happening? Or how are you seeing this business shaping up?

Yes. So we are in discussion with several OEMs on hybrids, and some are quite active and have a couple of models already in the market, others are still in early time phase. There is no confirmed policies about -- that we see other than 1 or 2 states doing something independently. But we'll have to wait and watch how this develops, but we certainly have capabilities to support OEMs through this.

Next in the line will be Mr. Gokul. You can unmute and ask your question. Anybody who has a question, please raise your hands.

Sir, two questions. At the start of the year, you had sort of indicated that the growth would mirror the growth which we've seen in FY '24, given Q1 being a more transient quarter because of the elections. Given that first half has gone and there have been some ch anges in the underlying automotive market, would you want to just revisit your growth expectation for FY '24?

So your question is, would we like to revisit growth estimates for '25? Is that what you're saying or...

Yes, I think that is the question, sir. I think he has gone to mute. That is the question, sir.

Okay. So I mean, we -- our business plan cycle constantly looks at what's happening in the market. We take feedback not just from the market, the inventory positions in the market, what our OEMs tell us and what we need to plan for the year. Of course, we have complex internal tooling, which also helps us fine-tune the possibilities under various scenarios in terms of what is the possible GDP growth rates, how are different sectors performing, and based on that, what should we plan for in terms of our plan, different segment level growth opportunities. So this is a thing we constantly do. So as we see today, the indicators are that '25 is likely to mirror 2024 growth rates. There can be ups and downs, and we're well prepared to handle that. And if there is a change -- we evaluate this at very regular intervals within our business planning cycles and we will adapt certainly.

Okay. Two more questions. So one is, if you could please comment on the underlying CV industry, because first half has been fairly weak for the -- both the major OEMs. What are you seeing on the trends and interactions with your customers on the outlook for the industry for second half and going forward?

CV industry we expect it to remain muted or where things are an inch down. I think that's the current expectation also.

Perfect. Great. Lastly, just on exports front. While the external environment has been very muted due to the geopolitical conditions, are you seeing things pick up over there? And what's the outlook for the near term over the next 6 to 12 months for the exports business?

Okay. So we don't look at exports on very short-term basis. That's not, again, we're banning our exports as well. We consider exports as a longer-term opportunity, while there are some medium, short-term gains based on some capacities or some changes in the market abroad. That's one way of looking at it. And we will certainly cater to that as it comes. But for us, growing our export business is much more of a longer-term opportunity over, let's say, in the next 5 years or so. So we are preparing ourselves to [inaudible 0:30:33].

Okay. What would be the export growth in H1 versus last year's H1?

We have -- this quarter, we have had slightly increase in the exports. But as already mentioned, it highly depends on the demand, where we have in the international global network, production network some demands. So overall, we see a growth of roughly 10% if we compare the previous year to this year. But again, for us, the long-term perspective is much more interesting, and this was what we had in the third quarter. And yes, of course, we are all the time appreciate if we can support our international production growth.

In the meantime, I'll read out the questions from the chat box. First question is, we have indicated about good growth in the PV segment despite underlying industry being weak. What will drive this growth?

Yes. I mean the PV segment is connected to -- quite a lot connected to what happens in our cities, disposable incomes, a trend towards premiumization or affordability, GDP growth in general, and how well people are able to drive in cities and further penetration in our Tier 2 and Tier 3 towns. So these would be the broad trends. And yes, we track these trends, and we expect steady growth in our PV segment.

The next question is, we indicated safety systems for 2-wheelers. What will be the components on 2-wheeler systems' safety in the listed entity?

So yes. I mean, we have our 2-wheeler division which offers some components into this market (Explanation: via cross divisional solutions around safety, comfort & efficiency). While majority of the safety systems go from our sister company, RBIC. But on the listed entity, our 2-wheeler division also caters to some segments ( Explanation: offers engine management system components like engine control units, fuel supply module, fuel injectors and) sensors, and all that.

Okay. And some questions from the chat box. Whether any restructuring under progress or -- on this thing for -- in the -- all the other listed companies in the Bosch stable in India?

Sorry. What was the question? Sorry...

Basically, the question is, see, whether -- see, we have a lot of unlisted companies in the auto space in India. Whether any chance of restructuring or any whether progress...

Yes. So I think I've spoken about this a few times in the past. We are constantly looking at our product portfolio, our business activities in the listed company and also business activities outside the listed company in the Indian context. We are very open to look at these things. These are discussions that are going on in the RBI N and Board with the promoter. As and when we have information to share, we'll certainly use that opportunity to share it with all. So all I can say is that t hese discussions are ongoing in terms of multiple elements, and we will share it as appropriate.

I think that's all, sir. Yes. There is no more questions. And any closing comments you want to make, sir?

I would say thank you to everybody who joined the call and showed interest. We're doing our best to ensure excellent business performance under difficult -- currently slightly difficult market conditions, and we hope to continue to keep this transitory going. And you will hear more from us in the coming 12 months. Thank you.

Thanks, sir. Thank you, all the participants. We can now disconnect our lines. NOTE This document is a transcript and may contain transcription errors. This transcript may not be 100 percent accurate and may contain misspelling and other inaccuracies. While the transcript has been edited for clarity, the Company takes no responsibility for such errors.