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While addressing shareholders at the company’s 68th annual general meeting (AGM), Bosch Ltd Chairman Bernhard Straub said the downtrend in the Indian automotive segment continues against the backdrop of cyclical and structural changes accompanied by the added pressure of the COVID-19 pandemic uncertainties.
“The nationwide lockdown followed by cluster wise lockdowns and uncertainties have led to the first quarter of the current fiscal seeing the deepest decline ever,” he added.
“The domestic tractor market is witnessing a bounce back to normal levels followed by two-wheeler and passenger cars, while light commercial vehicles also are showing signs of revival,” he noted.
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“Against this backdrop, the automotive sector is expected to show de-growth for the financial year 2020-21. In this context, it is important that the central government comes up soon with a special comprehensive stimulus package for the automotive sector,” he said.
Investments in construction activities and infrastructure have to continue to boost the demand side, he added.
Straub said that the Indian economy is expected to see the sharpest contraction in 40 years and as reports suggest India’s GDP for the financial year 2020-21 will be negative by 3.5 to 5 percent.
“This is primarily due to rising COVID-19 infections and weak fiscal stimulus resulting in lower inclination to consume, especially as credit growth remains muted and banks are saddled by rising bad loans,” he noted.
“At the same time, the rural areas of the country are expected to lead the demand recovery, driven by better minimum support price for the upcoming Kharif harvest and increased MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) spends in allied business activities. Also, the rural areas have seen a lesser impact of COVID-19 as compared to the urban areas,” Straub said.
Terming the last fiscal as challenging in terms of business, Straub said the company’s exports, the bulk of which were to Germany, China, Brazil, Bangladesh, and Malaysia decreased by around 21 percent as compared to the previous year.
“The company’s total revenue from operations declined 18.6 percent to Rs 9,841.6 crore in 2019-20 as compared with 2018-19 on a comparable basis,” he said.
“The domestic revenue from operations of your company declined 19.8 percent; whereas export revenues declined by 3.6 percent,” he told shareholders.
Straub noted that the coronavirus pandemic and the lockdown that followed disrupted established supply chains and showed the need for the industry as a whole to be more flexible and agile in its processes.
“The difficulties are not expected to abate anytime soon and it will take a few years for the industry to recover completely,” he said.
“It is inevitable that the current situation will have a less than favorable effect on our production and growth. We believe that it will take at least four to five years for the auto industry in India to get back to normal. We may have to shift our gears down to tackle rough roads, but our engines of growth and our clear vision of the future will take us steadily forward,” Straub said.