Bosch Ltd – one of the country largest auto parts manufacturer – on Thursday, reported nearly a five-fold year-on-year increase in consolidated net profit of ₹483 crore for the quarter ending March 31, as vehicle production, across categories, reverted to almost pre-Covid level in India. The bottom line though was impacted by higher input prices because of upsurge in commodity prices in the international market.
Vehicle manufacturing in India enhanced sharply during the quarter as Original Equipment Manufacturers (OEMs) multiplied production to replenish stocks at dealerships as retail demand surpassed supply of vehicles.
The firm reported a net profit of just ₹81.4 crore in the corresponding period when vehicle sales reported a double digit decline due the economic slowdown and transition to Bharat State 6 emission norms.
The German auto component manufacture
however engineered a sharp turnaround in its operations in the third and fourth quarter, after beginning the financial year with unprecedented loss of production because of the stringent lockdown measures imposed to contain the spread of Covid-19 pandemic.
The revenue from operations during the quarter enhanced by 43.76% year on year to ₹3216 crore when compared to ₹2237 in the corresponding quarter. The operating profit or earnings before interest, tax, depreciation and amortization (EBITDA), also jumped by 81.1% y-o-y to ₹619 crore due to the overall upgrading in sales and costing cutting measures taken by the firm.
The company though witnessed a sharp five -fold rise in raw material cost to ₹783.6 crore throughout the quarter as result of the sharp jump in commodity costs; other expenses also went up by 18.3%.
Contempt swift recovery in sales, vehicle manufacturers and parts suppliers are likely to witness pressure on operating margins due to continuous increase in commodity prices in the coming quarters. Explosive surge of covid-19 cases in India would also affect production plans for the first quarter of FY 22 as demand has plunged because of the lockdown in states.
As per Soumitra Bhattacharya, managing director, Bosch, the auto industry was seeing itself on a road of recovery until early this year and the company’s positive results validates the recovery.
“However, with the second wave being more severe, there is a clear uncertainty in the market. With 80% of our revenues driven through mobility business, we have been affected adversely. The challenge will be to manage the fluctuating demand, supply chain crisis and changing consumer behavior all at once," stated Bhattacharya.
