Market tumbles due to Covid-19 pandemic. Bosch Ltd, the Indian arm of the world’s largest auto parts maker, saw its order book for the BS VI program drop by 8 billion dollars. The German auto parts giant told analysts in its first quarter financial report conference call that the company had secured 24,000 million worth of BS, crore rupees VI orders, but due to the new Covid-19 pandemic, the orders fell to 18,000 crore rupees.

Business declined by 11% in FY2020. The auto components industry is poised for another year of sharp decline as domestic export demand remains weak. Bosch said on its Q4 FY2020 conference call that it does not expect the market to return to its previous highs before FY2024. Clearly, the company will have a long and difficult road ahead.

Looking back at the quarter, Soumitra Bhattacharya, Managing Director of Bosch India, said that the economic recovery looks weak this year, with global GDP expected to contract significantly in FY21. It is also a tough step for India, where the market suffered from a weak economy even before COVID-19 broke out.

“The Indian economy is expected to suffer 40% The worst contraction in years, with GDP shrinking by about 4-5%. Some segments of the automobile industry may return to 2009-2010 2000 levels. A positive sign is that tractors and two-wheelers are gradually recovering or demand is strong, which is likely to continue till the end of the festival season,” Bhattacharya added.

Bhattacharya Bosch said that Bosch will implement orders worth Rs 24,000 crore over the next five years. He said that despite having fallen sharply, there is a possibility of recovery as the market recovers.

The order book has come down to Rs 1,800 crore due to lower sales. He hoped that with further improvement in the market, the order book would recover to pre-Covid-19 levels, but Bhattacharya did not specify a timeframe for recovering the loss-making business.

In this challenging market environment, senior management has indicated that the focus in the short term is on controlling costs and retaining cash. Accordingly, for the financial year 2021, the company has halved its capital expenditure to Rs 200-25 about crore.

As per March quarter results, Bosch India’s industrial production guidance for fiscal 2021 implies a decline of 12-47% across the automotive sector. Due to the embargo, automobile sales declined, with Q2 sales falling 64% to Rs 9,920 crore. The result, irrespective of pre-tax profit on exceptional items, was Rs 33 billion.