>BOSCH LIMITED (IDFC SSKI)

HIGHLIGHTS OF Q1CY09 RESULTS

■ Bosch Q1CY09 results have been below our estimates primarily on account of higher than estimated raw material costs on account of adverse currency movement and shift in product mix towards the low margin non-auto business.

■ Net sales during the quarter declined 17%yoy to Rs10.1bn (we saw Rs10.9bn). Revenues were impacted primarily on account of the slowdown in the auto OEM space (both domestic and exports) and also on account of the lockout at the Jaipur facility which extended over the first 3 weeks of Jan09. While automotive business revenues declined 21%yoy to Rs8.5bn, the non-auto revenues increased 13%yoy to Rs1.4bn. As a result, the product mix for Bosch has changed adversely in favor of the relatively low margin non-auto business which now contributes to about 14% of its topline from about 10% earlier.

■ Raw material costs shot up sharply during the quarter to 56.2% of net sales as against 51.6%in Q1CY08 and 47.4% of net sales in Q4CY08 primarily on account of depreciation of INR against the USD which increased its import costs as also the change in product mix.

■ On account of a lower topline growth and a sharp increase in raw material costs, margins crashed 960bp yoy and 660bp qoq to 10.2%. Resultant, PAT for the quarter declined 70%yoy to 493mn (we saw Rs1.1bn).

Other Key highlights:

• Given an uncertain outlook for both the automobile and the tractor industry, the company has reduced its capex for CY09 to about Rs2.5bn

• During the quarter the company has bought back and extinguished about 365,627 equity shares after which the equity capital stands reduced to Rs317mn. Post the buyback, the promoter holding has gone upto about 70.6% from about 69.8% earlier.

To see full report: BOSCH LIMITED