Bosch’s long tryst with India
Long before ‘Make In India’ became the clarion call to get multinational firms to set up manufacturing facilities, Bosch was doing just that
Mumbai: Right now, Bosch India is in a bit of a spot.
It’s been more than a month since labour unrest began at the company’s Bengaluru factory. On 30 October, in a filing to stock exchanges, Bosch said that losses due to stoppage of work at its plant would be around 2% of the turnover. That’s about Rs.176 crore.
As things stand today, the union and the workmen have filed a writ petition in Karnataka high court, challenging the state government’s 10 October order which prohibited the strike, deeming it illegal.
Now there’s no easy way to say this, but for Prime Minister Narendra Modi’s ‘Make In India’ campaign, this is bad news.
For Bosch, it is a big downer because the company was prominently represented at the ‘Make In India’ conference held in New Delhi on 25 September by Franz Hauber, executive director of Bosch India.
Back then, in his speech, Hauber had articulated his urgency: “We also look forward for further ease of doing business in India through quicker, single-window approvals for greenfield and brownfield projects. We are happy that your government is looking into the much-needed labour reforms to reach worldwide productivity levels. We are sure with you (Indian Prime Minister) leading from the front, your government will bring in the above initiatives quickly.”
Why should Bosch’s troubles bother anyone? Good question.
To understand the scale and significance of Bosch, strip a few vehicles—maybe a few cars, diesel and petrol, trucks and perhaps a tractor.As you strip down each of them, part by part, here’s what is likely to have come straight out of the 10 factories of the German automotive component giant: the fuel injection system, for both diesel and gasoline engines, which determines how much fuel to let into the engine every time the accelerator is pressed; electronic control units (ECU), or simply the brain of the vehicle, which pick signals from the various sensors and tell the vehicle what to do, like how much fuel to inject; then there is the whole braking system—disc, pads, master cylinder, and the anti-lock brake system; the start-stop system which, while keeping the engine cool, also helps in economy, saving fuel by almost 8-12%; electric motors, all sorts of them, for instance, those used in power windows; spark plugs; windshield wipers and motors; starters; horns; fans; timing belts; batteries; bulbs; fuel, oil and air filters; and a navigation system to get you from place A to B without losing your way.
All of this—and this is still not the whole laundry list, but you get the drift.
Think about it like this—there’s a bit of Bosch in everything that’s mission critical in an automobile.
Steffan Berns, president and country head of Bosch India, puts it quite well.
“Bosch is one of the major, if not the largest, automotive suppliers in all vehicles,” he says. “We produce essential parts which are required to make a vehicle clean, economical, safe and comfortable.”
Then again, Bosch is not all about automotive components. The company also makes power tools such as drilling machines, home appliances such as refrigerators, washing machines, dishwashers and dryers. It makes diagnostic tools for automotive applications, such as battery testers. It makes car washers. In its garden tools business, it makes lawn mowers and chainsaws. This list, again, is long. But it helps to put across an important point.
Long before Modi’s “Come, Make In India” became the clarion call to get multinational companies to set up manufacturing facilities in India, Bosch was doing just that.
Bosch entered India in 1922, when Illies & Company set up a sales office in Calcutta (now Kolkata). For three decades, the company operated in the Indian market only through imports. The opportunity to set up a manufacturing plant came in 1951, when the Indian government under the five-year plan set a target to build some 50,000 stationary diesel engines for irrigating fields by 1956. Motor Industries Co. Ltd (MICO) was founded in 1951, with Robert Bosch GmbH picking a 9% stake and the rest held by its then-trading partner, Ghaziabad Engineering Company.
Over the years, Bosch has grown. And a few numbers should put this in perspective.
In 2013, the Bosch Group in India had a turnover of about Rs.13,200 crore, a three-fold increase over a decade ago. Bosch currently employs 27,000 people across 10 manufacturing locations and seven research and development (R&D) facilities in the country. Since 2010, the group has invested about Rs.5,400 crore in the expansion of manufacturing and research facilities, of which Rs.1,200 crore was invested in 2014 alone.
“We are active in all the businesses that Bosch is in worldwide,” says Berns. “In many cases we are market leaders. In all this we have had good, profitable growth in India.”
It is another matter altogether that Bosch’s success stands in stark contrast to the predicament faced by many foreign manufacturers, too daunted by India’s reputation for bureaucratic inertia, the rigidity of its labour laws and its infrastructural deficiencies to set shop here.
Which brings us to an important question: what makes Bosch successful?
Three reasons: first, local manufacturing tailored to the needs of the market; second, a strong R&D set-up to support local and global product development; and third, empowering people to work across functions, teams and geographies.
Berns says that Bosch’s core strength has been the company’s ability to manufacture its products according to the needs of the Indian market—and at a competitive price.
Take, for instance, the company’s role in the development of the Tata Nano. A first in the Bosch ecosystem, the company developed the two-cylinder common rail direct injection system with an enhanced ECU for the car.
While the Nano has sputtered and coughed, it is a successful model from a design and engineering point of view, says V.G. Ramakrishnan, managing director of consulting firm Frost and Sullivan, South Asia.
“With the Nano, lot of things got challenged,” he says. “It was a huge learning exercise in frugality for Bosch which till then had developed technology solutions at a German cost.”
Bosch and Tata Motors have continued their collaboration and are now working on developing a 1.1-CRS (common-rail system) for the Nano’s diesel version.
A lot of credit for this goes to Bosch’s R&D unit in India, the largest outside its home market in Germany. Berns compares the development work in India with what he calls building a house with balconies and then shrinking it down to windows—just enough to make sure everything works.
“We have been able to scale it down to the minimum requirements because over time when you do development, it is like a house and you add more and more balconies,” he says. “And it is a very difficult correlation between future buildings because there may be some correlation between the house and the balconies. Therefore, you have to start afresh and say what really is the market requirement. A small engine, for example. I wouldn’t call it balconies but windows.”
Over the years, the R&D activity has reached what Berns calls a maturity stage. Earlier, the R&D team would be called in to work on a specific part or software; now the team can work on the complete life cycle of developing a product.
“Starting from the design work to discussion to doing validation,” says Berns. “In February 2014, Bosch launched a research and technology centre to look at which products could be developed in a few years from now,” he added.
It would be fair to say that people are the key here. And the test of any successful multinational company is its ability to rotate and grow its talent pool. Bosch scores high on that. A large part of the company’s engineers and management have spent some time abroad, in Germany, Japan, the US, or any of the other 50 markets where the company operates.
“It takes many years to build this, but I think it is a very valuable asset,” says Berns.
There’s another dimension to rotation. Since Bosch operates in various businesses, the management team is often rotated across businesses.
“So more on electronics or engine parts or some are on brakes, there we also rotate people, to transfer experience from one unit to another. And the third part is also cross-functional areas,” adds Berns.
The man himself is a good example of that. Berns joined the Bosch group in 1990 in engineering in the diesel systems business. In 1994, he became the department head for engineering inline pumps and governors in diesel systems. From 1996 to 1999, he had his first stint in India as general manager of R&D and technical sales at Bosch Ltd (then MICO), Bangalore.
After his tenure in India, he returned to Stuttgart and headed the diesel systems electronics for around seven years before he was nominated to the board of gasoline systems as executive vice-president, engineering, looking after gasoline, transmission control and electrification.
In 2013, he came back to India as managing director of Bosch Ltd and president of Bosch Group India. “I would say at an average I changed my job every four years,” he says.
It is another matter altogether that his second stint has been far challenging compared with the steady growth years of the late 1990s. In the last few years, Bosch India’s financial performance has been flat due to the rupee’s depreciation and a long lean period for the Indian automobile industry. Add to that Bosch’s labour troubles.
Berns is hopeful that the ‘Make In India’ campaign will make things simpler, especially on taxation and labour. “You need something like this,” he says. “Everything will depend on the implementation and this has to follow now.”
Shally Seth Mohile contributed to this story.
Editor's Picks »
- Policy rethink and higher volumes to aid container shippers
- DCB Bank delivers a strong Q2 but pressure on margins foreseen
- Havells India: Rising costs give a jolt to profitability in September quarter
- All’s well at Mindtree, except for high client concentration risk
- India’s rising steel demand is making companies starry-eyed