M&A Critique

BOSCH on the path to an exciting journey

Combining innovation and focus on core business, Bosch India has been able to maintain its leadership despite many macro and micro headwinds.

Bosch Group is a leading global supplier of technology and services. It comprises of Robert Bosch GmbH and its roughly 440 subsidiaries and regional companies in 60 countries.

BOSCH has been successful in creating value for its promoters and shareholders.
Bosch has been operating in India for more than nine decades through Bosch Limited. The business divisions of the company include diesel systems, gasoline systems, packaging technology, power tools, automotive aftermarkets, starter motors & generators, energy & building solutions and thermos technologies and security technologies.

The company’s non-automotive business (Others) comprises of Industrial Technology, Consumer Goods and Energy and Building technology. Over the last five years, non-automotive segment’s contribution in total revenue increased marginally from 10% in 2011 to 13% in 2016.

Table 1: Revenue Contribution (All Figures in INR Million)

Particulars Automotive Others
Revenue 92,841 13,481
EBIT 15,716 805
Capital Employed 13,289 2,304
RoCE 118% 35%

Restructuring during last 5 years


After an agreement between Robert Bosch GmbH and SPX Corporation, USA in January 2012, the company had acquired Indian unit of ‘Service Solutions’ business from SPX India Private Limited in December, 2012 on a going concern basis for an aggregate consideration of Rs 9.9 crore.

2016: Sale of Starter Motors and Generators business in India

In a move to realign its global Starter Motors and Generators division (SG), all the assets and liabilities pertaining to Starter Motors and Generators, transferred as a going concern on a slump sale basis for Rs 486 crore to a 100% subsidiary of Robert Bosch Starter Motor Generators Holding GmbH.

This division was started in 1989 and it broke even in 2013. Despite contributing 10% to the top line, EBIT contribution of the division was only 1% to the Bosch Limited’s total EBIT.

Wealth Creation for shareholders

Capital Appreciation

Last five years were exceptionally good for shareholders. Bosch Limited’s share price soared 200% as against the 30-share S&P BSE Sensex, which registered double-digit growth rate.


Table 2: Dividend Pay-out Over the Years

Year Dividend per share
2012 50
2013 60
2014 55
2015 85
2016 85
Total 335

In 2015, the promoter, Robert Bosch GmbH received Rs 190 crore in the form of the dividend. In 2016, Bosch maintained the same dividend.


With the free cash flow, if the company has no acquisition opportunity then, it’s only option is to go for a buyback.
In August 2016, the company announced the buyback of 8,78,160 equity shares representing 2.79% of pre-buyback equity share capital of the company at Rs 23,000 per equity share amounting to Rs 2019 crore. Promoter Robert Bosch GmbH offered its share for the buyback. Out of total shares offered for buyback, 95.3% of total shares were offered by the promoters. As result of the buyback, promoters shareholding decreased to 70.49% from 71.18%.


Please note that 2014-2015 represents 15 months’ period starting from January 2014 to March 2015.

Table 3: Capital Expenditure & Free Cash Flows (All Figures in INR Million)

Particulars 2016 2015 2013 2012
Fixed Assets 12,869 12,435 13,777 12,716
Depreciation 3,950 5,484 3,842 3,670
Operating Cash Flow 13,259 13,942 10,570 9,591
Capital Expenditure 4,384 4,142 4,903 7,262
Free Cash Flow 8,875 9,800 5,667 2,329

Table 4: Other Financials Year-Wise (All Figures in INR Million)

Particulars 2016 2015 2013 2012
EBIT % 16.95% 15.84% 13.80% 14.97%
Borrowings 191 555 1,316 1,850
Net Worth 82,807 73,470 62,943 55,733
RoE 15.05% 18.21% 14.06% 17.19%
Capital Employed 82,998 74,025 64,259 57,583
RoCE 22.45% 27.07% 19.56% 23.47%
Total Assets 1,14,956 1,04,308 88,910 79,039
Fixed Assets Turnover Ratio 0.96 1.21 1.02 1.14
EPS 397 426 282 305


Over the years, Bosch India’s focus and investment in technology paved the way for it to maintain its position. However, it generates free cash flow almost equal to PAT (as capital expenditure and depreciation in last three years are equal) which it does not need for expansion. If the company has no acquisition opportunity or plans, then the only option available is to go for frequent buyback as permitted under the law to compensate its shareholders. Bosch group has eight other group companies in India. It may also consolidate one or more of them if any of them need cash for expansion and in the process payout to holding company or increase its stake in the listed entity.

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Aniruddha Jain