After giving a hint of manpower adjustments in the wake of a major decline in its first quarter profit last year due to slowdown in the auto industry, German auto component major Bosch may lay off hundreds of workers in India in the next few years.
Bosch's India unit is expected to slash “a couple of thousand" jobs in the next four years, said a report in Mint quoting Bloomberg.
The company may retrench about 10 percent of its 3,700-strong workforce in the administrative and management segments while it could be a little more than 10 percent of the 6,300 workers in the manufacturing level, Bosch India Managing Director Soumitra Bhattacharya was quoted as saying in the report.
“There is a transformation happening across the industry. We looked at that as an opportunity to transform the company even before the downturn started," Bhattacharya was quoted as saying in the report.
In August last year, Bosch had said it initiated several measures including "manpower adjustments" to remain competitive in the market, reported PTI. The auto parts maker had said this after it reported a 35.04 percent decline in its consolidated net profit at Rs 279.95 crore for the first quarter ended 30 June 2019, hit by a slowdown in the domestic automobile industry.
During the period under review, the company's revenue from operations declined to Rs 2,778.82 crore for the April-June quarter from Rs 3,212.15 crore in the year-ago period, Bengaluru-based Bosch had said.
"In light of this, the company has initiated several transformation projects, including restructuring, to remain competitive. The company has set up a provision of Rs 82 crore towards restructuring, reskilling and redeployment, that has been disclosed as an exceptional item for the quarter ended June 30, 2019," Bosch said.
In December last year, most of the carmakers like Hyundai, Tata Motors and Honda registered negative growth in vehicle sales. Only Maruti Suzuki and Mahindra & Mahindra showed some recovery in the month after the decline for almost ten straight months.
In September, major automobile makers, including Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors, Toyota and Honda had reported double-digit decline in domestic passenger vehicle sales as the onset of the festive season failed to lift the ongoing slump in the auto industry.
As the crisis in the country's auto sector deepened last year, automakers, parts manufacturers and dealers had laid off about 3.5 lakh workers between April and July last year.
The industry’s plight was highlighted by the Automotive Component Manufacturers Association of India (ACMA), with the trade body’s director-general, Vinnie Mehta, saying the sector was experiencing a “recessionary phase”.
In August last year, the Federation of Automobile Dealers Associations (FADA) had said that around two lakh jobs had been cut across automobile dealerships alone in the country in a span of three months from May 2019 as vehicle retailers take the last resort of cutting manpower to tide over the impact of the unprecedented sales slump, reported PTI.
"The majority of job cuts have happened in the last three months...It started around May and continued through June and July," FADA President Ashish Harsharaj Kale had said.
In July last year, it was reported that the auto ancillary sector had registered up to 15 percent loss in jobs since September 2018 due to fall in revenues because of a decline in auto sales for the past ten months.
As per the ACMA data, the auto component manufacturing companies' revenue growth had declined 14.5 percent in FY19 following the slowdown in auto sales from 18.3 percent in FY18. The sector had recorded a turnover of to Rs 3.96 lakh crore in FY19 as compared to Rs 3.46 lakh crore in FY18.
In September last year, ACMA had sought uniform 18 percent Goods and Services Tax (GST) in order to help companies with their working capital borrowings which could be used to invest in long-term assets.
The auto components industry employed about 50 lakh people and contributed 2.3 percent to India's Gross Domestic Product (GDP).
— With inputs from agencies
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Updated Date: Jan 02, 2020 19:14:34 IST