Profits from Indian operations to fall: Bosch

Written by Agencies | Frankfurt, September 28: | Updated: Sep 28 2008, 18:48pm hrs
German auto component major Bosch has said it expects profit from the firm's Indian operations to drop in the current year on account of high interest rates, increased commodity prices and overall inflation.

"... overall in the first six months of 2008, we were making reasonably good margins, reasonably good profits, but they are nowhere near what we used to make in the past," Bosch Managing Director V K Viswanathan said here.

The company, however, would make profits on margins this year too, he added.

"In the last six months, our profits managed to keep in line with that of the first half of the previous year, primarily because we have had some other income. Our turnover so far has grown by about 13-14 per cent in terms of sales growth but our profit growth has not been very well," Viswanathan said.

Bosch had posted a total income of Rs 4,576.54 crore during 2007 with a net profit of Rs 609.21 crore.

He blamed high interest rates, rising commodity prices and overall inflation as causes for the current slowdown in the auto industry.

"Interest rates caused by a high inflation have led to a credit squeeze and also cost of borrowing going up significantly. More than 70 per cent of the vehicles (in India) are sold through finance," Viswanathan said.

Overall inflation has affected the consumer's ability to spend, resulting in a fall in demand, he added.

"Commodity prices have also shot up very strongly, like steel, aluminium, copper and crude prices. These have led to increase in vehicle prices. On the other hand, even running costs are going up," he said, adding, overall there has been a significant slowdown in the automotive industry.