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Bosch provides technology and services in: Mobility Solutions, Industrial Technology,
Consumer Goods, and Energy and Building Technology, IOT
2. Robert Bosch GmbH and its 440 subsidiaries
3. Bosch Group in India operates through 13 companies.
4. Automobile Sector remains at core of the operations. (85% dependent on Auto)
5. Bosch invested Rs 460 Cr in capital expenditures in 2017-18.
6. Bosch also provides products like Bosch Power tools, Surveillance and security solutions,
Sensors
7. Dividend per share: Rs 100 totalling Rs 3679.4 Million. Dividend payout ratio: 26.8%.
8. Other operating revenue at Rs 2108 million decreased by 18.7 percent over the previous
year, due to higher provision written back in the previous year.
9. Other Income: Other income, which mainly comprises of mark-to market gains, profit on
sale of marketable securities, dividend and interest income, decreased by 17.1percent over
the previous year. Income from net gain on financial assets measured at Fair Value through
Profit and Loss (FVTPL) was Mio INR 2,185 for the year under review as against Mio INR
3,172 in previous year. Income from interest on bank and inter-company deposits increased
by 1.9 percent due to higher asset base.
10. Other Comprehensive Income: The investments in equity securities are classified as financial
assets through OCI as per Ind AS 109. Changes in fair value of equity securities is recognised
under OCI.
11. Inventory: Inventory as on March 31, 2018 increased by 3.9 percent to Mio INR 12,258 from
Mio INR 11,804 as on March 31, 2017 to support growth in sales. However, Inventory
Turnover Ratio has reduced by 1 day as an effect of GST implementation, which enabled
consolidation of warehouses and continuous focused measures on Inventory reduction.
Inventory:
Rs 12258 million
Total current assets: Rs 73346 million
Total Assets: Rs 139274 million
Inventories are valued at lower of cost or net realisable value(LCNRV), consistent with
conservatism principle. Net realizable value is expected selling price minus any cost of
completion, disposal and transportation. If Inventory is carried on the accounting records at
greater than its net realizable value (NRV), a write-down from the recorded cost to the lower
NRV would be made. It is reported in Income statement as expense (write down of
inventory). Following the concept of Conservatism, even if the NRV is higher than cost, we
record at cost.
Weighted average Basis: WAC assumes that goods are homogeneous. Is it difficult to make
any other cost flow assumption (FIFO?)? Problem with WAC is it assigns no more importance
to current prices than paid several months ago.
Cost of raw materials, traded goods and indirect materials include cost of purchase and
other costs incurred in bringing the inventories to their present location and condition.
Cost of FG, WIP includes RM, Direct labour, other direct costs, and production overheads.
They have disclosed changes in inventories of FG, WIP and stock in trade but not RM.
Opening and closing stock for RM has not been mentioned.
Bosch has not mentioned the amount of any inventory write down as expense separately.
According to Indian AS2 a firm should disclose inventory write down as expense.
Also, it should mention the amount of any reversal of any write-down that is
recognised as reduction in the amount of inventories recognised as expense; Bosch has not
disclosed it separately. Also the circumstances or events that led to reversal or write downs
of Inventory.
Cost flow being used by Bosch is Weighted average Cost (WAC). Ind AS2 grants
liberty of choice between FIFO and WAC. The competitors of Bosch like Siemens,
Delphi have followed the same cost flow method in their annual reports [
Reference: Siemens page no: 113, Delphi Annual report, page no: ].
Bosch largely being a manufacturing firm regularly purchases stocks at high
volumes. The stocks purchased are highly homogeneous in nature and hence
Bosch has gone with WAC. However, the concern with the WAC method is that
the timing of additional purchases can influence the numbers on book – majorly
profits and COGS. WAC also assigns equal importance to the current and old
prices unlike FIFO. [ Reference: textbook, page no: 189,190].
Amount of Inventory recognised as an expense is Rs 36 million for which adequate disclosure has not
been provided. It is not clear as to with which line item in Expense has this been clubbed in Profit
and Loss Statement. Furthermore, Rs 14 million worth of Inventory has been written down to Net
realisable value as compared to Rs 70 million last year. This has been recognised as an expense and
has been clubbed with ‘Changes in inventory of Finished goods, WIP and stock in Trade’ line item in
Income statement. There is no reversal of any write down of Inventories in current
reporting period. Ind AS2 prescribes carrying amount of inventories, if any, to be
pledged as securities for liabilities. For Bosch this item is zero. [Ind AS, page
no: 697]