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Directors Report of Bosch Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their SIXTY THIRD Annual Report together with the Audited Financial Statements for the fifteen months period from January 01, 2014 to March 31, 2015.

The Board of Directors of the Company at their meeting held on June 05, 2014, inter-alia, approved the change in the financial year of the Company to commence from April 01 of every year and to end on March 31 of the following year to comply with Section 2(41) of the Companies Act, 2013 ('Act'). Consequently, as a transitionary arrangement, the current annual accounts and Directors' Report of the Company are for a period of fifteen months from January 01, 2014 to March 31, 2015. Therefore, figures for the period under review are not comparable with the last financial year.

1. Financial Results

The following are the financial results:

(Rs. Million)

Net Sales (excluding recovery of 117,414 85,151 duties and taxes)

Of which Export Sales 14,625 10,578

Profit Before Tax 19,559 12,566

Less: Provision for tax 7,463 4,070

Add: Deferred tax and tax

adjustments relating to 1,281 351

earlier years

Profit After Tax 13,377 8,847

Appropriations:

Dividend:

- Dividend recommended at 2,669 1,727 Rs.85 per share (previous year: Rs.55 per share)

Tax on Dividend 543 308

General Reserve 1,337 885

Balance carried forward 8,828 5,927

Total 13,377 8,847

Net sales for the fifteen months period ended March 31, 2015 grew by 37.9 percent over the previous twelve months period ended December 31, 2013. The Profit Before Tax (PBT) for the period ended March 31, 2015 as a percentage of net sales was at 16.7 percent as compared to 14.8 percent for the previous year. The improved performance of the Company is mainly due to increased operational efficiencies and favourable product mix.

The Profit After Tax (PAT) as a percentage of net sales was 11.4 percent for the fifteen months period ended March 31, 2015 as against 10.4 percent for the twelve months period ended December 31, 2013.

2. Dividend

The Board of Directors recommend a dividend of Rs.85 per equity share for the fifteen months period ended March 31, 2015 as against a dividend of Rs.55 per equity share for the twelve months period ended December 31, 2013. This dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting.

4. Key Manufacturing Facilities

4.1 Bengaluru (Karnataka)

The Bengaluru Plant, established in 1953, is a pioneer in diesel system products catering to both domestic and export customers,

The Plant achieved a milestone of 1 millionth Common Rail production in March 2014, In line with the strategic focus to be fit for the future, various initiatives such as manpower restructuring, cost reduction and productivity improvement, etc, were undertaken during the year,

4.2 Nashik (Maharashtra)

The main products manufactured at Nashik Plant are Nozzles, Nozzle Holder Assemblies and the Common Rail Diesel Injection system,

The Plant faced a huge challenge mainly on account of steep drop in customer demand, This led to pressure on cost competitiveness and profitability, This was countered by various measures such as closures, break to temporary workmen, inventory reduction, focus on localization, etc,

As an eco-friendly measure, a 68 kWp solar powered generator for generating electricity in the administrative block of the Plant was installed, This is expected to bring down the carbon footprint by approximately 94 tons of C02 per year,

4.3 Jaipur (Rajasthan)

The Jaipur Plant mainly produces Distributor (VE) Mechanical and Electronic Diesel Control Pumps which are used in light and heavy commercial vehicles, sports and multi-utility vehicles and tractors,

The Plant witnessed 7 percent increase in the volumes as compared to 2013 owing to good export orders and local demand, The year also witnessed a significant reduction in the field complaints, resulting in enhanced customer confidence,

4.4 Naganathapura (Karnataka)

The Naganathapura Plant completed 25 years of operations in 2014, The Plant was able to sustain its growth despite a weak domestic market and uncertain export markets, Improvement in plant productivity and lean concepts enabled both Starter Motors and Generators and the Spark Plug businesses to remain competitive,

4.5 Verna (Goa)

During the period under review, the Verna Plant completed two years in its new state-of-the-art manufacturing facility, In line with the business strategy the plant transformed from being a single equipment seller to complete line solution seller, The plant is gearing up to cater to markets beyond geographical boundaries,

4.6 Kumbalgodu (Karnataka)

The Solar Thermal Collector production facility made a steady progress in 2014, almost doubling production compared to the previous year in a very competitive market, New product variants such as the Evacuated Tube Collector were successfully introduced,

4.7 New Facilities

The year 2014 saw the setting up of three new facilities at Bidadi (for Diesel Systems), Gangaikondan (for Gasoline Systems) and Chennai (for Power Tools),

A brief overview of these facilities is given below:

4.7.1 Bidadi (Karnataka)

With the addition of new products in the upcoming years and restriction on expanding the existing facility at the Bengaluru Plant, identifying a new location to supplement the existing facility was the need of the hour,

The Bidadi Plant is located in the Bidadi Industrial area at a distance of 35 kms from Bengaluru and has a super builtup area of approximately 38,000 sq, meters,

While one assembly line for Common Rail has been commissioned, full-fledged operation is expected by 2017-18,

4.7.2 Gangaikondan (Tamil Nadu)

This manufacturing unit is set up at State Industries Promotion Corporation of Tamil Nadu (SIPCOT) Gangaikondan, Tamil Nadu. It will facilitate the Company's Gasoline Systems business to further localize manufacturing and increase cost- competitiveness. Prior to the setting up of this new manufacturing facility, the Gasoline Systems division shared the Company's Naganathapura manufacturing facility for its local production.

This facility will produce powertrain sensors, fuel delivery modules and air management components for automotive and two-wheeler systems.

4.7.3 Chennai (Tamil Nadu)

The Company has set up a new Power Tools manufacturing plant approximately 37 km from Chennai at Oragadam, Tamil Nadu.

The Plant will cater to the requirements of new products for the Indian market and aims to be a low cost location in Asia Pacific region.

Commercial production at the Chennai Plant is expected to commence in later half of 2015.

5. information Technology (IT)

As part of customer focused initiatives, System to System communication has been enabled for select global OEMs from specific supplying locations. For Indian OEMs, SIAM-ACMA initiatives are being pursued. In an effort to empower the field representatives in Automotive Aftermarket, a new CRM software has been implemented in October 2014 to reap the benefits of advancement in IT and communication fields.

Bosch ERP systems have been enabled for the new manufacturing locations at Bidadi and Gangaikondan, providing end to end business operations.

6. Change initiatives

6.1 Continuous Improvement Process (CIP)

The "System CIP" concept is being widely used in the direct areas. The maturity level of "System CIP" in the direct areas has been on the rise. Extending of "System CIP" concept to indirect areas has been started. The existing Self Assessment Methodology of CIP activities have been modified to incorporate "System CIP" and other simplifications and the new assessment methodology is planned across all units by the end of 2015. CIP in indirect areas is gaining momentum with increasing focus on savings through CIP activities in indirect functions.

6.2 Bosch Production System (BPS)

The BPS Maturity Assessment methodology is being used for improving the maturity level of BPS implementation in the plants. "System CIP" is playing an important role for strengthening BPS implementation. Manufacturing lines are further improved using BPS tools before moving these lines to new manufacturing locations.

Bosch Connect is being used for quick and easy interaction amongst plants. This platform is aimed at worldwide communication of best practices of BPS and also for finding solutions to existing issues through knowledge sharing and experience from like cases.

7. Business Excellence

The Diesel Systems business division has adopted the European Foundation for Quality Management (EFQM) model for Business Excellence at its manufacturing locations in Bengaluru, Nashik and Jaipur from 2004. 'Living Business Excellence' is one of the key strategic themes and is included in the Vision and Mission statements of this division as 'Business Excellence at work'. Strategic measures/ targets are developed, deployed and reviewed across plants and connected corporate functions through a structured strategy management process. Key performance indicators are measured to enable the achievement of required business results.

8. Awards and Recognition

During the period under review, the Company won several awards as recognition for its commitment to excellence. Few such awards are:

* Fortune India's third annual survey of the country's most admired companies ranked the Company number one in the Auto Components sector.

* The Company received the Export Excellence Award 2014 for "Best Manufacturer Exporter" from the Federation of Karnataka Chambers of Commerce & Industry (FKCCI)

* The Innovation award from Mahindra & Mahindra - Auto and Farm sector for its "Innovation Driven Approach" by introducing 'Innovative, Overall Cost Effective & Field Fuel Efficient A-Pump System for Arjun 605 DI BSIIIA Tractors >50HP category'.

* The Intersolar Award 2014 for the Best Solar Project in the Industrial and Commercial category for the 1 MW first-of-its-kind solar project on a water lagoon for the Maruti Suzuki Manesar plant.

9. Corporate Social Responsibility (CSR) Policy and Initiatives

The Board of Directors have constituted a CSR Committee comprising of Mr. Prasad Chandran, Independent Director, Mr. Bhaskar Bhat, Independent Director, Dr. Steffen Berns, Managing Director and Mr. Soumitra Bhattacharya, Joint Managing Director as its members. Mr. Prasad Chandran, is the Chairman of the Committee. The CSR Committee oversees the Company's CSR initiatives under the overall supervision and guidance of the Board of Directors.

For details of the CSR initiatives and activities of the Company please refer Principle 8 of the Business Responsibility Report and Annual Report on CSR Activities enclosed as Annexure 'B' to the Directors' Report.

10. Subsidiary Companies

As the aggregate assets and income of MICO Trading Pvt. Ltd., as on March 31, 2015 are not material, no consolidated financial statements under Accounting Standard 21 "Consolidated Financial Statements" as notified under Section 211(3C) of the Companies Act, 1956, has been prepared.

As required under Section 212 of the Companies Act, 1956, annexed hereto are the Audited Statement of Accounts, the Report of the Board of Directors and Auditors' Report for the fifteen months period ended March 31, 2015 of MICO Trading Pvt. Ltd. A separate statement containing the salient features of the financial statement of subsidiary, associates and joint ventures under the prescribed format has also been enclosed with the Directors' Report of the Company as per the requirements of Section 129 of Companies Act, 2013 as Annexure 'E'.

11. Directors

Mr. Franz Hauber (DIN : 06485529) was appointed as an Alternate Director to Mr. Peter Tyroller with effect from January 01, 2014.

Mr. Hauber ceased to be a Director of the Company with effect from the close of business hours on February 28, 2015. The Board of Directors places on record their deep appreciation for the contribution and services rendered by Mr. Franz Hauber during his tenure as Director of the Company.

Dr. Andreas Wolf, Executive Vice President was appoined as an Alternate Director to Mr. Peter Tyroller with effect from March 01, 2015. Consequent to his appointment as an Alternate Director, Board appointed him as Whole-time Director for a period of four years with effect from March 01, 2015.

Brief profile of Dr. Andreas Wolf forms part of the Explanatory Statement of the Notice dated May 29, 2015, convening the 63rd Annual General Meeting of the Company.

Names of companies/firms in which Directors of the Company hold office as Director, etc. as on the date of this report are given below:

Mr. V. K. Viswanathan (DIN : 01782934)

* Magma HDI General Insurance Company Limited

* Bharti Airtel Limited

* HDFC Standard Life Insurance Company Limited

* Century Metal Recycling Private Limited

* Indo-German Chamber of Commerce (Committee Member)

* K S B Pumps Limited

* Credit Information Bureau (India) Limited

Mr. Peter Tyroller (DIN : 06600928)

* Robert Bosch Korea Limited

* Robert Bosch (South East Asia) Pte. Limited

* United Automotive Electronic System Co. Ltd.

* DEKRA SE (Member of the Supervisory Board)

Mr. Bernhard Steinruecke (DIN : 01122939)

* Zodiac Clothing Company Limited

* Nuremberg Messe India Private Limited

* HDFC ERGO General Insurance Company Limited

* Apollo Munich Health Insurance Company Limited

Mrs. Renu S Karnad (DIN : 00008064)

* GRUH Finance Limited

* Housing Development Finance Corporation Limited

* HDFC Bank Limited

* HDFC Asset Management Company Limited

* HDFC ERGO General Insurance Company Limited

* HDFC Standard Life Insurance Company Limited

* Indraprastha Medical Corporation Limited

* EIH Limited

* ABB Limited

* Feedback Infrastructure Services Private Limited

* Lafarge India Private Limited

* HT Parekh Foundation

* HDFC PLC Maldives

* WNS (Holding) Limited

* HIREF International LLC

* HIREF International Fund II PTE. Ltd.

* HIREF International Fund PTE Ltd.

Mr. Prasad Chandran (DIN : 00200379)

* Indo German Chamber of Commerce (Committee Member)

* Coromandal International Limited

* HDFC Standard Life Insurance Company Limited

* Public Concern for Governance Trust (Trustee)

* SEEGOS (Proprietorship Firm)

Mr, Bhaskar Bhat (DIN : 00148778)

* Titan Company Limited

* Titan International Middle East FZE

* Trent Limited

* Titan Time Products Limited

* Favre Leuba AG, Switzerland

* Tata Ceramics Limited

* Titan Engineering & Automation Limited

Dr, Steffen Berns (DIN : 06449396)

* Robert Bosch Engineering and Business Solutions Private Limited

* MICO Trading Private Limited (Director & Member)

* Robert Bosch (Bangladesh) Limited

* Confederation of Indian Industry (National Council Member)

* Robert Bosch Lanka (Private) Limited

* Indo German Chamber of Commerce (Committee Member)

Mr, Soumitra Bhattacharya (DIN : 02783243)

* Bosch Electrical Drives India Private Limited

* MICO Trading Private Limited (Director & Member)

* Automotive Component Manufacturers Association of India (Executive Committee Member)

* Bosch Rexroth (India) Limited

* Confederation of Indian Industries (Southern Council Member)

Dr, Andreas Wolf (DIN : 07088505) (Alternate Director to Mr. Peter Tyroller w.e.f. 01.03.15)

* Bosch Automotive Electronics India Pvt. Ltd.

* Bosch Chassis Systems India Ltd.

Dr, Steffen Berns is liable to retire by rotation and being eligible, offers himself for re-election, Brief profile of Dr, Berns is given in the Notice convening the forthcoming Annual General Meeting,

12. Board Meetings

During the period, January 01, 2014 to March 31, 2015, seven meetings of the Board of Directors were held,

The particulars of the meetings and attendance thereat are mentioned in the Corporate Governance Report,

13. Key Managerial Personnel

The following are the Key Managerial Personnel of the Company as on the date of this Report:

Dr, Steffen Berns (Managing Director) Mr, Soumitra Bhattacharya (Joint Managing Director & Chief Financial Officer) Dr, Andreas Wolf (Whole-time Director) Mr, S, Karthik (Company Secretary)

14. Remuneration Policy

During the period under review, the Board of Directors on recommendation of the Nomination and Remuneration Committee approved "Nomination and Remuneration Policy for Directors and Senior Management,"

The Policy, inter-alia, provides for criteria and qualifications for appointment of Director, Key Managerial Personnel and Senior Management, Board diversity, remuneration to directors, key managerial personnel, etc, The policy is enclosed as Annexure 'F' to this Report, The policy can also be accessed at www.boschindia.com under the "Shareholder Information" section,

15. Independent Directors

The Board has an optimum combination of Independent and Non-Independent Directors, In line with the requirements of the Listing Agreement and Companies Act, 2013, half of the Board comprises of Independent Directors,

The following are the Independent Directors of the Company as on the date of this Report:

1, Mr, Bernhard Steinruecke

2, Mrs, Renu S Karnad

3, Mr, Prasad Chandran

4, Mr, Bhaskar Bhat

16. Declaration as to Independence

The Independent Directors have given a declaration to the Company that they meet the criteria of independence as per section 149(6) of the Act,

17. Familiarization programme for Independent Directors

During the year under review, a separate training session for independent directors was organized by the Company, The session covered roles, responsibilities, rights, liabilities and other duties imposed on the independent directors under the new Companies Act, 2013 and the Listing Agreement, It also involved a brief overview on the vital provisions of the relevant latest statutory regulations,

The independent directors are apprised at Board meetings on important developments in various business divisions of the Company, They are also updated on important changes in the regulatory framework and business environment having an impact on the Company,

The aforementioned details have also been uploaded on the website of the Company at www.boschindia.com under the "Shareholder Information" section.

18. Performance Evaluation of Directors

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of the Board as a whole, the Directors individually as well as the working of the Board and its Committees.

A structured questionnaire was circulated to the Board members in this connection. The feedback from the Directors was summarized and ideas for further improving effectiveness of the Board processes, etc. were discussed.

19. Particulars of Employees

The information required pursuant to section 217 (2A)of the Companies Act, 1956 in respect of employees of the Company will be provided upon request. In terms of section 136 of the Act / 219(1) (b) (iv) of Companies Act, 1956, the Reports and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees particulars which is available for inspection by the members at the registered office of the Company during business hours on any working day. Any Member, if interested in obtaining a copy thereof, may write to the secretarial department in this regard.

20. Corporate Governance

A report on Corporate Governance approved by the Board of Directors of the Company and a certificate from the Practicing Company Secretary forms part of this Annual Report. The Company has fully complied with the Corporate Governance practices specified under the Listing Agreement.

A Code of Conduct for Directors and Senior Management, Code of Conduct for Prevention of Insider Trading, Whistle Blower Policy, Rules and Regulations of Service Conduct for Managerial and Superintending Staff and Code of Business Conduct effectively support the Corporate Governance processes.

21. Risk Management

The Company has a well defined Risk Management Policy. The policy has been developed after taking cognizance of the relevant statutory guidelines, Bosch Guidelines on risk management, empirical evidences, stakeholder feedback, forecast and expert judgment.

The policy, inter-alia, provides for the following:

1. Risk Management framework;

2. In-built pro-active processes within the Risk Management Manual for reporting, evaluating and resolving risks;

3. Identifying and assessing risks associated with various business decisions before the materialization of the risks and making informed decisions at all levels of the organization in relation to the Company's capacity to accept certain risks in business ventures;

4. Ensuring protection of shareholder's value through the establishment of integrated Risk Management Framework for identifying, assessing, mitigating, monitoring, evaluating and reporting all risks;

5. Strengthening Risk Management through constant learning and improvement;

6. Adoption and implementation of risk mitigation measures such that they are effective in achieving long-term goals of sustainability by becoming embedded in the business processes and culture of the Company;

7. Regularly review Risk Tolerance levels of the Company as they may vary with change in Company's strategy; and

8. Ensuring sustainable business growth with stability.

In the opinion of the Board, there are no elements of risks that may threaten the existence of the Company.

22. Whistle Blower Policy

The Company has a Whistle Blower Policy which provides a vigil mechanism for dealing with instances of fraud and mismanagement.

Details of the Whistle Blower Policy have been mentioned in the Corporate Governance Report. The Whistle Blower Policy has also been uploaded on the website of the Company at www.boschindia.com under the "Shareholder Information" section.

23. Business Responsibility

Pursuant to Clause 55 of the Listing Agreement, listed companies are required to submit Business Responsibility Report as part of their annual report, covering the principles enunciated in the said clause. Accordingly, a report on Business Responsibility forms part of this Annual Report.

24. Related Party Transactions

All Related Party Transactions entered during the period January 01, 2014 to March 31, 2015 were in ordinary course of business and on an arm's length basis. No materially significant transactions were entered between the Company and its Promoters, Directors, Key Managerial Personnel etc. which may have a potential conflict with the interest of the Company at large. There were no material related party transactions pursuant to the provisions of section 188 of the Act.

Prior approval of the Audit Committee is obtained for all foreseeable related party transactions on a quarterly basis. Details of all related party transaction entered on the basis of the aforementioned approval are placed before the Audit Committee on quarterly basis for their review.

The Company has also formulated a "Related Party Transaction Policy" specifying the manner for dealing with transactions with related parties. The same has also been uploaded on the website of the Company www.boschindia.com under the "Shareholder Information" section.

25. Energy Conservation, Technology Absorption, Foreign Exchange Earnings & Outgo

The report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under section 217 (1)(e) of the Companies Act, 1956 is enclosed as Annexure 'A' to this Report.

26. Auditors

Company's Auditors M/s. Price Waterhouse & Co. Bangalore LLP (Membership No. 007567S/S-200012) retire at the forthcoming Annual General Meeting and are eligible for appointment. They have confirmed to the Company that they are eligible to be appointed as Auditors in terms of Sections 139 & 141 of the Companies Act, 2013 and Rules framed thereunder.

27. Cost Audit & Cost Auditors

Pursuant to General Circular no. 15/2011 dated 11.04.2011 and order dated 06.11.2012 issued by Ministry of Corporate Affairs (MCA) under section 233B(1) of the Companies Act, 1956, M/s.Rao, Murthy & Associates, Cost Accountants, Bengaluru (Regn. No.000065, PAN: AAAFR8892D) were appointed as Cost Auditors for the period January 01, 2014 to March 31, 2015. The due date of filing of the cost audit report is September 28, 2015 in terms of erstwhile Companies (Cost Audit) Report Rules, 2011. Cost Audit report for the year 2013 was filed on June 27, 2014.

Pursuant to section 148 of the Act read with Companies (Cost Records and Audit) Rules, 2014 (as amended), the Board of Directors on recommendation of the Audit Committee appointed M/s. Rao, Murthy & Associates, Cost Accountants, Bengaluru as Cost Auditors to audit the cost accounts of the Company for the financial year 2015- 16. As per the requirements of the Companies Act, 2013, remuneration payable to the Cost Auditors is required to be ratified by the shareholders at the General Meeting. Accordingly, resolution ratifying the remuneration payable to M/s. Rao, Murthy & Associates is included in the Notice dated May 29, 2015, convening the Annual General Meeting of the Company.

28. Secretarial Audit

The Company appointed Mr. Sachin Bhagwat, Practicing Company Secretary, to conduct Secretarial Audit particularly with reference to compliance with Companies Act, 1956/2013, Listing Agreement and relevant SEBI Regulations for the financial year 2014-15. The report of the Secretarial Audit is enclosed as Annexure 'C' to this report.

29. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors report that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going concern basis;

e. proper internal financial controls are in place and that such internal financial controls are adequate and are operating effectively; and

f. systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

30. Details of Loans, Guarantee and investments

Details of Loans made during the period under review pursuant to section 186 (4) are enclosed as Annexure 'D' to this report.

31. Deposits

During the period January 01, 2014 to March 31, 2015, there were no deposits as per the provisions of Companies Act, 2013.

32. Material Changes and Commitments

There were no material changes and commitments between the end of the period under review and the date of this report which could have an impact on the Company's operation in the future or its status as a "going concern".

33. Significant and Material Orders passed by the Regulators or Courts

There are no significant or material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations.

34. Acknowledgements

The Directors express their gratitude to the various Central and State Government Departments for their continued cooperation extended to the Company. The Directors also thank all customers, dealers, suppliers, banks, members and business partners for the excellent support received from them. The Directors would also like to acknowledge the exceptional contribution and commitment from the employees of the Company during the period under review.

35. Disclaimer

The Ministry of Corporate Affairs vide its Circular No. 08/2014 dated April 04, 2014 clarified that the financial statements and documents required to be attached thereto, in respect of financial year commencing prior to April 01, 2014 shall continue to be governed by the provisions of Companies Act, 1956, schedules and rules made thereunder. Though the financial statements and the Auditors' Report have been prepared as per the provisions of Companies Act, 1956, the Company has to the extent possible provided the information in the Board's Report as per the provisions of Companies Act, 2013.

36. Cautionary Statement

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objective, expectations or forecasts may be forward - looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the statement.

For and on behalf of the Board of Directors

V. K. Viswanathan Chairman Date: May 29, 2015


Dec 31, 2013

The Directors have pleasure in presenting their SIXTY SECOND Annual Report together with the Audited Statement of Accounts for the year ended December 31, 2013.

Financial Results

The following are the financial results:

(Rs. Million)

2013 2012

Net Sales (excluding recovery of duties and taxes) 85,405 84,172

Of which Export Sales 10,578 9,402

Profit before tax 12,566 13,462

Less: Provision for tax 4,070 4,163

Add: Deferred tax and tax adjustments relating to earlier years 351 284

Profit after tax 8,847 9,583

Appropriations:

Dividend:

- Dividend recommended at Rs. 55 per share (previous year: Rs. 60 per share) 1,727 1,884

Tax on Dividend 308 306

General Reserve 885 958

Balance carried forward 5,927 6,435

Total 8,847 9,583

Net sales for the year 2013 grew by 1.5%. The Profit Before Tax (PBT) in 2013 as a percentage of net sales was at 14.7% as compared to 16.0% in 2012. The Profit After Tax (PAT) as a percentage of net sales was 10.4% in 2013 as against 11.4% in 2012.

Material costs as a percentage to sales decreased from 56.5% in 2012 to 55.9% in 2013.

Overall, the Profit Before Interest, Depreciation and Taxes for the year shows a decrease of 6.6% over the previous year.

Investments

Capital investment during 2013 was lower than previous year at Rs. 5,113 Mio. as against Rs. 7,262 Mio. in 2012.

Dividend

The Board of Directors recommends a dividend of Rs. 55 per equity share for the year 2013 as against a dividend of Rs. 60 per equity share in 2012. This dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting.

Business Situation

The global economy remained stable in 2013, with a modest recovery from the advanced economies especially in the United States of America and a relatively subdued domestic performance of the emerging and developing economies.

The situation in India was no different, with the domestic market suffering from weak consumer offtake and poor industrial production growth. However, the biggest challenge for India was the weakening rupee, which had to be stabilized to curb the capital outflows. The high inflation and interest rates did not boost the consumer sentiment in the market and thus did not lead to a favorable business environment in 2013 either.

The automotive segment in 2013, which constitutes a major share of our business, continued to lose ground from an already weak growth year in 2012. The domestic sales reflected a decline from 2012, while the export market continued to excel mainly due to good volumes from the three-wheeler segment. The overall production volumes declined by 3% over 2012.

Segment-wise, the tractor industry recorded a positive growth of 15% mainly driven by a good monsoon season and state specific sops. Despite many new model launches in the passenger car segment, the production volumes reduced to 5%. Within the passenger car segment, diesel share was at 46% in 2013, 2% points down from 2012. Production volumes of utility vehicles grew by only 1% over 2012. Commercial vehicles registered a negative growth of 13%. Heavy commercial vehicles were the worst affected with a negative growth of 29%. Light commercial vehicles which started the year on a positive note, ended up with a reduction of 4%. Three- wheeler production volumes registered a moderate 2% growth on account of the demand from export market.

Within this unrelenting tough market that prevailed in 2013, the Company performed moderately better ending up with an overall growth of 1.5%. The non- automotive business continued to grow by 19.1% in 2013 mainly on account of good performances in Power Tools, Packaging, Machine building and the Energy divisions. Sales from automotive segment could not match up to the growth of 2012 and ended up almost flat. Exports aided by the rupee depreciation grew at 12.5% over 2012.

Automotive Technology

Diesel Systems business which maintained its market share declined further by 5.0% in the year 2013 due to the slowdown witnessed by the automotive market throughout the year.

As a clear testimony to the Company''s strong innovation culture and its focus on providing value to customers, a CO2 program has been initiated which will benefit passenger car customers with fuel consumption reduction. The price sensitive and technology intensive low priced vehicle segment portfolio was strengthened further during the year under review with the launch of the Generation 3 Common Rail Systems. The development of a robust and cost effective selective catalytic reduction system was started, which will help in achieving future emission norms and improve fuel efficiency in commercial vehicles.

The launch of A5000 inline type fuel injection pump along with an electronic governor provides off - highway genset manufacturers a robust system solution for the upcoming Stage II emission norms of Central Pollution Control Board.

Despite challenging conditions in the automotive passenger car market, Gasoline Systems division achieved a 4.9% growth over 2012. New technology initiatives at Gasoline Systems for profitable growth include two wheeler Engine Management Systems and Alternate Fuel Systems. Gasoline Systems business has further improved its customer base.

Continuing the journey of transformation, Starter Motors and Generators business registered a 16.3% growth in 2013, despite difficult market conditions.

The New Base Line Generator is an ongoing success which enabled new customer acquisitions along with a good export volume. The business was further strengthened by extending to a second location for the manufacturing of the new Starters.

The Automotive Aftermarket division recorded a growth of 2.5% over 2012.

The existing product range was expanded with new product lines such as batteries, fork oils for two- wheelers and premium / spot lamps for cars.

The division expanded its width and depth of distribution by appointing more than 250 new first trade level customers. A "highlight" of the year was opening of Bosch Car Service Center in Leh at an altitude of 11,562 feet.

A new workshop module named Optimal Diesel Partner for diesel service was launched during the year. In the endeavor to constantly improve the supply chain, new and modern warehouses at Bhubaneswar and Indore for independent Aftermarket and at Pune for OE Spares were set up.

The division has been accredited with ISO 9001:2008 by TUV Nord (India) for design, development, manufacture and service of automotive diagnostic equipments and product marketing, sourcing, supply and warehousing of Bosch Automotive products. Significant progress was made in integration of automotive service solution business acquired from SPX India in the year 2012. Takeover of SPX Service Solutions opened up avenues of becoming a complete solution provider of diagnostic services in the Indian market. Good synergies are established with the current business offerings.

Industrial Technology Packaging Technology

Despite an economic slowdown, Bosch Packaging Technology division recorded a strong growth of 19.2% in net sales in 2013. Especially business unit Confectionery and Food has grown significantly by offering a wide range of products and services.

Confectionery & Food unit saw a big transformation in 2013 from a packaging machine supplier to system solution provider. Focus in the year 2013 was on the development of new products for product line Vertical Form Fill Seal Machine (VFFS). Product line Horizontal Form Fill Seal Machine (HFFS) also picked up very well in the market.

Packaging industry has great potential and is expected to see a double digit growth in the coming years.

Industrial Equipment

The Industrial Equipment division registered an overall growth of 62.4% in the internal and external market segments. The division acquired orders from new customers in the four-wheeler and two- wheeler automotive segment. The division also continued to export assembly lines to Bosch companies across Europe and Asia, during the year 2013.

Consumer Goods Power Tools

The Power Tools division achieved a steady growth of 9.9% in a trying and challenging business environment reinforcing another year of solid growth. For the first time, a unique concept event called ''Construction Monster'' was held in Delhi, Chennai and Mumbai. The event showcased the complete range of construction tools and solutions from Company to the large and medium construction companies. The year also witnessed the launch of Home and Car Washer range.

India''s first Do-It-Yourself store, aptly named ''DIY

Square'' was launched in Bangalore. The store showcases Company''s latest offering of products for the Home, Hobby and Garden segment with opportunity for live DIY experience in a fun way. The division had a spectacular success at the India International Trade Fair (IITF) exhibition, Delhi, with its Home, Hobby & Garden concept attracting more than 2 lakh visitors. The division went online through third party e-retailers which will be one of the key drivers in future.

Energy and Building Technology Security Technology

Security Technology business, excluding onetime project business, grew by 3.4%. The Business Unit (BU) Public Address and Conference Systems (PACo) performed very well recording a growth of 14%. Impressive performances were also registered by BUs of Fire at 17% and Critical Communication Systems at 26% over the previous year. Projects in both public and private sector were successfully executed - covering key verticals such as transportation, government, industry, commercial and places of worship. The highlight project was Adlabs Imagica which uses products from all the business lines of Security Technology. It is one of the largest theme parks in the country.

During the year 2013, the division organized ''Technology Day'' events in key cities across India to showcase its latest technology and product range. Additionally, participation in product introduction days and trade shows like Palm Expo and Broadcast India helped in strengthening the brand presence and product exposure to the target audience. Key products like HD starlight cameras, DCN multimedia and Plena Matrix digital sound system which are technology trend setters were introduced in the market and were well received.

Bosch Security Training Academy continued to impart technology/product training to the concerned target audience across India, including certain Certification Programs in select domains. Bosch Security Systems (CCTV) won the Readers'' Choice

Award – awarded by EFY Group in 2013.

Solar Energy

The division was successful with a healthy order book in both kW and MW scale projects. The division made its foray into the residential sector, by becoming an empanelled solution provider with Agency for Non Conventional Energy and Rural Technology (ANERT), Govt. of Kerala, for the supply of 1 kW solar power packs for homes. Another key highlight of the year 2013 was the empanelment for mini and micro grid rural electrification by Solar Energy Corporation of India (SECI), which is a milestone in itself. The Company proposes to enter into the promising energy efficiency sector of India, Asia and Middle East in 2014 and in this regard the Company has been accredited by Bureau of Energy Efficiency (BEE) as a Grade-1 ESCO (Energy Services Company), which adds to its long lasting credibility and eminence. An extensive network of channel partners and dealers has been developed which will help to leverage substantial growth in 2014 and beyond.

Thermo technology

Bosch Thermo technology division booked revenue across Solar Thermal Systems and Commercial and Industrial Boilers. The export markets for Commercial & Industrial Boilers in Bangladesh and Sri Lanka yielded good results with encouraging customer response. With efforts being made towards customization of products for the Indian market, the Company is investing for future growth opportunities in this area. On the production front, the Kumbalgodu facility commenced the series production of solar flat plate collectors.

Competition and challenges in our business sectors

The year 2013 was seen as challenging year for the Indian economy in general and in particular for the automotive industry. The weak consumer demand and suppressed liquidity in the market triggered by the slowdown and weak market sentiments placed additional pressure on all the manufacturing companies. High inflation and adverse foreign exchange increased the cost pressures and continued to challenge the businesses across all domains.

However, the Company continuously strived to capture every opportunity with its efficient processes and systems. The Company also placed itself with the ever changing demands and requirements from the market. The Company has always considered its people as its most valuable asset and this has always been its core strength. Though the business growth in the year 2013 has been tepid, the year 2014 is expected to revive the growth momentum, while continuing to be demanding. Amidst these challenging times, the Company remains bullish about the future growth prospects of the country and will continue to invest to meet the growing demands of the market.

To improve the competitiveness and to be fit for future in the medium term, focused activities are being carried out on growth, profitability and personnel related areas.

Plants

Bangalore (Karnataka)

The Bangalore Plant faced a big challenge due to steep drop in customer demand which led to huge pressure on cost and flexibility. The Plant was able to mitigate the situation by closures, discontinuation of temporary manpower, budgetary control, inventory reduction and manpower redeployment.

On the employee welfare front, the Plant conducted several cardiac, cancer detections and dental camps in conjunction with the associated hospitals from Bangalore for the benefit of its employees and their dependants.

The Plant participated in the Excellence Awards for Innovation and Creative Automation at the Chennai Trade Centre and won an award under the theme ''Sustaining good performance with grassroots Innovation''. The Plant also won the runners-up award in ''Supplier Quality Improvement Contest (SQIC)'' held by one of the Company''s prestigious customer viz., Kirloskar Oil Engines Ltd.

Nashik (Maharashtra)

The cascading effect of the sluggish demand in the automobile sector was also noticed in the Nashik Plant. The Plant took rigorous cost reduction measures like budget control, postponement of investments etc., to mitigate the cost impacts. The weak market demand, lead to correction in stocks through block closures. The Plant accelerated its value engineering projects for sustainable cost advantage.

In the year 2013, the Nashik Plant initiated standard operating procedures of high technology plasma process called ''C'' coating. This diamond-like carbon coating helps to increase the wear resistance of parts along with high hardness grade. This high investment technology is being used by Nashik Plant to cater to the demand for various products by other Company''s Plants.

In the year 2013, the Nashik Plant won the most coveted ''CII-EXIM Bank Award'' for Business Excellence which signifies the exemplary effort of excellent processes in the Plant.

Jaipur (Rajasthan)

Jaipur Plant crossed a milestone by producing its 5 millionth distributor pump in 2013. The production of the distributor pump ( VE pump) was started in the year 1990.

In the year 2013, the Plant was successful in transferring and commissioning of an assembly line from the Feuerbach Plant in Germany to enhance flexibility in production.

The focus in 2013 for the Plant was ''Quality'' and customer satisfaction. Various quantity initiatives were undertaken by the Plant towards reduction of 0 -km & Field complaints.

2013 was a very challenging year for the Plant due to the downturn of the heavy commercial vehicle market. The market shrunk by ~ 29% impacting the volumes manufactured at the Plant which fell by ~15%. Various pull back measures were initiated to remain cost competitive and sustain profitability.

During the year, a Reverse Osmosis water plant was added as a part of clean water initiative in nearby Vatika village catering to more than 1500 families.

2013 has also been a year of many awards and accolades for the Plant. The Plant was honoured with "PRIZE" In Cll-EXIM Bank Awards for Business Excellence 2013. Awards were also won from Rajasthan State Industrial Development and Investment Corporation (RIICO) for overall best performance, 1st Runner Up in innovative practices and 2nd Runner Up in most efficient water use, recycling and recharge category.

Naganathapura (Karnataka)

Naganathapura witnessed a strong growth of 13 % over previous year inspite of the weak domestic market driven strongly by Starter Motors and Generators, Spark Plugs and Gasoline

Systems divisions. The dip in the domestic market was countered by increased market share , while increasing export business significantly.

Along with significant improvements in productivity and quality, the Plant was able to equally contribute through improvements in facility maintenance and Health/Safety/Environment aspects, while driving many key initiatives with high associate involvement. The Plant was awarded the "Uttama Suraksha Puraskara" by National Safety Council (NSC) – Karnataka for its focus on higher levels of safety within the Plant which manifested itself in a significant reduction in safety linked incidents inside the Plant.

In 2013, the Plant continued to drive corporate social responsibility activities with focus on health & hygiene and road safety.

Verna (Goa)

The Verna Plant, which is the production unit for the packaging division provided a solid base for growth in 2013. Aided by the pro-active measures to tackle the economic slowdown, the Plant made good progress during the year.

Development initiatives towards products suited to the Indian market gained momentum. Some of the initiatives were - positioning the Plant as a solution provider rather than just a machine manufacturer; stabilizing the Horizontal Machine portfolio; partnering with customers right from the product development stage thus enabling the Company to develop highly specific requirements such as a stainless steel version of confectionery machines, dual mixed product in the same pouch etc., and localizing the critically manufactured parts leading to cost and lead-time benefits.

The year 2013 also saw the Verna Plant acting as a facilitator and providing assistance to Don Bosco Konkan Development Society in introducing Bosch India Foundation''s skill training program. This society works for the poor and under privileged children, youth and women in Goa, Karnataka and Maharashtra in the areas of education, skill training and income generation.

Kumbalgodu (Karnataka)

The new Solar Thermal Collector production facility was set up during the latter half of 2012 at Kumbalgodu which is approximately 25 kms from Bangalore. Products like solar flat plate collectors, a renewable energy product used to heat water for domestic and industrial applications are manufactured at the Plant. The Plant is equipped with state-of-the-art machines to produce screwless, single piece collector frames and full sheet absorbers for better efficiency.

The Plant commenced commercial production in January 2013. The variants include both standard systems and customised solution for large scale applications.

Bommasandra (Karnataka)

The Company has set up a new conversion / manufacturing plant at Bommasandra, Bangalore, in second quarter of the year 2013 for production of flexible abrasives under the Power Tools division of the Company. This facility is being used for conversion of coated abrasives into finished products viz., wide belts, narrow belts, rolls, velcro discs and hand sanding discs.

These finished products are mainly used in wood industries as well as metal and automobile industries.

This indigenous facility would enable the Company to bring down delivery time and cater to customer demands in a cost effective manner. The Company is optimistic that this facility will help to enhance its market share in the coated abrasive segment of Bosch Power Tools accessories. The commercial production at the Plant commenced in June 2013.

Industrial Relations

Industrial Relations at all Plants and other establishments generally continued to be cordial throughout the year 2013, except in the Bangalore Plant, where the Union and workmen went on tool down strikes on two occasions for 3 to 6 days. First, on an issue connected with introduction of scientific cycle time based working method. Second, for initiating disciplinary action against an office bearer of the Union for his misbehavior/misconduct. In spite of the above, various bipartite and tripartite settlements were signed by different Plants in cordial atmosphere on issues that concerned the management and the workmen. On the expiry of the Long Term Settlements in three of the Company''s Plants (Bangalore, Naganathapura and Nashik) on 31.12.2012 and in the Jaipur Plant on 31.05.2013, the Unions have submitted their Charter of Demands for the consideration of the respective Plant managements. Managements of the respective Plants have also submitted counter proposals to the concerned Unions. Intense negotiations are being carried out on the Charter of Demands and the management proposals for arriving at amicable settlements.

Information Technology (IT)

The Company has implemented a new system viz., SAP-HR. With this system, the Company has now a global personnel administration system with country-specific development for payroll and time management. This HR system supports not only the daily administrative business of the personnel departments but also allows the employees and managers to access relevant data through a self- service portal.

As a B2B initiative, the Company has participated in SIAM-ACMA EDI standards definition in 2013 and is part of pilot rollout for specific transactions with select OEM customers as per SIAM-ACMA roadmap.

Order management functionality, which was being used, has been replaced with new features in existing SAP system in December 2013. This reduces the number of systems used by end user and is first-of- its-kind change over in the Bosch world. It is in line with corporate information strategy of legacy system migration.

As part of Windows XP phase-out by Microsoft by March 2014, the Company has initiated a project for replacement of workstations. Upgrade is in progress for WIN 7 migration.

In 2013, the Company was able to considerably bring down the virus incident rate. This was possible with the concerted efforts from ISP community to address the root causes and improved awareness amongst the end users. Additionally, local administrative rights on workstations have been revoked centrally to avert the threat from malwares.

With continued focus on IT enabled business process maturity, a new and improved model has been adopted in alignment with the Business Excellence model, from seven dimensions to nine dimensions to enhance focus on process improvements and risks. Current year assessment included the assessors from Business Excellence team as well as to bring in the business perspective.

Bosch Connect is the IT platform for cooperation and communication, which aims to generate value- addition by increased productivity, development of ideas and intensive knowledge sharing amongst the workforce. With Bosch Connect, the Company is ready to be a globally connected company. In 2013, many activities including access permission for users and reverse mentoring sessions to senior management were carried out.

Change Initiatives

Continuous Improvement Process (CIP)

The CIP movement is now running since two decades and has attained a matured level. The focus in 2013 was to enhance the involvement of our associates and to bring in a culture of self assessments. The CIP assessment methodology was extended to various departments and plants using the Value Stream Design in Indirect Areas (VSDiA) which plays a vital role for holistic improvement and sustenance of business processes in indirect areas.

Associate involvement in the shop floor has been further improved by strengthening the Shop-Floor CIP (SFC) activities, encouraging internal competition among various CIP implementation teams, integration of suggestion scheme ideas and reducing the lead time in processing of suggestions by employees.

Bosch Production System (BPS)

BPS maturity assessment has been playing an important role in further implementation of BPS in manufacturing areas. Considerable overall improvement in various important parameters of BPS viz., maturity score, leveling compliance, overall equipment effectiveness, milk-run coverage, pull to suppliers, total inventory etc., have been refined in comparison to 2012.

Manufacturing lines planned for relocation have been subjected to Lean Line Design analysis for further improvements before being shifted, apart from making improvements related to logistics and shop floor layout. Further refinement of BPS maturity level, increasing System CIP cycles, leveling compliance, pull implementation, strengthening review mechanism of BPS implementation etc., have been identified as focus points for 2014.

Diesel Systems Business Excellence (DBE)

The Diesel Systems Business Excellence integrates various functions in the Corporate and Plants aligning them to the journey of achieving the Diesel Systems, India vision and mission. All the Diesel Systems'' manufacturing plants in India viz., Bangalore, Nashik and Jaipur; and the business unit as a whole have aligned their business according to the European Foundation for Quality Management (EFQM) model. Additionally, Business Excellence has served as the basis for further development of business unit''s effectiveness in a holistic manner.

Business units and Plants carry out regular assessments as health checks in the endeavor to continuously improve the systems / processes in their journey towards Business Excellence. Key performance indicators are measured to enable the achievement of required business results as cause and effect balancing all the key stakeholders. Diesel Systems, India is striving towards institutionalizing a culture of ''Living Business Excellence'' as ''Business Excellence at work'' by incorporating the same in its vision and mission. Strategic measures/targets are developed, deployed and reviewed across plants and connected corporate functions through a structured strategy management process. In 2013, this was extended to other business units of the Company making significant progress.

Diesel Systems, India has attained a good level of maturity in this exciting journey. Diesel Systems, India as a business unit was assessed for the first time in 2012 and it achieved a milestone equivalent to the EFQM ''Recognized for Excellence'' (R4E) level. Bangalore Plant won the coveted ''CII – Exim Bank award for Business Excellence'' in 2009 and Nashik Plant won the same in 2013. Jaipur Plant was also recognized with the ''CII-EXIM Bank Prize for Business Excellence'' in 2013.

Bosch Vocational Centre (BVC)

Bosch Vocational Centre is one of its kind in the country running Trade Apprenticeship Program, similar to German Vocational & Training Education (VET) System with a perfect mix of classroom theory, workshop practice and in-plant training.

The state-of-the-art facilities at Bosch Vocational Centre include CNC labs with machines and programming facilities, hydraulic labs with the latest trainer kits and teaching aids, mechatronics lab with PLC and robotics, computer training, cutting tool technology, metrology and plastics technology. This is apart from well-equipped classrooms, CAD lab for drawings, shop floor for training apprentices and the electrical and electronics lab to teach apprentices the basics of the trade.

Sustaining its excellent performance over the years, Bosch Vocational Centre has been declared as best establishment 46 times up to the year 2013. This laurel was received by BVC tenth time in a row. The gold medal tally by the apprentices reached 211 during the year.

Awards and Recognition

The Company won several awards, as recognition of its efforts. Few examples are:

- Automotive giant Mahindra & Mahindra Limited presented the Company with the Panchratna award ''Hira (Diamond)'' for ''Business Partner of the Year'' (2012-2013) at a supplier meet held in Copenhagen, Denmark on May 31, 2013.

- The Federations of Karnataka Chambers of Commerce & Industry (FKCCI) conferred the ''Star Exporter'' award in 2013.

- The Company was named as the ''Star MNC of the year'' by India''s one of the leading financial newspaper Business Standard.

- ''Best Supplier 2013'' was bestowed by Tata Motors Limited at the Annual Supplier Conference held at Macau.

Bosch India Foundation

Bosch India Foundation (BIF) is the trust of the Bosch

companies in India. Established in 2008, BIF touched the lives of 6936 youth in the focus areas of vocational skill development and healthcare through its many programs in 17 locations across India in 2013.

In the area of vocational training, with support from 33 implementing partner NGOs, the Foundation conducted over 80 skills training programs in 32 trades. Held over an average of three months, these short duration trainings aimed primarily to impart much needed soft and hard skills required to propel over 6400 drop-out youth onto career paths of their choice and aptitude, thus enabling economical upliftment of both youth and their families.

Through, 5 healthcare projects, the Foundation offered support to create sustainable and lasting change in the health conditions of 528 people. These projects included reducing maternal / infant mortality, rehabilitation of 66 spinal cord injury patients, rectification of severe orthopedic conditions of 20 underprivileged children and cleft lip and palate corrections of 236 very young rural children. Each of these interventions aimed at enabling the beneficiaries to live dignified and worthwhile lives in society through the changes gained in their health conditions.

Subsidiary Company

As the aggregate assets and income of MICO Trading Pvt. Ltd., as on December 31, 2013 is not material, no consolidated financial statements under Accounting Standard 21 "Consolidated Financial Statements" as notified under section 211(3C) of the Companies Act, 1956, has been prepared.

As required under Section 212 of the Companies Act, 1956, annexed hereto are the Audited Statement of Accounts, the Report of the Board of Directors and Auditors'' Report for the year ended December 31, 2013, of MICO Trading Pvt. Ltd.

Directors

Mr. Peter Tyroller joined the Board as Additional Director with effect from July 01, 2013.

Mr. Tyroller, 57, completed his engineering studies at the University of Applied Sciences in Ulm, Germany (1984). This was followed by a second course of studies in Engineering Management from the University of Applied Sciences in Frankfurt (am Main). He began his professional career with Alfred Teves GmbH (ITT Automotive) in Frankfurt, Germany in 1985. He served as the Director of the Airbag Systems Unit of Robert Bosch GmbH and Managing Director of United Airbag Systems GmbH, both in Schwieberdingen, Germany. He has been the Managing Director of the Wiper Systems & Electrical Motors Division of Valeo Autoelectric GmbH & Co. KG, Bietigheim. He held the position as Executive Vice- President Sales, Gasoline Systems Division, Robert Bosch GmbH, Schwieberdingen in 2000 and later as President in 2003.

He has been the member of the Board of Management, Robert Bosch GmbH from 2006 with corporate responsibility in Marketing and Sales, Automotive Original Equipment Sales and divisional responsibility in Automotive Aftermarket and since July 01, 2013 he took over the responsibility of Asia Pacific. Mr. Tyroller has been the president of CLEPA, the European Association of Automotive Suppliers since January 2010.

With effect from January 01, 2014, the Board of

Directors of the Company appointed Mr. Franz Hauber, as Alternate Director to Mr. Peter Tyroller.

Mr. Franz Hauber, 54, is a Mechanical Engineering degree holder from Fachhochschule Konstanz. He has been associated with Bosch Group for the last 26 years.

Mr. Hauber started his career in Bosch Group as a development engineer in ABS Hydraulics in Stuttgart. During these 27 years of association, he has worked in several management positions mainly in manufacturing, quality, logistics, safety, project management, and corporate functions as well. He has varied experience in divisions like Chassis System Control, Diesel System and Gasoline System.

He joined the Company on January 01, 2013 as the Executive Vice President, Manufacturing & Quality.

Dr. Albert Hieronimus ceased to be the Chairman and Director of the Company from the close of office hours on June 30, 2013. Mr. V.K. Viswanathan, Non- Executive Director, was appointed as Chairman of the Board with effect from July 01, 2013.

Dr. Bernd Bohr and Mr. B. Muthuraman ceased to be directors of the Company from the close of office hours on June 30, 2013.

The Board of Directors places on record their deep appreciation for the outstanding contributions and services rendered by Dr. Hieronimus, Dr. Bohr and Mr. Muthuraman during their tenure as Directors of the Company.

Names of companies/firms in which Directors of the Company hold/held office as Director/Partner are given below:

Mr. V. K. Viswanathan

- BSH Household Appliances Mfg. Pvt. Ltd.

- FLSmidth Pvt. Ltd.

- Indo-German Chamber of Commerce (Committee Member)

- Magma HDI General Insurance Co. Ltd.

- Bharti Airtel Ltd. (w.e.f. January 14, 2014).

Mr. Peter Tyroller (from 01.07.2013)

- Bosch Automotive Products (Suzhou) Co. Ltd.

- Robert Bosch Korea Ltd.

- Robert Bosch (South East Asia) Pte. Ltd.

Mr. Bernhard Steinruecke

- Indo-German Chamber of Commerce (Director General)

- FAG Bearings India Ltd.

- Zodiac Clothing Company Ltd.

- HDFC ERGO General Insurance Company Ltd.

- Apollo Munich Health Insurance Company Ltd.

- Nuremberg Messe India Pvt. Ltd

Mrs. Renu S Karnad

- HDFC Property Ventures Ltd. (Chairperson)

- Credila Financial Services Pvt. Ltd. (Chairperson)

- Housing Development Finance Corporation Ltd. (Managing Director)

- HDFC Asset Management Co. Ltd.

- HDFC ERGO General Insurance Co. Ltd.

- HDFC Standard Life Insurance Co. Ltd.

- Credit Information Bureau (India) Ltd.

- GRUH Finance Ltd.

- HDFC Bank Ltd.

- AKZO Nobel India Ltd.

- Indraprastha Medical Corporation Ltd.

- Feedback Infrastructure Services Pvt. Ltd

- G4S Corporate Services (India) Pvt. Ltd.

- Lafarge India Pvt. Ltd.

- EIH Ltd.

- HT Parekh Foundation

- WNS (Holdings) Ltd.

- HDFC PLC, Maldives

- United Spirits Ltd

- ABB Ltd.

- Hiref International LLC

Mr. Prasad Chandran

- Indo-German Chamber of Commerce. (Committee Member)

- Federation of Indian Chamber of Commerce. (Executive Committee Member)

- Bombay Chamber of Commerce and Industry.

(Managing Committee Member)

- The Energy and Resources Institute (Committee Member)

Mr. Bhaskar Bhat

- Tata Ceramics Ltd. (Chairman)

- Virgin Mobile India Pvt. Ltd. (Chairman)

- Titan Industries Ltd. (Managing Director)

- Titan International Middle East FZE.

- Titan Watches & Jly Intl. (Asia Pacific) Pte. Ltd.

- Titan International Marketing Ltd.

- Trent Ltd.

- Titan Time Products Ltd.

- TA Pai Management Institute, Manipal (Member of Governing Council)

- SDM Institute of Management, Mysore (Member of Governing Council)

- National Institute of Technology, Uttarkhand (Chairman, Board of Governance)

- Titan Foundation for Education (Chairman)

- Tata International Wolverine Brands Ltd.

- Favre Leuba AG, Switzerland (Director)

Dr. Steffen Berns

- Robert Bosch Engineering and Business Solutions Ltd. (Chairman)

- Bosch Automotive Electronics India Pvt. Ltd. (Chairman)

- MICO Trading Pvt. Ltd.

- Robert Bosch (Bangladesh) Ltd.

Mr. Soumitra Bhattacharya

- Bosch Electrical Drives India Pvt. Ltd.

- Automotive Component Manufacturers'' Association of India (Chairman of Consumers Affairs and Anti-Counterfeiting Committee)

- Confederation of Indian Industry (Chairman, Karnataka State Council)

- MICO Trading Pvt. Ltd.

- Karnataka State Industrial and Infrastructure Development Corporation Ltd.

Mrs. Renu. S. Karnad and Mr. Prasad Chandran are liable to retire by rotation and offer themselves for re-election.

Mrs. Karnad, 61, holds a Bachelor Degree in Law from the University of Bombay and Masters Degree in Economics from Delhi School of Economics. She joined HDFC Ltd. in 1978 in the legal and credit department and grew to become the head of lending business of HDFC Ltd. Presently, she is the Managing Director of HDFC Ltd.

In 1984, she was awarded Pravin Fellow – Woodrow Wilson School of International Affairs, Princeton University, Princeton, NJ.

Mrs. Karnad is an Independent Director of the Company (appointed on April 1, 2007). She is the Chairperson of the Audit Committee and member of Shareholders'' and Investors'' Grievance Committee of the Company. She does not hold any shares in the Company.

Mr. Prasad Chandran, 61, is a post-graduate in Chemistry and has a Masters degree in Business Administration. He has also received Advanced Management Education from Institutes in the US, UK and Japan. Mr. Chandran was a former president of Indo-German Chamber of Commerce (IGCC) and is presently serving as Committee Member. He is also the Managing Committee Member of the Bombay Chamber of Commerce and Industry and Member of the Executive Committee of Federation of Indian Chambers of Commerce & Industry (FICCI) and The Energy and Resources Institute (TERI). He is also an active participant in a number of trade industry delegations of the Government of India.

Mr. Chandran initiated the "Million Minds" Project which aims at improving governance and fighting corruption. Whilst implementing the BASF Global values and principles, he addressed policy issues on corruption to raise the standards of governance in India. The "Million Minds" project aims to sensitize stakeholders and creates voluntary action groups in different parts of the country. He is presently associated with a number of NGOs and is also an invited Board Trustee of the Public Concern for Governance Trust (PCGT) Mumbai.

Mr. Chandran was the Chairman & Managing Director of BASF India Limited. He was also the Chairman of BASF Group Companies in India and Head-South Asia.

Mr. Chandran is presently an Independent Director of the Company. He is the member of Audit Committee, Shareholders''/ Investors'' Grievance Committee, Remuneration Committee, Share Transfer Committee and Corporate Social Responsibility Committee of the Board. He does not hold any shares in the Company.

Particulars of Employees

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Report and Accounts are being sent to the shareholders of the Company excluding the Statement of Particulars of Employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said Statement may write to the Company Secretary of the Company.

Corporate Governance

A Report on Corporate Governance approved by the Board of Directors of the Company and a certificate from the Practicing Company Secretary is set out in the Annexure to the Directors'' Report. The Company has fully complied with the Corporate Governance practices specified under the Companies Act, 1956, and the listing agreement with the Stock Exchanges.

A Code of Conduct for Directors and Senior

Management, Code of Conduct for Prevention of Insider Trading, Whistle Blower Policy, Rules and Regulations of Service Conduct for Managerial and Superintending Staff, Code of Business Conduct etc., effectively support the Corporate Governance processes.

A Management Discussion and Analysis Report also accompany this report.

Business Responsibility

Pursuant to clause 55 of the listing agreement, listed companies are required to submit Business Responsibility Report as part of their annual report covering the principles enunciated in the said clause. Accordingly, a report on Business Responsibility is set out in the annexure to this Directors'' Report.

Energy, Technology, Foreign Exchange, etc.

The report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217(1)(e) read with The Company''s (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is set out in the Annexure to the Directors'' Report.

Auditors

M/s. Price Waterhouse & Co., Bangalore, (Regn. No.007567S) Chartered Accountants, the retiring auditors, are eligible for re-appointment.

Cost Auditors

Pursuant to MCA Cost Audit order no. 52/26/CAB- 2010 dated 06.11.2012, M/s. Rao, Murthy & Associates, Cost Accountants, Bangalore (Regn. No.000065, PAN: AAAFR8892D) have been appointed as Cost Auditors of the Company for the financial year 2013.

Due date of filing cost audit report for financial year 2013 is June 29, 2014.

Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

- Accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The annual accounts have been prepared on a going concern basis.

Acknowledgements

The Directors express their gratitude to the Central Government and the State Governments of Karnataka, Maharashtra, Rajasthan, Goa and Tamil Nadu for the support given to the Company. The Directors also thank all customers, dealers, suppliers, financial institutions and banks, members and others connected with the business of the Company for their co-operation.

For and on behalf of the Board of Directors

Bangalore V. K. Viswanathan

February 27, 2014 Chairman


Dec 31, 2012

The Directors have pleasure in presenting their SIXTY FIRST Annual Report together with the Audited Statement of Accounts for the year ended 31st December, 2012.

Financial Results

The following are the financial results:

(Rs. Million)

2012 2011

Net Sales (excluding recovery of duties and taxes) 84,172 79,295

Of which Export Sales 9,402 10,344

Profit before tax 13,462 15,740

Less: Provision for tax 4,163 4,709

Add: Deferred tax and tax adjustments relating to earlier years 284 196

Profit after tax 9,583 11,227

Appropriations:

Dividend:

- Dividend recommended at Rs. 60 per share (previous year: Rs. 50 per share) 1,884 1,570

- Special dividend at Rs. 85 per share - 2,669

Tax on Dividend 306 255

Tax on Special Dividend - 434

General Reserve 958 5,000

Reversal of Dividend Distribution Tax - (4)

Balance carried forward 6,435 1,303

Total 9,583 11,227

Net sales for the year 2012 grew by 6.2%. The Profit Before Tax (PBT) in 2012 as a percentage of net sales was at 16.0% as compared to 19.8% in 2011. The Profit After Tax (PAT) as a percentage of net sales was 11.4% in 2012 as against 14.1% in 2011.

Material costs as a percentage to sales increased to 56.5% in 2012 as compared to 55.4% in 2011.

Overall, the Profit Before Interest, Depreciation and Taxes, for the year shows an decrease of 8.5% over the previous year.

Investments

Capital investment during 2012 was higher than previous year, at Rs. 7,262 mio. as against Rs. 5,388 mio. in 2011.

Dividend

The Board of Directors recommends a dividend of Rs. 60 per equity share for the year 2012 as against a dividend of Rs. 50 per equity share in 2011 besides a special dividend of Rs. 85 per share in 2011 . This dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting.

Business Situation

The automotive market growth momentum slowed down considerably in the year 2012. The vehicle sales performance in the second half of the year resulted from low market sentiments, culminating from a slowdown in India''s GDP, Industrial production, high inflation, interest rates and with delayed monsoons. The Global scenario aided to the woes by continuing to remain weak and limiting exports. During the last 3 quarters (April''12 to December''12), automobile exports registered de- growth of 2.98 percent compared to the same period last year. However, the 4th quarter saw a slight recovery in the Passenger car segment owing to the festive season demand and some positive measures from the Government on the fuel prices. But it was far from compensating the overall situation in the market. Overall, the automotive production volumes grew by a mere 2 % over 2011.

Segment-wise, the Passenger Cars & Utility Vehicles recorded positive growth of 7.4% mainly with growth in Utility Vehicles supported by new model launches. Within Passenger cars, dieselization continued to remain strong with diesel share going up from 37% in 2011 to 48% in 2012. Commercial vehicles de-grew by 2% with Heavy Commercial Vehicles posting a de- growth of 12%. The Light Commercial Vehicles posted positive growth of 5.3% supported by a good growth in retail sector and ramp up of new models by OEM''s in the premium segment. Tractors de-grew by 6.6% with poor & delayed monsoons playing a major role. Three Wheelers registered a 5% de-growth due to the tumbling export market particularly in Sri Lanka and flat domestic sales. Two Wheeler market grew by 10% in the first half of the year but the growth considerably declined in the second half to end up with a year on year growth of 4%.

In view of the market conditions that prevailed in 2012, the Company performed moderately with sales from automotive segment growing by 4.7% and exports at Rs. 8,823 mio. with a de-growth of 11.4% over 2011. Our non-automotive business grew by 19.5% in 2012 as compared to 28.5% in 2011 and was mainly attributed to very good performance in the Power Tools, Security Technology and Machine building division.

Automotive Technology

Diesel Systems business de-grew by 0.9 % in the year 2012 as compared to the growth of 19.2% in the previous year owing to the slowdown witnessed by the automotive market during the last two quarters of the year 2012. As a clear testimony to the Company''s strong innovative culture and its focus on providing value to customers, shift from Product to System solution provider was reinforced with introduction of not only Fuel Injection equipments but also Air & Exhaust After Treatment solutions across segments. The Price sensitive and technology intensive Light Passenger Vehicle segment (LPV) portfolio was strengthened further in the year 2012 with the development of the Generation 3 Common Rail Systems.

Total Cost of Ownership (TCO) in the Commercial

Vehicle (CV) segment can be improved with the Denoxtronic solution for emerging markets. This has resulted in ~3% improvement in fuel efficiency with Selective Catalytic Reduction (SCR) technology in combination with Common Rail System (CRS). Integration of Inline pump with an electronic governor provided Genset manufacturers a robust system solution for the upcoming Central Pollution Control Board (CPCB) - Bharat Stage 2 norms planned for introduction in the year 2013.

Gasoline Systems Division witnessed a tough market situation in 2012 driven by the economy slow down and also the price parity effect between gasoline and diesel fuel affecting the gasoline Passenger Car segments. This has resulted a de-growth of 9.4% in 2012. However, the past year witnessed good market response for the 2 Wheeler EMS with continued interest from OEMs.

Starter Motors and Generators registered an impressive growth of 51.1% for the second consecutive year powered by New Base Line Generators both in the domestic and export market and also increasing the share of business with already existing products, thus doubling their turnover in two years. The division achieved significant overall productivity improvement over the previous year.

The division received recognitions from the customers Volkswagen and Ashok Leyland for Quality and ramp-up support.

The Automotive Aftermarket division recorded a turnover of Rs. 1,917 crores in 2012; with a growth of 9.6%. This included over 25% growth in 2 wheelers and almost 20% growth in Passenger Car business. The division received Quality awards from its customers Bajaj and Mahindra & Mahindra. In our endeavor to get closer to our customers, two new sales offices were established in the year 2012 - one in Jodhpur (Rajasthan) and the other at Jabalpur (MP). Aggressive network expansion at primary and secondary trade level continued and more than one new customer appointed per day to create demand in the slowing markets. eFOCuS, the Dealer ERP system, was implemented at ~250 distributor locations. Innovative customer binding programmes have resulted in increased demand generation from retailers and mechanics.

A new workshop module Bosch Tractor Point was launched; Express Bike Service was rolled-out across India. Novel training concepts such as Mobile Training Van, web-based Training portal, 2 Wheeler Training Concept were the other launches. Totally more than 25000 people were trained across the country in 2012. Bosch System Technicians (BST), hitherto available to Bosch Diesel Service, was extended to Bosch Car Service personnel in 2012. A new Annual Maintenance Contract (AMC) kit to strengthen the Quality standards of Bosch Diesel Service workshops was released. The year 2012 witnessed increased market coverage across vehicle segments through launch of new part numbers and seven new suppliers were taken on board. The division acquired the Diagnostic Tools & Technical Services Solutions business from SPX India to strengthen the Company''s presence in the diagnostic business area. SPX Diagnostics team launched 9 new test equipments for the Indian market in the year 2012.

Industrial Technology Packaging Technology

In line with the general business scenario, Packaging Technology division recorded a moderate 8.7% growth in 2012.The Confectionery division grew by about 56%.

The focus in the year 2012 was on the development of SVI (Vertical form fill Seal machine), Twin SVI basic machines for the market. The machines were showcased at the industrial exhibitions held at Mumbai and New Delhi in 2012.

The belt weigher was another significant addition to our portfolio as it is a locally developed product and showcases our development capabilities on a global platform. With the new FDI policy in retail, we anticipate higher expectations from our customers in choosing suppliers with capabilities to provide complete solutions to their packaging needs. Industrial Equipment

The Industrial Equipment division registered an overall growth of 12.1% both in the internal and external market segments. The division exported Special Purpose Machinery items to Bosch works in Europe and China during the year 2012.

Consumer Goods and Building Technology Power tools

The Power Tools division achieved an impressive growth of 16.7% thus sustaining its consistent record of strong double digit growth over the last decade in India. The division successfully opened 49 Bosch System Specialist Stores(BSS) in 2012. Also, for the first time, the division in partnership with Swan Machine Tools launched Accessorize -its exclusive Power tools Accessories store in July at Ahmedabad with a 100% focus on Accessories. Skil Hand tool was launched for the first time in India as lifestyle designer tools for home use and achieved an amazing success. The division in association with National Institute of Design (NID) launched a nationwide design contest called "India Changers" to recognize industrial design projects that use innovative design concepts to create socially relevant solutions for the betterment of India.

Security Technology

Security Technology business posted an impressive 31.4% growth in sales for the year 2012 compared to the sales achieved in 2011. Business unit of Video Systems made the highest contribution to this, growing at 29% over the last year. During the year 2012, the division enhanced its local product portfolio by releasing a new range of highly competitive mixer-amplifiers. The division participated in key Industry Trade shows - IFSEC, Secutech and PALM Expo, few of the key trade shows in the industry, in addition to certain road shows in key cities across India, to strengthen the brand presence and product exposure to target audience.

Solar Energy

The division started the year 2012 with the commissioning of 1 MW solar project which installed Bosch solar photo voltaic panels. The division also got empanelled as a certified channel partner for system integration, with the Ministry of New and Renewable Energy. With the empanelment, Bosch Limited can directly offer Government benefits to its customers. The division faced challenges due to accelerated price erosion of solar panel prices and is now focusing on the crystalline technology based solution.

Thermo Technology

New manufacturing facility was setup in the last quarter of the year 2012 at Kumbalgodu, Kengeri- Hobli, Bangalore, and the division geared up for the series of manufacturing of solar flat plate collectors, solar thermal water heaters and accessories upon completing validation trials in the current year 2013.

Competition and challenges in our business sectors

As in other regions of the world, the year 2012 was a challenging year for the Indian automotive industry.

The demand fluctuation from customers owing to the slowdown and weak market sentiments put additional pressure on the manufacturers. High inflation and adverse foreign exchange increased the cost pressures and challenged the businesses across all domains.

However, the Company continuously strived to capture every opportunity with its efficient processes and systems. The Company also paced itself with the changing requirement of the market and its developments. The Company has always considered its people as its most valuable asset and this has always been its core strength. Though the business growth in the year 2012 has been far from satisfactory, the year 2013 seems even more challenging but not without its fair share of opportunities and growth. The Company aims to continue its successful march ahead by focusing on customer satisfaction and meet expectation of all stakeholders.

Plants

Bangalore

In the year 2012, the Bangalore Plant attained moderate production level in all its products viz., Inline Pumps, Elements, Delivery Valves, Common Rail Pumps, Glow Plugs and Single Cylinder Pumps. The Plant had a big challenge in 2012 due to drop in customer demand which led to huge pressure on cost and flexibility. However, the Plant successfully tackled the productivity by taking measures such as inventory reduction, budgetary control, temporary closures and manpower re-deployment.

For the first time in the history of Bangalore Plant, the Bosch Board of Management from Germany comprising of eight Board members visited the Plant and the Technical Centre in Feb''12. The Bosch Board of Management were highly appreciative of how a Plant more than half a century can churn out market relevant products that are high on technology but low on costs.

The Plant received the "Golden Peacock Environment management Award" for excellence and ''Greentech Safety Award'' for EHS best practices. The young team of Managers from the Plant became the National Champions for Young Managers (NCYM) in a competition and were the winners as well as runners at National level.

Nashik

The Nashik Plant has achieved the highest production levels in Common Rail Injectors (CRI) by crossing a milestone of 2.5 million production mark. The Plant produced 50 million DSLA Nozzle. In the conventional products, the Plant faced sharp fall in demand due to general sluggishness in the market. To reduce the adverse impact of underutilisation of capacities, the Plant strongly focussed on cost reduction measures. Though, the Plant went through a tough time, it saw the year 2012 as an opportunity to closely review all the processes and improve in all areas to prepare for the future to meet the market demand. The Plant invested ~ 3,600 Mio INR for mainly expanding the capacity in CRI and for building a new production hangar.

The Plant was recognized with the "CII-EXIM Bank''s Prize in Business Excellence" for the year 2012. It was also awarded with the ''Greentech Safety Award 2012 (Silver)'' for outstanding achievements in Safety Management and "Bajaj Gold award 2011 to 2012" towards achieving and sustaining its quality of products. Seven apprentices from the Bosch Vocational training Centre (BVC) of the Plant won 1st and 2nd positions in the 24th Regional Work Skill Competition conducted by the CII and Director General of Employment & Training, Maharashtra.

Jaipur

Jaipur Plant produced its four millionth VE Pump in the year 2012. The Plant has successfully transferred VE components from Bangalore to Jaipur and initiated an all important strategic project on ''End of Production'' (EoP) at Feuerbach, Germany. This has reduced Value chain complexities and increased its cost competitiveness. Also, the Plant has created ready to use production space with state of the art facilities for further potential expansion.

The Plant was honoured with CII-EXIM Bank''s

''Commendation for significant achievements in Business Excellence'' award for the year 2012. The other awards received were: Co-creation award from M&M, Quality improvement award from KOEL, Smiley award from M&M, the national award for excellence in Water Management by CII, Best Employer Certificate by Rajasthan Government, AIMA Award for Best CSR Practices leading towards Responsible Business & Sustainability, an award from RIICO (Rajasthan Industrial Corporation) for Commendable Performance in Efficient Water use and Energy conservation award from Rajasthan Government.

Naganathapura

In the year 2012, good productivity improvement of the products manufactured was achieved by the Plant with substantial ramp-up. The Plant recorded major milestones in the production of NBL Generators in 2012.

Increased localization of power train sensors, accelerator pedal and fuel supply modules were the other highlights in the Gasoline system Plant. Improvements in Environment Health and safety were achieved.

Verna (Goa)

The year 2012 witnessed a very significant milestone for the Verna Plant. The year saw the scheduled completion of the construction activities for the new Plant that had commenced in 2011, and the same was inaugurated on the 10th of August 2012 by the Honorable Chief Minister of Goa in the presence of senior Bosch officials as well as our key suppliers and customers. The new facility has provided the division with the right platform to scale to greater growth levels in the coming years.

The Plant augmented internal processes by introducing "Project Management'' as one of its key process, the BPS initiatives also stabilized with the Point CIP, Flow production, and various process improvements contributing to reduced lead times. The Plant''s Supply Chain continued to focus on cost reduction initiatives, vendor development and lean inventory management.

Industrial Relations

Industrial relations at all Plants and other establishments continued to be cordial through out the year 2012. Various bipartite and tripartite settlements were signed by different Plants on issues that concerned the management and the workmen in a cordial atmosphere. On the expected expiry of the Long Term Settlements in three of the Plants on 31.12.2012, the respective Unions have submitted their charter of demands, for the consideration of the management, and the same are under the active consideration for negotiations along with the management proposals.

Information Technology (IT)

The annual assessment of the maturity of IT enabled business processes showed further improvement during the year 2012 on all seven dimensions - significant improvements in the areas of process organization, authorizations, documentation, training and communication.

A portal based solution was implemented to track goods in transit with the freight forwarders prior to being received by the customers. Electronic Data Interchange (EDI) of customer schedules and advanced shipment notifications was implemented with one customer. New IT tools and central authorizations concept was implemented which supported the purchase group and purchase organization harmonization across the region.

An initiative in the Bangalore Plant and corporate areas that focused on removal of unwanted and obsolete IT hardware, software and clean up of data on central storage achieved significant savings. This was made possible with the active involvement and enthusiasm of more than 100 internal "Data Security Partners" and more than 1000 IT users.

Change Initiatives Continuous Improvement Process (CIP)

The journey of CIP activities in the Company attained the completion of 2 decades in the year 2012 and during these 20 years CIP has contributed to orient the associates of the Company towards Continuous Improvement mindset. Focus on indirect areas has been improved over the years with the introduction of LeaderCIP approach in the Company. For optimizing repetitive processes (e.g. Machine Ordering Process, Recruitment Process, Customer Complaint Resolving Process), VSDiA (Value Stream Design in Indirect Areas) as an integral part of LeaderCIP, has been gaining a lot of importance since its inception. VSDiA has become most sought tool of CIP in 2012 for optimizing processes in indirect areas. A direction has been set to apply SystemCIP model to bring a clear focus for continuous and proactive improvements even in indirect areas to address application of LEAN philosophy.

Associate level involvement at lower level is being motivated by means of various CIP tools (e.g. Shop Floor CIP, Voluntary Lernstatt Team, Waste Elimination Process) and encouraging them to participate in internal as well as external competitions. Our CIP teams received accolades in the regional competitions. Deep rooted CIP philosophy practiced in the Company helped to bring increased amount of savings in the difficult year of 2012 in comparison to 2011 by means of systematic improvements.

Bosch Production System (BPS)

BPS has been playing a prominent role in the

Company in bringing improvements on the shop- floor by following principles and approach of Bosch Production System. To improve upon the understanding of associates regarding BPS implementation, 2 days'' BPS Basic program has been launched. This program has replaced the earlier 3 days'' "BPS 100" training program inline with the recent learning to give focus to implementation related with goal/s achievement rather than just addressing the principles of BPS. Further, to improve upon the contribution of process planners in the progress related with BPS implementation, "Leading BPS Plant - Process Planners" module has been launched.

The assessment methodology being used as part of BPS implementation progress has been instrumental in improving important aspects on shop-floor for improving BPS implementation maturity in conceptualization and execution. Considerable improvements in Leveling, Lean Line Design and reduction in Performance losses have been achieved in 2012.

Diesel Systems Business Excellence

The Diesel Systems Business Excellence integrates the various cross functions in the Plants and aligns them towards meeting the Company''s Diesel Systems Business (INDS) Vision and Mission. This has been implemented at all the Diesel Systems (DS) manufacturing Plants in India viz., Bangalore, Nashik and Jaipur. The Company adopted the European Foundation for Quality Management (EFQM) model of Business Excellence to improve the organization''s effectiveness in a holistic manner.

The Company carries out regular assessments at all Diesel Plants as a health check in order to continuously improve the systems and processes in its journey towards Business Excellence. Key performance indicators are measured to enable the achievement of required results as a cause and effect with respect to all the key stakeholders. INDS is striving towards institutionalizing a culture of ''Living Business Excellence'' as ''Business Excellence at work'' by incorporating the same in the INDS Vision & Mission. The strategic measures / targets are deployed across Plants & connected corporate functions through Policy Deployment process.

INDS has won many accolades in this exciting journey. Diesel Systems, India as a business unit was assessed for the first time in 2012 by a team of senior management from DS worldwide with an external EFQM lead assessor. INDS achieved a milestone equivalent to the EFQM ''Recognized for Excellence'' (R4E) level. Bangalore Plant won the coveted ''CII- EXIM Bank award for Business Excellence'' in 2009, Nashik Plant won the ''CII -EXIM Bank Prize for Business Excellence'' in 2012 and Jaipur Plant was recognized with ''Significant Achievement on Journey towards Business Excellence'' in 2012.

Bosch Vocational Centre

The year 2012 was devoted to intensify training of Associates (workmen and staff) and sustaining of our excellence in the field of training in the country.

Bosch Vocational Centre conducted and extended its support to various programs such as On Job Training, Skill Enhancement Training, CIP & 5S, Quality and Safety, Training Program on Mechatronics, Advanced Measurement Technique, Pneumatics, Hydraulics & CNC, Need based programmes like OHSAS, TPM and Knowledge Sharing Sessions for Company''s executives.

BVC being the "Best in Class" in the country also sustained excellence in the field of Vocational Training by increasing tally of Gold medal winners to 204. The Company was declared "Best Establishment" in the country for the 44th time.

Awards and Recognition

The Company won several awards, as recognition of the efforts put in by the Company:

- ''Overall Silver award'' for vendor performance at the Maruti Suzuki India Ltd (MSIL) Vendor Conference held at Bangkok in May 2012.

- ''President''s Award'' conferred by Mahindra and Mahindra on Bosch Limited, Diesel Systems for outstanding overall performance for the year 2011-12 at the vendor conference held at Prague in May 2012.

- ''Sustainable Initiative on Reusable Packaging Award'' at the Cummins Vendor Conference held at Pune in June 2012.

- ''Best Supplier of 2012'' award by New Holland Fiat India (P) Ltd (NHFIL) for all-round support given to NHFIL on Fuel Injection Systems for TREM3A Tractors.

- ''Car India & Bike India award 2013'' for being the Automobile Component Manufacturer of the Year 2013 held at Mumbai in January 2013.

Bosch India Foundation

Bosch India Foundation (BIF), the Trust of the Bosch companies in India, was able to reach out to an additional 5,700 youths in 2012. Of the two focus areas of Vocational Skill Development and Health care, the growth in activity was higher in the area of vocational/ skill training. Through 30 new proposals in 2012, BIF was able to start activities in new locations such as Pune, Nashik, Kolkatta, Kolar, Mysore, Udupi, Hassan, Wayanad and Ernakulam. BIF partnered with 20 new NGO''s taking the partnership base to a total of 35. Each partnership was of immense value as it helped the BIF to reach out to those communities and localities that the NGO''s served and had in-depth connection. In 2012, BIF partnerships offered short duration training in 32 trades. Three new areas that the Foundation made an entry was in supporting vocational training to

i) specially-abled youth

ii) construction workers and

iii) rural farmers.

Subsidiary Company

As the aggregate assets and income of MICO Trading Pvt. Ltd., as on December 31, 2012 is not material, no consolidated financial statements under Accounting Standard 21 "Consolidated Financial Statements" as notified under section 211(3C) of the Companies Act, 1956, has been prepared.

As required under Section 212 of the Companies Act, 1956, annexed hereto are the Audited Statement of Accounts, the Report of the Board of Directors and Auditors'' Report for the year ended 31st December 2012 of MICO Trading Pvt. Ltd.

Directors

Mr. Bhaskar Bhat joined the Board as Additional Director and Independent Director with effect from 01.01.2013.

Mr. Bhaskar Bhat, aged 58 years, is a B.Tech (Mechanical Engineering) from IIT Madras (1976) and has the Post Graduate Diploma in Management from IIM Ahmedabad (1978). He started working as a Management Trainee at Godrej & Boyce Manufacturing Company Private Limited in 1978. After spending five years in Godrej, he joined the Tata Watch Project which was initiated at Tata Press Limited. Since 1983 he has been associated with the Tata Watch Project which later became Titan Watches Limited and is now Titan Industries Limited. Presently, Mr. Bhaskar Bhat is the Managing Director of Titan Industries Limited and is responsible for Sales & Marketing, Human Resources, International Business and general managerial assignments of the company.

Mr. Bhaskar Bhat is a member of the Governing Council at the T.A. Pai Management Institute, Manipal and the SDM Institute of Management and Development, Mysore. He was appointed as the Chairperson of the Board of Governors at the new National Institute of Technology established at Uttarakhand. He received Distinguished Alumnus Award in IIT Madras in 2008. He was conferred the Qimpro Gold Standard Award for Business in February 2010. He won the Most Admired Retail Professional of the year 2011 at the India Retail Forum 2011 and distinguished Alumnus Award in IIM Ahmedabad in November 2011. He was ranked as the 4th CEO in a survey conducted by the Business Today, INSEAD and Harvard Business Review.

Mr. V.K. Viswanathan retired as Managing Director of the Company with effect from the close of office hours on 31.12.2012. However, he continues as Director and Vice Chairman of the Board from 01.01.2013.

Dr. Manfred Duernholz ceased to be Joint Managing Director from the close of office hours on 31.12.2012 consequent to assuming responsibility for leading projects in Diesel Systems, Robert Bosch GmbH.

The Board of Directors places on record their deep appreciation of the outstanding contributions made by Mr. V.K. Viswanathan and Dr. Manfred Duernholz to the growth and profitability of the Company.

With effect from 01.01.2013, the Board of Directors of the Company appointed Dr. Steffen Berns as Additional Director and Managing Director of the Company responsible for Automotive Aftermarket, Starters and Generators, Power Tools, Security Technology, Solar Energy & Thermo Technology and Engineering.

Dr. Steffen Berns, aged 50 years, studied Mechanical Engineering at Darmstadt Technical University, Germany, and got a Doctorate in Engineering from the Technical University of Aachen, Germany. He served the Company as General Manager-R&D and OE Sales during the years 1996 -1998. From 1998 to 1999 he held the position as President of Robert Bosch India Ltd. (Presently Robert Bosch Engineering and Business Solutions Ltd.). He then went back to parent company Robert Bosch GmbH as Senior Vice- President, Diesel Systems, responsible for Engineering Control Units and Sensors and since 2006 as Executive Vice President, Gasoline Systems division. He joined the Company from 01.09.2012 and became the Managing Director of the Company w.e.f. 01.01.2013.

With effect from 01.01.2013, the Board of Directors of the Company appointed Mr. Soumitra Bhattacharya as Additional Director and Joint Managing Director of the Company responsible for Finance and Administration, IT Co-ordinator and Diesel System Business in India. Consequent, to his appointment as Joint Managing Director, Mr. Bhattacharya ceased to be Alternate Director to Dr. B. Bohr from the close of office hours on 31.12.2012.

Mr. Bhattacharya, aged 52 years, is a graduate in Commerce and a Chartered Accountant. He has been associated with the Company since 1995 and has a valuable experience for over 27 years in the areas of Finance, Accounts and entire commercial functions including HR, Legal, Tax, systems etc. He served as a Commercial Director of Robert Bosch, Turkey. Prior to this assignment he served as Vice President responsible for the Commercial and Administration functions at the Company''s Plants at Nashik and Jaipur. He worked in Stuttgart, Germany, during 1998-99 on deputation to parent company Robert Bosch GmbH as General Manager at the Feuerbach Plant. He was Executive Director responsible for Finance and Administration of the Company until 31.12.2012 and became Joint Managing Director of the Company from 01.01.2013. He was also Alternate Director to Dr. B. Bohr during the period from 01.07.2011 to 31.12.2012. Mr. Bhattacharya is Vice Chairman of Confederation of Indian Industry, Karnataka State Council and Chairman of the Consumer Affairs and Anti-Counterfeiting Committee of Automotive Component Manufactures Association of India.

Names of companies/firms in which Directors of the Company hold/held office as Director/Partner are given below:

Dr.A.Hieronimus

- MindTree Ltd. (Vice Chairman)

- Bosch Rexroth AG (Member of Supervisory Board)

Mr.V.K.Viswanathan

- Robert Bosch Engineering and Business Solutions Ltd. (up to 31.12.12)

- Bosch Rexroth (India) Ltd. (up to 31.12.12)

- Bosch Chassis Systems India Ltd. (up to 31.12.12)

- Bosch Automotive Electronics India Private Ltd. (up to 31.12.12)

- Bosch Electrical Drives India Private Ltd. (up to 31.12.12)

- MICO Trading Private Ltd. (up to 31.12.12)

- BSH Household Appliances Mfg. Pvt. Ltd.

- FLSmidth Pvt. Ltd.

- Robert Bosch (Bangladesh)Ltd. (up to 01.02.13)

- Indo-German Chamber of Commerce (President)

- Confederation of Indian Industry (Committee Member, Southern & National)

Dr. B. Bohr

- ZF Lenksysteme GmbH (Chairman of Supervisory Board)

Mr. B. Steinruecke

- FAG Bearings India Ltd.

- Zodiac Clothing Company Ltd.

- HDFC ERGO General Insurance Company Ltd.

- Apollo Munich Health Insurance Company Ltd.

- Indo German Chamber of Commerce (Director General)

Mr.B.Muthuraman

- Tata International Ltd.(Chairman)

- Tata Africa Holdings (SA) (Pty) Ltd.(Chairman)

- Tata Steel Ltd. (Vice Chairman)

- Tata Industries Ltd.

- Tata Steel Europe Ltd.

- Tulip UK Holdings No.2 Ltd.

- Tulip UK Holdings No.3 Ltd.

- Tata Incorporated, New York.

- Strategic Energy Technology Systems Ltd.

Mrs. Renu S Karnad

- HDFC Property Ventures Ltd. (Chairperson)

- Credila Financial Services Pvt. Ltd. (Chairperson)

- HDFC Education and Development Services Pvt. Ltd. (Chairperson)

- Housing Development Finance Corporation Ltd. (Managing Director)

- HDFC Asset Management Co. Ltd.

- HDFC ERGO General Insurance Co. Ltd.

- HDFC Standard Life Insurance Co. Ltd.

- Credit Information Bureau (India) Ltd.

- GRUH Finance Ltd.

- HDFC Bank Ltd.

- AKZO Nobel India Ltd.

- Indraprastha Medical Corporation Ltd.

- Feedback Infrastructure Services Pvt. Ltd

- G4S Corporate Services (India) Pvt. Ltd.

- Value and Budget Housing Corpn(India)Pvt. Ltd

- Lafarge India Pvt. Ltd.

- EIH Ltd.

- HT Parekh Foundation

- WNS Global Services (P) Ltd.

- HDFC PLC, Maldives

Mr. Prasad Chandran

- BASF India Ltd. (Chairman and Managing Director)

- BASF Asia Pacific (India) Pvt. Ltd. (Chairman)

- BASF Lanka Private Ltd. (Chairman)

- BASF Catalysts (India) Pvt. Ltd.

- BASF Bangladesh Ltd.

- BASF Grameen Ltd.

- Indo German Chamber of Commerce. (Committee Member)

- Federation of Indian Chamber of Commerce. (Executive Committee Member)

- Bombay Chamber of Commerce and Industry. (Managing Committee Member)

- The Energy and Resource Institute (Committee Member)

Mr. Bhaskar Bhat (from 01.01.2013)

- Tata Ceramics Ltd. (Chairman)

- Virgin Mobile India Pvt. Ltd. (Chairman)

- Titan Industries Ltd. (Managing Director)

- Titan Properties Ltd.

- Titan International Middle East FZE

- Titan Watches & Jly Intl. (Asia Pacific) Pte. Ltd.

- Titan International Marketing Ltd.

- Trent Ltd.

- Titan Time Products Ltd.

- TA Pai Management Institute, Manipal (Member of Governing Council)

- SDM Institute of Management, Mysore (Member of Governing Council)

- Jain University (Member of academic Council)

- National Institute of Technology, Uttarkahand (Chairman, Board of Governance)

- The Titan Foundation for Education (Chairman)

Dr. Manfred Duernholz (up to 31.12.2012)

- MICO Trading Pvt. Ltd. (up to 31.12.12)

Dr. Steffen Berns (from 01.01.2013)

- Robert Bosch Engineering and Business Solutions Ltd.

- Bosch Automotive Electronics India Private Ltd.

- MICO Trading Private Ltd.

- Robert Bosch(Bangladesh)Ltd. (from 01.02.13)

Mr. Soumitra Bhattacharya (from 01.01.2013)

- Bosch Electrical Drives India Private Limited

- MICO Trading Private Limited

- Automotive Component Manufacturers Association of India (Chairman of Consumers Affairs and Anti-Counterfeiting Committee)

- Confederation of Indian Industry (Vice - Chairman, Karnataka State Council)

Dr. Hieronimus and Mr. B. Steinruecke are liable to retire by rotation and offer themselves for re- election.

Dr. Hieronimus, aged 65 years, holds a Diploma in Mathematics from the University of Cologne, Germany. He joined Mannesmann AG in 1979 and held senior positions responsible for materials management, sales and operation planning in the Mannesmann Group companies in Germany. In 1990, he became a Member of the Management Board of Mannesmann Demag Baumaschinen GmbH and later of the Board of Management in Mannesmann Rexroth GmbH. From 1997 to April 2001, he was a Member of Executive Board of Mannesmann Rexroth AG, Germany and continued in that position till August 2003, upon the takeover of Rexroth AG by Robert Bosch GmbH. Dr. A. Hieronimus was Managing Director of the Company from 01.09.2003 and consequent upon assuming new responsibility from 01.02.2008 as Chairman of the Board of Directors of Bosch Rexroth AG, he ceased to be the Managing Director of the Company from 01.02.2008. The Board of Directors appointed Dr. A Hieronimus as Chairman of the Company from 01.02.2008. Dr. Hieronimus holds 640 shares in the Company. He is a member of Audit Committee and Shareholders''/Investors'' Grievance Committee of the Company. He is also the Chairman of the Shareholders''/ Investors'' Grievance Committee and a member of the Audit Committee in MindTree Limited.

Mr. B. Steinruecke, aged 57 years, studied Law and Economics in Vienna, Bonn, Geneva and Heidelberg. He has a Law degree from the University of Heidelberg and passed the Bar Examination of the High Court of Hamburg. He worked with Coopers and Lybrand, Hamburg before joining Deutsche Bank in 1984 and rose to become General Manager of the Mumbai Branch and Joint Chief Executive Officer of Bank''s operations in India. Later, he became the Managing Partner and Speaker of the Board of the ABC Privatkunden-Bank, Berlin. In July 2003, he became the Director General of Indo -German Chamber of Commerce. Mr. Steinruecke is an Independent Director of the Company, Chairman of Shareholders''/Investors'' Grievance Committee, member of Audit Committee, Remuneration Committee and the Share Transfer Committee of the Board. He does not hold any shares in the Company.

Particulars of Employees

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Report and Accounts are being sent to the Shareholders of the Company excluding the Statement of Particulars of Employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said Statement may write to the Company Secretary at the Registered Office of the Company and the same will be sent by post.

Corporate Governance

A Report on Corporate Governance approved by the Board of Directors of the Company and a certificate from the Practicing Company Secretary is set out in the Annexure to the Directors'' Report. The Company has fully complied with the Corporate Governance practices specified under the Companies Act, 1956, and the listing agreement with the Stock Exchanges.

A Code of Conduct for Directors and Senior Management, Code of Conduct for Prevention of Insider Trading, Whistle Blower Policy, Rules and Regulations of Service Conduct for Managerial and Superintending Staff, Code of Business Conduct etc., effectively support the Corporate Governance processes.

A Management Discussion and Analysis Report also accompany this report.

Business Responsibility

Pursuant to clause 55 of the listing agreement, listed companies are required to submit Business Responsibility Report as part of their annual report covering the principles enunciated in the said clause. Accordingly, a report on Business Responsibility is set out in the annexure to this Directors'' Report. The report covers all activities connected with Corporate Social Responsibility undertaken by the Company in the year 2012.

Energy, Technology, Foreign Exchange, etc.

The report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217(1)(e) read with The Company''s (Disclosure of Particulars in the

Report of Board of Directors) Rules, 1988, is set out in the Annexure to the Directors'' Report.

Auditors

M/s. Price Waterhouse & Co., Bangalore, (Regn. No. 007567S) Chartered Accountants, the retiring auditors, are eligible for re-appointment.

Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

- Accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The annual accounts have been prepared on a going concern basis.

Acknowledgements

The Directors express their gratitude to the Central Government and the State Governments of Karnataka, Maharashtra, Rajasthan and Goa for the support given to the Company. The Directors also thank all customers, dealers, suppliers, financial institutions and banks, members and others connected with the business of the Company for their co-operation.

For and on behalf of the Board of Directors

Bangalore Albert Hieronimus

27th February 2013 Chairman


Dec 31, 2011

The Directors have pleasure in presenting their SIXTIETH Annual Report together with the Audited Statement of Accounts for the year ended 31st December, 2011.

Financial Results

The following are the financial results:

(Rs. Million)

2011 2010

Net Sales (excluding recovery of duties and taxes) 79,294.7 66,305.0

Of which Export Sales 10,344.1 8,460.7

Profit before tax 15,739.9 12,027.9

Less: Provision for tax 4,710.0 3,660.0

Add: Deferred tax and tax adjustments relating to earlier years 195.7 221.1

Profit after tax 11,225.6 8,589.0

Appropriations:

Dividend:

- Dividend recommended at Rs. 50 per share (previous year: Rs. 40 per share) 1,569.9 1,255.9

- Special dividend at Rs. 85 per share 2,668.9 -

Tax on Dividend 254.7 208.6

Tax on Special Dividend 432.9 -

General Reserve 5,000.0 3,750.0

Capital Reserve - 0.6

Reversal of Dividend

Distribution Tax (4.8) (3.6)

Balance carried forward 1,304.0 3,377.5

Total 11,225.6 8,589.0

Net sales for the year 2011 grew by 19.6%. The Profit Before Tax (PBT) in 2011 as a percentage of net sales was at 19.8% as compared to 18.1% in 2010. The Profit After Tax (PAT) as a percentage of net sales was 14.1% in 2011 as against 13.0% in 2010.

Material costs as a percentage to sales increased to 56% in 2011 as compared to 54.3% in 2010.

Overall, the Profit Before Interest, Depreciation and Taxes, for the year shows an increase of 22.7% over the previous year.

Investments

Capital investment during 2011 was higher than previous year, at Rs. 6,587 mio. as against Rs. 3,021 mio. in 2010.

Dividend

The Board of Directors recommends a dividend of Rs.50 per equity share for the year 2011 as against a dividend of Rs.40 per equity share in 2010. This dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting.

A special dividend of Rs.85 per equity share was paid to the shareholders in 2011, on the occasion of 125th anniversary of Bosch and to commemorate 60 years of the Company since its incorporation in the year 1951. The total dividend payout for the year 2011 is at Rs.135 per equity share.

Business Situation

The automotive market was upbeat in the first half of the year 2011, continuing the growth momentum from the previous year. However, poor market sentiments, increased food & fuel prices and interest rates took their toll, what with the sale of passenger cars in October 2011 falling to the lowest in two years forcing the industry to slash forward looking forecasts. The widening price differential between petrol and diesel has further favoured the demand for diesel cars. This notwithstanding, OEMs continued to launch new models in all market segments especially passenger cars. Overall, the automotive sector was able to sustain double digit growth aided by a solid performance in the first half of the year 2011 and partially aided by stable rural demand.

Segment-wise, the commercial vehicle sector leads the pack with a strong 22% growth in 2011 over the previous year. Within this, Light Commercial Vehicle (LCV) segment grew by 30% driven by robust demand for sub 3.5 ton LCVs. Tractor segment continued to grow strongly with a 24% growth over 2010 backed by a bumper agricultural output. Two Wheeler and Three Wheeler segments registered a growth of 18% and 15% respectively.

In view of the above scenario, the Company outperformed expectations with sales from the automotive segment growing by 19.1% and exports breaking previously achieved records and clocking the best ever performance at Rs.10,344 mio. with a growth of 22.3% over 2010.

Our non-automotive business grew by 28.5% in 2011 as compared to 2010. This growth is mainly attributed to strong performance in the Power Tools, Packaging and Machine Building divisions.

Automotive Technology

Diesel Systems business grew by 19.2% in the year 2011 despite the ups and downs witnessed by the automotive market in 2011. The Diesel Systems business continued to drive focused innovation on the value line Common Rail System (CRS) for Light Commercial Vehicles as also simplification of the

CRS for small engines to create value propositions for our customers. These value offerings have helped the Company bag significant orders from key OEMs amidst stiff competition. The growth would have been much higher for the Diesel Systems business, but for the sluggishrtess experienced in the second half of the year mainly in the passenger car segment which grew by just 7% over previous year. Within this, there was a clear shift in the market from Gasoline to Diesel passenger cars owing to the high price differential between the two fuels.

Gasoline Systems business suffered a slowdown in 2011 and posted a de-growth of 6.4% due to reduction in passenger car sales consequent to gasoline price increase. The division introduced the first 2 Wheeler Engine Management Systems (EMS) in series production for a customer project. Focus on system engineering in Low Price Vehicle and 2 Wheeler systems for innovative and cost effective solutions to the Indian market, were the other highlights of the division.

Starter Motors and Generators business witnessed a strong growth of 63.1% in the year 2011 powered by New Base Line Generators both in the domestic and export market. The division also achieved overall productivity improvement over previous year.

In the year 2011, the division introduced "Thermal Protected Starters" for Commercial Vehicle applications, which is an Indian platform project going global. The division added renowned global OEMs to its portfolio of customers like Renault, Volkswagen and Ford in 2011. The division bagged "Best Supplier" award from the customer JCB India for delivery and quality.

The Automotive Aftermarket division registered an impressive growth of 15.2% in the year 2011. This continuous growth over the years is made possible owing to the division's expanded footprint in the market through roll-out of new concepts/ modules such as Express Bike Service (EBS), Tractor Points(TP) as well as extension of existing service networks at both 1st and 2nd Trade Level. The IT tools and systems (e.g. e FOCuS, FR Portal {for Field Representatives}) were also introduced for better sales and dealer management. Customer binding and brand building initiatives further boosted our market competitiveness. Infrastructure projects including new sales offices and warehouses successfully completed in the year 2011, for better customer responsiveness.

The OE filters, spark plugs and OE service blocks recorded highest ever sales and acquired new customers. New products from the Diagnostics Centre of Competence were successfully launched in line with 'local-for-local' strategy. With one new part number released per working day, the market coverage of all the Company's products further increased across vehicle segments.

Industrial Technology

Packaging Technology (Verna (Goa) Plant)

The year 2011 was the most defining year for the Packaging Technology division as it achieved the highest turnover with 40% growth over 2010. At the end of the first quarter of 2011, the division bagged the single largest export order for a record number of 60 machines. This project was successfully executed and the machines delivered within the time frame.

The division expanded its product portfolio with the development of a low cost candy wrapping machine. This machine was also exhibited at Interpack, Germany, for business promotion and was well received. On the vertical baggers, it had a very successful launch of SVI2600 B, at the India

Packaging Show in Delhi. A host of features like low height, high output and easy accessibility allow for improved packaging efficiency. During the same occasion, the Belt weigher FBW4021B was previewed, which offers high output and accuracy.

The division continued its success with the horizontal form fill and seal machines bagging orders from some of the most prestigious customers in India. It also executed first local order for pharmaceutical machines of MLF and FLC lines.

The year 2011 was also the year the division took up construction activities for its new Plant. The enhanced capacity will provide the division with the right platform to scale higher growth levels.

Industrial Equipment

The Industrial Equipment division registered a good growth of 53.1% in the year 2011. Business with the Company's customers grew by 23% in a highly competitive market.

New and prestigious customers from the Auto and Electrical equipment sectors were added to the Company's customer list. The division witnessed a substantial growth in Tool Room activities during the year 2011. Exports to Europe were also an important achievement. The division focused on building up of skills for the manufacture of machines and equipments to meet international standards.

Consumer Goods and Building Technology Power tools

The Power Tools division achieved an impressive growth of 22% in the year 2011 making 'PT India' one of the few countries to register a consistently strong growth in the last 4 years.

In 2011, the division launched its new state-of-the- art training center in Bangalore created with an investment of Rs.50 mio. making it one among the largest training centres in the Bosch PT world. With this initiative, Bosch PT India becomes the first Power Tool player in the country to offer advanced training programmes to its customers and end users.

Also launched in the year was the Fischer Exclusive Store at Kolkata to provide anchoring solutions to meet the growing demand in the region. The division inaugurated 'Bosch System Specialist' stores in nine cities across the country including one at Goa which is the largest of its kind in the world. In the year 2011, Bosch Power Tools India marked the 125th anniversary of Bosch through an innovative campaign called 'Power Drive 125' spread across 20 different locations in the country.

The division continued to supply tightening and pneumatic system solutions to major automotive OEMs such as Volkswagen, General Motors, BMW and Mercedes Benz in India. Localization was one of the core focus areas of the division. Manufacturing of a 2kg Hammer began at the Bosch Power Tools Plant in Bangalore making it only the third Plant in the Bosch Power Tool World to do so. Bosch Accessories showcased tremendous growth by crossing Rs.100 crores turnover mark in 2011 doubling the turnover in two years, rising to No.3 position. The division bagged the Gold and Silver medals at the prestigious 'TOOLYMPICS' contest-2011, in recognition of the various innovative market oriented activities.

Security Technology

The Security Technology division achieved 18.4% growth in the year 2011 compared to 2010. The division launched its distribution business for Video System Products under the Brand name of' Advantage Line'. It established a new business -'Engineering Solutions & Software', catering to large integrated projects.

There were numerous key projects for the year 2011. To mention a few - a prominent racing circuit, various state assemblies, a major airport, steel plant and power plant.

The division participated in IFSEC 2011, lauded as one of the most important trade exhibitions for Commercial & Homeland Security. A full range of security, safety, and communications products from Bosch were showcased at this important platform.

Solar Energy

In the year 2011, the Solar Energy division launched solar energy products and services in India. To capitalize on the potential of the nascent Indian solar photovoltaic market, the division introduced 60 cell mono-crystalline silicon module and Micromorph thin film modules. Along with photovoltaic modules, the division also offered project development services including engineering, procurement and construction of solar power plants. Since June 2011, the division delivered 1000 kWp of thin film modules.

Thermo Technology

The Thermo Technology division started its activities in 2011. It ventured into sales and service of industrial boilers coming from Germany and China. The series manufacture of solar flat plate collector, storage tank and mounting structure for domestic and commercial hot water applications are planned in 2012.

Competition and challenges in our business sectors

As in other regions of the world, the year 2011 was a testing year for the Indian automotive industry. In addition to the demand fluctuation from customers owing to the recession, volatile raw material prices aggravated the cost pressures of manufacturers. High inflation and labour issues made it one of the most challenging years to do business in.

However, the Company was among the very few organizations that were able to convert this apparent downside into an opportunity. With efficient processes and systems, the Company ensured that it remained cost competitive, delivering innovation and value to our customers, thereby maintaining its market share.

The Company's aggressive engineering, manufacturing, marketing and sales initiatives will continue into 2012 with renewed vigor, to expand our reach and strengthen the leadership position. Further, our clear long-term focus and sustained investments in future technologies, prepares us for the uncertainities that lie ahead and helps us enhance the Company's value proposition to all stakeholders.

Plants Bangalore

Bangalore Plant attained the highest production level in all its products viz., Inline Pumps, Elements, Delivery Valves, Common Rail Pumps, Glow Plugs and Single Cylinder Pumps in the year 2011.

The Plant invested Rs.185 mio. in 2011 towards expansion projects for meeting increased demand for the products manufactured. A milestone of producing 1 million 'Common Rail Pumps' and 15 million 'A pumps' was reached in the year 2011.

After being awarded the CII-Exim Bank award for Business Excellence at the national level in the year 2009, the Bangalore Plant sustained and further improved on living business excellence through the assessment carried out internally.

Nashik

During the year 2011, the Nashik Plant achieved the highest production levels of Nozzle holder assembly, DSLA Nozzle and Common Rail Injectors. The Plant manufactured the 100 mio. NHA-Injector, which was a new milestone achieved. To keep pace with the growing demand, the Plant made an investment of Rs.2,715 mio. in its production facilities.

The Plant was honored with CII-EXIM Bank's 'Commendation for Significant Achievements in Business Excellence' for the year 2011 as well as the 'Golden Peacock Environment Management Award' from the Maharashtra State Government.

Jaipur

In 2011, the Jaipur Plant achieved its highest production since its inception in the year 1999. The Plant realized the highest ever single investment of Rs.753 mio. towards enhancing the capacities and further expansion.

The year 2011 has also been a year of awards and accolades for the Plant. It received the Best Supplier Award from Tata Cummins, Supply Linearity Award from Ashok Leyland, the National Award for

Excellence in Water Management by CII and the Best Employer Certificate by the Rajasthan Government.

Naganathapura

In the year 2011, substantial ramp ups in New Base Line generator and Hx Starter business were resorted to by the Plant. The Plant achieved a record production of 32 mio. units of Spark Plugs in the year 2011.

Lean Concepts were implemented vigorously in the Plant. Energy conservation measures were put in place during the year. The Plant maintained cordial Industrial relations and the employees of the Plant worked as a team towards achieving better results.

Information Technology (IT)

The maturity of IT-enabled business processes using SAP were assessed and showed improvements over the previous year. A focused effort on improving the usage of planning tools within SAP is in progress. A new Business Intelligence Platform has been put in place to support business reporting requirements and tracking of Key Performance Indicators.

Improvements were achieved in Information Security, Data protection and Control of Authorizations. Formal processes exist to periodically audit and report results.

Change Initiatives

Continuous Improvement Process (CIP)

The year 2011 was a year which had good balance between CIP in Direct areas and Indirect areas. Direct areas showcased their strength with Conventional CIP and LeaderCIP which laid the platform to make improvements in Quality, Cost and Delivery. Conventional CIP enabled all value streams to achieve system CIP targets and LeaderCIP enabled leaders to lay more focus and guide their respective teams in meeting organizational targets. Value Stream Design in Indirect Areas (VSDiA) took a front stage in eliminating waste and in reducing lead time which directly acted as a backbone for direct areas. VSDiA Improvements were effective in Plants as well as in corporate departments within the Company.

Team Oriented Production (TOP), Voluntary Lernstatt Team and Shop Floor CIP increased the involvement in CIP activities in 2011 compared to 2010. LeaderCIP trainings were launched in 2011 across all managerial levels to follow the PDCA-Guided process approach in CIP. The yearly "GLS CIP 2011" was held in order to share good CIP practices across the Company with the participation of Executive Directors. CIP teams received accolades in regional, national and international competitions organised by recognized quality circle forums.

Bosch Production System (BPS)

BPS in 2011 played a very prominent role focusing on a set of guided principles that were implemented in order to achieve business targets of the Company. The focus in 2011 was to improve in three areas viz. "Source, Make and Deliver". The Company won the BPS award in the 'Source' category by establishing good BPS Compliant suppliers. BPS Knowledge training was extended across all Plants with a view to have a common understanding in all areas and to measure the effectiveness within the Company. It was found that value stream managers were orienting / aligning themselves to attain system maturity and business Key Performance Indicator (KPI) targets.

Standardized and Reusable packaging of raw materials and finished goods initiatives helped business divisions to eliminate waste in transportation and adopt environment friendly concepts. In order to reduce lead time, the entire value chain was focused on many localization, cost reduction (RPP) projects, inventory reduction projects were initiated. Shop Floor Management Cycle (SFMC) and TPM models were implemented successfully in many locations.

Diesel Systems Business Excellence

The Diesel Systems Business Excellence (DBE)

integrates the various cross functions in the Plants and aligns them towards meeting the INDS (Diesel Systems India) Vision and Mission. DBE was started in 2005 at the Diesel System manufacturing Plants in India (Bangalore, Nashik and Jaipur) and have adopted the European Foundation for Quality Management (EFQM) model of Business Excellence to improve the organization effectiveness in a holistic manner. Regular assessments are conducted at all Plants as a health check to identify strengths and focus areas to work upon. The RADAR approach is used extensively at INDS where we know the Results that we have to achieve, a clear cut Approach is defined and they are Deployed. Assessment and Refinement help us to continuously improve the systems and processes in our journey towards Business Excellence by enabling maturity of the organisation and its people. Key performance indicators are measured to enable the achievement of required results as a cause and effect with respect to all the key stakeholders.

INDS is striving towards institutionalizing a culture of'Living Business Excellence' as 'Business Excellence at work' by incorporating the same in the INDS Vision & Mission. To deploy this vision theme, INDS long term strategy map has one of the bubbles as 'living BE'. The strategic measures / targets are deployed across Plants and connected corporate functions through Policy Deployment process.

The INDS have won many accolades in this exciting journey. Bangalore Plant won the coveted CII-EXIM Bank award for business excellence in 2009, Nashik Plant won the CII -EXIM Bank Commendation for significant achievements in Business Excellence' for the years 2010 and 2011 and Jaipur Plant was recognized with Commitment to Business Excellence in 2008.

First Strategic Assessment was conducted at INDS in January 2012. Structured assessment document as a description of entire INDS was prepared by strategy/change teams with respect to 15 key business related topics such as innovative products, cost competitiveness etc. A team of senior business leaders from Diesel Systems India and Diesel Systems Bosch lead by an external Assessor from EFQM carried out the assessment and presented the key findings to INDS management. The maturity level of INDS in terms of Business Excellence is currently at a level of'Recognized for Excellence' based on the band of results achieved. Based on key areas of improvements identified during the assessment, teams have initiated projects / measures to further enhance the organizational effectiveness.

Bosch Vocational Centre

The year 2011 is indeed a special year for Bosch Vocational Centre (BVC) since it marked the celebration of Golden Jubilee year for having completed the 50 years of its establishment of the Centre. The BVC was functional as early as 1960. The BVC's valuable services over the past fifty years in imparting technical education and training have benefited many talented young people. Bosch Vocational Centre has the fame of producing young skilled work force meeting the present day requirements of Industries.

BVC won five gold medals for all the five trades participated at the 86th All India Skill Competition for Apprentices organized by the Directorate General of Employment and Training (DGE&T), Ministry of Labour and Employment, Government of India in May 2011.

BVC being the "Best in Class" in the country also sustained excellence in the field of Vocational Training by increasing tally of Gold medal winners to 191. BVC received the 'Best Establishment' Award for the 42nd time. BVC also continuously invests in upgrading facilities and infrastructure to maintain high standards of training.

Awards and Recognition

The Company won several awards, as recognition of the efforts put in by the Company:

- Award for achieving targets in delivery year 2010 by Toyota in April 2011 in the area of "Localization for Etios Project".

- Award from Cummins for the best supplier in the category "Assemblies" at the regional Cummins supplier conference held in Pune in June 2011.

- "Overall Performance of the Year 2010" award from the John Deere at their Supplier meet held in June 2011.

- Tata Motors award for excellence in "Technology and Innovation" at the Tata Motors National Vendor Meet 2011, held in Mumbai in July 2011.

- Bosch Group was awarded the 'Presidents Award' given by Mahindra & Mahindra for overall performance of the Company in streams such as supplies, quality, development and cost effectiveness.

- Recognition certificate from Maruti Suzuki for superior performance in the field of timely capacity enhancement for the year 2010-2011.

- Subros Car & Bike award 2012 in the 'Best Automotive Component Manufacturer' category.

Bosch India Foundation

Bosch India Foundation, with its vision "Enabling Lives and Livelihood", increased its reach to seven locations in India. By the end of its 3rd year of its functioning, the Foundation had benefited 3,515 youth of various underprivileged communities through support of skill trainings and medical projects.

In 2011, vocational trainings were introduced in eight new trades such as automobile service mechanic, tractor mechanic, motor winding, AC mechanic, masonry, carpentry etc., through partnership with 20 committed NGOs who are in close contact with the community and its needs. Yet another highlight was the vocational training support extended to 84 mentally challenged and spastics youth across three locations in India.

The Foundation supported 20 surgeries for young children with complex orthopedic problems and helped them to walk. The surgeries are conducted by Sparsh Vachana to a select set of 200 underprivileged children every year. The Foundation also continued its support to the Gujarat Cleft and Craniofacial Research Institute (GCCRI) which conducts free corrective surgeries for those born with facial deformity.

Industrial Relations

Industrial relations at all Plants and other establishments continued to be cordial excepting Bangalore Plant where the Union and Workmen went on a sudden Tool Down Strike from September 28, 2011, demanding that all outsourcing and ancillarization activities must be stopped. The unreasonable demand was rejected outright by the management and taking note of facts by the State Government of Karnataka, in exercise of powers vested in them vide section 10(3) of Industrial Disputes Act (amendment) 1947, issued orders on October 12,2011 prohibiting the strike forthwith. The Union called off their strike unconditionally on October 13,2011. Normal Plant operations had been restored for all workmen from October 14,2011 The Directors place on record their deep appreciation of the sincere and dedicated teamwork by employees at all levels to meet the quality, cost and delivery expectations of our customers.

Subsidiary Company

As the aggregate assets and income of MICO Trading Pvt. Ltd., as on December 31,2011 is not material, no consolidated financial statements under Accounting Standard 21 "Consolidated Financial Statements" as notified under section 211(3C) of the Companies Act, 1956, has been prepared.

As required under Section 212 of the Companies Act, 1956, annexed hereto are the Audited Statement of Accounts, the Report of the Board of Directors and Auditors' Report for the year ended 31st December 2011 of MICO Trading Pvt. Ltd.

Directors

Dr. Manfred Duernholz has been re-appointed by the Board as Joint Managing Director of the Company for a further period of one year with effect from January 01,2012. The Board also appointed Mr. Soumitra Bhattacharya, Executive Vice President of the

Company as Alternate Director to Dr. B. Bohr with effect from July 1,2011.

Names of companies/firms in which Directors of the Company hold/held office as Director/Partner are given below:

Dr. A. Hieronimus

- MindTree Ltd. (Chairman)

- Bosch Rexroth AG (Member of the Board)

Dr. B.Bohr

- Robert Bosch GmbH (Member of the Board)

- ZF Lenksysteme GmbH (Member of Supervisory Board)

Mr.B. Steinruecke

- Indo German Chamber of Commerce. (Director General)

- FAG Bearings India Ltd.

- Zodiac Clothing Company Ltd.

- HDFC ERGO General Insurance Company Ltd.

- Apollo Munich Health Insurance Company Ltd.

Mr. B. Muthuraman

- Tata Steel Ltd. (Vice Chairman)

- Tata International Ltd.(Chairman)

- Tata Industries Ltd.

- Tata Steel Europe Ltd.

- Tulip UK Holdings No.2 Ltd.

- Tulip UK Holdings No.3 Ltd.

- Tata Incorporated, New York.

- Tata Africa Holdings (SA) (Pty) Ltd.

- Strategic Energy Technology Systems Ltd.

- Confederation of Indian Industry (President)

Mr. Renu S Karnad

- Housing Development Finance Corporation Ltd. (Managing Director)

- Credit Information Bureau (India) Ltd.

- GRUH Finance Ltd.

- HDFC Asset Management Co. Ltd.

- HDFC ERGO General Insurance Co. Ltd.

- HDFC Property Ventures Ltd. (Chairperson)

- HDFC Standard Life Insurance Co. Ltd.

- Indraprastha Medical Corporation Ltd.

- HDFC Bank Ltd.

- AKZO Nobel India Ltd.

- EIH Ltd.

- HDFC Sales Pvt. Ltd. (Chairperson)

- Feedback Infrastructure Services Pvt. Ltd.

- G4S Corporate Services (India) Pvt. Ltd.

- Value and Budget Housing Corporation (India) Pvt. Ltd.

- Credila Financial Services Pvt. Ltd. (Chairperson)

- Lafarge India Pvt. Ltd.

- HDFC Education and Development Services Pvt. Ltd. (Chairperson)

- Transunion LLC, Chicago.

- HDFC PLC, Maldives.

Mr. Prasad chandran

- BASF India Ltd. (Chairman and Managing Director)

- BASF Asia Pacific (India) Pvt. Ltd. (Chairman)

- BASF Catalysts (India) Pvt. Ltd.

- BASF Lanka Private Ltd.

- BASF Bangladesh Ltd.

- BASF Grameen Ltd.

- Indo German Chamber of Commerce. (Committee Member)

- Federation of Indian Chamber of Commerce. (Executive Committee Member)

- Bombay Chamber of Commerce and Industry. (Managing Committee Member)

- The Energy and Resource Institute (Committee Member)

Mr. V.K. Vishwanathan

- Robert Bosch Engineering and Business Solutions Ltd. (Chairman)

- Bosch Rexroth (India) Ltd. (Chairman)

- Bosch Chassis Systems India Ltd.

- MICO Trading Pvt. Ltd.

- Foundation Brake Manufacturing Ltd.

- Bosch Electrical Drives India Pvt. Ltd.

- Bosch Automotive Electronics India Pvt. Ltd. (Chairman)

- BSH Home Appliances Pvt. Ltd.

- Hagglunds Drives (India) Pvt. Ltd.

- FLSmidth Pvt. Ltd.

- Indo German Chamber of Commerce.

(Vice President)

- Confederation of Indian Industry (Committee Member)

Dr. Manfred Duernholz

- MICO Trading Pvt. Ltd.

Mrs. Renu S Karnad, Mr. Prasad Chandran and Mr. V.K. Viswanathan are liable to retire by rotation and offer themselves for re-election.

Mrs. Renu S Karnad, 59, holds a Bachelor Degree in Law from the University of Bombay and Masters Degree in Economics from Delhi School of Economics. She joined HDFC Ltd in 1978 in the legal and credit department and grew to become the head of lending business of HDFC Ltd. She is responsible for the lending operations of HDFC, both retail as well as corporate, framing policies and strategies for mortgage lending by HDFC, development of new retail products, expansion of branch network and other channels of distribution, budgeting and management information system, for setting goals and targets at the national, regional and branch levels, monitoring performance vis-a-vis the budgets, development of new asset and liability products, introduction of innovative and structured products, coordinating resource raising from domestic and international markets, negotiating and finalizing financing facilities from multilateral agencies such as World Bank, Asian Development Bank, Commonwealth Development Corporation (CDC) and KfW, communicating with equity analysts and international investors besides also coordinating with regulators such as the National Housing Bank and liaising on behalf of HDFC with the Government of India and the State Governments and Housing Industry etc. As a member of the Investment Committee of HDFC, she partakes in the decision making for investments by HDFC in debt, equity and other related treasury products. She is currently functioning as Managing Director in HDFC Ltd.

In 1984, she was awarded Pravin Fellow - Woodrow Wilson School of International Affairs, Princeton University, Princeton, NJ. She has attended several senior management programs on financial management, urban planning, political science and women's studies. Mrs. Renu S Karnad is an Independent Director of the Company (appointed on 01.04.2007). She is the Chairperson of the Audit Committee, member of Shareholders' / Investors' Grievance Committee, Investment Committee and Property Committee of the Company. She does not hold any shares in the Company.

Mr. Prasad Chandran, 59, is a post-graduate in Chemistry and has a Masters degree in Business Administration. He has also received Advanced Management Education from Institutes in the US, UK and Japan. He is the Past President of the Indo German Chamber of Commerce (IGCC). He is also the co- chairman of the National Committee on Chemicals and Petrochemicals of the Confederation of Indian Industries (CII), Member of the Executive Committee of Federation of Indian Chambers of Commerce & Industry (FICCI) and Managing Committee Member of the Bombay Chamber of Commerce and Industry. He is also an active participant in a number of trade/industry delegations of the Government of India.

Mr. Chandran heads the "Million Minds" Project. This is conceptualized by him to improve governance and fight corruption. Whilst implementing the BASF Global values and principles, he addresses policy issues on corruption to raise the standards of governance in India. The "Million Minds" project sensitizes stakeholders and creates voluntary action groups in different parts of the country. He is associated with NGOs like Public Concern for Governance Trust (PCGT) and Coalition Against Corruption (CAC) etc.

Mr. Chandran is the Chairman and Managing Director of BASF India Limited. In addition to his direct responsibilities, he is a member of the BASF Human Resources Council, which oversees the personnel policies and the Sustainability Development Council, which oversees the sustainability issues of the BASF Group in the Asia Pacific Region. Mr. Chandran is an independent Director of the Company (appointed on 01.01.2009). He is the member of Audit Committee, Shareholders' / Investors' Grievance Committee, Remuneration Committee and Share Transfer Committee of the Board. He does not hold any shares in the Company.

Mr. V. K. Viswanathan, 61, is a Bachelor of Commerce from Madras University and a Chartered Accountant. Prior to joining the Company, he was the Group Treasurer & Head of Mergers and Acquisitions with Hindustan Unilever Limited with which group he was associated in various capacities for 17 years.

Mr. Viswanathan joined the Company as Chief General Manager in August 1998. After a brief orientation in the Company, he took up an assignment in the Diesel Systems Division of Robert Bosch GmbH, Germany from September 1998. Upon completion of the assignment, he returned to the Company in November 2000. Mr. Viswanathan joined the Board as Additional Director and Joint Managing Director on 01.01.2001, responsible for Finance, Administration and IT Co- ordination. Upon assuming new responsibilities in Robert Bosch Corporation, Farmington Hills, USA (Robert Bosch North America), Mr. Viswanathan ceased to be a Director and Joint Managing Director of the Company from February 28,2006.

Upon completion of his assignment with Robert Bosch Corporation, Farmington Hills, USA (Robert Bosch North America), he was appointed as Additional Director and Joint Managing Director with effect from 01.11.2007 and from 01.02.2008 as Managing Director responsible for Automotive Aftermarket, Starters and Generators, Packaging Machine, Power Tools and Security Technology. Mr. Viswanathan is a member of Shareholders'/ Investors' Grievance Committee, Share Transfer Committee, Investment Committee and Property Committee of the Company. He does not hold any shares in the Company.

Particulars of Employees

Information in accordance with the provisions of Section 217(2 A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, this Report and Accounts are being sent to the Shareholders of the Company excluding the Statement of Particulars of Employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said Statement may write to the Company Secretary at the Registered Office of the Company and the same will be sent by post.

Corporate Governance

A Report on Corporate Governance approved by the Board of Directors of the Company and a certificate from the Practicing Company Secretary is set out in the Annexure to the Directors' Report. The Company has fully complied with the Corporate Governance practices specified under the Companies Act, 1956, and the listing agreement with the Stock Exchanges.

A Code of Conduct for Directors and Senior Management, Code of Conduct for Prevention of Insider Trading, Whistle Blower Policy, Rules and Regulations of Service Conduct for Managerial and Superintending Staff, Code of Business Conduct etc., effectively support the Corporate Governance processes.

A Management Discussion and Analysis Report also accompany this report.

Energy, Technology, Foreign Exchange, etc.

The report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217(l)(e) read with The Company's (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is set out in the Annexure to the Directors' Report.

Auditors

M/s. Price Waterhouse & Co., Chartered Accountants, the retiring auditors, are eligible for re-appointment.

Directors' Responsibility Statement

Pursuant to Section 217(2 AA) of the Companies Act, 1956, the Board of Directors report that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

- Accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The annual accounts have been prepared on a going concern basis.

Acknowledgements

The Directors express their gratitude to the Central Government and the State Governments of Karnataka, Maharashtra, Rajasthan and Goa for the support given to the Company. The Directors also thank all customers, dealers, suppliers, financial institutions and banks, members and others connected with the business of the Company for their co-operation.

For and on behalf of the Board of Directors

Bangalore Albert Hieronimus

28th February 2012 Chairman


Dec 31, 2010

The Directors have pleasure in presenting their FIFTY- NINTH Annual Report together with the Audited Statement of Accounts for the year ended 31st December 2010.

Financial Results

The following are the financial results:

(Rs. Million)

2010 2009

Net Sales (excluding recovery of duties and taxes) 66,305.0 47,497.7

Of which Export Sales 8,460.7 5,854.6

Profit before tax 12,027.9 7,934.1

Less: Provision for tax 3,660.0 2,495.5

Add: Deferred tax and tax adjustments relating to earlier years 221.1 467.8

Profit after tax 8,589.0 5,906.4

Appropriations:

Capital Redemption Reserve 6.3

Dividend:

Dividend recommended at Rs.40 per share (previous year: Rs.30 per share) 1,255.9 941.9

Tax on Dividend 208.6 160.1

General Reserve 3,750.0 4,500.0

Capital Reserve 0.6 35.4

Dividend and Dividend Tax thereon write back relating to previous year (3.6) (14.7)

Balance carried forward 3,377.5 277.4

Total 8,589.0 5,906.4

Net sales for the year 2010 grew by 39.6%. The Profit Before Tax (PBT) in 2010 as a percentage of net sales was at 18.1% as compared to 16.7% in 2009. The Profit After Tax (PAT) as a percentage of net sales was 13.0% in 2010 as against 12.4% in 2009.

Material costs as a percentage to sales increased to 54.3% in 2010 as compared to 53.7% in 2009.

Overall, the Profit Before Interest, Depreciation and Taxes, for the year shows an increase of 38.9% over the previous year.

Investments

Capital investment during 2010 was higher than previous year, at Rs.3,021 mio. as against Rs. 1,446 mio. in 2009.

Dividend

The Board of Directors recommend a dividend of Rs.40 per equity share for 2010 as against a dividend of Rs.30 per equity share in 2009.

Business Situation

The upswing in the Indian automotive industry which began in the second half of the year 2009 continued in 2010 as well. Indias fast growing middle class segment coupled with soaring demand from rural areas created a very buoyant market in 2010, resulting in all business units attaining an all-time high production and sales volumes. New model launches and easy financing options were the other key drivers that helped to achieve a higher growth trajectory in 2010.

All segments, be it commercial vehicles, passenger cars or tractors, posted strong double digit growth levels. Leading the pack, was the Medium and Heavy Commercial Vehicle segment which recorded a growth of 70% over 2009. Light Commercial Vehicle and Passenger Car segments which were the first to recover post the stimulus packages announced by the Government of India in 2009, continued their robust performance in 2010 with 44% and 30% growth respectively. The tractor segment crossed the half a million production mark. This segment registered a growth of 29% over the year 2009.

As a result, our Company performed exceedingly well with sales from the automotive segment growing by 41.5% and Exports recording the best ever performance at Rs.8,461 million with a growth of 44.5% over 2009.

Our non-automotive businesses grew by 26.6% in 2010 compared to 2009. This can be mainly attributed to growth in the Power Tools, Security Technology and Machine Building divisions.

Automotive Technology

Diesel Systems business grew by a significant 51.9% in the year 2010, recording an all time high sales. This phenomenal growth was driven primarily by the robust demand in the Medium / Heavy Commercial Vehicle and Tractor segments.

The Bharat Stage 3 (BS3) and Bharat Stage 4 (BS4) emission norms were also introduced in 2010 and our Company was closely associated with all OEMs for effective, timely and smooth transition.

One of the major highlights of the division was the successful introduction of inline fuel injection pumps for Medium duty Commercial Vehicle applications meeting BS3 emission norms. The year also saw the introduction ofValue-Line Common Rail Systems for Medium duty Commercial Vehicle applications. These unique products are a clear testimony to the Companys strong innovative culture and its focus on providing value to the customers.

Gasoline Systems business achieved a growth of

60.9% in the year 2010. The key highlights of the division were the development of Engine Manage- ment Systems for two wheelers and Low Priced Vehicles. As a firm commitment to providing local development and application support, the division focused on heightened R&D infrastructure build up.

Starter Motors and Generators business witnessed a growth of 12.2% in the year 2010 over 2009. The division was successful in acquiring many new projects. A new product HX87 Starter Motor was launched for Commercial Vehicle applications.

The Automotive Aftermarket division registered an impressive growth of 24% in the year 2010. This success was achieved primarily on account of expansion of product and customer portfolio, widened distribution network, effective channel management and innovative customer binding programmes.

The division expanded its presence pan India, taking the number of workshops to 1963 outlets in 2010 as compared to 1600 workshops in 2009. Another key highlight was the introduction of 500th Bosch Car Service outlet. With this, Bosch Car Service has become one of the largest distributor and service networks in the automotive market in the country.

Industrial Technology

Packaging Technology (Verna Plant)

The year 2010 saw many challenges in Packaging Technology business with postponed customer projects and increased competition in general. Despite these market dynamics, the division achieved a growth of 6.2% in the year 2010 over 2009.

Significant improvements in design quality and dedicated engineering efforts have resulted in the reduction of design lead time and cost optimization. The division successfully launched Transwrap 1650 and High speed cup doser machine in Chocolate and Confectionery segment.

The division sold a record 24 Nos. BVK 2000 candy wrappers in the year 2010, as well as bagging the first order for sale of this machine in the African market. It also executed the first commercial order for Pharmaceutical machine for the overseas market.

Industrial Equipment

The Industrial Equipment division posted a positive growth of 6% in the year 2010 after a de-growth in the previous year. This was mainly driven by capital investments within our Company and our external customers.

New product launches such as Bosch Vertical Machining Centre, BeAT 40 and assembly lines for key and core processes in the manufacture of diesel and gasoline fuel injection systems were the major highlights of the division.

Consumer Goods and Building Technology Power tools

The Power Tools business recorded a strong growth of 28.3% in the year 2010 and maintained a robust pace of growth higher than that of construction and infrastructure sectors in India.

The division launched the full range of Lawn and Garden Tools including the Hedge Cutter and Lithium Ion Lawn Mower. To capitalise on the potential in the infrastructure segment, the division also launched the I&I (Industrial & Institutional) concept which caters to the needs of these segments along with the FATS (Fischer-Accessories-Tools-Spares) concept to provide comprehensive construction solutions to the thriving infrastructure sector.

Localization was one of the core focus areas of the division. Production of 2kg Hammer was started in 2010 at the Bosch Power Tools Plant in Bangalore. This is the 3rd Plant in the Bosch Power Tool World to manufacture these kinds of hammers. The division launched the first Fischer Exclusive Store at Hyderabad to provide anchoring solutions.

The division also supplied tightening system solutions to the major automotive OEMs in India and specialized power tools and anchoring solutions for a major metro rail projects.

Security Technology

The Security Technology business achieved a 19.8% growth in the year 2010 compared to 2009. The division was successful in implementing the Professional Sound System at the Jawaharlal Nehru Stadium for the Common Wealth Games held in New Delhi. The Company is also successfully implementing the Video Surveillance System for a major Metro Rail project.

Another key highlight of the division was the launch of Bosch Security Training Academy. The state-of- the-art demo and training center was set up at Bangalore. This training academy aims to bring the highest level of manufacturer training to the industry, to improve product knowledge, its application and awareness.

Competition and challenges in our business sectors

Our Company will continue to expand its product portfolio, deploy its resources towards developing innovative technologies and market relevant products with a view to take on the challenges arising from competition both locally and globally.

Focus on increasing productivity, achieving cost competitiveness in all areas, efficient utilization of resources and customer centric initiatives will be accorded paramount importance.

While the year 2010 saw an exhilarating pace in our operations, 2011 will see more dynamic activity across business spheres. With innovative and market relevant products, we shall strive to be successful in converting business potential into profitable growth and secure the leadership position of our Company.

Plants Bangalore

Bangalore Plant attained the highest production levels in all its value streams viz., Inline Pumps, Elements, Delivery Valves and Glow Plugs, in the year 2010.

The Plant added new generation products with the start of production of the Rail which is part of the Common Rail system. A-Pump (Inline Pump) which has been the main line product for the Plant since its inception in 1951, has extended the life of the product further with the launch of A4000 variant which conforms to BS3 norms.

Nashik

Nashik Plant has achieved the highest production levels of Nozzle Holder assembly, DSLA Nozzle and Common Rail Injector.

The Plant was honored with CII-EXIM Banks Commendation for significant achievements in Business Excellence for the year 2010.

Jaipur

Jaipur Plant rolled out its 3 millionth VE Pump in the year 2010 alongside achieving highest production levels since its inception in 1999. With focused effort, the Plant was able to ensure seamless transition from BS2 to BS3 norms by supporting OE customers efficiently with respect to product mix and call-off schedules.

The Plant won the first prize from Rajasthan Government for Energy Conversation in the automotive segment.

Naganathapura

In the year 2010, the Plant has expanded its product portfolio by setting up a new hangar for the manufacture of Gasoline Systems.

The Plant has obtained BS OHSAS 18001 certification from TUV-Nord for having implemented the new Occupational Safety and Management System keeping in mind the safety of associates.

Information Technology (IT)

The Companys IT systems and processes are periodically audited to ensure adequacy of Information Security and controls for Authorizations.

The Automotive Aftermarket division of the Company migrated its business operations to an SAP system to meet the increasing and varying needs of its business for optimized support of the retail business.

Change Initiatives

Continuous Improvement Program (CIP)

In 2010, a more methodical approach of CIP was adopted through involvement of leaders, known as LeaderCIP. It is a structured improvement process that works with the goal of excellence in controlling everyday work, thereby increasing the value contribution. The program attained a multifold growth in support functions in 2010 and provided a platform for leaders and associates to address issues through many CIP workshops, laying the foundation for sustainable development. Along with this, a new approach called VSDiA - Value Stream Design in Indirect Areas, applying Lean (waste elimination) philosophy in indirect processes has immensely helped in identifying and eliminating "Non-value adding activities".

While indirect functions benefitted from LeaderCIP and VSDiA, CIP for direct functions resulted in many problems being solved through the Shop Floor CIP drive. In the year 2010, associate involvement in improvements also increased through Team Oriented Production (TOP) and Voluntary Lernstatt teams. Our associates participated in regional, national & international competitions and won accolades for the Company.

Bosch Production System (BPS)

BPS, a time tested and proven model at Bosch, can be successfully implemented through continuous improvements. The BPS has 8 guiding principles and supporting implementable tools called elements. The main focus in 2010 was to align the BPS principles and its elements with the business objectives. The measurement of overall effectiveness of BPS implementation was improved from audit orientation to system maturity and business penetration. The two supportive strategies viz., BPS leadership trainings and New BPS Assessment model helped align value stream culture with business Key Performance Indicators (KPIs).

The BPS focus is now being extended to our business partners with an aim to holistically improve the entire "value chain". Project Transform1 has been launched with our key component suppliers to improve their operational efficiencies through training and implementing lean concepts.

Deployment of Business Excellence (OBE)

Deployment of Business Excellence (DBE) in our Diesel Systems business led to improvements in leadership aspects, strategy management, people engagement, process orientation, resource management and eventually business results. DBE is facilitating the organization to align all its functions towards the Companys vision and mission. This management concept places a strong emphasis on meeting all stakeholders expectations.

While the Bangalore Plant (Diesel Systems) was awarded the CII-EXIM Bank award for business excellence based on the European Foundation for Quality Management (EFQM) model in 2009, the Companys Nashik Plant has been honored with CII -EXIM Bank Commendation for significant achievements in Business Excellence for the year 2010.

Bosch Vocational Centre

The Company has always emphasized on skills development and has believed in keeping in pace with the latest technological advancements. The focus on overall development of skill sets has resulted into a comprehensive and an intensive training programme under the aegis of the Bosch Vocational Centre (BVC). The training is designed in accordance with the Bosch guidelines to develop the skills and technical knowledge of the employees. With the multicraft approach, the emphasis is on practical hands on training.

BVC crossed a milestone by winning 7 Gold Medals at the 83rd All India Competition for Apprentices. The present medal tally is at 182 gold medals. BVC received the Best Establishment Award for the 40th time. BVC also continuously invests in upgrading facilities and infrastructure to maintain high standards of training.

Awards and Recognition

The Company received several awards and recognitions for its achievements:

- Mahindra & Mahindra Best Performance Award 2009-10 for product development.

- Overall Excellence Award conferred by Maruti Suzuki India Limited for Vendor Performance.

- Par Excellence Trophy Award from Quality Circle Forum of India for Naganathapura and Jaipur Plants.

- Gold Award from M/s Bajaj Auto for meeting the quality and delivery targets.

- Award from M/s Volvo Eicher for outstanding contribution to Supply Chain Management.

- Excellence in Technology Award from Tata Motors at National Vendor Meet.

Dematerialization of shares

Of the 28.82% shares held by the public, 27.74% shares have been dematerialized as on 31.01.2011.

Members holding shares in physical form are advised to dematerialize their shares to avoid the risks associated with the physical holding of such share certificates.

Bosch India Foundation

Bosch India Foundation, in its continued effort to serve the underprivileged sections of the society, initiated over 15 different projects in the fields of vocational training and health program during the year 2010. The programs were conducted with active participation of Bosch Associates across four cities viz., Bangalore, Pune, Ahmedabad and Coimbatore. One of the new projects introduced was the training for Fitter, Electrician, CNC mechanics and Mobile set repairers. Around 1200 underprivileged youths have benefitted from the program so far. Also conducted was the Health awareness for women and children in slums through radio communication.

Industrial Relations

Industrial relations at all Plants and other establishments continued to be cordial. Long term productivity linked wages settlement for a four year period (2009 - 2012) was signed at 4 Plants of the Company. The Directors place on record their deep appreciation of the sincere and dedicated teamwork by employees at all levels to meet the quality, cost and delivery expectations of our customers in a growing market.

Subsidiary Companies

As the aggregate assets and income of MICO Trading Pvt. Ltd., as on 31st December 2010 is not material, no consolidated financial statements under Accounting Standard 21 "Consolidated Financial Statements" as notified under section 211 (3C) of the Companies Act,1956, has been prepared.

As required under Section 212 of the Companies Act, 1956, annexed hereto are the Audited Statement of Accounts, the Report of the Board of Directors and Auditors Report for the year ended 31st December 2010 of MICO Trading Pvt. Ltd.

Directors

Names of companies/firms in which Directors of the Company hold/held office as Director/Partner are given below:

Or. A. Hieronimus

- Mind Tree Ltd.

- Bosch Rexroth AG (Member of the Board) (from 01.01.2011)

Dr. B. Bohr

- Robert Bosch GmbH, Germany. (Member of the Board)

- ZF Lenksysteme GmbH

(Member of Supervisory Board)

¦ Mr. B. Steinruecke

- Indo German Chamber of Commerce. (Director General)

- FAG Bearings India Ltd.

- Zodiac Clothing Company Ltd.

- HDFC ERGO General Insurance Company Ltd.

- Apollo Munich Health Insurance Company Ltd.

Mr. B. Muthuraman

- Tata Steel Ltd. (Vice Chairman)

- Tata International Ltd.( Chairman)

- Tata Incorporated, New York.

- Tata Industries Ltd.

- Tata Steel Global Minerals Holdings Pte. Ltd.

- Tata Steel Europe Ltd.

- Tulip UK Holdings No.2 Ltd.

- Tulip UK Holdings No.3 Ltd.

- National Institute of Technology, Jamshedpur (Chairman)

- Xavier Labour Relations Institute, Jamshedpur (Chairman, Board of Governors)

- Indian Institute of Technology, Khargpur (Chairman, Board of Governors)

- Strategic Energy Technology Systems Pvt Ltd.

- Tata Africa Holdings (SA) (Pty) Ltd.

Mrs. Renu S Karnad

- Housing Development Finance Corporation Ltd. (Managing Director)

- Credit Information Bureau (India) Ltd.

- GRUH Finance Ltd.

- HDFC Asset Management Co. Ltd.

- HDFC ERGO General Insurance Co. Ltd.

- HDFC Property Ventures Ltd. (Chairperson)

- HDFC Standard Life Insurance Co. Ltd.

- HDFC Venture Capital Ltd.

- Indraprastha Medical Corporation Ltd.

- Sparsh BPO Services Ltd.

- HDFC Sales Pvt. Ltd. (Chairperson)

- Feedback Ventures Pvt Ltd.

- G4S Corporate Services (India) Pvt. Ltd.

- Transunion LLC, Chicago.

- HDFC PLC, Maldives.

- Value and Budget Housing Corporation (India) Pvt. Ltd.

- Credila Financial Services Private Limited. (Chairperson)

- HDFC Bank Ltd. (from 27.01.2011).

- AKZO Nobel India Limited.

Mr. Prasad Chandran

- BASF India Ltd. (Chairman and Managing Director)

- BASF Polyurethanes India Ltd. (Chairman and Managing Director)

- BASF Construction Chemicals (India) Pvt. Ltd. (Chairman)

- BASF Coatings (India) Pvt. Ltd.(Chairman)

- BASF Asia Pacific (India) Pvt. Ltd. (Chairman)

- BASF Catalysts (India) Pvt. Ltd.

- BASF Lanka (Private) Limited, Sri Lanka.

- BASF Pakistan (Private) Ltd.

- BASF Bangladesh Ltd.

- BASF Grameen Ltd.

- Styrolution India Private Ltd. (Chairman)

- Indo German Chamber of Commerce. (Committee Member)

- Federation of Indian Chamber of Commerce. (Executive Committee Member)

- Bombay Chamber of Commerce and Industry. (Managing Committee Member)

- The Energy and Resource Institute (TERI). (Committee Member)

Mr. V. K. Viswanathan

- Robert Bosch Engineering and Business Solutions Ltd. (Chairman)

- Bosch Chassis Systems India Ltd.

- MICO Trading Pvt. Ltd.

- Bosch Rexroth (India) Ltd. (Chairman)

- Bosch Electrical Drives India Pvt. Ltd.

- Bosch Automotive Electronics India Pvt. Ltd. (Chairman)

- BSH Home Appliances Pvt. Ltd.

- Hagglunds Drives (India) Pvt. Ltd.

- Indo German Chamber of Commerce. (Committee Member)

Dr. Manfred Duernholz

- MICO Trading Pvt. Ltd.

Mr. B. Steinruecke, Dr. B. Bohr, and Mr. B. Muthuraman are liable to retire by rotation and offer themselves for re-election.

Mr. B. Steinruecke, 55, studied Law and Economics in Vienna, Bonn, Geneva and Heidelberg. He has a Law degree from the University of Heidelberg and passed the Bar Examination of the High Court of Hamburg. He worked with Coopers and Lybrand, Hamburg before joining Deutsche Bank in 1984 and rose to become General Manager of the Mumbai Branch and Joint Chief Executive Officer of Banks operations in India. Later, he became the Managing Partner and Speaker of the Board of the ABC Privatkunden-Bank, Berlin. In July 2003, he became the Director General of Indo-German Chamber of Commerce. Mr. Steinruecke is an Independent Director of the Company, Chairman of Shareholders/Investors Grievance Committee, member of Audit Committee, Remuneration Committee and the Share Transfer Committee of the Board.

Dr. B. Bohr, 54, holds a Diploma in Production Engineering and a Doctorate in Engineering from the University of Aachen, Germany. He joined Robert Bosch, GmbH, Reutlingen, in Production Engineering in 1983 and held several positions such as Manager (Production Engineering): Manager (Product Planning): Managing Director (Manufacturing), Nippon ABS Ltd., Japan: Executive Vice President (Manufacturing), Semiconductors and Electronic Control Unit Division; Executive Vice President (Development worldwide), ABS and Braking Systems Division. In 1999, he became a Deputy Member of the Board of Management of Robert Bosch GmbH and a Member of the Board of Management of Robert Bosch GmbH in 2001. He has corporate responsibilities for Automotive Group, Automotive Systems Integration and Quality Management, divisional responsibility for Gasoline, Diesel Systems, Chassis Systems, Brakes and Control and Steering Systems with regional responsibility for India.

Mr. Muthuraman, 66, holds degree in Metallurgical Engineering from Indian Institute of Technology (IIT), Madras and Masters Degree in Business Administration from Xavier Labour Relations Institute (XLRI), Jamshedpur. Mr. Muthuraman joined Tata Steel as a Graduate Trainee in 1966 and worked in the areas of Iron-making and Engineering Development for 10 years. Thereafter he moved to Marketing and Sales Division and rose to the position of Vice President. He was appointed Executive Director (Special Projects) in August 2000 and contributed as change Manager for the major diversification projects of Tata Steel. He was appointed Managing Director of Tata Steel in July 2001. He is currently the Vice Chairman of Tata Steel Ltd. Mr. Muthuraman is an Independent Director of the Company, member of Audit Committee, Remuneration Committee, Investment Committee and the Share Transfer Committee of the Board.

Particulars of Employees

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, this Report and Accounts are being sent to the Shareholders of the Company excluding the Statement of Particulars of Employees under Section 217(2 A) of the Companies Act, 1956. Any Shareholder interested in obtaining a copy of the said Statement may write to the Company Secretary at the Registered Office of the Company and the same will be sent by post.

Corporate Governance

A Report on Corporate Governance approved by the Board of Directors of the Company aifd a Certificate from the Practicing Company Secretary is set out in the Annexure to the Directors Report. The Company has fully complied with the Corporate Governance practices specified under the Companies Act, 1956, and the Listing Agreement with the Stock Exchanges.

A Code of Conduct for Directors and Senior Management, Code of Conduct for Prevention of Insider Trading, Whistle Blower Policy, Rules & Regulations of Service Conduct for Managerial & Superintending Staff, Code of Business Conduct etc., effectively support the Corporate Governance processes.

A Management Discussion and Analysis Report also accompany this report.

Energy, Technology, Foreign Exchange, etc.

The report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217(l)(e) read with The Companys (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is set out in the Annexure to the Directors Report.

Auditors

M/s. Price Waterhouse & Co., Chartered Accountants, the retiring auditors are eligible for re-appointment.

Directors Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

- Accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The annual accounts have been prepared on a going concern basis.

Acknowledgements

The Directors express their gratitude to the Central Government and the State Governments of Karnataka, Maharashtra, Rajasthan and Goa for the support given to the Company. The Directors also thank all customers, dealers, suppliers, financial institutions and banks, members and others connected with the business of the Company for their co-operation.

For and on behalf of the Board of Directors

Bangalore Albert Hieronimus

28,th February 2011 Chairman


Dec 31, 2009

The Directors present their FIFTY-EIGHTH Annual Report together with the Audited Statement of Accounts for the year ended 31st December 2009.

Financial Results

The following are the financial results:

(Rs. Million)

2009 2008

Net Sales (excluding recovery of duties and taxes) 47,497.7 45,416.5

Of which Export Sales 5,854.6 6,844.5

Profit Before Tax 7,934.1 8,565.7

Less: Provision for tax 2,495.5 2,602.2

Add: Deferred tax and tax adjustments relating to earlier years 467.8 375.2

Profit After Tax 5,906.4 6,338.7

Appropriations:

Capital Redemption Reserve 6.3 0.3

Dividend:

Dividend recommended at Rs. 30 per share (previous year: Rs. 25 per share) 941.9 800.6

Tax on Dividend 160.1 136.1

General Reserve 4,500.0 5,000.0

Capital Reserve 35.4 --

Dividend write back relating to previous year (14.7) --

Balance carried forward 277.4 401.7

Total 5,906.4 6,338.7

Net sales for the year 2009 grew by 4.6%. The Profit Before Tax (PBT) in 2009 as percentage of net sales was at 16.7% as compared to 18.9% in 2008. The Profit After Tax (PAT) as percentage of net sales was 12.4% in 2009 as against 14% in 2008.

Material costs as percentage to sales declined to 52.9% in 2009 as compared to 53.2% in 2008. The staff cost was at 12.9% of sales as compared to 11.7% in 2008. Operating expenses (excluding staff cost) increased to 22.5% from 21.4% of sales in 2008. The depreciation for the year decreased to 6.4% from 6.7% of sales in 2008 reflecting lower investments in 2009.

Overall, in terms of Profit Before Interest, Depreciation and Taxes, the result for the year shows a decline of 6.3% over the previous year.

Investments

Capital investment during the year was lower at Rs. 1,446 mio. as against Rs. 4,336 mio. in 2008.

Dividend

The Board of Directors recommend a dividend of Rs.30 per equity share for 2009 as against a dividend of Rs.25 per equity share in 2008.

Business Situation

The sharp decline witnessed in the fourth quarter of 2008 in the Indian automotive market continued in the first quarter of 2009 as well with Medium and Heavy Commercial Vehicle segment registering a drop as high as 60% over first quarter 2008. However, the timely stimulus package announced by the Government of India helped the industry to recover lost ground. The Passenger Car and Light Commercial Vehicle segments were the first to respond and stabilized by March / April 2009. The recovery in Medium and Heavy Commercial Vehicle segment was delayed until September 2009. Despite this recovery, this segment registered a decline of 20% for the year as a whole in 2009 compared to the vehicle production in 2008.

Effectively, our sales from the automotive segment grew by 4% in 2009. With this, the marginal decline in sales to OE customers / exports has been more than offset by the growth in the Automotive Aftermarket business.

Our non-automotive business grew by 4.9% in 2009 compared to 2008 mainly driven by growth in sales from the Power Tools and Packaging Machines divisions.

Automotive Technology

Diesel Systems business de-grew by 2.7% owing to a steep decline in demand in the Medium and Heavy Commercial Vehicle segment and significant decline in exports business.

The Diesel Systems team was successful in developing a mechanical based system for Medium and Heavy Commercial Vehicles to meet Bharat Stage (BS) III emission norms. This in-house development is testimony to the Bosch culture that fosters innovation and thereby defending our leadership position in the diesel business with a competitive edge. The first single cylinder based Common Rail system for the small goods carrier segment was well received in the market.

Strong demand from OE customers led to growth in Gasoline System business by 121% in 2009 albeit on a lower base of 2008. A significant milestone was reached with the start of production of Gasoline Engine Management systems for Tata Nano.

Starter and Generator business also witnessed a steep decline in sales in the first half of 2009 but considerably grew in the second half, more so during the last quarter of the year. With this, the division was able to limit the decline to 10.9% in the year 2009 over 2008. Introduction and start of production of the New Baseline Alternators, Compact Direct Starter Motor products and the launch of Start-Stop systems which were well received in the market were the major highlights of the division in 2009.

The Automotive Aftermarket grew by 17.3% in 2009 compared to the year 2008 clocking double digit growth for the fourth consecutive year despite fall in exports business. This growth was a result of new product launches, major distribution initiatives, increase in network strength, end customer oriented campaigns with the latest service trends, and customer binding programs. To encourage the general public and traders to deal with only genuine automotive parts, the division organized several raids in 2009 with the support from law enforcement agencies to safeguard not only the brand Bosch but also to provide safe and reliable products to Indian customers.

Bosch Car Service, the largest multi-brand car service network in India added 103 stations across the country during the year 2009, ending up with 361 stations. A Manual outlining dos and donts of Bosch Car Service communication which include signages, interiors, displays, hoardings, product posters and promotional activities has been made available to all Bosch Car Service partners in order to ensure consistency in brand identity and uniformity in communication by strictly adhering to the specifications stated in the guidelines.

Industrial Technology

Packaging Technology (Verna Plant)

Our Packaging Technology business was stabilized at our manufacturing location in Verna, Goa. Packaging Technology division went hand in hand with the changing market scenario and grew by 15.9%. All the three verticals viz. Food, Confectionary and Pharmaceuticals posted robust growth driven by the rapidly changing consumer preference and needs. The division has successfully added two machines SVI 2620 and BVK 1200 in the Packaging Machines and Confectionary / Chocolate business units respectively.

The successful implementation of Material Resource Planning has reduced the delivery time of components. Bosch Production System (BPS) has been initiated in Food Packaging Machines which has improved the productivity and quality of Terra 25 and TW 100 NEL machines.

Industrial Equipment

In view of major Capital investments which were withheld within our Company as well as by our external customers in the year 2009, sales in the Industrial Equipment division de-grew by 18.8% in 2009 compared to the year 2008.

The division continued to strive towards providing innovative solutions and has developed machines for manufacturing Fuel Injection Pumps, Filters and Gasoline System parts especially for small car projects. This division also provided solutions for assembly lines of gearbox and transmission components for Heavy Commercial Vehicle manufacturers.

Consumer Goods and Building Technology Power tools

Power Tools business grew by 19.3% despite the construction business being impacted adversely by the economic downturn. The division launched the Bosch Lithium Ion powered cordless tools with a range including drivers, impact drivers and impact wrenches.

The other highlights of the division was the conceptualization and inauguration of the Worlds first "Clean and Green Solutions Store" at Chennai showcasing the entire range of Bosch Lawn and Garden and High Pressure Washers. Successful usage of the combination of Fischer, Accessories and Tools for projects like Common Wealth Games Stadia, New Delhi Airport, Delhi Metro Rail Corporation, Bosch Tightening Systems and Pneumatic Tools at the prestigious Volkswagen assembly line, Pune, were some of the initiatives taken in the year 2009.

Security technology

The security Technology business declined by 17.4% in the year 2009 compared to 2008. This decline was predominantly due to postponement of many infrastructure and corporate projects.

Key highlights of this business group was the successful completion of the National Gallery of Modern Arts project in New Delhi and the Worlds first electro-voice EVA stadium installation in Mumbai which is the largest EV installation in India.

Competition and challenges in our business sectors

The Companys businesses continue to face intense competition both from the local and global players. Despite the adverse conditions, the Company strengthened its position by expanding its product portfolio and deploying its resources in developing new and innovative technologies and products.

The year 2010 will be equally, if not more, challenging and demanding due to severe pressure on input costs and pricing as we pursue our return to the growth rates of 2007 and before.

Improving customer delight while judiciously managing the long term growth and structure of the Company will be of paramount importance and we are determined to meet this by our continued efforts to achieve cost competitiveness through productivity improvement and effective utilization of resources and capacities. Bharat Stage III and Bharat Stage IV emission norms are scheduled to be introduced this year and our customers need to be supported efficiently with respect to product mix and call-off schedules.

The market optimism seen in the beginning of 2010 has heralded clear signs of economic re-bound. However, we must continue the austere measures adopted during the period of economic downturn and whilst doing so, must focus on improving flexibility, speed and technological superiority in order to sustain our competitive edge.

Plants Bangalore

The Plant attained highest production of Inline Pumps, Elements, Delivery Valves and Glow Plugs. New generation Single Cylinder Pump (PF51) for Common Rail system was launched in Sept 2009.

The Plant received prestigious recognitions from our key OE customers viz. M/s Mahindra & Mahindra Ltd., Kirloskar Oil Engines Ltd., and John Deere India Pvt. Ltd., at respective supplier recognition events. The Plant also received Diesel Systems recognition for Energy Conservation and C02 reduction.

Nashik

Nashik Plant has completed 40 years of operations in the year 2009. The Plant achieved the production landmark of one million Common Rail Injectors and 90 million conventional Injectors. Production ramp- up of a new variety of conventional Injector commenced in the year 2009 for Commercial Vehicle applications. In conventional products, Nozzle Holder Assembly achieved highest turnover in the history of the Plant.

Nashik Plant received "Best-In-Class Manufacturing IT Award" for excellence in manufacturing in private and public sector. The Plant also bagged the Gold award in 10th Annual Greentech "Environment

Excellence" and silver award in 8th Annual Greentech "Safety" organized by Greentech Foundation.

Jaipur

Jaipur Plant completed 10 years of operations in March 2009. The Plant also crossed the milestone of 3 millionth VE Pump manufactured in India during October 2009.

The Jaipur Plant quality circle won the Par Excellence Award in 23rd National Convention on Quality Circles-2009 in December 2009 at Bangalore organized by Quality Circle Forum of India.

Naganathapura

The Plant introduced two new products in 2009 viz., Throttle Position Sensor and In-Tank Fuel Pump Module.

Information Technology (IT)

In the year 2009, the Companys ERP system was upgraded to the mySAP ERP ECC 6.0 software to ensure good support and readiness for Bosch-wide IT initiatives.

The Companys IT systems and processes are periodically audited to ensure adequacy of internal controls and information security. Further improvements were made particularly related to bringing down the level of Critical Authorizations and putting in place more effective virus monitoring and prevention measures.

Change Initiatives

Continuous Improvement Program (CIP)

CIP continued to remain an area of focus in the year 2009. The Companys CIP was further bolstered by the introduction of LeaderCIP, an approach created to fortify leaders involvement in continuous improvement activities. CIP workshops saw active involvement of people at all levels, both managerial and non managerial. The employee involvement in continuous improvement, under Lernstatt, Kaizen or classical CIP reached benchmark levels in 2009 with a good momentum in the Voluntary Lernstatt Team (VLT) and shop floor CIP drives. The Company is also driving such workshops with its customers and business partners.

Bosch Production System (BPS)

The BPS implementation drive across all Plants benefited the Company. The BPS maturity, being representative of a lean manufacturing system, was measured again in 2009 using an extensive audit procedure covering eight important principles such as pull system, standardization, perfect quality etc.

This initiative also addresses improvements in the entire supply chain. Business Partners were also trained on BPS and projects were taken-up at their sites on topics such as Value Stream Mapping, Quick Change-Over and other lean practices.*

Deployment of Business Excellence (DBE)

Deployment of Business Excellence in our Diesel Systems business has fostered improvement in leadership aspects, policy and strategy management, people focus, process orientation and resource management. DBE is facilitating the organization to align all its functions towards the Companys vision and mission. The management concept places a strong emphasis on meeting all stakeholders expectations.

Bangalore Plant (Diesel Systems) in the course of its business excellence journey based on the European Foundation for Quality Management (EFQM) model was honored with the coveted CII-EXIM Bank Award for Business Excellence for the year 2009 at a function held in New Delhi on 19.12.2009.

The Nashik Plant was assessed for Business Excellence in 2009 and has made a significant improvement in overall maturity of excellence.

Bosch Vocational Centre

Bosch Vocational Centre (BVC) conducted and extended its support to various programs such as On Job Training, Skill Enhancement training, Quality and Safety, training program on Mechatronics, Advanced Measuring Techniques, Pneumatics, Hydraulics and CNC and need based programmes like OHSAS, TPM and knowledge sharing sessions for our executives. The year 2009 was devoted to intensify training of our associates (workmen and staff) and sustaining excellence in the field of training in the country. BVC continuously invested in upgrading facilities and infrastructure to maintain international standards.

BVC has won 17 Best Apprentices Awards (Gold Medals) announced in the year 2009 in three competitions viz., 80th, 81st and 82"" All India

Competition for Apprentices held during May 2008, November 2008 and May 2009 respectively. BVC being the "Best in Class" in the country also sustained excellence in the field of Vocational Training by increasing its tally of Gold medal winners to 170. The Company was declared the "Best Establishment" in the country for the 38"1 time.

Awards and Recognition

The Company received several awards and recognitions for its achievements:

- Third DHL-CNBC TV18 International Trade Award (ITA) for performance in exports business.

- Mahindra & Mahindra - Farm Equipment Sector, Sanjeevani Special Appreciation Award for outstanding performance in 2009.

- NDTV Car & Bike Award 2009 for the Auto Component Manufacturer of the Year.

- Bosch-Diesel Systems at Bangalore was honored with CII-EXIM Bank Award for Business Excellence for the year 2009.

- UTVi-Autocar Innovation Award jointly with Mahindra & Mahindra for the first Start-Stop system in India.

- Honda Motorcycles and Scooters India (HMSI) award for achieving quality and delivery targets (spark plug division).

- Adjudged as a runner-up in National Institute of Personnel Managements (NIPM) prestigious competition on "HR best practices-2008".

Buy-back of shares

Pursuant to the Public Announcement made by the Company on 08.12.2008 for buy-back of shares which commenced on 15.12.2008 and closed on 24.10.2009, the Company has bought back 652,560 equity shares from the open market for a total consideration of Rs.2003 mio. and extinguished all the shares that were bought back. Consequently, the percentage holding of Robert Bosch GmbH has increased from 69.73% to 71.18%.

Dematerialization of shares

Of the 28.82 % shares held by the public, 27.65% shares have been dematerialized as on 29.01.2010.

Members holding shares in physical form are once again advised to dematerialize their shares to avoid the risks associated with the physical holding of such share certificates.

Bosch India Foundation

Bosch India Foundation in its effort to serve the underprivileged sections of the society, through vocational training and health program, embarked on several projects during the year 2009 like Basic Computer skills, Plumbing, Sericulture, Soft Skills, Hospitality and Guest care, Orthopedic club foot and Cleft & Palate surgery etc. The programs were conducted with active participation of Bosch Associates across three cities viz. Bangalore, Pune and Ahmedabad. About 600 underprivileged youths benefitted from the program.

Industrial Relations

Industrial relations at all Plants and other establishments continued to be cordial. The Directors place on record their deep appreciation of the sincere and dedicated teamwork by employees at all levels to meet the quality, cost and delivery expectations of our customers in a growing market.

Subsidiary Companies

As the aggregate assets and income of MICO Trading Pvt. Ltd., as on 31 st December 2009 is not material, no consolidated financial statements under Accounting Standard 21 "Consolidated Financial Statements" as notified under section 211(3C) of the Companies Act, 1956, has been prepared.

As required under Section 212 of the Companies Act, 1956, annexed hereto are the Audited Statement of Accounts, the Report of the Board of Directors and Auditors Report for the year ended 31 st December 2009 of MICO Trading Pvt. Ltd.

Directors

Names of companies/firms in which Directors of the Company hold/held office as Director/Partner are given below:

Dr. A. Hieronimus

- Bosch Rexroth AG. (Chairman of the Management Board)

- MindTreeLtd.

Dr. B. Bohr

- Robert Bosch GmbH, Germany. (Member of the Board)

Mr. B. Steinruecke

- Indo German Chamber of Commerce. (Director General)

- FAG Bearings India Ltd.

- Zodiac Clothing Company Ltd.

- HDFC ERGO General Insurance Company Ltd.

Mr. B. Muthuraman

- Tata Steel Ltd. (Vice Chairman) ,

- Natsteel Asia Pte. Ltd, Singapore. (Chairman) (upto 02.02.10)

- Natsteel Holdings Pte. Ltd. Singapore. (Chairman) (upto 02.02.10)

- Tata Steel (Thailand) Public Co. Ltd., Bangkok. (Chairman) (upto 02.02.10)

- Tinplate Company of India Ltd. (Chairman) (upto 14.01.10)

- Tata International Ltd. (Chairman)

- Tata Incorporated, New York.

- Tata Industries Ltd.

- Tata Steel Global Minerals Holdings Pte. Ltd.

- Tata Steel Europe Ltd.

- Tulip UK Holdings No. 2 Ltd.

- Tulip UK Holdings No. 3 Ltd.

- CEDEP (European Centre of Executive Development), France. (Director)

- National Institute of Technology, Jamshedpur. (Chairman)

- Xavier Labour Relations Institute, Jamshedpur. (Chairman, Board of Governors)

- Indian Institute of Technology, Kharagpur. (Chairman, Board of Governors)

Mrs. Renu S Karnad

- Housing Development Finance Corporation Ltd. (Managing Director)

- Credit Information Bureau (India) Ltd.

- GRUH Finance Ltd.

- HDFC Asset Management Co. Ltd.

- HDFC Bank Ltd.

- HDFC ERGO General Insurance Co. Ltd.

- HDFC Property Ventures Ltd. (Chairperson)

- HDFC Standard Life Insurance Co. Ltd.

- HDFC Venture Capital Ltd.

- ICI India Ltd.

- Indraprastha Medical Corporation Ltd.

- Sparsh BPO Services Ltd.

- HDFC Sales Pvt. Ltd. (Chairperson)

- Feedback Ventures Pvt Ltd.

- G4S Corporate Services (India) Pvt. Ltd.

- Transunion LLC, Chicago.

- HDFC PLC, Maldives.

- Value and Budget Housing Corporation (India) Pvt. Ltd. (from 14.02.10)

Mr. Prasad Chandran

- BASF India Ltd. (Chairman and Managing Director)

- BASF Polyurethanes India Ltd. (Chairman and Managing Director)

- Ciba India Ltd. (Chairman)

- BASF Styrenics Pvt. Ltd. (Chairman)

- BASF Construction Chemicals (India) Pvt. Ltd. (Chairman)

- BASF Coatings (India) Pvt. Ltd. (Chairman)

- BASF Asia Pacific (India) Pvt. Ltd. (Chairman)

- BASF Catalysts (India) Pvt. Ltd.

- BASF Finlay (Private) Limited, Sri Lanka.

- BASF Pakistan (Private) Ltd.

- BASF Bangladesh Ltd.

- Indo German Chamber of Commerce. (Committee Member)

- Federation of Indian Chamber of Commerce. (Executive Committee Member)

- Bombay Chamber of Commerce and Industry. (Managing Committee Member)

- The Energy and Resource Institute (TERI). (Committee Member)

Mr. V. K. Viswanathan

- Robert Bosch Engineering and Business Solutions Ltd. (Chairman)

- Bosch Chassis Systems India Ltd.

- MICO Trading Pvt. Ltd.

- Bosch Rexroth (India) Ltd. (Chairman)

- Bosch Electrical Drives India Pvt. Ltd.

- Bosch Automotive Electronics India Pvt. Ltd. (Chairman)

- Indo German Chamber of Commerce. (Committee Member)

Dr. Manfred Duernholz

- MICO Trading Pvt. Ltd.

Dr. A. Hieronimus, Mr. V.K. Viswanathan and

Dr. Manfred Duernholz are liable to retire by rotation and offer themselves for re-election.

Dr. A. Hieronimus, 62, holds a Diploma in Mathematics from the University of Cologne. He received a Doctorate in Business Administration also from the same University.

Dr. Hieronimus started his career as an Academic Assistant in the University of Cologne, Germany. He joined Mannesmann AG in 1979 and held senior positions responsible for materials management, sales and operation planning, head of department of sales and marketing, head of the department of corporate planning in the Mannesmann group companies in Germany. In 1990, he became a Member of the Management Board of Mannesmann Demag Baumaschinen GmbH and later of the Board of Management in Mannesmann Rexroth GmbH. From 1997 to April 2001, he was Member of Executive Board of Mannesmann Rexroth AG, Germany and continued in that position till August 2003, upon the takeover of Rexroth AG by Robert Bosch GmbH.

Dr. A. Hieronimus was appointed as Managing Director of the Company from 01.09.2003 and consequent upon assuming new responsibility from 01.02.2008 as Chairman of the Board of Directors of Bosch Rexroth AG, he ceased to be the Managing Director of the Company from 01.02.2008. The Board of Directors of the Company appointed Dr. A. Hieronimus as Chairman from 01.02.2008. Dr. Hieronimus holds 640 shares in the Company. He is a member of Audit Committee and Shareholders/ Investors Grievance Committee of the Company. He is also the Chairman of the Shareholders/ Investors Grievance Committee and a member of the Audit Committee in MindTree Limited.

Mr. V.K. Viswanathan joined the Board as Additional Director and Joint Managing Director on 01.01.2001, responsible for Finance, Administration and IT Co- ordination. Mr. Viswanathan joined the Company as Chief General Manager in August 1998. After a brief orientation in the Company, he took up an assignment in the Diesel Systems Division of Robert Bosch GmbH, Germany from September 1998. Upon completion of the assignment, he returned to the Company in November 2000. Upon assuming new responsibilities in Robert Bosch Corporation, Farmington Hills, USA (Robert Bosch North America), Mr. Viswanathan ceased to be a Director and Joint Managing Director of the Company from 28.02.2006.

Upon completion of his assignment with Robert Bosch Corporation, Farmington Hills, USA (Robert Bosch North America), he was appointed as Additional Director and Joint Managing Director with effect from 01.11.2007 responsible for Automotive Aftermarket, Starters and Generators, Packaging Machine, Power Tools and Security

Technology. He was appointed as Managing Director with effect from 01.02.2008.

Mr. Viswanathan, 59, is a Bachelor of Commerce from Madras University and a Chartered Accountant. Prior to joining the Company, he was the Group Treasurer & Head of Mergers and Acquisitions with Hindustan Unilever Limited with which group he was associated in various capacities for 17 years.

He does not hold any shares in the Company and is a member of Shareholders/Investors Grievance Committee of the Company and Chairman of the Audit Committee of Bosch Rexroth (India) Limited.

Dr. Manfred Duernholz joined the Executive Management of the Company on 01.02.2008 as Joint Managing Director responsible for the Powertrain business.

Dr. Manfred Duernholz, 54, holds a diploma in Engineering and a graduate degree in Machine building from the Technical University of Aachen, Germany. He is also a doctorate in Engineering.

He held varied technical position from 1974 to 1999 before joining the Bosch group in April 1999. In the Bosch group he held important positions including in Engine Laboratory at the Feuerbach Plant (1999- 2001), as Senior Vice President-Development (2001- 2007) and as Senior Vice President-Engineering (2007). He does not hold any shares in the Company.

Particulars of Employees

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, this Report and Accounts are being sent to the Shareholders of the Company excluding the Statement of Particulars of Employees under Section 217(2 A) of the Companies Act, 1956. Any Shareholder interested in obtaining a copy of the said Statement may write to the Company Secretary at the Registered Office of the Company and the same will be sent by post.

Corporate Governance

A Report on Corporate Governance approved by the Board of Directors of the Company and a Certificate from the Auditors of the Company is set out in the Annexure to the Directors Report. The Company has fully complied with the Corporate Governance practices specified under the Companies Act, 1956, and the Listing Agreement with the Stock Exchanges.

A Code of Conduct for Directors and Senior Management, Code of Conduct for Prevention of Insider Trading, Whistle Blower Policy, Rules & Regulations of Service Conduct for Managerial & Superintending Staff, Code of Business Conduct etc., effectively support the Corporate Governance processes.

A Management Discussion and Analysis Report also accompany this report.

Energy, Technology, Foreign Exchange, etc.

The report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217(l)(e) read with The Companys (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is set out in the Annexure to the Directors Report.

Auditors

M/s. Price Waterhouse & Co., Chartered Accountants, the retiring auditors are eligible for re-appointment.

Directors Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

- Accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The annual accounts have been prepared on a going concern basis.

Acknowledgements

The Directors express their gratitude to the Central Government and the State Governments of Karnataka, Maharashtra, Rajasthan and Goa for the support given to the Company. The Directors also thank all customers, dealers, suppliers, financial institutions and banks, members and others connected with the business of the Company for their co-operation.

For and on behalf of the Board of Directors

Bangalore Albert Hieronimus

5th March 2010 Chairman



 
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