How is Bosch Power Tools catering to the needs of Indian customers?
Globally, Bosch Power Tools business is part of the consumer goods business sector - one of the verticals of Bosch Group. Bosch Power Tools products are used for applications like drilling, hammering, grinding, fixing, etc. Our division roughly contributes about 7 per cent of Bosch global business. Though our contribution is small to the overall Bosch group, our division is one of the fastest growing businesses within the group.
In India, where Bosch Power Tools started its operations in 1993, we are the pioneers in power tools segment. Construction and manufacturing sectors are the leading user-segments of our products. These are followed by wood working and some specific applications in automotive industry. Of late, we are seeing high traction for our cordless devices/tools from renewable energy sector.
Is demand for cordless power tools growing?
The complete evolution of power tools industry - from manual to corded to cordless - is a nature progression. We introduced cordless products 4 years ago. In India, cordless products account for miniscule share in the overall power tools market. In the developed countries, the market is evolving very rapidly towards convenience as platform; and hence, demand for cordless tools is growing very fast. For example, in the US, cordless account for about 99 per cent of the market.
As the market leader, our aspiration is to move Indian market - which at presented is primarily a corded power tools market - towards cordless in line with the global trends. Cordless power tools are new concepts and are sold at a price point that is higher than the corded and, hence, it requires a lot of user education. So, this year we will do a lot of business development activities for these tools.
In terms of SKUs, our aim is to increase cordless power tools range and take it to 10-15 per cent of our overall product portfolio. We plan to launch few products in new application areas to cater to the evolving needs of the market. We intend to have a product range that covers all critical application areas for cordless.
In Dec 2020, Bosch Power Tools India rolled out its 10 millionth power tool. What is the significance of this for the company?
We were successful in doubling the number of products produced in India from 5 million to 10 million in just 4.5 years. This is a big achievement for us. Bosch Power Tools started its production in India in 1997. It took us about 19 years to reach the milestone of 5 million in 2016. By producing right products for the Indian users and with a strong support of our channel partners, we were able to reach the next 5 million in a short span of time. It also justified the confidence that the Bosch group had on the Indian market.
What is the contribution of B2B and B2C segments to Bosch Power Tools India's sales?
As Bosch Power Tools focuses on professional users, most of the products are targeted at B2B segments. However, there are a few products, for example high pressure washers, have started going into DIY (do-it-yourself) segment. Entry level drilling machines have also got traction from B2C users.
Are you seeing pick-up in demand since the last quarter of 2020? How soon can we expect to reach pre-Covid market levels?
We are seeing an uptick in demand, which is more than our expectation. One of the reasons for this demand is the pick-up in construction sector, especially on large government projects. Power tools as category, and Bosch as one of the key players in the segment, will do very well in the next three years. The reason behind our confidence primarily stems from the fact that large amount of investments have been planned in the construction sector (like roads, railways, airports, etc). Construction sector growth will have multiplier effect on other parts of the economy - especially manufacturing, which will see a lot of companies investing in capital expenditure where power tools will play a role. Effective implementation of vehicle scrappage policy, which was announced in the budget 2021-22, will also lead to higher usage of power tools. So, we are very hopeful of showing strong growth in the next three years.
What are emerging trends in power tools segment?
We are seeing that the users of entry level power tools are opting less for after sales support. Use-and-throw concept is very popular in the western countries, but India culturally is different. However, Indians are also moving towards use-and-throw concept for entry-level products.
Convenience is now a major parameter for customers to select a product, even if it comes at a higher cost. We have “No-Worries” offer wherein you pay 30-50 per cent more and for the next 3 years the entire servicing is taken care by us. This scheme is gaining traction among the customers as they get hassle-free, fast service at their convenience.
Power tools at the entry level is crowded by imported, unbranded products with doubtful safety features. Over the last few years, the acceptance of branded products is growing and people are becoming brand conscious even in power tools industry. This trend will be very good for the overall industry.
What are your growth plans for 2021?
We are actively engaging with our head office by putting together business proposals to enhance capacity as demand grows. It is an ongoing process, but has accelerated in the last 2-3 months after we saw a fillip in demand in the fourth quarter of 2020. We are very hopeful - based on market feedback and volume trends we are receiving - to increase the line capacity to meet the growing customer demand. Our focus could remain on products which are suited for Indian needs.
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