Shares in Bosch's Indian unit dropped 3.4 per cent following the news of restructuring.

India-listed manufacturer Bosch Ltd said on Tuesday it had begun restructuring parts of its business in light of a deepening slowdown in the country's automotive industry, as the German car parts supplier posted a drop in June-quarter profit.

Bosch, the latest firm to flag weak conditions in the Indian auto market, said its automotive sales dived 17.5 per cent in the June quarter.

The outlook for the auto industry was "extremely" challenging, Managing Director Soumitra Bhattacharya said in a statement.

Bosch, which makes a wide range of auto products including braking systems and batteries, is the latest firm to restructure its business or limit production due to the slowdown, which has been exacerbated in recent months by a liquidity crunch in the shadow banking sector.

Automakers Tata Motors Ltd and Mahindra and Mahindra Ltd (M&M) said last week they would cut production at some plants in response to slowing demand that industry executives say has driven the sector to one of its worst downturns.

Earlier on Tuesday, an auto industry body said India's domestic passenger vehicle sales in July had fallen at the steepest pace in nearly two decades.

Bosch has earmarked Rs 82 crore ($11.5 million) as a provision for restructuring, which would include "manpower adjustments," it said.

"The slowdown is not cyclical, but structural," Mr Bhattacharya said. "Necessary course correction measures will be taken in order to remain competitive."

Shares in Bosch's Indian unit dropped 3.4 per cent following the news of restructuring. The company's profit in the three months ended June dived 35 per cent to Rs 280 crore, while revenue from operations dropped 13.5 per cent to Rs 2,779 per cent.