142nd Day Of Lockdown

Maharashtra54831338184318650 Tamil Nadu3145202563135278 Andhra Pradesh2641421709242378 Karnataka1964941126333511 Delhi1494601343184167 Uttar Pradesh140775887862280 West Bengal98459671202059 Telangana8647563074665 Bihar8274154139450 Gujarat71064542382652 Assam5883842326145 Rajasthan5249738235789 Odisha4592731785321 Haryana4163534781483 Madhya Pradesh3902529020996 Kerala3811424922127 Jammu and Kashmir2489717003472 Punjab2390315319586 Jharkhand185168998177 Chhatisgarh12148880996 Uttarakhand96326134125 Goa871259575 Tripura6161417641 Puducherry5382320187 Manipur3752204411 Himachal Pradesh3371218114 Nagaland30119738 Arunachal Pradesh223115923 Chandigarh1595100425 Meghalaya11154986 Sikkim9105101 Mizoram6203230
Business Autos 13 May 2020 Auto component indus ...

Auto component industry likely to witness double-digit degrowth in FY21

PTI
Published May 13, 2020, 12:22 pm IST
Updated May 13, 2020, 12:22 pm IST
India exports around 12 percent of the total auto components to economies with reliance on crude oil such as Africa and Latin America
Auto component industry likely to witness double-digit degrowth in FY21. (PTI Photo)
 Auto component industry likely to witness double-digit degrowth in FY21. (PTI Photo)

Mumbai: The Auto component industry is likely to witness a second consecutive year of double-digit degrowth this fiscal mainly on account of disruption in operations due to coronavirus pandemic and the subsequent lockdown, according to a report.

The counter measures are likely to lead to lower-income levels, weaker consumer sentiments, production disruptions, decreased industrial output as well as the lesser movement of vehicles, resulting in a decline in global automobile demand and therefore, lower revenue and profitability for auto ancillaries in FY21, India Ratings (Ind-Ra) said in the report on Tuesday.

 

"Ind-Ra expects that the auto ancillaries industry on an average could record at least 100bp EBITDA margin decline in FY21 and the profitability decline for export-focused auto ancillaries could be steeper as exports earn higher margins. The lower commodity prices could aid the profitability for the sector, though only to a limited extent, due to pass-through agreements with OEMs and OEMs' higher bargaining power.

"Also, some benefit may accrue to companies with overseas manufacturing units, as certain economies have announced support measures to meet part of the fixed costs during the shutdown period. A depreciated rupee rate could partly offset the decline in sales volumes; however, the benefit is not expected to be significant," it said.

 

However, the revenue and profitability of auto ancillaries focused on domestic markets are likely to fare better due to higher content per vehicle on the back of evolving regulatory norms including BS-VI applicable from 1 April, 2020, as per the report.

Entities with a large reliance on overseas markets are expected to face a higher demand risk as the key markets of the US and Europe have been the most impacted by the virus, which could lead to uncertain business conditions, it said.

The US, Germany and the UK are the largest export markets for auto components globally.

 

Besides, India also exports around 12 percent of the total auto components to economies with reliance on crude oil such as Africa and Latin America.

...




ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT