Strong demand, increase in vehicle sales and improving exports playing positive role- CRISIL report
Aurangabad:
Auto components industry's revenue in the country is likely to grow by 19-21 percent year-on-year in the current fiscal year. Moreover, the MSME clusters in Aurangabad are expected to grow by 19-22 per cent, said ratings and risk advisory firm Credit Rating Information Services of India Limited (CRISIL) in its report published recently.
As per the report, the growth will be driven by four factors including strong demand from the original equipment manufacturers, increase in sales of passenger vehicles which is expected to surpass pre-covid levels, stability in demand, recovery in sales of commercial vehicles and two-wheelers from the pandemic-driven slump over FY21-22, improving exports triggered by the supply-chain de-risking strategy of global OEMs and demand from the aftermarket segment.
A lack of increase in the commodity prices such as steel, aluminum and plastic in tandem with the increase in demand is leading to a positive operating leverage due to which the margins will improve by 20-40 basis points year-on-year to 7.5 to 8.5 per cent, the report added. Moreover, the MSME clusters in Pune are expected to grow by 14-17 per cent, and Pantnagar and Aurangabad by 19-22 per cent.
Various factors to influence growth
Two-wheeler sales may boost amid improving rural incomes and re-opening of schools and colleges. Surging freight demand, improving transport profitability and better construction activities will influence growth in demand for commercial vehicles.
Captures 70 percent of market
The MSMEs in Aurangabad capture 70 percent of the auto components market throughout the country. Covid and rising prices of raw material left a major impact on the MSMEs. However, they have recovered and demand has been rising since then. The predicted 19-22 per cent growth of Aurangabad’s MSME cluster by CRISIL will definitely have a positive impact. However, the exports are still low. This is due to the global economic slowdown. said Kiran Jagtap, Massia president.