Auto component industry to widen revenue streams

As Indian automakers pour in $ 5 billion of investment to manufacture electric vehicles (EVs), auto component producers seek to march in step by augmenting capital expenditure.

Auto parts makers include Minda Corporation, Sona Comstar, NEI Industries, Anand Group, Sansera, Lucas TVS, JBM Auto, Rane, Brakes India, JK Fenner, and Lumax announced plans to expand their capacity and create new skills to tap into the demand for EV parts.

According to ICRA's sample study of 49 large auto ancillary companies the auto component industry might devote about Rs 16,700 crore in the financial year 2023 for capital expenditure and about Rs 20,800 crore in the financial year 2024.

In this space, EV projects are expected to be around 25-30% of total investment, the research company added.

ICRA Limited vice president & sector head-corporate ratings said that they expect the Capex investments from the larger ancillaries to be around 6-6.2% of operating income in the financial year 2023. The recently announced PLI scheme would further contribute to boosting the Capex over the medium-term besides investments via new entrants in the EV segment.

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