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| Auto ancillaries sales up 7% in FY09: CII |
| BS Reporter / Chennai Aug 13, 2009, 15:37 IST |
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Net sales of auto ancillary sector in Southern Region rose by 7.2 per cent between April 2008 and March 2009 compared to national level of 5.3 per cent, according to Confederation of Indian Industry (CII’s) Southern Region(SR) Quarterly Industry and Economic Update for the Automotive and Auto Components Sector.
However, net profit of auto ancillary units in Southern region declined by about 40.8 per cent, compared to 2007-08.
The study added, investment climate is intact in Southern states like Tamil Nadu, as committed projects in the automotive segment are on track. There are about 142 projects that are coming up in Southern Region that accounts for one third of the concentration of the auto industries in India .
The major automobile and auto component production clusters in Southern Region are located at Chennai, Bangalore and Hosur.
There are 46 registered OEMs in India, out of these 15 are located in the Southern States of the country. In the organised sector, 27 per cent of the companies are located in the Southern region, amongst which the maximum are situated in Tamil Nadu, due to the concentration of the auto companies in that region.
According to the CII study, in 2008-09 listed companies in the automotive sector with registered offices in the Southern Region reported an 11 per cent decline in Operating Income to Rs 100.73 billion, growth was at 17 per cent in first quarter of FY'09, but declined to 12 per cent in second quarter, as the early signs of recession became evident.
The growth in OI during the first half of FY'09 was replaced by a sharp decline in operating income (yoy) at 29 per cent in third quarter of FY'09 and 34 per cent in the fourth quarter.
The study indicated auto component suppliers were affected by high raw resource costs from their suppliers and price reduction demands from their customers.
As a result, they faced added hardships of reduced orders as vehicle production was cut by automakers starting roughly in September 2008. Industry analysts suggest that suppliers need to run at least 80 per cent capacity to make a profit but expect suppliers to be running at only 50-60 per cent capacity in 2009.
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