Exports to decline in fiscal 2021

For fiscal 2021, CRISIL Research expect India’s auto component exports to decline by 12-14% after declining by
6% in fiscal 2020. With the spread of Covid-19 in Europe, the US and South America, automobile production in
these key export destinations (Europe, the US and Brazil account for 27%, 24% and 5% share of India’s exports)
is expected to be lower than the preceding year. This is expected to hit India’s automotive component exports.
However, with the number of Covid-19 cases plateauing globally, demand is expected to recover on a sequential
basis. This is evident from the automobile industry showcasing signs of recovery in North America and Europe,
registering an on-year growth in sales. As consumers are adapting to the ongoing pandemic environment, leading
to an improving economic scenario, auto component demand from these countries is projected to witness a slight
uptick.

Exports to grow at a slightly slower pace in the long term

Auto component exports are projected to rise at 3-5% CAGR between fiscal 2020 and 2024 after seeing a two-
year consecutive decline in fiscal 2020 and 2021. As India is moving towards higher global standards in terms of
quality and safety measures. This helps players to expand into newer geographies and gives them an edge
compared with other low-cost countries. Currently, the penetration of Indian automotive components in major
markets is minuscule — comprising a little more than 1% of global exports - indicating considerable scope for
domestic manufacturers to expand their exports share in the coming years as they expand to new geographies and
widen their product offerings.

REVIEW AND OUTLOOK ON THE ALUMINIUM DIE CASTING MARKET IN INDIA

Review of aluminium casting market in India

40% of the metal castings in the automobiles industry use aluminium, with a majority of cast components made
for the two-wheeler and passenger vehicle segments. Some of the casting components used in the vehicles are
cylinder blocks and cylinder heads, transmission housing, pistons, crank covers, clutch parts, axles, chassis parts,
gear box and wheel parts. Demand for aluminium castings, which are used as part of alloy wheels, has picked up
due to an increase in penetration of alloy wheels in two-wheelers and passenger vehicles.

Non-ferrous/ aluminium casting forms nearly 70% of the overall casting market in value terms. Two-wheelers
account for ~70% of the aluminium die casting market, followed by passenger vehicles with 25% share and
commercial vehicles with a 4-5% share in value terms. Original equipment manufacturers account for 75-80% of
the offtake. Exports account for 15-20%, with the aftermarket comprising the remainder. Size of the aluminium
casting industry was about Rs 169 billion in fiscal 2020. Demand for aluminium die casted products stood at 0.44
million metric tonnes in fiscal 2020.

Revenue distribution (fiscal 2020)

Rs 169 billion market

ey Aftermarket,
4%

 

Source: CRISIL Research

Outlook on aluminium castings market in India

During fiscal 2020, amidst a slowdown in economic growth, regulatory price hike, weak rural demand and a loss
of March month’s sale due to Covid 19 lockdowns, underlying growth in the automotive industry (domestic+
exports) dropped nearly 15% y-o-y. The commercial vehicle segment contracted the most at 30%, while a major
contributor to the automotive industry, the two-wheeler segment, contracted 14%. This contraction trickled down
to the automotive aluminium casting industry with ~14% drop in volumes & 18% fall in value.

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