Elofic Industries Unlisted Shares Essentials

Introduction: 

• The auto-components industry expanded by a CAGR of 6% over FY16 to FY20 to reach US$ 49.3 billion in FY20.
• Auto-components industry account for 2.3% of India’s gross domestic product (GDP) and employs as many as 1.5 million people directly and indirectly
• A stable government framework, increased purchasing power, large domestic market, and an ever-increasing development in infrastructure have made India a favorable destination for investment.

• The auto ancillary market was valued at INR 3,61,578 Cr in FY2020 and is expected to reach INR 6,72,657 Cr by FY 2025, expanding at a CAGR of 15.35% during the FY 2021–FY 2025 period.
• Reduction in excise duties in the motor vehicles sector is expected to propel the demand for auto ancillary products.
• Both domestic and export markets are almost similar in terms of market share breakup. Engine and Exhaust components along with body and structural parts make up nearly 50% of the potential domestic sales as well as exports. Transmission and steering parts, and electronics and electrical equipment are the other key products
• India is emerging as global hub for auto component sourcing. A cost-effective manufacturing base keeps costs lower by 10-25% relative to operations in Europe and Latin America. Relative to Chinese suppliers, India is also geographically closer to key automotive markets like the Middle East and Europe

• To develop India into a manufacturing hub of auto mobiles and auto components, the Government of India has allocated INR 570 Bn under the production-linked incentive (PLI) scheme
• The PLI scheme, introduced in November 2020, is expected to attract additional investments in the auto ancillary sector from domestic and foreign investors.
• Government has come out with Automotive Mission Plan (AMP) 2016-26 which will help the automotive industry to grow and will benefit Indian economy in the following ways:
• Contribution of auto industry in the country’s GDP will rise to over 12%.
• Around 65 million incremental number of direct and indirect jobs will be created.
• End of life policy will be implemented for old vehicles.