Petrol Stop - US auto bankruptcies hit Indian auto suppliers: Fitch

Petrol Stop Home

US auto bankruptcies hit Indian auto suppliers: Fitch

Thursday, 09 July 2009

09 July 2009;business-standard.com:New Delhi: The bankruptcies of leading American car makers Chrysler and General Motors coupled with depreciation of the rupee could adversely impact the prospects of the Indian auto suppliers, says a report. "The high degree of consolidation in the US auto market, which has become the second-largest export destination for the Indian auto component sector, may clearly hinder the prospects of early revival," global credit ratings agency Fitch Ratings today said. According to the report, the export-oriented suppliers have suffered an even sharper decline in sales and profitability, due to the slump in the global markets and the bankruptcy filing by major US auto makers (Chrysler and GM)." While Chrysler has exited bankruptcy, GM is expected to come out of bankruptcy in the coming weeks. Fitch Ratings asserted that reduction in export revenues and depreciation of the rupee against the dollar has forced some auto suppliers to restructure their borrowings into longer maturities, in order to reduce the imminent pressure on cash flows. In its report on the Indian auto suppliers, Fitch Ratings pointed out that such a situation could prolong the payment period for outstanding dues from these automakers.