Exports have been a saviour for automobile companies and consumer goods manufacturers hit hard over the last three-four quarters due to a consumption slowdown in India. The trend is set to continue-chief executives said the outlook for overseas sales is improving even further. This has shielded segments such as automakers, among the worst affected this year in terms of domestic sales, from production cuts. Some industries such as garments are even embarking upon increased capital expenditure, thanks to booming exports.
Maruti Suzuki, Bajaj Auto, Honda Motorcycle & Scooter, ITC, Arvind, Dixon, Dabur, Godrej Consumer Products, Marico and others have said exports or overseas sales have grown at a double-digit pace in the first half from the year before, while domestic sales and volumes have slumped. The Society of Indian Automobile Manufacturers (SIAM) said overall exports of passenger vehicles rose 12% to 376,679 units in the first half from the year-ago period. In contrast, domestic sales grew 0.5%, but the export boost lifted overall production by 2.4%.
Arvind vice-chairman Punit Lalbhai said the export market outlook is “extremely good” and the company is expanding capacity since it’s run out of slack.
Bajaj Auto executive director Rakesh Sharma said the steady revival in the overseas markets continues and the number of countries that remain stressed is also slowly reducing .
The company is expanding its new plant in Brazil that went on steam in June with an additional investment of $10 million in equity share capital.
“The second quarter in exports was better than the first quarter and the third quarter should continue the same trajectory of a 10%-plus improvement over the previous quarter,” Sharma told analysts last month.
“There are tailwinds supporting us on the US dollar rate. Therefore, both revenue and ebitda growth will be better than the volume growth.”
India’s largest car manufacturer Maruti Suzuki shipped 148,276 units overseas in the first half, up 12%, while domestic sales volume fell 0.3%. The contribution of exports to total sales was 14%. Overseas shipments by Bajaj Auto, the country’s largest exporter of motorcycles and three wheelers, rose 9% in the April-October period from the year ago.
Homegrown consumer electronics manufacturer Dixon Technologies, which has flagged a local slowdown in products such as televisions, said export orders are robust in categories like mobile phones and lighting.
Managing director Atul Lall said any slowdown in the local market can be overcome either by acquiring new customers, increasing the share of wallet of existing customers or exports. “There is a huge focus on export orders,” he said.
In fast-moving consumer goods (FMCG), companies like ITC, Godrej Consumer Products, Dabur and Marico said exports have been a saving grace this fiscal year as they face local demand headwinds. Marico and Dabur said growth in international markets rose in double digits.