imports are an integral part of the auto component industry especially with the increase in electronics and advanced technology componentsnew delhi icra projects its sample of 44 auto ancillaries with aggregate annual revenues of over rs 250000 crore to grow by 58 in fy2024 driven by healthy domestic demand despite a high base and weak export environmenticra expects ev opportunities premiumisation of vehicles focus on localisation improved export potential and regulatory norms changes to translate into healthy growth for auto component suppliers over the medium to long termfor 9months in fy2023 icras sample reported a robust revenue growth of 26 on a yoy basis aided by the benefits of operating leverage increase in content per vehicle easing of cost pressures and improvement in the supplychain scenario the rating agency expects yoy improvement of 100150 bps in operating margins in fy2024 with the same returning to precovid levels of 11115 that said certain headwinds will continue to persist especially for companies that have a high share of imports because of the forex volatility for 9m fy2023 the operating margin for the sample set stood at 10 about 30 bps lower on yoy basis advt ms vinutaa s vice president and sector head corporate ratings icra limited said domestic oem demand constitutes almost 50 of sales for the indian auto component industry this is likely to remain healthy in fy2024 with high singledigit growth expected across segments except for tractors further the replacement demand is expected to remain stable in fy2024 growing at 68 supported by underlying demand drivers including increase in mobility improving economic activity and healthy freight movement discouragingly the export orders have slowed down in the last few months and are likely to remain weak in h1 fy2024 impacted by economic gloom geopolitical tensions and supplychain issues however ancillaries will benefit from supplies to new platforms because of vendor diversification initiatives by global oemscost inflation continues to be a key headwind for the industry while costs have eased on a sequential basis in the last few months they remain at elevated levels while gross margins for icras sample improved in q3 fy2023 on a qoq basis the upside was limitedancillaries are looking at enhancement of product portfolio and increased value additioncontent per vehicle the new products targeted are largely ev agnostic or for evs further companies have adopted consolidation of delivery and optimisation of routes to the extent possible to reduce freight expenses increased usage of power from renewable sources usage of energyefficient machinery factoring arrangements to reduce working capital requirements and other measures like improvement in output per employee through automationtechnology enhancement is likely to support margins going forward vinutaa added advt imports are an integral part of the auto component industry especially with the increase in electronics and advanced technology components while the gradual increase in usage of advanced components that are unavailable in india has contributed to import increase over the years supply chain disruptions and domestic market recovery contributed to an increase in imports