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New Delhi [India], February 26 (<keyword id="19904948" type="General" weightage="20" keywordseo="ani" source="keywords">ANI</keyword>): Passenger vehicle volume is expected to ascend to a new peak for the third straight time next financial year, growing 5-7 per cent on a high base of 6-8 per cent estimated for the current year ending March 2024, according to <keyword id="19955699" type="General" weightage="20" keywordseo="crisil-ratings" source="keywords">Crisil Ratings</keyword>. This ascend is expected as sport utility vehicles (SUVs) race ahead even as demand for cars and exports remain muted. Healthy volume growth of the SUV segment, which enjoys higher margin, will steer an improvement in operating margin to 11.5-12.5 per cent next financial year, the rating agency said on Monday. Better cash generation, along with strong balance sheet and robust liquidity will support funding of sizeable capital expenditure to set up additional capacity, keeping credit profiles of passenger vehicle makers stable, the agency said. A significant change in consumer preference has cranked up demand for SUVs leading to its market share doubling to 60 per cent of total domestic volume this fiscal from 28 per cent before the pandemic in fiscal 2019. This preference is expected to further grow backed by a healthy pipeline of new model launches across price points, including electric variants, and normalised availability of semiconductors after a prolonged period of short supply. "While the overall PV volume is seen rising 5-7 per cent next fiscal, we expect demand for SUVs to accelerate at twice the pace at over 12 per cent driven by array of feature-laden launches at competitive price points, varied technology options including hybrid and electric, and increased access to credit," said <keyword id="19898319" type="General" weightage="20" keywordseo="anuj-sethi" source="keywords">Anuj Sethi</keyword>, Senior Director, CRISIL Ratings. In contrast, demand for cars is seen slowing this fiscal too due to the ongoing weakness in the rural market and lower affordability at the entry level. The cost of vehicles has risen in the past 3-4 years as manufacturers have been passing on higher commodity prices and have had to comply with more stringent regulations on safety and emissions. The situation is similar on the exports front. The share of passenger exports is estimated to have slowed to 14 per cent this fiscal compared with 17 per cent in fiscal 2019, mainly due to inflationary headwinds and limited availability of foreign exchange in key export markets -- <keyword id="19968988" type="General" weightage="20" keywordseo="latin-america" source="keywords">Latin America</keyword>, south-east <keyword id="19915288" type="General" weightage="20" keywordseo="asia" source="keywords">Asia</keyword> and Africa -- in the past two years. "This trend is expected to continue next fiscal," Crisil Ratings said. But increasing share of SUVs with higher realisations, along with stable commodity prices and full benefit of price hikes executed last fiscal have resulted in operating margin expansion of manufacturers by 200 basis points (100 basis points is equal to 1 percentage point) to 11.0 per cent this fiscal. A further improvement in sales mix in favour of SUVs can take that number to 11.5-12.5 next fiscal, it said. (ANI)

SUVs to drive passenger vehicle volume 5-7% next financial year: Crisil

Continuing healthy demand from construction, real estate and automobile sectors will help the paint sector register a 10-12 per cent <keyword id="45663" type="General" weightage="20" keywordseo="revenue" source="Orion">revenue</keyword> growth this fiscal against an 18 per cent estimated rise in the just-concluded fiscal, according to a report. Volume expansion and the resultant cash generation will help <keyword id="583484" type="General" weightage="20" keywordseo="Paint-companies" source="Orion">paint companies</keyword> maintain healthy balance sheets, which will also buffer credit profiles despite the rising capex, <keyword id="6359483" type="General" weightage="100" keywordseo="crisil" source="Orion">Crisil</keyword> said in a report on Wednesday. The top five companies have announced Rs 12,000 crore capex in fiscal 2023 and 2024 on the back of Rs 7,000 crore they incurred in the previous four fiscals. New players are expected to add nearly one-third of the total existing capacity of 4.2 billion litres by fiscal 2025-end, the report added. Paint companies are likely to close <keyword id="4131553" type="General" weightage="20" keywordseo="FY23" source="Orion">FY23</keyword> with a robust 18 per cent revenue growth, primarily led by higher realisations on the back of a 6 per cent price hike during the year, along with the full impact of a 20 per cent price hike effected in the third quarter of FY22. Along with healthy volume growth, moderating crude-linked input prices will ensure operating margins to remain stable at 15-16 per cent in fiscal 2024, almost similar to the last fiscal, the agency said in the report based on the five top companies that account for 90 per cent of the Rs 65,000-crore industry or 4.2 billion litres annual capacity now. The report also said their near debt-free balance sheets will support credit risk profiles despite all major paint companies being on an aggressive capex spree. The domestic paints sector also comprises the decorative segment, which commands 80 per cent of the market. According to Anuj Sethi, a senior director at the agency, paints demand normally grows at 1.6x-2x of GDP. Decorative paints are likely to see a revenue increase of 11-12 per cent this fiscal, driven by increasing renovation/construction activity and a greater preference for branded products. On the other hand, industrial paints will see 8-9 per cent revenue growth on the back of higher government spending on infrastructure and steady demand from the automotive segment, Sethi added. Since the key raw materials are crude-linked derivatives, the 30 per cent fall in <keyword id="45185" type="General" weightage="20" keywordseo="crude-oil" source="Orion">crude oil</keyword> prices from a high of USD 115 per barrel in June-July 2022 to USD 85 per barrel now will help boost the operating margins. But this will be largely offset by higher selling expenses due to aggressive sales push and increase in ad spend by industry leaders to counter competition from new entrants. Another margin risk is the falling rupee, which the agency sees trending at 82-83 a dollar, up from 80.2 in FY2023, impacting the cost of imported materials, which account for a third of overall their raw material requirements. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/google-chrome-alternatives-for-privacy-conscious-ios-and-android-users/articleshow/99614789.cms">These web browsers are the best alternatives to Google Chrome for privacy-conscious iOS and Android users</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/condom-maker-mankind-pharmas-4326-crore-ipo-to-open-next-week-on-april-25/articleshow/99614288.cms">Condom maker Mankind Pharma’s ₹4,326 crore IPO to open next week on April 25</a>

Paint companies to log 10-12% growth in revenue this fiscal: Crisil

Mumbai, Apr 24 () The Indian IT sector is staring at a revenue growth sliding to a decadal low of up to 2 per cent and an impact on profitability owing to narrowing of margins due to the COVID-19 pandemic, a report said on Friday. The companies will lose out on new deals, which will compromise future revenues, and also face reverses on the exiting ones, which may be renegotiated as their overseas clients face difficulties due to the lockdowns, domestic rating agency Crisil said in the report. The USD 97 billion IT sector is one of the largest service exporters and helps the economy also by supporting over 40 lakh jobs if the IT-enabled services are also included. Major companies including Infosys and Wipro have earlier this month discontinued the practice of giving yearly guidances, while TCS hinted at pain during the first two quarters of the year. "Typically, new deals get finalised between March and May, but this time around, most clients will focus on mitigating emerging business risks and defer discretionary IT spend, while letting existing contracts continue," Crisil's senior director Anuj Sethi said. Crisil said that revenue growth for the industry will decline to a decadal low of 0-2 per cent. The ongoing restrictions on mobility, which has resulted in the entire aviation sector being closed, will also cause delays in deal consummations, Sethi added. The IT industry's largest client segment of banking, financial services and insurance which accounts for 28 per cent of the industry revenues will deliver an 8 per cent topline growth on rising share of digital transactions and presence of larger and longer-term maintenance contracts that are critical to operations, Crisil said. While healthcare segment, which accounts for 8 per cent of the IT industry revenues, will also grow at similar levels, it said. However, other segments including retail (32 per cent of IT service revenues), and communication, aerospace, defence and transportation (22 of revenues) and manufacturing, travel and tourism and oil and energy will see a steep and immediate impact on revenues considering sluggish demand in these sectors, it said. The rating agency said operating profitability could moderate by 2-2.50 percentage points to a decadal low of 20 per cent for 2020-21, despite gains from rupee depreciation. The slowdown in revenues will have an impact on profitability because the IT firms will have to continue investing in new age technologies to showcase their ability to execute complex digital projects, its associate director Rajeshwari Karthigeyan said. Karthigeyan explained that in the last four years, the share of digital revenues has grown to about 40 per cent of the total revenues, but at the same time has seen a narrowing of profit margins by up to 1.50 per cent. IT companies have already streamlined costs and raised utilisation rates to record high of 85-90 per cent by increasing the share of fixed price contracts, which will make it impossible to derive any gains from optimising employee or outsourcing costs, the agency said. The ratings agency, which studied 15 companies constituting 70 per cent of the total revenues, said there will not be any impact on ratings as a result of this and limited itself to say that ones with revenue concentration in weak segments may face some challenges. It flagged the extent of the pandemic and its impact on the global economy as a key monitorable factor going ahead. AA ANUANU

IT sector revenue growth may hit decadal low due to COVID-19: Crisil

New Delhi, Dec 23 () Profitability of domestic hospital sector would continue to improve in the current as well as next financial year driven by enhanced coverage under Ayushman Bharat as well as deeper expansion in smaller towns, says Crisil Ratings.
 The improvement in demand will also be driven by alterations made to healthcare delivery models by hospital chains to align with regulatory changes as well as factors like increasing lifestyle diseases and medical tourism.
 "With insurance coverage of Rs 5 lakh under the Ayushman Bharat scheme (up from Rs 1-3 lakh under various government schemes), preference for private hospitals is rising," Crisil Ratings said.
 The Crisil study covering 41 leading domestic hospital firms revealed that the bed additions in tier II cities will be higher in future, resulting in better materialisation of latent demand and adoption of Ayushman Bharat schemes.
 "Crisil expects 60-70 per cent of bed additions to come up in tier II locations in the next 2-3 fiscals," Crisil Ratings Senior Director Anuj Sethi said.
 Currently, healthcare facilities are clustered around tier I cities such as Chennai, New Delhi, Bengaluru, Kolkata, and Mumbai, he added.
 Even as revenue growth is set to increase to 14-15 per cent over fiscals 2020 and 2021, operating profitability of hospital firms is also expected to improve to 16 per cent over this period, Crisil said.
 "This will be supported by a rise in bed occupancy rates to 75 per cent from 60-65 per cent, automation and optimisation of clinical procedures, efficient sourcing, and continuing recalibration of pricing of services," it added.
 A series of regulatory events in financial years 2017 and 2018 had impacted revenue growth and profitability of private hospitals.
 While demonetisation and ban on large cash transactions impacted occupancy, implementation of GST, price cap on medical implants, and increase in minimum wages for nurses and staff moderated profitability, Crisil noted.
 With occupancy and cash generation improving, hospital firms (41 entities) are expected to expand capacities by investing around Rs 4,800 crore in fiscals 2020 and 2021, it added. MSS 
DRR

Profitability of domestic hospital sector to improve in FY20, FY21: Crisil

Mumbai, Jan 21 () The Rs 4-lakh crore FMCG sector will close fiscal 2020 with a 9 per cent growth, down 4 percentage points and a jump in rural buying will lift the same to 11 per cent in fiscal 2021, a report said on Tuesday.
 The recovery in growth for the fast moving consumer goods (FMCG) sector will begin playing out from March-April 2020 riding on a jump in farm incomes, Crisil Ratings said in its report.
 The estimate comes amid reports of a sharp fall in overall consumption, with one media report also claiming that there has been a de-growth in the activity for the first time in four decades. This dip in consumption is one of the most important factors dragging down the GDP growth.
 Better storage levels in reservoirs, which are over 40 per cent higher than the year-ago period due to better rains, an 8 per cent increase in winter crop output and better visibility for the upcoming seasons will lift the rural consumption, it said.
 "Higher spending by the government on rural infrastructure could benefit rural incomes and thereby demand for FMCG products," its senior director Anuj Sethi said.
 He added that urban areas growth for the FMCG sector is unlikely to improve over the 8 per cent level due to a growth in modern retail.
 However, the growth will not be uniform across companies, the rating agency said after an analysis of 57 companies which account for half of the industry's revenues.
 Packaged food segment, which accounts for 50 per cent of the industry's revenues will continue to grow at up to 10 per cent in fiscal 2020 and inch up to 12 per cent in fiscal 2021 on a shift to branded products and deeper penetration of product segments, it said.
 The personal and home care segment, which accounts for a third of FMCG revenue, is also likely to see recovery in growth to 8-9 per cent in fiscal 2021 from 6-7 per cent in fiscal 2020 it said, attributing the slower growth to a focus on discretionary spend-driven products in the segment.
 The agency said it expects the operating profits of companies to remain healthy at up to 20 per cent level despite a hit of up to 1.5 percentage points on raw material costs and promotional expenses.
 "The credit profiles of FMCG companies are likely to remain stable, supported by well-capitalised balance sheets," Sushant Sarode, its associate director, said. AA SHW
SHW

FMCG sector to expand at 9 pc in FY20, growth to improve in FY21: Report

<ul><li>India’s new e-commerce rules may be a setback for global players like Amazon and Flipkart. </li><li>The biggest beneficiary will be large Indian retailers and the largest of them all is Mukesh Ambani’s Reliance Retail. </li><li>While his physical stores benefit from less pricing pressure, his e-tail venture will get a level playground to fight established giants, at no extra cost. </li></ul>E-commerce in India is gearing up for some <a href="https://www.businessinsider.in/indias-new-e-commerce-policy-has-rivals-flipkart-and-amazon-teaming-up-to-counter-the-new-directive-and-the-republic-day-sale-will-probably-be-their-last/articleshow/67366996.cms">massive changes</a> from February 1. Foreign e-commerce players — like Amazon and Flipkart — will no longer be able to offer consumers ‘deep discounts’ or sell their own brands through their respective platforms. It’s a big blow to Jeff Bezos’ and Walmart, and not the best news for consumers in India. Local vendors are voicing their support for the new policy, hoping they can regain some market share, without having to lose more money by offering discounts. 
	
	
	
	
	
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 However, the biggest beneficiary of the new policy may not be a broke Snapdeal or the now-jaded Shopclues. It is likely to be India’s <a href="https://www.businessinsider.in/e-commerce-wars-amazons-jeff-bezos-vs-mukesh-ambani-in-india/articleshow/67620116.cms">largest retail chain operator</a> Reliance Retail, owned by Mukesh Ambani — the richest man, not only in India, but in Asia. The facts Physical retailers — with the brick-and-mortar stores— are the immediate benefactors. The new rules are expected to boost sales for offline vendors by taking away the discounts available to consumers online. CRISIL estimates that it could increase revenue for offline retailers by ₹100 billion to ₹120 billion by 2020. Just as the loss of business for e-commerce is the gain for retail chains, the advantage is usually with the larger players in the space — because of the sheer scale, reach and resources at their disposal. And the largest of them all is Reliance Retail. “The impact on e-tailers would be largely in the electronics and apparel segments, which account for a bulk of their revenues,” says Anuj Sethi, the senior director at CRISIL Ratings. Coincidentally, 34% of Reliance Retail’s revenue comes from its electronics arm — Reliance Digital. It’s also the largest holder of foreign brand licences for apparel in India. Some of its top brands include Diesel, Hamleys, Kenneth and Steve Madden. Reliance Retail’s offline avatar served 3.5 million customers a week through 9,146 stores across 5,800 cities as of September 2018. Brokerage house CLSA further estimates that the company’s revenue may grow nearly 12-fold to $138 billion in the next 10 years. 
 
 
 
 
 
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 If CLSA’s estimate were to come true, Reliance Retail alone will be making over a quarter of all revenue from retail — both online and offline — in India, expected at about $550 billion, in the next decade. The timing There is no doubt that online retail still has a lot of potential in India. Nasscom and PricewaterCoopers (PwC) estimate that the market will balloon to $150 billion by 2022. Online players still make for <a href="https://www.livemint.com/Industry/9iUxlQZ4iHwPiXRKscx3LK/Indias-ecommerce-market-to-grow-30-to-200-billion-by-202.html">only</a> 3% of the total retail market in India, and the prospects are still huge. So for Mukesh Ambani, as the chairman of Reliance Industries, it’s an unavoidable opportunity. One part of Reliance Retail— the apparel brand Ajio — is already online. Now, he is looking to expand the offerings beyond apparel, with a pilot programme in the state of Gujarat. Before Ambani’s entry, Amazon had <a href="https://www.businessinsider.in/amazon-takes-the-fight-to-walmart-by-investing-another-27-billion-in-india/articleshow/65404423.cms">invested over $4.7 billion</a> in India over the last six years, primarily because it identified the potential of a market with a population of nearly a billion and half people. For the same reason, <a href="https://www.businessinsider.in/indian-unicorn-flipkarts-board-approves-15-billion-deal-with-walmart/articleshow/64027810.cms">Walmart bought Flipkart</a> in 2018 for a whopping sum of $15 billion, paying a heavy premium for joining the game late. Over the years, Amazon, Flipkart and other early birds have burnt billions of dollars giving discounts, getting people used to shopping online and creating a market. Then, the government revised its policy on foreign direct investment (FDI) in e-commerce on December 26, 2018, changing the rules of the game, which would bring the likes of Amazon and Walmart on a level playing field with new entrants. Less than a month later, Mukesh Ambani took the stage at the investor summit Vibrant Gujarat and unveiled his plan to expand his online retail business. The government’s new e-commerce rules are essentially trying to protect India’s retailers — including Reliance Retail — from the deep discounts offered by e-commerce giants. That is how Ambani’s physical stores gain. What’s more, as a new entrant to e-commerce, going against established players with equally deep pockets, Ambani will not have to burn money through discounts. In fact, he is not allowed to. He gets a level-playing field to fight established giants like Amazon and Walmart-owned Flipkart, at no extra cost. The spin Ambani had his own spin on why the change in rules was justified. "In this new world, data is the new oil. And data is the new wealth. India's data must be controlled and owned by Indian people and not by corporates, especially global corporations,” Ambani said at the Vibrant Gujarat Summit in January 2018. He was alluding to the fact that two biggest e-commerce companies in India are owned by foreigners, and they have access to priceless data on Indian consumer behaviour. Even people from the government echoed the ‘nationalistic’ spin to the story that Ambani offered. “We don’t want to build walls, but at the same time, we explicitly recognize and appreciate that data is a strategic asset,” Aruna Sundararajan, the nation’s secretary of telecommunications said last year at a press conference. The other view can be equally convincing to Ambani’s critics. John Elliott, the author of “Implosion: India’s tryst with reality” begs to differ. “The idea that Reliance is any safer at protecting Indian people’s data than Amazon or Walmart is ludicrous,” Elliott told Business Insider. See also: <a href="https://www.businessinsider.in/indias-new-e-commerce-policy-has-rivals-flipkart-and-amazon-teaming-up-to-counter-the-new-directive-and-the-republic-day-sale-will-probably-be-their-last/articleshow/67366996.cms">India’s new e-commerce policy has rivals Flipkart and Amazon teaming up to counter the new directive — and the ‘Republic Day’ sale will probably be their last</a> <a href="https://www.businessinsider.in/the-indian-government-just-dealt-a-serious-surprise-to-amazon-and-flipkart-heres-what-that-means-for-online-shoppers/articleshow/67272151.cms">The Indian government just dealt a serious surprise to Amazon and Flipkart — Here’s what that means for online shoppers</a> <a href="https://www.businessinsider.in/e-commerce-wars-amazons-jeff-bezos-vs-mukesh-ambani-in-india/articleshow/67620116.cms">Amazon's newest challenger may be the richest man in Asia</a>

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SUVs to drive passenger vehicle volume 5-7% next financial year: Crisil

ANI

Paint companies to log 10-12% growth in revenue this fiscal: Crisil

PTI

IT sector revenue growth may hit decadal low due to COVID-19: Crisil

PTI

Profitability of domestic hospital sector to improve in FY20, FY21: Crisil

PTI

FMCG sector to expand at 9 pc in FY20, growth to improve in FY21: Report

PTI

Mukesh Ambani may be the surprise winner from India's new rules hurting Amazon and Walmart

Prabhjote Gill

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