Acquisition cost of fleet operators to decline after GST reduction: Crisil Ratings

Crisil Ratings said post the rationalisation of GST on commercial vehicles, acquisition of new fleet by operators would decline substantially.

It said in a statement on Monday that GST on commercial vehicles has been reduced to 18% from 28%.

"This will bring down the acquisition cost of fleet operators," it said.

Domestic commercial fleet operators are expected to clock a revenue growth of 8% to 10% this financial year, according to the statement. Strong domestic demand and import-related fleet requirements will drive growth.

Higher revenues and stable margins will result in improved cash flows, which will partially fund the incremental working capital requirement, the statement said. Dependence on external short-term debt will be limited, and operators will undertake additions to their fleets funded by long-term loans.

Increased fleet utilisation will ensure operating margins to remain stable between 8% to 8.5%, according to the statement.Read about our editorial guidelines and ethics policy