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 on Thursday 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.

Noting that it continues to remain concerned about the recovery prospects, the agency said it would maintain a "negative outlook on the industry".

The report said that the working capital requirements have come down from their peak in the second half of 2008. "This improvement has been supported by the clearing-off of inventories; with production being resumed by original equipment manufacturers (though at reduced levels).

"This, combined with the liquidity support from banks and market instruments...has resulted in the availability of funds for production, that has resumed with a lag in comparison with the OEMs," it noted.