By Ananta Agarwal and Hritam Mukherjee
(Reuters) -Indian textile manufacturer Arvind’s margins may come under pressure in the first two quarters of the ongoing fiscal year, as it partly absorbs the impact of U.S. tariff policy, a company executive said on Thursday.
Top U.S. retailers have been haggling with suppliers over how the costs that U.S. tariffs are set to impose might be distributed, Reuters has reported.
Arvind said it will strive to reduce costs and increase volumes to lessen the pressure on margins and pause all non-critical and discretionary capital expenditure until there is clarity on tariffs.
It also did not provide a forecast for the fiscal year due to “prevailing uncertainty” and plans to issue one “at a later stage”.
Its shares closed down about 5% after the comments, despite a 52% year-on-year increase in its fourth-quarter net profit to 1.51 billion rupees ($17.64 million).
“The demand situation is the most robust we have seen in recent memory,” Arvind’s vice chairman Punit Lalbhai said in a post-earnings call, adding that customers are talking about volume increases and advancing orders.
India remains in a comparatively favorable position due to the heftier tariffs that could hit bigger U.S. garment suppliers such as Bangladesh, Vietnam and China, from July.
Exports made up nearly 40% of Arvind’s annual revenue in fiscal year 2024, according to its annual report.
Part of the volume benefit could come from the UK-India free trade agreement, the company said, as the pact will open up a new “key geography”. UK currently makes up less than 2% of its business.
($1 = 85.5800 Indian rupees)
(Reporting by Ananta Agarwal and Hritam Mukherjee in Bengaluru; Editing by Mrigank Dhaniwala)
