Vardhman Textiles Navigates Global Headwinds With Strategic Resilience And Expansion Plans

In a challenging macroeconomic environment marked by tariff uncertainties, raw material price disparities, and logistical disruptions, Vardhman Textiles Ltd has reported a marginal improvement in its Q4 FY25 performance over the preceding quarters. Speaking at the company’s earnings call, Neeraj Jain, Joint Managing Director and Sagrika Jain, Executive Director, offered a detailed perspective on the current landscape, company strategy, and future roadmap.

Neeraj Jain highlighted several headwinds impacting the textile sector, particularly the Indian spinning industry. Indian cotton prices continue to be non-competitive globally, trading at around US$ 0.82–0.83 per pound compared to US$ 0.78–0.79 for landed cotton in Vietnam or Indonesia. This pricing disparity is primarily due to India’s Minimum Support Price (MSP) policy and lack of duty-free imports, placing Indian spinners at a US$ 0.03–0.04 disadvantage.

Man-made fibers (MMF) such as polyester and viscose are also facing headwinds due to the Bureau of Indian Standards (BIS) quality control order, which has effectively restricted imports. Consequently, domestic MMF prices are 18–20% higher than in global markets, further compressing margins.

On top of this, the ongoing global tariff tensions, especially the recent 10% US duty on textile imports, are adding uncertainty. While Indian exporters may benefit in the long term due to relatively lower tariffs compared to China or Bangladesh, brands are currently pushing suppliers to absorb the additional costs, a difficult ask for spinners already operating on thin margins.

Contrasting the spinning segment, Vardhman’s fabric division has delivered one of its strongest quarters ever. Sagrika Jain noted robust demand across US, UK, and EU markets, particularly post-festive season, contributing to high-capacity utilization and significant revenue growth.

She emphasized that while short-term uncertainties loom due to evolving trade dynamics, the company is optimistic, citing client feedback viewing the tariffs as “short-term pain for long-term gain.” This proactive customer engagement strategy is positioning Vardhman as a dependable strategic partner.

To further capitalize on this momentum, Vardhman is on track to expand fabric production capacity by 38% by the end of calendar year 2025. This includes a shift towards value-added processed and synthetic fabrics, reducing reliance on grey fabrics. Full capacity absorption is targeted by FY28, with fabric revenues expected to rise by Rs 500 crore in FY26 and Rs 1,000 crore in FY27.

The company’s technical textile venture, focusing on synthetic fabrics such as windcheaters and rain-protective gear, is progressing well. Phase I of production, at 1.5 million meters per month is expected to go live in Q3 FY26. Initial demand has been encouraging from both existing and new clients, including sportswear brands.

Meanwhile, Vardhman is undergoing a Rs 1,200 crore modernization program aimed at improving operational efficiency, reducing costs, and enabling production of more complex, high-margin products. A significant portion of this investment is being capitalized, with only Rs 50 crore expected to impact the P&L directly.

Neeraj Jain expressed confidence that these modernization efforts will boost EBITDA margins by at least 15% over current costs, especially through energy savings, manpower optimization, and flexibility to produce differentiated products.

Both leaders acknowledged that the current trade regime is fluid. While the US has imposed a blanket 10% duty, historical data suggests India may emerge with one of the lowest applicable rates, providing a competitive edge over countries like China (45–50%) and Bangladesh. This potential tariff differential could translate into export gains if the situation stabilizes.

Exports to Bangladesh, a key market accounting for 50% of Vardhman’s yarn exports, have faced logistical delays due to road transport restrictions, now rerouted via sea. While costs remain stable, delivery times have increased, impacting service levels.

Despite a subdued outlook for the spinning segment especially basic yarns, where profitability remains elusive, Vardhman remains bullish on its fabric and synthetic businesses. Quality cotton procurement, controlled CAPEX deployment, customer-centric strategies, and expanding into high-margin segments are expected to drive long-term growth.

As Neeraj Jain concluded, “Unless our raw materials align with international markets, spinning margins will remain under pressure. But on the fabric side, the expansions, product innovation, and cost controls will create substantial growth opportunities.