Arvind’s labor turmoil could hit net profits

Wednesday, 13 June 2012

The on-going strike at Arvind’s Naroda plant, may see annual net profit fall by close to 8 per cent and revenue decline by 1 per cent if it continues for 10 more days, says Nirmal Bang Institutional Equities. Arvind, maker of denim fabrics for brands such as Lee, Wrangler, Arrow and Tommy Hilfiger, has been facing a major slowdown in operations with its workers on strike demanding a 40 per cent salary hike. Meanwhile the company has asked the workers to join duty or face strict legal action. However, paying no heed to the threat, many of the workers kept away from their duty. The company has termed the strike illegal alleging that its management had assured implementation of a wage hike within six months and still the workers were adamant on continuing with the strike.

The company’s appeal which was published in a newspaper urging its workers to join back the duty had said that the Ahmedabad Textile Mills Owners' Association (ATMOA) and the Majdoor Mahajan Sangh were working towards resolving the wage hike issue of all the textile mill workers of the city. Also the Labour Commissioner has been working for a positive outcome of the negotiations between the company management and the union.

Arvind’s denim manufacturing operations was affected by 60 per cent as around 2,500 workers called for a strike demanding 40 per cent wage hike. The workers belonged to several departments including rope dyeing and spinning. Earlier, a petition was filed in an industrial court by the Textile Labour Association (TLA) which represents the textile mill workers.

The Naroda plant employs about 3,500 workers and primarily manufactures denim fabrics. It has an annual capacity of 84 million metres out of the 108 million metres of total denim capacity of Arvind. Arvind ended 2011-12 with net profit of Rs 434.23 crores on revenue of Rs 3,494.12 crores.

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