Trump tariffs could cost Sona Comstar 3% of annual revenue, company says

Vivek Vikram Singh, managing director and group chief executive officer of the Gurugram-based company, revealed the estimated loss from Trump tariffs in the January-March earnings call.

“There is risk of losing some business from tariffs, as customers might look to localise some parts. There is going to be impact on the overall demand as well, but there will be clarity on it in the coming months,” Singh said during the call.

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In the financial year ended 31 March, the company’s revenue rose 12% to ₹3,555 crore. Of this, about two-fifths, or ₹1,422 crore, came from United States market. New profit grew 16% to ₹601 crore.

Going by the company’s estimate, the annual revenue loss would be about ₹106 crore.

In January-March, revenue from operations declined 2% year-on-year to ₹868 crore, while net profit rose 10% to ₹164 crore.

Interim tariff relief

However, the company got an interim relief after president Donald Trump’s administration said that American auto companies will get some credits to import parts for domestically-made vehicles. This interim measure was intended to give automakers a two-year timeframe to fully localize their value chain.

“Post the announcement, our position is pretty comfortable,” Singh said during the call.

Also read: US GDP drops to 0.3% in Q1; Donald Trump says ‘NOTHING TO DO WITH TARIFFS. Be Patient’

On 26 March, the US had announced that all automobile imports into country, including auto parts, will face a 25% tariff to encourage local production of vehicles. As a company with a high exposure to the US, Sona Comstar’s business faced severe uncertainties from Trump tariffs.

However, the company continues to put up a brave face.

“Our customers are not too worried about the impact. We will have to wait and see how the situation evolves,” Singh said. “In our business, the relative pricing is important. With China facing higher tariffs, it is a great opportunity for us to gain market share in the United States.”

Since the start of the year, Sona Comstar’s share price has fallen by about 20% as against a 3.6% fall in Nifty Auto.

On plans for a new facility in the US, the company said that it will wait for the dust to settle on the whole tariff issue before thinking of setting up a new plant there.

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In April 2024, the company opened a new plant in Mexico to cater to demand in the North America region. To be sure, Mexico is so far is exempted from any additional tariffs from the United States.

The North American market is an important destination for Indian component makers, who exported about one third of their total shipments of $21.2 billion in FY24 to the region.