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Business Standard
20 hours ago
- Business
- Business Standard
Trump tariff turbulence: Tiruppur knitwear lifeline stretched thin
The clatter of knitting machines is the pulse of Tiruppur, each metallic click and hum carrying the livelihoods of nearly 1.2 million people, directly or indirectly tied to the textile and apparel trade. The faintly sweet scent of cotton in the air, sometimes replaced by the pungent tang from dyeing units, is as much a part of daily life as the morning tea. But lately, the streets wear a different mood. The industry's outward resilience masks an undercurrent of unease. In this corner of Tamil Nadu, more than 12,500 kilometres from the Oval Office, the trade moves in Washington are sending tremors through shop floors. Relatively high 50 per cent US tariffs on Indian goods threaten orders, revenues, and hundreds of thousands of jobs. 'Tiruppur is like a phoenix — we will rise from the ashes,' say exporters in almost unison. It is a familiar refrain in a town that has survived crises before: The closure of dyeing units in 2010–11, the GST blues of 2017, the Covid-led collapse of 2019, raw material shortages, wars. 'Even if we lose 50 per cent of our US revenue, that's about ₹6,000 crore. With trade deals with the European Union and the United Kingdom, we can replace it,' says K M Subramanian, president of the Tiruppur Exporters' Association and promoter of KM Knitwear, as devotional chants of Om Namah Shivaya play softly in his office, giving a sense of clam. But that calm confidence isn't infectious: Many believe the next six months will decide survival — if the 50 per cent tariff stays. Tiruppur, the knitwear capital of India, along with nearby Coimbatore, accounted for 69 per cent, or around ₹44,747 crore, of India's total knitwear exports worth ₹65,178 crore in 2024-25. Of that, the US market, based on industry estimates, claimed over ₹13,000 crore. Now, with the Donald Trump administration's higher tariff move, exporters expect US shipments to halve, crippling a sector where more than 80 per cent of companies are the micro, small, and medium enterprises (MSMEs) with an annual revenue of less than ₹100 crore. Hence, one could see two worlds in one city: One where companies are holding their breath for an 'Indian trump card' to solve the tariff war; the other betting on diversification and the new openings in the EU and UK. Inside the modest, paint-peeling office of the Tiruppur Exporters and Manufacturers Association (Teama), president M Muthurathinam voices the bleaker view. 'There are MSMEs that are 100 per cent dependent on the US. They will be wiped out. Diversion of orders will take six months to a year; we need incentives to survive,' he says. Teama's membership, comprising mostly small companies with less than ₹10 crore turnover, has fallen from 1,200 before Covid to around 700 now. Retail giants -- Walmart, Target, Amazon, TJX, Kohl's, Gap, H&M -- have told Indian suppliers to pause shipments until tariff details are clear. 'We're seeing not just holding of orders but also cancellations. One of my US customers, too, has dropped orders for summer 2026,' says N Thirukkumaran, chairman of Esstee Exports India. Around 700,000 people depend directly on the sector here, and another half-million indirectly, including 300,000 migrant workers from Odisha, Uttar Pradesh, West Bengal, Jharkhand, and Bihar. Industry groups are pushing for a special jobs package. For US brands, too, relocating sourcing isn't easy. Bangladesh and Vietnam can't instantly absorb large orders. 'Tiruppur works on wafer-thin margins,' says R Senthil Kumar of Premier Agencies. They are around 5 per cent in the US market, versus up to 25 per cent in Europe, according to Teama. Subramanian notes that brands have long-established supply chains here. 'Shifting will disrupt sourcing from Japan, Vietnam, and elsewhere. US customers will end up paying more.' For some, the damage has already been done. G R Senthilvel of Polo Castle shut his unit and sold ancestral property to clear ₹2.25 crore in debt after years of setbacks -- demonetisation, introduction of GST, rising costs, and global slowdown. 'We need an immediate package from the government, support from the banking sector, and handholding to find new markets like the EU, UK, or even Africa,' says Senthilvel. Africa, many agree, offers promise but comes with banking risks, outside of South Africa and a few others. MSMEs need a one-year breathing space with packages, tax breaks, and relaxed banking rules, demands Senthil Kumar of JM Knits and Weaves. 'Without six months' stability, we won't survive.' Some have sidestepped the storm by focusing inward. S Sathasivam's Horse Club unit thrives in the domestic market, which brought in about ₹35,000 crore last financial year. But even here, cotton price hikes are pushing a shift to polyester. 'It's a huge crisis for hubs like Tiruppur. We need price control on raw materials,' he says. As the road out of town grows quieter, the rhythmic thump of knitting machines fades, but the 1.2 million heartbeats they power seem to echo in unison: 'Tiruppur needs a stitch in time'.
Mint
25-05-2025
- Business
- Mint
Why balanced advantage funds are back in focus for moderate risk investors
Dynamic asset allocation funds (DAAFs), also known as balanced advantage funds, invest across equity and debt in a flexible, market-responsive manner. In theory, these funds increase equity exposure when valuations are low and shift towards debt when equity valuations appear stretched. This ability to dynamically balance risk and reward makes them particularly attractive to moderate-risk investors looking for inflation-beating, tax-efficient returns, without the need to time the market. Historical data reveals that dynamic asset allocation funds (DAAFs) have offered strong downside protection, relatively low volatility, and consistent returns, especially appealing for moderate-risk investors. Read this | Mastering the art of investing: Build a portfolio that lasts On a 5-year daily rolling CAGR basis since each fund's inception (as of 30 April 2025), none of the DAAFs delivered negative returns, even during major market downturns like the 2008 global financial crisis and the 2020 Covid crash. In absolute terms, during the 2020 Covid-led market crash, DAAFs declined by 12.7% to 33.9% (average: –22.4%), notably better than the Nifty 50 TRI, which fell by 38.3%. These figures underline the ability of well-managed DAAFs to cushion downside risk and deliver inflation-beating returns with lower volatility—particularly beneficial for moderate risk takers. Additionally, since they are taxed as equity funds, their post-tax returns are more efficient than many traditional alternatives. However, not all DAAFs are equally suitable for moderate investors. Some can exhibit considerable volatility depending on their strategy. Hence, selecting a fund that stays true to its label, dynamically adjusts allocations, and consistently balances equity and debt exposure is critical. Choosing the right strategy: Pro-cyclical vs counter-cyclical Dynamic asset allocation funds typically follow one of two approaches. Pro-cyclical strategies take aggressive equity positions when markets are rising—essentially buying high with the aim of selling higher. Counter-cyclical strategies, on the other hand, are more conservative and valuation-conscious, increasing equity exposure when markets are falling, and thus following a buy-low-sell-high philosophy. Read this | Diversification isn't about how many stocks or funds you own—it's about which ones Both approaches have proven effective in different market cycles, and a combination of the two has historically offered a good mix of inflation-beating returns, lower volatility, and more consistent outcomes. However, this doesn't mean investors must own both. Moderate risk takers may find counter-cyclical funds more suitable, given their focus on downside protection. Aggressive investors, seeking to maximise upside in bull markets, might prefer pro-cyclical funds. Those who fall somewhere in between could consider holding a mix of both. Given the inherent market exposure in these funds, investors should ideally have a three- to five-year investment horizon and treat DAAFs as part of their equity portfolio. They are not substitutes for pure debt instruments. That said, the presence of debt and arbitrage components does lend them a degree of stability, making them especially attractive for those using systematic withdrawal plans (SWPs). A key advantage is that investors don't need to time their entries, especially in counter-cyclical funds where the strategy itself is designed to respond to valuation shifts. Why DAAFs are well-placed in the current market Today's market environment makes a strong case for DAAFs, particularly for moderate risk takers seeking inflation-beating, tax-efficient returns. Equity markets remain volatile and are currently in a corrective phase, which is beneficial for both long-term equity investors and arbitrage strategies. Large-cap valuations appear reasonable, especially when compared to the stretched valuations of mid- and small-cap stocks. Read this | Mastering Fixed Income Trinity: Balancing income, duration, and liquidity for smarter investments Meanwhile, on the fixed income side, although policy rates have come down, AAA bond yields remain elevated at around 7%. More rate cuts are expected through 2025 and 2026, which could push bond prices higher, adding to debt portfolio returns. DAAFs, as a category, appear well-positioned to tap into this dual opportunity. The average fund has a 55% allocation to equities—largely tilted towards large-cap stocks—and a 45% allocation to debt and arbitrage. The average yield-to-maturity of the debt component stands at about 7%, with maturities around 4.8 years. Also read | Can multi-asset funds balance risk and returns? Together, this asset mix offers a compelling risk-reward balance, giving investors a shot at both capital appreciation and income stability. While DAAFs aren't a complete replacement for traditional debt products—especially for highly risk-averse investors—they are becoming increasingly relevant in a falling interest rate environment, where beating inflation after taxes will likely require hybrid strategies. Rushabh Desai is founder of Rupee With Rushabh Investment Services. Views expressed are personal.
Time of India
16-05-2025
- Business
- Time of India
Snacking doesn't grow for 1st time since Covid
Generative AI MUMBAI: Call it consumption fatigue, price pinch, or a lack of new choices, demand for snacks remained static in FY25. Not all households necessarily cut back on spending on biscuits, noodles, or namkeen, but they did not buy more of them either, data sourced from market research firm Kantar showed. Some may have even purchased a lesser quantity of snacks than usual. Some analysts attributed this to a 'market correction' following a Covid-led spike in snacking, while companies said that high inflation also played a spoilsport. 'Consumption itself would grow based on either shoppers buying more frequently or buying more on every occasion of purchase. After constantly increasing the annual shopping trip for snacking products since the pandemic, for the first time this year (FY25), the shopping trips did not grow,' analysts at Kantar told TOI. Munching loses punch in FY25 12.8kg Snacls: Consumption of snacks has been static at around 12.8kg per household in FY25. Categories like noodles (2kg) and biscuits (7.2kg) have, in fact, lost some consumption, indicating that there is some 'cutting back on the quantity being purchased', the firm, which captured household consumption of biscuits, noodles, pasta, macaroni, vermicelli, chocolates, cookies, and savoury snacks, said. Consequently, snacking as a category saw a slowdown in growth led by biscuits, which saw a 1% volume growth in FY25 compared to 10% in FY24. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 10 Mysterious Photos That Cannot Be Explained True Edition Undo Volume growth of savoury snacks declined to 7% from 11% during the period. Biscuits account for about 56% of snacking volumes. The snacking segment as a whole saw a deceleration in volume growth to 4% in FY25 from 9% in FY24. Edible oil prices: High commodity inflation, particularly in edible oil — a key ingredient used in biscuits and snacks — translated into grammage reduction in smaller packs, pushing consumers to purchase fewer packs of products like biscuits, said Mayank Shah, VP at Parle Products. In the snacks category, 80% of volumes come from small packs, Shah said. 'There has been a 40-45% rise in edible oil prices since last year after govt increased import duty on edible oils,' Shah said, adding that the tax benefits should spur consumption going ahead. 'We don't expect edible oil prices to go further up from here, but even at this level, prices are high,' he said. Local brands: A section of consumers also seems to have moved to smaller or local brands to save on costs. A snacking report released by Mondelez (survey conducted in Oct 2024) indicated that a higher percentage of consumers bought smaller numbers of snacks than normal and also shifted to 'off-brand versions' due to the price difference over the past 12 months, driven by economic pressures. 'Consumer snacking habits are shifting, with consumers adjusting their behaviour over the past years — opting for mindful choices, smaller portions, and diverse experiences. Despite economic pressures, 86% still see snacking as a daily boost, choosing smarter ways to save — like using coupons or buying in bulk — rather than cutting back. For Mondelez, this highlights the need for flexible pack sizes, pricing, and innovations that deliver quality and trust,' said Nitin Saini, VP (marketing) at Mondelez India. K Ramakrishnan, MD, south Asia, Worldpanel Division at Kantar, described the flat growth in the consumption of snacks as an 'expected slowdown', given the rapid growth the sector saw since the pandemic. Manufacturers will have to provide some incentives to spur the consumption of snacks. There was some slowdown witnessed in the snacks category, but it was the least impacted across food categories, said Manoj Verma, COO at Bikaji Foods International. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
