Subros Flags Rising Labour Costs as Emerging Challenge for Auto Component Sector

Subros has indicated that rising labour costs and wage settlements are emerging as an additional pressure point for automotive component manufacturers, alongside elevated commodity prices and global supply chain disruptions.

The company reported revenue from operations of Rs 3,755 crore for FY26, up 11.52% year-on-year, while profit after tax increased 10.22% to Rs 165 crore. In the March quarter, revenue rose 15.55% year-on-year to Rs 1,049.76 crore, while profit after tax stood at Rs 49.69 crore.

During its post-results analyst call, the company said labour cost pressures are being seen across multiple manufacturing regions following wage revisions and labour settlements.

“There would be impact of labour wage settlement for sure, not only limited to the geographies where the minimum wages have been revised, but in other geographies also as a benchmark,” the management said during the call.

The company added that it is in discussions with customers regarding compensation mechanisms linked to the increase in labour costs.

“Since the impact is huge, we are in discussion with the customer for compensation. A substantial part of this increase will be compensated by customers,” the management said.

Subros also noted that broader cost pressures continue across the industry, including higher prices of commodities such as aluminium, copper, steel and polypropylene, along with longer freight cycles and shipping delays linked to geopolitical developments.

The company said inventory cycles in some cases have increased from around 25-28 days earlier to nearly 45-60 days because of supply chain disruptions and container delays.

Management indicated that FY27 could continue to remain a challenging year from a margin perspective because of the prevailing global environment.

“FY27 will be a more pressed year for us,” the company said, while adding that it expects to offset part of the pressure through productivity improvements, localisation initiatives and operational efficiencies.

Subros further said thermal systems linked to hybrid, electric and CNG vehicles now contribute around 25% of its revenue, with the company continuing to invest in future mobility-focused thermal management technologies.