Lokesh Machines' Credit Rating Downgraded Amid US Sanctions Impact

Lokesh Machines Limited (LML), a prominent player in the machine tools industry, has faced a significant setback as Acuite Ratings & Research Limited downgraded its credit ratings. This development comes in the wake of the company's inclusion in the US Treasury's Office of Foreign Assets Control (OFAC) sanctions list, which has disrupted its supply chain and impacted production.

Credit Rating Downgrade

Acuite Ratings has lowered LML's long-term rating from 'ACUITE BBB' to 'ACUITE BBB-' and its short-term rating from 'ACUITE A3+' to 'ACUITE A3' on bank facilities totaling Rs. 208.42 crore. The outlook has been revised to 'Stable,' and the ratings have been removed from 'Under Watch with Negative Implications.'

Key Factors Behind the Downgrade

The downgrade reflects a deterioration in LML's operating performance, which began in Q3 FY2025 and continued into H1 FY2026. The primary reasons for this decline are:

Disruption in the supply of electronic components from a key supplier
Adverse impact on production
Decline in scale of operations

Financial Performance

The impact of these challenges is evident in LML's financial performance:

Metric	FY2025	FY2024	Change
Operating Income	228.32	293.54	-22.22%
EBITDA Margin	12.51%	13.88%	-1.37%
PAT Margin	0.24%	4.72%	-4.48%

The company's H1 FY2026 operating revenue moderated to Rs. 98.48 Cr, compared to Rs. 137.84 Cr in H1 FY2025.

Current Status and Outlook

As of October 16th, 2025, LML has an unexecuted order book position of Rs. 116 Cr. The company has initiated steps to address the sanctions issue and anticipates a favorable outcome in the near term. However, Acuite notes that the scale of operations is likely to remain subdued in the short term as proceedings are ongoing.

Company Background

Lokesh Machines Limited, founded in 1983, is a well-established player in the machine tools industry with over four decades of experience. The company specializes in designing and manufacturing custom-built special purpose machines, CNC machines, and components for various industries, including automotive and defense.

Strengths and Challenges

Despite the current setbacks, LML maintains some positive aspects:

Healthy financial risk profile with a net worth of Rs. 212.36 Cr as of March 31, 2025
Low gearing at 0.63 times
Long-standing presence and expertise in the machine tools segment

However, the company faces challenges such as:

Working capital intensive operations with high inventory days
Intense competition in the industry
Concentration risk in the auto segment

As the situation evolves, stakeholders will be closely monitoring LML's efforts to resolve the sanctions issue and its impact on the company's financial and operational performance in the coming quarters.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-5.15%	-7.00%	-15.13%	-14.86%	-51.63%	+603.88%

Lokesh Machines Limited , a prominent player in the manufacturing sector, has announced significant corporate developments following its recent board meeting. The company's Board of Directors convened on November 11, 2025, to discuss and approve key matters, including financial results and a new appointment to the board.

Financial Results Approval

The board has approved the un-audited financial results for the quarter and half-year ended September 30, 2025. This approval includes:

Statement of Un-audited financial results
Statement of Assets and Liabilities
Segment-wise revenue
Cash Flow Statement

These financial documents were accompanied by a Limited Review Report, ensuring compliance with regulatory standards.

New Independent Director Appointment

In a move to strengthen its leadership, Lokesh Machines Limited has appointed Mr. Kolkappadam Vadavatah Sanil Babu as an additional Non-Executive Independent Director.

Aspect	Details
Name	Mr. Kolkappadam Vadavatah Sanil Babu
Position	Additional Director (Non-Executive – Independent)
Appointment Date	November 11, 2025
Background	Mechanical Engineer
Key Expertise	Aerospace & Defence, Operations, Production, Sales & Marketing

Mr. Sanil Babu brings a wealth of experience to the board, with comprehensive expertise in:

Plant Operations & Production Management
Aviation Maintenance Operations & Technical Services
Operational Excellence & Lean practices
Sales, Marketing & Business Development
Project & Program Management
Strategic Planning & Execution
Quality Systems & Audits
Training, Mentoring & Capability Building

His appointment is expected to contribute significantly to the company's strategic direction and operational excellence.

Regulatory Compliance

The company has affirmed that Mr. Sanil Babu has not been debarred from holding the office of Director by SEBI or any other authority. Additionally, it was disclosed that he is not related to any existing director of the company, ensuring independence in his role.

These developments underscore Lokesh Machines Limited's commitment to corporate governance and strategic growth. The approval of financial results and the addition of a seasoned professional to the board signal the company's focus on transparency and strengthening its leadership team.

The board meeting, which commenced at 12:10 PM (IST) and concluded at 02:45 PM (IST), marks a significant day for Lokesh Machines Limited as it positions itself for future challenges and opportunities in the manufacturing sector.