India Ratings and Research (Ind-Ra) has downgraded Sutlej Textiles & Industries Limited's Long-Term Issuer Rating to 'IND A-' from 'IND A', assigning a Negative Outlook. This downgrade reflects the company's financial challenges and expectations of lower-than-anticipated EBITDA improvement over the next few years.

Key Factors Behind the Downgrade

The rating agency's decision is based on several critical factors:

1. Elevated Leverage: Ind-Ra expects Sutlej's net adjusted leverage (net debt/EBITDA) to remain above 5.0x over FY26-FY28.
2. Low Interest Coverage: The company's interest coverage (EBITDA/gross interest expense) is projected to be between 1.0x-1.75x.
3. Planned Capex: Sutlej's modernization, upgradation, and value-added product initiatives are expected to increase debt and leverage.

Financial Performance

Sutlej Textiles reported the following financial metrics for FY25:

Despite an improvement in EBITDA for FY25, the company's financial performance has been volatile over the past few years.

Capex Plans and Discretionary Nature

The company has outlined capex plans of approximately Rs. 6,500.00 million over FY26-FY30. However, this capex is discretionary and depends on:

• Cash generation
• Internal accruals
• Potential fund infusion
• Debt tie-ups

Rating Actions on Financial Instruments

The bank loan facilities, totaling Rs. 13,465.10 million, have also been affected by this rating action.

Outlook and Future Considerations

The Negative Outlook reflects Ind-Ra's concerns about Sutlej Textiles' ability to significantly improve its EBITDA in the coming years. The company's financial flexibility and ability to manage liquidity through additional loans and working capital management will be crucial factors to monitor.

Investors and stakeholders should keep a close eye on Sutlej's ability to execute its capex plans effectively while managing its debt levels and improving operational performance. The company's success in diversifying its product mix and entering new value-added segments could play a vital role in its financial recovery.

As the textile industry continues to face challenges, Sutlej Textiles' ability to navigate these headwinds while improving its financial metrics will be critical for any potential rating upgrades in the future.

Sutlej Textiles & Industries Limited, a recognized four-star export house, has announced significant changes in its senior management, effective November 1, 2025. The company, known for its textile manufacturing units across India, is restructuring its leadership to optimize operations across its various mills.

Key Management Changes

Reasons and Implications

The reshuffling comes in the wake of Dinesh Rajpurohit's resignation from his position as Executive President of Rajasthan Textile Mills. Rajpurohit cited unavoidable personal reasons for his departure, which will be effective from the close of business hours on October 31, 2025.

To ensure smooth operations and leadership continuity, the company has strategically re-designated two of its existing senior executives:

1. Rohit Arora: With over 26 years of experience, Arora brings expertise in operational excellence, quality management, and project execution. His background includes:

   • B.Tech with honors from National Institute of Technology - Jalandhar
   • Certification in Business Management from ISB, Mohali
   • Strengths in techno-commercial acumen, profit enhancement, and fostering innovation

2. Upendra Kumar Pattnaik: A seasoned textile technologist with more than 34 years of experience in the spinning industry, Pattnaik's extensive knowledge spans multiple operational and business roles.

Strategic Implications

This restructuring appears to be a strategic move by Sutlej Textiles to:

• Ensure seamless leadership transition following Rajpurohit's departure
• Optimize the utilization of its experienced executives across different units
• Potentially streamline operations and enhance synergies between various textile mills

The company's decision to redistribute responsibilities among existing leaders suggests a focus on internal talent development and operational continuity. By leveraging the diverse experiences of Arora and Pattnaik, Sutlej Textiles aims to maintain its competitive edge in the textile industry.

As the changes take effect, stakeholders will be watching closely to see how this new management structure impacts the company's performance and strategic direction in the coming months.