Sutlej Textiles and Industries Ltd has posted a remarkable return to profit in the June quarter, driven by operational improvements and a strategic shift towards higher-value products, as it plans to expand its energy-efficient textile offerings and global footprint.
Sutlej Textiles and Industries Ltd has returned to profitability in the June quarter after a sharp improvement in operating performance, with EBITDA rising ninefold year on year to INR47.2 crore. The company said margins widened for a fifth straight quarter to 6.7%, helped by a better product mix, tighter procurement and a cleaner quarter with no exceptional items. Management described the recovery as broad-based, noting that all three business clusters and six manufacturing units generated positive EBITDA.
The turnaround comes as Sutlej steps up its shift towards higher-value products, including Sutlej Green Fiber and technical textiles. According to the company’s earnings call, the value-added yarn portfolio still accounts for only 10% to 15% of the mix, well short of the 30% to 35% target, but a pipeline of new stock-keeping units is being tested by customers. Ashish Srivastava, the chief executive and whole-time director, said the transition from trial orders to regular business typically takes three to six months, suggesting the strategy is still in an early phase. He also said about 60% of the improvement in the raw material-to-sales ratio came from moving up the value chain, with the rest from operational efficiencies.
The business is also trying to scale its home textiles operation now that it has moved into profit. Srivastava said the aim is to double the size of that division within two years. The company’s recycled polyester arm, Sutlej Green Fiber, now has gross sales of roughly INR400 crore, with about 70% to 75% consumed internally, and management is looking to add performance features to the material to meet brand-specific demands. Earlier company updates and market reports also show Sutlej has been expanding beyond its core yarn business, with domestic sales forming a major part of revenue and export efforts stretching across dozens of markets, including Europe, Latin America and newer regions such as the Far East and Africa.
Even with the stronger quarter, several cost pressures remain. Employee expenses are still running at 16.6% of revenue, which management acknowledged is above the level it wants to see. Finance costs rose to INR18.3 crore in the quarter, and the company expects absolute interest outgo for FY27 to rise to about INR75 crore as it funds capacity expansion and modernisation. Management sounded cautious on the coming quarters, pointing to geopolitical uncertainty, uneven global demand and volatile cotton prices, which it expects to stay neutral to slightly firm. Still, Srivastava said the company is aiming to at least match Q1’s performance and build a business that delivers stronger margins and better cash generation over time.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
