Sutlej Textiles and Industries Limited (NSE: SUTLEJTEX) Q1 2026 Earnings Call dated Aug. 07, 2025
Corporate Participants:
Unidentified Speaker
Sachin Karwa — Chief Financial Officer
Ashish Srivastava — Chief Executive Officer
Analysts:
Unidentified Participant
Mahesh Shah — Analyst
Raj Tagore — Analyst
Rushab — Analyst
Dheeraj Thakur — Analyst
Presentation:
operator
It. Sam It It Sa. Sa. Sam Sa. Ladies and gentlemen, you had been connected to Sutra Textile Industries Limited Conference call call will begin shortly. Please stay connected. Ladies and gentlemen, you had been connected to Suitless Textiles Industries Limited Conference call call will begin shortly. Please stay connected. Foreign. Ladies and gentlemen, Kati and Welcome to the Q1 FY26 earnings conference call of C Textiles and Industries Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on attached on phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Sachin Karva, Chief Financial Officer. Thank you and over to you sir.
Sachin Karwa — Chief Financial Officer
Good evening everyone and welcome to Earning Conference call of Surplus Textiles and industries for the first quarter ended 30th June 2025. With me on the call today is our CEO and whole time director Mr. Ashish Kumashrivastav along with Mr. Ranjan Chaudhary, Chief Operating Officer and Stellar IR advisor, our investor relationship team. We have already uploaded the investor presentation and I hope everyone has and had an opportunity to go through the same. Let me start the call by giving you the financial highlight of the quarter after which Mr. Ashish will update you on the business as well as industry highlights.
Let me begin by acknowledging that the broader global and geopolitical context continues to shape the business environment, especially the textile industry. While uncertainty remains high, we believe once the microstability returns, especially in terms of tariffs and trade flows, the industry will find its new norm. As a company, we are positioning ourselves to to respond with agility once the environment materializes. Talking about the financial performance of Q1, our consolidated total income came at rupees 610 crore which was lower by 8% on year on year basis. Gross margin was at 42.4% which was lower by 165 basis point on year.
On year basis, EBITDA for the quarter stood at Rs.1 crore with margin of 0.2% and a reported loss of rupees 30 crores. In terms of segmental performance during Q1, the yarn segment continued to be key revenue contributor with rupees 562 crore supported by stable demand. The quarter was particularly impacted by the unfortunate war between India and Pakistan. Our manufacturing units in Northern India face operational disruptions on account of war. Additionally, margin pressure persisted due to elevated input costs, particularly raw cotton and energy and lower yarn selling prices. The home textile segment Contributed to this 43 crore aiding top line and operating efficiency.
Additionally, the company’s continued focus on value added and recycled green fiber product helps strengthen its premium product portfolio and cater to evolving customer preferences. In response to evolving market dynamics and cost pressures, we have initiated a multi faced strategy which includes product diversification, market realignment, technology upgradation and development of value added in specialty yarn. We are continuously working on cost optimization and strengthening the balance sheet with our debt equity ratio maintained at comfortable level of 0.95x. With that, I now request Ashish to please take it forward with business and industry updates.
Ashish Srivastava — Chief Executive Officer
Thank you Sachin and good evening once again everyone. Thank you once again for joining Sutler’s Textiles Q1 FY26 earnings call. As my colleague updated, the first quarter presented significant challenges due to geopolitical and macroeconomic headwinds. Notably, our largest manufacturing facility which is based up north in Jammu Kashmir, faced operational disruptions for over a month due to the India Indo park conflict located close to the border. The safety of our employees was our top priority leading to temporary workforce evacuation. I would like to place some record and commend our on ground and leadership teams for their exceptional efforts in restoring operations.
By July, we successfully resumed full scale production at our KATWA unit which is in Jammu and Kashmir demonstrating our commitment to operations operational resilience. Despite these disruptions, our diversified business model supported stable performance. The yarn segment, which constitutes roughly about 90% of our revenue, was most affected, yet our fiber and home textile businesses performed in line with expectations. Domestic sales, accounting for about 65% of total sales, remained robust while export volumes faced minor delays, particularly to Bangladesh due to regional tensions. Fortunately, these disruptions caused no significant customer dissatisfaction or order losses. Key export markets like Bangladesh and Turkey continue to drive our young businesses.
Our limited direct exposure to US Market has shielded us from the recent tariff uncertainties including ongoing discussions around potential increases in U.S. import duties on textiles. While these tariff talks remain fluid, we are closely monitoring developments and believe our diversified market presence and our focus on non US markets will mitigate potential risks. Meanwhile, we are actively exploring opportunities to expand our home textile exports to UK and eu, particularly leveraging the potential of the India UK Free Trade Agreement. This aligns with our strengths in design and value added furnishings. On the cost front, we did face some margin pressure due to the volatile polyester prices tied to the global crude oil fluctuations.
Despite these challenges, our focus on product diversification, value added and specialty adds and operational efficiency helped us maintain stability. In summary Q1 FY26 once again tested our resilience. But our swift recovery, diversified portfolio and strong customer relationships kept us on track. We are strategically recalibrating to diversify markets and enhance our premium product offerings. Exploring new opportunities and positioning satvish to capitalize on the Indian textile sector. Indian textile sector’s long term growth potential as market conditions stabilize. Thank you for your continued support. We now open the floor for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question may press star N1 on the touchdown telephone. If you wish to remove yourself from question Q, you may press star and two participants are requested to use answers while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. Participants may press star in one to ask question. The first question is from the line of Mahesh Shah from Star Investment. Please go ahead.
Mahesh Shah
Yeah, hi. Thank you for the opportunity. So just wanted to know, so with the US recently imposing a 25% tariff on select Indian textile exports, so how do you see this impacting Satlaj’s direct and indirect exports to the US especially for home textiles and yarn supplied to converters in countries like Bangladesh and Vietnam for example.
Ashish Srivastava
So I think if you look at Satlaj’s business model, I mean we are just making the value added yarn which is basically the dyed yarn which we supply to the exporter segment and which we also do for the domestic segment. Now as I said, as I mentioned that roughly about 65%, 60 to 65% of our business is in the domestic market which works mostly with the domestic brands and the production is consumed within there. In that there is definitely a segment of exporters which make use of these yarns to either do the knitting or other value addition and then export the apparel or the final product to different markets.
So only that segment is what is going to get affected as far as our supplies to Bangladesh is concerned or our supplies to other regions is concerned that should remain broadly non affected, so to say.
Mahesh Shah
Okay, thank you. Thank you. Understood. So apart from that, just on the other hand, so let’s say like with the India UK FDA now signed, so what kind of strategic or value upside do you anticipate from the UK markets? So particularly in the home furnishings where India holds such a strong position?
Ashish Srivastava
Sure. So I think UK offers a very unique opportunity and we need to kind of leverage the FTA which is the details of which is kind of getting unfolded as we move forward. We think that the whatever potential downside which we will see in us see, the challenge is not about the 25% duty. This challenge is more on the uncertainty. And we think that in about one or two months this uncertainty will come to an end. Once this uncertainty comes to an end, even US markets will start, the buyers will start placing more orders on India is concerned.
On the other hand, on the UK side we see for the Satlaj home business, big brands like Mnsom or a whole range of other customers, specifically increasing the sourcing from India and we as a company getting benefited out of it.
Mahesh Shah
Okay, got it. Thank you and best of luck.
Ashish Srivastava
Thank you.
operator
Thank you. The next question is from the line of Hari Kumar, an individual investor. Please go ahead.
Unidentified Participant
How are the company’s plans going towards the diversification towards technical textile? Sir?
Ashish Srivastava
So thank you, Mr. Harikumar. See, we are at this point of time putting together a strategic business plan where we are exploring which areas we need to focus on. And we are definitely evaluating different areas including technical textiles. And we will come back to you with a more clear plan possibly by the end of, by the end of this year. But we are evaluating all the options and technical textiles is one of them.
Unidentified Participant
Thank you sir. And the second question is regarding this yarn spreads, how are they? Are they comfortable right now? Sir? Profitable.
Ashish Srivastava
So I think there is a lot of pressure on the commodity yarns and that is kind of evident. What we do is mostly synthetic yarn and also the value added dyed yarn. So in these segments while they are precious, but they are the precious are not as much as let’s say in the, in the basic cotton or polyester yarns.
Unidentified Participant
And this best conversion server, the body conversion, is it remaining profitable? Sir?
Ashish Srivastava
Yes. So the fiber conversion is definitely remaining profitable. What we are again there looking at collaborations with different technologies where we can add certain performance aspects to the fiber. While we are converting the plastic to the fiber, we are in detailed talks with at least three of three of our partners. Where we become, where we do, where we impart certain functional finishes onto the fiber. And then obviously the whole, the whole utilization of it or the becomes very different.
Unidentified Participant
Okay, thank you for going there.
Ashish Srivastava
Thank you so much.
operator
Thank you. A reminder to all the participants, you may press star and one to ask question. The next question is from the line of Raj Tagore from Bavaria Capital. Please go ahead.
Raj Tagore
Hello. I’m audible.
Ashish Srivastava
Yes.
operator
Yes sir.
Raj Tagore
Yes. Thank you for this opportunity. So my first question would be online of the Bangladesh market as there were a lot of news about Bangladesh banning the imports of yarn from India and there is a potential shift of the imports from India to China. So are we analyzing any kind of potential risk in this and how are you planning to counter this?
Ashish Srivastava
So two things. First, Bangladesh. The ban was on the land shipment of yarn into Bangladesh. Normally the yarn used to take the road route through Benapol which was banned. Now all the yarn which is to go has to go through a sea shipment via Chitta bomb. Right. So that’s the band which has happened. Second is as far as, as I mentioned earlier, the pressure on the commodity yarn will become more and the cotton melange, the cotton dyed yarn variety is going to still remain lucrative for Bangladesh to buy from India. Having said that, we are exploring other markets oblique other products so that we diversify in any case including the newer markets of Latin America and all which are becoming more open as far as the functional yarns is concerned.
Raj Tagore
Thank you so much sir. And my next question would be on the lines of the volatility of the raw material prices. How are we seeing the price of the raw material in this quarter and are we expecting any stability in the trend in the coming year of FY26 and the future financial year as well? Can you shed some light on it?
Ashish Srivastava
Sure. So I think I’ll take it in two parts. One is the volatility in the polyester prices which is linked to the crude prices. So that is directly linked to how the crude moves. And basically we need to kind of index or kind of plan basis that on the cotton side what we hear is the crop is going to be good both in India as well as global. The Indian cotton prices remain to be a little higher than the international cotton prices. And in this year alone again the minimum support price has increased leading to some, I mean some increase in the raw cotton prices.
But we think that the price, I mean because the availability is not so much of an issue, the prices will more or less be range bound except for the increase in the minimum support price which is going to happen as far as India is concerned.
Raj Tagore
Thank you. So my last question would be on the lines of the cotton prices. As we all know that the international cotton prices are a bit lower as compared to the cotton prices available to us. So are we facing any potential pressure on our margins and are we taking any proper measures to mitigate this risk and you know, to improve our margins?
Ashish Srivastava
So yes, I think what your observation is absolutely right. The Indian cotton prices continue to remain a little higher than the international prices. We, we are evaluating or we evaluate from time to time, however, the cotton prices internationally when because of the duty structure and because of the landed cotton prices by and large come up similar. So to say. Having said that, we continuously explore options of buying reasonably good cotton from different countries to hedge the overall cotton price. And then in India based on, because we do mostly the blended yarns and not the 100% cotton gray in the mixing, whatever we can kind of work around is what we play to ensure that our mixing cost or the margins are kind of maintained.
Raj Tagore
Yeah, that’s it from my side. Like thank you for your time and all the wish for your future.
Ashish Srivastava
Thank you so much, Raj.
operator
Thank you. A reminder to all the participants, you may press star and one to ask question. The next question is on the line of Rishabh from Fino West. Please go ahead.
Rushab
Hello, Am I audible?
Ashish Srivastava
Yeah. Hi Rishabh, you are on audible.
Rushab
Hi. Hi. Hi sir. So thank you for the opportunity and I wanted to ask a few questions. But to start with if you can give me a rough figure about the raw material, how much it was imported and how much we have procured domestically. And how has been the trend of the cost? Were they higher in the quarter one or how was it compared to last quarter?
Ashish Srivastava
So 90% of our material, raw material is indigenous. You know, I mean we don’t, we don’t import that much, let’s say for the quarter except for from outside, except when it is specified for certain products by the customer. The pricing as I said the was volatile on polyester and on cotton. We have seen the prices have moved by about 3% from last quarter to this quarter.
Rushab
Okay, okay. And also I wanted to understand what is our long term strategy. So are we like focusing on reducing the dependence on low margin commodity yarns or are we planning to diversify into other textile segments like technical or functional textiles? Anything for sure.
Ashish Srivastava
So I think you know, I mean if we were to classify the yarns which we currently do, they will fall into three broad categories. One is the poly viscose or the poly viscose diet which goes into typically a suiting product. We have cotton and cotton melange which basically goes into the sweater industry. And then we have other synthetics which based on goes into different industry applications. What we are currently evaluating is industrial yarns. The application of this can be in different industries for different which get value added and can goes into different kind of industries.
We are evaluating the carpet industry which where certain specific qualities of yarn go as a carpet backing. And of course we are evaluating the FR yarns which is fire resistance, fire retardant yarns which goes both for application in home as well as frf.
Rushab
Okay, okay, understood. And my last question is on any, have we planned any capex or are we doing any Capex for current year?
Ashish Srivastava
For sure, I think we, we have planned based on the. So the capex is primarily on account of three buckets. One is the regular maintenance to improve efficiency. The second is on the machine upgrade and the third is investments which are going in newer categories of products. Currently in the first category, I mean we have overall capex number but you know it will not be right for me to kind of comment on that. But I can give you us a brief of how we are evaluating because the market conditions are uncertain. So on the Regular maintenance about 20% is what is going to go about the machine upgradation it’s about 40% and balance 40%.
We have kind of kept it for entering into newer product segments or newer categories. So that’s the kind of spread obviously the CAPEX decisions will be subject to. Subject to, you know, different other factors.
Rushab
Okay.
Ashish Srivastava
But definitely, definitely we have planned reasonable Capex both for growth and maintenance as we move forward.
Rushab
Okay, understood sir. Thank you for the all the answer and clarity. Thank you.
Ashish Srivastava
Thank you. Rishabh.
Sachin Karwa
Yeah.
operator
Thank you. A reminder to all the participants, you may press star in one to ask questions. Participants may press star and one to ask question is there are no further questions from the participants. I will hand the conference over to the management for closing comments. Over to you sir.
Sachin Karwa
Thank you everyone for your time and for attending the earning call. We will meet you back again for the Q2 update. Thank you so much.
Ashish Srivastava
Thank you so much. If there are any specific questions which you think have remained unanswered, you can always email it to us and we’ll be happy to engage with you one to one. There’s one more.
operator
The last question is from the line of Dheeraj Thakur from Elara Capital. Please go ahead.
Dheeraj Thakur
Hello.
Ashish Srivastava
Hi Dheeraj.
Dheeraj Thakur
Yeah, hi. Actually I wanted to understand that despite an improvement in utilization levels, volume have declined in this quarter. Has there been any change in the installed capacity?
Ashish Srivastava
No, I think in our initial commentary what we said is that we lost about close to about 15 to 20 days of production in one of our larger units which is based. Yeah, so it is primarily because of that. In spite of that loss. In fact that loss was almost about, you know, 18% of the total capacity. We still have been able to restrict the sales loss to about 12%. So.
Dheeraj Thakur
Understood, understood. And could you please share the export revenue split across the key geographies or major customers If Possible, sure.
Ashish Srivastava
So I think for the quarter one, 65% is what was going into domestic and 35% is in exports. In 35% if we were to look at roughly about 45% is going into Bangladesh and the balance is going into different other geographies. So Bangladesh still remains to be one of our dominant countries where we export. This is the direct and any rough.
Dheeraj Thakur
Estimate about how much is usa.
Ashish Srivastava
So you as I said again in the opening comment, directly we export. So yarn we don’t export, I mean very negligible amount which goes, except for that in automotive segment which are functional yarns but that the volume is very less. What we export to us is the home textiles. The home textiles. In the home textile there’s a reasonable, as far as exports is concerned, I think about 60% is what goes into exports to us but thankfully we did.
Dheeraj Thakur
Not see much of 35% goes to us.
Ashish Srivastava
No, no.
Dheeraj Thakur
Out of the total home textiles 60%.
Ashish Srivastava
So if you look at, I’ll just lay it down for you, 90% of our business is in yarns. Roughly about 10% is what is there in. Or 8% is what is there in home textiles. Of the 8%, roughly 60% is exports. So roughly 6.4% of our total volume is in exports. In that 6.4%, roughly 60% is what goes to exports, which is roughly about 3.5% if I hope my math is right.
Dheeraj Thakur
Got it, got it, got it. So US is very small component at the moment.
Ashish Srivastava
Yeah, as of now. But we are still looking at, you know, I mean how, how to even ensure that we don’t have distribution disruption because these are reasonably priced niche fabrics which go there.
Dheeraj Thakur
Understood. And one more question, is there, what is your current cotton inventory position? And also can you elaborate on your cotton procurement strategy like for, like for how many months we carry this job?
Ashish Srivastava
So typically we contain, we maintain a stock of about 60 days except certain months where because cotton is an annual crop. Right. So you know, averagely we maintain about 60 days to. From 60 days to 75 days based on how the forecast are, how the prices are moving and there is a robust sourcing strategy which is in place through which we constantly monitor and procure the raw material.
Dheeraj Thakur
Okay. So we carry the two months inventory in hand. Currently we would be having too much inventory at this moment as well.
Ashish Srivastava
Yes, give or take, you know, four or five days here in time.
Dheeraj Thakur
Also I based on the margin point. So what are the key drivers or initiatives which are there in place to improve the margins going forward and Additionally, why are the margins in home textiles relatively very low?
Ashish Srivastava
So I think in the. So two parts to the answer. Home textiles it was always the effort was always to build the business, you know. So now as the. As the utilization goes more our costs. So our gross margins are good but our final numbers on the profitability become less. So as we go forward, our order book remains quite healthy and you will see a reasonable difference in quarters to term Come. As far as the home textile business is concerned on the yarn business, as I said earlier, we are looking constantly looking to upgrade our product mix to move from.
We are looking at it from two lenses. One is the industry, the application industry and the other is how can we impart more performance or we can enhance more performance of the yarn by giving it a particular finish or playing with the fiber. So these are the things which we are kind of currently working on to ensure that we enrich our product mix and which will contribute better to our bottom line.
Dheeraj Thakur
Understood. So that, that answers my question. And what is the current utilization level for home textile?
Ashish Srivastava
So we are. So what we do. I think what we have. Let me just have a look at it segment wisely. So if you look at the overall capacity which is going only onto home textile is only about 40% balance. We are using it, but we are using it for processing. So it is not really value adding to the home textile. So there is a significant room for improving our. So out of the total capacity, how do we increase our share of home textiles in the process? That’s the effort which is currently on.
Dheeraj Thakur
So currently the utilization is 40%.
Ashish Srivastava
Yes. So capacity is utilized 100%. But what is going for home textile.
Dheeraj Thakur
Is only remaining is for selling of yarn.
Ashish Srivastava
No rest is going. So this is fabric processing. So this goes for job processing. So basically we are doing job work.
Dheeraj Thakur
Okay, okay, okay. So you take the outsourced work.
Ashish Srivastava
Yes, got it, Got it.
Dheeraj Thakur
Perfect. Perfect. So yeah, that answers all my questions.
Ashish Srivastava
Thank you so much for answering.
Dheeraj Thakur
Yeah, yeah.
operator
Thank you. A reminder to all the participants. You may press star in one to ask question.
Ashish Srivastava
I think if there are no more questions we can possibly end this call. Thank you everyone once again and we look forward to interacting with you in the next quarter. Thank you.
Sachin Karwa
Thank you.
operator
Thank you. On behalf of Suitlase Textiles and Industries Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you. It.