India Ratings assigns Sutlej Textiles and Industries ‘IND A+'/Stable -; its CP 'IND A1+'

14 Mar 2022 , 03:16 PM

India Ratings and Research (Ind-Ra) has assigned a long-term Issuer Rating of IND A+ and Commercial Paper (CP) rating of IND A1+ to Sutlej Textiles and Industries Limited. 

The credit rating agency has assigned IND A+ / Stable rating on the company’s Term Loan. On fund-based working capital limits IND A+ / Stable / IND Al + rating has been assigned.

Ind-Ra assigned IND A+ / Stable / IND Al + rating on non-fund-based working capital limits and Commercial Paper (CP) at IND Al+.

The ratings reflect Sutlej’s established position in India’s value-added spun-dyed yarn industry and strong clientele. The rating is further supported by an improvement in profitability on account of an improvement in the gross margin, supported by an increase in realisations as well as structural changes in costs by way of rationalising the manpower and energy costs, and reduced dependency on outside suppliers for its polyester staple fibre (PSF) requirement.

The ratings are also supported by the company’s adequate liquidity position and an improvement in the credit metrics in H1FY22. However, the ratings are constrained by the company’s loss-making Home Textile division, exposure to volatility in raw material prices and inherent textile industry risks.

Towards close of trade on Monday, Sutlej Textiles and Industries Ltd was trading at Rs71.90 per piece down by Rs1 or 1.37% from its previous closing of Rs72.90 per piece on the BSE.