Good morning, Sir. Thanks for taking my questions. I got a few of them. First on the Q1 number, just wanted to understand the underlying growth because if I adjust for the currency depreciation because we now have a very large international business, which has a translation gain and the price increase because of the raw material inflation, it appears that this quarter at least the underlying volume has declined? In this backdrop, we are expecting a very solid growth over next two years, which is over 20% growth at the lower end of the guidance, now, what gives us the confidence that being a number one player we will grow at least 2 to 2.5x that of an industry growth rate while this quarter implies some decline in the volume? That is my first question.

Firstly, I think, great question. I would say that the inference that the volume as a decline may not be very accurate given a very broad spectrum of our product range. We sell our product range from €1 to €130 to €140, we are not able to kind of set that aside; however, given that we have seen a modest growth of 6% this quarter in spite of the geopolitical situation. We must remember that last year Q1 included a lot of sales from the March onwards when we have taken over the business because on the acquired entity we were doing live with some of the SAP areas, so the growth is better than that. What gives us confidence in delivering both growth and EBITDA, I would say, let me talk about first EBITDA. As I mentioned, it is a lot of value capture still coming in. We have not seen the full value capture into the numbers and that journey will continue and that is completely in our control. In terms of growing of the business, this is a business which has lost a lot of business and we are looking to recover the business, so we are not saying that we will try and grow completely out of line, etc., but there is a lot of scope where we can retain some of the lost business. The business was lost because of various reasons, lack of focus, the insolvency issues, etc. So, this gives us the confidence of why we would deliver robustly.

Got it, Sir. Sir one related question to this, you said that there is a lot of value yet to be captured. When you talk about the value these are the cost efficiency benefit and if it is then how much of this journey from 800 to 1400, 1500 will be led by the revenue growth and how much of it is the benefit of the value capturing that we are talking about?

I think the numbers are very clear. Substantially, this would come from cost reduction or value capture.

My second question is on the capex plan. We have a large capacity can you help us in terms of where are we in the utilization cycle and do we envisage any large capex requirement either from a product development category, new product or backward integration that we foresee in the next 12 to 18 months?

From a volume perspective, we do not need any new capex we have enough capacities to grow on the numbers which we have indicated; however, we are looking at some special initiative, either backward integration or special projects and these are determined by the ROI and if the return is good we are going to do this. We do not expect any substantial there would be some moderate capex.

Got it. One last question on the gross profit margin. This quarter we did probably one of the highest margins which is 54% how do we see gross profit margin and was there any benefit of lower inventory, which we were carrying, which may normalize going in next one to two quarter and what would be the impact if raw material prices start reversing again and there have already been approved prices which have fallen down substantially from the peak?

So actually, if you look at the business gross margins, the gross margin will not be that high. Now the gross margin movement from last quarter to this quarter on a basis will be about 2%, out of this 2% movement I would attribute this to kind of looking at some cost reduction areas, which have come in yields, in utilities, production, etc., and there is a very minor, I would say, one-off areas. So I would say that we should continue to be in the range of 50% plus of gross margin.

Thanks. Just one question to add here.

Just a request, would you like to please rejoin the queue, if you have any follow-up.

I will come back in the queue. Thank you, Sir. Thank you for answering all the questions and best of luck for the coming quarter.

Thank you, Sanjesh. We will take our next question now. Before that just to remind all the participants please restrict to two questions each and then return to the queue for a followup. We have Ankur Periwal of Axis Capital. Ankur, please unmute your microphone. Yes. Please go ahead.

Thanks for the opportunity and congratulations on good set of numbers. First question is on the guidance. Now, while we are building in 5% to let us 7% sort of a revenue CAGR depending upon the range that we are looking at over the next let us say two to three years how much of this will be volume and how much of this will be value? Value could be here, more premiumization, etc., and related question on the margin side the synergy benefits of the value capture that you mentioned is still pending, over what timelines are you going to achieve that, is it 2028 only or probably it will sort of flow through in 2029 also?

As I described, our product portfolio is very complex now. Like we have said, we sell our product which is €1 and we sell our product which is €130, so cost looking at either value growth or volume growth, will not, it is important that we grow and the growth is profitable. The growth should not hamper our gross margin and that is what we are really focused on here so that is the first area. The second is the value capture will be continuous, we will be delivering more value capture in terms of FY2027-FY2028, major portion will be FY2027- FY2028, some will be, of course, some of the 2028 value capture will also flow into the 2029.

Sure, Sir. Thanks for that and a second question on the balance sheet side on the debt repayment. What are our plans on the debt repayment side, given that, a lot of debt also sits on the global side and, secondly, on RIECO, earlier, we had plans to hive off that business, any revised thoughts on the same? Thanks.

The acquisition debt what we had availed, very small part of it we have prepaid and we will be repaying some of the loan. As our net debt position is improving as visible in the presentation, we think we will be able to accelerate the payment of the acquisition debt. On RIECO, the first quarter, we had faced certain execution challenges primarily because some of the subcontractors have faced difficulty with labor availability. We expect the things to normalize from the current quarter onwards. We are confident that before the year end it will be posting a positive number that is the work that we are trying to do.

Summary is that a transformation of RIECO will continue and we will continue to see how we can get the better numbers.

Sure. Thanks a lot and all the best.

Thank you. We have our next question coming in from Rohit Nagraj of 360 One Capital. Rohit, please go ahead.

Again, on the guidance front, given that for FY2029 for the consolidated business we have significant improvement from FY2027 to FY2029 almost 16% to 17% CAGR at the higher end and on the EBITDA front also it is closer to doubling, on the EBITDA front do we expect that the acquired business will have margins of almost touching to double digits and historically have they anytime done that? Thank you.

Historically they did do double digits always consistently and as I described the journey to the earlier question was on the sales side we are looking at a lot of business regain and on the EBITDA side we are looking at a lot of value capture initiatives. For FY2029, we have been holding this from day one this is not a new guidance.

Right. Got that Sir. Sir second question is, in the last three to five months have we taken any material price increases and have they been completely absorbed, obviously there will be an element of the RM cost inflation, but we do not expect that the pricing should again correct and that may lead to some impact on the margins?

I did not follow your question, Rohit.

I will repeat it. Thank you. So in the last three to five months in our portfolio have we taken any price increases across our product portfolio, obviously there will be one element, which will be because of the input cost inflation and another element could be from the demand supply dynamics is it that these prices will sustain going forward or if the demand supply situation again gets impacted we will have to reverse a part of that? Thank you.

So most of our price increases right now have been only to pass on whatever cost increases we have experienced. In order to build a trusted customer we have been very particular not to take any advantage of the demand and supply situation, so if the raw material prices kind of soften, etc., oil prices soften etc., at that point we will only reverse some of the pricing.

Sure. Thanks a lot. All the best.

Thank you, Rohit. We will take our next question now. We have Nitesh Dhoot of Anand Rathi. Nitesh, please go ahead.

Hi, team. Good morning and congratulations on a good set of numbers. My first question is if you could lay down the strategy behind acquiring the 70% stake in Sudarshan Colorants from the overseas subsidiaries what is the rationale behind that? Is it like any cash transfer that we are probably looking at from the parent to the European entities for any deleveraging purpose or what exactly is the thought process behind that?

So, this decision that it was envisaged right at the beginning. At the time of acquisition, we have gone for indirect acquisition that is because of financing reason, it became simpler to acquire this entity through its earlier holding structure, but that time itself it was a plan that eventually we would like to hold these shares directly from Sudarshan Chemical and we are now just carrying on. It is only within the group holding structure rationalization, which was planned earlier itself. There is nothing further to that and we do not see this will have any impact on the business.

Alright, Sir and my second one is, if you look at the notes to the consolidated financial results, note number nine that is after June 30, 2026 a wholly owned subsidiary signed an agreement with an employee representative body for an employee restructuring program and the impact

has not been quantified, so is that a European Works Council deal and does it mean that a restructuring charge is coming up in Q2 or Q3 and if that is the case how much would that charge be and whether that is built in your EBITDA guidance for FY2027?

As it was mentioned in the note, right now the quantification was not possible. By the end of Q2 I think we should have clarity on the quantification of this. As of now, we cannot provide anything more than that because the numbers are quite fluid, so by next quarter, we will be able to provide some more color.

Alright, Sir. Thanks a lot for answering my question. I wish you the best for the coming quarters.

Thank you, Nitesh. We have Archit Joshi of Nuvama with his question now. Archit, please unmute your microphone.

Good morning, gentlemen. Thanks a lot for the opportunity. Sir, if you can share your thoughts on the four key application areas industry wise that we cater to, your outlook on that from a near term perspective, how we are seeing demand and let us say paints, packaging, plastics, inks and some of the other specialty applications that you have started to cater to now, especially after the Heubach acquisition? So, your thoughts, Sir.

If you look at the coatings market, the current situation in US, both the decorative market, which is the house paint market and the automotive have been subdued and both in US and Europe perspective. If you look at plastics, this is probably short term, given the whole geopolitical situation there has been a substantial increase in polymer prices and that is where I think our customers are running, the whole value chain has tied up they do not want to keep high cost inventories and, there is a hand to mouth kind of supply situation and that is why you see the cycles in plastics. In printing inks, the volume driven printing ink has been a little bit on the decline market in general as a long-term trend given the digitalization, so the volume driven market has declined; however, some of the specialty markets where there are stringent regulations for packaging, etc., that market has been on that spectrum. We have kind of divided it into special applications, which is several applications there, which is agro, which is digital inks, etc., that market we are seeing very good growth.

Got it Sir. Sir my second one on the RM basket, prior to the acquisition a few important RM that we used to track as analysts like Beta-naphthol, 2B acid, 4B acid, firstly how are they placed in terms of the existing supply chain and after the acquisition how has your RM basket widened, which would be the critical raw materials that would be requiring now, let us say for the specialty pigments or even if we have broadened our azo pigment portfolio, so if you can share that would be really helpful? Thank you.

I think we look at various categories of raw materials. So the categories would not have changed, like for example, let us say benzene, toluene, acetic acid or analyte driven, nicotine driven benzene. So I think what a prosperous driven market or categories, but what has changed in our product mix, azo is good but I think high performance has grown substantially and our pigment dispersion business has grown substantially and that those categories then become more important.

Sure Sir, would the same RM be used for these azo and specialties would that be a fair assumption?

No, they are different.

So those are also certain special polymers or something that you would require, if you can name that will be really helpful to track the underlying RM?

It is like phosphorus driven category becomes important there and then there are very specific categories, which we can share with you offline later.

Sure that works Sir. Thanks and all the best for the coming quarters.

Thank you, Archit. We have Rashmi Gohil of Arihant Capital with a question. Rashmi, please go ahead.

Good morning. Thanks for giving me this opportunity. Q1 revenue analyzes to roughly Rs.10,600 Crores, which is already above the top end of your Rs.9800 to Rs.10,200 Crores FY2027 guidance while business EBITDA margin 9.4% is running ahead of what Rs.800 Crores EBITDA, which implies on that revenue base, are you reaffirming FY2027 guidance as is, or is there upside bias and how much of this Q1 strength was one-off?

Madam, great question from your side, but as I mentioned that I think our results are solid, there are not many one offs, there may be a few areas, and that is why we are bringing out the business EBITDA from that perspective. However, as I said, given the current geopolitical situation, we want to do a wait-and-watch look at how Q2 comes out and hence we are not revising our guidelines currently. We will revisit this at end of Q2.

For our guidance which we have been given, I do not think the guidance would be 15% but the area where we would want to look at how far the acquired group is in high single digits or low double digits.

Thank you so much. All the very best for the next upcoming quarters.

Thank you, Rashmi. We will take our next question now. We have Gaatha Jain of Monomer Capital. Gaatha, please go ahead.

Thank you so much for the opportunity. I am a little new to the Company, so my question might be very basic. I just wanted to understand the contract part of our business, how do we have the contract with our clients, is it like a long-term contract or a short-term contract and are we able to pass on the raw material prices in terms of contract?

With your questions it does not seem you are new to the Company I think great questions. I think our business is quite a repetitive business, so to change any of the pigments in the coating industry is a substantially long period and it will depend from customer-to-customer but it may take anywhere between one to two years and if it is automotive paint it would even take five years, so that way it is a sticky business. Generally what we like to do is we would love to negotiate quarterly prices with our customers and in a steady state of the business that business kind of flows in, but when there are these current ups and downs in the geopolitical and raw materials move, and costs move, we look at passing on those increases.

Alright. Thank you so much. That is all from my side.

Thank you, Gaatha. We have Pratham Kankariya of Quantum AMC Private Limited. Pratham, please unmute your microphone.

Thanks. Sir, just one question. So, India business has grown much faster, so in past you have mentioned that you would be transferring some products from the Germany base to India base, so is that the same effect which we are seeing in the India business?

There is some business which are intercompany businesses do, which we have gained from that perspective, so partially that is correct. Either we have been producing here and selling in and vice versa, so it does have that impact.

How should we see margins going forward assuming there might be some gain with the low cost inventory that we had on raw material basis?

Thanks.

Thank you, Pratham. We have Viraj Mahadevia of MoneyGrow with his question now. Viraj, please unmute your microphone.

I am new to the Company but congratulations on an astute bit of deal making here with Heubach. Quick question, Sir. Before Heubach started its troubles a few years ago it used to be a billion euro topline business, Sudarshan more recently has done Rs.9000 Crores in topline, so the combination of the two do you see a more aggressive growth, revenue growth going forward as you can build effectively another Sudarshan out of this acquisition in terms of topline or are you being more selective and measured in your revenue growth because you are cutting off unprofitable some business or you have excessive China competition in certain product lines, can you give us some view around why the revenue growth will not be more aggressive in the next two to three years?

Great question, Sir. If you look at Heubach, Heubach was made of two companies that is Clariant and the Heubach business. That was integrated and you are right it was about EUR one billion , but I think as soon as the integration happened a lot of business was lost and that is where I think when we look at our projections what we are looking at is given our current market share it is difficult to grow beyond what the market size is going, but we have put in a lot of numbers here because we believe there is a substantial opportunity in capturing lost sales and that is where I think we are looking at it and I think from EBITDA perspective, also looking at how do we reduce costs and ensure that there are lean operations that is where I think we improve the EBITDA margins.

Yes, Sir I agree on the cost side and the synergies and China plus one coming from India, but on the revenue side itself even if Heubach was doing Rs.5000 Crores equivalent of revenue after the acquisition that leaves substantial growth to potentially to recapture some of that lost business is that on the agenda because you should be able to grow your market share faster than the overall market?

Absolutely, Sir and that is where if you see a slide number nine, that is where I think we have done our projection on the investor deck from that perspective, where we said we could reach Rs.12,000 Crores plus.

Thank you so much. Requesting participants to please click on the raise hand icon from the participants tab, if you wish to ask a question. Any participants? Alright. So, ladies and gentlemen we will take that as the last question. I will now hand it over back to the management team for their closing remarks. Over to you, management team.

Thank you. Thank you, Ranjit and IIFL Capital and thank you participants for joining our quarterly earnings call. We remain confident in our journey going ahead and looking forward to interacting with you in the coming quarters. Thank you.

Thank you so much. Ladies and gentlemen, as there are no further questions on behalf of Sudarshan Chemical Industries Limited, that concludes today’s conference call. Thank you all for joining us and you can now click on the leave icon to exit the meeting. Thank you all for your participation. *****