Key Financial Figures

  • Q4 FY26 Reported EBITDA: INR73 crores
  • Q4 FY26 Business EBITDA (adjusted): INR118 crores
  • One-time purchase price allocation credit: INR37 crores (non-cash gain)
  • Release of inventorized overhead due to inventory reduction: INR82 crores
  • Net debt reduced from INR934 crores (Dec '25) to INR755 crores (Mar '26)
  • Net debt-to-equity ratio: 0.3x
  • Acquired group inventory reduction: EUR 29 million in Q4 FY26
  • RIECO revenue growth: 17.5% YoY to INR268 crores in FY26
  • RIECO EBITDA turnaround: from negative INR17 crores to positive INR10 crores

Integration and Operational Updates

  • Integration involves three companies: Sudarshan, Heubach, and Clariant (Heubach-Clariant integration was incomplete)
  • 19 manufacturing sites globally across 11 countries and 5 continents
  • Over 50% of manufacturing assets based in Asia
  • Serving 4,000+ customers in 100 countries with 1,600 products
  • One SAP Drive project "Integra" launched to integrate 4 systems and 180 applications by year-end
  • GCC (Global Capability Center) setup in progress, expected operational in 6-8 months
  • Customer trust rebuilding efforts resulted in "Best Supplier of the Year" awards from several customers

Guidance and Outlook

  • FY27 EBITDA guidance: EUR 35 million
  • Medium-term guidance (3-4 years): EUR 90-100 million EBITDA
  • Legacy Sudarshan business expected to deliver 8-10% growth in FY27
  • Target additional inventory reduction of EUR 15-20 million in FY27
  • No capacity constraints expected for growth projections

Challenges and Risk Factors

  • Middle East crisis impacting petroleum-derived raw material costs (price increases and supply constraints)
  • Energy costs significantly increased
  • Logistics costs and returns increased
  • Customers exercising caution in inventory building due to geopolitical uncertainty
  • US housing market and paint market showing weakness

Q&A Session Highlights

  • Inventory reduction program: EUR 29 million reduced in Q4, targeting EUR 15-20 million further reduction
  • Debt repayment: Acquisition finance has ballooning schedule, first repayment starts in current financial year
  • Supply chain: No material challenges faced despite geopolitical situation
  • Integration benefits: Expected to materialize over next two financial years
  • Demand recovery: Q4 growth was volume-driven (not price increases) and broad-based across regions
  • Depreciation: Q4 reduced to INR50 crores due to purchase price allocation adjustments (annual run rate INR347 crores)
  • Capacity utilization: Enough headroom available in both legacy and acquired businesses for growth
  • Gross margins: 4-5 percentage points difference between legacy and acquired businesses due to product portfolio and fixed cost structure
  • Non-core assets: Exploration of disposal opportunities at initial stage
  • Industry growth: Typically 3-4% globally, aligned with regional GDP growth

Capital Structure Impact

  • Net debt reduction of INR179 crores in Q4 FY26
  • No immediate capital requirements for growth projections
  • Balance sheet maintained at healthy levels comparable to pre-acquisition debt levels

Participants

Management: Mr. Rajesh Rathi (Chairman and MD), Mr. Nilkanth Natu (CFO), Mr. Amey Athalye (GM Finance)

Moderator: Mr. Ankur Periwal (Axis Capital)