Wait one minute.

Thank you. Thank you 360, 360 ONE Capital Market Research and Rohit Nagraj ji specially for hosting our investor call.

Happy Dhanteras to all of you all, and we've just declared the results today, and I'm very glad that we had a good quarter, and very glad to present the results to you all. Please shoot.

Continue. As all of you all are aware, we've integrated two entities, Clariant Heubach legacy and Sudarshan legacy, and today we are one Sudarshan, one of the most value-adding pigment player rooted in customer-centricity, innovation, and agility.

To give you an integration update, as we had mentioned last time that we've been focusing on innovation, and this is just the start, and we are doing several areas where we are working on heavy-metal-free dyes, bringing in new innovation to high-end industries like cell phones, digital inks, right. We are working on recycled plastics, colors for recycled plastics, agro, etc., and our innovation update has been very good.

The second important aspect has been that there was a toll manufacturing agreement with Clariant for manufacturing aluminum dyes, and we've signed definitive agreements to get this manufacturing business, and we expect to close this early next year. On the VP4, we sold one of the raw materials which we were producing a small amount of that raw material was used by us, but otherwise that majorly the raw material was going to one of our customers, and we sold this business to the customer.

We've closed this deal on November 2nd at a value of 75.8, and we've received all the funds, and all the carve-out activities have been successfully completed. From a value capture perspective, we continue to focus on deriving value capture, reducing costs.

The fifth is as one Sudarshan integration, one of the important aspects has been the culture and system integrations, and system-wise we were using four SAPs. We were using 130 different applications.

We are integrating these into one, and we'll have one system going live. We've gone live on wave one, which includes Sudarshan legacy and Heubach India legacy, and on the other aspects we're making good progress, and I will talk a little more as we go ahead.

As I spoke about innovation to all of you all, we've launched several products into the cosmetic, cell phone industries, and also recycled plastics, right? As I mentioned, this is just one sign to show you all that we've reopened the innovation pipeline.

Yeah. In terms of aluminum dye business, as I mentioned, this business serves consumer goods and architectural coatings, and we are at a toll manufacturing agreement which we've signed definitive agreements to get this manufacturing site.

VP4, as I mentioned, we've closed the deal, and we've received 75.8 million, which these funds will be used to reduce the debt of the company. Talking about the performance of the company now, generally, if you see, the overall US housing and European construction are still weak.

The masterbatch, because of the volatility in oil prices and hence the polymer prices, the masterbatch demand has been very volatile. This has been one of the areas to kind of and challenges external challenges for us external, I would call, headwinds for us to kind of look at this, right?

Some of the indicators have been positive. European manufacturing index has moved positively, and certain raw material prices have stabilized.

We expect signs of demand uptake towards Q4, maybe not right away. We have to ensure that we are regaining some of the volumes.

In terms of the pigment performance, Natu ji will take us through the details, but how we've organized this is legacy Sudarshan, acquired group, and the pigment total global business, and Natu ji will highlight some of the areas and performances. Yeah.

Nilkanth Natu (CFO): Thank you, sir. For the quarter two, financial year '27, the quarter under review, the legacy Sudarshan pigment business revenue from operation is at ₹821 crore compared to ₹730 crore Q1 of FY27 and ₹651 crore of the last year.

The EBITDA is at ₹128 crore for the quarter under review, and the EBITDA percentage is at 15.6%. For the acquired group, the quarter under review shows the consistent performance in terms of the revenue.

The revenue is at ₹1,962 crore and with ₹112 crore EBITDA for the quarter. Total pigment global business for the quarter shows the revenue of ₹2,695 crore and with the business EBITDA of ₹242 crore compared to last year same quarter of ₹2,327 crore of revenue and with ₹90 crore of the EBITDA.

It shows a good upswing compared to the last year Q2. This is a bridge between the business EBITDA and the reported EBITDA for the acquired group.

The business EBITDA is at ₹112 crore, and there has been the inventorized overhead from increase in the stock, which is of ₹22 crore, and the reported EBITDA for the quarter for acquired group is at ₹134 crore. This is a pigment performance for the first half of the financial year.

Just to take couple of key numbers, revenue from operation for legacy pigment Sudarshan business is at ₹1,551 crore, shows the growth of 26%, and business EBITDA is at ₹255 crore compared with ₹172 crore last year, and the percentage is at 16.5% for the first half of the year. Acquired group revenue for the first half of the year is at ₹3,935 crore, with business EBITDA of ₹240 crore, and the EBITDA percentage is at 6.1% compared with the last year of ₹3,565 crore of the revenue and ₹70 crore of the EBITDA, which was at 2%.

The RIECO quarter RIECO performance for the quarter 2 FY27, the revenue from operation is at ₹47 crore. Company is facing execution challenge due to the supply chain bottleneck, which is internal.

For the first two quarter, we had seen the performance subdued. The EBITDA for the quarter is negative ₹3 crore, and for first half of the year, the revenue is at ₹85 crore with negative EBITDA of ₹13 crore vis-a-vis the last year of ₹111 crore of the revenue and ₹6 crore of EBITDA.

One of the reason for this performance also is execution challenge, as I mentioned, which has reflected in the revenue, and two late-stage projects have seen the cost overrun, which have been fully accounted during the quarter. This is one Sudarshan performance, and one Sudarshan performance includes RIECO performance as well.

Legacy Sudarshan includes RIECO performance. The key number is revenue from operation is at ₹868 crore versus ₹712 crore of the last year, and the business EBITDA is ₹126 crore compared with the ₹91 crore of Q2 last year and ₹118 crore of Q1 '27.

No change in the acquired group numbers. For the half-yearly performance of one Sudarshan including RIECO, the legacy Sudarshan business revenue is at ₹1,636 crore versus ₹1,340 crore revenue last year H1, a growth of 22%, and the business EBITDA is at ₹243 crore versus ₹178 crore last year, shows the healthy improvement in the EBITDA.

No change in the acquired group for H1. In terms of the financial ratios, the earning per share for first half of the year is 26.2, which is before exceptional expenses.

Return on capital employed is at 22.6%. Net debt to equity shows healthy ratio of 0.2.

Net debt is at ₹580 crore, and net working capital is at 25.3%. The key balance sheet ratios show significant improvement.

One of the areas where management will be further focusing on is on the net working capital efficiencies to drive in the coming quarters.

I think just to kind of caution that in November we've received the money from the VP4 sale, so that's not included in this, right? You want to clarify?

Yes. This ₹580 crore net debt number is the position as of September end.

We have closed VP4 deal, and the funds has been received on 2nd November. This particular amount which we have received is not included in the net debt.

Thank you.

In terms of the outlook, I think Sudarshan has completed a strong H1 with healthier profitable and momentum as one of the largest global pigment platforms backed by a very broad technology depth and a global footprint that supports supply resilience, right? With this, given the external situation is very challenging, we are cautiously navigating a challenging market environment given the geopolitical uncertainties, the raw material costs, the logistic cost increases.

At the same time, we are winning back trust of our customers and some of the lost sales. Once the external environment improves, I think we should have a better revenue growth to, right?

The third focus remains the SAP integration, a major challenge before us, and we expect to complete this by mid next year, right? We want to reaffirm strongly our guidance for the acquired group, €700 million and €35 million of EBITDA.

Thank you.

I hope I'm audible.

Yes.

Hi, team. Good evening, and congratulations on a good set of numbers.

My first question is, sir, how much of this improvement coming through on the revenue side is from volumes, and how much is because of the price pass-throughs? Related one is, have we been able to gain back some of our lost market share during the previous Heubach-Clariant period, or it's still underway?

I would like to divide your question. When you look at Sudarshan legacy sales, there were three aspects, right, from it.

As we were going live on SAP, from a Sudarshan perspective, we had requested customers to buy material and keep as during the first October week, we were going live. Certain sales got booked in September, right, of which could in a normal course of business would have been October.

The second piece is, of course, there is a volume growth, and I would divide it into half and half, right, from that perspective, given this other factor not being there, and the rest is volume growth. On the acquired group, we have some volume growth, muted volume growth, but rest is all price increase.

We have been able to gain business and trust of all our global key accounts, and several of the businesses are coming back to us. Of course this a ongoing process, but we are well on that track.

Sure, sir. My next question is on the EBITDA guidance for the acquired group.

So €35 million is what you had guided for full year. I think we're already two-thirds are done, but we still haven't upgraded our FY27 guidance.

Any particular reason for being conservative here? Are we looking at a probably a weak quarter ahead, repeat of Q3 last year, or what really is the reason?

Allied question to this would be that the VP4 sale, where we're having to give up EBITDA, is that also getting accounted for in this retained guidance?

In the retained guidance, we've taken that into account that the VP4 share is gone. I think Q3 Q3 last year was quite a subdued quarter.

We don't expect such a subdued quarter this quarter. We're tending cautiously because this is the first normal Q3 quarter, right, which we are going to experience as we've acquired this business.

Hence we're keeping the guidance as today.

All right. Just a connected question to this, just a clarification, not a question exactly, but so the captive use for this VP4, it was mentioned as 5% earlier, but your November deck, your current presentation says it's about 10%.

What is the correct number there if you could just clarify?

Nitesh ji, it's between 5% to 10%, I think a very low amount depending on the demand situation, right? The matter of fact is it's quite low, right, in the single digit.

Sure. Sure, sir.

Thank you. Thanks for unmuting.

Good afternoon, sir. Thanks for taking my question.

First question, again, on the revenue growth. How are we looking in terms of product portfolio on the R&D side, the pipeline of product, and what gives us a confidence that we will be able to accelerate growth, say, in CY27?

Sanjesh ji, I think, as we've explained, we have a very broad portfolio of products, and what we're doing is we are leveraging, our technical marketing and innovation teams to work very closely with customers to come up, and I just gave you a glimpse of some of our new launches which we've just done, right? Which gives a flavor of how the engine has started moving forward, right?

What gives us the confidence is, I think, given the external situation normalizes and the demand returns, I think we've been able to win back a lot of trust with the customers, and this will give us this will give us, some room of growth coming forward.

Can you help us understand geographically, because now we are a global player, which are the geographies where we are seeing a traction, where we are working very closely with the technical team? What kind of the application are we looking at where we are seeing early sign of deal wins and new contracts or any inquiries coming in?

I think, Sanjesh ji Sanjesh ji, I think one area we were working on is a lot of lost business, right? Lot of lost sales.

These were global key accounts who are mainly based in Europe and US, right? Of course they have a global presence, and they have a global demand, but I think their key contacts are based there, right?

This is one area where we've worked very closely together. This is across industries, but I would say the main industries which is giving us this demand is coatings and digital inks, right.

Coatings and?

Digital inks.

Digital inks. Okay.

What are the areas where we have lost the sales during this transition, and which are the players who have gained, and what gives us confidence that the customers will come back?

We lost business across industries, and again, this is lost across it's not a concentrated portfolio where one or two suppliers have gained in, right? It's been a loss across.

What gives us the confidence is we've already seen some of this business come back, right? It's not just talk now, right?

We are seeing some of the business come back. I think to the fullest extent would take some time to kind of build that up.

One one one last question from my side before I come back on the queue. Now we are trying to be a more cost-competitive player, working on the innovation of the European player and having the learnings of India cost structure.

Are we trying to place ourselves as a value play or an innovation play when we go to the customer?

I think there are two parts, right? I think, one is bringing innovation to the customer is an important part of bringing back the energy back in the relationship.

The matter of fact was that we had a very high fixed cost, which we needed to shed and which would improve our performance, right? These are the two aspects.

Are we taking cost as a play?

Sorry?

Are we taking cost as a play to win back the customer? Now that we can play around with it?

No, no, I don't think that's our saying that our drive towards the customer saying that we are cheap and buy from us, right? I think some areas where we're not cost-competitive at all, we're trying to reduce our cost.

I think the cost play is more to improve our own performance, right, than gain back share.

Got it, sir. Got it.

Very helpful. Thanks for answering all those questions, and best of luck for the coming quarters, and happy Diwali, sir.

Thank you, sir. Same to you.

Thank you, sir.

Hi, Mr. Rathi.

Congratulations on the transformation journey of the group. A couple of questions from my side.

One is, in your current results, you announced a ₹74 crore employee restructuring in Germany. Can you give us a little bit of more detail around that?

What does that entail? Is it largely plant labor, headcount?

What are the other kind of costs? How much will be the annual savings coming out of this restructuring exercise?

Thank you, Viraj ji. I think this is related to the earlier announcement which we had made regarding reducing the headcount in Europe.

This are mainly related to all the support functions, right, not the direct manufacturing functions. The savings should be similar or slightly a higher amount than this per annum.

Fantastic. That will start reflecting in Q3 itself?

No, no, no. It will take one year, because the agreement is by this financial year-end, by then people will go away.

Start going away. Gradually come in over the next one and a half year, sir.

Understood. Understood, sir.

Excellent. Sir, my next question is, if I look at the group now, after the VP4 divestment, your net debt as of last quarter was ₹500-odd crore.

You sold this business for ₹800 ₹850 crore. You're acquiring a small business, potentially, for 7 million CHF.

You should be meaningfully net cash by the year-end. Given that the steady build in the business and the operational synergies, the business should be generating cash flows, meaningful cash flows in '27 and especially in '28.

Given the lack of future capex investments, given that now you have a global footprint and all these plants, has the promoter group considered doing company buybacks, given the low promoter shareholding and the attractive share performance in terms of value?

Viraj ji, I think not the promoter group, but I think, as a board, we're looking

As a board, yes.

As a board, we're looking at all options and what makes sense. More importantly, I think the board is also trying to look at saying that how are we going to use this cash so that we are able to give a better return to our shareholders, right, for the future?

That thinking, parallelly though we were first waiting that the full transformation has completed and then we start thinking about it, but the board has been pushing us to actively look at the right usage for the cash for the future. We will, probably in a year's time, we will have a full-fledged plan on how we will actively look at this too.

Understood. Thank you very much.

I'll get back in the queue.

Thank you, Viraj.

Hello. Thank you for the opportunity.

I just wanted to ask, have we considered a merger with Sudarshan Colors, we can simplify our corporate structure instead of having two listed entities, operate as one, and do away with the minority interest as well?

Gupta ji, I think there are several aspects which the board is looking at, but given that there are too many moving parts, I think we will come back to this in some time. Currently, I think we are looking at how to improve our operations, how to integrate our systems, etc., and then look at some of these structural changes.

Got it.

Hi, thank you for taking my questions. Sir, the first question was under the previous private equity ownership, were there any key business areas which were really underinvested in the business over a span of three, four years in which we need to now correct?

If you could give some color on what they were?

Can you repeat your question, sir? I didn't follow you.

No, no. I was checking, before we acquired the business, global business, right, it was private equity-owned, right?

I wanted to understand, were there any business areas where they were underinvested?

I think Heubach was yes, owned by private equity. I think there was several lessons and learnings for us that I think the integration between the two entities had not happened, but before that also, I think the investment in innovation, etc., had stopped, and technical investments in the business had stopped, which we have rewired.

There was also a lot of overhead of which we've tried to reduce and streamline the org structure.

Okay. In the current org structure, sir, the key leadership roles for the acquired group, do we have to refill many of these roles?

Have those people left, or you have seen reasonable continuity in the positions where you wanted it to be that way?

What we've done is, sir, we've integrated the organization into a functional organization across legacies, right? We've ensured that we have a lean structure, but the competency is not lost.

Exactly as per design, we've been able to reduce a lot of overhead and fat from that perspective.

Manjeet Buaria: Sure, sir. I understand the excess sort of people not being there.

I was asking more in terms of the people you wanted to retain in leadership roles. Do you have to take them from India, or do you have to hire for those roles, or the people who were there erstwhile organization, they've continued with us?

We worked on a meritocracy basis. We have a functional organization, and whether the functional head sits in India, Europe, US is irrelevant, but I think we've chosen the best so from that perspective.

We've been able to retain most of the critical talent. We've also done some rehiring in some areas, but I think all in all, I think the org structure is quite well set.

Got it. Sir, and one last question.

I think in the Q1 presentation, you had given a FY29 aspiration on revenues and EBITDA, and I think the EBITDA there implied about close to 12% EBITDA margin. I just wanted to understand the bridge between the current 9% levels to that 12%.

Will that heavy lifting be done by the acquired group EBITDA, or is there scope within India as well to improve the EBITDAs from where they already are in our legacy business? Thank you.

I think most of the improvement, Manjeet ji, came from the acquired group. Of course, there is some scope within the legacy Sudarshan business also to improve, but most of the improvement came from the legacy came from the

Sir, I was talking about the forward-going, where you had given FY29 vision you have.

Yes, I'm talking about that only, sir.

Okay. Got it.

Thank you, sir. Thank you so much.

Thanks. Hi, good evening, everybody, and first of all wishing you all a very happy Diwali and Dhanteras.

Sir, I just have one question. Archit: When we had made the acquisition at Heubach, and we were speaking quite a lot about value capture initiatives, and you have elaborated that in the presentation also, but I think some of the areas that we were discussing last time around was shifting commodities to low-cost regions, sourcing optimization, backward integration, SAP integration.

I think these were some of the key areas that we spoke of. I guess at a business EBITDA level, we have done quite well on margins.

I think we are at about 6%, 6.5%. From the time of acquisition till now, if you could help us, what are the things that we have been able to achieve on capturing the value, and what would be the things that are still pending for us to reach that €90 to €100 million mark that we are planning over the next three to four years?

That would be helpful, sir. Thank you.

Great question, Archit ji. Archit ji, firstly, I think what we've worked on is, as you mentioned, this has been our number one set of our priority was to win back trust with our customers, right?

The second part was look at value capture and reduce costs, right? I think some of the areas which we've been able to reduce costs are, first, on the org structure with, right?

We've done a lot of work and reduced costs there. Second is manufacturing cost reduction, right?

We've really worked across whether it's yield improvements, throughput improvements, utility cost reductions across our sites. The third has been purchase cost reduction, looking at more global buying, looking at Asia-based buying globally.

That these are some of the areas we've been able to achieve. The third is IT integration.

IT integration had two phases. One is, of course, cost reduction, but also looking at how we are able to reduce our costs, right?

As I mentioned, the transactions which we are doing today are four transactions. We have four SAPs.

Consolidating them into one, right? These are some of the aspects which we've been able to do well.

The IT integration is still in progress, but we've made considerable progress in this areas, right? What we've not done so far is any backward integration, right?

We want to kick-start some of the backward integration projects. The second is use of artificial intelligence or AI in the business.

This is the second leg which we've not still kind of unlevered. We still have a lot of scope still in purchase, manufacturing, but these are some of the additional levers to kind of reach target margins, Archit ji.

Right, sir. Sir, these are the initiatives.

Would that help in a 300, 400 basis points swing on margins, since we are at, let's say, 6%, 6.5%, and I think at €90 to €100 million, we would reach near about 9% to 10%? Would backward integration and implementation of AI, if these are the two larger areas we are targeting, would that facilitate that 300 bps swing, or would there be anything else with regards to some more optimization on sourcing or product mix or something like that?

Absolutely, sir. I think these things would, as I mentioned, there is still manufacturing and procurement more work to be done.

In addition to that, the backward and this integration, but we are also hoping that we are able to bring back some business and get operational leverage, right, which we should be able to get 1% or 2% percentage of EBITDA from there, right? I think we should be able to kind of reach this margin.

Sure, sir. Sir, just one last bit if I can squeeze in.

The production mix that we were planning, the commoditized ones into places like India, has that completely been done, or that is also left to a certain bit?

The production has been moved, sir, but I don't think we've got the full mileage. We've not been able to still fully commercialize those businesses, so that's the scope where we can win some.

Right, sir. Great.

Thanks a lot for answering all the questions, sir, and again wishing you a very happy Diwali. Thank you.

Thank you, sir. Same to you.

Hello?

Yes, ma'am.

Yeah. I understand that much of the EBITDA margin improvement will come from the Heubach business.

We have seen improvement already in the last couple of quarters. Just want to understand what's the kind of levers which would drive further improvement in margins.

That is first. Is there any operational or structural issue which the Heubach business is still facing?

My second question is on the inventory destocking. Has the overhang reduced, or is still residual destocking pending, is there any other further negative surprises on this front?

Ma'am, the first question had two parts. I didn't understand the second part of the question.

Sir, it was related to what would be the levers that would drive Heubach business EBITDA margin improvement?

Yeah. I think, as I mentioned, ma'am, I think there are two aspects.

One is a strong value capture in operations, purchase, organization structure, streamlining that, right? Further leveraging some of the backward integration, there's a lot of IP on backward integration, and use of AI, right?

These are the levers which would give us a lot of value capture initiatives, plus we are hoping that we are able to drive some EBITDA growth from growth too, a small amount from there, right? These are the levers which will help us improve our performance.

Okay. Understood.

My second question was on inventory destocking, what's the current status right now, and is

From the customer's bit, I think the destocking is over, and I'm hoping that it's over because it can't be forever and ever, right? We don't see a destocking impact now coming in, right?

In fact, it's the high inventory scenario, customers are buying only when there is a requirement, right? They're not stocking up enough, right?

Of course, there is a general external geopolitical uncertainty and hence the demand is muted.

Okay. Okay.

If I could just squeeze in one more. The global pigments industry is growing at roughly 3% to 4% annually, and in the last time, the guidance for Sudarshan was given for 9% till FY29.

We know this kind of slow down that you just spoke about in Europe and US in the automotive and decorative paints industry, what gives us confidence that Sudarshan will be able to beat the global pigment industry growth rate?

I think the first is our thesis was that we will be able to win back some of the businesses which we've lost, right? That will give us some growth.

That is first aspect. Given that, our aspiration to grow EBITDA, like I said, two-thirds of the aspiration, two-thirds of it comes more from internal cost reduction, maybe one-third of the EBITDA growth comes from driving sales upright from that perspective.

Yeah. Yeah.

Just one thing. I understand the drivers that you spoke about, but 3% to 4% and us growing by 9%, do you think there is a lot of divergence there?

No, I think I just mentioned that we've lost a lot of sales, and we want to regain this sales, and that's where the growth would come in.

Understood. Thank you.

Thanks for the opportunity. Congrats on a strong Q2 and becoming debt-free within two years of acquisition.

Sir, first question is we have monetized VP4. Are there any such more pieces which could be monetized at some point in time, and will that add to, again, getting more into core and offsetting the non-core businesses?

Thank you.

Hi, Rohit ji. I would say I wish that there were more, but I don't think there are any such low-hanging fruits anymore, right, from that perspective.

I think this was our original thesis when we did the acquisition, right, of getting this. We had never anticipated that our anticipation on value was lower that time.

I think given when we looked at in-depth numbers, etc., that's where I think we looked at VP4 from that perspective.

Got it. Thank you.

Sir, second question, on slide 10, we have provided the innovation and new pipeline. In terms of generally on a yearly basis, how many of such new products are we working on, and in terms of monetization of those products, what is usually the sales run rate that we look at when we are looking at these niche spaces?

Thank you.

Rohit ji, I think, as I mentioned in my talk, I think this is re-energizing the organization and greasing the organization that we learn to kind of listen to customers, anticipate what are their unmet needs, and go back to the market with innovations where customers feel excited to work with us, right? This is an overall customer relationship management which gives a help to our existing business also, right?

I think some of these new spaces take some time to click. I think gives a good base for strengthening the relationship, and of course, these also help in improving the EBITDAs, right, because they are better margin products.

Yeah.

Right. Got that, sir.

Thanks a lot for answering all the questions, and Diwali wishes to the entire team. Thank you.

Thank you, Rohit ji. Thank you so much.

Thank you, sir. Thank you for the opportunity.

Sir, my first question is you have mentioned that now you are restarting your innovation pipeline. Would that have a material impact on expenses?

Would there be any cost coming out of this?

The team is already part of it, there is no additional cost.

Okay. Sir, my second question, like you are mentioning like for Heubach, there you are looking for to recapture the lost business.

Would you be gaining market share or is your gaining market share from competitor, or what's the scenario there?

We had lost we had lost market share, we're Rajesh Rathi (Chairman and MD): We had lost we had lost market share, we're going to regain that market.

Sir, what competitive edge we have vis-a-vis with our competitors there?

I think that was the very basis that customers had lost trust in us. We've regained that trust, the relationship, ensuring that we serve them well, rebuild relationships, and the reliability with.

Okay. Sir, any other acquisition in mind, like for maybe strengthening your backward integration, or maybe some pieces where still you need maybe some more acquisitions?

I think not for backward integration, but I think the management and the board kind of keeps looking for opportunities, but nothing where it can expand our footprint, etc., but I think nothing, at the right time, of course, if we do find, we will come and talk about it.

Okay. Thank you, sir.

Thank you for answering all the questions. Happy Diwali to everyone, sir.

Thank you.

Thank you. Same to you.

Hello, can you hear me?

Yes, we can hear you.

Yeah. Yes, sir.

My question is, for the Heubach, I think earlier you mentioned that two-thirds of our operating margins improvement would be largely coming from the cost synergy, wherein you are planning to do some cost rationalization. By when can we see the improvement?

Based on your assessment, how much we have already done the cost saving till now from the acquisition date?

Dhavan ji, some of the improvements which you've seen in EBITDA is part of that value capture and or cost reduction, right, already. As I mentioned, we'll continue this journey from that aspect to kind of keep improving our performance, right?

From employee cost and the other operational cost perspective, let's say the employee is roughly ₹1,500-odd crore, the annual run rate over there, and then the other cost is roughly ₹2,000-odd crore. Both together is roughly ₹3,500-odd crore, kind of the cost.

How much saving can we expect from these two things, and then by when can we expect this would be materialized in terms of the numbers?

As you can see our performance, we already this year clocking towards €35 million of €35 million of EBITDA, and going forward also, we've given the guidance. Most of this will come through the cost reduction on these areas, which you've seen.

Okay. Okay.

In terms of the sales that the earlier the company lost because of some reason, I think we planning to acquire those customers, at what stage are we right now, and by when can we expect that sales to flow in the Heubach?

Building the trust with the customers has given us rich dividends. We've already won back some of the businesses.

As you may have seen our last year's performance in Q3, etc., Q2 was quite muted, and we've already seen a positive trajectory from that perspective. This process will continue to building, and in that the geopolitical uncertainty, as it improves, and the external situation improves, I'm sure this will give us also rich dividends, and we'll be able to see the full benefits.

Sure, sir. Yeah.

Thank you. That's all from my side.

Thank you, sir.

Thank you. Thanks a lot for the follow-up.

On the strategy side, sir, if we look at the aluminum dyes acquisition, adding a Swiss site wherein, while the value capture relies on footprint optimization, acquiring something in Europe wasn't really on the cards if I'm correct. Is this Swiss site a long-term plan there, or will the technology move to India?

How will it play? Any more acquisitions in Europe that we might be evaluating?

Nitesh ji, sorry, there was some technical challenge, we were not able to unmute. Can you hear me, Nitesh ji?

Yes, yes, I can.

Nitesh ji, absolutely. I think this is a very niche business, Nitesh ji, and the product approvals are very rooted to the site, right?

Very sensitive to where it is produced, etc. For the business continuity, this was very important, right, to have these assets.

This business was being toll manufactured, the business belonged to us, but this was toll manufactured these products by Clariant for us, and Clariant in the long term didn't want to do this. In order for us to continue the business, this was very important to get that our side.

Having said this, we do see a lot of opportunities in improving the cost base in that plant too, and we will definitely work on that.

Sure. That helps.

Sir, just one last there. Management expected a further €15 to €20 million inventory reduction coming through in FY27.

However, if we look at the inventory days, that has actually gone up in the first half if we have to look at, and even on the absolute number, I think it's up by 25% over 31st March. Any color on the inventory side here?

Nitesh ji, spot on. I think if you see our performance to H1 of '26, we have improved our performance, right, compared to H1.

There are some seasonalities, etc., but given the current geopolitical situation, right, the lead times for raw materials have increased a lot. The lead times for finished good deliveries have increased a lot, right?

More variation in demand, right? All this has caused us to, increase some of our inventories, not exactly not where we want to be.

Given this situation, to manage this has been quite challenging, and that's where I think you've seen these increases. Having said that, compared to H1 last year, there is still an improvement, right?

In number of days, in definitely number of days. Absolute.

Sure. Thanks a lot, sir.

I think I wish entire team a very happy Dhanteras and a happy Diwali. Thank you so much.

To you, sir, thank you so much, and same to you.

Hi, Mr. Rathi, thank you for taking my question again.

Are there any unfunded pension liabilities from the acquired group of Heubach, or that's all been factored in into the deal consideration?

Yes, sir. There's no unfunded.

There are no, no, no.

Excellent. The second one is, you talked about backward integration into India not having really kicked in, but are there spare capacities and technical capability to make a lot of these European products in India?

Some of these products are not still made by us, right? The IP exists between the two legacies, and that's what we want to get the potential out, right?

Exploit that and get that. That's where it is.

It's not like a transfer of manufacturing asset, but it's, I think, creating new capacity starting to produce some of these raw materials.

The capacities are there. It's just transferring the skill set, is it?

Or the [unclear]

No, we don't make these products there, sir, but we have the IP, we can make them in the lab. We don't have physical assets on this.

We can make it in the lab. We have people who know the know-how, etc., right?

It's about putting actually metal on the ground in India.

Oh, you would have to increase capacities to make them in India?

Yes. Make an investment for it.

Excellent. Thank you.

All the very best and happy Diwali and lots of dhan.

Thank you, Viraj ji. Thank you so much.

Thank you, Bhavin, for anchoring our call. Thank you, Rohit ji, for hosting our quarterly earning call.

Thank you, participants, for your time and interest in Sudarshan Chemical. We remain confident in the long-term prospect of our combined business, and we look forward engaging with you again in future.

Wishing you all a very happy Diwali. Thank you.

Thank you.