Sudarshan Chemical Industries Limited (NSE: SUDARSCHEM) Q1 2026 Earnings Call dated Sep. 24, 2025
Corporate Participants:
Unidentified Speaker
Rajesh Rathi — Chairman and Managing Director
Nilkanth Natu — Chief Financial Officer
Analysts:
Unidentified Participant
Archit Joshi — Analyst
Rohit Nagraj — Analyst
Nilesh Ghuge — Analyst
Nitesh Dhoot — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Sudarshan Chemical Industries Limited Q1FI 26 earnings conference call hosted by Anundati Shares and Stock Brokers 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 you can signal the operator by raising the hand. And now hand the conference over to Mr. Nitesh dude from Manvati Shares and Stock Brokers Limited. Thank you. And over to you Mr. Dut.
Nitesh Dhoot — Analyst
Yeah. Thank you Neera. Good afternoon everyone. We welcome you all to Sudarshan Chemical Industries Limited Q1FY26 earnings conference call. Sudarshan Chemical Industries Management will be represented by Mr. Rajesh Rathi, Managing Director, Mr. Neel Kant Natu, Chief Financial Officer and Mr. Amaya Thale, General Manager, Manager of Finance. We’ll start the call with the management’s presentation post which we’ll open the forum for an interactive question and answer session. We’ll request all participants to ask only two questions and they can join back the queue for follow up questions. With this I hand over the call to Ratiji for his opening remarks.
Rajesh Rathi — Chairman and Managing Director
Thank you. Thank you so much Mr. Nitishpur and I’m ratty for hosting this call and we are looking forward to our interactions today. So firstly would like to give you an integration update. Some of the information I’m going to repeat as this is some important information for everyone to understand and some of you all may not have the full context or may not have heard me last time. So on March 1st we or March 3rd we signed, we completed the transaction where we acquired the Legacy Haibok and Legacy Clariant business. So to give you a context, HBOK or Clarion Legacy is, was among the top two pigment players globally and between and with a.
With a rich history of several organic pigments being invented in this company. So very rich heritage of technology and more importantly a global manufacturing footprint with 17 manufacturing sites across the world, very high quality and a broad product portfolio with advance, you know a lot of technical focus I would say. So this was for us let’s say the Clariant Legacy and Haiboc Legacy which we acquired Sudarshan on the Sudarshan Legacy, one of the fastest growing companies in pigment industry. 75 years of experience with customer centricity as our core value and a strong agility culture within the company.
So if you combine the two companies and look at the broad portfolio manufacturing footprint and the technical base of IBOG and we bring in customer centricity entrepreneurship and agility. So definite formula for creating a world leader in pigments. A value creating pigment leader rooted in customer centricity and agility. So that’s the new Sudarshan. I would say in all we have 19 manufacturing sites now globally, in 11 countries, five continents. We serve almost all customers in every country and we have a very unique and a broad product portfolio. Our manufacturing footprint is very wide and given the current geopolitical situation and the terrorist situation, this is a big advantage for us as, as an organization as we have the flexibility of supplying from India, Europe, Latam to any of these countries and especially us to.
Right. So that’s a big, so the manufacturing footprint gives us a big advantage. I would say if you look at our product portfolio, we serve a very, very broad product portfolio. We serve the conventional industries of coatings or paints, plastics, printing, inks. But in addition to this we also serve digital inks. You know, we supply our aluminum dies into, you know, we are suppliers to iPhone, cellular phones and the latest, some of our colors are also used in the latest iPhone 17 and 17 Pro. So these are the new areas where we, we sell into two with our broad portfolio.
So again to give you a context, you know, Clariant for the last legacy, for the last five, seven years, seven years had decided to divest the business. After that, you know, Hoiberg took over the business. Then there was a insolvency. All this had, you know, within the company and kind of the mindset had become day to day survival. Right. Whereas we want everyone now to shift to plane to win. Right. Whether you are in the sales team, how do we win against our competitors? Whether you are in the plant, how do we, you know, be agile in reducing our cost and being humble. That’s the change which we are trying to bring within the organization. Of course being courageous and bold is very important but staying humble at the same time is very key. And humbly listening to all our stakeholders, especially our customers and post correct our paths where required. Customer centricity and responsiveness is at our heart and we are rebuilding our customer service teams which were, you know, which, which were disintegrated today we didn’t have customer service.
Customer service had become back offices either in Romania, Poland, Mexico or in India. We are bringing back the front facing customer centric teams. Entrepreneur mindset is very important and speed in what we do. The fourth principle is simplicity. Clariant belongs to the Hex legacy. Hext was a 35 billion euro company with many businesses and hence quite a Few of the processes designed may not be relevant today and very complex. So we want to drive simplicity in what we do. I think bottom line, financial stability is very, very important. You know, cash is king. We are investing for the long term, but how do we ensure that short term, we preserve cash and be prudent is also as important.
Our integration has progressed very well. And I would say all in all, the integration is of three legacies and not two. It’s the Colorant legacy, the Haiboc legacy and Sudarshan legacy. So we are really actually looking at integrating three companies and a lot of hard work is going on in that to give you a more definite flavor on what we’ve done, especially in this quarter. What we’ve achieved is we’ve stabilized all our operations and ensured that product availability is not a concern for our customers. So we had to. Some of our supply chain processes are still broken.
We are fixing those, but we’ve ensured that we pump up inventory, that our service levels improve. As I mentioned, we’ve set up customer service, we’ve defined a roadmap for our integrated IT systems. You know, just to give you a flavor. We were working on, you know, we were working on four different SAP systems and we want to integrate those into one. And also there are several applications outside of SAP which we use almost 78 to 80 applications. We want to see how we can reduce those cost and also integrate those applications in that perspective. Right. So from that perspective, the second, the next leg where we are playing in is setting up the gcc, the Global Capability center from that perspective. And also we fully finalize our OP structure. Right.
So I would say all in all our team has really achieved a lot in this short period. One of the areas, if you remember I spoke about and which I committed is our team had connect committed to is turning around the business was important and that was. That was based on cost reduction and value capture. As during insolvency there were several, I would say several. What do you say? What do you call them? So several tariffs, not terrorists. Surcharges. Sorry, several surcharges imposed. Imposed on customers which were not market driven and those surcharges have to be taken back.
And hence we are working on a lot of cost reduction in every area. Right. From optimizing our operations where we are looking at, you know, across what are the ideas of reduction in cost within the sites. But we also comparing our processes across sites to see how we can reduce cost. Procurement has been a big lever. Where I think the procurement initially was as SPD was an acquired group was more focused on Europe but we’ve shifting this to Asia to more competitive sources and also taking advantage of our combined volumes. Right. It as I already spoke to you all several ideas on reducing the cost. If you when we benchmark the IT costs the IT costs for at least three to four times higher than the world benchmark costs. Right.
So it’s a great liver both from a cost reduction and also bringing in efficiency and processes. The other SGNA cost we’ve looked at several. You know optimizing the org structure which has happened and that’s given us a great benefit too in. In terms of that and product management we were outsourcing several of our several products which we’ve insourced and that’s giving that will be also give us a big advantage. Net working capital will be our next focus on how to optimize cash and working capital. As as I always said that we are very excited of our journey ahead.
There’s a great opportunity if you look at how the industry shaped right. Five or six years ago there were five global players. Today there are only two global players. With Sudarshan as the only player who’s focused on only pigment business. Right. So this provides us a great opportunity in creating the most valuable pigment company in the world. Customer centricity. The way we are driving our customer centricity customer centric across and bringing in agility. I think this is going to be a very distinct advantage for us. We would become a a world leading color solution provider because our technical marketing product management teams and our portfolio and the right sales team we can work with customers really to providing great solutions to the customers. With this I will start with the Q1 performance update. If you look at just to give you a little bit of a reflection on what’s happening in the market it is the fact that some of our customers today there are headwinds from a market perspective.
Our customers currently struggle with low demand and also high inventory. High inventory was caused by two areas. One was given the tariff situation some of our customers had built inventory. The geopolitical situation also anticipating better demand. So this was one area but specific to HBOK during the insolvency there were several customers who were very insecure and built up high inventories. Right. We expect them to destock this and you know by December we should come back to a little bit of a normal numbers. So there’s a double impact really for us where we see you know, moderate demand and many customers who had built up inventory. So destocking of that. Right.
Also there’s, you know, we are learning new areas where we see August as you know, from a Europe perspective or you know, Europe is almost shut. So because of that this is a new seasonal impact which even I have learned about from that perspective. So however, having said all this, there is a great trust from our customers and they want customers want to rebuild a meaningful relationship with us. We’ve already been honored with several customer prestigious awards from both the coatings and plastics industry. We’ve got the excellent supplier of awards and we are seen as an ideal global partner for combining our expertise and you know, we have great commitment from customers to do business with us.
So that’s, that’s a great area to kind of work together on with this we’ll come to the numbers from our Q1 quarter and.
Nilkanth Natu — Chief Financial Officer
Thank you Mr. Ratin. Good evening ladies and gentlemen. I will take you through the quarterly financial highlights. Starting with 1 Sudarshan. Total revenue for the quarter stood at Rupees 2507 crore. This number includes Legacy Sudarshan Acquired Group and repo business. Year on year and quarter on quarter number are not comparable as acquisition of Herbach Ubac global pigment business was completed in March 25. Legacy Sudarshan includes standalone Sudarshan and existing subsidiaries. Performance of the Legacy Sudarshan revenue for the quarter stood at 628 crore, marginally down by 1% and EBITDA for the quarter is at 87 crore versus 81 crore last year and EBITDA margin is at 13.9% versus last year of 12.7%.
We have seen revenue ramp up starting in the acquired group. Revenue for the quarter is at rupees 1882 crore versus one month revenue of March 25 post deal closure which was at rupees 525 crore. Absolute EBITDA is at 78 crore which is 4.1%. Coming to the pigment business, Legacy Sudarshan revenue from the pigment business for the quarter stood at 578 crore which is marginally down 2% compared to the last year Q1 which was at 589 crore. EBITDA for the quarter is at 87 crore compared to 90 crore last year and the EBITDA margin is at 15.1%.
Revenue from global Pigment Business which is Legacy Sudarshan Pigment Business and Acquired group stood at 2456 crore for quarter one FY26 with the adjusted EBITDA of rupees 165 crore which is at 6.7%
Rajesh Rathi — Chairman and Managing Director
just. To add what Nati said, think legacy. Sudarshan. We may see Q1 and Q2 to be a little flattish or slightly this. But by the year end we should pick up sales. This was mainly in specific geographies and specific customers. Also we found some areas like especially Europe and North Latam where demand was stuck. We are working on, you know, winning back some of these areas. And as we say acquired group, the sales ramp up has started though the market is not favorable. But we are in a good shape to gain back some of the businesses.
Thank you.
Nilkanth Natu — Chief Financial Officer
On the financial ratios, earning per share for the quarter is at rupees six which is not annualized number. Return on capital employed for the quarter, Return on capital employed is at 14.3% compared to 13.7% last year. And net debt to equity is at 0.5%. We continue to drive our focus on the net working capital. Net working capital as a percentage to revenue stood at 23.9%. With this, net debt for the quarter Is stood at 11084 crore. With this I will hand over back to Mr. Rati for his closing comments.
Rajesh Rathi — Chairman and Managing Director
So net debt net it just to explain. Can you go back? That’s right, yes. You wanna, you wanna, you wanna explain?
Nilkanth Natu — Chief Financial Officer
Yeah. Okay. So net debt for the quarter is at 1084 crore compared to 652 crore in the Q4 of the last financial year. And this is because of the part of the purchase consideration which was paid in June, which is as per the. Agreement with the analyst.
Rajesh Rathi — Chairman and Managing Director
Yes. So I think this was just part of the payment which was paid in June as part of that or the whole purchase price consideration.
Nilkanth Natu — Chief Financial Officer
Yeah. With this I hand it over to Mr. Rati for his view on the outlook and closing remarks. Thank you. Yes.
Rajesh Rathi — Chairman and Managing Director
So. Our projections, as we said that we are on track on what we had projected to be the acquired group for 35 million euros. We would expect, we, we, you know, after seeing this business for five to six months now, I and my team feel very confident that we would be able to deliver not only this year’s number but financial year 28 or 29. I would say we are on, we would be on track to delivering the 90 to 100 million EBITDA out of the acquired group. Having, you know, I’ve already spoken about tough market conditions but in spite of that we would be able to deliver these numbers.
So all in all I think a good place where we are in there are definitely some distinctive advantages which one Sudarshan brings into play. One is obviously, you know, One of the fastest growing pigment companies. But you know, if you look at all our legacies, the combined experience is probably 300 or 400 years beyond 200 years, right. So that’s a great history which we have with us, which we can build on. We offer customer first solutions and we really build back that technical expertise, the technical market, the product management and the customer connect to the sales team.
Right? Quite a few of our sales team, you know, major part of our sales team is very technically driven which helps in kind of delivering customized solutions to our customers. We offer one of the most comprehensive organic pigment portfolio. But now we also have an expanded portfolio into specialty dyes, anti corrosive pigments, pigment preparations, etc, which has really given us a great boost in our product range. Probably the most comprehensive globally product we. You know, one distinct advantage we have is if you look at our manufacturing footprint, we are the only ones with such a white footprint of our manufacturing footprint.
And more importantly, 50% of this being in Asia. Right. So a long term cost imperative. But in addition to this, a specialty portfolio out of Germany. Right. And then of course we have Latam also as an important region for us to manufacturing pigments. So this really gives us a great, I would say competitive advantage, a long term advantage as we build this. So thank you everyone and thank you for listening to us. From that respect.
operator
Thank you very much.
Nilkanth Natu — Chief Financial Officer
And with this we hand it over back to the moderator for the question answer session. Thank you.
Questions and Answers:
operator
Thank you very much. We now begin with the question and answer session. Anyone who wishes to ask a question may click on the raise hand icon to ask your question. Kindly announce your company name before proceeding with your question. Participants are requested to restrict to two questions per participant and requesting you to join back the queue for a follow up. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may click on the raise hand icon in the bottom of your screen to ask your. . Question is from line of Archit Joshi. Kindly announce your company name and proceed with your question.
Archit Joshi
Hi. Hi. Good evening gentlemen. This is Archit Joshi from Noama Institutional Equities. Firstly, many congratulations for a successful integration and reporting a decent quarter. So my first question is regarding a comment rather that you made with regards to being on track to achieve the early guidance that we had given for Hoybax EBITDA, which is roughly 35 million euros. And as we can see closer to the annual. Hello? Hello. Am I audible? I think I got disconnected.
operator
No sir, you’re audible. We can hear you.
Archit Joshi
Yeah, yeah. So sir, As I was saying, the the path that you had set up for FY26 to achieve 35 million euros of EBITDA from Hoiback seems fairly within reach. But if you could explain what would drive this to take us to our FY28 FY29 number. I would like a breakup. If you can give on two accounts, what would be the cost items that you think are easily achievable or are low hanging fruits which might help in boosting the ebitda? And on the sales front, how do you see this 2000 odd crore revenue, quarterly revenue of fiback if one annualizes it, let’s say to 800,000 crores every year to grow at what rate to be able to reach that 9200 million euro EBITDA.
Rajesh Rathi
So a great question. I think as we had mentioned, there’s a great opportunity in cost reduction and value capture initially, right. And just several levers, you know, main ones being manufacturing or operations, right. We expect a large part of the cost reduction to come from them. Equally important is the procurement of purchase a liver and you looking at these two livers and then there is a one time correction in the OP structure, right. Some of the, the O structure benefits though we’ve completed, we are still not seeing in the EBITDA margins as the restructuring cost of that is still, still there.
Right. So from that perspective these are the three main levers. Of course it is also, you know, then there are small levers like it, there are other functions. From a perspective where we are looking at this, right, we see from a growth side as I mentioned, you know, till January we don’t see too much of growth coming in. From a perspective that we see hockey stick, we should be, we are engaging very well with customers. We will see some growth coming in from that. And then on a year on year we see, you know, a natural growth of you know, 4 to 5% coming in from, from that business year on year later these would be the levers where we will kind of come to coming.
Please also remember that when we started looking at this business the EBITDA was zero. And as we are working on the, as we are working at the value capture it takes time for it to come into, you know, have the full impact. Right. So that’s where I think we are sitting today.
Archit Joshi
Great sir. I think that answers my first question, second question and then I’ll fall back. In the queue if possible. You’d mentioned that 50% of our production comes from Asia. So I’m assuming that this is 50% production volumes. Might we also get a number on what we do in Europe and US as manufacturing capacities that we have there.
Rajesh Rathi
So I think you know these are just bulk mark figures. Giving you a flavor of how this distribution is. I would say 50% from India, 30% from Germany and balance from Latin America and Japan. Right. Other other geographies and that gives a very distinct advantage for us because the way we have a global manufacturing footprint, you know, this is definitely a competitive advantage for us. Right. And most of our competitors are either fully based in Asia or have no presence in Asia or negligible presence in Asia.
Archit Joshi
A small one to squeeze in.
operator
Sorry to interrupt you archetype. Can I request you to come back for a follow up question please?
Archit Joshi
Sure, sure.
operator
Thank you very much. I request to all the participants kindly restricted two questions per participant and rejoin the queue for a follow up question. Next question is from Dana Frohen. Kindly accept the prompt, join us panelist and mute your audio, turn on your video, introduce your company name and proceed with your question.
Rohit Nagraj
Thanks for the opportunity. Rohit Nagraj from BNK361. So congratulations on the successful integration and relatively good performance. So first question is in terms of the production footprint. So have we started optimizing the production given that Sudarshan legacy business was also exporting some of the products to these countries and now since we have the how back facilities particularly situated in Europe are we have we started shifting some of those products to outback or where are we pro in that process of optimizing the production and if so what is the timeline that we are looking at in terms of optimizing it and getting those benefits accrued? Thank you.
Rajesh Rathi
So a great question Rohit. From up from a perspective, you know there were, there are two aspects to look at where to make the product. Right. First was as you know there was a process which was in place where some of the non specialty azo pigments were being moved from Germany to India. Right. So that process is just getting completed now. Right. Then the product management group is in totality looking at what’s the right place to make the right product. Right. Globally that so and that depends on two factors is the manufacturing cost, landed cost of the product manufacturing total cost of the product, on what geography and what’s the capacity utilization impact. Right. So. So the product management looks at the entire margin and then decides how to make. Of course one caveat is there we have tariff situation and hence you know the tariff situation sometimes would kind of tweak the strategy to make this product locally in Mexico or you know Mexico or Germany and not in India.
Rohit Nagraj
Sure. Thanks. So second question on the numbers front two sub questions. One is that the integration cost that we have taken during this quarter is it going to be a recurring in nature and if so what could be the quantum. And second question on the net debt front the debt has increased during the quarter. However the cost of debt and interest seem to be extremely high. So how are we likely. I mean what is the kind of average cost of debt that we can take for FY26? Thank you.
Nilkanth Natu
Thanks Rohin here. So firstly on the integration cost the current integration stroke restructuring cost is at 32.8 crore and we expect the similar Runway and this is for and initiatives which are currently being, you know driven our go to market initiative, value capture etc. Coming to the final
Rajesh Rathi
just to add some of our. Some of our IT restructuring cost or the cost of organization restructuring that’s not included in this. That will be over and above this. But this is what are. This is what the current costs are please.
Nilkanth Natu
And on the finance cost. Rohit, while there has been increase in. The network which we had mentioned in. Our opening remarks in the Q4 there was. There was a partial timing impact because we had drawdown the loan during March and there was a bit of the timing which was on a lower side. This particular quarter has a full quarterly impact on the finance cost which is seen in the financials.
Rohit Nagraj
So just clarification. No questions. First the recurring and the restructuring and integration cost what is the timeline that they will end? And if I take the run rate of about 4045 crores of interest it looks like on an annual life basis the average cost of debt is about 15 16%. So just clarifications on these two aspects. Thank you.
Rajesh Rathi
The. The. This. The integration. We planned the integration cost for this year and you know the integration cost should be 10 million plus for this year excluding the I I IT or the organization restructuring. On the interest cost. Natushi, you want to.
Nilkanth Natu
Yes. So Roy, on the interest cost since it is right now you are looking at the net debt. If I see on the gross debt the interest cost should be in the range of 6.5 to 7.5%. There are also other accounting impact in the interest cost which is on account of the lease accounting where the finance cost on the lease is also captured here it is not on the borrowings but it is more of the lease accounting there. So from the perspective of the modeling 6.5 to 7% can be taken as a finance Cost on the gross.
Rohit Nagraj
Thanks a lot. These are very helpful. Thank you. And all the best, sir.
Rajesh Rathi
Thank you.
Nilkanth Natu
Thank you.
operator
Thank you very much. Next question is from Rano Bharat Singh. Kindly accept the prompt. Join as panelist, Unmute your audio, turn on your video, announce your company name and proceed with your question. Go ahead, sir.
Unidentified Participant
Hello.
operator
Yes sir, go ahead. You’re audible.
Unidentified Participant
Yeah, yeah. How are you? And thanks for the opportunity. Hello? Hello.
Rajesh Rathi
Yes sir, we can hear you.
operator
Yes sir, we can hear you. Go ahead.
Unidentified Participant
In say Germany, which is currently contributing 30% of our production and if I understand that when at the time of acquisition we were anticipating that government will do some kind of a cost structure and everything. So is that already there in the place or is German manufacturing unit is profitable or what stage we are in turning it to be profitable?
Rajesh Rathi
Sir, I couldn’t fully follow your question, but what I understood is our manufacturing footprint. If you’re talking about a manufacturing footprint. Correct. From Germany, whatever products had to be transferred have been transferred back to India. And now it’s a stable manufacturing. You know, it’s a stable manufacturing. This. There are good value capture ideas on, on Germany and we will ensure that it is self sustaining on its own.
Unidentified Participant
Okay, great. And second thing in opening remark, you also not bringing down or working capital currently what cycle we, I mean how many number of days we have working capital and where, how do we plan to bring it down and what is the sustainable level that we are anticipating? Hello?
Rajesh Rathi
Yeah, just a second. So we are approximately at 24, 25 of working capital. We want to bring it down to 21%.
Unidentified Participant
Will it be by year end or it’s a gradually that will come down gradually.
Rajesh Rathi
Our focus is first on building the planning processes. And you know, our first target is building customer trust. So ensuring even if we are little inefficient, we don’t want to compromise on that. The good part is pigment inventory is, you know, doesn’t get obsolete. It has a shelf life of. Not like an infinite shelf life, 20 years. Right. So we will ensure that at the right time, once the planning processes are in place, we will optimize the inventory.
Unidentified Participant
Okay, thanks a lot and all the best.
Rajesh Rathi
Thank you, sir.
operator
Thank you very much. Our next speaker shareholder is Maitri. Kindly join us. Panelist, unmute your audio, turn on your video, announce your company name and proceed with your question. Go ahead, ma’.
Nilesh Ghuge
Am. Yeah. Hi, good afternoon sir, this is Nilesh from SDFC securities. Good. Can you hear me?
Rajesh Rathi
Yes, very clearly. Yeah, sure.
Nilesh Ghuge
Sorry. Hi. So a couple of question. First thing on the depreciation. So can you tell us the depreciation for this year and FY27? Will it be the extrapolation of the Q1 number? And second question, in your presentation you mentioned that our customers currently struggle with low demand and they already have high inventory because they built up high inventory due to insolvency. So based on current demand and outlook on the demand, how many months of inventory do they hold as of now? So these are the two questions. Thank you sir.
Nilkanth Natu
Thank you. Nish. On the depreciation, depreciation part, currently for the quarter the depreciation is at rupees 99 crore and we expect the similar range each quarter going forward. For the. Thank you.
Rajesh Rathi
On the, on your second question, I think of course it, you know there are two impacts, right? One is overall in general there is this destocking effect because people have had anticipated demand and you know, and also looked at any uncertainties and built up the demand. The second part is also that they, you know, when it’s concerning us that high bok built up, you know, hoibox customers, legacy Hoibox customers built up demand due to the insecurity. Right. So these were the two factors I would say where destocking happens. And that’s why destocking is more pronounced for us now. Right? Because lot of customers are destocking. It’s very, you know, customer to customer, it differs. But we believe that, that customers, you know, are kind of stocked up on certain products till December. Right. And we should see a good, good area of numbers coming up.
Nilesh Ghuge
Thanks. Thanks a lot sir.
Rajesh Rathi
Thank you.
operator
Thank you. Next question is from Land of Hosen. Kindly accept the prompt, join as panelist and meet your audio. Turn on your video and answer your company name and proceed with your question.
Unidentified Participant
Hello, Am I audible?
operator
Yes sir, go ahead.
Unidentified Participant
So just wanted to understand in the domestic market this quarter numbers were weak and you have said that in the Q1 and Q2 the numbers will be weak and largely in Q3, Q4. So what’s the prime reason for. I think you’ve already said in terms of that there is some inventory buildup. But how do you see that in the full year? Can you see a full year revenue growth of more than double digits? Can we see a four year revenue growth of double digits? Considering that in the domestic business.
Rajesh Rathi
Just to clarify, when you mean domestic business you mean legacy Sudarshan business, correct?
Unidentified Participant
Correct.
Rajesh Rathi
Legacy Sudarshan business. Absolutely sir, I think we should. The aim at the end of the year is to hit the 10%, you know in that region 8 to 10% number. From the year end perspective, Q2 should be still a little soft on two reasons. One is of course last year, you know, our Q2 was very, very I would say was a very robust quarter last year and you know, and we had seen significant growth. And this you know, combined with that seeing last year’s robust growth and this year’s little bit of a muted demand. These are the two areas where we’ll see a little bit of of softness in Q2 and we should be able to build up that as, as we go ahead.
Unidentified Participant
Got it. And so secondly, when we global pigment sector, I think you already in the start said that only two players. So from the earlier five years to two players. So on the pricing front have have you seen that the pricing has largely improved because of the two players being only two players in the segment largely driving the compared to five players as the realizations have improved across the board.
Rajesh Rathi
I think generally the you know there is a good competitiveness on pigments from Asia and there is of course price differential between the Asian player and a global player. But that has not significantly increased. And I think our focus is on capturing value volumes and hence you know we would, we will not, you know, we will keep our pricing at where we are now.
Unidentified Participant
Got it. I think so that is the only question from my side. Thank you.
Rajesh Rathi
Thank you.
Unidentified Participant
Thank you.
operator
Thank you very much. Next question is from nine of Raja. Kindly join us panelist and meet your audio. Turn on your video, announce your company name and proceed with your question. Go ahead sir.
Unidentified Participant
Yeah. Good evening sir. Thanks for the opportunity. Sir, just couple of questions. So first one is you mentioned that some of the commodity business has been moved from Germany to India. So I would like to know has it been moved to Sudarshan India business or the high box India. And also what is the margin uplift you are looking at by moving this?
Rajesh Rathi
Some of these products were part of the movement even before, before we had acquired this group. So it was moved to either the you know, group companies, either the public listed or the private both. This was done because these products were not, not very viable out of Germany. Right. The costs were very high and hence these were, these were, these were moved to, to move to India. Right. From India. I don’t recall right now the margins, what this was but I think it was a very favorable area where we could compete with making these products here. Right. Where in Germany we were not able to. Okay.
Unidentified Participant
Okay, got it sir. So the second question is I see that the power cost is A major component of your other expenses. So particularly on the European region.
Rajesh Rathi
Can you. Sir, it’s very difficult to follow you. Can you talk louder?
Unidentified Participant
Yeah. Can you hear me now?
Rajesh Rathi
Not very clear, but Raja, if you.
operator
Can speak little louder or get the microphone closer.
Unidentified Participant
Yeah, Hello, Is it audible now?
operator
No, sir, it’s still feeble. Can you speak a little louder, please?
Unidentified Participant
Is it? Okay now?
Rajesh Rathi
Let’s try. It’s very feeble, but we’ll try to hear.
Unidentified Participant
Yeah, yeah. Sir, this is the. This question is on the power cost in the European region given this, the war between Russia and Ukraine. So I, I mean, generally most of the companies are seeing a higher power cost. So I just want to know, is the scenario improving or is it the same or is it deteriorating?
Rajesh Rathi
So I think, I think there’s also a normal cycle in Europe where in the winter season the power prices do increase. The big surge which had happened during the Ukraine, Russia or the energy that time, that’s. That is not prevalent anymore. Right. And hence, hence the power differential cost during the normal months other than the winter does not, you know, is not significantly, very different.
Unidentified Participant
Okay, so it’s no longer a headwind for us, is that.
Rajesh Rathi
No, it’s not a headache for us anymore.
Unidentified Participant
Okay, sir, thanks a lot. Sir, all the best.
Rajesh Rathi
Thank you.
operator
Thank you very much. Next question is from Nilesh Dud from Aranvati. Please go ahead.
Nitesh Dhoot
Yeah, yeah. Hi, sir, thank you for this opportunity. Just a couple of bookkeeping questions from my side. So first is on the pigment business gross margin. You know, can you give the split between the legacy and the acquired group? That is the first one.
Rajesh Rathi
So Niteshi, first of all, the host cannot ask questions. Right. So I think currently we know we are not giving out the gross margin numbers given that, you know, once the business stabilizes, especially of the acquired group, we’ll be able to do that. But the acquired group does have, you know, a higher gross margin than the legacy Sudarshans directionally.
Nitesh Dhoot
Right, right. And so just one more for Neelkanji. So basically, you know, if you see the other expenses, you know, that includes the integration cost, 33 crores, you know, that’s related to the acquired group. In the last quarter, if I remember, you had 20 crores expense and that was considered in the adjusted EBITDA number which you gave out in the presentation for Q1. However, this appears to have been left out, you know, when, when giving the adjusted EBITDA at 165 crores. So considering this as a one off, you know, does it need to be added back to that EBITDA number or how should we go about it?
Nilkanth Natu
So we have adjusted the EBITDA with 20 colors of one off cost. The current 165 crore adjusted EBITDA which we had, you know, mentioned in our presentation need no further adjustment.
Nitesh Dhoot
Okay, okay. And just, just one, one more on the foreign exchange adjustment. So you’ve mentioned 27 crores as the gain that you know, that has been adjusted and you know in the reported numbers there is another 11 and a half crore. So I mean is this, you know, part of that number or you know, has it to be treated separately?
Nilkanth Natu
So Nitaji, the 27 crore, the forex gain adjustment which we have mentioned in our presentation, this is more of a accounting, accounting treatment which is related to the FX translation on the intercompany loan between Sudarshan India and Sudarshan Europe. Bv. These loans were given as a part of this transaction. So we have excluded this exchange gain from the normal operating EBITDA which is reported.
Nitesh Dhoot
Okay, okay, fine. That answers my questions. Thank you so much.
operator
Thank you very much. And I’ll hand the conference over to the management for closing comments.
Rajesh Rathi
Thank you. Thank you Mr. Nitesh. Yeah, yeah. Thank you Mr. NitesH and Anandrati research. Thank you all the participants for your time and interest in Sudarshan Chemicals. We remain confident in the long term prospect of our business and also on the integration which we are, which we have mentioned in our opening remark. We look forward engaging with you again in future. Thank you.
operator
Thank you very much on behalf of AAN Bhatti Shares and Stock Brokers limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.
Nilkanth Natu
Thank you.