Sudarshan Chemical Industries Limited (NSE: SUDARSCHEM) Q2 2025 Earnings Call dated Oct. 29, 2024
Corporate Participants:
Rajesh Rathi — Managing Director
Nilkanth Natu — Chief Financial Officer
Analysts:
Nitesh Dhoot — Analyst
Rohit Nagraj — Analyst
Rajesh Kothari — Analyst
Archit Joshi — Analyst
Noel Vaz — Analyst
Sanjesh Jain — Analyst
Dhavan Shah — Analyst
Jignesh Kamani — Analyst
Aditya — Analyst
Tejas Sonawane — Analyst
Rohan Patel — Analyst
Sabyasachi Mukerji — Analyst
Sandeep Abhange — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Sudarshan Chemical Industries Limited, Q2 FY ’25 Earnings Conference Call, hosted by Dolat Capital. 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. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Nitesh Dhoot from Dolat Capital. Thank you, and over to you, sir.
Nitesh Dhoot — Analyst
Thank you, Steve. Good morning, everyone. On behalf of Dolat Capital, I would like to thank the management of Sudarshan Chemical Industries for giving us the opportunity to host their Q2 FY ’25 earnings conference call.
From the management team, we have with us today Mr. Rajesh Rathi, Managing Director, Mr. Nilkanth Natu, Chief Financial Officer, and Mr. Amey Athalye, General Manager Finance. Without further ado, I would like to hand over the call to the management for their opening remarks, post which we’ll open the forum for the Q&A session.
Thank you and over to you, sir.
Rajesh Rathi — Managing Director
Thank you, Dolat Capital and Mr. Nilesh for hosting our earnings call. Good morning, ladies and gentlemen. Welcome to Sudarshan’s Quarter 2, FY ’25 Earnings Conference Call.
Our investor presentation has been uploaded on the stock exchanges for your ready reference. During the call, we could make forward-looking statements. These statements consider the environment as we see as of today and carry risks and uncertainties that could cause our actual results to differ from those expressed in today’s call. We do not undertake to update any forward-looking statements made on this call.
I would like to take you through the financial highlights. On overall basis, there has been robust growth in the top line and recorded highest ever figures in quarter 2 as well as H1 FY ’25. The robust performance is also reflected in higher gross margins as well as EBITDA margins.
Coming to the quarterly performance. On a consolidated basis for the quarter, total income from operations stood at INR696 crores, as compared to INR601 crores for the same period last year, higher by 15% year-on-year. EBITDA for the quarter stood at INR94 crores, compared to INR66 crores in Q2 FY ’24 and EBITDA margins stood at 13.6%, compared to 10.9% over the same period last year.
The half-year performance. On half-yearly basis, total income from operations stood at INR1,330 crores versus INR1,209 crores in the same period last year, a growth of 10%. EBITDA for H1 is at INR175 crores versus INR135 crores last year and the margin is at 13.2% versus 11.2% over the same period last year.
Now, going into the details of our Pigment business. Coming to the Pigment business, I am glad to report that we have achieved highest ever quarterly revenue and EBITDA. This is the seventh consecutive quarter, where top line has grown on year-on-year basis and EBITDA margins are now closer to 16%. Our go-to-market strategy has resulted in increasing the export revenue and we also see growth across all the major international geographies. There is a strong traction in the new product business as well.
For the quarter 2 FY ’25, income from operations stood at INR660 crores as compared to INR522 crores for the same period last year, growth of 26% year-on-year. On a sequential basis, revenue is higher by 12%, compared to INR589 crores of the quarter 1 FY ’25. During the quarter, we have delivered robust export sales of INR360 crores, as compared to INR250 crores, higher by 44% year-on-year. On a sequential basis, export revenue is higher by 20%, compared to INR302 crores of quarter 1 FY ’25.
We have seen growth across geographies with contribution coming from Europe, North America and South East Asia. With higher growth from the international geographies, the export domestic mix stand at 55%-45%, compared to 47%-53% in the same period last year. India sales for the quarter is at INR300 crores, higher by 10%, as compared to INR272 crores in the same period last year. On a sequential basis, India sales continues to deliver consistent growth and sales is higher by 4%, compared to INR287 crores of quarter 1 FY ’25.
Speciality pigment sales stood at INR457 crores, as compared to INR362 crores for the previous year same quarter, 26% year-on-year growth. On a sequential basis as well, the revenue has grown by 13%, as compared to INR403 crores of quarter 1 FY ’25. Non-speciality sales for the quarter stood at INR202 crores, which is higher by 26%, compared to the same period last year. And on a sequential basis, the revenue is higher by 8%, compared to INR187 crores of quarter 1.
Gross margin of Pigment business for the quarter is at 47.8% as against 44.8% for the same period previous year and compared with the sequential quarter, gross margins have marginally gone up from 47.2%. EBITDA for the quarter stood at INR105 crores, as compared to INR67 crores for the previous year same quarter and EBITDA margin is at 15.9%, as compared to 12.8% over the same period last year. On a sequential basis, EBITDA is higher by 60 basis points.
In H1 FY ’25, the total income from operations for the Pigment business stood at INR1,249 crores versus INR1,058 crores in the same period last year, a growth of 18%. EBITDA for H1 is at INR195 crores versus INR131 crores last year and a margin is at 15.6% versus 12.4% over the same period last year, thereby increase of 3.2%.
Now coming to the balance sheet. The balance sheet of the company continues to strengthen with healthy business operations. The net debt of the company has reduced further to INR359 crores in quarter 2 from INR445 crores in quarter 2 of FY ’24 and INR375 crores in quarter 1 FY ’25. This has also resulted in improving the leverage ratio to 0.3 times in quarter 2, compared to 0.4 times in quarter 2 last year.
The working capital cycle continues to be managed efficiently. The cash conversion cycle is down to two days to 80 days in quarter 2 FY ’25, while it is higher by seven days compared to the sequential quarter Q1 mainly due to plan increase in the inventory. To summarize, the capex, which we have built over the period has started showing the results and getting reflected in the financial performance. We have now positioned ourselves to provide wider baskets of the products to the customer globally. We are confident in our growth journey and we are committed to deliver long-term value to our stakeholders.
With this, we now open the floor for question-and-answer session. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.
Rohit Nagraj
Thanks for the opportunity and congrats on a good set of numbers. The first question is on the Engineering business. Now given that the Pigment business has been showing robust growth in terms of both top line as well as margins, do we have now plans and given that we have now going for acquisition of Heubach, are there any plans of hiving of the engineering business given that it is dragging the overall margins and performance? Thank you.
Rajesh Rathi
Thank you for your question, sir. It is a great question. The Board has taken a strategic view of building this business. So the transformation journey for this has been launched as we speak. And give us one year and I think this business will also show good robust numbers.
Rohit Nagraj
Sure, fair enough. The second question is in our presentation on slide 19, we have given the outlook for FY ’25 and beyond, where in the first column we have talked about the capex program to drive future growth and bring in EBITDA improvement. Just a clarification, will there be any incremental capex or the ones that we have done that is going to drive the incremental improvement?
Rajesh Rathi
Rohit, thanks for the question. So, the clarification here is there will not be any new incremental capex. The capex program, which we had initiated in the past and completed in FY ’23, as I mentioned in my opening remarks, we are seeing a good traction for our new products, which has been in the market. And in fact, we see that this new product and the capex will contribute going forward.
Rohit Nagraj
Sure, thanks a lot and all the best and Shubha Deepavali.
Rajesh Rathi
Thank you, Rohit. Wish you the same.
Operator
Thank you. The next question is from the line of Rajesh from AlfAccurate Advisors. Please go ahead.
Rajesh Kothari
Hi, thank you very much for this opportunity and congratulations for a good set of numbers. I’m just trying to understand that with what I would say, consolidation in the number of industry players, do you expect that the pricing power which has been hit significantly, because if I look at the global companies, P&L, most of them are operating at zero margins. Do you think now there is some pricing power, which will prevail and that can lead to better profitability? That’s number one.
Number two, considering that you have issued now a lot of time, which has been spent in getting the approvals, do you expect the capex, which has been done, the asset utilization to improve and the asset turn can improve over the next 12 months to 18 months?
Rajesh Rathi
Thank you for your question, sir. I think the first thing is that most of the pigment companies have not been doing well, is not — is because I think we’ve been — Heubach and Sudarshan have a different position in the market, and one of the most value-creating companies, I think, in the pigment segment, and that was because of some of the principles we follow, right? And I think it’s going to be important that we continue and build the new organization based on these principles. One is customer centricity. So how do we be not inward looking and be more customer focused, and what are the areas, where we want to kind of focus on.
And the second is a very lean organization based on first principles, right? And what are the — and very much looking at what are the overheads we are building, how do we streamline our the SG&A costs, etc. So I think the first in building a profitable company, I think it will be more on focusing on the cost side rather than on the pricing side, sir.
Rajesh Kothari
Okay. But in last three years to four years, do you think the pricing by and large would have reduced?
Rajesh Rathi
No, sir. I don’t think the pricing with — there are always segments of market, but the segments which we play in, I don’t think the pricing has reduced.
Rajesh Kothari
Okay. And can you answer also my second question, which is about the asset turn improvement in asset turn?
Rajesh Rathi
As we — as we had mentioned, our capex plan to achieve the goal was four years. If the going — so anywhere between three years and four years was our plan, and that’s what we will kind of try and achieve.
Rajesh Kothari
So where are we in that — I mean, so it seems that has been — some time has been already passed, almost, I think, 24 months has been, and capex was happening every year, correct, from FY ’19, FY ’20, FY ’21. So I’m saying in that journey, where are we in terms of…
Rajesh Rathi
I think we are in the — we are about, let’s say, between one year and two years, right, in that journey. So we are in the mid 18 months, right.
Rajesh Kothari
Understood. And by when you think you’ll be doing the QIP to this resolution, which was passed through to fund this acquisition. By when do you think that will be done?
Rajesh Rathi
So the QIP-related, the procedure will be followed as per the regulatory guidelines.
Rajesh Kothari
Okay. Okay. Got it. Now, basically, my question is by when you think the raising will be done? That what my question is.
Operator
I’m sorry to interrupt Mr. Rajesh. Could you please come back in the question queue for further questions?
Rajesh Kothari
Sure. No problem. Thank you. Wish you all the best.
Operator
Thank you. The next question is from the line of Archit Joshi from B&K Securities. Please go ahead.
Archit Joshi
Hi, good morning, sir. Thanks for the opportunity and season’s greetings to all of you. I have two questions. Firstly, on the reported exports growth, which has been quite robust for this quarter. I just wish to ask, if this growth is driven by any product-related or customer-related issues that Heubach might be facing at the global level and there has been a natural shift towards us in terms of garnering that market share from them, because we are going to be a unified entity sooner or later. Or is there any other green shoots in a particular industry or segment that we are witnessing, which is the reason why there has been a strong export growth?
Rajesh Rathi
This was — Archit, this was a planned growth, right? Given the new capexes, these were all oriented more towards the international markets and that’s where you see this growth coming.
Archit Joshi
Sure, sir. Any particular industry that is aiding to this strong growth in exports? And just clarifying that this is not because of Heubach’s issue, right? Not any market share gains coming from Heubach to us?
Rajesh Rathi
So this is mainly coatings and plastics market, which we are gaining. And there are headwinds in the general industry, which has also helped building this. Nothing very particular to, I would say, Heubach, but general, I think, headwinds in the industry, which are favorable for us.
Archit Joshi
Got it, got it, sir. So my second question is on the capital structure. I think from what we heard from you all during the last concall is that we need somewhere close to INR900 crores, INR1,000 crores of incremental capex for refurbishments, legal costs, etc. And we obviously made an announcement towards raising INR1,000 crores-plus INR250 crores with the green option. That leaves us with another INR1,000-odd crores left, right, to fund the entire acquisition along with further capexes. Are there any plans beyond what we have announced on the QIP and would we be looking to sell maybe the EPC business or maybe any spare land at our disposal? Or would this be entirely funded through debt? If you can just help us outline the capital structure for this fundraising?
Nilkanth Natu
So Archit, there will not be any further plan to increase the equity beyond what we had mentioned as far as our QIP issue is concerned, correct? That is point one.
Second is, as Mr. Rajesh Rati mentioned in the opening question, as a management, we have taken the decision to transform the Rieco business and build this business. So, currently there is no plan right now of monetization of that particular asset. And there is no spare asset like land, etc., available for monetization.
Archit Joshi
So, would it be fair to assume the balance amount will be all funded through debt? If one were to build in some numbers, if you can just give some clarity on that account?
Nilkanth Natu
Yes.
Archit Joshi
Got it. Got it, sir. Thanks a lot for the clarification and Happy Diwali to all of you.
Nilkanth Natu
Thank you. Same to you.
Operator
The next question is from the line of Noel Vaz from Union Asset Management. Please go ahead.
Noel Vaz
Yes. Hi. Thanks for letting me ask the question. So, in the presentation, it is mentioned that you have a market share…
Operator
I am sorry to interrupt, sir. Your voice is coming very low.
Noel Vaz
Hello. Can I be heard? Hello.
Operator
Sounds good now. Thank you.
Noel Vaz
Yeah. Yeah. So, and it’s mentioned that the current market for the pigments is about $8.6 billion. So, relevant to Sudarshan. So, with the potential acquisition from Heubach, are we looking at the market share being closer to about 30-odd percent or 25%? Or should we think about that?
Rajesh Rathi
So, I think the organic pigment market is about, I would say, $5 billion. And the balance, you would kind of include the inorganic micas, etc., right? Given, so from that perspective, if you look at the market share, we would be about 20% going forward.
Noel Vaz
Okay. Thank you. That is all from my side.
Rajesh Rathi
Thank you.
Operator
Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Sanjesh Jain
Yeah. Good afternoon, sir. Thanks for taking my question. First is on the operating leverage in the pigment business. You said that there is a 400 basis point Y-o-Y improvement in the gross profit, and there is another 400 basis point improvement at the EBIT level. We are not seeing the operating leverage at, playing out in the margin. And even if I look at the other expenses, that inflation remains quite steep. Can you help us understand what is driving such a sharp increase in the other expenses?
Rajesh Rathi
Sanjesh, thanks for this question. So, if you look at the other expenses, it is a combination of two, three cost levers. One is the manufacturing-related cost, second is the selling variable-related cost, and the small portion remains is on the admin or fixed cost.
Predominantly, this other expense has been on a higher side as far as the manufacturing and selling variable cost is concerned. With the increase in the sales and with the increase in the volume, it gets also translated into the production-related cost going up, which is in line with the manufacturing volume. And the sales increase gets reflected in the selling variable cost.
So, with this, we see that this percentage should be more or less in this line. And that is the reason how we are looking at EBITDA margin increasing in line with increase in the gross margin side.
Sanjesh Jain
You are telling that there is absolutely no operating leverage because you say that the percentage remains static and it has been static till now as well. We are telling that there is no operating leverage in the business on the manufacturing side. I thought ETP and all we run continuously, that cost should not rise equivalent. Again, utility cost should not be proportionate. Admin cost should drive certain operating leverage, but clearly none of them are visible to that. Why would sales and marketing costs will go up similar to the gross profit?
Rajesh Rathi
So, Sanjesh, sales cost will go up due to the freight, correct, the freight and, you know, the commission which is related to the domestic sales part. So, to that extent, those will be in line with the increase in the sales.
Sanjesh Jain
Okay. Got it. Got it. The second is on the Rieco. Can you help us understand when you say we are in the process of transformation, what actually we mean in terms of transformation, which does it involve more investment? What are we really trying to achieve when we say, we are in a transformation of Rieco?
Rajesh Rathi
I mean, there’s no investment envision. We are strengthening that organization, the business processes, so that the numbers are more consistent and we improve the numbers.
Sanjesh Jain
No product changes, no product improvement. Where are we really focused on? We are telling the only organizational is a problem right now in Rieco and rest of all in the place?
Rajesh Rathi
So, it’s a whole go-to-market strategy. I mean, there are a lot of levers in how the transformation takes place. To answer your question, obviously, there’s no new investment we need. I think what we need is to execute our projects well. And the entire process, it’s a project-based business. So, ensuring that any cost runs, etc., or arrear to etc. So, there’s a lot of, there are several levers which today I can’t tell you, but basically it’s more on the execution areas. We believe that Phase 1, whatever business we have, how do we deliver better and get better value even if, and then look at looking at any other diversification in that business.
Sanjesh Jain
Great, great. Thanks for those elaborate answers and best of luck for the coming quarters.
Rajesh Rathi
Thank you.
Nilkanth Natu
Thank you, Sanjesh.
Sanjesh Jain
Thank you, sir.
Operator
The next question is from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.
Dhavan Shah
Yeah, thanks for the opportunity, sir. So, my question is on the export side. I think you mentioned that because of the better growth in the coating and plastic, we did some good revenues in the export business. So, I just wanted to understand, I mean, is this largely because of the inventory filling in the system due to restocking or is it like the genuine demand in the end segment? And how do you see, inventory and the demand situation for our type of pigment in the export business?
Rajesh Rathi
Just to clarify, sir, I didn’t say that the markets are growing. I said, our capex projects aim to deliver, this was what we aim to deliver through our capex projects, right? And transformation of our sales — transformation of our sales area, right? So, so that is the — that was the crux area. And our capex program is now started delivering, which was focused mainly on the coatings and plastics area. And that’s where we are seeing growth.
Dhavan Shah
So, exports were for the products, which were, you know, we were not manufacturing earlier and the competitors were there in the international business. So, we are getting the market share of those products. Is that correct?
Rajesh Rathi
Absolutely. This was the synthesis of the whole getting into more specialties and doing the whole capex program, right? The whole process.
Dhavan Shah
And what is the market size of this coating and plastic in the international business? And how much would be our addressable market and based on INR750 crores of capex, what we did, how much revenue do you expect from this to vertical in the export business?
Rajesh Rathi
As we’ve been giving guidance to the market are, we expect the INR750 crores to deliver about in three years to four years, but our potential of about 2 times, right? About INR1,500 crores, right.
Dhavan Shah
Okay. And how much of that have we already done? I mean, at what this INR360-odd crores kind of the revenue denotes the how much asset turn at this moment, if you analyze it, because there was earlier based business also was doing some revenue, right?
Rajesh Rathi
Like we said, we are into this process to acquire the 100% utilization, we would take three years to four years. We have crossed. We are on the mid-market. We’ve completed about 18 months in this journey.
Dhavan Shah
Got it, sir. Got it. Okay. Thank you. Thank you so much, sir.
Operator
Thank you. The next question is from the line of Rohit Nagraj from Central Broking. Please go ahead.
Rohit Nagraj
Yeah, thanks for the follow-up. In our, you know, there is an exceptional item regarding the fees related to a transaction. So, have we accounted for all the fees or will it be carried forward over a period of time till the entire transaction is not consolidated? And what could be the quantum for this? Thank you.
Rajesh Rathi
So, Rohit, the exceptional cost, which we have reported, these are the costs which are incurred in quarter 2 for this particular transaction, majorly on account of legal fee and due diligence cost. And we don’t comment on the quantum till the time that, you know, the transaction is closed.
Rohit Nagraj
Yeah, but there will be incremental cost which will come as and when the transaction is culminated, right?
Rajesh Rathi
Sure. Yes, yes, there will be incremental cost as and when we move ahead in the transaction, yeah.
Rohit Nagraj
Right, just second question, I’m not too sure whether I should ask it from the Heubach perspective, but given that we had also explained in the earlier call that for domestic business, we will not be doing any investments given that it is already being done. So, given that Heubach is also probably operating at relatively lower utilization levels, can we expect that for the next maybe three years to five years, there may not be material investment from capacity increase perspective? However, it could be primarily because of maybe some refurbishment and maybe some maintenance cost associated to Heubach facilities? Thank you.
Rajesh Rathi
Absolutely well said, sir. At least three years, we don’t see any major capex coming in and as we mentioned, some of these capexes would be — whatever capexes in the three years would be regular in nature in terms of maintenance etc.
Rohit Nagraj
Thanks a lot, sir. Thank you.
Rajesh Rathi
Thank you, Rohit.
Operator
Thank you. The next question is from the line of Jignesh Kamani from Nippon Mutual Funds. Please go ahead.
Jignesh Kamani
Hi, just on the speciality segment, so if you take about export grew by around 44% and generally export is slightly more or you can have you on the speciality segment versus domestic, but if I look at the speciality and the non-speciality growth, both is around 26 percentage. So, why export higher growth is not reflected in the higher growth rate in the speciality? So, we are showing more of a non-speciality in export this time?
Hello?
Rajesh Rathi
Yeah, just a second.
Jignesh Kamani
Yeah.
Rajesh Rathi
The growth is…
Jignesh Kamani
Hello, sir?
Rajesh Rathi
Yeah. Yeah. Can you repeat your question?
Nilkanth Natu
Can you please repeat your question, sir?
Jignesh Kamani
So, export group is around 44 percentage for us and generally export is very heavy on the speciality compared to the non-speciality mix. But when I look at the speciality and non-speciality growth, it is almost 26 percentage. There is no additional higher growth in the non-speciality. So, just want to understand, we sell more of the commodity grade in the export, you can say? Because speciality growth is not reflective of the export growth.
Nilkanth Natu
No, sir. I think the speciality growth for exports is good because it’s all capex-driven.
Jignesh Kamani
In second one, the operating leverage, which earlier you can say, Sanjesh has asked, so if you take about based on the EBITDA margin, the gross margin you mentioned on the pigment division, we used to have a close to around INR160 crores kind of quarterly cost, or you can say, last quarter, which increased to close to around INR210 crores this quarter on the pigment division. So, almost 26% growth in the overhead cost, you can say. And if you compare Q-o-Q, it is almost 12% increase in the cost. So, why the overheads and everything is increasing drastically in pigment division?
Rajesh Rathi
So, first of all, it is not the overhead. So, if I see the quarterly number, the consolidated number for the other expenses, which I mentioned, which is the combination of the manufacturing, selling and other costs, is at INR176 crore, compared to INR158 crores. So, it is not the number, which you are referring. And as I mentioned, that majority of this part is linked with the manufacturing production activities, as well as the sales activity.
Since we have seen growth in the sales number, which also gets translated in our production volume and the utilization, we see the cost getting increased in that range.
Jignesh Kamani
But your pigment sale is grown up by around 26% Y-o-Y, while your overhead is grown by 26% Y-o-Y. So, there is no benefit of leverage, you can say?
Nilkanth Natu
So, sir, it is not the overhead again. So, it is the expenses, which are related to the freight commission, the manufacturing cost related expenses. So, it has been in line with the increase in the sales side.
Jignesh Kamani
So, incrementally also, whatever the growth in the revenue, we will see similar kind of growth in this cost item also, right?
Nilkanth Natu
To some extent, yes. What you are saying is to some extent.
Jignesh Kamani
Understood. Thanks a lot.
Operator
Thank you. The next question is from the line of Aditya from Security Investment Management. Please go ahead.
Aditya
Yeah. Hi, sir. Thanks for the opportunity. So, this 26% growth which you have witnessed in a pigment division, what would be the share of volume and price mix for this 26% grwoth?
Rajesh Rathi
So, the prices have been quite stable, but we do not split up the volume, etc., right now in a public forum. But the direction I will just give you is saying that the pricing has now been stabilized, yeah.
Aditya
Understood, but, sir, last year, there was raw material deflation and the market was also not doing good. And the prices, I believe, are at rock bottom. So, why haven’t seen increase in pricing of our end products?
Rajesh Rathi
We are not able to follow your question, sir.
Aditya
Sir, last year, there was raw material deflation which was impacting the end prices and the market was also not doing that great, because of which the end product prices for our products were quite low. So, we haven’t seen any improvement from those low prices.
Rajesh Rathi
The prices of raw materials remain to be the same, sir. I have not understood. Why are you assuming that the prices have increased?
Aditya
Also, this strong growth which you have witnessed is majorly due to volumes only.
Rajesh Rathi
Yeah.
Aditya
Understood. And, sir, this strong volume growth, this is majorly because we have gained market share from our competitors or the end market has also started improving in the export markets?
Rajesh Rathi
As I explained earlier, sir, that our whole capex investment was for speciality products targeted towards the global coatings and plastics market, right? And that’s playing out now, right? So, I think that’s the question which, yeah.
Aditya
Understood, sir. Thank you, sir.
Operator
Thank you. The next question is from the line of Tejas Sonawane from Asian Market Securities. Please go ahead.
Tejas Sonawane
Two questions. For the CMPI exceptional items reported in our quarterly numbers, so, the notes which are there, mentioned quarterly result, which kind of is the net amount which you have kind of recorded, which is net of the gain which you have received from the sale of the old land and the expenses which have incurred. So, correct me, if I wrong over here. So, the expenses which you have incurred for a Heubach transaction are close to INR325 crores net of which we have reported close to INR11 crores of loss for this quarter?
Rajesh Rathi
Tejas, if you see the exceptional item line and the note number 7 and note number 8, so, note number 7 gives a reference to the exceptional gain on account of the land sale, which we had done in the last year, April ’23 and that is during the financial year ’24. So, that transaction of INR315 crores is different and currently the INR11 crores, which is reported for the quarter under consideration is related to the cost in relation to this definitive agreement entered for Heubach. So, these are two separate transactions.
Tejas Sonawane
Okay, understood. And then secondly, just wanted to ask you if you could provide us at least some sense as to whether the Heubach group, whether their EBITDA operating profit is on the positive side or the negative side for CY ’23? Any sense which you can provide on that front?
Rajesh Rathi
So, from a confidentiality and an antitrust perspective, we cannot comment on the numbers upfront.
Tejas Sonawane
Okay, no problem. Okay, that is it from my side. Thank you so much.
Rajesh Rathi
Thank you, Tejas.
Operator
Thank you. The next question is from the line of Rohan Patel from Turtle Capital. Please go ahead.
Rohan Patel
Yes, thanks for the opportunity. I just want you to share me with data points related to volume growth that for quarter 2 as well for first half for domestic and export and speciality and non-speciality if you can provide that?
Rajesh Rathi
So, Rohan, from a competitive perspective, sir, we do not provide these numbers.
Rohan Patel
Okay. So, if you can just give us an idea that for the domestic revenue for half a year, which has grown 10% and export revenue, which has grown 27% year-on-year, how much would that be from volume and how much would that be from price? Like, it would be more dominated by volume, if you can give us any idea?
Rajesh Rathi
Yes, it’s the same question, sir. We can’t give you volume. But like I mentioned, prices are quite stable now and prices are quite stable now, right.
Rohan Patel
Okay. And you don’t see that now — so, you are just referring that now it has bottom out and now it’s stable. Now we cannot see any more going down.
Rajesh Rathi
Yes.
Rohan Patel
Okay. And can you share your perspective regarding phthalocyanine market? Like what are the trends and how the market is on year-on-year basis?
Rajesh Rathi
I think, as a company, we do have that business. But we are spread across. Phthalocyanine business is a very competitive business. There is over capacity in that business.
Rohan Patel
Okay. Okay. That was from my side. Thank you.
Operator
Thank you. The next question is from the line of Sabyasachi Mukerji from Bajaj Finserv. Please go ahead.
Sabyasachi Mukerji
Yeah. Hi. Thanks for the opportunity. Two questions. One, on the export side, we have seen a very good growth this quarter. And last few calls, you were saying that there is an increase in customer inquiries and good possibility of shortening of approval cycle and all. Any update you can share? Have there been conversations, any progress, anything on this thing, if you can share?
Rajesh Rathi
So the progress is seen in our numbers. And as I mentioned that our capex program has started yielding results. And that’s how we are seeing this growth.
Sabyasachi Mukerji
Okay. How do you see the rest of the year pan out? I mean, is the momentum continuing? Or do you see, do you foresee any challenges ahead?
Rajesh Rathi
So, I think we — going forward, we don’t see any major challenges. But whatever our average growth so far has been, I think we should be able to deliver those numbers on the half year.
Sabyasachi Mukerji
Okay. Second question. On this fundraise, will the promoters participate?
Rajesh Rathi
So can’t comment on that currently. I think we’re going through the process right now.
Sabyasachi Mukerji
Okay. Yeah, that’s all from my side. Thank you.
Rajesh Rathi
Thank you.
Operator
Thank you. We have a next follow-up question. It’s from the line of Sandeep Abhange from LKP Securities. Please go ahead.
Sandeep Abhange
Yes. Can you hear me?
Rajesh Rathi
Yes, we can hear you, Sandeep.
Sandeep Abhange
Yes. Yes. Yeah. Yeah. So thanks for taking my question, sir. I wanted to understand the overall growth in the exports. So how is the market looking overall? What is your view on the export? So do you see this kind of a growth on a sustainable basis? Because we have done the kind of capex and we are kind of trying to achieve our targeted growth, mainly in the speciality market. So do you see this growth sustainable going forward? Or how do you see it, if you can comment on this particular export growth?
Rajesh Rathi
So I think the question is that, as I mentioned, the new capex program — there is some echo in the line.
Sandeep Abhange
Hello, can you hear me?
Rajesh Rathi
No, we can hear you. Yes, but there is an echo in the line. I am asking the organizers to check. Organizers to check because there is some echo in the line. We hear our voice only.
Sandeep Abhange
Okay.
Rajesh Rathi
Steve, Steve, can you check please the line connection?
Operator
Sandeep sir, are you still on a speakerphone?
Rajesh Rathi
Hello?
Sandeep Abhange
Yes, I am there.
Rajesh Rathi
Sandeep, can you hear us?
Sandeep Abhange
Yes, yes, I can hear you.
Rajesh Rathi
Okay. So I think, the capex program is yielding good results. I think a lot of our customers are looking at, initial trials are over, we have commercialized a few businesses. Going forward, we do expect growth in terms of, I would say, in the between somewhere — in the teens — in the mid-teens numbers going forward too, and I think that’s how we should be able to build.
Sandeep Abhange
Okay, okay, that’s helpful. And secondly, I wanted to know the kind of revenue target which you had earlier given during your capex plan, that you will be achieving between INR3,200 crores to INR3,600 crores kind of a revenue for the next, by ’26 and ’27. I just wanted to understand, you’re already almost inching up towards INR3,000 crores kind of a revenue for Sudarshan. So are we expecting a faster reach towards that target in the next coming one year or two years? How do you see, only on the Sudarshan part, like stand alone basis?
Rajesh Rathi
On the stand alone basis, sir, our guidance was that the INR750 crores revenue should give us about INR1,500 crores between three years to four years of time. Since the Europe market and some of the other markets are recovering slightly. Somewhere between three years and four years we should achieve it.
Sandeep Abhange
Okay, okay. And this last question I wanted to understand, when would we expect the integration of Heubach and Sudarshan in terms of the financials? By when we can expect that?
Rajesh Rathi
I think the closing should happen somewhere in our Q4 quarter, right? And after the closing, the integration process will begin.
Sandeep Abhange
Okay, okay. Thanks so much. That’s very helpful.
Operator
Thank you. The next question is from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.
Dhavan Shah
Yeah, thanks for the follow-up, sir. So my question is again on the export side. So you mentioned that we did capex of roughly INR750-odd crores and the peak revenue would be INR1,500-odd crores. So out of that, what would be the share of this coating and plastic in the overall pie? And if you can share, the global market size out of this $5 billion of the global market, addressable market, what would be this coating and plastic market? Or maybe what could be our addressable market for our products in those two segments?
Rajesh Rathi
So I think the majority of this INR1,500 crores should come from coatings and plastics, right? And the rough number, I don’t kind of recall, but about, I would say, $3.5 billion should be the market for the coatings and plastics.
Dhavan Shah
And the products what we are selling right now, out of this $3.5 billion, what could be the market? I mean, there are other competitors are also selling, right? So if you can club it up, what would be the market of those products, which we are selling right now?
Rajesh Rathi
As I mentioned, sir, overall basis, this would be there are a few chemistries, which we don’t do for the coatings and plastics. So, but I mean, we are covering majority of the spectrum of the market. There’ll be exceptions, but overall perspective.
Dhavan Shah
So out of this $3.5 billion of global market…
Operator
Mr. Dhavan sir, could you please follow back-in the question queue for further questions?
Dhavan Shah
Sure.
Operator
Thank you. The next question is from the line of Noel Vaz from Union Asset Management. Please go ahead.
Noel Vaz
Yes, thank you for the opportunity again. Just one follow-up on the acquisition that can happen. So the thing is that as it currently stands domestically, we have over a 35% market share. Will there be some potential issues that could pop up because of anti-competitive rules in any specific geographies or even domestically? Thanks.
Rajesh Rathi
So we are going through the antitrust filings, but I think we have quite a complementary product portfolio from that perspective. So, but the process is being followed obviously currently by our regulation.
Noel Vaz
Okay. That is all from my side. Thank you.
Operator
Thank you. The next question is from the line of Rohit Nagraj from Centrum Brookings. Please go ahead.
Rohit Nagraj
Thanks for the follow-up. Again, on the Rieco front, sir, we have done in last four years from the revenue front, it has done extremely well. And you said that there is a strategic focus on the same. Just one clarification. So the margins of the margins of — EBITDA margins Rieco had been sub 10%. So is it possible that once it attains a particular size and based on our strategy, it can reach the margins of the pigment business or will it be always a lower margin business than the pigment business? Thank you.
Rajesh Rathi
So the first phase is to — the first phase is to get into the low teens and have it consistent, right? So that our processes are robust. So I would kind of look at it from a first phase of this. The second phase, whether, we can go in the mid-teens, etc. I think that answer we can’t give today, sir. But first focus would be that to reach there.
Rohit Nagraj
So, thank you so much.
Operator
Thank you. Ladies and gentlemen, that was the last question for today’s conference call. I would now like to hand the conference over to the management for their closing comments.
Rajesh Rathi
Thank you, Steve. Thank you, Nilesh Dhoot and Dolat Capital. And thank you participants for your time and interest in Sudarshan Chemicals. We remain confident in the long term prospects of our business and we look forward to engaging with you again in future. And we also wish all of you a very happy and prosperous Diwali. Thank you.
Operator
[Operator Closing Remarks]