Sudarshan Chemical Industries Limited (NSE: SUDARSCHEM) Q3 2025 Earnings Call dated Feb. 17, 2025
Corporate Participants:
Nilkanth Natu — Chief Financial Officer
Rajesh Rathi — Managing Director
Analysts:
Sanjesh Jain — Analyst
Rohit Nagraj — Analyst
Ankur Periwal — Analyst
Yash Bhandari — Analyst
Rajakumar Vaidyanathan — Analyst
Archit Joshi — Analyst
Devansh Jain — Analyst
Nitesh Dhoot — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Sudarshan Chemical Industries Limited Q3 and Nine Months FY ’25 Earnings Conference Call, hosted by ICICI Securities. 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 during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Sanjesh Jain from ICICI Securities. Thank you, and over to you, sir.
Sanjesh Jain — Analyst
Thank you. Thanks, Manav. Good afternoon, everyone. Thank you for joining on Sudarshan Chemical Industries Limited Q3 and Nine-Month FY ’25 Results Conference Call. We have Sudarshan Chemical Management on call, represented by Mr Rajesh Rathi, Managing Director; Mr Nilkanth Natu, Chief Financial Officer; Mr Amey Athalye, General Manager, Finance. I would like to invite Mr Natu to initiate the — initiate with the opening remarks. Post which we will have a Q&A session. Over to thank you.
Nilkanth Natu — Chief Financial Officer
Thank you, ICICI Securities and Sanjesh Jain for hosting our earnings call. Good afternoon, ladies and gentlemen. Welcome to Sudarshan’s Q3 FY ’25 earnings conference call. Our investor presentation has been uploaded on the stock exchange 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 you — update any forward-looking statements made on this call. Now taking you to the financial highlights on the quarterly performance. On a consolidated basis for the quarter, total income from operations stood at INR66 crore as compared to INR566 crores for the same-period last year, the growth of 18%. EBITDA for the quarter stood at INR79 crores as compared to INR62 crores in-quarter three FY ’24. EBITDA margin stood at 11.9% as compared to 10.9% over the same-period last year. On the nine months performance, the total income from operation for the nine months ended December ’24 stood at INR1,996 crore versus INR1,775 crores in the same-period last year, reflecting a healthy growth of 12%. EBITDA for the period at INR254 crore versus INR197 crore last year and EBITDA margin is at 12.7% versus 11.1% — 1% over same-period last year. Now going into the details of our pigment business, for the quarter three and FY ’25, income from operations stood at INR601 crores as compared to INR521 crores for the same-period last year, growth of 15% year-on-year. This is the eighth consecutive quarter of sales growth on year-on-year basis. Seasonally, Q2 is always strong quarter, while post-festive India demand and color in the year end at the international geographies has translated into the softer Q3. The EBITDA from the pigment business has been INR79 crores as INR69 crore in-quarter three FY ’24. During the quarter, the export sales stood at INR315 crores as compared to INR244 crore, higher by around 29% year-on-year. During the quarter, we have seen healthy growth from the couple of large regions in the market. The export market continues to grow with the share of pie increased at 52% in-quarter three FY ’25 versus 47% in the previous year. India sale for the quarter is at INR286 crore, higher by 3% as compared to INR278 crores in the same-period last year due to the muted demand from the coating segment. Specialty segment sales stood at INR416 crores as compared to INR358 crore for the previous year same quarter, 16% year-on-year higher. Non-specialty sales for the quarter stood at INR186 crores, which was higher by 14% as compared to the same-period last year. The gross margin of the pigment business for the quarter has remained flat to 45.2% as against 45.5% for the same-period last year. In YTD FY ’25, the total income from operation for the pigment business stood at INR1,850 crores versus INR1,579 crores in the same-period last year, a growth of 17%. EBITDA for the nine months at INR274 crores versus INR200 crore last year and EBITDA margin is at 14.8% versus 12.7% over the same-period last year, thereby increase of 210 bps. The export has grown from INR765 crores to INR977 crores with the growth of 28%, while the domestic sales have grown from INR816 crores to INR873 crores, the growth of 7%. Now coming to the balance sheet. The balance sheet of the company continues to remain healthy. The net-debt of the company has reduced to INR362 crores in Q3 FY ’25 compared to INR434 crore of the last year Q3. The reduction in debt has resulted in improving leverage ratio to 0.3 times in-quarter three as compared to 0.4x in-quarter three of the last year. The working capital cycle continues to be managed efficiently. Cash conversion cycle is lower by four days to 80 days in-quarter three FY ’25 and remain in the same range during the year. Now coming to the engineering business. RICO performance for the quarter compared to H1 FY ’25 have shown improvement due to the execution excellence and control on the cost. The revenue for the quarter is at INR65 crores compared to INR45 crores last year, an increase of 44%. EBITDA for the quarter three FY ’25 is at breakeven compared to the negative EBITDA of INR7 crores same-period last year. We have initiated the transformation project to turn-around business into sustainable profitable business and we expect this turnaround will be visible and will benefit — benefits of the same is expected over next 18 to 24 months. I would also like to update you on the status of the acquisition transaction. Post Q1, post Q3 FY ’25, we have completed equity fundraising via qualified institutional placement and the preferential allotments. Despite challenging secondary market, the QIP order book demand was healthy and we take this opportunity to thank our investors for their confidence in growth story. Equity financing raised along with the debt financing will be used towards the proposed acquisition of Global Pigment business. We have received all the antitrust approvals and we are making constructive progress to consumate this transaction by March ’25. The company has incurred the acquisition and integration-related cost of INR41.9 crores in the current year and the same is being presented as an exceptional cost in the profitability statement. So to summarize, we are confident in our growth journey and are committed to deliver long-term value to our stakeholders. With this, we now open the floor for question-and-answer session. In this Q&A session, we request everyone to restrict the questions related to Q3 FY ’20 financial performance. Thank you.
Questions and Answers:
Operator
Thank you so much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handsets only while asking a question. Ladies and gentlemen, we’ll wait for a moment before the question queue assemble. Before we move on to the questions, I would like to remind all the participants you may press star and one to ask a question. The first question is from the line of Rohit Nagraj from B&K Securities. Please go-ahead.
Rohit Nagraj
Thanks for the opportunity. First question is on the financials. So if I look at the Pigment segment sequential EBIT as well as other engineering reco segment EBIT, both have improved. However, we have seen that the EBITDA and EBIT, which is on the reported consolidated numbers, it has declined sequentially by about 16% and 27%. Could you just help us with why this is there?
Nilkanth Natu
Rohit, can you please repeat your question — question once again?
Rohit Nagraj
Yeah. In the segmental revenues, if I look at the EBIT of pigment as well as the other segment, sequentially, that is Q-on-Q from 2Q to 3Q, it has improved. The Pigment segment EBIT has improved by almost 27%, while the other segment losses have reduced. But if I look at the EBITDA for Q2 and Q3, there is a decline. So just wanted a little more understanding why it has happened or even the EBIT has also declined. And if I consider the exceptional item, NHO that is below EBIT
Nilkanth Natu
So Rohit, if I see the segmental revenue which is given as a part of our node, correct. Now if I break this down between the pigment and the engineering business, yes, you are correct. The engineering business, the revenue sequentially has grown to INR65 crores from INR36 crore. And as far as the EBIT is concerned, it is negative INR1 crore compared to negative INR11 crore in Q2. So there is a sequential — there is an improvement. As far as the pigment results are concerned in terms of the EBIT, the revenue, as we mentioned, has come down to INR601 crore and this has been reflected in our EBIT segment result, which is at around INR48 crore compared to INR74 crore. Yeah, is related into EBITDA ROE.
Rohit Nagraj
EBIT which was segment — segment EBIT was INR38 crores, if I’m not wrong in Q2 and this quarter it is INR48 crores, if I remember correct. However, if we look at the EBIT on the consolidated reported numbers, it has come down sequentially, even the EBITDA has also come down sequentially. I mean, just in terms of the EBIT, considering on a Q-o-Q basis, in the segmental reporting, it has improved. But on the consolidated basis it has declined. So just wanted to have a perspective.
Rajesh Rathi
Yeah, Rohit, you’re comparing standalone results versus consolidated results?
Rohit Nagraj
I think it is consolidated on good. Maybe otherwise I’ll take it off.
Rajesh Rathi
Okay. Yeah. Okay. Yeah. The second question in terms of individual consumer or user segments, how has been the demand during this quarter and whether we have seen improvement or deceleration just from coatings, polymers, ings, etc
Nilkanth Natu
Think if you look at the two markets, India, in India, we’ve seen Q3 is generally a soft — softer quarter in general for the whole business. In terms of Q3, especially on the coating side, we’ve seen softer demand. Also demand of inventory destocking has taken place, but that’s where Q3, I think coatings we saw a weaker demand. In terms of overseas, I think our new products are getting good traction and we are able to gain good share there. Thank you. That’s — that’s been the general part.
Rohit Nagraj
Yeah. And are there polymers as well as success in the segment? Yeah?
Nilkanth Natu
I think those have been fairly good. We’ve been doing okay.
Rohit Nagraj
Okay. And both in domestic as well as international books.
Nilkanth Natu
Yes.
Rohit Nagraj
Fair enough. I’ll get back-in the queue. Thank you.
Operator
Thank you. We have our next question from the line of Ankur Periwal from Axis Capital. Please go-ahead.
Ankur Periwal
Yeah, hi, sir. Thanks for the opportunity. A first question on the pigments business. So if I look at our gross margin and I’m not referring to your Slide number 12 — sorry, slide number 11 on the presentation. So if I look at Pigment business, the gross margin has sort of dipped on a quarter-on-quarter basis and there is a decline in the EBITDA margin as well. While I understand that one should not look at this business on a sequential basis, but the trajectory — the upward trajectory in margins that we were seeing in first-half. In the second-half, we are largely flattish on a year-on-year basis in terms of gross margin. Any specific reason to highlight here?
Rajesh Rathi
Generally our business has taken a upswing where the product mix change has helped us improve our gross margins, which used to be probably in the 43% range right and below, which is now moving north of 45, right? And I think we should be now in the range of 45 plus in the coming in the times ahead due to our product mix change. Obviously, quarter-on-quarter things would keep changing depending on you know what’s the product mix, which customers have bought, et-cetera and how this has panned out, right? Sure. So I wouldn’t be too concerned on the gross margin area. On the EBITDA bit, of course, a few things. We had to add-in some extra resources to plan for the new growth, which is coming up and also few expenses, which we had to incur also on the extra bid. And generally, December is also an annual plant maintenance, which we look at which there is an extra — we had some extra costs. And last year the annual kind of shutdown came into January, right? So that’s a little bit of a difference.
Ankur Periwal
Sure, Raj ji. That’s helpful. Just on the revenue breakup, and you rightly — when you mentioned that gross margin now is — should be more 45% plus versus 43% plus historically. This is largely led by the product mix, higher — higher proportion of specialty revenue versus the non-specialty?
Nilkanth Natu
Yes, sir. Yes, absolutely. And the — you know the new molecules which we’ve launched, our whole strategy was to change the product mix, right?
Ankur Periwal
Correct. So this ramp-up is led by the new products that we — the new capex, the new products that we have commissioned?
Nilkanth Natu
Yes, sir.
Ankur Periwal
Okay. Sir, in the first-half, we were seeing a deflationary trend and hence volumetric growth was higher than the pigment revenue growth. Is that trend continuing in Q3 as well or we have largely caught up and now volumetric growth will be lower or at par to the revenue growth.
Nilkanth Natu
So I think we’ve caught up and I think they are in-line now.
Ankur Periwal
Okay. Okay, fair enough. And just lastly, if you may you highlight some initiatives that we have taken from a Huback side more at end in terms of ranking — ramping-up the software aspects, the manpower, the distribution network, et-cetera, especially in European market? Thank you.
Nilkanth Natu
Yeah. Hi, Ankur, can you please repeat the question?
Ankur Periwal
Yeah. So Natu ji, just wanted your thoughts on the investments that we would have done in the company more on the software aspects, which is you know, let’s say, from a technical manpower perspective, marketing distribution strength and how do you plan to ramp it up?
Nilkanth Natu
Yeah. So obviously, sir, given the current scenario, I think today we are still operating on a basis as and once we close the target, but we have been doing preparation for that for integrated structure. So where we’ve looked at, at we’ve rehired some of the technical area folks and we are preparing post D1 to really have a customer-centric technograde organization. So a lot of preparation and investments have gone into that. So, but of course, post day-one, we can activate this.
Ankur Periwal
Sure,. Just one follow-up. You know, as I see, you have highlighted that by March, we should be able to consume this transaction. By what time-frame can we look at you ramping-up business, they are into operational losses right now. So how quickly we can see a recovery there? Any broad timelines will be great.
Nilkanth Natu
So it will be very — it’s very difficult to talk about it now because of the antitrust issues, even we don’t have full transparency on the business, right? So I think we will at least require — once the — once everything is closed, we will need some time to introspect and kind of come up. We have very-high level, but we need to go into depth, look at finer numbers, et-cetera, to kind of come up with the detailed turnaround strategy. But I’m quite confident that you know, year-one itself, you should be able to kind of at least deliver positive results.
Ankur Periwal
Great, sir. That’s it from my side. Thank you and all the best. Thank you.
Operator
Thank you. A reminder to all participants, you may press star and want to ask a question. We have our next question from the line of Yash Bhandari from New Wealth and Neo Wealth and Asset Management. Please go-ahead.
Yash Bhandari
Good afternoon, sir. Congratulation on Open Offer. What are the approvals —
Nilkanth Natu
Your voice, we are not able to hear you. Can you please slightly louder?
Yash Bhandari
I’m audible now?
Operator
Hello, can you please use your handset. MR. Yash is disconnected. We’ll move on to the next question from the line of Mr Sanjesh from ICICI Securities. Please go-ahead.
Sanjesh Jain
Good afternoon, sir. Thanks for taking my question. First question on the mix and margin. The impression was that as the export grows, that will have a positive impact on the gross profit margin in the pigment business. In this quarter, exports have done well versus the domestic. But we see gross margin slightly deteriorating. Any particular reason you want to use — I know you said that there is some product mix changes and sequentially it’s difficult to call-out, but just broader understanding from a trend perspective as the export grows, the margin should improve, right?
Rajesh Rathi
No, I think absolutely, like we said with the product mix change, we should be north of 45, right? And that’s the area where we want to kind of focus our area and that’s where we will continue to deliver the growth.
Sanjesh Jain
Okay. Got it. Got it, got it. Thank you. From the new product perspective, can you help us understand in the current scenario with the ramp-up in the capex, which we completed last year. How have we seen the contribution of new product growing in the overall business for.
Nilkanth Natu
So, Nilkanth here. So as we as we mentioned earlier, the revenue ramp-up from capex projects which were commissioned till FY ’23 is progressing as expected. We had earlier guided the market that the entire ramp-up, revenue ramp-up from this particular projects will take three to four years time. We are at the midpoint of this particular projection period. Whatever the target which we have set-in for this particular new capex utilization and currently what ramp-up we are getting are in-line. And that is also if you can see that there is a slight which is also happening between specialty and non-specialty segment revenue due to that ramp-up which is happening. So we see a good progress, good acceptance from the customer and we are on-target, as we mentioned earlier, to take this ramp-up between three to four years period. We are just in the mid of this projection period. Thank you.
Sanjesh Jain
No, that’s very clear. But from a new product which got introduced with this new clients, where are the contributions today?
Rajesh Rathi
So I think the contribution — that’s what we — I think that’s what Mr tried to describe. I think we are right on-track on delivering those products, which we had said that three to four years, we should be able to fully utilize the capacities and we are right on-track on delivering those numbers and that’s where you see the material margin change coming into?
Sanjesh Jain
Got it, got it. Next on the capex front, any CapEx guidance you want to share for FY ’26?
Rajesh Rathi
No, right now, I don’t think we will have any major capexes. Right now, the Board is not — as an integrated company, we will present sometime once the day-one happens, the new budgets, etc to the Board, but we don’t see any major capex is happening in the next year.
Sanjesh Jain
Got it. And now that Rico is showing the benefit of the transformation what we have been speaking in last two, 3/4, how should we see RICO performance going into FY ’26?
Rajesh Rathi
Full benefit of the — this should look — we should — it should be at least 18 months where you see the benefit. I think as a standalone unit, we want to see good growth and a sustainable EBITDA of 10% plus in that business, right? And that’s what we want to deliver through this transformation.
Sanjesh Jain
Got it. And when we see good growth, do we mean 20% plus or like I said, sir, it’s — we don’t give forward-looking statements, but I think the transformation will entail that, right? So we want to see how we could grow that business healthily. I think more — more important is the EBITDA growth of the ROCE, right, working capital kind of control. And then of course, some strategic initiatives on the top-line growth too, right? So all this is getting executed together now, right? Right, right. Last question on the domestic pigment business. So this quarter appears to be unusually soft. You did mention that coating had a drag. But if I look at the paint company’s result from the volume perspective is still doing better because I think for us, plastics are doing growth as usual, I assume means 8% to 10% and just plus 3% growth in overall domestic business means that in coating business on a Y-o-Y basis, we have declined. I don’t think paint companies’ numbers, whatever they have been reported, they are declining. Yeah, when are we missing?
Rajesh Rathi
So I think — I think there were two points. I think like I said, there was a destocking effect because they had taken a lot of — in Q2, they had taken in more inventories and which were lying at inventories at that and that’s where we saw the destocking effect. Already in this quarter, we are seeing a good gain back, right? So I don’t think there is any business loss. I think quarter-on-quarter this adjustments are happening on the basis. And the supply portfolio, we are not losing any market-share, right? We are not losing any market-share, but that’s what I think is looking at, right?
Sanjesh Jain
Yeah. Very clear. Very clear. Just one last question. Are we also supplier for the new entrant in the pigment business so that we maintain the market-share?
Rajesh Rathi
Yeah, absolutely, sir. Absolutely.
Sanjesh Jain
Yes. Okay. Got it. Very clear. Very clear. Thank you. Thanks for answering all those questions patiently and best of luck for coming quarters.
Rajesh Rathi
Thank you. Thank you, Sanjesh.
Sanjesh Jain
Thank you, sir.
Operator
Thank you. We have our next question from the line of Rajakumar Vaidyanathan from R. K. Investments. Please go-ahead.
Rajakumar Vaidyanathan
Yeah, good evening. Can you hear me?
Operator
Yes, sir.
Rajakumar Vaidyanathan
Yeah. Thanks for the opportunity. Sir, the first question is, with this government push for this monomaterial, flexible packaging like the recyclable plastics there is also a push to reduce usage of carbon black and you know not using strong pigments, strong colored pigments because the recyclability will improve when you don’t use you know the coloured pigments. I mean you are more,
Operator
Sorry, Mr Rajakumar. Please go-ahead again.
Rajakumar Vaidyanathan
Yeah, can you hear me now?
Operator
Oh, yes.
Rajakumar Vaidyanathan
Hello. Can you hear me?
Operator
Yes, sir, we can hear you. Please go-ahead with the question.
Rajakumar Vaidyanathan
Yeah. Sir, the question is on the government push for this mono-material flexible packaging or particularly when it comes to plastics to make the plastics recyclable, there are some guidelines given in terms of reduced usage of carbon black and also usage of — I mean we should not use the strong colored pigments and so on and so forth. So I just want to know what is the long-term impact of these initiatives on our business
Rajesh Rathi
We are studying the regulation and the impact, but our preliminary analysis shows that we should not have much impact because the segment we serve is not very strong and we are coming up with some solutions there. So — but our complete plan is not in-place and we will share our plan as soon as we are ready soon. But we don’t see a major impact on us. That is the initial.
Rajakumar Vaidyanathan
Okay. Okay. And second thing, sir, what is the scenario on the raw-material inflation with the rupee depreciating, are we seeing escalation in costs or the — are the material costs are still benefit?
Rajesh Rathi
As you know, we are net exporters. So I think it doesn’t — it’s not — it is not — hi, Vijay. So as Mr Rathi said that we are the net exporter and with this rupee depreciation, we had done the simulation analysis. The current impact of this deprecision is not that material.
Rajakumar Vaidyanathan
Okay. And sir, lastly, this — with respect to this Uback acquisition, I just want to know, will we get the benefit of that whatever brought forward losses or we are only just acquiring the businesses?
Nilkanth Natu
Sorry, your last line was not very clear. Can you please repeat?
Rajakumar Vaidyanathan
So the question is, will we get the tax benefit of whatever losses this Group has incurred in the past because when we turn-around on-net profit, will we be able to leverage their tax losses?
Rajesh Rathi
So sir, as we mentioned that this particular deal is a combination of asset deal as well as the share purchase deal. So wherever there is an asset purchase deal, those losses will not be available to the purchaser. So that will not be the significant for us.
Rajakumar Vaidyanathan
Okay, sir. Thank you. T
Operator
Hank you. We have our next question from the line of Vishesh Dhoka from Nuvama Wealth. Please go-ahead.
Archit Joshi
Hi, good evening, sir. Thanks for the opportunity. This is Archit Joshi from Nuvama. Sir, I just wish to get some clarification regarding the capital structure. I think beyond the INR1,180 crores of acquisition cost, you’re also expecting roughly INR900,000 crores of refurbishments and legal costs, maybe some revamps required in the assets of. All put together, I think that number was coming somewhere between INR2,000 crores to INR2,200 odd crores. And since we have closed the QIP at roughly INR800 crores, the balance INR800 odd crores will be fully-funded. So that is the only question that I had. Rather what kind of debt levels will we be settling at over the next maybe two, three years? Thank you.
Nilkanth Natu
So I think we also have some preference shares issued. So the equity raise is about INR1,100 crores, right? And the balance will be raised to debt.
Archit Joshi
Okay. So with the existing roughly INR350-odd crores of debt, another 1,000 odd incrementally. So 1,300 crore 1,400 would be a good number just for modeling purpose. Would that be a right assumption?
Nilkanth Natu
Yeah. So we are hoping that we don’t need all the money right now immediately, but we are keeping all the lines open. But directionally, you’re right, sir.
Archit Joshi
Sure, sir. Thank you. Thanks and all the best.
Operator
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is from the line of Rohit Nagraj from B&K Securities. Please go-ahead.
Rohit Nagraj
Yeah. Thanks for the follow-up. And apologies for the previous question on the segmental front. I think there was some calculation there. So first question is on. If all the approvals are in-place by March. When do we see the consolidation happening of in our financials from numbers?
Rajesh Rathi
Hi, Rohit. So as we mentioned that all the regulatory approvals and the antitrust approvals have been received. As far as the consolidation is concerned, the financials will get incorporated into India financials after day-one
Rohit Nagraj
So technically speaking, the day-one should be April one.
Nilkanth Natu
So as we’ve indicated, day-one, we are hoping in March. Our exact date will be informed as soon as we are able to conclude on that. Yeah.
Rohit Nagraj
Sure, sure. Second question is again on the UBAC front. So we have — on the exceptional items, we have unincorporated the legal or consulting charges. But beyond that inflation standalone or consolidated Indian entity, have we taken any new manpower in terms of spearheading the business? Is it already in-place or once the consolidation is done, then we will try to look at it given that hopefully, the business on a broader front will be managed from India, although it may be having individual subsidiaries in individual countries. So just on a manpower front or from the management front, any costs which we have incurred till now or will there be incremental costs which will come post the day-one? Thank you.
Rajesh Rathi
So it’s a process which is in-process. So I think our core manpower is in-place, which we’ve already hired or are in the process of getting hired. And as we go through, we will be building the organization, but I don’t see any substantial costs coming into play.
Rohit Nagraj
So that’s it from my side. Thank you and all the best.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. I repeat, if you wish to ask a question, you may press star and 1. The next question is from the line of Devansh Jain from Neo Wealth and Asset Management. Please go-ahead.
Devansh Jain
Hello?
Operator
Yes, Mr.
Devansh Jain
Hi, sir. Good evening. I just wanted to — I have few queries regarding the Uback open offer. So what are the approvals required in the open offer and what is the expected timeline? Hello am I audible?
Rajesh Rathi
Yes. Yeah, just a second please. Yeah. Hello. Yeah. So basically this open offer process will be trigger in post-closing of the transaction and the draft later of offer will be subject to approval what are the approvals required?
Devansh Jain
And what are there any other approvals other than SEBI?
Rajesh Rathi
No, I think it is SEBI only.
Devansh Jain
Okay. So we are — we are expecting the transaction to be closed in March ’25 and then post that there will be, which will be published.
Rajesh Rathi
Yeah. Yeah
Devansh Jain
Okay, sir. Thank you.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one on touch telephone. Thank you. We have our next question from the line of Nitesh Dhoot from Dolat Capital. Please go-ahead.
Nitesh Dhoot
Yeah, hi, team. Thanks for the opportunity. So I have — my question is on the declining promoter stake or you can consider the declassification. So with this, is there a plan to transition the company towards a professionally managed entity and any changes in leadership, board composition or decision-making processes due to the reduced promoter involvement
Rajesh Rathi
So I think as we, as we go-ahead, we are getting professionally managed and also we are strategic holders of our stock and that should continue and I think we have a strong foothold. Going-forward, of course, the Board will look at how it should get reconstituted — reconstituted. Currently, there is — currently there is no such thought right now, but I think they will actively keep — consider this the next few Board meetings.
Nitesh Dhoot
Thank you, sir, and all the best.
Rajesh Rathi
Thank you.
Operator
Thank you. A reminder to all participants, if you wish to ask a question, you may press star and 1. I repeat, if you wish to ask a question, you may press star and 1. The next question is a follow-up question from the line of Rohit Nagaraj from B&K Securities. Please go-ahead.
Rohit Nagraj
Thanks for the follow-up. Just one clarification. For the open offer for Uback colorants once it goes through to fund the open offer, will we need additional debt funding at the growth level beyond what we had currently considered in terms of the acquisition cost and the refurbishment or working capital expenses?
Rajesh Rathi
In our cash influsion, that was already taken into account, sir.
Rohit Nagraj
Okay. Sure. Thanks a lot. Thanks for the clarification. Thank you.
Operator
Thank you. Ladies and gentlemen, that would be the last question for today. And I now hand the conference over to the management for closing comments. Over to you, sir.
Nilkanth Natu
Thank you. Thank you. Thank you, Mr Sanjesh Jain and ICICI Securities, and thank you participants for your time and interest in Chemicals. We remain confident in the long-term prospect of our business and we look-forward to engaging with you again in future. Thank you.
Operator
Thank you so much, sir. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.