Sudarshan Chemical Industries Limited has received a reaffirmation of its 'Crisil A1+' rating on its Rs. 50 crore commercial paper programme from Crisil, an S&P Global Company. The rating agency announced this decision on April 16, 2026, maintaining its positive assessment of the company's short-term creditworthiness.

Rating Rationale and Key Strengths

The reaffirmation reflects Crisil's expectation that Sudarshan Chemical will maintain a sizeable corpus of unencumbered liquidity of Rs. 750-850 crore over the medium term. This liquidity buffer is considered crucial during the turnaround phase of the recently acquired Heubach group, ensuring timely availability of funds for business operations and debt repayment obligations.

The rating continues to reflect several key strengths including the extensive experience of promoters in the pigment industry, established market position of both SCIL and Heubach, diversified product range and end-user industry profile, strong distribution network with marquee clientele, and average financial risk profile supported by healthy financial flexibility.

Heubach Acquisition Impact

On March 03, 2025, SCIL completed the acquisition of Heubach group for a purchase consideration of €151.9 million (approximately Rs. 1,389.9 crore). The acquisition was funded through debt of around Rs. 1,600 crore (€175 million) and equity raise of around Rs. 1,000 crore through QIP, preferential equity issuance, and convertible warrants.

Post-acquisition, Sudarshan Europe B.V., a wholly-owned subsidiary of SCIL, has indirectly acquired 54.36% shareholding in Heubach Colorants India Limited, which is listed on BSE and NSE. The combined entity now operates 19 manufacturing sites across 11 countries, making SCIL the second-largest pigments player globally behind DIC.

Financial Performance and Challenges

The acquired Heubach group has shown sequential revenue decline over three quarters of fiscal 2026, dropping from Rs. 1,882 crore in Q1 to Rs. 1,479 crore in Q3. This decline is attributed to demand softness in Europe and North America, coupled with inventory destocking by key customers.

Operating margins present a mixed picture. While the legacy business maintained stable margins at 12.8% in the first nine months of fiscal 2026 compared to 12.7% in the corresponding period of fiscal 2025, the acquired group's margins deteriorated significantly from 4.1% in Q1 FY26 to losses in Q3 FY26.

Liquidity Position and Outlook

Crisil has assessed the company's liquidity as 'Strong', highlighting the unencumbered liquid surplus of Rs. 1,097 crore as of December 31, 2025. The rating agency expects annual net cash accrual of Rs. 250-350 crore along with cash surplus of Rs. 750-850 crore to be sufficient for meeting yearly debt repayment obligations of Rs. 120-300 crore and annual capital expenditure of Rs. 150-250 crore over the next two years.

The company also maintains access to fund-based limits of Rs. 515 crore with an average 12-month drawing power of Rs. 333 crore, which has been utilized to 69% on average during the past 12 months through January 2026.

Strategic Transformation

The Heubach acquisition has significantly transformed SCIL's global footprint and product portfolio. The company now offers approximately 1,600+ products across 60+ brands, with market reach extending to around 120 countries from the previous 85 countries. The acquisition provides access to coatings, plastics, and inks segments in overseas markets with an established customer base.

While the rating reaffirmation indicates confidence in the company's fundamental strengths and liquidity position, Crisil notes that the successful execution of the turnaround strategy for the Heubach operations will be critical for maintaining the current credit risk profile and achieving improved profitability metrics over the medium term.

Sudarshan Chemical Industries Limited has submitted its quarterly compliance certificate to stock exchanges, fulfilling regulatory requirements under SEBI (Depositories and Participants) Regulations, 2018. The certificate covers the company's adherence to securities handling protocols during the fourth quarter of fiscal year 2026.

Regulatory Compliance Submission

The company filed the certificate on April 13, 2026, with both BSE Limited and National Stock Exchange of India Limited. The submission pertains to Regulation 74(5) of SEBI (Depositories and Participants) Regulations, 2018, covering the period from January 1, 2026, to March 31, 2026.

Registrar & Transfer Agent Confirmation

MUFG Intime India Private Limited, serving as the company's Registrar & Transfer Agent, issued the compliance certificate on April 6, 2026. The entity operates under SEBI Registration Number INR000004058 and was formerly known as Link Intime India Private Limited.

The certificate confirms that securities received from depository participants for dematerialisation during the quarter ended March 31, 2026, were properly processed. MUFG Intime verified that all securities were confirmed to depositories within prescribed timelines and that security certificates received for dematerialisation were appropriately handled.

Securities Handling Compliance

The confirmation certificate validates several key compliance aspects:

• Securities received for dematerialisation were confirmed or rejected to depositories as required
• All securities comprised in certificates have been listed on stock exchanges where earlier issued securities are listed
• Security certificates received were mutilated and cancelled after due verification by depository participants
• Names of depositories were substituted in the register of members as registered owners within prescribed timelines

Corporate Structure Details

MUFG Intime India Private Limited operates from Block No 202, 2nd Floor, Akshay Complex, Off Dhole Patil Road, Pune, with Corporate Identification Number U67190MH1999PTC118368. The entity's Vice President – Corporate Registry, Ashok Shetty, signed the compliance certificate on behalf of the organization.

The submission reinforces Sudarshan Chemical Industries' commitment to maintaining regulatory compliance in securities handling and depositories management, ensuring proper adherence to SEBI guidelines for investor protection and market integrity.