Sudarshan Chemical Industries , a leading player in the global pigment industry, has announced a revision in its financial guidance for FY26, citing soft global demand and high customer inventory levels. The company has adjusted its acquired group guidance from €35 million to €25-30 million for FY26, reflecting the current market challenges.

Key Highlights

• Revenue growth remained flat in the recent quarter
• Guidance for acquired group revised downward for FY26
• Q3 expected to remain subdued, with recovery anticipated from Q4 onwards
• Long-term 3-4 year projections maintained despite temporary setbacks

Market Challenges and Inventory Issues

Sudarshan Chemical has faced headwinds due to low demand across most pigment end-use sectors, particularly in coatings and plastics. This softness in demand has been attributed to high interest rates, which have led to lower household demand for paints and automotive products. The company's Managing Director, Mr. Rajesh Rathi, explained that the situation was exacerbated by unexpectedly high inventory levels at customer sites:

"Most of our global customers have degrown. But added to the problem of this degrowth was, as I had mentioned last time, during insolvencies, customers bought above normal stocks not only from Heubach, but products which were similar from competitors."

Financial Performance

The company's financial performance reflects these challenges:

The legacy Sudarshan pigment business saw flat growth, mainly affected by the coatings market in India. However, the plastics market performed well.

Outlook and Recovery

Despite the current challenges, Sudarshan Chemical remains optimistic about its long-term prospects. The company expects a recovery starting from Q4 of the current fiscal year. Mr. Rathi stated:

"Our 3- to 4-year guideline still remains the same. As I mentioned, this is a temporary phenomenon due to the demand adjustment, and that's the reason why we have to only adjust for this year. Our long-term 3- to 4-years guidance remains the same."

Integration Progress and Value Capture

The company reported positive progress in integrating its recent acquisitions, including stabilizing operations, generating good leads, and launching projects to integrate IT systems. Sudarshan Chemical is also focusing on value capture across various areas, including operations, supply chain optimization, and technical synergies.

Conclusion

While Sudarshan Chemical Industries faces short-term challenges due to soft global demand and high customer inventories, the company maintains its long-term outlook. Management expects a gradual recovery starting from Q4, with ongoing efforts in integration and value capture expected to drive future growth and efficiency.

Sudarshan Chemical Industries Limited , a prominent player in the chemical industry, has received four Goods and Services Tax (GST) orders from the Office of Superintendent Range-I, Bhabanipur, Kolkata South, West Bengal. These orders, covering the period from April 2018 to March 2022, have resulted in a total demand of Rs 38.18 lakh, comprising taxes of Rs 11.55 lakh and penalties of Rs 26.63 lakh.

Breakdown of GST Orders

The company has provided a detailed breakdown of the four GST orders:

Company's Response

Sudarshan Chemical Industries has stated that it believes it has a strong case against all points raised in these orders. The company is currently preparing to file appeals against these demands. It's worth noting that the company maintains that these orders will not have any impact on its financial, operational, or other activities.

Regulatory Compliance

In compliance with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Sudarshan Chemical Industries has duly informed the stock exchanges about these GST orders. The company has emphasized that the orders are appealable, and it is in the process of filing appeals before the appropriate authority.

Investor Considerations

While the total demand of Rs 38.18 lakh is significant, it's important for investors to note that the company is confident in its position and plans to contest these orders. The outcome of the appeals process will be crucial in determining the final financial implications, if any, for Sudarshan Chemical Industries.

As the situation develops, stakeholders should keep an eye on further updates from the company regarding the progress of its appeals and any potential impact on its financial statements.

Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Investors are advised to conduct their own research and consult with financial professionals before making investment decisions.