Sudarshan Chemical Industries Ltd — Q3 FY26

Sudarshan Chemical Industries Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=WEq9A7_HPJo Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to Sudashian Industries, Sudashian Chemical Industries Limited Q3 0:09 9 seconds and FI26 earnings conference call hosted by Anandati Sharon Stock Brokers Limited. As a reminder, all participant 0:18 18 seconds lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this 0:26 26 seconds conference is being recorded. I now hand the conference over to Mr. Nesh Dud from Anandra Sharon Stock Brokers. Thank you and over to you Mr. Dud. 0:38 38 seconds Uh thank you. Uh good morning everyone. 0:41 41 seconds Uh on behalf of Institutional Equities, I would like to thank the management of uh Sudashan Chemical Industries for giving us the opportunity to host their 0:49 49 seconds Q3 and 9 months FI26 earnings conference call. uh from the management team of Sudashan we have uh with us today Mr. 0:57 57 seconds Rajesh Rati chairman and managing director Mr. Nil Kand Natu uh chief financial officer and Mr. Amethal uh 1:05 1 minute, 5 seconds general manager of finance. Uh without further ado, I would like to hand over the call to the management for their opening remarks. Uh post which we'll 1:13 1 minute, 13 seconds open the forum for an interactive uh question and answer session. Uh thank you and over to you team. 1:22 1 minute, 22 seconds Uh thank you this is Rajesh Rati and thank you Anandra and D for hosting uh our call. uh we are looking forward to a 1:31 1 minute, 31 seconds very uh active participation u in today's call and uh um so uh with this 1:39 1 minute, 39 seconds uh I would like to start our uh presentation um so I would just like to reflect uh 1:48 1 minute, 48 seconds reflect on uh and you know remind everyone um that we completed the acquisition of Hybox Global Business 1:58 1 minute, 58 seconds which included Clarient's pigment business. Uh this uh uh you know just to remind everyone 2:05 2 minutes, 5 seconds Hobbok Legacy plus Clarion were among the top two global players with a legacy of more than 200 uh years. Sudaran on 2:15 2 minutes, 15 seconds the other hand was a fastest growing uh pigment organization uh with customer centricity at his heart and agility. 2:24 2 minutes, 24 seconds We uh our whole endeavor is that this new sudaran would be a global value adding pigment leader rooted with 2:32 2 minutes, 32 seconds customer centricity and agility and innovation coming from ibok. So we are combining this in creating a new pigment 2:41 2 minutes, 41 seconds uh global leader uh and it's it's a very exciting journey what we are embarking on. 2:51 2 minutes, 51 seconds uh altogether uh we have 19 manufacturing facilities in 11 countries and five continents. This is the major 3:00 3 minutes differentiator for us in the marketplace. Uh and 55% of our uh manufacturing footprint is in 3:09 3 minutes, 9 seconds Asia which makes us uh quite competitive. We have the broadest product portfolio uh in the industry and 3:17 3 minutes, 17 seconds uh with this new one sudashan [clears throat] we are serving new markets like uh you know cell phone market which 3:26 3 minutes, 26 seconds uh uh cell phone markets digital inks uh personal care in a much larger way. Uh 3:34 3 minutes, 34 seconds very exciting uh product portfolio and the markets we are serving. 3:40 3 minutes, 40 seconds Uh with this I would like to give you uh some update on um uh on our integration 3:47 3 minutes, 47 seconds to remind everyone we've completed uh 11 months into the integration. We've made very good progress uh progress u you 3:56 3 minutes, 56 seconds know the first thing we wanted to create was customer confidence right and customer centricity was our main theme 4:03 4 minutes, 3 seconds there we've done a lot in this region we've gained back the trust of uh customers we've improved our customer 4:12 4 minutes, 12 seconds service example you know we've created customer service uh teams locally in each country um we've rebuilt our technical marketing organization. 4:24 4 minutes, 24 seconds We we we carried high stocks for a long time to ensure that uh we uh we are able 4:31 4 minutes, 31 seconds to serve the customers well. We did not want them to experience any issues in supplies so that it builds back the 4:39 4 minutes, 39 seconds trust and that's gone a long way uh uh long way uh with us. Right. The second uh very important aspect was value 4:48 4 minutes, 48 seconds capture. Right. And we've been working very intensely and this was a thesis of the uh the second thesis where we wanted 4:57 4 minutes, 57 seconds to look at how we can turn around this business right so we've been working on multiple work streams uh across 5:04 5 minutes, 4 seconds operations procurement organization IT and fixed cost and the implementation is going very well um we already have 5:14 5 minutes, 14 seconds captured 40 uh cres of uh this which we have realized uh in our Q3 if you compare to Q1. Um 5:23 5 minutes, 23 seconds and we also have a very healthy pipeline uh going forward. 5:29 5 minutes, 29 seconds Uh in parallel uh so this in parallel uh if you look um to our value capture 5:37 5 minutes, 37 seconds efforts we are improving the setup of the operating model of one sudarian. One big initiative is creating a global 5:45 5 minutes, 45 seconds capability center. We where we plan to shift not only the back office but also 5:51 5 minutes, 51 seconds create some uh capability roles here and use um you know digital innovation to 5:58 5 minutes, 58 seconds even improve our um response time to customer become more productive. um uh this is this initiative is going to be 6:07 6 minutes, 7 seconds uh very important and I'm glad to tell you that we have inaugurated our GCC on 6:14 6 minutes, 14 seconds u February 4th and we will now be ramping up in the next uh I would say 6:20 6 minutes, 20 seconds one year uh this operations right uh again very important creating that 6:27 6 minutes, 27 seconds one culture right uh as you you know we are present in multiple geographies multiple 6:34 6 minutes, 34 seconds legacies and it was very very important to kind of create this one culture of 6:40 6 minutes, 40 seconds sudaran and we've aligned more than 90% of our colleagues uh on purpose mission 6:47 6 minutes, 47 seconds values uh on living this culture last not the least it was very important to harmonize 6:55 6 minutes, 55 seconds processes and systems we were working in on four SAPs and we 7:03 7 minutes, 3 seconds progressing very well to harmonize this into uh you know one SAP 7:10 7 minutes, 10 seconds uh by December 26. This is a very important initiative again will create a lot of productivity improvement. Uh as 7:19 7 minutes, 19 seconds imagine today we are dealing you know we we have to generate four different invoices to the customers. Uh and this 7:26 7 minutes, 26 seconds all will kind of once we have on one SAP this will all become you know one transaction right so again a great uh 7:34 7 minutes, 34 seconds deal of improvement uh we would see there and this again is progressing uh very well. 7:46 7 minutes, 46 seconds Uh now jumping into the Q3 performance. 7:49 7 minutes, 49 seconds Uh I would say Q3 quarter was a very tough quarter not just for us for the chem specialtity chemical industry very 7:57 7 minutes, 57 seconds tough quarter and uh especially uh you know the focus uh you know we saw a big 8:04 8 minutes, 4 seconds demand issues in Europe and North America. Let me talk a little more about it. Um 8:11 8 minutes, 11 seconds uh you we saw a low demand com across uh our uh across our industry right and uh 8:20 8 minutes, 20 seconds um AC across all our industries which we serve. Uh this was uh primarily if you 8:27 8 minutes, 27 seconds see the household market, paint market was uh affected, automotive market was affected and that that caused uh some uh 8:37 8 minutes, 37 seconds uh concerns. Um most of our uh customers had very subdued uh performance and they 8:44 8 minutes, 44 seconds were detocking uh uh there was a lot of detocking uh happening uh more this was the general market area 8:53 8 minutes, 53 seconds but more specifically to us during the Hobbok um insolveny time most of our 9:00 9 minutes customers were very dependent on Hbok and were insecure about the supply position and hence created a lot of high 9:08 9 minutes, 8 seconds stocks during that period. Once we started interacting with customers and uh they started gaining confidence, 9:16 9 minutes, 16 seconds these stocks they wanted to deplete, right? And their expectation was that they would start buying uh from this Q4. 9:26 9 minutes, 26 seconds Uh and we'll talk a little bit more uh when we're talking about the Q4 what what we feel uh will happen on Q4. The 9:33 9 minutes, 33 seconds other challenge in the last quarter was also the tariffs. lot of customers especially our US-based customers are a 9:40 9 minutes, 40 seconds big challenge uh and uh you know the buying was little bit muted there uh but that you know again we've got good 9:49 9 minutes, 49 seconds clarity uh going forward in this uh talking about a little bit on the 9:56 9 minutes, 56 seconds numbers uh this is a one dertion number including the pigment and repo performance uh our revenues uh you know 10:04 10 minutes, 4 seconds compared to the last quarter were flattish or slight degrowth in the legacy sudarian and of course compared to the 10:11 10 minutes, 11 seconds last quarter uh we've deown uh this is mainly attributed to the same issues 10:18 10 minutes, 18 seconds which I described the acquired groups saw a a larger uh dip mainly on account 10:26 10 minutes, 26 seconds of destocking uh by our customers uh as they had high stocks of hibbok related 10:32 10 minutes, 32 seconds products um and as one sudarian um you know we did uh compared to Q2 because uh 10:40 10 minutes, 40 seconds the Q Q3 was far uh more subdued um I'll talk a little uh more on the numbers 10:47 10 minutes, 47 seconds later um uh you know uh I can I can continue here maybe the AIDA on the acquired group uh 10:56 10 minutes, 56 seconds we saw a loss of uh 38 kores and um after the ex and we also due to labor 11:05 11 minutes, 5 seconds code I think we had uh 46 crores 46 kores approximately of due to the labor 11:12 11 minutes, 12 seconds code uh we had to make for one sudashan provision right um so 11:20 11 minutes, 20 seconds this was uh this was the overall performance the 9-month performance uh if you see uh 11:29 11 minutes, 29 seconds sudashan legacy has been flattish um and the uh 11:35 11 minutes, 35 seconds And as one sudarian of course it's not a comparable thing because uh you know the corresponding 9 months did not have the acquired right. 11:51 11 minutes, 51 seconds uh I think uh as I said in the pigment uh from this is a deep dive into the pigment business and u uh as I mentioned 12:00 12 minutes our business was uh flattish compared to Q3 given the muted demand uh and I'll 12:07 12 minutes, 7 seconds speak uh a little more in fact uh I would want to deep dive a little more on the acquired group uh given the 12:15 12 minutes, 15 seconds performance and uh you know uh So if you look at uh if if you look at 12:23 12 minutes, 23 seconds the acquired group only now I'm going to speak on the acquired group Q1 we reported a profit of 78 kores right and 12:31 12 minutes, 31 seconds this is the bridge from 78 kores to how we reach to a negative 38 right uh so I 12:39 12 minutes, 39 seconds think there were two areas one was a selling price variance uh then a huge drop in volume and mix right which cost 12:47 12 minutes, 47 seconds 116 million but on The positive side we could reduce cost of employees by 25 12:55 12 minutes, 55 seconds kores and other IT cost insurance and other fixed cost we could uh reduce by 13:01 13 minutes, 1 second 15 kores and hence uh we ended up at 38 kores. If our cost reduction uh efforts 13:10 13 minutes, 10 seconds were not there, you know, our losses could have been 78 crores, right? 13:22 13 minutes, 22 seconds This is a 9-month uh pigment performance. U again uh similar uh uh uh 13:29 13 minutes, 29 seconds area numbers 13:37 13 minutes, 37 seconds uh on reco you want thank you Mr. 13:42 13 minutes, 42 seconds on the reco performance the quarter consideration we we we see the revenue at 51 CR compared to 60 K last quarter 13:52 13 minutes, 52 seconds uh and on the IITA side it is marginal negative but what is positive if we see for 9 month performance there has been a 14:01 14 minutes, 1 second lot of improvement in the IITA compared to the last year negative 20 K to the current year 9 months performance of 4.2 14:11 14 minutes, 11 seconds A couple of initiatives which we have started in the REO business. One is uh you know the transformation of the 14:18 14 minutes, 18 seconds business and the fixed cost control as well as you know uh strict monitoring of the project cost is 14:27 14 minutes, 27 seconds helping us to regain the deba. We expect a quarter four for this business to be good and uh this will be the turnaround year for the banking. 14:40 14 minutes, 40 seconds On the financial ratio side uh earning per share EPS before exceptional not 14:48 14 minutes, 48 seconds annualized is negative 1.4 majorly for for the 9 months. 14:54 14 minutes, 54 seconds Sir sorry to interrupt you. Can I request to get the mic closer towards your side a little bit? 15:03 15 minutes, 3 seconds Yeah. Now is this. 15:05 15 minutes, 5 seconds Yes sir. Yes sir. Much better. Thank you. 15:08 15 minutes, 8 seconds Uh thank you. Earning per share for the period in the review is negative 1.4 uh rupees per equity share. We see 15:18 15 minutes, 18 seconds positive in terms of the net to equity ratio is at 0.5 and this has been in the similar range for the couple of quarters 15:26 15 minutes, 26 seconds and the networking capital is at 20 25.6%. 15:31 15 minutes, 31 seconds And we are focusing on optimization of the networking capitals going forward in the coming quarters. Thank you. 15:42 15 minutes, 42 seconds Uh with this we complete the Q3 performance. wanted to give you an outlook uh for the business. 15:50 15 minutes, 50 seconds [clears throat] 15:50 15 minutes, 50 seconds uh as we described I think Q2 and Q and especially Q3 were very subdued performance but I'm glad that the worst 15:57 15 minutes, 57 seconds is behind us and uh uh we look forward uh you know and you know that it was an 16:04 16 minutes, 4 seconds industry issue um and one must understand that uh you know we acquired this business the transformation uh was 16:13 16 minutes, 13 seconds going forward and uh at the same you know the uh subdued demand and of the 16:20 16 minutes, 20 seconds industry didn't help us right so that's but I'm glad to tell you that that's behind us and we are looking forward to 16:27 16 minutes, 27 seconds a very positive uh uh you know going forward very positive results right uh as I mentioned customer trust is rebuilt 16:36 16 minutes, 36 seconds and uh uh they had assured us that they will start buying after January and I'm very glad to tell you that um uh most of 16:44 16 minutes, 44 seconds the global accounts have uh started buying uh to to the full extent which was promised it and this is what we've 16:52 16 minutes, 52 seconds seen in January and early Feb. Uh we also see good you know better signs of a 16:59 16 minutes, 59 seconds little bit of economic recovery. Uh our integration is progressing very well and we will continue to build a solid one 17:08 17 minutes, 8 seconds sudashan right. Our value capture work uh is going very well and that should really help our uh uh profit going 17:16 17 minutes, 16 seconds forward and working capital improvements. 17:23 17 minutes, 23 seconds uh as I described uh due to you know Q1 we were uh we had come back well but given the subdued performance of Q2 and 17:32 17 minutes, 32 seconds Q3 uh our AIDA has been at 6.5 million but we have a very good positive momentum 17:39 17 minutes, 39 seconds and outlook and uh I want to ex I want to kind of clarify here that we expect a 17:47 17 minutes, 47 seconds 9 to 10 million of a business aida right however we are in a mode Now to start because we've rebuilt some of our supply 17:55 17 minutes, 55 seconds chain processes and uh we've understood what the customer demand is. We want to start reducing our inventories now 18:05 18 minutes, 5 seconds finished especially the finished good inventories and that would have a impact 18:11 18 minutes, 11 seconds uh on uh on our on our IIDA going forward but it will have a very positive impact on cash flow uh and you know and 18:21 18 minutes, 21 seconds that's the right business decision uh going forward right in the coming three uh I'll talk a little bit more on this 18:28 18 minutes, 28 seconds so that I clarify uh What we mean uh is business iida is the operating profit from actual sales 18:36 18 minutes, 36 seconds without the impact of inventory change and uh inventory change uh and 18:44 18 minutes, 44 seconds especially the inventory change at uh manufacturing locations and I uh and I'll clarify what I mean here right the 18:53 18 minutes, 53 seconds reported IITA we are talking about operating profit from actual sales with the impact of inventory change at 19:01 19 minutes, 1 second manufacturing sites, right? Um our target in the next three quarters is to 19:08 19 minutes, 8 seconds reduce our inventory in the range of 30 to 14 million. Right. Uh this is uh 19:15 19 minutes, 15 seconds business positive as it will generate higher operating cash while reducing finished goods inventory. However, like 19:23 19 minutes, 23 seconds I said, temporary we anticipate that this will lead to a reduction in reported EITA. 19:31 19 minutes, 31 seconds The balance sheet impact as you can imagine this will reduce the working capital, generate a operating cash flow 19:38 19 minutes, 38 seconds at the current uh run rate of sales. Uh this will have a positive impact on the balance sheet and net level will be lower. 19:49 19 minutes, 49 seconds However, on the P&L, rationalization of production volume in the coming quarters is likely to have an impact on the 19:56 19 minutes, 56 seconds reported IIDA due to the release of capitalized overhead or inventories 20:03 20 minutes, 3 seconds overhead in the range of 9 to 12 million and this would happen in the next uh three quarters. This will be a short-term impact on a analyzed patient. 20:12 20 minutes, 12 seconds This should get normalized. 20:17 20 minutes, 17 seconds So uh I think to summarize on the balance sheet uh we'll be able to reduce the inventory to the range of 30 to 40 20:24 20 minutes, 24 seconds million which will have a very significant positive impact on our balance sheet uh improved position of 20:31 20 minutes, 31 seconds net debt. Uh however on the P&L uh we you know there would there could be a 9 20:38 20 minutes, 38 seconds to 10 million of uh this mainly due to um you know the over um overhead 20:45 20 minutes, 45 seconds absorption uh right the overhead absorption uh having this right 20:53 20 minutes, 53 seconds uh you want to add anything nu on this Right. 21:01 21 minutes, 1 second We uh uh just to remind everyone and kind of uh we you know we we took over 21:08 21 minutes, 8 seconds this business uh which we [clears throat] were not which was not doing very well and we needed some time 21:15 21 minutes, 15 seconds to transform it though I would have loved that we you know uh we did this much faster but there are some realities 21:23 21 minutes, 23 seconds and that's what's happening uh you know given the market conditions uh this has been a little slower than what where we 21:31 21 minutes, 31 seconds wanted to reach but we must remind ourselves that Sudarin is now one of the largest pigment players in the world. We have the widest product portfolio. 21:40 21 minutes, 40 seconds There are industry tailwinds which are supporting us. We are structurally advantage with our global footprint. As 21:48 21 minutes, 48 seconds I mentioned 55% of our manufacturing footprint is based uh out of Asia which 21:56 21 minutes, 56 seconds is a big advantage for us compared to any of uh to our uh global competitor 22:03 22 minutes, 3 seconds and uh our ITA performance is heading the right directions as synergies are slowly coming together. Right. 22:15 22 minutes, 15 seconds With this uh with this I would like to uh you know this was our uh small presentations and with this we would be open to taking any questions. 22:26 22 minutes, 26 seconds [clears throat] 22:59 22 minutes, 59 seconds Thank you very much. We'll now begin with the question and answer session. 23:04 23 minutes, 4 seconds Anyone who wishes to ask a question may click on the raise hand icon to ask your question. Kindly accept the prompt and 23:13 23 minutes, 13 seconds announce your company name before proceeding with your question. 23:17 23 minutes, 17 seconds Participants are requested to reset to two questions per participant. 23:29 23 minutes, 29 seconds First question is from the line of Sanjay Chain. 23:37 23 minutes, 37 seconds Yeah. Hi. Uh good morning. Uh thanks for taking my questions. I got a few of them. 23:43 23 minutes, 43 seconds Uh first on the Sanjesh sorry to interrupt you before you proceed with your question kindly uh yeah sorry uh so this is Sanjay Jin I am 23:51 23 minutes, 51 seconds from ICSA securities uh thanks for reminding that uh so so couple of questions from my side uh uh first on 24:00 24 minutes the uh cost side uh now that there is a sharp rise in the benzene prices and we have seen in the earlier aar of sudashan 24:10 24 minutes, 10 seconds uh just wanted to understand how a merged entity looks Looks like uh the price hack used to take a quarter or two 24:16 24 minutes, 16 seconds uh before we uh get the full benefit on our P&L and that used to put a temporary pressure on margin. Uh now that there is 24:24 24 minutes, 24 seconds a sharp increase uh from the low end of uh the benzing derivative now uh how do you see cost pressure panning out say in 24:32 24 minutes, 32 seconds a quarter uh next quarter or a quarter after that? Uh that's my first question. 24:37 24 minutes, 37 seconds Uh second question on the inventory uh that we are trying to liquidate now uh generate more cash and have a better or 24:45 24 minutes, 45 seconds a lighter position. I thought this should have started immediately push the uh merger at least at our end. I can 24:54 24 minutes, 54 seconds understand customer being a little skeptic uh on the continuity part but from the sudian perspective we should 25:01 25 minutes, 1 second have uh embarked on this earlier. Why now? Why two quarter of delay? We were uh looking or be uh we are looking to 25:09 25 minutes, 9 seconds completely acquire stabilize operation and only then go for a uh liquidation of inventory from a BCP perspective and now 25:17 25 minutes, 17 seconds we are more confident in doing that. Is that the right way to see? These are my initial two questions. Thank you. 25:24 25 minutes, 24 seconds Thank you. Uh thank you so much uh Jen. 25:27 25 minutes, 27 seconds Uh great questions. I think the first one is uh uh on the benzene side we do you know on certain raw materials we do 25:36 25 minutes, 36 seconds see uh increases but I think uh we are very well we are well covered on uh the raw materials and we should not see any 25:45 25 minutes, 45 seconds impact on Q4. Secondly, our with our larger portfolio uh our dependency the impact which could have especially if 25:54 25 minutes, 54 seconds you refer to benzene would be quite u minuscule right so in general we don't see this right uh the number two 26:03 26 minutes, 3 seconds question is very important strategically uh as you may recall our most important aspect was to build 26:12 26 minutes, 12 seconds customer trust uh at the same time all our supply chain processes were broken. 26:18 26 minutes, 18 seconds Uh we had to implement a common uh supply chain planning um tool across the 26:26 26 minutes, 26 seconds three legacies. Uh and uh that has progressed well. We had to create a good supply chain organization. 26:34 26 minutes, 34 seconds uh and until we had that confidence that we will be able to deliver deliver uh c 26:42 26 minutes, 42 seconds as per customers expectation we did not want our customer you know we did not want to start reducing inventories 26:50 26 minutes, 50 seconds because that would have disrupted our building the customer confidence. One of the most pain area for them in the last 26:58 26 minutes, 58 seconds three years was complete disruption on um uh disruption on um supplies and I'm 27:08 27 minutes, 8 seconds very glad to tell you that our strategies worked well. The first nine months has created a very good um 27:15 27 minutes, 15 seconds confidence with the customers. We have uh built some of our uh processes uh though uh we have to do some more work 27:22 27 minutes, 22 seconds but we now feel confident that we can start reducing um uh in inventories. 27:31 27 minutes, 31 seconds That's that's clear. Uh followup question on the demand side. uh now that this quarter has been quite subdued and 27:40 27 minutes, 40 seconds we appear to be more confident for Q4 uh from the time we started uh on the AITA 27:46 27 minutes, 46 seconds side we started with 38 million euro on the anticipation and now we are uh three quarters down the line standing at $16 27:55 27 minutes, 55 seconds million how do we uh remain confident of profitability being maintained and improved from here and number two on the 28:02 28 minutes, 2 seconds demand side what is giving us the confidence is there order backlog or a 28:10 28 minutes, 10 seconds order book which we are sitting on. 28:13 28 minutes, 13 seconds Sorry to interrupt you. We are losing your audio. So the confidence on a much better Q. Thank you. 28:21 28 minutes, 21 seconds Uh but can you get my question or do you want me to repeat it? 28:24 28 minutes, 24 seconds So I think the first thing I think your first question was on what is our confidence on the demand? Um uh our our 28:32 28 minutes, 32 seconds confidence on the demand uh is uh uh as as I mentioned the customers promised that they could uh they would start 28:41 28 minutes, 41 seconds buying uh after January and we are seeing that uh already in January and early February as I mentioned. So that 28:49 28 minutes, 49 seconds gives us the confidence that Q4 uh you know demand is coming back right. Um 28:57 28 minutes, 57 seconds basically uh structurally uh why we are confident about delivering our long-term target is 29:04 29 minutes, 4 seconds none of our uh our thesis uh remains uh strong. We are working on the value capture. We build customer trust and uh 29:13 29 minutes, 13 seconds if you know if the market uh we didn't have as much of market issues uh we would have been able to deliver a 29:22 29 minutes, 22 seconds a better number and uh that gives us the confidence of the long term. 29:34 29 minutes, 34 seconds Thank you very much Sanjay. I'll request to come back for a follow-up question. 29:41 29 minutes, 41 seconds Next question. Before that, a request to all the participants. Kindly restrict to two questions per participant. The next question is from the line of Chetan 29:49 29 minutes, 49 seconds Kera. Kindly introduce yourself and proceed with your question. 30:00 30 minutes Yeah, I'm Chetan Chola from Pragya Equities. Thanks for the opportunity. 30:05 30 minutes, 5 seconds See, as a promoter, your current stake stands approximately 8.19%. 30:10 30 minutes, 10 seconds Which is notably low. Could you share your thoughts on this holding level? Any plans to increase it or how it align with your company's long-term strategy. 30:24 30 minutes, 24 seconds uh we've we've transformed uh Sudaran into uh a more of a I would say 30:31 30 minutes, 31 seconds professionallydriven organization and uh you know our shareholding is uh u you 30:39 30 minutes, 39 seconds know quite uh substantial the Raki family uh owns uh substantial shareholding and they'll continue 30:47 30 minutes, 47 seconds supporting us we have several good strategic investors uh I would say investors 30:54 30 minutes, 54 seconds who are uh be [clears throat] long-term uh I have already um I think from my perspective uh uh I have uh I have 31:04 31 minutes, 4 seconds warrants which uh will come and that will help to increase my shareholding 31:12 31 minutes, 12 seconds yeah my second question is what's your long-term strategy of all operation is there any plan to merge or high for or 31:20 31 minutes, 20 seconds some of the operation or diver some of the offers. 31:30 31 minutes, 30 seconds Whatever manufacturing footprint changes uh whatever manufacturing footprint changes we wanted to uh bring in we have 31:38 31 minutes, 38 seconds already brought those u uh we have brought those uh changes uh some uh you know Frankfurt was to be right sized 31:47 31 minutes, 47 seconds which has been uh done and uh that's uh you know that production is already transferred into India uh we don't see 31:56 31 minutes, 56 seconds uh any need to further I mean there will be tactical but No major kind of changes in uh manufacturing. Yeah. 32:05 32 minutes, 5 seconds Yeah. Your thought on you US trade deals and what kind of advantages we will have because of it. Thanks for this that's all from my side. 32:16 32 minutes, 16 seconds um in in the short term uh there will not be any immediate impact given that it would take at least 10 to 12 months 32:23 32 minutes, 23 seconds until the agreement gets ratified by EU and India before the actual enforcement. 32:29 32 minutes, 29 seconds Uh we will continue to closely track developments to assess the implications and accordingly re-evaluate our approach 32:38 32 minutes, 38 seconds as required. Our global production footprints allows flexibility to respond as the market and policy conditions 32:44 32 minutes, 44 seconds evolve and that's where I think uh you know it's we are very keenly looking at how this EU uh India EU FDA shapes up. 32:59 32 minutes, 59 seconds Thank you very much. 33:01 33 minutes, 1 second Next question is from the line of Jag Kamani Kani introduce yourself and proceed with your question. Yeah. Hi Jesus Kamani 33:10 33 minutes, 10 seconds from Nepal missure fund. Hope I'm audible. 33:14 33 minutes, 14 seconds Yeah. Uh just on the seasonality part in huba. So we have only just three quarter number of the hub. So just can you help 33:22 33 minutes, 22 seconds understand about the seasonality part like if you take out from first quarter to third quarter it looks like revenue is declined by 20%age. So out of that uh 33:31 33 minutes, 31 seconds how much is because of the seasonality element and how much is because of the big demand and so out of say if you take about 100 as a base for full year 33:40 33 minutes, 40 seconds generally how the seasonality pattern happen between 1 Q 2 Q 3 Q and 4 Q. 33:47 33 minutes, 47 seconds So um J thank you. I think most of you know when you see the subdued 33:54 33 minutes, 54 seconds performance today compared to Q1 to Q3 it is primarily driven that of detocking and uh they you know so we won't see 34:03 34 minutes, 3 seconds such a strong uh you know going forward this is not a seasonality effect of course um uh as we now become more 34:12 34 minutes, 12 seconds global uh the seasonality December generally you know generally December is 34:20 34 minutes, 20 seconds a uh last I would say at least last uh 10 days of the month everything is closed and uh so that's the impact we 34:29 34 minutes, 29 seconds see the 10 days in the 120 days where uh we see that uh demand especially in Europe uh and latam yeah so but the 34:39 34 minutes, 39 seconds current [clears throat] performance which you're seeing is largely uh you know it won't be that drastic though Q3 would be our weakest quarter it won't be 34:48 34 minutes, 48 seconds that drastic following of the middle understood and second uh question on the f cost structure so if I assume that 45% 34:57 34 minutes, 57 seconds is a gross margin so if you take in first quarter where we close to around 78 K kind of beta on the revenue base of 35:04 35 minutes, 4 seconds 1880 K uh roughly around uh x of roial our overhead cost including fish and variable was roughly around 950 to,000 35:12 35 minutes, 12 seconds cr at the uh hub level so when you mention that 45 cr kind of saving 40 cr kind of saving you achieve in last two 35:20 35 minutes, 20 seconds quarter is just 4% of the total overhead cost both fixed and variable. So it looks slightly on the lower side 35:28 35 minutes, 28 seconds considering you mentioned that there's a large amount of the overhead cost and everything and which there is a optionality available on the reduction part. 35:38 35 minutes, 38 seconds So uh so Jignh if you look at our cost uh if you look at our pipeline of value capture that is very strong. However, 35:46 35 minutes, 46 seconds for it to hit the IIDA, right, we need uh you know, it's a timing effect, right? Because uh please remember that 35:53 35 minutes, 53 seconds we it's not even 10 months that we've taken over this asset, right? And uh uh for us to start uh looking at some 36:01 36 minutes, 1 second areas, it does uh it does take time and of course we are uh we dealing with uh a 36:08 36 minutes, 8 seconds very stringent uh countries where the labor law is uh difficult. some of the other costs which takes time. So from 36:17 36 minutes, 17 seconds that perspective the pipeline may pipeline is larger but the impact on PNL takes time to come in. 36:25 36 minutes, 25 seconds Sure. And my last question on say if you take about this uh 4,000 port annual fixed uh annual cost ex of the raw 36:33 36 minutes, 33 seconds material how much proportion is the fixed cost and how much is variable because even a slight drop in revenue will if it fixed cost component is very 36:42 36 minutes, 42 seconds high then volatility in EIA will be much sharper because of the higher element of fixed cost at least till the time uh our 36:49 36 minutes, 49 seconds cost uh I can say benefit will flow to the P&L. 36:54 36 minutes, 54 seconds So uh one of the challenges and that's where I think we are focusing on fixed cost reduction [clears throat] the acquired group the manufacturing uh cost 37:03 37 minutes, 3 seconds fixed cost is very high compared to the variable cost right and if you look at legacy sudashan it's quite you know the 37:10 37 minutes, 10 seconds variable cost is high the fixed cost is low and that's why any perform any dip 37:16 37 minutes, 16 seconds in uh demand causes a much larger uh impact on the iota on the acquired and 37:25 37 minutes, 25 seconds that's that's uh that's the area we are working. 37:30 37 minutes, 30 seconds Thank you Jesus. I'll request to come back for a follow-up question. A kind request to all the participants. Please limit your questions to two per participant. 37:40 37 minutes, 40 seconds Next question is from the line of Dan Dakshid. 37:43 37 minutes, 43 seconds Kindly kindly introduce yourself and proceed with your question. 37:49 37 minutes, 49 seconds Yeah. Yeah. Thanks. Thanks for taking my question. Uh this is Gagand Digshit from LR Securities. Uh so so till now you 37:56 37 minutes, 56 seconds have achieved 40 crly rate of the cost saving from the synergy. So so what is the uh your target uh I mean at the end 38:05 38 minutes, 5 seconds of the app 27 quarter the I mean the synergy that you want to achieve from it and uh uh and is there any uh 38:14 38 minutes, 14 seconds restructuring costs further need to be incurred in this whole process? That's my first question sir. 38:22 38 minutes, 22 seconds So Gaga G the entire thesis uh of what we are looking at the long-term 3 to four year target right where we are 38:30 38 minutes, 30 seconds going to deliver where we're looking to deliver 90 to 100 million comes a lot from uh you know assuming that there is 38:37 38 minutes, 37 seconds normal sales uh going on comes from cost reduction [clears throat] and I can tell you that our uh funnel uh of cost 38:46 38 minutes, 46 seconds reduction is going in the right direction right uh you know the you know so far the impact was also of the timing 38:54 38 minutes, 54 seconds so far and given the volume was much lower we could not see that impact uh on 39:01 39 minutes, 1 second the PN okay sir uh my 39:09 39 minutes, 9 seconds uh uh yeah uh my second question is sir your net is at the council group level is 1153 cr while 39:17 39 minutes, 17 seconds your finance cost is around 40 K. So, so it looks like that uh rate 39:24 39 minutes, 24 seconds is very high more than 13% annualized rate looks like. So, do you have any plan for the refinancing of your that's that's my second question? 39:36 39 minutes, 36 seconds Uh uh thanks for the question here. So uh in terms of the interest cost uh it has 39:45 39 minutes, 45 seconds two element. One is the interest cost on the borrowings and also as per the in this accounting standard we also need to 39:52 39 minutes, 52 seconds account for uh the finance cost on the leases uh uh etc. So if I see only the 39:59 39 minutes, 59 seconds normal run rate of the bank finance which we had taken for this acquisition and overall date level uh we are in the 40:07 40 minutes, 7 seconds range of 5.75 to 6% as a interest cost balance effect is because of the India's 40:14 40 minutes, 14 seconds accounting on the lease and the other fair valuation of the land. Thank you. 40:20 40 minutes, 20 seconds Yeah that's thank thanks sir. Thanks thank you. 40:26 40 minutes, 26 seconds Next question is from the line of Rohit Puti. 40:29 40 minutes, 29 seconds Kindly introduce yourself and proceed with your question. 40:34 40 minutes, 34 seconds Uh yes u thank you uh Mr. Rati for a very elaborate uh explanation. 40:40 40 minutes, 40 seconds Uh I would have two questions principally. Uh I saw somewhere in the slide and you saying that the business 40:47 40 minutes, 47 seconds aida would be roughly€ 10 million um in the quarter to come. um uh and probably u a little higher in the quarter next. 40:59 40 minutes, 59 seconds Uh however, there would be a a one-time inventory loss u which would take down the reported IIDA. But is it fair to 41:07 41 minutes, 7 seconds understand that uh over the next two quarter the business ibida would be 10 and say 12 or 13 about 25 million euros 41:16 41 minutes, 16 seconds and there would be a one-time stock impact which would uh take it down to about 7 or 8 million over the next two 41:25 41 minutes, 25 seconds quarters. Second, uh due to this liquidation, will the entire €40 million 41:31 41 minutes, 31 seconds uh lead to uh a debt reduction and uh just as a uh uh question uh January has 41:39 41 minutes, 39 seconds already gone by and we are probably in the middle of February. Uh what is the confidence of the management to hit u60 41:48 41 minutes, 48 seconds to 165 million e of sales from our European acquisition? 41:57 41 minutes, 57 seconds Uh Ro great uh great question. So first of all I think u the confidence uh level 42:03 42 minutes, 3 seconds of uh Q4 is quite high based on uh our performance so far right uh from that 42:11 42 minutes, 11 seconds perspective our uh uh what we what we are looking at is u um Roi what we're 42:19 42 minutes, 19 seconds looking at is u uh what you what you described uh going forward on the business aida uh that's correct and we 42:29 42 minutes, 29 seconds are looking to reduce uh 30 to 40 million of inventory which uh would 42:37 42 minutes, 37 seconds translate into um you know translate into cash and reduction in net debt uh 42:44 42 minutes, 44 seconds as time uh progresses and the impact of that uh in the short term could be 9 to 12 million and we must understand that 42:52 42 minutes, 52 seconds this is only because of the overhead allocation the inventory this is not bad inventory this is all good inventory Right. The only thing what's going to 43:01 43 minutes, 1 second happen is my production volumes are going to be much lower than my sales volume and that's where it gets impacted. 43:09 43 minutes, 9 seconds Uh did I answer your question Ro? 43:11 43 minutes, 11 seconds Uh yes. So what you are saying is once the 3040 million euros of stock is uh 43:18 43 minutes, 18 seconds sold uh probably from Q2 financial year next uh you would normalize your production and sales levels to a little 43:27 43 minutes, 27 seconds higher than what we've seen or what we are seeing in this quarter and next and correspondingly the uh both the business 43:35 43 minutes, 35 seconds iida would go up and there would be uh pretty less inventory losses from Q2 onwards. 43:41 43 minutes, 41 seconds Uh very well said. Well, very well captured. Thank you. 43:50 43 minutes, 50 seconds Thank you very much. 43:54 43 minutes, 54 seconds Next question is from the line of Share Malan. Can you introduce yourself and proceed with your question? 44:07 44 minutes, 7 seconds At this time, may I request to unmute your line and proceed with your question? 44:20 44 minutes, 20 seconds Did you know response? We move on to the next participant. 44:24 44 minutes, 24 seconds Next question is from the line of Rohit Nagaraj. Kindly introduce yourself and proceed with your question. 44:32 44 minutes, 32 seconds Uh, thanks for the opportunity. This is Rohit Aaraj from 361 capitalist. 44:38 44 minutes, 38 seconds Uh so first question uh is again in terms of the inventory liquidation. Uh is it that we will be selling this 44:46 44 minutes, 46 seconds inventory at a discount just to make sure that it gets adjusted over the next three quarters and uh a similar I mean 44:53 44 minutes, 53 seconds adjacent question to that uh this quarter on the acquired group we did about 1479 crores of sales. So for the 45:01 45 minutes, 1 second next three quarters would it be just marginal increase given that these inventories will be liquidated and there 45:08 45 minutes, 8 seconds will not be consequent growth from the current uh levels. So for next three quarters is it safe to assume that there 45:18 45 minutes, 18 seconds will be only marginal growth in terms of the acquired group revenues? Thank you. 45:24 45 minutes, 24 seconds So I think uh answering your second question there will be sales growth but we are saying that the the the sales 45:32 45 minutes, 32 seconds will be from inventory rather than fresh production. Right? So uh so what we are saying is the production volumes will 45:40 45 minutes, 40 seconds not be in line with what our sales is going to right. This is uh again to clarify this is all good inventory. 45:48 45 minutes, 48 seconds Right? So we are not uh we are not selling this at any discount or anything. This is all good uh inventory. 45:55 45 minutes, 55 seconds We are adjusting our supply chain uh parameters, our planning parameters that we can kind of uh uh do this right. Um what was the first? 46:09 46 minutes, 9 seconds Did I answer your question Ro G? 46:11 46 minutes, 11 seconds Uh yes. Yes. uh the second question uh is in terms of the inventory aligned 46:18 46 minutes, 18 seconds with the customers. So two elements to it now last quarter we had stated that 46:25 46 minutes, 25 seconds on a sequential basis we will be having more or less a similar kind of performance uh but we've seen that performance has no materially deteriorated. 46:36 46 minutes, 36 seconds Uh so uh did we not have any inkling in terms of how the customer uptake has been and second question is that is 46:45 46 minutes, 45 seconds there any challenge in terms of the uh user segment where the demand is getting hit and that's why these inventories at 46:54 46 minutes, 54 seconds the customer levels uh they are not being equated or not being used up. uh so you know two parts of the question 47:01 47 minutes, 1 second one is that uh whether our understanding of the customer inventories was not in line and second in terms of industry 47:09 47 minutes, 9 seconds landscape are there any headwinds in terms of demand or consumption thank you 47:16 47 minutes, 16 seconds so the uh the first question second question you I may need more clarity but the first question is we did expect and 47:23 47 minutes, 23 seconds that's what we said that Q3 uh demand would be uh subdued but we did not expect this to be at that level. the 47:31 47 minutes, 31 seconds amount of stocks which uh our customers carried we uh you know are uh we did not 47:39 47 minutes, 39 seconds have the it it was very difficult to estimate how much stock they have and when they'll start buying right so that was uh uh that's where uh uh we thought 47:49 47 minutes, 49 seconds Q3 uh you know though we thought it'll be more subdued than Q3 but not to the level which it fell right so from that 47:57 47 minutes, 57 seconds perspective uh that was a learning for us to see what it is but I think most of this is 48:04 48 minutes, 4 seconds behind us now right because customers has started buying uh could you clarify on the second question I didn't get the 48:12 48 minutes, 12 seconds uh uh so the consumption at the customer end which remains subdued and because of 48:20 48 minutes, 20 seconds which we are not able to sell the products uh is it due to the reason that uh the user industry consumption where 48:27 48 minutes, 27 seconds the pigments are being used uh is there any demand challenge or consumption challenge. So the industry on a large 48:35 48 minutes, 35 seconds whether it is stagnated and there has been some challenge because of which the material is not being consumed the customers. 48:44 48 minutes, 44 seconds Yes. So the demand has been challenging but this is a short-term this is not a long-term shift right I mean people will not stop painting their houses or you 48:53 48 minutes, 53 seconds know people will not stop buying cars but I think this was a temporary challenge uh and uh uh and all our customers are 49:02 49 minutes, 2 seconds facing this uh temporary challenge and uh as the economy improves I'm sure but the amount of dip it's not you know the 49:12 49 minutes, 12 seconds customer's demand is not to the level of our performance this was mainly detocking right so customers demand is 49:19 49 minutes, 19 seconds not down by 20%. Right? Customers demand would be uh you know from a perspective. 49:26 49 minutes, 26 seconds So that's that's the uh that's the big change uh that's the big difference. 49:32 49 minutes, 32 seconds Sure. Uh got that. Thank you so much and all the best. Thank you. 49:39 49 minutes, 39 seconds Next question is from the line of Kasha Pujara. kindly introduce yourself and proceed with your question. 49:47 49 minutes, 47 seconds Hi, thank you so much for taking my question. I'm Kashia from Telm India. I had a couple of questions and pardon me if it's repetitive. I just had a bad 49:55 49 minutes, 55 seconds network so might have slipped out. So firstly on the legacy sudashian business you know the revenue has been flat uh in 50:02 50 minutes, 2 seconds the first nine months and if historically this business has grown at close to 11% keer over long periods of 50:09 50 minutes, 9 seconds time uh bearing a few exceptions uh in between though uh so just one question was that you know having you know after 50:18 50 minutes, 18 seconds the hoyback integration the thought process was that some commodity products could be kind of put to India and uh 50:25 50 minutes, 25 seconds that could have in fact bumped of the India growth. So just want curious to understand from you how one should think about the legacy sudashan business 50:34 50 minutes, 34 seconds growth rates uh for the remainder part of FI26 that is Q4. Uh do you think the 50:41 50 minutes, 41 seconds softness continues or do you think that you're seeing turnaround here and what are the long-term sustainable growth rates for the legacy Sudashian business? 50:52 50 minutes, 52 seconds uh pashi um I think the fund fundamentals of the sudian business remain strong what we saw is one of the 51:01 51 minutes, 1 second uh you know like one of the exceptional quarters which we've seen in legacy sudarian in the past where the industry went through a very bad patch right and 51:10 51 minutes, 10 seconds that's where our uh uh uh even the sudarian legacy growth was uh subdued um 51:17 51 minutes, 17 seconds and uh that uh that caused uh This second clarification I would like to give you the Frankfurt products were not 51:25 51 minutes, 25 seconds transferred to Sudarian legacy but to the uh the Clariant legacy right plant. 51:32 51 minutes, 32 seconds So uh so that impact was wasn't to be seen in Sudarian legacy but u sudarian 51:39 51 minutes, 39 seconds legacy we had transformed the portfolio and those thesis of our capex still remain intact and uh we should see u you 51:48 51 minutes, 48 seconds know growth returning back u uh returning back so from Q4 FI26 you think we'll be back 51:56 51 minutes, 56 seconds on that 10 11% growth rates of Sudashan legacy business I would not like to give but I'm saying 52:04 52 minutes, 4 seconds in the long term we should be back to 10 11%. 52:08 52 minutes, 8 seconds Sure. And just on the highback piece while lot has been discussed there uh the demand that we are seeing right now 52:15 52 minutes, 15 seconds uh that on which you are basing your guidance of say 9 10 million in FI26 Q4 52:21 52 minutes, 21 seconds is it a function of uh restocking at the customer level that's coming back or is 52:27 52 minutes, 27 seconds it uh that the demand environment has actually picked up because uh you know I'm just trying to understand whether 52:36 52 minutes, 36 seconds this is more like a one time uptake in Q4 as restocking happens or is the end demand environment gradually turning better? 52:45 52 minutes, 45 seconds Uh like I described sir the demand is subdued but not to the level we saw our performance right. So uh the customers 52:53 52 minutes, 53 seconds finish their detocking and they are buying because there is normal you know probably demand uh there right and so 53:01 53 minutes, 1 second it's not going to be just a Q4 effect but this is we are saying that demand is coming back right because the detocking 53:09 53 minutes, 9 seconds uh is over and people will start buying normally understood and I'm sorry just one more 53:16 53 minutes, 16 seconds question uh uh so this 10% margin guided millions or on a billion dollar close to 53:23 53 minutes, 23 seconds say 90 or 100 billion of euro AITA that you're kind of guiding. Uh just how are your thoughts 53:31 53 minutes, 31 seconds on uh this? Is it more like a backended number or do you think that uh you know you will be able to kind of build it 53:40 53 minutes, 40 seconds more linearly in terms of cost optimization working capital initiatives? Would it be like you know some trickling in in 27 28 or everything 53:48 53 minutes, 48 seconds kind of trickles in more towards the end? Just trying to think about how one should build a bridge to 10% uh or 100 million aida that you're kind of implying. 53:59 53 minutes, 59 seconds Um no absolutely Kashm G. So I think uh we would see uh a gradual uh improvement in performance and a ramp up uh and then 54:08 54 minutes, 8 seconds u you know there would be a little bit of a update because all our initiatives will be completed uh on cost reduction 54:16 54 minutes, 16 seconds for the next year. So the full year benefit you will see uh towards the end but you will see a gradual improvement. 54:22 54 minutes, 22 seconds It's not going to happen that it's uh you know the last year you will see everything. 54:28 54 minutes, 28 seconds Understood. Understood. and [clears throat] and generally if I okay uh do I have room for one more question sorry uh 54:36 54 minutes, 36 seconds s requested to come back for a followup question please no problem no problem thank you thank you next question is from the line 54:44 54 minutes, 44 seconds of Atish Milan kindly introduce yourself and proceed with your question uh yeah good morning I'm Atish from 54:52 54 minutes, 52 seconds Abakis mutual fund uh just two questions from my side firstly on a consolidated basis what percentage of your employee 54:59 54 minutes, 59 seconds Toy cost is currently coming from outside of Asia and specifically from Europe 55:23 55 minutes, 23 seconds uh difficult to answer just off hand uh this number but I think if you can ask what's your intention 55:30 55 minutes, 30 seconds uh you know more than happy to answer uh uh you know what where we were headed. 55:36 55 minutes, 36 seconds No, I'm just trying to ascertain because you als you you had mentioned that about 55% of your manufacturing footprint is coming from Asia, right? I'm just trying 55:43 55 minutes, 43 seconds to get a sense of the employee cost because obviously that's a big percentage of your um overall cost profile now. 55:51 55 minutes, 51 seconds Yeah. So I think our u uh you know our aim is to kind of get to uh a 12 to 13% 56:00 56 minutes of employee cost uh in the long run right and that's where we are targeting towards uh gaining a lot um you know uh 56:08 56 minutes, 8 seconds there is a other than manufacturing u there's a big setup uh even uh you know outside of India in terms of uh 56:17 56 minutes, 17 seconds innovation uh u you know the entire technology G um this and support and a lot of support uh 56:25 56 minutes, 25 seconds to the business right okay so just to that point since Q1 uh we've been seeing obviously there's been 56:33 56 minutes, 33 seconds reductions sequential reduction in the total employee cost so if you could just probably mention how you've achieved that 56:42 56 minutes, 42 seconds um as as I stated we have um you know you you know our o structure design is very lean and it's a functional 56:49 56 minutes, 49 seconds organization Earlier there were there were BU organization there was a lot more management out of Europe which has been streamlined. 57:01 57 minutes, 1 second Understood. Okay. Thank you and good luck for the forthcoming quarters. Thank you sir. 57:07 57 minutes, 7 seconds Thank you very much. Next question is from the land of the matur. Kindly introduce yourself and proceed with your question. 57:21 57 minutes, 21 seconds D may request to unmute your line and proceed with your question. Hello. 57:32 57 minutes, 32 seconds Yes, you're audible. Go ahead. 57:33 57 minutes, 33 seconds Thank you so much. Uh Du from SDFCMF. Uh so a question on the legacy business. Uh so uh so there's some uh weakness in 57:41 57 minutes, 41 seconds terms of probably the growth has uh slowed a bit. uh I'm not sure if so the legacy business and the uh acquired business I'm not sure the portfolio is 57:50 57 minutes, 50 seconds exactly the same I mean there's not significant overlap so the weakness that you're seeing in demand is it a very broad-based industry weakness because 57:58 57 minutes, 58 seconds the acquired business we understand the customers had also acquired a lot of inventory and all those but uh the weakness that we see in the India 58:05 58 minutes, 5 seconds business I mean the legacy business I'm just trying to understand what can we attribute that to uh because probably it's not the inventory uh But is it the 58:13 58 minutes, 13 seconds general demand weakness across all industries? 58:16 58 minutes, 16 seconds Uh uh hi DH thank you. Thank you for your question. Great question DH. As I mentioned, 58:23 58 minutes, 23 seconds you know the if you see the uh what Sudarian legacy represents how the 58:29 58 minutes, 29 seconds industry has performed right um and in the acquired group you see the T-tocking 58:36 58 minutes, 36 seconds impact right what we saw is the first uh 7 to 8 months a very subdued demand even 58:44 58 minutes, 44 seconds in the India subcontinent right 58:46 58 minutes, 46 seconds [clears throat] 58:47 58 minutes, 47 seconds uh which was fairly growing but we've seen that completely change after November, right? And um uh so the the 58:56 58 minutes, 56 seconds legacy business is uh being uh is completely attributed to the demand uh 59:03 59 minutes, 3 seconds slowdown uh from our customers and uh this will come back uh uh you know as we go forward. 59:13 59 minutes, 13 seconds Got it. Sure. And uh secondly uh again continuing uh we had invested meaningfully in new products uh uh new 59:20 59 minutes, 20 seconds segments in the legacy business. Uh so if you can provide some comments how are those performing probably in terms of approvals and also uh uh the margin 59:29 59 minutes, 29 seconds trend that you were expecting is it continue uh I mean gross level probably because uh at operating level you will be suffering a bit but at the gross 59:37 59 minutes, 37 seconds margin level are these products performing as you were expected as you had expected or uh there is scope further to improve on margins on those products also. 59:47 59 minutes, 47 seconds Um I think the uh the products on the newly invested are performing very well. 59:52 59 minutes, 52 seconds Um and u however alike given the slow slowness in demand uh we've not seen the 59:59 59 minutes, 59 seconds volume but the uh but we are still uh you know so that that part has worked. 1:00:06 1 hour, 6 seconds In fact, we see a demand much better for that compared to the some of our regular uh products right from that perspective. 1:00:15 1 hour, 15 seconds And going forward, we see a great uh synergy between um the acquired group 1:00:22 1 hour, 22 seconds and Sudashan legacy products where we could make some of the base products here uh and send you know and kind of 1:00:29 1 hour, 29 seconds look at uh finishing them in uh Europe too. Right. 1:00:34 1 hour, 34 seconds Got it. And so just to uh follow up on this uh so the industry weakness that you're seeing focusing on the legacy business uh the industry weakness that 1:00:41 1 hour, 41 seconds you're seeing is not causing a price uh I mean this is not probably because of the price action or because of over supply and causing a price action on 1:00:49 1 hour, 49 seconds your products. It is more of genuine demand I mean volume uptick. It is uh it is what we so it's not a mix of volume and price. It's purely volume as of now. 1:00:58 1 hour, 58 seconds Yeah. 1:00:58 1 hour, 58 seconds And you don't see it moving to price because the volumes are coming back. Yes. Absolutely. Sure. Okay. Perfect. Thank you so much. 1:01:05 1 hour, 1 minute, 5 seconds Thank you. 1:01:07 1 hour, 1 minute, 7 seconds Thank you very much. Ladies and gentlemen, we'll take that as the last question. I'll now hand the conference over to the management for closing comments. 1:01:23 1 hour, 1 minute, 23 seconds Thank you. Uh thank you Nit and research. Uh thanks a lot participant for joining our investor call. 1:01:33 1 hour, 1 minute, 33 seconds uh as as Mr. Rati mentioned this has been the subdued quarter but we see the green shoot and we see the improvement 1:01:41 1 hour, 1 minute, 41 seconds in the coming quarters to come and we are seeing the uptake uh we remain confident in our journey going forward 1:01:49 1 hour, 1 minute, 49 seconds and uh we thank you for your continued support. Thank you so much. 1:01:56 1 hour, 1 minute, 56 seconds Thank you very much on behalf of Sudashian Chemical Industries Limited and Anandati Shares and Stock Brokers Limited. That concludes this conference. 1:02:05 1 hour, 2 minutes, 5 seconds Thank you for joining us and you may now disconnect. Thank you.