SUDARSHAN
23” December, 2016
Listing Department,
National Stock Exchange of India Limited,
rading Ring, Exchange Plaza,5" Floor,
Rotunda Building, P.J. Towers, Plot No.C/1,G Block,
Dalal Street, P.J.Towers, Bandra Kurla Complex,Bandra ( East ).
Mumbai 4000 001 Mumbai 400 051
be
BSE
1" Floor, New
Dear Sir,
Sub : Upgradation in the Rating of the Company,
Ref : Regulation 30 of SEBI ( Listing Obligations and Disclosure Requirements )
Regulations, 2015 — Schedule HI PART A
We are happy to inform you that India Ratings & Research have upgraded the Company
rating to “IND A +"; Outlook Stable w.e.f. 23" December, 2016. We are enclosing
herewith the printout of the said news as posted on their website
Kindly take the above on record and further arrange to publish the same in your web
{or the information of our shareholders, investors and public at large
‘Thank you.
Yours truly,
P.S.Ragha
Company Secretary
Enel : As above
Sudarshan Chemical Industries Limited
Giobal Head Office :
162 Wellesley Road, Pune - 411 001, India
Tel: 191 20 260 58 888 Fax: +91 20 260 54
Email: contacty'sudarstian.comLogin
India Rating:
& Research
Arter Grou Company
India Ratings Upgrades Sudarshan Chemical Industries to ‘IND
A+’; Outlook Stable
23 By Neeemoy Shah
India Ratings and Research (Ind-Ra) has upgraded Sudorshon Chemica Industries Limited (SCIL)
DEC 2018 ongeTerm issuer Rating to"IND Av" tron IND A. The Outlook Is Stable. A fl st of ating actions
Isat the end ofthis commentary.
KEY RATING DRIVERS
Consolidated View: Ind-Ra contwes to take a consolidated view of SIL and ts subsidiaries, namely Presclent Color
United (100% subsidiary), RIECO Industries Limited (100% subsidiary), Sudarshan Eurepe B.V. (100% subsicry) and
Suarshan North America i. (step-down subsidiary), forthe rang purpose. All te companies are i the same tne of
‘business except RIECO Industries which runs an engineering business. Prescent Color manufactures colours and
addive mastor batches, whe Sudrsin Europe and Sudarshan North America are the markting and trading arm of
SCIL, SCIL has provided corporate guarantees tothe det of to of is Subsisanes
Improvement in Preftabilty and Creit Mores: The upgrade reflec the improvement in SCIL's EBITOA margins to
1.9% n FYIG (IMFYL7 standalone EBITOA margins o 15.79%) from 10.79% In FY15, resulting in an provement in ts
net financial everage (adjusted det/EBTDA) to 24x fom 3.2x and EBITDA interest coverage to 4.9x from 34x, The
Improvement n margins was cven by 2 reduction inthe price ofthe company's key raw material on account of
sourcing efiiencles, a decine in input prices, and better realisation from the higher-margi hghperformance pigments
and effect pigments. fad-Ra expects SCHL to maintain is EBITDA margins ane overal cred profile witha focus on
hgher-margin pigments and on the developed market of Europe and North America and closure of highly polluting
Pigment manufacturing units in Ching,
Long Track Record and Market Leaé “The ratings continue to reflect SCIL's over 60-year tong operating
‘rack record and leadership position in the Indian pigment industry with a market share of around 35% and presence
croes the Ao, phthalocyanine and sub segments of highee-marginhigh-perfermanee pigments (source: SIL), There
's no other domestic compete having a presence aereze al the segments, according to SCIL. The company's
‘management also has 30-year-fong operating experince
Well developed Glabal Distribution Network The company has a global dstibution network with six sales offices, 19
sock points and 80 channel partners. thas been operating in the pigment business for more than GO years and Mas
developed strong relationships with ts customers and suppers. To cater tothe developed market of Europe and North
‘America, managemert has set up marketing subsidres In both the geographies, whichis tkely to support revenue
‘growth over the next four to ive yeas, It has also registered a wholy owned Chinese subscary to dstnbute prgments
In local markets and improve the sourcing effclency.
Healthy Liqldty: SCH has Realty leuilty wth average bank Knit ution of 73% forthe tring 12 months ended
September 2016. Ind:Ra bevee that ts cash fom operations willbe adequate over FYI7 and FYB to repay its debt
‘blgavions. The cash from operavons has been postive through the toe years ended FYIG,Large Capex in Pptin: The company’s expansion in Reha has been granted Mega Project status under the Package
Scheme of incentives, 2019, bythe government of Malarashra in October 2015, Under the scheme, t hae to invest 9
‘uum of R75 tn ny ele Me assets athe ste widun a period Of fve years from the date of application.
The board has akteady approved capex of INR1,620 rill, which wil be spent over FYA7 and FY38,Ind-Ra beioves
thatthe company wil take incremental debt fr thie expansion and the ered metrics italy will ome und pressure:
however, bettr EBFTDA marge from te valuc-added pigments wil result an improvement in he Metis, making
thom comfortable forthe ratings.
olatity in input Costs Volatity ka input costs could lead to fluctuations in the company's margins, The prices ofthe
bask chemical raqured to manufacture pigments sre fay volatile as they depend onthe intornatona! pices of key
nurs wth varying lags to pass on price kes, Hence, te margins are volatile.
RATING SENSITIVITIES
Positive: A sustained improvement nthe EBITDA margins with a higher proportion of revenue from value-added
goats reiting i an improvement in tho overall erat pote withthe net overage reducing below 1.5e on 9
sustained baste could result in a postive rating action.
Negative: Deterioration n the EBITOA margins and/or aay debled capex over and above te agency's expectation
leading tothe net leverage exceeding 2.5x ona sustained basis coud lead to negative rating action,
COMPANY PROFILE
‘SCL Isa pubic lmited company, It manufactures a wide range of organic and inorganic pigments as well as
Intermediates and postedes with close to 90% revere coming fren pigments
ScIL's ratings:
Long-Term Issuer Rating: upgraded to "IND A"; Outlook Stabe from IND A; Outlook Poste
= INRI,893.5 milion term loans (increased from INI, 366.5 milion): upgraded to IND A Outlook Stable for "IND
Ouslook Positive
+ INRY, 860 millon fund based working capital tts (reduced trom 1NR2,237.5 millon}: upgraded to"IND A Ouook
Stable from ‘IND A Outlook Poetive
|NR37@ millon* fund based working capital iit: assigned "IND At!
+ INRJ,013 millon non-fund based working capital nts (increased from INR3,012.5 millon): affirmed at "IND AL”
+ INRS34 main tem depost (reduced fom INRSOO mition) aftred at TNO UA Outlook Stable
Proposed INR7SO milton long-tcm loans: Provisional IND A’ withdrann a company di nok proceed with the
instrument as envisaged
+ Earle part of INR2, 237.5 milion fund-based working capital iis
SOLICITATION DISCLOSURES
‘Adatona information is avaliable at wo sndaratings.coin. The ratings above were solicited by, or on behalf of, the
‘ssuer, and therefore, India Ratings has been componsated forthe provision ofthe ratings.
Ratings are nota recommendation or suggestion, diet or Inctecy, to you or any other person to buy, sl, make oF
hold any investment, loan or secunty oF to undertake any investment strategy wth respect to any investment, fan oF
sscutity or any tse,