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Pune-based Sudarshan Chemical Industries Limited (SCIL) has announced a significant expansion of its operations through the acquisition of the global pigment business of Germany’s Heubach Group for ₹1,180 crore (€127.5 million).
This strategic move, made on October 11, is expected to enhance SCIL’s product offerings and strengthen its market position internationally.
Impact on SCIL’s Valuation and Stock Performance
In response to the acquisition news, SCIL’s shares surged by 19.1%, reaching ₹1,208, which boosted the company’s valuation to approximately ₹8,359 crore.
The deal, which involves both asset and share acquisitions, is poised to enhance SCIL’s technological capabilities while expanding its reach in key markets, including Europe and the Americas.
Strategic Advantages of the Acquisition
The merger will result in a comprehensive pigment portfolio, consolidating 19 global sites and diversifying the asset base. Following its integration with Clariant in 2022, Heubach emerged as the second-largest player in the global pigment market.
However, the Heubach Group has faced financial difficulties over the past two years, struggling with rising costs, inventory issues, and high interest rates. SCIL aims to implement a clear turnaround plan to address these challenges effectively.
Leadership and Future Plans
Rajesh Rathi, SCIL’s managing director, will take the helm of the combined entity, steering the newly formed company towards its growth objectives.
The acquisition is contingent on regulatory approvals, including those from the Competition Commission of India and relevant authorities in other jurisdictions. SCIL anticipates that the acquisition will be finalized within 3-4 months, pending regulatory and shareholder approvals.
Strong Financial Performance Amid Growth Strategy
SCIL has experienced impressive growth this year, with its shares more than doubling. In FY24, the company reported a net profit of ₹335 crore on revenues of ₹2,141 crore. In the three-month period ending June 2024, SCIL achieved a net profit of ₹41 crore with revenues of ₹580 crore.
Conversely, the Heubach Group reported a consolidated turnover of €879 million in 2023, a decline from €1,069 million in the previous year.
