Sunshield Chemicals FY25: Revenue Surges 29.52% to Rs 368.94 Cr, Profit Falls 22.63%

NEW DELHI (India CSR): In a dynamic global economic landscape, Sunshield Chemicals Limited, a prominent player in the specialty chemicals sector, has demonstrated remarkable resilience and strategic agility, as revealed in its Annual Report for the financial year 2025. The company announced a substantial 29.52% increase in its total income, painting a picture of robust top-line growth. While the surge in revenue is a clear indicator of market traction and operational efficiency, the period also saw a notable decline in net profit, reflecting the complexities of escalating operational costs and a shifting international trade environment. This comprehensive overview delves into the company’s financial performance, strategic drivers, and outlook, offering a human-centered perspective on its journey through the fiscal year.

Sunshield Chemicals Limited’s Highlights FY25:

A Glimpse into FY25 Financial Milestones

Sunshield Chemicals Limited’s financial results for the year ended March 31, 2025, highlight a period of significant expansion in its core operations. The company’s revenue from operations ascended to Rs 365.79 crore in FY25, a substantial leap from Rs 283.38 crore in the preceding financial year 2023-24, representing a 29.08% growth. This impressive top-line performance was complemented by a remarkable increase in other income, which more than doubled to Rs 3.15 crore from Rs 1.48 crore in the previous year, marking a 112.84% rise. Consequently, the total income for FY25 reached Rs 368.94 crore, up from Rs 284.86 crore in FY24, translating to an overall 29.52% growth.

However, the narrative of growth was tempered by a decline in profitability. The company reported a profit before tax of Rs 18.05 crore for FY25, a significant 32.50% decrease compared to Rs 26.74 crore in FY24. This trend continued down to the net profit, with profit for the year (after tax) recorded at Rs 14.58 crore, a 22.63% decline from Rs 18.85 crore in the previous year. The total comprehensive income for the year also saw a reduction of 23.71%, settling at Rs 14.38 crore in FY25, down from Rs 18.85 crore in FY24. This decline in profitability directly impacted shareholder returns, with Earnings Per Share (EPS) dropping to Rs 19.83 in FY25 from Rs 25.63 in FY24.

This mixed financial outcome underscores a period of strategic investment and adaptation amidst evolving market dynamics, where increased operational scale met with higher costs, influencing the bottom line.

Decoding Revenue Streams: Domestic Dominance vs. Export Challenges

A deeper dive into Sunshield Chemicals’ revenue composition reveals a strategic shift towards the domestic market. The company experienced a phenomenal 39.95% surge in domestic sales, which soared to Rs 303.70 crore in FY25 from Rs 217.00 crore in the prior year. This robust performance in India highlights the company’s strong localized market presence and effective catering to national demand.

Conversely, the export segment faced headwinds, with export sales declining by 5.73% to Rs 61.30 crore in FY25 from Rs 65.03 crore in FY24. This dip in international demand reflects the ongoing uncertainties in the global specialty chemicals industry, exacerbated by geopolitical tensions, trade wars, and fluctuating tariff structures. Despite the decline in export volume, the company’s ability to significantly bolster its domestic sales underscores its strategic focus on strengthening its position in the home market.

The substantial increase in other income, which jumped by 112.84% to Rs 3.15 crore, also played a role in supporting the overall revenue growth. This diversified income stream indicates potential gains from non-core activities or financial assets, contributing positively to the total income despite the pressures on export revenue.

Specialty Chemicals: The Core Engine of Growth

Sunshield Chemicals operates fundamentally within the specialty chemicals segment, a high-growth, innovation-driven category characterized by low-volume, high-value formulations tailored for specific end uses. The company’s expertise lies in manufacturing and selling a diverse range of customized and specially formulated chemical products. These products serve a broad spectrum of industries, including Home and Personal Care, Industrial Formulations, Paints and Coatings, Agrochemicals & Lubricants, and Additives. Their wide client base spans across India and international markets in the Americas, Europe, and the Far East, serving diverse sectors such as Metal Treatment, Wire Enamels and Insulation, PVC Stabilizers, Inks and Coatings, Agrochemicals and Fertilizers, Plastics, Polymers, and Rubber, Textile Processing, and Latex Products and Tyres.

Key products contributing to the company’s offerings include:

• THEIC: Available in powder and noodles form, primarily used as heat stabilizers and PVC stabilizers.
• Ethoxylates & Propoxylates: These function as dispersing agents in paper & pulp, emulsifiers in dye manufacturing, dissolution and floatation aids, and components in agro insecticides and herbicides. They are known for low-foaming nonionic surfactant properties and excellent wetting capabilities.
• Antioxidants: Segmented by application into plastic processing, rubber processing, fuel & lubricants, and adhesives.
• HQEE: A specialty elastomer and crosslinking agent, vital as a chain extender for polyurethanes (PU) to enhance material properties.
• BC 700: Used as a matting and effects agent in the paint and varnish industry.

The company specifically noted strong growth in Ethoxylates and Antioxidant-based products during FY25, attributing this success to higher demand and improved pricing. This focus on product innovation, customization, and deep industry understanding enables Sunshield Chemicals to consistently meet the dynamic requirements of its clients and maintain its strategic importance in the evolving specialty chemical segment.

Navigating the Cost Landscape: Factors Impacting Profitability

While revenue saw a significant boost, a detailed review of expenses sheds light on the factors contributing to the decline in net profit. The cost of materials consumed rose by 40.39% to Rs 270.63 crore in FY25 from Rs 192.77 crore in FY24. This substantial increase directly impacts the cost of goods sold and overall profitability. Employee benefits expense also saw a 16.41% increase, reaching Rs 19.08 crore from Rs 16.39 crore, reflecting higher personnel costs.

Furthermore, finance costs increased by 16.82% to Rs 9.10 crore from Rs 7.79 crore, indicating higher borrowing costs, which is significant given the company’s debt-to-equity ratio of 1.05. Depreciation and amortization expense also grew by 32.38% to Rs 9.77 crore, possibly due to increased capital expenditure and asset additions. Other expenses rose by 25.21% to Rs 42.31 crore. These aggregate increases in major cost categories explain the pressure on the company’s profit margins despite the robust revenue growth.

The impact of these cost increases is also evident in several key financial ratios:

• Current Ratio: Declined by 12.37% to 0.77 from 0.88, primarily due to an increase in current maturities of long-term borrowings.
• Debt Service Coverage Ratio: Fell by 25.14% to 1.94 from 2.59, attributed to an increase in principal repayment amount towards long-term borrowings.
• Return on Equity Ratio: Decreased significantly by 35.53% to 16.40% from 25.44%, directly linked to the reduction in net profit.
• Net Profit Ratio: Dropped by 40.05% to 3.99% from 6.65%, also a consequence of the reduction in net profit.
• Return on Capital Employed: Reduced by 32.06% to 13.29% from 19.56%, due to a reduction in Earnings before Interest and Tax.

These ratios collectively indicate that while the company achieved strong sales, the profitability per unit of sales and capital employed diminished, mainly due to rising costs and increased financial obligations.

Strategic Initiatives and Future Outlook

Sunshield Chemicals is not merely reacting to market conditions but actively shaping its future through strategic initiatives. A significant development during the fiscal year was the proposed rights issue of equity shares, aggregating up to Rs 15 crore. This capital infusion is earmarked for crucial purposes: repayment of borrowings, capital expansion, and general corporate needs. The company has already received in-principle approval from BSE Limited and final observations from SEBI, indicating progress toward this important financial maneuver.

The company’s commitment to growth is also evident in its capital expenditure. In FY25, additions to property, plant, and equipment (PPE) amounted to Rs 64.29 crore. Furthermore, capital work-in-progress (CWIP) saw additions of Rs 51.01 crore for construction costs and Rs 2.78 crore for project salary costs. These investments underscore the company’s efforts to increase its production capacity and embrace technological advancements. For instance, the company is installing a new high-efficiency thermic fluid heater and a low-power chilled water system, and proposes a 2.5 megawatts solar power plant to utilize alternate energy sources.

In terms of technology absorption, the R&D department is focused on new product development, leading to import substitution of one product. Total R&D expenditure for FY25 was Rs 1.17 crore, with Rs 92.01 lakh as capital expenditure and Rs 24.69 lakh as recurring expenditure, representing 0.32% of turnover.

The company’s outlook emphasizes increasing local sourcing of materials, expanding production capacity, and investing in research and development to create specialized products. Efforts are also underway to improve supply chain flexibility to reduce dependence on volatile international markets. Supported by government policies like ‘Make in India’ and infrastructure development, Sunshield Chemicals remains confident in navigating global challenges and achieving sustainable growth.

Addressing Risks and Maintaining Resilience

The specialty chemicals industry is inherently exposed to various risks, and Sunshield Chemicals acknowledges these challenges proactively. Ongoing tariff wars and global conflicts, such as the Russia-Ukraine war and Middle East tensions, have led to rising raw material prices and supply chain disruptions, making cost prediction difficult and increasing market uncertainty.

A particularly significant risk identified is the availability of critical raw materials like Ethylene Oxide (EO), which is currently supplied by a single manufacturer in the country. Any disruption in this supply could severely impact production. To counter these threats, the company has implemented a comprehensive Risk Management Framework to identify, assess, and mitigate their impact, with regular reviews by management to address evolving risks, especially those related to trade policies and supply chain instability.

Beyond market and supply chain risks, the company also prioritizes health and safety, recognizing the inherent hazards associated with its raw materials and manufacturing processes. Strict safety measures, equipment, and procedures are in place, adhering to global standards and legal requirements, ensuring employee and community well-being.

Corporate Governance and Human Capital

Sunshield Chemicals maintains a strong commitment to corporate governance, with a Board of Directors that conforms to Listing Regulations and the Companies Act, 2013. The board comprises seven directors, including a Non-Executive Chairperson, Managing Director & CEO, and a mix of Non-Executive and Independent Directors. Notably, Ajit Shah, Cyrus Poonevala, Prof. Aniruddha Pandit, and Mukesh Malhotra are Independent Directors, constituting 57.14% of the Board’s strength.

During the year, Prof. Aniruddha Pandit was appointed as an Additional Non-Executive Independent Director with effect from March 14, 2025, a decision approved by shareholders via postal ballot on April 21, 2025. Mukesh Malhotra was also appointed as an Additional Non-Executive Independent Director from May 5, 2025, subject to member approval at the upcoming AGM. Dr. Maya Parihar Malhotra, the Chairperson and Non-Executive Director, is also seeking re-appointment. The company’s compliance officer is Mr. Amit Kumashi, who also serves as the Company Secretary.

The company’s internal financial controls are continuously reviewed and improved, ensuring orderly operations, asset protection, and accurate financial reporting. Both internal and statutory auditors have assessed these controls, and the Board believes they are effective with no significant weaknesses.

In terms of human resources, employee relationships remained satisfactory throughout the year, with a total of 218 permanent employees on the rolls as of March 31, 2025. The median remuneration for employees was Rs 5.39 lakh per annum, with an average salary increase of 3%. The company expresses appreciation for the dedicated support from its employees at all levels.

Sunshield Chemicals also actively engages in Corporate Social Responsibility (CSR) initiatives. For FY25, the company had a CSR obligation of Rs 44.23 lakh and spent Rs 44.30 lakh on various projects, resulting in an excess amount of Rs 6,723 for set-off. These activities included promoting education, rural sports, environmental sustainability (plantation and road construction), and infrastructure support in village schools.

You Learn

Sunshield Chemicals Limited’s financial year 2025 was marked by significant revenue growth, primarily driven by a strong performance in the domestic market for specialty chemicals. While the company navigated rising operational costs and a challenging global export environment, leading to a dip in net profit, its strategic investments in capital expansion, R&D, and a robust risk management framework position it for future stability. With a clear focus on innovation, operational excellence, and responsible growth, Sunshield Chemicals continues to build long-term value for its stakeholders, adapting to market shifts and reinforcing its position as a key enabler in diverse industries. The ongoing efforts and strategic plans highlighted in its latest Annual Report signal a company firmly committed to its growth trajectory despite the multifaceted challenges of the current economic climate.

(India CSR)