The company reported a net loss of Rs 30 Cr for Q2FY27 as EBITDA margins shrank to 0.5%. To combat liquidity constraints and high financing costs, the board approved a Rs 250 Cr rights issue. While annual guidance is withdrawn, management is targeting a recovery by Q4FY27.
Speciality Chemicals Firm Reports Q2 Loss, Announces Rs 250 Cr Rights Issue
Net Loss stood at Rs 30 Cr for Q2FY27; Rights issue approved for Rs 250 Cr.
Reader Takeaway: Rights issue offers a lifeline for liquidity, though operational recovery in the aroma chemicals segment remains pending.
What just happened
The company reported a net loss of Rs 30 Cr in Q2FY27, as EBITDA plummeted 93% year-on-year to Rs 2 Cr. The sharp decline was driven by heavy losses in the aroma chemicals division and the suspension of the Dahej Diphenol plant. Following the poor performance, the management officially withdrew its FY27 revenue guidance of Rs 2,000 Cr.
Why this matters
The company is facing severe liquidity stress, which has led to high trade credit penalties. The board has approved a rights issue of Rs 250 Cr to resolve these bottlenecks. Promoters, who hold approximately 48% of the equity, have committed to subscribing to their full entitlement to support the turnaround plan.
The backstory
The aroma chemicals segment, specifically vanillin, saw revenue drop 41% YoY, suffering from plant underutilisation. Simultaneously, the Dahej performance chemicals plant has been suspended since May 2026 due to unviable input costs, with no timeline for restart. These operational hurdles created a significant drag on the bottom line.
What changes now
Management is pivoting focus toward the food and pet food blends business, which continues to show growth. The capital raised from the rights issue is earmarked to clear Rs 130 Cr of overdue trade credits. By reducing this debt, the company expects to save Rs 180–200 Mn per quarter in financing penalty costs.
Risks to watch
The Q4FY27 turnaround targets of over Rs 600 Cr revenue and Rs 60 Cr EBITDA are ambitious and highly dependent on the timely success of the capital infusion. Continued margin pressure from raw material and freight costs remains a persistent risk for the company.
What to track next
Investors should monitor the subscription timeline for the rights issue and the company's ability to normalize plant utilization in the aroma chemicals division during the upcoming quarter.