Ladies and gentlemen, good day and welcome to Galaxy Surfactants Limited Q1 FY 2027 earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference call, please signal an operator by pressing star and then zero on your touchtone telephone. Please note, this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. K. Natarajan, Managing Director, Galaxy Surfactants Limited. Thank you, and over to you, sir.
Thank you. A very good afternoon, ladies and gentlemen. It gives me immense pleasure to welcome you all to our Q1 2026-2027 conference call. There is a saying that smooth seas do not make skilled sailors. Over the last two years, your company has navigated some exceptionally turbulent waters, geopolitical uncertainty, supply chain disruptions, reformulations, and unprecedented volatility across feedstock. While these challenges tested us, they also strengthened us. They sharpened our execution and enhanced our resilience. Today, as we report our highest-ever quarterly EBITDA of INR 252.5 crores, I believe we are beginning to see the benefits of the capabilities, enduring relationships, and strategic foundations that we have been building over the last several years. Our ability to anticipate risk, manage volatility, make disciplined commercial decisions, and leverage a diversified portfolio across markets and customer segments has been critical in preserving competitiveness through multiple external disruptions.
Supported by decades of industry experience, deep customer and vendor relationships, operational excellence of our team, and a robust risk management framework, these capabilities have enabled us not only to navigate uncertainty but also to emerge stronger, culminating in nearly doubling our profitability during this quarter. Many of the factors that constrained growth over the last two years, including customer reformulations and trade-related uncertainties like the U.S.A. tariffs, have either normalized or become significantly more manageable. Before I move to a regional performance, it is important to understand the broader environment in which these results were delivered. Q1 was characterized by significant volatility in feedstocks, both petrochemical and oleochemical, primarily driven by developments in West Asia. Crude remained elevated throughout most of the quarter, averaging above USD 100 per barrel.
The oleochemical feedstock prices also moved from average levels of USD 2,800 per metric ton to a high of USD 3,300 per metric ton for the quarter before correcting below USD 2,500 per ton towards the end of June. Such sharp movements within a short period created significant challenges and opportunities across procurement, pricing, and inventory management. In such circumstances, disciplined execution and supply chain agility become key differentiators. Against this backdrop, I am pleased to report a meaningful recovery in growth momentum. Consolidated volumes grew by 5% year-on-year, with both our segments growing in mid-single digits. Moving to our regional performance now. India, our primary engine, grew by an impressive 11%, led by double-digit growth in performance segment and high single-digit growth in specialty products.
More importantly, we witnessed a recovery in Tier 1 customer demand and the return of positive growth momentum in businesses that have been impacted by reformulations over the last several quarters. Due to geopolitical developments, the relative economics between oleochemical-based and petrochemical-based feedstocks reversed. Availability constraints and cost pressures in portions of the petrochemical value chain made oleochemical-based solutions increasingly attractive, enabling good growth momentum. Non-Tier 1 and the direct-to-consumer segment volumes also grew near double digits year-on-year basis, showing good momentum across regions. With strong remuneration drive, we remain confident that our India region performance will continue redlining to its long-term growth trajectory in the coming quarters. Rest of the World region volumes grew by 6% year-on-year. The Americas led the growth as demand recovered following greater clarity on tariff-related developments, while our premium Specialty Care business at TRI-K continued its strong performance.
It was also encouraging to see APAC deliver double-digit growth, reflecting the investments and strategic actions we have been taking over the last few years. Whether it is strengthening our market presence, expanding our distribution reach, localizing portfolios, or deepening customer engagement, these efforts are now translating into tangible business outcomes within, sorry, within the specialty chem mix has improved, contributing positively to growth in EBITDA per metric ton, moving us steadily towards objective of improving the quality of our earnings through a richer and more differentiated product mix. Coming to the AMET region, the quarter began under extremely challenging circumstances. The developments in West Asia crisis created significant disruptions across the region during April and early May, impacting both inbound and outbound supply chains. Our Asia operations were also affected during this period. What I found particularly encouraging, however, is the resilience demonstrated by rigid business and operations teams.
As conditions gradually stabilized, we saw a strong recovery in momentum supported by close coordination across manufacturing, supply chain, procurement, and commercial teams. Their ability to adapt swiftly, maintain strong customer engagement, and ensure uninterrupted business continuity enabled us to recover a substantial portion of the volumes impacted during April and May, driving a strong improvement in performance from the month of June onwards. While EMAP volumes were down 4% year-on-year, they improved by an impressive 19% sequentially, reflecting both the underlying strength of customer demand and the resilience of our business model in the region. At the same time, we remain watchful of the evolving geopolitical situation and its potential implications for global supply chains.
The operating environment continues to remain dynamic, and while the long-term growth potential of the region remains intact, we will continue to prioritize agility, supply continuity, and exceptional customer service as we navigate the quarter ahead. Coming to our financial performance, for quarter one, I am pleased to inform you all that the EBITDA stood at INR 252.5 crores compared to INR 135.1 crores in Q1 FY 2026. While EBITDA per metric ton improved to INR 35,458 per metric ton from approximately INR 20,009 per metric ton in the corresponding period last year.
The business performance reflects the benefits of a healthier business mix, recovery in customer demand, increasing contribution from our Specialty Care portfolio, superior inventory risk management, disciplined commercial execution, strong cost management, and the superior collaborative efforts of our teams across the organization. I am also pleased with the progress being made with our EPC project in Mexico.
The project continues to progress as planned, contributing EPC service income during the quarter, and we remain on track for commercialization over the next 12 months. Innovation continues to remain at the heart of our Strategy 2030 journey. During the quarter, we introduced Simplex, an innovative platform designed for modern, mild personal care formulations such as body washes, facial cleansers, and shampoos. Simplex helps formulators simplify product development while delivering superior mildness, enhanced sensorial attributes, and formulation flexibility to meet evolving consumer preferences. We are also proud to share another significant innovation milestone for GalaxSea. GalaxSea Earth Biosurf received recognition at the Innovation Zone Awards 2026, held at the Cosmoprof and Expo. GalaxSea Earth Biosurf is an innovative enzyme surfactant synergy that combines cleaning performance, formulation efficiency, and sustainability for next-generation laundry care solutions. This recognition further validates our commitment to science-led innovation and sustainable product development.
As we look ahead, demand indicators remain encouraging across many of our key markets. With upcoming festive season in India and improving momentum across several international markets, we expect demand to remain healthy through the coming quarters. At the same time, we remain watchful of developments in West Asia and their potential impact on feedstock availability, freight markets, and global supply chains. While supply chain pressures had started easing towards the end of June, the situation remains fluid and recent geopolitical developments have once again introduced volatility across commodity and the logistics markets. Longer transit times, port congestion, and elevated freight costs continue to be the areas that require close monitoring. Our experience over the years has taught us that agility, disciplined execution, and proximity to customers become even more important when external conditions are uncertain.
Our focus remains clear: ensuring supply continuity, maintaining the highest levels of customer service, responding swiftly to changing market dynamics to make our customers win in the marketplace. As regards our guidance for the full year, we maintain our volume guidance at 6%-8% for the full year FY 2026, 2027, but I, however, increase the range of the EBITDA per metric ton guidance from the current INR 19,000-INR 21,000 per metric ton to INR 24,000-INR 25,000 per metric ton. Thank you, ladies and gentlemen, for your continued trust and support. Wishing you all a very happy Independence Day in advance. I now open the floor for questions.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may enter star followed by one on their touchtone telephones. If you wish to remove yourself from the question queue, you may enter star and two. Participants are requested to please use only handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Sanjesh from ICICI Securities. Please go ahead.
Yeah, good afternoon, sir. Thanks for the opportunity.
Yeah.
A couple of questions. First, on this EBITDA for TG, if I take 35 for this quarter, you said we will do 24- 25 for the entire year.
We are indicating that this 35 should come down to that our normalized range of INR 21,000 to INR 22,000. Is that the way to think about it?
In a way, yes. It also is factoring in certain things to look at, because when we are giving this guidance, we also look at the positives and also some possible potential implications. It is based on that.
Got it. Can you help us understand? Generally, we had a very narrow range. I think only once during COVID we did this kind of a very high EBITDA per kg. What has led to INR 35 EBITDA per kg in this quarter? How much was it inventory gain, or how much was it because of product change, or how much was it because we could get better spread or higher demand situation? What led to this expansion?
First of all, I think as I said, if you see in the last conference call for the full year results, I did say that with the easing of the U.S. tariffs and things getting better, it is going to be reflective on our Specialty Care business.
Right.
Which obviously started doing well, and that is how I had a confidence that I will get the higher end of the volume and also the higher end of the EBITDA per metric ton. In the last call, obviously, things were still fluid because we were just 45 days into the quarter and things were extremely challenging. In that context, I also said that various opportunities that could emerge, in terms of because there will be some challenges but some opportunities, but it is all about how the team capitalizes on the opportunities and manages well the challenges to mitigate a good portion of the impact. That actually what happened. If you have to look at how did we deliver at INR 25,000 per metric ton, structurally, all the work that we were doing last year but the external situation was against us started coming in our favor.
One was the reformulation, as I said, because that gave us the volumes back and also a good operating leverage, which was missing last year because there was certain impact on volume through reformulation. The second one is structurally, in terms of a special ingredients portfolio getting better and the mix within the special ingredients portfolio getting better. That is one, because the volumes are coming back into U.S. and the APAC region. The other thing is with regard to certain opportunities we had in terms of commercial execution, which we could selectively leverage on. Some of it may continue, some of it may not continue. Depends on how the situation develops as the quarter moves forward.
Very clear. One thing, because I think U.S. is a reiteration. We had an impact. We are going back to our normalized levels. That should not have led to a material improvement, probably would have gone to 21, 22. How does the U.S. market look for us, say for rest of the nine months? Has the demand sustained? Are we seeing the order book getting better? New product development? How is the U.S. market particularly looking for us?
U.S. market in terms of, as I said, our premium specialties led by our TRI-K business, is certainly doing well. We also launched a new product called Everbond last year, which is showing very significant momentum in terms of customer acceptance. It has started contributing meaningfully to our revenues in the TRI-K business. Also in terms of our special ingredients portfolio, out of India and Egypt into the U.S. market has also got enabled well. We expect this to continue because we are also seeing a good customer acceptance. A lot of project approvals and customer approvals also started falling in place, which also has led to this.
One is the tariff coming out, and the other is your customer approvals and everything having in place, which obviously was worked upon last year, and they started happening very sequentially well from February this year as the tariffs also came down.
Got it. Last two question, one on India and one on AMET. India, obviously double-digit growth back to it, very good thing to see that. But the risk of reformulation still remains, assuming the tool goes back to the normalized level. Have we changed our path in terms of we were thinking of even getting in some of those products? Have we changed any plan there? That is number one. Number two, I think BASF has announced the shutdown of the plant of their consumer care plant, which was competing with us. That should give us more volume now that the competitive intensity, one of the largest competition is folding their operation in India. Last one on AMET. Though all the good things, volume still continues to decline even on a low base. How should we see this?
Is more demand-side issue, or was it more supply-side issue? Should we end up with a positive volume growth in AMET in FY 2027?
I will answer the AMET question first. Last but first. AMET, as I have also been telling my team, I think somehow their stars don't seem to be aligning well because the team is constantly challenged. As they conquer one challenge, they end up eating one more. But credit to the team that they have been extremely agile and resilient. Last quarter was not a demand issue, quarter one. Quarter one was almost seven weeks of our Q1 in our Egypt location was watered because there was no incoming raw material because every material was stuck in Jebel Ali or in Port Qasim or in Jeddah. There is nothing that is reaching. It only started flowing in from the last week of May.
We are seeing that we are making up for what we lost, and there is a good traction that we are seeing from June onwards. The demand is not a cause of concern. If we didn't have the issue with regard to the logistics due to the Red Sea crisis, I think you would have seen a good growth year-on-year. Because sequentially, the AMET business has grown by 18%, although we are down year-on-year by 4%. That should give an indication as to how the demand momentum has been in place. The supply-led situation actually didn't allow us to register the year-on-year growth.
Got you.
Yeah. The other question that you had was with regards to the India business. The first and second question, obviously, are sequential, I will cover that together. The first is with regard to, is there a risk of reformulation going back to what it was earlier? I would say that, yes, if the petrochemical prices come down significantly and the alcohol prices remain elevated. As of today, when we see the balance, we do see that the balance is not significantly concerning for the reformulation to get aggravated. This particular advantageous situation we are in terms of reformulation being in our favor, we expect that to continue for some more time. Because it has to depend on both the oleochemical and petrochemical balance. We see the balance to be even favorable as of today.
Yes, we need to wait and watch all these things pan out in the coming months. With regard to BASF announcing its closure of its chemical plant, sulfation plant in Dahej. This is something that, yes, it can. We are waiting for our customers to engage with us, but to know whether we are able to sell, because it was only last week that they announced. Yes, if you look at it, simply put, yes, if one major player in the country closes their operations, it can result in some demand upset. But we are not able to make any clear statement right now because it is just a one-week-old story.
Just one last follow-up on it. What is your view? If we continue with the folio itself or we were thinking of even adding the newer portfolio, any change in the view from a longer-term perspective we want to gauge?
Oh, no. We are very clear that we are already ready and we have commercialized and we started supplies, as we said, even in the last meeting, that we already started supplies of the petrochemical derivative. But then the way things happened, the derivative itself was not available. So we had the facility, but we could not use because we had to use our entire thing on Oleo. There is no change in our approach. We will continue to be watching, and that flexibility that we have built in will be there. So there is no change. And it has been well established. All approvals are in place, so all ready.
Thanks. K. Natarajan, this is very helpful and best of luck with the coming quarters.
Thank you.
Thank you. Our next question is from the line of Rohit Nagaraj from 360 ONE. Please go ahead.
Thanks for the opportunity and congrats on very strong set of numbers. Sir, first question is on the availability of key raw material from Indonesia. Indonesia has now mandated biodiesel from 40%- 50%. Any visible impact that we have seen or incrementally the pricing of lauric fatty alcohol will remain at elevated levels? Just our thoughts on this. Thank you.
That was the mandate of 40%- 50% where the Indonesian government has already been talking. I think the palm oil pricing on the MDEX has already factored this in. If you see, you have the palm oil prices today, you are talking about at something like $1,100- $1,200. I think the forecast is because the IC season months continue. The forecast is that it should remain at these levels. We do see that there should be some steady state in the prices of fatty alcohol because it is currently at about 2,700 and 2,800 CIF India. We do see that it should move sideways between 2,600 and 2,800. We do not see any significant jumps as well as no significant corrections downwards. But stability itself is going to give you some good way to ensure that you are able to manage your business well. Sorry.
Right. Got that. Sir, second question is, during the quarter gone by, because of the supply chain challenges in many of the geographies, including India, did we see any inventory stocking by our customers which has also benefited our volume growth?
See, one thing that I can answer it in a different way, because one of the thing was that if you see post the GST rationalization, I think almost up to November, all our customers were flushing out the higher GST stocks and relabeling and all that stuff. They really started getting the momentum in terms of business only from January, February. As they are building their pipeline, I think the West Asia crisis happened. What we see is that when the festive season demand and the summer season demand was getting catered to and they are preparing for it, this hit. So you have a situation where you had a lower pipeline combined with some fear about availability of feedstock, would have driven some amount of extra buys. We will probably know that as the whole reasons, because even today we see that the momentum is in place.
That essentially means that our customers are preparing for the festive demand. As of now, the momentum looks to be healthy.
Perfect. Sir, just one last clarification in terms of our guidance. You mentioned 6%-8% volume growth and at the higher end. Given that first quarter we have done about 5.5%, if we were to reach at 8%, we will have to grow by more than 8.5%. But in the blended level, 7.5% consecutively for the next three quarters is what we can. If we were to achieve 7% as a blended volume growth, how confident are we? Obviously, for the recent times, you again just now answered that the momentum is good. But after Q3, Q4, are we still confident that we will be able to maintain this 6%-7% on an average volume growth, given that AMET is still facing some challenges? Thanks.
Yeah. Firstly, I am confident. I will give you the reason why I am confident, okay? It is also because, I think, Amway, in terms of the demand momentum, we are not seeing any issues. I would not know as to if there is another black swan event that happens, it can get impacted. But as of now, we do not see that. And the only reason why we could not grow year on year on the, we grew year- on- year by 4% in terms of our Amway business was only because of the supply side constraints, which have got resolved now. Okay. If the demand situation does not get impacted because of any black swan event, as well as the supply side, I do not see any reason why Amway will not get back to its growth trajectory in this year.
The second is with regards to the India market.
Because India and Amway are the major drivers of the volume growth. With regard to India, we do see that the consumer demand, I think rural continues to outpace the urban demand. All our customers are, they are commenting they are very positive in terms of the demand momentum getting better. Okay. And I do see all of them are coming up with a lot of market development and demand generation initiatives, which tells us that they do see that there is a good potential for the demand to really grow and sustain. The other thing is, the only spoiler there can be if the reform. Because what impacted India only was the reformulation last year. But as I responded to the question from Sanjesh, the way it is balanced today, I do not see that as a big risk, but we never know.
But as of today, the way we know and evaluate the market, and if this continues next year, we should get back to the same 6%-8%. I do not see a reason we will not.
Perfect, sir. That answers all the questions. Thanks a lot, and all the best.
Yeah. Thank you.
Thank you. The next question is from the line of Arun Prasad from Avendus Spark. Please go ahead.
Hi. Good morning, everyone. Thanks for the opportunity. K. Natarajan, my first question is on the gross margin. In the last two years-
I'm sorry, sir. There's a lot of background noise.
Hopefully now it is better.
Yeah.
I was talking about the gross margins that
Hello?
you've been able to maintain in the last two years.
We are still not able to hear you, sir.
Hopefully now better, sir.
Yeah, yeah. Better now.
Okay. Please proceed. Yeah.
Yeah. Sorry. Apologies for this. In the last two years, we have been consistently hitting the INR 52 to INR 53 per kg of gross margin trend. Obviously, this quarter is a kind of an aberration. If we see the rupee depreciation in the last one year, almost 8%-9% it has happened. Naturally, we should be on a steady state. Going forward also, we should be hitting north of INR 58 per kg of gross margin. Whenever we have reached this kind of a gross margin on a per kg basis, we have also delivered INR 25 per kg of EBITDA margin on a consistent basis. The current year guidance, irrespective of what happens because of this Iran prices and all, shouldn't it be a long-term guidance going forward from INR 20 to INR 25 per kg? Shouldn't it be the way we should be thinking on this, sir?
Yeah, I would like this to be, but we should wait. You know that I'm a very optimistic guy, but at the same time, I don't want to be over-promising and under-delivering. I need to be able to also guide properly. You're right in terms of the way you're evaluating it. If I need to change my guidance, I would like to wait at least for one quarter.
Understood, sir. Is there any pressure on the pricing on rupee terms? Obviously, there will be some kind of a negotiation on passing on the benefit of rupee depreciation. Is it common in our industry with our customers? How do they look at it from the-
I would not say there's any pressure on pricing, because one of the things that the way that we engage with the customers on any pricing discussion is being transparent. They know that we don't use any opportunity to profiteer, but they're also very clear that based on the transparency, they know as to what are the reasons and why the prices are increasing. What is the reason why it's increasing? Because all of them, once they are able to understand the rationale, I think all of them fall in line. There's no way that I can do with the rupee depreciation. Anything I can do with the rupee depreciation from 88 to 95. They're also aware, I'm also aware.
But if you are able to be transparent as to what are the components of the price increase, I think customers do come around and they look at it with favor. That is what we do. And that helps us because we deal with all our customers in an extremely transparent manner.
Understood, sir. Secondly, the domestic market, in increasing palm oil prices, typically the grammage cut happens as a stock gap arrangement. On top of that, we have seen some kind of a restocking because of the prices. Shouldn't the second half should be slightly weaker like we have seen in the past? That makes it difficult for us to fulfill the full year volume growth on the upper side of the guidance.
See, when I am giving you the guidance, typically, we also have to think through all this and also what our customers are indicating in terms of their commentary. If you look at what our customers are indicating on the commentary, they are very clearly saying that they are seeing Q2 momentum impact, very clearly. Now, if the Q2 momentum is intact and the fetch demand really catches up, everyone is talking about this impact of the monsoon deficit, being there and what implication it has, for our harvest. That answer we will have by the end of the quarter two . That will give us much clarity. That really is not an issue. I think the H2 will be very different. It will certainly be better.
But when we are looking at the guidance, we are also constrained to look at the guidance based on what our customers are looking at in terms of the demand, the way it is going to pan out. And you are right. If there is going to be a demand headwind in terms of rural demand getting impacted, you are right. H2 can be lower.
Understood, sir. Slightly zooming out on our long-term guidance of last year's investor day, can you share any updates where we are in terms of achieving moving towards more cosmetics-related ingredients and other value-added products? Have you started putting the capacities as our CapEx is going towards those avenues? What is the customer feedback? Those kind of broad commentaries you can give will actually be helpful.
Yeah. First of all, we have said we have introduced the beauty and wellness as one of the induced segments that we cater to. And we also said we will also start enhancing our presence in the live-on segment through our emollients and esters business. I think we have started. If you see whatever we have launched as new products, we look at BioCel, we look at Lumitig, we look at Simplex. Plus, also what we're looking at, what I explained about Everbond, which is one of the super specialty ingredients that our TRI-K launched, and we are seeing good project in pattern. And also in terms of already we are seeing it being accretive to our revenues. All that in terms of what we had said in terms of our Strategy 2030, execution is happening on those lines. Projects and pattern are getting built.
Obviously, that's all on track. The only thing is on what we talked about where our beauty and wellness, this thing will also have inorganic growth component. A lot of work has happened, but we've not been able to come up with any announcement. But it is suffice to say that a huge amount of work is happening. I hope that we will be able to come up with something in the coming months.
Sir, if you can indicate what percentage of the CapEx we will be spending towards this beauty and wellness going forward, or have you started anything? And finally, this year's CapEx, where we are going to spend?
Well, first of all, some of the CapEx we've already front-loaded. That's why we said, okay, that we've already had some of the CapExes that we have commissioned, some of it will be commissioned this year. It's all part of that INR 150-200 Crores CapEx that we incur every year because we also do prepare in anticipation of certain businesses fortifying, because if you don't have the capacity, we can't even start the market development exercise. One of the thing is what will be the sort of thing that we may do because if the accurate growth, M&A inorganic growth is going to be one component. That, yes, the details and everything we may not be able to say because it's all about getting the right fit and the right candidate, and a huge amount of work is on as far as that initiative is concerned.
Understood, sir. Any CapEx guidance for-
I'm sorry to interrupt, sir, but could you return to the question queue?
We talked about CapEx guidance, so I think this year we will be at about an additional investing of about INR 150 Crores.
Okay. Same as last year. No CapEx. Thanks, sir.
Thank you.
Thank you very much.
Thank you.
Thank you. The next question is from the line of Jignesh Kamani from Nippon India Mutual Fund. Please go ahead.
Yeah, hi. Just want to know about the quantum of the pricing gain, because if you take about fatty alcohol price, almost of just 3% year-over-year and 2% quarter-over-quarter also up 2%. But if I take about our average duration, just increase our 30 odd percentage from 190- 250, and similarly, quarter-over-quarter increase from 217 to almost 17%. Because of the shortage of the material and hence the finished product's prices spike and hence you benefited and it will revert as the supply situation normalize or anything else to it all? Because even if I talk about growth rate in the Specialty Care, it is lower than the Performance Surfactants segment.
No. What we have to understand is that, first of all, there is also a cost increase because if you look at my freight rates, more than doubled in my export side. It also goes into your price because the CIF price.
Okay.
Second thing, we also had a mix change because when the reformulation happened, you also had a certain mix change within my performance products portfolio that also had that increase because some of it we sell at a 70% active, some products we sell at 100%, 95% active. So when the mix changes, that also increases the selling price. Because finally, dried products are priced more than, say, a liquid or a paste product. So that also contributed to that selling price going up. But what it also meant is that it's important that what it tells is that we were very well prepared when the opportunity got presented and all that headwinds that were there last year when it became converted to tailwind, I think we were in a good position to be able to leverage on that opportunity.
Or let me ask another way. If you remove the raw material increase in the spike in the finished goods product, just because of the better mix, what kind of average ASP has increased?
I would not want to specifically comment on that because, not that I don't want to, because there are too many stuff that has happened that I don't want to specifically point it because it will only confuse. What essentially you want to be wanting to know as to what product it will sustain?
Yeah, exactly. Out of right now 35,000, you can say, EBITDA per metric ton. What is the element of the inventory spike or the finished goods spike benefit, which might be one surprise?
I don't want to say it that way. What I can say is that because that essentially also will not be the right indication. What I say is that we achieved 35,000, and moving forward, we are looking at achieving something like 21 for the next three quarters, 21- 22, the average coming down to 24- 25. Then essentially factors in all the structural stuff that have fallen in place very clearly as compared to last year. Last year, full year, we were only at 19,000. Okay.
Understood.
It essentially means all our specialty ingredients portfolio getting better in U.S.A., our premium specialty is getting great momentum through our TRI-K Specialties business. My volume growth in India coming back, reformulation. Also the way it is favorable to us continuing, all this has been factored in, and basis that I will increase the guidance for the year to INR 24,000 to INR 25,000 from EBITDA. We see volume growth at 6%-8%, which last year I was almost de-growing by 1%.
Understood. As of now, we are confident about INR 21,000-INR 22,000 kind of sustainable quarterly EBITDA per metric ton.
That is what we are looking at. Okay. Yes.
Understood. Sure. Thanks a lot.
Thank you. Participants, a request, kindly limit your questions to three questions so that the management can address questions from all the participants in the queue. The next question is from the line of Aditya S. Kantak from SMIFS Institutional. Please go ahead.
Thank you, sir, for the opportunity, and congrats on a good set of performance. Just a couple of questions. Sir, when we look into the customer mix, some 40% is coming from the regional players. I believe, sir, the regional and the local players have limited pricing power to absorb this much raw material price hike. Since, sir, we have taken a good jump into the prices, what actually changed in terms of demand, so these players have also been able to absorb this much price rise by you. Any idea, sir, onto the demand side more if qualitatively you can say, the personal inflation we are witnessing, the inflation is also going up. Still, the personal expenditure by the consumers is intact. So that is what
Yeah, that's only if you see the results of our customers also, it tells you as to how the consumer demand seems to be still intact. If you look at Hindustan Unilever Limited, has reported almost 5% volume growth for this quarter on the back of a 6% volume growth last quarter. The commentary from them is clearly indicating the same thing we are seeing in all our other customers, end customers who have reported a good growth in volume terms. Whereas all of them have also talked about increasing prices because the inflation is much beyond what anyone can absorb. So we do see that something beyond the price increases have been much beyond what anyone can absorb and keep the consumers insulated from that.
Got it, sir. Sir, when we look in the overall mix, the Specialty Care actually show on quarter-on-quarter basis on year-over-year basis, the percentage has came down, like from 40% now to around 34%. Although absolute definitely looks quite good, but in terms of percentage, that has gone down. So this mix change, sir, if I remove all the benefits of inventory and everything, whatever the freight cost and all. So in terms of a mix wise, how much we could have achieved in terms of EBITDA per MT in this quarter?
That's what I'm saying. Suppose we didn't have all this thing, we would have still been about INR 21,000 per metric ton. The reason why the Specialty Care portfolio has come down as a percentage is because my denominator has gone up now. Because the Performance Surfactants also grew significantly. When the denominator goes up, the percentage obviously will look lower. Last year was a different story because the denominator itself was lower. It also tells you that the specialty moment in absolute terms, if you see, it has registered a very good growth. What essentially happened is that that's a good indication in terms of moving forward as to how structurally things will continue to remain where they are and get better.
Okay, sir. Sir, my third question is on to the demand side, like from the international markets in Europe and U.S. Although we understand that you mentioned, now the negativities of tariffs and all are behind and we are getting good customer approvals and all in place. But you had also mentioned some two quarters back, there are some demand-related issues structurally which can change. Have you seen any sort of that change from the customer side commentary in U.S., some sort of structural change happening? Or we could continue to witness some double-digit growth in volumes, at least for the next two to three years.
See, rest of the world, first of all, we don't hold any great share in any of these markets, in Europe or in Latin America or in Americas. What I said two quarters back was even the special ingredients, because of the inflation situation, I think the products in pipeline were not getting matured faster because customers were taking time. After, because they were anyhow looking at the demand situation. This more is with regard to Europe. Which is where I said this because we had good amount of products in pipeline but not maturing. Whenever a situation was like even last when February, March, this thing happened, I think many of our customers in Europe really went slow. Then we have seen that getting better now. From that part, yes.
But in U.S., we are seeing that the demand is still upbeat. They are also growing well as the economy. Inflation seems to be getting better based on what the Fed had summed up with. So I don't see any demand implication there. But yes, when people are looking at getting into new products or whatever, there will be some amount of extra time they may take. But yes, I think we do see that also has gotten better in terms of the way things are getting reflected in our first quarter numbers in the U.S. market.
Just one last question if I may.
I'm sorry to interrupt, sir. Could you return to the question queue?
Got it. Thank you.
Thank you. The next question is from the line of Tanvi Vyas from Anand Rathi. Please go ahead. Tanvi, your line is unmuted. Please ask your question. There appears to be no response from this participant. We'll move on to the next question. It's from the line of Umang Shah from Banyan Tree Advisors. Please go ahead.
Hi, sir. Thank you for the opportunity and congratulations on good set of performance. Sir, my first question was that in FY 2022, we had seen similar spike in fatty alcohol price, and after that, for next two years, the prices ended up becoming stable and declining. We saw something similar in Q3 of FY 2025 when prices crossed or near $2,500 per metric ton, and after that they have been hovering in a similar range. With first quarter at $2,800 as being one of the highest levels. Any reason why you are not building some stability or decline in prices for next one or two years?
Any stability I am not building what? Any stability or-
Decline. Decline in prices.
In prices of fatty alcohol?
Yes, yes.
Yeah. See, the problem in terms of fatty alcohol is driven by palm kernel oil prices, and palm kernel oil prices is driven more by the palm prices. The palm prices obviously get driven by how your petrochemical, your crude petroleum prices behave. So they are closely connected because of the biodiesel mandates. If I look at the chart purely on the technicals, I can probably say that what you are saying is right because even my sourcing team comes up with the technical charts. Probably last one year we are seeing that those charts do not get. They are not in line with those charts because there are a lot of other factors that suddenly start propping up and ends up like this innovation mandate of 42, 50. I think it comes down, logically it should, but there is also this aspect of El Niño.
Next year it will get impacted with El Niño. This year is going to impact production in U.S. next year. So there can be a supply-led support to the prices. A lot of moving parts. That is why I am not uttering any guess. We need to look at it quarter on quarter, and that is the best way to manage the situation.
Absolutely. Sir, going forward, would we be committing more capital in the form of capacity expansion or acquisition in AMET markets?
You are asking whether I am going to commit any capital into AMET markets?
Yes, yes.
The AMET market, very clearly, we have already done our CapEx. We obviously will be doing Any CapEx we will be doing there will be more in terms of certain debottlenecking exercises that we will do, investments. There is no acquisition we are planning in AMET for sure. There is no plan that we have there at all.
Okay. For you, market has not structurally changed for us in AMET market, right? Last year, one of our customers had backward integrated, if my memory serves me right. In that context, the market has not permanently changed. It is just right now it is a decline. Once things stabilize, it will also bounce back.
What has changed, has changed. It is not worsening from there. It is not that it is reversing, okay? Because that shift churn in the, at my end customer space, okay, that has happened. What we think is that that having happened, there are other growth avenues that we have been looking at in various other markets, which obviously has constantly been challenging to one situation or the other. External situation, which we actually had last quarter, but the restoration cycle has further aggravated and created an issue in terms of our supply constraints, okay. The way things are and our honorable position, we do see things are looking better from a demand scenario. It is also about how we are able to. Because that particular thing of the churn in our end customer business shares was in the local Egypt market.
We have also been working on diversifying our portfolio to other countries, right, to take care of this. All these are working well for us.
Understood. Thank you so much, sir. Have a great quarter ahead.
Thank you.
Thank you. Next question is from the line of Tanvi Vyas from Anand Rathi. Please go ahead.
Hello, sir. Am I audible?
Yeah.
Yes, ma'am. Please proceed.
Yeah. Hi. Congratulations on a great set of numbers there. Just one question regarding, you mentioned this quarter you recorded your EPC service income. So if you could quantify this and whether, like you had mentioned in the last call that 2027 was the last part of the recognition. So is this spread out equally across the next few quarters as well?
See, first of all, due to reasons of confidentiality with our customer that we have entered into, we cannot be able to disclose what is the number we have recognized. But it is suffice to say that we have recognized, but what is recognized is not significantly impacting the overall numbers that we are putting. So to that extent, I can give you clarity. This is going to be completed this year, and I think we will have the recognition completed by end of this year, this financial year.
Okay. Thank you so much. Just one thing, this gets recorded in the Performance Surfactants segment as well, right?
No. This is a separate segment. It is not Performance segment. This is a separate segment.
Okay.
This is not related to that. It is a separate business model. Yeah.
Okay. Thank you so much.
Thank you. The next question is from the line of Rohit from Sunidhi Securities. Please go ahead.
Yeah. Thank you for taking my question, sir, and congratulations for good set of numbers. So two questions from my side. One is, as we have seen the contract revision from the customer side. Just wanted to understand if all these contracts are on the spot basis only, or would there be long-term contracts that are also revised in terms of pricing? Or is it just a spot basis just to absorb the RM cost increase?
No. See, one thing is very clear that wherever a contractual business there is a clear laid down methodology as to how the cost increase or decrease will be passed on. So that is being ensured, because that is why I said it is all transparent. On spot prices, again, there is a very clear this thing, and then whatever is something that needs to be revised, will be revised. Okay? As I said during, I think, the initial part of my call, when one question was asked, it is about how transparent we are with customers. Actually, customers know that there is a genuine reason which was not in our control, and that is the reason for the increase. I think they are extremely fair to observe it.
Similarly, they also know that when a reduction is possible, Galaxy is going to pass it on at the first available opportunity.
That ensures that there is a process that is there, but it is not something where the customers keep resisting, as long as they are able to understand the rationale for that.
Okay. Fair enough. Secondly, in terms of inorganic expansion, as we were discussing some time back also, are we still progressing well on this part, or how to look at this inorganic expansion maybe for next one or two years?
Yes. This is something that we are progressing well in terms of the way that we are evaluating, mandating with regard to what can be the targets. But we need to get the right fit. We are very clear that we will not do anything that doesn't meet the criteria that we have set, because anything that we do has to be in line with our strategy and also accretive to our profitability. We are very serious of that. A lot of work is happening in terms of evaluating. I hope it is all about accretive. We should be able to announce something in the coming quarters. But we need to wait and watch, but we will not do anything just for the fear of missing out. That certainly we will not do.
Okay. Fair enough. That's it from my side, sir. Thank you, and best of luck.
Thank you. The next question is from the line of Bhavesh from DV Investment Advisors. Please go ahead. Bhavesh, your line is unmuted. Please ask your question.
Yeah. Can you all hear me?
Yes, sir.
Yeah. Thank you for the opportunity. I just want to understand the company from next three, four-year perspective and the whole transition from, let's say, Performance to Specialty Care side. So we have introduced products like TRI-K and Simplex. So I just want to understand, are there any some more products in pipeline that we have, and what is the competition intensity in these products? And also, how we are looking at the mix going forward from Performance to Specialty in the next three, four years?
First of all, I'd like to clarify, there is no— Our strategy is not a transition from Performance to Specialty. Our strategy is very clear that we have to grow both the legs of our business, Performance and Specialty Ingredients. That is how when we did present our last analyst day presentation, we said very clearly how we are going to look at the growth for both. There is no way that we're going to be saying that we want to deprioritize our Performance Surfactants business. That I want to clarify very clearly. We have clear plans to grow both the businesses. For Performance Surfactants, the way that we need to be staying relevant and competitive is in terms of how we are going to be having our operational excellence clearly come in and giving us the strength.
That is what is going to enable us to be able to weather any competitive intensity and still deliver the profitable growth. If you look at this, for simplifying, all these products that we have launched, we have more products in the pipeline. I think some of it will be launched in the next quarter. There is a clear plan. We do look at all new products. Our guessing is by 2030, they should contribute to almost greater than 5% of our total revenue and our contribution margins.
We are introducing these new products, so do we have any peers who are making these similar products with this chemistry, or we are one of the suppliers?
No. Peers, they may. What we come up with is very clear positioning on what our product delivers in line with the consumer trends, and with all our studies with the claims substantiation as well as the ease of formulation. That's what we will do. That is something that the many products that we launched are first-time, and that's the reason why we say that when we come up with a product which is new and not in the market, the customers, after they're convinced about its relevance in terms of their requirements, they do take time to approve because they need to do a whole set of testing. Because if it's something similar to what is already there, they only need to do the incremental approval mechanism. But we don't want to be getting there in terms of our innovation platform.
Okay. That's it from us. Thank you.
Thank you. The next question is from the line of Ishika Bajaj from Credent Family Office. Please go ahead.
Hi. Am I audible?
Yes, ma'am.
Yeah. You mentioned that you increased your EBITDA margin guidance, EBITDA per metric ton guidance as well. At a company level, I understand, but is there any industry tailwind that you are seeing because the competitors in this space have also reported good numbers for the quarter. I just wanted to understand your view on the industry going forward.
If you look at the industry in terms of demand, I would say that the demand as of now looks to be resilient despite the inflation that has happened because of the commodities going up due to the registration crisis. We do see that across, say, in APAC, in India, I think even all kinds of customers are looking at the demand momentum sustaining. What my competition is doing, because many of the competition are not into the entire range of products that we have. With competitors in India, we have the largest portfolio in terms of scale and also a large customer base. We are pretty different, but that also is what differentiates our business model and underscores its robustness.
Thank you.
Thank you. Ladies and gentlemen, we will take that as the last question. I now hand the floor over to the management for closing comments.
Thank you, ladies and gentlemen. Have a great weekend, and once again, wishing you all a very happy 80th Independence Day.
Thank you very much. On behalf of Galaxy Surfactants Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.