Ladies and gentlemen, good day and welcome to Galaxy Surfactants Limited Q4 and FY 2025 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict.
As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. K. Natarajan, Managing Director of the company. Thank you, and over to you, sir.
Thank you. Very good afternoon, ladies and gentlemen. Welcome to our quarterly earnings call for Q4 FY 2024/2025. As we gather here today, I'd like to take a moment to express my gratitude to all our stakeholders for their unwavering support and dedication. Your commitment has been instrumental in navigating the challenges and seizing the opportunities that this fiscal year had presented.
As we reflect on the past quarter and the full fiscal year, it is evident that the business environment has been, in more than one ways, dynamic and complex. The supply side volatility, which has been a persistent theme, has shown some signs of stabilization, yet it remains a critical factor to monitor. The geopolitical landscape, while less turbulent compared to previous quarters, still poses uncertainties that we must navigate with caution. On the demand front, the story remains mixed.
India, which constitutes a significant portion of our business, has seen flat performance this quarter and for the full fiscal year. This is primarily due to the lingering effects of the previous quarter slowdown, compounded by rising fatty alcohol prices from Q2 onwards by more than 40%, leading to a slower than expected recovery of demand in the Performance Surfactants segment.
We remain optimistic, though, about the potential for growth in the coming quarters, driven by improving economic indicators and the gradual normalization of market conditions. The AMET region has also experienced flat performance.
While the macroeconomic environment remains challenging, there are signs of improvement in demand factors and the easing of supply chain disruptions, making us cautiously optimistic. We are taking proactive measures to enhance our market presence and capitalize on emerging opportunities as the region stabilizes.
In contrast, the rest of the world has been a bright spot, registering double-digit growth this quarter and for the full fiscal year as well. This robust performance is a testament to our strategic focus on expanding our global footprint and leveraging the growing demand for premium specialties. The strong demand in rest of the world is driven by continued expansion in Europe, APAC, North and Latin America.
We're confident that this momentum will sustain, supported by favorable market conditions and our ongoing efforts to innovate and diversify our product portfolio. While for this quarter, in rest of the world, we registered a 9% volume growth, the year-to-date volume growth stands at 17%, driven by niche specialties. Coming to Q4 FY 2025 performance, I'm pleased to report that our consolidated EBITDA for the quarter stood at INR 135 crores, marking a strong sequential growth of 23% over Q3.
In line with this, our EBITDA per metric ton improved significantly from 17,534 per metric ton to 21,715 per metric ton, an impressive 24% increase quarter-on-quarter basis and a 5% increase on year-on-year basis.
This performance was driven by the effective pass-through of raw material price increases to customers, a reduction in freight cost due to the easing of supply chain constraints, improved yield and cost management across various operational areas.
Furthermore, certain one-time costs that had impacted profitability in the previous quarters were effectively addressed, contributing to the overall margin expansion. On a widely consolidated basis, we have reported an EBITDA of INR 510 crores, which translates to EBITDA per metric ton of 19,868 per metric ton, which is broadly in line with the performance of the previous year.
These results reflect our continued focus on operational excellence, cost efficiency, and strategic agility, positioning us well for sustained and profitable growth. From innovation perspective, we are proud to share that our latest innovation, GalGuard Prebiotive, has been honored in the Best Ingredient Silver Award in the functional category of the Innovation Zone in in-cosmetics Global Exhibition that was held in Amsterdam in April beginning.
This prestigious recognition is a testament to our unwavering commitment to excellence and innovation. It not only validates our efforts, but also inspires us to continue developing sustainable ingredients that will shape the future of the personal care industry. Coming to the outlook. While the past quarter and the full fiscal year have presented their share of challenges, we remain resilient and focused on our long-term goals.
The performance of business in rest of the world demonstrates our ability to adapt and thrive in a dynamic environment. We are optimistic about the future and are confident that our strategic initiatives will drive sustainable growth and profitability. Looking ahead, uncertainties persist, particularly around geopolitical developments, such as the implications of U.S. tariffs and its impacts on overall global demand.
While this may have a direct impact on certain products, the broader concern lies in their potential to drive inflation and dampen overall demand. For India, we are certainly optimistic on the consumer story with inflation under control, interest rates going down, and the government providing tax reliefs in the budget. All the prerequisites for revival of growth are in place. On the supply side, we continue to face challenges that have persisted from the previous quarters.
Notably, the price of fatty alcohol have remained elevated at the same levels as in Q3, and we anticipate that they'll stay high for at least one more quarter. This situation is primarily due to supply shortages in Southeast Asia, while poor plant productions, shutdowns or breakdowns in palm kernel oil manufacturers have significantly impacted the availability of these critical raw materials. In respect to sea freight, sea freight costs have eased out as compared to previous quarter.
However, it is being affected by several factors, like the postponement of reciprocal tariffs by the U.S.A., which has led to higher demand for containers, further straining capacity. Moreover, there are no signs of ships returning to the Suez Canal route, which continues to disrupt the traditional shipping lanes. Congestion in Europe, China, and Southeast Asia also affecting export and import shipments, exacerbating the delays and increasing lead times.
Despite these ongoing challenges, we are actively working to mitigate the impact on operations. We are closely monitoring the supply chain, engaging with multiple suppliers, and exploring alternative sourcing options to ensure that we can maintain our production schedules and meet customer demand.
While the current environment presents difficulties, we remain committed to navigating these challenges with agility and resilience, ensuring that we continue to deliver value to our stakeholders. To conclude, as we look forward, we are inspired by our vision for the future.
As Nelson Mandela said, "It always seems impossible until it's done." We are committed to taking the necessary steps today to ensure a bright and prosperous future for your company. We remain vigilant and prepared to navigate the uncertainties, leveraging on our strengths and the strategic initiatives required to ensure continued success. Thank you once again for your continued support and trust. We look forward to sharing more updates and progress in the coming quarters. Thank you, and now handing over to the meeting coordinator.
Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two.
Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Thank you, sir, for the opportunity. Sir, in this quarter, this rise in your pricing per kilo, have we taken the complete impact of the raw material price, or there is still left, like we will be taking further price hikes in next quarter also?
It is pretty dynamic because it always gets passed on with a lag. The only thing is that the sequential increase seems to be like it was close to about, in the last quarter, about $2,600 for metric ton. It has gone to about $2,800, $2,900 progressively. Yes, there will be always some lag in terms of passing on, but I would say that a good portion has already been passed on.
Okay. And sir, as you had mentioned that Indian market will continue to remain subdued and raw material prices also might remain elevated for the next 3 to 6 months. Is there any change in your volume guidance for FY 2026 from the earlier 8% which we have given?
Yeah. As I said, that is the guidance. I did mention in the last conference call itself that continues to be our long-term guided range. That is not something that we are looking to deliver, at least till the time the India market really starts turning around. We would probably be looking at closer to the lower end of the band. Okay.
We delivered close to about 3.5% last year. Okay. We would probably want to continue the momentum that we generated on volumes in the last quarter. Okay. And look at how do we leverage on the other geographies like rest of the world, okay, to be able to deliver closer to the lower end of the band.
That would be something that I would like to look at for the Q1 of 2025, 2026. Okay. We would be in a better position to talk about whether we will go back to the early guided range of 6% to 8%, probably when we do the conference call for Q1 2025, 2026.
Okay. Sir, onto the raw material prices. So these palm kernel oil prices are on an uptrend, whereas the LAB prices have been more or less, you can say, subdued only or flattish. Sir, now surfactants can be made via the LAB route also. Is there any change in contracts, like global players are shifting more towards the LAB route, they are procuring more surfactants from this segment, rather than palm kernel oil.
LAB typically used majorly in your powder detergents. That's something that our customers will try various ways of reformulation and all that. But then we don't supply majorly into powder detergents. We supply majorly into liquid detergents.
And there, we do see that something that is remaining intact. But then, yes, we need to be conscious that these sort of changes can happen, and we are seeing as to how well we are able to get prepared to counter that.
Got it. Sir, any idea onto the freight cost, like for full fiscal FY 2025, we had again seen a rise in freight cost, which is why your per kilo EBITDA also remains impacted. What is your outlook like? Can it remain at these levels or there's a chance this can go down and improve your EBITDA?
No, we expect freight rates to I think it had started actually coming down very well. But then these recent issues on reciprocal tariffs being introduced, then postponing it and people trying to keep on shipments has personally its own share of challenges in terms of that sustaining.
The other issue also is that with the ongoing issues still continuing in the Israel-Hamas conflict, I think the Red Sea crisis continues to remain very live. Unless we have the Suez Canal route getting opened up and people taking the Red Sea, I think we will continue to be having these challenges on the freight front.
Got it. Sir, just one last question. Sir, onto the volumes, when we look at the breakup. The AMET volumes are still subdued in FY 2025. I believe last year also, they were at the bottom, and there has been no material improvement in FY 2025. But the rest of the world volumes have seen a good uptake. Any idea, sir, on the two markets, how this could behave for the next few years?
Yes, one of the thing is that last year, if you see, most part of this thing, AMET was impacted, not so much by demand, but because of the supply side issues, because of the incoming raw materials getting delayed. I think we do see that has probably got significantly better. We do expect that Africa, Middle East, Turkey this year should start resuming its growth momentum.
Whereas rest of the world, driven by the Americas region, we have also done well across all other geographies like Europe and APAC. Okay. We would expect this momentum to continue. That is what I said, that gives me the confidence that even with India really not picking up in the first half, we should be able to be looking at volumes at the lower end of the guided range of 6%-8%.
Got it. Thank you, sir.
Thank you.
Thank you. We have our next question from the line of Rohit Nagraj from B&K Securities. Please go ahead.
Thanks for the opportunity. So first question is on the Specialty products. Last year, during FY 2024, we had seen a very strong growth during the year. It was probably primarily propelled by even the consumption in India, which was growing at mid-teens. This year it has become flattish.
I understand that it is again predominantly driven even from the developed markets. Early from last year, we had seen some pickup because inventories were normalized and there was pickup in terms of demand. What is our current perception on the specialty products and how things are likely to shape up in near future, given that generally these are slightly higher value than the Performance Surfactants? Thank you.
In Specialties, what we have, what goes into the premium formulations and what goes into masstige formulations. If you see, the volumes that were majorly impacted by the Specialties that goes into the masstige products which is majorly in India and AMET, which is where we have seen an impact because there has been some downtrading that has happened into people going more into the low-end products.
I think this is going to be a factor in terms of all the commodity prices start getting better and the demand momentum has to come back. Once the demand momentum comes back, it takes up everything along with it. So masstige Specialties have impacted the Specialties growth for the current year.
Whereas if you look at the sort of momentum we are generating on projects getting done on my prestige Specialties, those seem to be in a good space, and then we do see a good amount of projects in pipeline getting developed with customers.
Sure. Sir, second question in terms of, given that this year our volume growth has been slightly tapered off, and next year also, we are guiding on a lower end of our normal band. In terms of capacities which are available, do we still have to go in for the normalized Capex of INR 150-170 crores, or we will probably take a breather in the coming year?
No, there are some projects that we've already. There's nothing new that we're taking up. The projects that we have rolled out will start getting commissioned in this year. But there's nothing significant that we're looking at this year, at least, because we need to take a breather, as you rightly said, because my project team also has been pretty busy. We will wait and watch, but what is absolutely required, is what will be done.
Sure. And just one last clarification in terms of the. Unilever has announced that we'll be making the surfactant facility for them in Mexico. Any numbers on the same from our perspective? The impact for this is about $1.5 billion. Any clarity if you want to provide?
No, I cannot. I'm allowed to, but then I'm bound to confidentiality with the customers. It's only what the customer themselves have disclosed. Beyond that, we are not able to because we are bound by a very clear conversation with them in terms of what is our role, what is the investment that we will be responsible for. I think that's something that we would need to keep out of the discussion.
Perfect. Thanks a lot, and all the best.
Thank you. All the best.
Thank you. Before we move on to the next question, a reminder to all participants, if you wish to ask a question, you may press star and one. If anyone wishes to ask a question, you may press star and one now. We have our next question from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Yeah, good afternoon, sir. Thanks.
Good afternoon, Sanjesh.
I got few questions. First, on this margin. Q4 appears to be very strong. Do we hold on to our guidance of 20.5%-21.5% EBITDA margin for FY 2026?
Yes, Sanjesh.
That guidance remains intact, right?
Yes.
Second question is on other expenses. Volume sequentially appears to be stable to better, while there is a drop in the other expenses. Any particular reason why there is a drop in the other expenses?
No, that's because we also have been looking at, given the demand scenario, we've also looked at certain cost optimization efforts. That's one. Second is also there were some one-time costs that were there earlier, which has also been taken care of. So there is a combination of certain things that are not continuing into this quarter, and also in terms of good amount of actions we have taken on cost optimization. Freight rates also coming down is also reflecting in expenses being lower.
But that again may jump up back, right, in Q1?
Maybe the freight costs go up. But at least right now the problem is the freight costs haven't jumped up that significantly, although they have started going up. The major challenge on the freight front is in terms of getting containers and schedules from the shipping companies. So I'd probably expect that it may remain at the levels that they were in Q4.
Okay. The next question is on demand itself. What are the measures are we taking within our control to drive the higher volume growth both in India, across the region, India, Middle East, which is AMET, and the rest of the world?
Yeah. The first one is in terms of, okay, is how do we ensure that we are able to have our sales team getting every drop of demand that is available, and we have the ability to be able to fight in the market to be able to get our share of the business. That is something we are very clear.
So it is like how do you prioritize volume growth over margin growth? That is very clear. Second is also in terms of how we also are able to create certain better go-to market strategies. I think we are also working on that. Okay, but those will start showing more results as far as the Specialty are concerned.
But in Performance Surfactants, we are well-positioned in terms of what we are currently doing on the go-to market strategies, only in terms of how do we ensure that given the tepid demand situation, how do we do not lose even a single metric ton of business. So that way, it is a question of how do you get your sales team focused on that particular single-minded objective.
Very clear. The next question is on fatty alcohol versus crude-based surfactant. Now that crude prices have been falling while fatty alcohol remains very sticky and high, do you see there is a shift, at least on the lower end of the product, from fatty alcohol to, say, petrol-based surfactants?
Yeah. We do see, okay? We also know that it's not that they've not been done earlier. There have been enough times when this particular scenario has played out. There are formulation challenges. Yes, given the way things are with a very tepid demand and elevated prices of oleochemical feedstocks, we do see certain reformulations happening.
We are also looking at how do we prepare ourselves to be able to, if it be even for a short term, how do we be able to manage this flexibility in a more effective manner. Although we are very clear that this is not going to be a long-term trend, we'll keep having the short-term challenges of reformulation, and we are seeing how well we are able to participate in that.
Any products that we want to introduce within the petrol based in India, which can help us add little bit of volume and drive the growth? Any product portfolio changes? I know we don't want to do LABSA.
Yeah.
Any product beyond LABSA?
There are alpha-olefin sulfonate, okay, which is one other alternative. Okay. There are certain synthetic alcohol-based derivatives, okay, instead of fatty alcohol-based derivatives. So there are multiple options. It all depends on how customers. Because it's not that a particular ingredient will fit every customer.
So each customer, when they reformulate, they have their own reformulated thing, and we need to work with that. So we are seeing how we are able to prepare, okay, to be managing all that we can do. LABSA is something that we will not do in India, which we are very clear. Other than that, we are evaluating every other option, including synthetic alcohol-based surfactants to olefin-based surfactants.
Got it. But we haven't started any of that, right? That means we need
No, we can.
Sorry to interrupt, Mr. Sanjesh, we request you to move on.
Let me answer this for him. It is not that we have a service. The only thing is how you rejig your internal supply chain to be able to manage multiple grades. That is all, and SKUs. Because every time that you change your runs and everything, you need to have a washing and all this, how do you manage productivity and flexibility? How do you manage these two in a very effective way is what is the challenge which we are working on.
From the capacity perspective, we are covered for that as well. You do not need a separate plan for that.
No, you do not need.
We do not need that.
Yes.
Very clear, sir. Thanks for-
Yeah, we will require some debottlenecking, but that we will do. Those are not significant.
Those are not significant.
Yeah.
But this plant can handle the new age or the petrol-based. Not new age. Sorry. Petrol-based-
Not exactly new age. Old age products we can handle.
Yeah, old age products. That's what I was correcting. Sir, just one last question before I get back in the queue.
Sorry to interrupt, Mr. Sanjesh. We request you to rejoin the queue.
Okay, fine. Thank you, sir. Thanks for answering all those questions.
All right. You can come back in the queue, we'll answer. Yep.
Yeah. Thank you, sir. Bye.
Thanks.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin the queue.
I repeat, ladies and gentlemen, please restrict yourself to only two questions per participant. Should you have a follow-up question, please rejoin the queue. We have our next question from the line of Arun Prasad from Avendus Spark. Please go ahead.
Good afternoon, Natarajan .
Yeah, good afternoon, Arun.
Sir, I have a couple of questions. First up, these freight trades continue to hamper our performance in a very volatile manner. Last time also we discussed when this happened. Are we still doing CFR-based billing? Why we are not completely shifting to FOB-based billing so that the freight trades are completely passed down to the customers on the same shipping parcels?
No. One of the things we need to be clear is that that's one of the value delivery that we need to provide to customers. It can't be that I keep shifting. Tomorrow freight rates will come down, and then it doesn't mean that I want to do CFR. These are all things that we as a nation would have the capability to manage that, which is what we are doing.
There is no way, because customers also want delivery done on time. They also have challenges in terms of getting the containers, same thing. And they expect that value delivery from us. That's the reason why they need us. So I don't want to be hitting at our basic purpose of existence itself. That's the way I'll put it.
But, sir, if we are giving that value-added service, we should also be able to recover the-
Yeah
incremental free trades over and above that, right?
We are recovering. It is not that. But then if the freight rate jumps up today and I have already done a contract which is there up to June, there is no way I can go and in between take it up. That will be the volatility situation that we will have to contend with.
In this hypothetical situation where the June contract ends and when the contract renews in July,
you will be able to recover the, say, by the time the freight rate comes down to a normal level. So the renewal happens at the original rate, or you pass it on or recover some of the freight rates also in the next contract?
No. It will be on the new rate which we expect for the next contract. My freight buyers have to manage that properly, okay, with the relationship we have with our shipping companies and freight service providers.
Okay. It is not that you will end up saying that, "I'll continue on the last quarter." No, that never happens. The same thing happens when the freight rates also increase, correct? I do not charge them the previous quarter's freight rate. I will charge what is going to be applicable for the next contract period.
If there is a high volatility, we have to absorb. That is what I understand.
Yeah. High volatility both ways. There are times that it may benefit us also.
Yeah. Right. Understood. Sir, that means if you see in FY 2025, our gross margin per kg increased by around roughly INR 3 per kg, whereas on our EBITDA per kg was flat. If the current freight rate continues, we should see this INR 3 per kg flowing into EBITDA. That is the right way to expect in FY 2026?
No, I am not able to get the way that you are looking at it. But one thing that I can tell you is that it is not that the freight under a whole inquiry impacts you by INR 3 per kilo. No, that is not the case at all.
Sorry, sir. Why you said so? Because obviously the freight rates will be on a per kg basis only will be incurring, right?
Yeah. But when you say gross margin, when you look at it is not only about freight mass. EBITDA, then you have various other costs also that will be there.
Okay. Sir, we already discussed that we will be passing on the raw material price within certain lag.
Correct
assuming that
Yeah, everything else remaining same, what you are saying is true.
Right. Understood. Sir, second is on the volumes front. We mentioned that rest of the world, this is the highest volume quarter. Is this a kind of a baseline from which we can operate, or this is kind of a top in terms of maximum we have completely realized maximum potential from the rest of the world volumes?
No. We are still looking at what more we can do. We are still hunting for more customers. We are trying to deepen our presence with existing customers. There is a momentum that this business has gathered, and we will continue to build on that momentum. It is not that we have really gotten and deepened our presence into those markets. There is still huge potential available, and we will continue to grow there.
But sir, to maintain our 6% lower end of the volume growth, and given that India is kind of flat and may not recover this year, and it continues to have its own problems. So the rest of the world needs to grow at very high double digits even to deliver 6% volume growth.
I said, I will look at lower end, provided India continues to show some improvement.
Okay.
If India continues to be negative, AMET, I expect that it would start growing this year, and we do see that we should have the clarity by the end of first quarter of this year. And I have reasons to believe that will happen. India is where we are still not seeing that because my customers also are not giving us that confidence. Okay.
Right.
So I would like India to at least start growing at some decent level, not at the earlier very high levels. Okay. And then we are able to look at the lower end. Otherwise, last year, with everything that we did, we grew by about 3.5%. Correct?
Correct. Even if rest of the world continues to grow at that 9% on a per annum basis, AMET can continue to grow at 2%, 3%, but India doesn't grow at all, we still deliver only the 3.5%. Correct?
Correct.
Yeah.
Typically when the palm oil prices goes up and the stabilizers-
Sorry to interrupt. Your two questions are up. Can we please request you to rejoin the queue?
Sure. Thank you very much.
Thank you so much.
Thank you.
We have our next question from the line of Umang Shah from Banyan Tree Advisors. Please go ahead.
Hi, sir. Thank you for the opportunity. Sir, just wanted to ask, we have INR 260 crores of CWIP in our balance sheet. What does it pertain to?
It is pertaining to projects that are going to be commissioned.
Okay. Is it specialty or performance?
Specialty or Performance.
Sorry, can you repeat? Is it Specialty or Performance?
Yeah, it's I think majorly skewed towards Specialty.
Sure, sir. Yes, sir. In Specialty, if you could break the numbers for full year in terms of preservatives and mild surfactants. I understand these are the two big categories. Any qualitative comments on how these two categories went, or if there's another big category that I'm missing out on, any comments on that? That would be great.
Qualitatively, both of them continue to be the major categories, mild surfactants and preservatives. But yes, we don't provide the breakup of our Specialty into the individual components.
Right. Sure, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, please limit yourselves to only two questions per participant. Should you have a follow-up question, you may please rejoin the queue. We have our next question from the line of Gaurav Nigam from Tunga Investments. Please go ahead.
Good afternoon, sir. Thank you for taking my question.
Good afternoon.
Sir, I have one question on the AMET business. Sir, with geopolitical tension between India and Turkey, just wanted to understand how we are supplying and serving that market. Is there a near-term impact that you expect in that market?
See, India to Turkey, our business is not significant, so I do not see any great impact on that.
Is it happening from outside India specifically? I mean, just wanted to-
Yeah, it will happen. It happens from Egypt.
Got it.
Yeah.
Understood. Thank you.
Yeah. Thank you.
Thank you. We have our next question from the line of Krishan Parwani from JM Financial. Please go ahead.
Yeah. Hi, sir. Thank you for taking my question. Two questions. First, if you look at overall volume growth over the last 6- 7 years, it has been around 3%-4%. I just wanted to understand how you intend to pick the growth rate to your long-term aspiration of 6%-8%.
Oh, yeah. Correct. First is, I think, when we talked about 6%-8% as a thing, we had factored in India growing at a very good pace, and we are very confident that will happen. What is happening now is a blip. That is one. How do we ensure that we are able to continue to maintain our leadership position in India is going to be an important criteria.
India also has to grow at a good pace, and there is a huge amount of growth potential available given that the per capita consumption in India is the lowest in terms of home and personal care products. The other thing is how we are deepening our presence in the other markets.
If you see the way that the rest of the world we have started showing growth, it happened because of almost 3- 4 years of good work that we have been doing there. How do we then keep deepening our presence and enhancing our business in the other markets is going to be important for us to be delivering 6%-8%?
Even what we are doing, say, with our customer outside India is also to see how we are able to participate in markets that they are currently not able to because we do not have a manufacturing in that location.
Understood. Secondly, just on the continuation to that question. If you look at our Specialty portfolio, I think the growth rate over the last 10 years is about four and a half, and over the last eight years is about 2%. If this kind of growth rate continues, how do we expect to increase our percent EBITDA margin to our aspired range?
Yeah. One of the things is that in Specialty, this is a huge focus for us. We are putting in place various measures to be able to, as I said, the products and the markets where we will be clearly focusing and the go-to market strategies relevant to each of the markets, okay, is something that we have very clearly laid a path for ourselves. That is something that is going to be a critical component of our growth in the coming years. We are preparing well for that as to how do we increase our Specialty in intermediates business.
Understood, sir. Thank you for answering my question. Wish you all the best.
Yeah, thank you.
Thank you. We have our next question from the line of Abhishek Ranawat from Oaklane Capital. Please go ahead.
Hello.
Hi. Hello?
Yeah. Thank you for taking my question. I have only one question about the EPC project. Actually, I have joined this con call a little late. I just wanted to ask about the EPC project, what is the size of this project, what is the execution period, and what is your future plans about this particular project and the overall EPC business?
First clarification is EPC is not one of the business verticals that we have. It is just that to further the strategic interest of our customer because it also made a strategic fit for us, we are doing it for this customer.
That is very clear. With regards to how we are going to be doing what further we are going to do in this project, we are evaluating how we can further our strategic interest in the markets that are of interest to us and the products that are going to be made in that particular site.
The third one with regard to what is the investment, that as I said earlier, you joined late, but it was asked to me earlier. That is something we have only confidential with the customer. We cannot be disclosing what is the size of investment that the customer is putting in.
Okay. Thank you.
Thank you.
Thank you. We have our next question from the line of Sudhanshu from Marcellus Investment Managers. Please go ahead.
Good afternoon, sir. I have got a couple of questions. Sir, please can you just help us with the Q4 volume growth for India?
Q4 volume growth for India was about - 1%.
Wonderful. Thank you, sir. Second, sir, in terms of our balance sheet items, we see increase in inventory and receivables. Is it that the terms of trade have changed where we are offering higher credit and storing higher tonnage or is it just because the RM prices have gone up and hence optically this looks like-
I think Abhijit, our CFO, will answer this. Yeah, Abhijit.
Yeah, it is primarily on account of the higher raw material prices when we compare it with respect to the last year numbers.
All right. One final question, if I can just ask. This year our Capex is around INR 200 odd crores, and our guidance is around INR 150 odd crores of Capex every year. Is this any particular project which is driving this higher figure for this particular year, and this would normalize to that guided range going forward?
No, we do expect that. We give this guidance not because we know that there are replacement Capexes that we incur, plus there are certain Capexes that we incur with regard to revamping our, this thing with regard to making our plants a little bit more efficient and effective. It is in that context we guide. As I said, we expect that any new projects, even brownfield, this year, we don't see initiating anything in a significant way because we are commissioning a lot of projects this year.
Okay.
There will continue to be some project, but there will be more need-based in terms of either small improvements or require some replacement.
Okay. Noted, sir. Thank you very much.
Thank you.
Thank you. We have a follow-up question from the line of Rohit Nagraj from B&K Securities. Please go ahead.
Thanks for the follow-up. Sir, in terms of AMET region, given that the geopolitical issues and even on the currency front, have we made any changes in terms of the trade credit, which is also impacting our volumes and business order? Thank you.
No, we are always very clear that trade credit is something we do only after a lot of due diligence is done with regard to the creditworthiness of the customer and the country risk in which the customer is based. So there is nothing that has changed here.
Something has been there since the time we started doing business in Africa, Middle East, Turkey. So there is nothing different that is happening now, unless you are alluding to something which I am not able to get.
No. I was just generally given that the situation has been quite volatile over the last 2, 3 years. Have we made changes earlier, the credit period was-
No, so we have been extremely particular. If you see, that's why in the last 45 years of Galaxy's existence, I think we would have hardly written off any bad debt. So we are very prudent in terms of trade terms that we offer to customers. We are very clear that we have to be extremely diligent in terms of granting trade terms.
Right. And second question is on Tri-K. Any new development on that front? In terms of new products or newer areas which we are targeting and probably the growth prospects of the same.
Yeah. So Tri-K, I think it's getting on to more. They just introduced 3 new products. Which essentially one was their thing, which is finding a lot of interest is in what you call a hair bond. Which is hair bonding, this thing for, say, treated hair.
We also have something that is working in terms of hair growth, which was launched in in-cosmetics Global. So we do see good amount of interest being generated in these products, and that's going to be a route for Tri-K to expand its offerings and build its business. So we have good amount of interesting stuff happening there as well.
Thank you a lot, sir.
Yeah.
Thank you. We have a follow-up question from the line of Arun Prasad from Avendus Spark. Please go ahead.
Thanks for the follow-up opportunity. Sir, I was trying to understand the projects which are currently we have done in the last two years. I think we have done around 300, 330 crores of Capex in the last two years. Apart from maintenance Capex, is there any plant which is yet to commission? Can you just give those brief details will be helpful.
Yeah, we're putting in something which is create some Specialty ingredients project that's getting commissioned. It will get commissioned in the first half of this year. We also have some that we have done with regard to getting our effluents treatment systems spruced up.
There's some that we have done with regard to getting our pilot plant set up, more capable of delivering more reactions that we know to do, more technologies that we need to do to establish capabilities for new products. So those also some of in phases is getting commissioned.
Sir, this ETP plant, pilot plant will not give any immediate boost to our volumes, right? Only the Specialty plant will give the volume booster.
Yes.
What is the size of this plant, sir, in terms of Capex? Is it like a big plant or a very small plant?
It is a big plant, but I am not able to give you the specifics of that because that would end up revealing too much. I do not think we would want to say that how much is it into Specialty, but it is suffice to say that out of 330, a good portion will be on Specialty.
All right, sir. Understood. Sir, second on the India volumes. We have seen this cycle playing out in the past as well, where formaldehyde price goes up and then stabilizes, and then the volume growth comes. Going by the current trends, probably suffice to say that currently we are in the stabilization phase, and after this we should expect some kind of volume growth once formaldehyde price is stable here.
Yes. We will, because India, we have the huge potential. However, if you see one of major players, global players in formaldehyde personal care segment in India has made a very clear statement in terms of how India is critical to their global strategy and how do they see India contributing significantly to their growth in the years going ahead.
I think we also echo that particular sentiment. It's only that we'll have to pass through this phase, and it always happens. This sort of situation we have even seen earlier. But yes, we need to stay watchful and ensure that we prepare well for the future to deliver in the growth that certainly is going to come our way.
Sir, what is the time period? Typically, it is 3 months lag or a 6 months lag or a 1-year lag, the volume growth comes post the formaldehyde price stabilizations.
Typically 6 months because what happens is that consumers see, unfortunately, the quantum of increase has been so high that it had to be passed on to the consumers. Consumers then find their own ways to be able to cut back on consumption. Typically, they can manage their budget in a month by saying that, this is the quantity that they will buy in that month, and they manage within that.
The usage in a very smart way gets reduced. But then once the prices start getting reduced for the consumers to again become little bit more carefree in terms of using it more per use or more usages per week, could take easily because the sentiments have improved. So it'll take about, we have seen earlier, 6 months to 1 year.
This is irrespective of the price differential between the petrol-based and the oleo-based products.
Yeah. Because petrol, finally, there is an equilibrium that is always reached. But then petrol-based, we also know that petrol-based products have their own challenges in terms of formulation being very effective.
Because consumers, once they spot that there is a difference in the way that the formulation is performing, then that can be a significant impact for the brands. So essentially, they are very careful about it because given a choice, I can say that they would always want to go back to oleochemical-based feedstocks. Well, all of them have been talking about their carbon footprint. They have been talking about moving away from petrol feedstocks.
I would say that these all will be getting to using some petrol feedstocks little bit higher into the formulation, maybe a temporary thing that they will have to do from the point of view of managing their profitability, but that is not something they would want to do as part of their long-term strategy.
Okay. Thank you, sir. Thanks for answering all the questions. All the best.
Thank you. We have a follow-up question from the line of Sanjesh from ICICI Securities. Please go ahead.
Thanks for taking my question. I got one question on the bio-based or an enzyme-based surfactant. Are we thinking on that direction to move up in the value chain, add new line of product?
Oh, yeah. We are onto biosurfactants. That is something that we have worked on. We also have a product that is already into the pilot stage. Looking at how we then will probably be launching that once we complete all our application studies. That is a new part of our innovation in terms of getting into the newer surfactants.
We also know that the application of this is into niche products, because they also come with a good amount of costing formulation increase. We need to be very clear that this is going to be a, the starting will be low volume, high margin product. We need to find ways to see how we are able to get it into more brands. That is what we are working on.
Got it. The last question is on the liquid detergent, which we saw good uptake in last 2 years, which was driving a good growth for us in India. Because of this high-cost raw material, are we seeing the penetration of liquid detergent being less than what we had in FY 2025?
No, I think the momentum for liquid fabric detergents has been pretty good because we see more brands getting launched. There is a perceptible shift that is happening in the consumer preference for liquid, at least in the urban areas, based on the commentaries that most of our customers whom we track, their quarterly results, I think they have all been pretty gaga about liquid fabric wash continuing its momentum in terms of growth.
Despite that, India for us is not growing. I thought this transition itself was very big for us.
No, also what happens is that this transition, see, we're talking about the fabric wash market is close to 15 million to 20 million tons. Out of that liquid is today, probably it can be about 100,000 tons. So in terms of growth rate, it is very impressive, but it's not enough to be looking at taking us. That will take time. It will happen faster. But it's not going to happen in next 2- 3 years. Because we also know that it's very superior performing formulation, liquid fabric wash, but per wash cost is high.
Got it. Very clear, sir. Thanks for answering all those questions from the.
Thank you. Welcome.
Thank you. We have our last question from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Sir. Hello.
Yeah.
Yeah, thank you, sir, for the follow-up. Sir, my question is on to the U.S. and the EU side. Are there any new ingredients or formulations we are planning to launch? Like we have launched a new product of Galseer DermaGreen. How many new products are there in the pipeline targeting the international markets? And sir, if there is any sort of a market size which we can give for this product of Galseer DermaGreen, and what is the feedback from the customers, and how is the acceptance?
GalGuard DermaGreen essentially is so well received from our customers. There is a huge amount of projects in pipeline that is getting created. We continue to do a lot of efficacy studies into various end use requirements. Similarly, we just did a certain version of a product called GalGuard Prebiotive that won an award, as I told during my opening remarks, in the in-cosmetics Global Amsterdam exhibition.
Yes, so these two and we will not be able to tell you the size typically because it all depends on specific customers. It is not that we are trying to replace some huge. It is not an alternate surfactant that we are coming up with. It is a use for coming up with superior formulations. It can only be based on the sort of projects and pipeline value that we keep generating with customers.
Okay. And sir, any feedback like from the customer side, whether this product has been well accepted into the international markets and how is the traction?
Oh, yeah. The way we look at it is that first is when the customers are interested, they ask for a small sample. Then we find that they ask for bigger samples. We find that a good amount of customers who are asking for bigger quantity of samples, that tells us that they want to do more studies in terms of formulating it and then seeing as to which applications they want to be launching, which brands they want to be incorporating. That way we are able to gauge that it has generated significant amount of interest.
Okay. And sir, is it possible at least we can share what could be the penetration rate or we are still in the very early stages?
We don't want to do that. Probably once this really gets into a situation where I have at least 10 customers who have got it into their brands and it is going in regularly on a commercial scale, then yes, we may be able to give you some idea about what can be the sort of size of the white space for this product.
Sir, how many products are we planning to launch in the next 2 years?
Typically we do about one or 2 products between us and say, Tri-K put together, 2, 3. Like this year we launched 2. Okay, so that's what we'll do. The more This thing is because each product we launch, it takes almost 3- 5 years for it to blossom fully. We don't want to spread ourselves too thin. We do have projects, products that are there in the pipeline to launch, but we launch them in a very calibrated manner.
Got it. Thank you.
Thank you.
Thank you. Ladies and gentlemen, this will be the last question for today. I now hand the conference over to the management for closing comments.
Yeah, thank you. Thank you all for the continued support and trust that you have placed in us. We look forward to sharing more updates over the coming quarters. Look forward to meeting you sometime middle of August to share our Q1 FY 2025, 2026 results. Wishing you all a great day. Thank you so much.
Thank you. On behalf of Galaxy Surfactants Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.