Ladies and gentlemen, good day and welcome to Galaxy Surfactants Limited Q1 FY 2025 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectation of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in a 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 the 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 from Galaxy Surfactants Limited. Thank you, and over to you, sir.
Thank you. Very good morning, ladies and gentlemen. On this call with me is Mr. Vaijanath Kulkarni, my Chief Operating Officer and Executive Director, and Mr. Abhijit Damle, our Group Chief Financial Officer. So once again, very good morning. It gives me immense pleasure to welcome you all to our first investor conference call for FY 2024-2025. As I look back at the quarter gone by, the comparative that comes to my mind is that of the hare and the tortoise story. A story we have all grown up hearing, but perfectly descriptive of the scenario today. At one end, we have the volatile supply chain and geopolitical escalations, which like the hare's pace, have been changing rapidly, and on the other end, we have the demand scenario which like the tortoise has been slowly but steadily improving across geographies.
In a world destabilized by volatile macros, logistical challenges, and elongated lead times, attaining the upper range of the guided volume growth was a major positive in this quarter. I strongly believe the volume momentum should sustain going ahead, driven by growth across all geographies. While volume growth was in line with our expectations, the EBITDA per metric ton came in at INR 20,197 / metric ton, slightly below the guided band of INR 20,500/metric ton- INR 21,500/ metric ton. Higher supply chain costs across all locations contributed towards this being lower than the guided range of INR 20,500/ metric ton. Despite multiple challenges, I believe we are on track to regain our profitability trajectory. There are visible signs of improving demand for our premium specialties, which will enable an improvement in our overall profitability.
Volume growth across all regions and segments was a major positive in this quarter. James Clear in his book, Atomic Habits, has said, we often dismiss small changes because they don't seem to matter very much in the moment. Drawing inspiration from the same, I now will take you through the small but important improvements that have happened in this quarter, as this will play an important role as far as this year's performance will be concerned. Starting with India, which grew by 2% in this quarter. While this may appear to be relatively slower compared to the double-digit growth we have seen in the last four years, this comes on the back of a relatively slower April that we had, but an extremely strong May and June. Above average monsoons, revival of rural spending, along with the consumption incentivizing budget should ensure strong momentum going ahead.
Despite the geopolitical escalation and Red Sea crisis, Africa, Middle East, and Turkey grew by 4.9% in this quarter. This is a major positive. Small but steady improvements seen quarter-on-quarter, despite deteriorating macros, gives us the confidence that the path to revival, which began in H2 of FY 2023-2024, is now moving towards the path of growth. We remain cautiously optimistic and are working towards delivering on a high single-digit growth this year in our Africa, Middle East, and Turkey markets. As the rate cut cycle gathers momentum, improving overall spending has slowly translated into strong demand for mass-reach categories. This is a phenomenon visible across all developed markets. This quarter saw your company growing by 24.5% in rest of the world markets, driven by strong growth seen in Europe and Latin America.
We strongly believe the momentum in mass-reach categories should translate to strong double-digit growth for these markets. Improving consumer sentiment should accelerate new launches of premium Speciality Care products, which in turn should aid our premium specialties from H2 FY 2024-2025. As one can see, your company has grown across all regions in this quarter, even segmentally while our Performance Surfactants grew at 5.4%, Specialities driven by mass-reach recorded 13.3% growth. While overall volume growth stood at 8% sequentially as well as year-on-year, we saw growth in our EBITDA. While demand remains steady across geographies, capitalizing on the same, even the supply volatility was the major challenge. Unavailability of containers, port congestion at some of the major ports in the world, combined with higher lead times and rationalized availability of raw materials, did adversely impact the volumes in this quarter.
A more supportive environment would have resulted in strong double-digit volume growth for a company. To conclude, as Greek philosopher Epictetus had said, just keep in mind that the more we value things outside our control, the less control we have. In line with that, at Galaxy, we remain focused on what we can control, be it in terms of new launches, leveraging and enhancing our share with customers, adding new customers or building capabilities, competency, and competitiveness across businesses. Our endeavor remains to focus on improving ourselves as an organization. As instability, volatility, and crisis gather steam, we at Galaxy remain fully committed and focused towards ensuring stable, consistent, and improving performances. Thank you, ladies and gentlemen.
Thank you. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, wait for a moment while the question queue assembles. The first question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Thank you, sir, for the opportunity. Sir, first question is on to the improvement in your per kilo EBITDA spreads for this quarter. Sir, despite the logistic challenges and the continued rising prices, you had also mentioned in your presentation that raw material arrivals were impacted and dispatch of finished goods. The higher freight rates also could have been there. But despite this, our other expenses have gone down on a sequential basis. Any particular reasons for the same?
See, the other expenses, typically it is more in terms of freight, because freight is part of the revenue in terms of based on the Incoterms that we have. Typically, if the DDP shipments were lower within this quarter, then the revenue, the DDP costs are much higher than CIF freight costs. That can be the only explanation for that, nothing else.
Sir, there was availability of containers, like have you faced this problem? Or we were having very smooth operations for this quarter into the exports market.
No, it wasn't smooth at all. That's what I said during my opening address, that the challenges actually aggravated pretty significantly from May onwards. It was both incoming and outgoing. Transit times have got elongated, congestions across all the major ports, and even availability of containers and slots. Forget about the rate increases, even availability has become a challenge. But yes, my team has been doing a fantastic job in terms of managing in this new normal. We do hope that if the situation doesn't escalate, my team has found a way to manage despite all these constraints.
Sir, this has started from May, as you mentioned. For the coming quarter, can we see some softening of volumes or it will be again smooth only?
What I am saying is that the demand scenario looks robust across geographies. The supply chain situation, though not improving, at least should not deteriorate. If it does not deteriorate from where it is today, we do not see any reason why we cannot have a good volume growth next quarter as well.
Sir, onto the volume performance, as mentioned in your presentation that the rest of the world markets has seen a good improvement. Any particular geography which we can mention, which has seen sharp uptick in demand or in volume?
So we have Europe, we have Latin America. We also have Asia-Pacific.
And sir, this will continue going ahead. Along with this, you expect the AMET market also to perform, or it will remain flattish in terms of volume growth from here?
See, because rest of the world is growing by 24.5% . Also, we need to understand is based on a lower base that was there in the corresponding quarter last year, because the destocking impact started happening only from that quarter. That is one. But yes, given that, we still have a good robust demand emerging from these geographies and we will continue the growth momentum. With regard to Africa, Middle East, Turkey market, again, we see no reason why our demand growth that we had this quarter cannot be continued. The only spoiler can be if the supply chain situation worsens beyond what it is today.
Sir, this quarter on to EBITDA per kilo, there is a very good improvement standing at around INR 19/kilo, INR 19.5 / kilo. Sir, we had guided for INR 20.5/kilo- INR 21.5/kilo . So, are we on track to beat that guidance also considering these Q1 numbers and if there is significant improvement from here on?
What we had said when we guided to the higher end, when we increased the range of guidance from INR 20,500/metric ton- INR 21,500/metric ton band, we had said very clearly what is going to make us hit this higher band is we expect the premium Speciality Care ingredients to start catching up from the H2 of this year. So we continue to remain consistent on that, and we do hope that once that happens, we should see the EBITDA per metric ton also tending towards the higher end of the band.
Thank you.
Thank you.
The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Good afternoon, Natarajan. Thanks for taking my question. Good afternoon, sir. First on the India market, because the other FMCG companies have also reported the slower volume growth. How has been the trend post-June? Is it holding up the faster growth of May and June even in the July and beyond quarter?
So far we are seeing that holding up.
They are holding up. From next quarter onwards, we should at least again cross that mid-single- digit kind of a volume growth, right?
It should, but as all of them, all our customers commentary, we see, they are seeing that the rural demand is coming up in last quarter, and they expect that to continue given the good monsoon that we have had and the budget that has put more money in the hands of the rural consumers. So with all this in place and with the price corrections that have happened, surely rural demand is poised to register good growth. So we do hope that really translates into a good demand for us as well.
Got it. AMET, somehow it feels that I thought we can grow by double- digit because base was very favorable and we are still at the mid-single-digit of 5%. What is happening in AMET? Is recovery slower or competition more aggressive? What is happening on the AMET market?
AMET actually we could have done much better. As I said, there are severe issues in terms of getting incoming consignments. Because of the Red Sea issue, the incoming raw materials were severely impacted.
In fact, we had containers coming almost 30, 40 days after their scheduled date of arrival. Due to uncertainty, production also got impacted. I think there was no doubt of demand to cater to. The issue was in terms of availability of feedstock to continue production, which is getting better now, getting better in terms of the way we have started managing it. If the situation doesn't deteriorate further, I think we should see some good numbers moving forward.
For remaining three quarters, if assuming supply chain issue normalizes, we should be hitting a double-digit growth at least, right, in AMET market?
Yeah, that is what we are aiming at. We do hope that the environment supports us. That's what is our endeavor.
Got it. You mentioned about premium product launches in H2. Are you hinting at product taking it to more geographies, or are you hinting at new product launches itself?
No, I didn't say new launches. See, what had happened, Sanjesh, was over the last 12, 15 months, because of the cutback in demand that happened in U.S. and Europe, the destocking and all that, led to many of our customers where we had started certain projects in pipeline for our new products, they had actually suspended work on that because they were finding that the demand itself has gone . So that has recommenced in terms of the work on that.
You are telling that the premium product which customer were launching, which were not launched because of the weaker market, are getting launched now?
Correct. We have got some indication from customers that they have revived those. If that is the case, it also means that it translated into them taking those premium Speciality Care ingredients from us, which will then help us in terms of a better EBITDA per metric ton in H2. That is what we say.
Natarajan, can you give a little bit more color on the Speciality Care? What is driving more growth for us? It is preservatives, it is mild surfactants, or it is value-added products. What actually is driving growth in the Speciality Care for us?
Actually, it's a combination. It's not that one of it. We have preservatives, we have mild surfactants, we have our non-toxic preservatives. Also some of the new products that we launched, we have seen some early victories. That also has started. That's why it's well-rounded and a well-spread-out thing in terms of Speciality Care. But we would want the premium special ingredients to now contribute more, and that obviously depends on our customers resurrecting the launches that they had held back.
When you say premium product, what are these product are we referring to?
You're talking about, say, high-end cleansing solutions. You're looking at high-end cleansing bars. You're looking at, say, solid format shampoo bars. You're looking at high-end skin moisturizing creams, which require better emollients and high-end emollients. You're looking at certain formulations that require safe preservatives, natural ingredients, or ingredients with more naturality index. I'm talking about these sort of-
How has been proteins doing for us? I think we expanded the capacity in TRI-K as well. How has been the performance of proteins for us?
It has been good. This quarter was a revival quarter as far as that business is concerned, because that suffered significantly last year in terms of the destocking that happened in U.S. and the way E.U. demand was very tepid. That has started getting revived. I think that's good. That also was one of the highlights of our first quarter in our North America business.
Got it. Thanks, Natarajan, for patiently answering all those questions, and best of luck for the coming quarters.
Thank you, Sanjesh. Have a good day.
Thank you, sir. Good day.
Thank you. The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead.
Thanks for the opportunity. Good morning, Natarajan-ji.
Good morning.
My first question is, once again, on the Speciality Care growth of mid-20%. How much of this growth we can attribute to, say, restocking, and how much is to be, say, because of the customers' new product launch? Because last time we had these container issues, customers were over-ordering more than they required. There will be a little bit portion of the growth attributable to that as well?
Unfortunately, I do not have the split that you are asking for, but the right question. I will hazard a guess here. Probably, I think about 40% of this can be attributed to the restocking of inventory. The balance is in terms of certain geographies where we also got some newer businesses. I could put it that way.
Right, sir. That means, maybe this very high double-digit growth can also be attributable to the low base, which should slightly normalize from the second half. That is the way to think about this?
Yeah, that is the way to think. What is currently happening will continue, but if we have certain products that are in the pipeline, which the customers are now looking at reevaluating and relaunching, which they had suspended last year, it can be different story. But without that, it just continues. It also means that if the demand really picks up, companies will also start restocking, because many of the inventory at my customers' end and also at the retailer end is also being reduced significantly. The people , with the demand being robust, they would start looking at restocking and increasing inventory levels to the normal thing it should be. Right now, many of the inventory levels are pretty tight across the value chain. I think that also can be a thing, that restocking also should happen, which can also be one of the positives in terms of the demand.
Sir, last time we spoke, you indicated the Speciality Care volumes, if it reaches around 100, 105, then you will kickstart the CapEx program. Now, looking at the current growth trajectory, it should be very close to that levels. So the CapEx on the Speciality Care side, is it in the annual?
There is one which is already under implementation execution. I think we are looking at it getting commissioned by end of this financial year. There is something more that is on the drawing board, which we are working on. Yes, because we always need to be adding capacities ahead of the demand coming in, so that we are well prepared because we can't afford to lose any demand because we don't have the capacity. So that we are very much on track.
Just a bit more color on this capacity, sir. It will be more on the non-toxic preservatives or mild surfactants. There we see very high incremental growth as compared to the capacities currently we have.
No, it cannot be said which one it will be, because many of the high-end formulations will require both mild surfactants and non-toxic preservatives, high emollients, and emulsifiers. This is something that will be across. We may not be able to very clearly demarcate, say as to which will be the sort of capacity that will get set up. Because some of them will be remodeling, some of them will be brownfield investments that we will be doing.
Understood. Sir, my second question is on India. Last two quarters, the growth has slowed down, but we have given a commentary that it hinges upon the rural demand recovery. Anything else which can help us deliver better apart from rural? Do you see any potential from the urban side also? Any indication from the customer that this can rebound back even if the rural does not come on?
You see, what has happened, Arun, is that all the FMCG companies have started taking price cuts, reduced prices only over the last, probably most of it happened in the last quarter, very significantly. Now, that should start translating demand because good demand from both rural and urban. All of them have started reporting. If you see, all my customers have started reporting after a long time, a volume- led growth and not a value- led growth. In fact, value growth is negative. My entire growth is coming through volume. Which essentially indicates that these price corrections we have done is yielding results in terms of volume growth. And we do expect that that will start translating into volume growth for us also in line with that.
In India, again, if you see, it is only because many of them, when they took price correction, they also want to ensure that the inventory is kept at minimum. Because they do not want to be having high price inventory and the new lower price inventory existing together. That also starts resulting in sudden cutback in terms of their production. And now once the demand is in touch, you will have restocking happening. They build up the inventory pipeline again, and that will be good. In India, if you see, the real barometer is the effective demand that starts from August. August, September, October, demand will determine as to whether the demand growth has come back on track. We will wait for that. The current indications tell me that my customers are optimistic that it will sustain.
Thank you, sir. One clarification. You said the price that is happening on the ground, is it a direct price cut or is it via the grammage increase, sir?
No, there are multiple. There are combination of this. Price cut also has been cut. There are one, if you buy a pack of two, one is free. You also have grammage increase. So it is a combination of all this. You have some customers doing this. Some customers and some products, they end up doing grammage increase. Some products they are giving one for two free. In some, they are looking at taking clear price cut. So it is a combination that is happening.
So this grammage cut, which has happened recently, that is where you are hopeful that India volume growth will bounce back, a long with the fresh demand. Is that right understanding?
Can you repeat the question? I think I lost you in between.
Sir, this grammage cut, which was taken recently, that is where we are hopeful that the India volume growth can come back. Is that right understanding?
Typically, the FMCG companies will always take a grammage increase before they actually take a price cut. Because the grammage increase will tell them whether their demand is really come back. That's the way to test out. Similarly, when they give two for one free, it tells them, because if you do a direct price cut, then you can't again take the price up. These are the ways for them to test out. That's what they're doing. Once they realize that it has some effect, they will then get back to actual price cuts. They will convert those grammage increase to a price reduction and restore the grammage that was there earlier. That's typically what they do every time. They do the same thing when they do increase price. They don't increase the price in the first year. They reduce the grammage.
T hen they slowly start increasing price. The same thing they do it when they have to unwind this price increase cycle.
So, in this cycle, where we are at this point of time, sir? We have already seen grammage cut and demand is picking. I just wanted to understand, we are in which part of this cycle in this?
Right now, based on the commentary that my customers are giving, today morning, I read something of Nielsen. It tells me that rural demand is really picking up, which is good. All our customers are looking at getting into rural areas where even there are thousand consumers using AI and all that to tell their sales team. That's all they're telling you to target c onsumers who bought products there in rural area, which is good. But right now, if you see, all of them are saying very clearly that all that they're doing in terms of price reduction is resulting in green spots in terms of demand looking up, and they expect this to continue. We are also seeing that this is continuing.
Only thing is, we need to see it going up to much higher levels, which should happen in the festive season, as I just told you.
Thank you, sir. Thanks for your really insightful answers on this.
Thanks.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer questions from all participants, please limit your questions to two per participant. If you have a follow-up question, please fall back in the question queue. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.
Thanks for the opportunity and congrats on good set of numbers. Sir, first question is the absorption of the incremental logistic cost. Given that it's been almost six months since the Red Sea issue happened. Whether those costs have now been completely passed on to the customers and whether the customers have completely absorbed this price increase and herein, given the current environment remains the same, the pricing part from the logistic cost will not affect us. Sir, just your thoughts on the same. Thank you.
Obviously it gets passed on with a lag. If there are no further increases that happen, I think we would have been successful in passing on all the increase. What happened last quarter was something also different, where the incoming freights went up significantly, and that results in nominal cost going up, which we have the cost of passing on. But as I said earlier, that from October, the shipping companies tell us that things should start stabilizing. Till the time, we will have to find ways to ensure that we are able to engage with the customers and ensure that we are able to judiciously pass on the increases.
That's helpful. My second question is in terms of our future growth from new product development. Are there any pockets which are currently untapped by us, maybe in Speciality Care products and where we are currently working on, and which probably will be giving us incremental growth? Given that, and historically also, we've been always specifying that 6%-8% volume growth is largely what we expect when the FMCG grows slightly below that. Are there any such untapped areas which we are working on and those will continue to give us volume growth to an extent? Obviously the margin improvement, what we have suggested, 4%, 5% every single year, that will also be on track.
Untapped will be in terms of geographies that we need to be further penetrating, also in terms of a certain thing there, we need to increase our basket of ingredients with customers, which also we are doing. With regard to new products, we know that there are certain consumer trends which our innovation team is working on in terms of coming up with product solutions. Those will be something that we can say is untapped because we still not ready with the product. But the good amount of product that we have launched and we have initiated a lot of products in pipeline with the customers, we should see it translating into demand as the quarters go by. We are well positioned across all segments. We need to be coming up with newer product ideas in line with the consumer trends and commercialize them.
We also have to ensure that whatever we have launched, we are able to get better revenues and margins out of that, which is what we are working on. This is what got stalled in terms of development by customers because of the unfavorable demand situation in the developed markets, which is getting revived now, which bodes well for us in terms of the way that H2 and onwards will look. We also need to focus on how do we acquire more customers. We also penetrate geographies that we have currently under-penetrated. It's a combination of all this.
Just one clarification on this. In terms of the innovation funnel, normally, how much of that is driven from our side, and how much of that is coming from customer end in terms of certain applications or specific criteria?
I think what we come up, it probably can be, say, 50/50, 60/40 in terms of what we come up with and sometimes what customers tell us as what they want. It's a combination. Some of the innovation pipeline also involves product innovation that we do, which is in line with the sustainability agenda. That's also something is part of that. You can say that to be back of the level of calculation, I can tell you about 50%- 60% can be what is initiated by us, and the balance 40%- 50% can be what the customers then prod us into thinking.
Thanks for all the answers and all the best, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Krishan Parwani from JM Financial. Please go ahead.
Hi, good afternoon, sir. Thank you for taking my questions. Just couple of clarifications. Does this quarter volume include the 2,500 metric ton deferred volume from the last quarter?
Yes, it does. Some volume from this quarter also got deferred to next quarter in terms of whatever we could not service because of supply chain issue. This continues. This includes both.
Secondly, did favorable inventory kind of help you in making higher per kg EBITDA ?
No, not exactly. It was more in terms of my Speciality Care ingredients contribution going up . Plus also in terms of we managed our raw material positions well, because the raw material prices also were on a steady or an increasing side, but not very significant. But then it was more in terms of how you manage the freight situation. That was important in terms of how you manage your freight buying, how you manage the engagement with customers, how you ensure that you are able to get the materials to the customers on time. The combination of all this which enabled us to have a reasonably good EBITDA per kg .
Noted. I think, sir, you mentioned your Speciality Care contribution going up. Let us say basis our calculation in terms of volume, it has almost gone down by 4 percentage points. In terms of revenue contribution, it has gone down by 3 percentage points sequentially. I am not sure what I am missing.
Actually, it is Speciality Care year- on- year has grown by about 13.3%. And Performance Surfactants grew by 5.4%. Sequentially, I am talking to you in terms of your year- on- year. I am not talking quarter- on- quarter. Quarter- on- quarter, there can always be changes. We are now talking about year- on- year. Year- on- year Speciality Care grew by about 13.3% a nd Performance Surfactants grew by about 5.4%, delivering a weighted average of about 8%.
Fair enough. Lastly, I think you mentioned that freight is also included in your pricing, basically the CIF basis. Does that mean once the freight situation gets better from October, as you mentioned, our realization and per kg profitability could also come down? I mean, we have seen that happening from Q3 2023 to-
No, see what happens is that the point here is we do FOB shipments depending on what the customer wants. We do export shipments, we do CIF shipments, we do DDP shipments. What I said was, I was asked why has your average gone up by some INR 18 crore, to which I explained that it is nothing to do with whether it is an impact because of we are not able to pass on the freight impact. If my DDP shipments were higher in terms of percentage in this quarter as compared to the corresponding quarter last year, the DDP costs are much higher than if it was an FOB. In FOB, there is no freight included. Once I book that, I also took a corresponding expense also. So I said that is not expense. It is not a question of a margin impact.
It is not a margin impact. Margin impact will be only we are unable to pass on all the costs, whether it be freight or DDP cost to our customers, which we have been able to do with a lag in the way that the freight rates have been going up. That is what I said.
Noted, sir. Thank you for patiently answering my question. Wish you all the best, sir.
The next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance. Please go ahead.
Thank you. Hi, sir. First question is just to get clarity that we heard news about Unilever reducing the content of palm oil in their products. Has that anything to do with any implication on our products or is it something else? Just, very basic question, but to get understanding on it.
Actually, first thing is our products don't have anything in traditional soaps which are made from oil. There is nothing, no connection with what business lines that we are in. We don't cater into soaps. What we do is syndet soap is a specialty for us, which is synthetic detergent soap. It has nothing to do with what Unilever has announced in terms of reducing the palm content by 25%. There is no connection with our business.
Understood. Second one. I think, in past, we have mentioned that AMET plans also caters to the Europe demand. So AMET performance is impacted by what happens in Europe demand as well. Where are we in terms of, say, demand recovery in Europe? In that backdrop, how should we see the performance of AMET sub-unit, which is impacted by both demand in AMET region as well as Europe region?
I think demand in Europe has been looking up. We do hope that this continues. But one of the challenges that our Egypt plant had was in terms of availability of feedstocks to continue to have uninterrupted production to serve our customers. So last quarter was a very, very severe quarter in terms of impact of incoming raw materials. But despite that, the team has delivered a 6% volume growth, which is commendable. But with things being where they are today and not further aggravating, I think our team is well positioned to be able to meet some enhanced demand that we are seeing both in AMET region and in Europe.
So there is no challenge in terms of end- user demand in either of the regions. Incremental deterioration, sir, when I say challenge.
You said very good?
There is no challenge at the end- user geographies that is AMET or-
The demand mercifully seems to be looking up, which is good, but we only need the supply side to be supportive. I think things, if it doesn't worsen from here on, we should have found a way to be able to participate in this demand growth.
Last question. All this challenge in terms of freight rates or container availability is because of the longer route taken by the ships because of the Red Sea challenge. Is there anything else, any concrete reasons for this, and are you seeing any improvement on that side?
See, essentially the Red Sea crisis started in November when they skipped going through the Red Sea. They skipped Suez Canal. They had to go through the Cape of Good Hope. So we had ships taking more time to reach the destination. So containers also took more time to come back. You also have China trying to send a lot of material into the U.S. in terms of EV components to beat the higher duty rates that will kick in from October. So there's a combination of factors that aggravated, which led to congestion at ports, unavailability of containers, freight rates going up. Everything, all that could go differently has happened. Now, we are only saying this having happened, it shouldn't worsen from here on.
We do not want any geopolitical escalation that can further mess up the Red Sea situation.
Noted. Sir, thanks a lot and all the best.
Thank you.
The next question is from the line of Shalini Gupta from East India Securities. Please go ahead.
Good afternoon, sir. I have two questions. One is that what is your view on lauryl alcohol prices? They have looked up a bit.
See, lauryl alcohol prices, it is on the increase, in fact. They increased by about 10% compared to the previous quarter in this quarter. But if you see the last one month, it has gone up significantly, aided by the increase in the oil prices. It has gone up by another about 30% in just about 30 days. We are also seeing some correction. This is a constant seesaw that keeps happening. That is why it is very critical that we need to have a very robust raw material risk management framework in place, which we have. We are ensuring that we have the right buying done, the timing of the buying and the quantum of buying to take care of this price volatility.
Are you expecting the high prices to sustain? This kind of 30% price increase in one month, you are saying.
No, I do not want it to sustain, but that is what it is today. Any increase in feedstock price is going to also result in my customers having to pass that on to consumers, and the demand that is now making a comeback based on the price reductions they have done should not get impacted because they have to then again increase the prices. It is not good from a consumer demand perspective for the prices to sustain. I only said to the question that you asked that we have started looking at again, and we do hope that it comes back to and gets normalized as levels it was the previous quarter.
And sir, earlier you had guided for about 8% volume growth in financial year 2025. That remains?
6%- 8%, that remains.
And what kind of increase in realization are you looking at? 6%- 8% volume growth is clear, but increase in prices?
Price, are we talking about EBITDA range we have given? We increased the guidance last quarter to 20,500 metric ton- 21,500 metric ton. That essentially builds in that as the volume growth plus increase in EBITDA, which essentially means that we need to have more amount of high premium specialties that should contribute, which we said should happen from H2. That was the rationale, we increased it and we continue with the same guidance.
That is it from my side. Thank you.
Thank you. Have a good day.
The next question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Thank you, sir, for the follow-up. Sir, this rise in the lauryl alcohol prices, is this also related to the higher freight cost globally, which is going up?
That is one. Even oil prices have gone up significantly in the last three to four weeks. The palm prices have gone up, palm oil prices have gone up, soybean prices have gone up. The entire oil complex has gone up, and this essentially leads to an increase in your feedstock in your derivative prices, plus the increased freight rate also contributes to that. That is an added one.
So, sir, does this rise in the lauryl alcohol prices also trigger a revision in your fixed contract prices also like with the customers you had made?
It all depends on what sort of contracts we have. There are contracts where we have quarterly resets for prices. There are contracts where we do a contract for six months or one year, and then we need to ensure that we have the covers taken at those prices and we close the positions. It is not that all customers buy in a particular, the same way. There are different models. Only thing is we need to ensure that whichever model we have, we need to have a system by which we are able to manage the risk in terms of the open positions of the feedstock, which we have a very good system, which is proven over the last eight years, where we have managed this sort of volatility in a very elegant and effective manner without having any significant impact on our profitability.
Perfect. Sir, my second question, sir. Sir, I would like to give you two scenarios. Sir, first is in FY 2024, when the global inflation was high, demand was lower and exports market was weak. S till we had managed to give an 8% volume growth. Now, sir, this year we are talking of the rest of the world markets showing good volume growth. AMET market also posting around double-digit growth. Indian markets would show the similar growth of last year. Demand is good. Still, sir, why are we guiding the similar range band of volume of 6%-8% when in negative time it has clocked around 8%? In good times, it should be higher, at least considering 10%-12%. Just want to know your logic for coming to that 6%-8% volume band.
Your logic is right and my logic is also that. But unfortunately, the environment doesn't follow a particular logic, so we have to also be cautious because I don't want to be guiding higher and then you have external situation is not supportive. We need to wait for two more quarters before we can make a final comment on increasing the guidance.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today's conference call. I would now like to hand the conference over to the management for their closing comments.
Thank you, ladies and gentlemen. It was a pleasure interacting with you. I look forward to catching up again in three more months. Wish you all a great day and a very nice weekend. Thank you.
Thank you. On behalf of Galaxy Surfactants Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.