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Ladies and gentlemen, good day, and welcome to the Galaxy Surfactants Limited Q1 FY '24 Earnings Conference Call. 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 the guarantees of future performance and involve 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 call, '[Operator instructions]'. Please note that this conference is being recorded. I now hand the conference over to Mr. Unnathan Shekhar, Promoter and Managing Director. Thank you, and over to you, sir.
Thank you very much. Ladies and gentlemen, a very good afternoon, and welcome to this first earnings call for the financial year '23, '24. At the outside, before we turn on the quarterly performance, it is important to reflect on the long-term picture. Despite the volatility that we have witnessed in the past 40 months, our stakeholder relationships have not only strengthened but further firmed up our internal processes, capabilities and competencies. I'm sure the experience garner will hold us in good stead going ahead. Continuing with the long-term picture, it is also important for us to understand the market picture as on date and how we will influence the numbers not only the current year, but perhaps for the next few quarters. India has emerged as the bright spot globally, we believe the key drivers for sustained uptick in consumption are a stable macroeconomic environment, supported by innovation and technological developments backed by a buoyant market filled with emerging new players and traditional majors. Today, with all the more mentioned factors driving, the stars are aligned for sustained double-digit growth going ahead. Galaxy is not only positioned to capitalize on this, but also playing a significant role in enabling it. The last 40 months have seen global inflation cracking new highs, something that the developed markets have not witnessed for the past four decades. It has not only impacted the spending frequencies, but also led to change in spending patterns. Combined with the inner FX of award, bulk of the spending today is towards food, energy and basic amenities. While the picture was the same, even in the Pecora, the percentage in absolute amounts have increased significantly as adversely impacting the disposal income available for luxuries and premium products. The combination of excess inventory, slowing demand due to changing spending patterns along with the fears of recession and high inflation, have completely dented the buoyancy in 2021 in the other parts of the world. But like any other cycle, barring any macroeconomic shock, we do expect things to improve slowly but steadily going ahead. With inflation easing and countries in the European Union, adapting to the new normal, we do believe the end is near, and consumption will make a compact from 2024. Now whether by global backdrop impacts imports depend in developing countries the most. Despite this time, it has been no different. The southern depreciation of the Turkish lira from 11 at the start of 2022 to '27 as of today, equivalent to a 243% in 18 months, and that of the Egyptian pound from 15 to 31 during the same period dented consumption significantly in these markets. While this is something that has happened previously in Egypt, but the difference this time was the fact that inflation was mainly food driven. This impacted domestic consumption severely. Even with respective Turkey, fears of an economic collapse resulted in significant cutbacks and migration that's impacting overall consumption. While the situation continues to remain trim volatile, adaptation is visible. Barring for any other macro shocks, we are seeing signs of recovery. With improvement in good malice and stability and currency, growth should make a comeback in the second half of 2023. Focusing on this quarter, this has been a relatively stable quarter for us. Progressive improvement of supply side factors, and only pickup in demand ensured a healthy 7.4% volumes growth for this quarter. We are pleased to share that in quarter 1 FY '24, volume growth stood at 7.2%. This has been possible due to the strong double-digit growth drop by India. Barring any risks due to monsoon or crude, we see this momentum sustaining. Africa masstige and Turkey is slowly but steadily making a compact. While volumes remained flat year-on-year, we do see signs of improvement going ahead, especially from H2 2023. This should further enable us to meet the guided volume target of 68%. Inventory destocking continues in North America. By quarter 4, this yet again has adversely impacted our specialty volumes. Having said that, we are pleased to share that despite the decline in North America quarter-on-quarter specialty as well as Rest of the World volumes have grown. This has been due to the slight recovery seen in Europe and growth dropped in Asia Pacific by our specialty car products. The slowdown in Africa, Mediation Turkey and North America has impacted our subsidiaries performance, which after two good years are now witnessing headwinds on account of demand. While challenges persist, we do believe H2 FY '23, '24 will be better than H1 FY '23, '24. While we have refrained from giving out any EBITDA per metric ton guidance, going by the current trend and visibility we have, we believe EBITDA per metric ton should be in the zone of INR 20,000 to INR 22,750 per metric ton for FY '23, '24. For now, volume growth remains the key prerogative. To conclude, ladies and gentlemen, Stephen Covey once said, where you are headed is more important than how fast you are going. This is extremely important in the current context as given the volatile and uncertain backdrop, moving ahead steadily coldie. While growth may be slowing globally, the steady as imported by our India business is ensuring the volume momentum sustains. We remain confident that the second half of FY '23, '24 will be better than the first half. And that the volatility seen in the last 40 months should give me to sustain consistency from 2024, '25. Thank you, ladies and gentlemen. We are now opening the floor to questions.
We will now pick in the question-and-answer session. Any participants present on the audio bridge who wish to ask questions, '[Operator instructions]'. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sanjesh Jain from ICICI Securities.
First on this EBITDA per kg, what we look to achieve in FY '24, which is close to INR 20 to INR 23 per kg. In this quarter, we are close to INR 21 a kg. And in the second half, we expect a mad to pick up, which will be dilutive from the EBITDA per kg perspective, and we expect it to recover. What will lead this? Are we expecting even better recovery in the specialty than what EMAT can recover and the mix can always work in our favor, is that? Or number two, are we looking a stronger uptake of specialty in India? Has that trend started in a way which is very visible and it's positively rubbing off us on the margin side?
Yes, it is. Natarajan here. First, as Shekhar said in his opening call opening note that volume growth is the key prerogative. Now, the guidance that we have given in terms of 22 to 22750 is essentially with a very clear is that the volume load estimate is an of 6% to 8%. And we do expect that from second half, your Americas should pick up better but that does means my special ingredients volume should have an uptick. That's one of the key assumptions basis based on which we have given this particular guidance.
And on the India side, even where the specialty is picking up any materially than what we have seen?
India is majorly driven by performance surfactants but that will not significantly drive the EBITDA metric and the higher end of the band that we indicated. Rest of the world, more so North America has to come back aggressively.
And that said, Sanjesh, yes. There is also a premiumization at play in India, which we would desire that it continues and grows further.
Got it. Second, on the EMAT situation, Turkey and Egypt, you right, you said the situation remains very fragile. Last time we have seen a quicker comeback but this time it appears will be difficult. How much time do you anticipate to reach an FY '21 kind of a volume in this segment from where we have almost fallen more than 20% now? Do you think it will take a couple of years to again cross that volume line?
Very interesting question, Sanjesh. I think we did see certain green shoots emerging at the beginning of this quarter. But surprisingly, we have seen a resurgence of inflation again in the last week to 15 days. So, it remains highly volatile. And as we said, the surgeon is again on food inflation. So, we would expect the consumers to balance more in terms of the basic commodities, basic necessities. So, we would like to be optimistic and that at the same time be on car in terms of the ground situation, whatever is happening. So we will get more clearer picture, possibly maybe by the end of this quarter.
On the Egypt plant itself, are we looking now to diversify more aggressively out of Egypt and Turkey because if we see the history right from the day we started work there, it has been very volatile, very uncertain. Do we enter aggressively in the LatAm market in the nearby European market and more Africa market and reduce the proportion of Egypt and Turkey, thereby keeping the geography at let stable?
No, you are right. I think we have certainly diversified our product portfolio there in Egypt in a very conscious way. And Egypt is much more diversified in terms of its portfolio compared to what it was a couple of years back.
And at what utilization rate are we running now is you plan there?
Today, we are approximately about 68% to 70%, approximately.
Okay. For the next few years, we don't need to do the CapEx there, right? So it should be very stable in terms of free cash flow generation?
Yes.
Second, on the specialty side, how are we seeing the offtake of the miles affected in the export market and the blended preservatives, which we are proprietarily making? How has been the trend on these two sides?
Yes. So, this has been impacted. We have seen that since the second quarter of last year because there has been a net in terms of the premium segment and the Prestige segment in these materials find use. So, that's why it's important that the current demand situation, the destocking in the U.S. turns around well, and then we do see that things would start picking up. So, obviously, that's one of the reasons why you see that the specialty volumes have got impacted. That has been very intact, I think things would have been pretty different. So, that's what we want to turn around in terms of the market situation.
Of course, one thing that we have seen is that though there is a very, very small decline year-on-year. But on quarter-on-quarter, there has been an improvement with respect to the specialty products, which is an encouraging sign.
I was taking small seasonality because even last year, we saw the same trend. On a sequential basis, generally Q2 tend to be better because of the summer in the developed market. It's more seasonal? Or do you really see the underlying demand also improving?
No. We have to, I think, stay on the macro level, the discretionary products, which is what in tracker, which means the specialty ingredients have been impacted. That is for a fact. So, we have to see inflation moderating or going back to the pre levels. That is one. So that particularly the majority of consumers are able to have certain discretion income coming into their wallet. Now, that's going to be a very important shift that has to happen in these developed markets.
Got it. Last two questions from my side. One on the CapEx, INR 150 crores, which we intend to spend this year, where will it go? What are we looking in terms of opportunity to invest? And number two, the food inflation has again started. Do you see risk to the fatty acid prices again there because of this food inflation?
Yes. So firstly, on CapEx, it will be a combination of what we'll be doing in India and Egypt and also will be on both the legs of performance affecting and special ingredients. So some of them are already on in progress in terms of implementation. So, that's been the case even the previous years. And as regards the food inflation, yes, food inflation, suddenly, if it pushes at the vegetable oil prices, so it can lead to an increase in your fatty acid alcohol and fatty acid prices. So as of now, it seems to be a little bit tepid. But it's more supply-led. So in case you have supplies getting impacted because of weather conditions, things can be significantly higher. So yes, so we're keeping a close watch on the weather patterns now and the stocks of vegetable oils in Southeast Asia. So let's hope that the supply remains not much impacting.
The next question is from the line of Nilesh Ghuge from HDFC Securities.
A question is on raw materials, sir, if I look at the raw material prices, the Pattan coal prices have fallen almost by more than 45% Y-o-Y and continues to be going down Q-on-Q as well. So have you passed on the benefit of those through your long-term customers? Or still there is something left with you?
No, it's been passed on as is always the case.
So no further correction as far as the raw material prices is concerned, or pass on a little left?
But there'll always be because it's not that you pass on everything within the same quarter. So there will be some amount of spillover. That is always the case every year. So, a significant part of it keeps getting pass on in the same quarter. So there's nothing different this time.
Okay. So, based on the volume, I know that you stopped giving volumes, but based on the comments in the opening remarks and the presentation, if I back calculate the gross margin, gross margins for this quarter should be in the range of INR 51,000 to INR 52,000 per kg. So do you think it will remain at this level for FY '24?
No. See, the EBITDA per metric ton has been about 21, close to $21,500 per metric ton this quarter. So I didn't get you a number of 50 to 52, what was that?
Gross margin.
Yes. So, I think we need to focus on the EBITDA per metric there. So that's what we have also guided to 22 to 22750 with a volume growth of 6% to 8%. I think that will be the number that we should stick to.
Yes. And sir, my second question is on the local and niche player share. So that share is continuously going up at the same time your MNC share is coming down in revenue, and you mentioned that there is a slowdown in development on. Do you think this year also the share of local and niche pair will be more compared to your MNC customers?
No, it will be typically, always moves within a range. So I think in India, everyone seems to be doing well. So, I don't see that as an issue. But yes, there is a minor churn amongst them, okay, and that was given the range. So, I don't see that as a key determinant.
But just correct me if I'm wrong, if your share of this local and niche spare increase as the margins will be better, right?
Yes, it should be. But depending on what sort of product portfolio that we work with them. So yes, in a general way, it should be okay, but it differs between customer to customer.
The next question is from the line of Rohan Gupta from Nuvama.
Sir, first question is on closely looking at how we are guiding roughly now INR 2,220, 2,750 kind of margins per ton, though probably not adequately available, the volume future is property, but we have been guiding for last year, roughly 6% to 8% kind of revenue growth and expecting EBITDA growth higher than that and the bottom line growth we will have then that within the operating level. Now when you're talking about roughly even at the high range of 22 to 22,750 kind of margins per tonne that leads to roughly close to 7% to 8% decline compared to last year in terms of margins. So even if we achieve the highest number, probably the bottom line growth looked like more like a flattish in the current environment. So, are we just being slightly convert or the scenario actually has seen much faster or deteriorated much faster than what we had anticipated in that?
No, Rohan, we are not being conservative, so we've been very realistic. We have explained as to how North America and Europe have been impacted significantly with the specialty volumes. And we also know that that's something we should come around. So as we are very clear that we need to grow our volumes at 6% to 8%, that is a key priority. And we need to have absolute EBITDA to be growing higher than our volume growth. That's very clear. But this guidance is to only ensure that we are able to give some sort of '[[inaudible 00:23:03]]' stopped giving the EBITDA for maternal guidance for almost last two to three quarters. So we wanted to get back to that so that the market gets some clear picture is always thinking as to where directionally things are going to be.
So you are seeing that still there will be growth at EBITDA level? Higher than the volume growth?
Yes, that's from or this thing personally, we are very clear that's what we work towards export we aim in. But then we only won the external situation also to be equally cooperative. With that in mind, yes, we should be growing our EBITDA absolute, higher than our volume growth. That's very clear.
Sir, last time when you were talking about that we have seen a significant destocking happening in a market like now, in U.S. markets and now like Walmart and all they are going more closely towards inventory destocking that has impacted the volume. However, down trading was also taking place in some of the markets like Europe where the consumption, or consumers have been facing the inflation. So do we see right now the volume decline, which has happened, I assume that the inventory destocking situation will be broadly over. So it is now the real consumption, which is getting hit? Or you see that the specialty volumes, which are still weak in the current environment is more weaker because of the destocking is still taking place?
So see, the inventory destocking is something that it started progressively coming down. So we do expect, based on discussions with customers, that by September, it should be fully through. The other aspect also is as what Shekhar said during his address opening address, that there has been this thing where the consumers have started moving more towards mass and master products. So, for them to come back to consuming in a very robust manner, the Prestige products is something we do hope that it starts happening from the second half. So we are eagerly awaiting that. Probably we'll have a better answer to this question when we meet next about conference call for the next quarter results.
The last question from my side. Sir, we are seeing that the Fat prices have fallen to almost INR 12.0 level, which is almost of coal to that label. From here, we may see some slight recovery. But do we see that the impact of the falling raw material prices, which would have led to benefiting the end consumer in terms of the falling end prices, it is helping only the Indian market to grow or the Indian markets are overall growing irrespective of across the categories and specialty also and in a substance in the market as well?
So we've been looking at the commentary of all our customers in India, the big customers. So you feel that all of them are very clear that the lower commodity prices has enabled them to pass on the reduction. So as you've seen all of them increase the grand rate, there are more bigger packs that are now into the market. So that's aiding our customers to be able to start getting their demand higher and the fixturing consumption by lowering prices increasing grammage. Yes, but for anything very significantly impactful as far as supply is concerned, we do hope that the situation continues and keep sustaining sort of growth momentum that has been there over the last three to four months in India.
We have the next question from the line of Rohit Nagraj from Centrum Broking Limited.
Just first, initially a clarification, any specific reasons for not providing the volume data for the quarter?
Yes. So, we have decided to make a change on this one because what we wanted to be giving, given the context in which we're talking that their inputs are more important because the specific numbers can be a little bit not appropriate. So we said we stick to this as moving forward as the way that we'll guide the market in terms of what we have grown in terms of volumes. We will report the overall volume growth specifically, but the individual numbers typically need to be given in a directional way so that we end up being consistent in the way we put it across.
Sure. First question is on India. So we have seen consistently high growth over the last few quarters. And given that earlier the inflation was also higher, the growth did not subside. So is it related to some specific new product introductions that we have done? I mean you just alluded that in terms of the customers, they have increased the grammage, et cetera. But from our side, it is through some new product introductions? Or is it based on the market share gain that we have had?
It's a combination of all this that you have said. So there have been some walled gains that we have had. The other thing is in terms of the way there are some categories that we participate in have grown pretty much well from a customer's point of view, which has enabled us to participate much more in the franchise. And the other one is we have also seen some good traction in terms of the new product introductions that we have done in terms of specifically to the D2C brands and also in some new directions that we did. So the combination of all this because what is important that as far as we on all these spreads, the market also has to be cooperative and India has been really cooperative in terms of the demand side. So that's good for us. And if it this sustains, I think we will have the numbers getting sustained in terms of India volume growth.
Got it. Just second clarification, again, slightly on the numbers. I mean, pardon me, I'm pressing again on this. So last year, we did about INR 568 crores of EBITDA for the entire year. First quarter, we have done INR 123 crores. So if I just did a 568 million, minus EUR 123 million, it's close to about INR 450-odd crores, which signifies about INR 150 cores of absolute EBITDA in the next three quarters consistently. So, how confident are we that maybe given that we have given the EBITDA per metric ton guidance, is there any possibility of the 6% to 8% volume growth probably getting higher, given that we have seen positive traction across the geographies and India is continuously performing exceptionally well?
Yes. So yes, what I'm saying is that you're pretty much right in terms of what you have concluded. But yes, our aspirations are very, very confident, but we do hope that the external scenario starts operating pretty well. And we do have reasons to believe that the worst is bender in terms of the developed markets. So, let's keep our fingers crossed, that's important. But an internal mandate to our teams is very clear that we need to better our last year EBITDA numbers. And we need as we focus in terms of ensuring that we grow very aggressively on our volumes. That's very clear. So just to the guidance that we have given is to ensure that we are able to give some clarity to the market participants. But that in limit us in terms of what we need to do.
The next question is from the line of Vipraw Srivastava from InCred Capital.
Just one question I had. So for this quarter, if we look at the EBITDA margins, it's around 13.1%. And that has been the trend for last two, three quarters, around 14% to 15%. So, as you have seen the raw material prices have actually come down significantly for Galaxy. So going ahead, if prices go upwards, so do we expect that these margins might contract slightly to around 10%, 11%, which we have seen historically? Or do you expect those margins to hold for the let next two quarters?
I said, I don't think we need to -- that's the reason why we guide the market in terms of EBITDA per metric to with the margin percentages can vary depending upon how the raw material prices go up and down. So that clearly is not indicative of the propensity of our business to deliver margins. So a bit of a medical is what needs to be looked at.
Okay, excellent. Just one more question. So regarding the U.S. market, which you have told that you expect the numbers to improve from the second half of this FY. So I mean, is this based on some discussions with any clients, I mean, will they be taking more orders post in the second half? Or is it just based on just a qualitative analysis based on our experience? I just want to understand the reason behind that.
It's a combination, the way some readings that we do or what is happening in the market, some commentary in terms of our customers in the U.S. market, some amount of case-to-base discussions and meetings with our key customers there. No one gives you these things very clearly. But this what we term our team who are in the front arisen they relate back to us. So it's based on that. We have come to this particular expectation in the second half of this year.
The next question is from the line of Krishanchandra Parwani from JM Financial.
Just one question from my side. So based on the qualitative commentary that you have given in the presentation about the volume growth, so this is that the realization for your specialty products have jumped significantly in this quarter. So what would be the reason for the same, if you could answer that?
So can you repeat your question, please?
So my question is your specialty care realization has jumped from INR 134 per kg in the last quarter to 193 per kg this quarter roughly? So any particular reason? Because I think it had started normalizing from, let's say, 230 to almost like 130 in the last quarter.
No, no, it's a mix impact, okay? So you also see that the volumes are lower or specialty. And then the mix with Nortel, the relation per kg will look higher. Because there's a denominator which is lower. So plus there is also a mix that is also feeding to that.
'[Operator instructions]' The next question is from the line of Bobby Jayaraman from Falcon.
Just wanted to clarify, what do you really mean the consumer is not spending enough? Because all the data that's coming out from the U.S. at least, is that the economy is robust. That's the reason the Fed is not even stopping interest rate increases. Unemployment at a very low level. People are spending their purging on luxury products actually, if you look at the sales of Louis Vuitton and all that. So your comments don't really reconcile with what's happening there.
Yes, you're right, Bobby. We also been wrapping with this. But then we have been trying to find as we read our customers' commentary, we're also looking at our competitors' commentary there. And we're also looking at all the other clinical manufacturers there. And all of them seem to be reporting very, very low results. So, we are trying to establish the correlation if the entire U.S. market is doing well. While it only in our segment, we and our competitors there in the U.S. and all the other chemical players in the U.S. don't seem to be performing very badly. So we are trying to get to some analysis there. We have not completed on this. So we are also adding the same question in our mind.
Okay. And could you give some actual examples of the products that use your chemicals, for example, I know there are some screens and other face screens. But what are the brands specifically? Can you mention them?
It will be our high-end charges. It will be shaver oils, it will be higher.
What I mean is the actual brand like head-end holders or what's the brand you're talking about here growth?
There are a lot of them. We don't want to be talking about that because there's some content that we get into with our customers. So we don't want to be revealing that.
Because when you say high-end brands in shampoos or sunscreens, I mean, it's hard to think of any. I mean, most of the brands in the Pune, I mean the ultra high-end --
Bobby, I think you should look at for sulfate-free formulations.
Okay. What was that again?
Sulfate-free formulations. So you can look at preservative free. You can look at anti-aging.
Are your chemicals they're used in sunscreens, correct? The specialty chemicals that you have?
No. We don't have a big presence in Sun screen formulations.
So your presence were anti-aging claims or just facial claims in general?
Shower gels into shampoos, into toothpaste, into home care formulations, both cleansing as well as testing fabric enhancers all out.
Okay. I understand. So if you take samples, when you say high-end shampoos, how does that compare with head and shoulders from top and gamble? Would it be, what, 50% higher price? Or I'm just trying to get a sense of what kind of products you're referring to when you say high-end?
Yes. So if you look at salt typically, is in high-end shampoo thing that is ultrates high-end. So compared to Adams, you look at any sulfate-free I think you will --
At what price premium to, had on sold this?
And there are a whole lot of niche players in U.S. who sell these shampoos at a much, much higher price compared to what you call a '[inaudible 00:38:48]'.
Okay. So you supplied to those brands?
There are a lot of small niche players around the United States of America.
So those are the ones you're referring to when you say that your volumes are picking up. Is that correct?
See, even all the major players also have their own premium high-end sulfate-free formulation. So even that has got impacted. All the players have their presence in high-end prestige formulations, whether it be a local misprint or even bigger customers who are their own brand into that segment.
Right. So some brand like Dagoren holders would be masstige for you, right? That wouldn't be premium.
Yes, yes. They would come under the category of Masstige.
Okay. So you're talking about like a 20%, 30% premium to these brands are the ones where you're seeing uptake? Would that be correct?
Yes. I mean you would be surprised to know that there are other brands in U.S., which sell for something like $16 a barrel.
$16 a barrel. Okay.
But they may have a very, very small process. So this is what I'm saying, to just to give you an idea what we call extreme prestige high premium very high premium.
Sorry to interrupt. Bobby, please rejoin the queue for follow-up questions. '[Operator instructions]'. The next question is from the line of Karan Gupta from Uranium Capital.
So my first question is related to the raw material at palm oil I think the most important raw material for us. So any plan, any possibilities to back an integration of this around the period, basically this extract some savill and palm oil any backward litigation you are planning or thinking about this because this is raw material fluctuating in price very much more than 50% from quarter 1 '21, I think, on the quarter?
But that's not going to change even if that would integrate. So that's better managed by our strategic vendor partners. They're doing a pretty good job. And we really have better partners who really work for us, big for us and support us well to ensure that we are able to manage it volatility better.
Okay. I mean See, I just did a small face on this thing. So the exception of extraction from palm oil or your Savill give you this safe and alcohol at this out? For your information, the fatty alcohol and fatty acids, which are significant or relevant or important for the personal home care industry largely come from palm kernel oil and coconut oil, which are the main contributors in terms of what we call a noticarbon chain. The palm oil and swab oil also contribute to certain fatty acids. But the large constituents of the five calls in the personal home care industry are from the Nordic chase. That gives you a picture of what specific oils are consumed significantly for the home and personal vendors. And suvill and palm oil do not have the lauric --
Okay. So it's better to rely on the vendor?
Yes.
Okay. Second is something related to the maybe this question or the information will confidential with you. But just on the broader view, if I take the one model of shampoo. So, how much the contribution of our overall products or chemicals in that pattern? I mean in any product, what is the contribution of -- I just try to understand the significance of --
For your information, a bottle of shampoo, the contents will contain almost 70% water. Our ingredients going into a shampoo boating will constitute approximately anywhere from 18% to 22% or so. So 70% is contributed by water.
So 18% to 20% level product?
Yes.
Okay. Great. So in one product, let's just say shampoo or your service or Melodie or any or everything? We can include two, three chemicals or four chemicals, just to increase the effectiveness of the product?
It can be anywhere from a simple shampoo, could be as only four ingredients to a very complex formulation, which could contain even as high as 15 to 20 ingredients.
15 to 20 ingredients?
Depending upon the claims that --
Yes. Okay. At the last one, related to Specialty Chemical, how is it going? We have major products in this range and contributing approximately less than our set performance affecting. So the growth trajectory of this specialty chemicals to just give the broader sense?
So we didn't hear the question. I think there's some disturbance in your -- Can you please repeat your question?
Yes. And the last question is related to the specialty chemicals ligand measure or see as a product, but some of the specialty chemicals I'm not able to imagine. So just in the product the growth trajectory at because we have a major producing in this segment and contributing around -- so just trying to understand the growth Tajitos Specialty Chemicals?
Yes. So we have said this earlier. So our strategy is to grow both left of the market, both the performance opacities and specialty impedance. And they will continue to be disproportion only 50% to 64%, 40% 35% because the way incident get formulated. I think they typically have disproportion. So there is a specialty metals portfolio growth, we mainly be driven by the development because there are much more reward consumers there, and they've got a clear demand with regard to these prestige products in which our special engines go in a significant way. So that's what it's going to be.
Sir, the current participant seems to have dropped from the queue. '[Operator instructions]'. The next question is from the line of Rohit Mehra from SK Securities.
Just one question. What is the current capacity utilization? And secondly, what is the debt-to-equity ratio?
So today, the capacity polish is 68%. Then our debt equity ratio is less than 0.15.
Thank you. As we have no further questions, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you very much. Thank you, ladies and gentlemen, and I look forward to the next quarter. Thank you.
On behalf of Galaxy Surfactants Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.