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Earnings Call Analysis
Q3-2024 Analysis
Galaxy Surfactants Ltd
In the essence of Napoleon Hill's wisdom, the story of Galaxy Surfactants weaves together perseverance and the pursuit of success amidst a challenging business environment. With patience and persistence, the company has navigated through various hurdles over its 43-year legacy, setting the stage for future triumphs. The recent fiscal year has seen Galaxy Surfactants not only gain market share but also earn prestigious accolades, such as the 2023 Excellence Award by Procter & Gamble and the Supply Resilience Award by Henkel—testimonies to its progress with major clients and operational resilience.
Defying the bounds of a 6% to 8% target range, the company's volume growth for the third quarter reached 8.4%, and year-to-date sales growth stood at 8.5%. This acceleration surpassed expectations, fueled by the mitigating impacts of inflation and a burgeoning demand revival. While Galaxy Surfactants encountered challenges such as the Red Sea escalation—which caused a spill-over of 2,000 metric tons into the next quarter—this not only demonstrates adversity but also a robust growth trajectory, particularly in the Indian market with a remarkable 13.6% growth.
Even as North America grapples with surplus inventory, other regions have charted a healthier trajectory in volume growth. India shone brightly, while the Middle East, Turkey, and Rest of the World also contributed positively. The latter regions have witnessed an impressive comeback, primarily driven by masstige product categories. Collectively, both the Performance and Specialty segments have posted formidable numbers, signaling a strong market foothold.
Galaxy Surfactants recorded an EBITDA per metric ton of INR 18,781, slightly deviating from the forecasted range of INR 19,500 to INR 20,500. This shortfall can be attributed to one-off factors: the normalization of freight rates and the increased costs due to the Red Sea situation. Even with these one-time detractions totaling around INR 7 crores, the adjusted EBITDA would have aligned with the projected figures. Egypt's zero export incentives this quarter compared to last year's INR 21 crores also played a role. Nevertheless, the company remains steadfast in its confidence that the following fiscal year will mark a resumption of its profitable growth pattern, leveraging the strong foundation it has built.
Ladies and gentlemen, good day, and welcome to Galaxy Surfactants Limited Q3 and 9 Months 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. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Unnathan Shekhar, Promoter, Managing Director from Galaxy Surfactants Limited. Thank you, and over to you, sir.
Thank you. Ladies and gentlemen, a very good afternoon to all of you. Thank you for being here. It gives me immense pleasure to welcome you all to this quarter 3 FY '24 quarterly earnings call. Patience, persistence and perspiration make an unbeatable combination for success. This simple yet powerful quote by American Author Napoleon Hill highlights the importance of the 3 Ps across various spheres of life.
Business is not different. While we all wish for success that is linear, volatility and uncertainties ensure success over the long run is always nonlinear. It requires organizations to persevere, be patient, build on competencies and persist in order to strike big when opportunities come knocking.
Throughout the last 43 years, we have seen many such years where significant progress in terms of profitability alluded us, but these are also the years which set us up for big victories. The key was to remain patient, sharpen ourselves, persist and build on the positives.
The financial year '23-'24 is one such year. While profitability might not reflect the progress made, the real positives lie in the market share gains, awards and recognitions received, resilience demonstrated and the relationship fortified during the year.
Starting with awards and recognitions, which we received during the quarter, we are pleased to share that your company recently won the 2023 Excellence Award. This award was given under the Fabric and Home Care category by Procter & Gamble to its top 9 suppliers out of which 7,000 global suppliers. This is the second consecutive year that your company has won this award.
We are the only Indian as well as Asian company to have won this award for 2 consecutive years.
We also won the Supply Resilience Award awarded by Henkel for our excellent operational performance in 2023. These successes provide a glimpse of the progress we have made with some of our key customers.
Let me move on to the underlying business performance. While the underlying volume growth stood at 8.4% for the quarter 3 FY '24, for 9 months, the sales stood at 8.5%, exceeding the 6% to 8% volume growth band defined at the start of the year. Given the receding effects of inflation and visible revival in demand, we are confident of meeting the upper band of 8% for FY '24 despite the emerging challenges.
While the quarter began on a strong note, the Red Sea escalation proved to be a dampener in the second half of December, leading to a spillover of volumes to quarter 4 FY '24. The cumulative spillover was close to 2,000 metric tons, which is approximately 3% of our quarterly volumes. While the spillover does not adversely affect the business, rising freight costs and lead times post greater risk. Further escalation remains the biggest risk going ahead.
Barring North America, a healthy uptick in volume growth is visible across geographies. While masstige categories continue to do well, sustained uptick in premium specialty products holds the key for improvement in margins. While North America did see some sequential improvement, it yet continues to reel under the aftermath of excess inventory.
Now getting to the specific volume growth numbers for YTD December. India continues to be the bright spot. YTD December, our volume growth stood at 13.6%, driven by Performance Surfactants. Despite the Red Sea escalation and currency volatility, the Africa, Middle East, Turkey region has grown at 2.3%. Rest of the World is slowly but steadily making a comeback, driven by masstige products. Rest of the World has registered 7% volume growth for the 9 months ended December. Both our segments, Performance as well as Specialty have done well. Performance has clocked 7.3% and Specialty has clocked 10.8% volume growth.
As stated in our calls previously, volume growth remains the key prerogative. The numbers reported are encouraging despite the multiple global challenges as volume growth signifies the company through its relationships and products has been able to capitalize on the first sign of demand revival.
Coming on to EBITDA per metric ton, we stood at INR 18,781 per metric ton for the quarter, below the guided band of INR 19,500 to INR 20,500 per metric ton. This quarter, we had a couple of one-off impacts, which adversely impacted EBITDA.
Starting with the normalization of freight rates when compared to quarter 3 FY '23 and significant increase in the second half of December along with the spillover volumes to quarter 4 due to the Red Sea escalation. Cumulatively, this impacted EBITDA by about INR 7 crores. Adjusted for this, the EBITDA would have come in the guided bands.
Export incentives owned in Egypt are only accounted on cash basis. The same stood at INR 21 crores for quarter 3 FY '23, but was 0 in this quarter. To conclude, ladies and gentlemen, long-term structural stories requires patience, persistence and perspiration to yield the desired results. India is one such structural story and your company Galaxy is one part of it. We strongly believe if FY '23-'24 was the year of normalization, FY '24-'25 will be the year of resumption. Resumption of our profitability journey in line with our business model principles. We remain confident and committed to ensure the same.
Thank you very much for your patience, ladies and gentlemen. Thank you very much. We now look forward to your questions.
[Operator Instructions] The first question is from the line of Aditya Khetan from SMIFS Institutional Equities.
Just a couple of questions. Sir, first, on to the Red Sea issue, as you mentioned that -- so there was a spillover of volumes in Q4 FY '24. So sir, just wanted to know, so until now also the Red Sea issue hasn't been resolved? And are you seeing a material uptick in volumes in Q4 also? Or like we can see a spillover to even Q1 and Q2?
No, no. So -- Natarajan here. So see, when the Red Sea issue happened in December when the shipping company decided not to take the Suez Canal route. There was a temporary suspension of sailings because they were deciding as to which route to take. Once they align in terms of taking an alternate route, avoiding the Suez Canal, okay, then things resumed, okay.
So there was a halt in terms of supplies into Egypt, okay, and out of Egypt because of the sudden impact of the Red Sea blockade. Now things have resumed in a sense that now we know the sailings have resumed and they're taking a different route, which increases your transit time. But now we don't have to see any issue moving forward. That was only temporary at that point of time.
Got it?
Okay, okay. And sir, on to the one-offs, you have mentioned so INR 21 crores is the export incentive which was recorded in last quarter, which was 0?
Last -- third quarter of last year, which was 0 this quarter. We are comparing year-on-year, right? So when we compare year-on-year and quarter -- quarter of last year and quarter of this year, we said in the quarter 3 of last year, we had a gain of INR 21 crores, which came as export incentives in Egypt, which we account for only on a cash basis, only when it is received, but not when it is accrued. Now that was 0 this quarter of this year.
Okay. So sir, like we are maintaining our EBITDA per tonne guidance like for the next 2 years, like around INR 20, INR 22 per kilo. Like that would be maintained?
No, we said INR 19,500 to INR 20,500. We are -- that is what the indication that we have given to you.
Yes. But then for the guidance for -- that is the guidance we have given for this financial year. But for the next financial year, we'll have to wait until we end this year, okay? So then we will then review the situation and then come up with a revised guidance we made...
Got it. Just one last question. Sir, until now, sir, we are not witnessing inflation coming down, so by a significant margin being in North America. So like any like thought you have like -- so this can sort of slow down our volume growth over the next coming years. Is there any risk on to that assumption?
So one thing is we are seeing that Africa, Middle East, Turkey, the growth momentum commenced, although inflation is still a concern, but commodity prices have started coming down. Food inflation came down. Okay. So now the only thing is that we do see actually a brief lull because of the Red Sea blockade, things will come back. So that is our expectation. We do see things turning around for better. And commence -- resuming the growth momentum that we had, okay, over the last 6 months.
Within North America, we still see that the destocking is something that has probably bottomed out, and we are seeing that demand we're seeing green sorts in terms of new demand, new orders being received by us. And we are confident that things should pick up moving forward.
What we are also seeing is that the home and personal care industry manufacturers have taken certain price calls or price decisions in terms of lowering the price, which also should aid in this resumption of demand in North America, I'm referring specifically to North America. Yes. So we are seeing signs of revival in North America.
And similarly, sir, into the domestic market also like the HPC manufacturers have taken a price reduction?
Yes. So it will result in demand pick up. We do see rural demand picking up, okay? So yes, it's good that these decisions are being taken. So the momentum in terms of growth should -- growth demand in rural segments should pick up.
[Operator Instructions] Our next question is from the line of Arun Prasath from Avendus Spark.
Sir, my question is on the volume growth that we have said, this is close to 9%. And if you look at the fatty alcohol prices, it's almost in the third quarter, it is the decline is not more than 5%. So how do we explain the top line decline of 13% given the 9% volume growth and 5% to 6% fatty alcohol price reduction, the 13% is decline on the top line, notwithstanding the export benefit that we got in the -- but still, is there any gap in our understanding or in prices which have shown a different trend as compared to the...
No, no. So I think, Arun -- Natarajan here. So the 5% because we also have contracts of earlier period coming in. So I think that will not be the right way to look at it because it is not that when the prices get revised in a particular quarter as per external reports, that reflects the price that we get. So it's not -- if that's sort of the correlation you're drawing, it's not the right correlation to draw, okay? So it is in terms of -- it also in the previous period when you look at it, okay, as to what the mix was in terms of our pricing. So that's not the right way to look at it.
But even if I extend this analysis to 9 months, still the -- if you look at the 18% drop still -- most of the contracts should have renewed over this period. So...
No, no. One of the things that you also should see is that the mix also has changed. If you look at overall volumes, the specialty products has come down. So that is a higher priced products, correct? So when the mix changes, we also have the impact on the revenue, know?
Okay. Right. Okay. So is this mix, especially specialty care products, this is only in India? Or is it in the North American product -- North American impact is having a very high impact on the overall impact because I understand in India, it is not the case?
No, you are right that the impact on specialties has been particularly from the developed countries, both North America as well as Europe.
Right. Given the contribution from this geography in terms of volume is probably 1/3, still this is -- is it the case of the margins in the underlying products falling higher than the -- what we have seen historically?
No, no, no, Arun. See, if you see the developed markets, there is North America and Europe, contribute disproportionately as far as the specialties are concerned, okay? They have been impacted now for at least last 4 quarters, and we are seeing a revival or resumption only now, okay? So slowly, we would start coming back, and here is where we said that this coming period or this coming year, we would see a resumption of demand of these -- for these specialty products also in the respective geographies.
And what is the driver that is -- you are assuming this will revive, but what is the driver for this resumption? Is it the inflation or our market share gains also has to happen?
No. The driver is -- one is that I say that, emptying of the pipeline inventory, which was there, which was supplying the North American geography, at least for the last almost 4 to 5 quarters or so. So one is the emptying of the pipeline, one. And number two, I would say, the inflation easing a little, okay? The inflation is still there in North America, but it has eased a little.
So these are the 2 things, which we think is a reason. But when we convey to you, this is in terms of what we're observing and what we're experiencing in those markets in terms of the demand coming back.
Right. Understood, sir. Within India, is our specialty portfolio now with the inflation easing off and you said there is a revival. Is it the chance of customer upgrading? Because usually, deflation scenario people will downgrade. But you are already seeing the signs of people switching to better products, thereby our specialty increasing? Or it's still this trend within India is yet to be seen?
See, what we mentioned even last time, in fact, India is seeing a very interesting development, particularly in terms of home care, okay? We see maybe in the context of convenience, we do see the home care market, that is fabric care, fabric [ detergents ] experiencing good growth with respect to the premium [ detergents ], what we call the liquid [ detergents ]. The liquid [ detergents ] which are premium have seen pretty good growth over the last 3 years. They are continuing to grow. Maybe the base is small, but we are seeing that this particular category has been growing well.
Similarly, the premium [ detergents ] also have grown well as far as fabric care is concerned over the last almost 1.5 to 2 years or so. So as far as personal care is concerned, the superpremium specialties in India still remain a small percentage. India is still largely a mass and a masstige market as far as personal care is concerned.
Understood. Thanks for this detailed one. My second question is on this Red Sea impact. When we said the freight is higher, do we have the ability to pass it on to the customers? Or is it something like a -- is it a temporary one? Or is this -- or is this something we can recover from the customers? How our contracts are structured?
No, no. So the contracts of what happened, Arun, was that immediately when it happened and the freight rates went up, then you have -- there's a time by which you start passing it on. So first is clearly, we were ready to pass on, but the suddenness with which it happened, it didn't allow me to pass on immediately. So very clearly, there is an urgent need to pass on and we are passing on. And we do see that these rates are temporarily increased. Until the time the Red Sea issue continues, the blockade, the freight rates are going to be higher.
And then this is only a concern for India business or for AMET also, this is a problem?
No, no. Essentially, this is only for business into -- so Egypt actually sources good amount of its requirements from Asia and also exports out of Egypt into U.S. And so obviously, you will have an impact -- and India also serves Egypt. So there will be an impact in terms of incoming for Egypt as well as for the outgoing freight.
[Operator Instructions] The next question is from the line of [ Anupama ] from Ratna Traya Capital Partners.
Sir, this is Pavan. So I just wanted to understand, last 4 years, if we look at the volume performance, it has been around 4% or so. Our guidance band is somewhere around 8%. So I just want to understand what -- I understand last 2 quarters, we have delivered 8% kind of volumes. But going forward in the medium term, what gives us confidence that, that is the right band because last 4 years, the cadence has been relatively lesser?
Okay. So let us talk about -- maybe I have to give you a historical context and historical perspective. See India used to have a growth rate of around 8% to 10%. The global market used to grow at something like 2% to 4%, okay? And so based on our product mix, and the characteristic of the various geographies, we are -- we used to give or indicate a growth range of about 8% to 10%. And this I'm talking about maybe about 6, 7 or 8 years back.
Now then, COVID hit us, okay? Now COVID, the year was a very, very different year, okay? And it didn't reflect the secular trend that one used to observe in various markets and geographies and various countries. So there was, what I would call, a temporary upsurge in terms of consumption, driven by the need for cleanliness and care across various geographies. And this was also clubbed with the supply chain disruptions, which made manufacturers, that is our customers, draw more from us in terms of their ingredients.
And the aftereffect of this was seen in '21, '22 where there was a double volume, both in terms of where they have over ordered, one. And there was a huge supply chain disruption across the world, okay? And there was a huge freight upsurge again that we had seen, both supply chain disruption as well as freight upsurge.
So that was the time that we talked about or scale down our volume growth indication. So in '21-'22 and '22-'23, we talked about an optimistic band of around 6% to 8%, okay? And in terms of historical things, we didn't even -- we were there around at the lower band.
Now we felt as far as the beginning of this year is concerned that the demand was slowly coming back. And again, at the beginning of the year, we had given an indication of 6% to 8%, okay? Now today when we are at 8.5%, you would say, this has come on the basis of whatever I mentioned in the initial speech, which has come out of our relationships for the market share gains as well as the revival of demand, which started happening in quarter 2 and quarter 3 also to the world. India has remained a very, very strong story, okay?
So you would have seen that in India in the last 6 quarters or 8 quarters, we have grown consistently. So this gives you a historical background. In terms of the volume growth, it used to be 8% to 10%, then it came down to 6% to 8%. And then now we said and going forward, we would like to look at maybe 8% to 9% in the coming year. Does that answer your question?
Yes. I had one more question. On the EBITDA per tonne, if I look at it last year number, of course, if I look at it from a historical perspective, looks pretty odd at around INR 23,000, INR 24,000 if I'm right. So how many years would you -- do you think it would take us to actually get back into that kind of band again? Are we actually looking at -- looking -- yes.
See, we did explain even during those times that a lot of those gains were also opportunistic gains, okay? One. And number two, certain disproportionate product mix during those particular quarters, okay? We did caution and we did moderate expectation during those times that we would look forward to normalization of EBITDA. And that's how, in the beginning of this year, we said we would like to give you an indication of INR 20,500 -- INR 19,500 to INR 20,500 EBITDA per metric ton, which we would like to going to maintain. And as Mr. Natarajan said, we would relook at it in the first quarter.
Okay. Okay. And just one last question on the volume side. So basically, if we are looking at 8% to 9% volume, volume kind of growth, we are looking at almost like 15% volume growth in India. Is that the right assumption?
No, need not because we also see growth coming back in Africa and Middle East, Turkey, we're also seeing in U.S. and Europe coming back. So it's not that India needs to be at 15%.
Okay. You think you can manage it with below 15% also? 13% or 12% also, it can be managed, those numbers?
No, no. We'd like to grow India also 15%. I'm just saying that if you deliver even 8%, 9%...
Okay.
[Operator Instructions] The next question is from the line of Rohit Nagraj from Centrum Broking.
Sir, my first question is, you mentioned that there was some spillover from Q3 to Q4 in terms of volumes. And given that we have grown by almost 8.5% in 9 months. And you alluded that probably will grow at a higher band of 6% to 8%. Are we expecting some volume decline during the current quarter, and it could be related to the exports issue or the Red Sea issue? Any comments on that?
Yes, good question. While -- Rohit, while we are seeing demand as a function, we have to be cautious with respect to the Red Sea issue, okay? So we have -- let us be optimistic and look forward to this particular quarter, okay? So we have suddenly factored the Red Sea disruption.
Sure, sir. That helps. Second question, in terms of our CapEx for the 9 months this year and any guidance for FY '25? I think we've been saying that it will be in the range of INR 150 crores, INR 175 crores. Just wanted to hear it from your end.
Yes. So this 9 months, we have a CapEx of about INR 90 crores, and we are on -- in the guidance of the same that we already mentioned about INR 130 crores to INR 150 crores for the year.
Sure. And when this...
Yes. As you said, we are in line with our CapEx expenditure. By the end of the year, it will be around INR 130 crores to INR 150 crores. Yes.
Sure. Sure, sir. Just one last clarification. So we just mentioned in our commentary that the North America, we are seeing some pickup, which is happening, probably early signs. And given that, generally, the premium specialties are going up, that should construe to better EBITDA per metric ton. So is it a fair assumption that if North America picks up in Q4, Q1. Again, we will move to closer to that band of INR 19,500 from whatever we are currently having?
That is the estimate. You are right, as North America picks up and Europe picks up, you would see the resumption with respect to the specialties, and we would expect to see the margins going up.
[Operator Instructions] Our next question is from the line of Aditya Khetan from Swiss Institutional Equities.
Sir, my first question is, sir, recently, in January '24, sir, one of our competitors have announced INR 600 crores investment into its oleochemicals and surfactants business. Sir, we view this as a risk? Or like any comments from your side, like are they for targeting the domestic export and how things will go ahead?
So we have no comments on what competition is. We are very clear what we need to do. And competition always gets the best in us out. So it's okay. So they will do what they need to do. We'll do what we need to do. So we don't see that as a risk.
Okay. So like, are we foreseeing any sort of an increase in competitive intensity or anything?
So competitive intensity has always been very high. And we have grown despite the competitive intensity, and we'll continue to do the same moving forward.
Okay. Sir, also our Specialty mix, sir, you have said that the Specialty mix has gone down. Any numbers, sir, you can give out, like so 60 or 65 Performance? So how much decline into Specialty we have seen, that mix number?
So actually, Specialty grew this quarter, know?
For the year also -- the growth in specialties was 10.8% for the first 9 months of this year.
Okay. To one of the earlier participant, you mentioned that mix has gone down, so I was wondering on it. Okay. Okay, sir. Yes.
[Operator Instructions] The next question is from the line of Krishan Parwani from JM Financial.
Yes. Just one question from my side. So basis our understanding, I think prices of some of the key products, let's say, which you said in Performance products are still 10% above the long-term average. So is it possible that on a sustainable basis, our per tonne EBITDA could be more like INR 16, INR 17 per kg even, let's say, even taking into the consideration the higher share of Specialty? Yes.
No, no, no. We don't think so.
Okay. So you don't see the price drop in, let's say, the product like SLES, CAPB...
We don't.
The next question is from the line of Nirav Jimudia from Anvil Research.
So I have 2 questions. So one is on our production capacities in India spread across the 3 locations, Tarapur, Taloja and Jhagadia. If you can just help us out what is the current capacity utilization between the 3 plants put together?
Approximately all put together, we are about 70%.
Okay. And sir, let's say, at this 70% utilization, how much would be exported out of India and how much would be used for domestically here in India to sell?
From India, overall, if you look at it, overall, our export is about -- consol revenues is about 65% and domestic India is about 35%.
Okay. So let's say, if we are producing 100 here in India, 30 is exported out and 70 is...
No, no, no. We are talking about consolidated. Total international business for us is approximately 65%, and India would constitute 35%, that is on a overall consolidated...
That is what we would always like to be sticking to. So we don't want to be getting into specific -- India specific, how much is exports and how much is domestic.
Got it. Got it. And let's say, whatever is exported out of India would be predominantly the specialty volumes or because Egypt generally serves the Performance Surfactants. So the good proportion of volumes going out of India would be more on the specialty side or how the mix looks there?
All, all. All products contribute to these exports. All products contribute to the exports.
Got it. Sir, second question is on one of our slides you have mentioned about the revenue breakup for 9 months between the 3 geographies. Is it possible to share the volume breakup between the 3 geographies, how it looks like?
No.
No.
Got it. Okay. Okay.
The next question is from the line of [ Prolin N], who is an investor.
Just one question from my side. When you are giving sort of guidance of 8% to 9% volume growth. I mean -- and North America is also you're assuming that, that will recover. So I mean when you interact with some of your customers, is there a risk that when they do their inventory restocking, so to say, they might not go back to their previous levels because of a higher interest rate environment. I mean, is that a risk and then the recovery in terms of volume or even sustenance of volume, can it be delayed by a year? I mean, what's your comment on that since you have looked at the whole industry for a very long period of time?
So one thing that they did was that they have -- all our customers also think through. And before they start reordering, they also take a hard look whether -- when they start reordering and start reinstating the inventory levels and the pipeline inventory, whether they do see a risk of the demand not really coming back. So if they have waited this long and started coming back, it's only fair to assume that the demand would be positive, demand growth would be positive moving forward.
Sure. So I was not, I mean, commenting from a demand point of view. What I was saying was that, I mean, I mean, every company will look at their own balance sheet, right, while restocking and cost of financing has probably gone up. So what I was trying to understand was that even if demand comes back, do you think that they can do with lower inventory levels than what they have done in the past or that at this point of...
But what I would say is that in this market, okay, when there is a demand uptick that is being looked at, I think they would always like to be having higher inventory to be catering the demand because losing a demand, okay, is not something that anyone would like to afford.
Fair point. That's it from my side.
The next question is from the line of Bhavin Soni from Anand Rathi.
Sir, I just wanted to get a clarification regarding the INR 7 crores impact on EBITDA we had given earlier on the commentary with respect to a one-off.
Yes, yes. So what we said was the quarter had a couple of one-off impacts. So one was the normalization of freight rates when compared to quarter 3 FY '23, which happened in quarter 3 FY '23, but there was a significant increase in the second half of December, this quarter 3 of FY '24, that was one. Due to which, there was obviously a spillover of volumes of -- which we said, which went into -- which we have gone to -- which has gone to quarter 4. So cumulatively, these impacted the EBITDA by about INR 7 crores.
The next question is from the line of [ Anubhav Sahu ] from [ MCPro Research ].
So a couple of questions. So one for the Q3. So what was the volume growth for the India domestic business? And incrementally, what demand trend are you seeing for the rural areas?
India grew about 13.5%. Okay? And then what do you expect the demand -- rural demand was actually negative. That's why the commentaries from our customers say, which has started turning around in some of a positive trajectory. So it is probably the sort of about 2% to 3%. So it is expected to pick up as we move forward.
Okay. Okay. And as far the spillover of volume from Q3 to Q4, so which geographical areas were impacted because of this?
It's only Africa, Middle East, Turkey.
Africa, Middle East, Turkey.
Okay. And for Q4, I guess now this increase in freight cost is already getting factored in the new supplies, which we have been sending to the customers?
Yes.
Okay, okay, okay. Okay, that's all from my side.
The next question is from the line of [ Anupama ] from Ratna Traya Capital Partners.
Yes. You mentioned that the freight cost has come down. So can you, like, give us a normalized rate going forward? Freight cost per metric ton?
Freight costs have gone up now. We talked about freight cost normalizing in the previous year, quarter 3 of previous year, okay? As a matter of fact, the freight costs were normalized even up to September of '23, okay? We started seeing this jump in freight once the Red Sea issue started escalating.
So Q4 can be expected pretty much an elevated freight costs as compared to Q3?
Yes, yes. yes.
Yes.
And what about FY '25 -- '24?
[indiscernible] it all depends on how the Red Sea crisis pans out. If it gets better and things get resolved, it will come down. If we get worsened or continues to remain where it is today, it will be higher. So it's something that we are not in control of.
And what is your guidance for CapEx for FY '25?
Similar. It will be similar. Yes.
Yes, yes. I mean we have been saying that we have been doing CapEx of about INR 130 crores to INR 150 crores in a financial year and that we continue for the next year also.
Ladies and gentlemen, that was the last question for today. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you, ladies and gentlemen. Thank you for your time. Wish you all the very best. 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.