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Ladies and gentlemen, good day, and welcome to the Galaxy Surfactants Limited Q4 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. K. Natarajan, Managing Director from Galaxy Surfactants Limited. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen. I welcome you all to our final investor conference call for financial year '23-'24. Before we get into the call, since this is the first time I'm presiding over the call for members and participants, who do not know me and my team, I will start with a short introduction. I am K. Natarajan, Managing Director and CEO.
I've been associated with the company for the past 30 years and I have handled roles across -- handled multiple roles across processes. I was [ injected ] into the Board of Galaxy Surfactants Limited in 2016.
Mr. Vaijanath Kulkarni, our Executive Director, has taken over from me as the new Chief Operating Officer of the company. He has been associated with the company for the past 28 years, having established and led our Galaxy Chemicals Egypt operations right since inception.
Welcome, Vaiju. I also have with me Mr. Abhijit Damle, our CFO, who has been associated with the company for the past 15 years. He took over from Mr. Ganesh Kamath, our earlier Executive Director and CFO in October 2022. Welcome, Abhijit.
The opening remarks of mine is divided into three parts. In part one, I'll cover the long-term picture. In part two, I will explain the medium-term picture, the cycle of demand vis-a-vis supply-led inflation and supply restoration. And in part three, I shall cover the performance for financial year '24 and provide a brief guidance for financial year '25.
Ladies and gentlemen, the long-term picture remains extremely positive. Since financial year 2016, Galaxy has grown in terms of volumes by 1.5x, in terms of EBITDA by 2x and in terms of net profits by almost 3x, thus tripling our earnings and doubling our operations just over the last 8 years.
In short, we have created nearly 2 Galaxies in the last 8 years in terms of earnings. So this is certainly a significant achievement. Galaxy, as an organization, has always believed and focused on the long-term picture. And over the long term, we reiterate that the structural story remains intact, in fact, extremely positive and extremely vibrant.
With improvement in accessibility via quick and e-commerce, innovation-led premiumization, rising value and quality-based consumption, the headroom for growth is significant as far as [indiscernible] industry is concerned. Galaxy is positioning via its basket of products and strong relationships. Built across stakeholders will not only -- will enable it surely to capitalize on the emerging opportunities.
Having said that, as Marshall Goldsmith has commented, what got you here won't get you there. So we are not in any way resting on our past laurels. In fact, drawing inspiration from it, it will be critical for us to remain agile, stay focused and ensure with significant incline of the customer as well as innovation value ladder to build on this momentum.
Moving on to the medium-term picture. It is important for us to understand the demand cycle vis-a-vis the supply scenario. While a lot of this has already been spelled out over the conference calls we have had since 2020, connecting the same is critical to gauge and understand the future projections.
The period between FY 2020 to FY 2023 saw low single-digit volume growth for Galaxy, while EBITDA for metric tonne significantly improved from INR 16,700 per metric tonne to close to INR 25,000 per metric tonne, thus resulting in a profit growing by 1.6x.
As felt out at the start of FY '24, we did realize that this wasn't a sustainable model with negligible volume growth and for -- backed by a profitability growth. It was critical for us to get the volume growth back. So while the profitability has declined in FY '23-'24, we personally believe the restoration of the demand and supply cycles is the biggest positive for this year.
Restoration will lay the foundation for improvement in volumes followed improvement in margins going ahead. The reason I say this is because since 2020, there has been significant volatility across both demand and supply side, which has adversely impacted the business.
The period between 2020 to 2022 March was marked by moderate inflation, strong demand and stocking of the consumers due to the -- due to various issues like container availability, rising freight costs and supply gaps. While demand was robust, we could not completely capitalize on the same because supply with gaps in terms of our volume growth. Despite the constraints, specialty volumes had clogged the strongest quarter in quarter 4 FY 2022.
But just as the momentum was building up in the developed markets, the Russian-Ukraine war halted the momentum. The war saw an sudden uptick inflation to record heights, while suppliers and customers had an opportunity to pass on and maximize profitably in FY '22-'23, restoration of supplies declined [indiscernible] high prices, led to inventory glut. Rising prices and deteriorating macros eventually led to deterioration in demand, impacting mass demand in emerging markets and premium consumption in developed markets.
Thus, financial year '23-'24, began with an inventory glut in developed markets and uncertainty with respect to demand revival in developing markets. While inflation has begun to cool off in H2 of calendar year 2022, demand revival only began around H2 of calendar year 2023.
Now why is this important? It's because H2 calendar year 2023 marked the first time when both demand and supply cycles stabilized post the pandemic. We started with mass consumption, making a comeback first, followed by the end of the destocking cycle at the end of 2023 in the developed markets, which eventually translated to strong pickup in masstige products in the start of 2024.
While the Red Sea escalation did disrupt the supply chains briefly in quarter 4 FY 2024, it did not impact the demand. Unless there is any further escalation, we believe the same should not cause any further disruption. Drawing insights from the 2020 to 2024 demand and supply cycles, we believe the destocking cycle is over. H1 FY 2025 will see stabilization and the next restocking cycle will commence, okay, from the beginning of H2, 2025. This will certainly help our demand for premium specialties.
Momentum of mass and masstige products will sustain barring premium macro-driven deterioration. Accelerated approvals will ensure new launches and sustained traction for our new products going ahead.
Finally, moving on to our performance for financial year '24-'25, let me start with a big highlight of this quarter. We are pleased to share that your company, Galaxy Surfactants won the Silver Award at the prestigious in-cosmetics Global in Paris for the best -- in the category of the Best Functional Ingredient. We are the only Indian as well as Asian company to have won this award, and this puts us amongst the list elite innovative specialty companies.
After 4 years of flat volumes, this year, your company registered 7.7% volume growth, meeting the 6% to 8% guidance stated at the start of the year. The EBITDA of metric tonne at INR 20,019 per metric tonne has come in within the guided range of INR 19,500 to INR 20,500 per metric tonne with quarter-on-quarter improvement starting from Q2 FY '24.
The change in product mix, reversal of onetime benefits realized in FY '23 saw the EBITDA per metric tonne decline to INR 20,019 per metric tonne from INR 25,051 per metric tonne. While this may appear significant, it needs to be understood, factoring in the 7.7% volume growth as well as close to 6% export incentives that was not realized in our Egypt business this year.
Moving on to the individual markets, starting with India, India continues to remain a bright spot for us registering a 11% growth in financial year '24, while the momentum remains strong, rural recovery remains a key going ahead. Below average rainfall was slow down on premiumization, remain the key risk.
Easing inflation, stabilizing macros did help in recovery of mass segments in AMET market, while volume growth did decline by 1.5% for FY '24. This was primarily due to the adverse volumes degrowth we faced in January on account of the Red Sea escalation.
Having said that, February and March were stronger than normal. Therefore, barring any further escalations, AMET should see double-digit volume growth in the coming year. Rest of the world made a strong comeback in H2 FY '24, registering a healthy 29% volume growth. Q4 FY '24 [indiscernible] highest quarterly volumes driven by masstige products. This is a very positive sign as it implies the end of destocking cycle and stabilization of demand.
Going ahead as demand stability returns and uptick in premium specialties and restocking will be the next big triggers. Accelerated approvals for new products, along with uptick in premium specialties will ensure improvement in EBITDA per metric tonne going ahead. While volume growth stood at 13.3% for FY '24, going ahead, FY '25, we expect the mix to gravitate towards premium specialties leading to better profitability.
To summarize, as stability returns, volume growth will proceed to profitability growth. Therefore, the key this year will be to ensure our volume momentum. Volume growth of 6% to 8% for FY '25 will be the first target and uptick in premium specialties and improvement in overall mix should further help in strengthening the EBITDA per metric tonne. For FY '25, the range, we are working, which stands at INR 20,500 to INR 21,500 per metric tonne, with H2 gravitating towards the upper range of demand and H1 being closer to the low range.
More importantly, we plan to get back to the 22% to 23% ROCE band from existing 18% clogged in FY '24, thus compliant with cardinal principles of PAT growth being higher than EBITDA growth and EBITDA growth is being higher than the volume growth.
To conclude, ladies and gentlemen, with ethos and relationships built over decades at Galaxy, we remain fully committed towards ensuring we not only sustain but build on this momentum for the coming decades. Thank you, and wishing you all the very best.
[Operator Instructions] The first question is from the line of Nirav Jimudia from Anvil Research.
I have a few questions to ask. Sir, of the guided volume growth of 6% to 8% for FY '25 and EBITDA of around INR 20.5 to INR 21.5 per kg range what you just mentioned on. For this sort of volume growth, what assumptions we have taken for each of the categories of performance as well as the specialty?
Like if I heard it clearly, we clocked something around 13% to 14% volume growth for specialty in FY '24. So if you can just help us with the assumptions being taken by you for the volume growth of FY '25 between these 2 broad categories?
So these two business, there is obviously a matter of details. But what is important is that we are looking at the growth momentum continuing in the rest of the world that essentially means that specialty chemicals should grow better. And more importantly, the mix of the Specialty Care ingredients will be much better, whereas Performance Surfactants will be majorly driven by what happens in India and Africa, Middle East, Turkey.
We do see, as far as Africa, Middle East, Turkey is the worst is behind us in terms of the Red Sea issues and the demand stabilizing. And Africa and India, the growth momentum needs to continue. So this would essentially ensure that we are able to deliver any of this mix in the 6% to 8% band.
But sir, safe to assume that this year would be more towards the growth in the specialty volumes like what we have seen in FY '24 so the momentum should again be built up over the specialty volumes. And like you mentioned that this would be more towards the premium categories rather than the masstige categories, which should happen from second half of FY '25?
So that's what is the expectation. And then if that really fluctuates and sustains that should be good. But finally, what is important for us to ensure that we are able to grow across geography and customer segments because we also know that each of these geographies has their own challenges and how do we ensure that we are able to be ahead of the game and ensure that we are able to capitalize on every opportunity. So that's our approach.
Got it, sir. Sir, second question is for India, like we have seen a double-digit volume growth for FY '24. So is it possible to bifurcate the growth numbers between how much it has come from the new product launches or the new customers being acquired or the newer applications of our products or was there a market share gain in India because of which we have seen this double-digit volume growth?
So one is in terms of -- we have the -- I may not be able to give the exact breakup, but I can tell you that this particular volume growth is driven by essentially acquiring new customers which is, what we call as, hunting for new customers and then also getting a bigger wallet share from our existing customers.
And there are certain new products that we launched, but that, obviously in India market, has not been significant, but that also has contributed to enabling us to get to that double-digit volume growth.
Okay. Last question from myself side is...
I'm sorry to interrupt sir. I request you to return to the question queue for follow-up question.
[Operator Instructions] The next question is from the line of Aditya Khetan from SMIFS Institutional Equities.
Sir, my first question is last quarter you did highlight that there was -- that because of this Red Sea crisis, there has been a deferment of volumes. So this quarter also, sir, like we are replacing because of Red Sea crisis. Again your sequential volume growth is a bit lower. So again, like we would be witnessing some deferment of volumes in Q1?
See, the -- if you look at in the quarter 3, when we spoke, there was essentially a situation when -- only November end, the old blockade happened and the rerouting of the shipments started happening, okay, by the shipping companies. So when we spoke to you in the call sometime in February, we have said the worst is behind us and things will start improving. But then it started improving, but not at the pace that we wanted to be able to recoup what our volumes we had lost.
So we are into this situation where things have improved, but they have not come back to what it was before the Red Sea blockade happened. We do see that the whole thing would start getting better, okay, fully to the pre Red Sea blockade levels, okay, in the coming month or so.
Okay. Sir, last quarter, you did also mention that the one-off volume was almost 2,000 tonnes. So similar figure, can you give for the current quarter, how much because of the Red Sea crisis impact on the volumes?
So essentially, you look at that, we're talking about something -- like something then of about 2,500 metric tonnes.
Okay. So sir, so these volumes will be recouped in the coming quarter?
Yes, that's what we would want to because we do see that the demand side seems to be healthy. We also have a situation where we have to keep informing customers about certain delays that we see. So once -- we have also reset our supply chain, so we have now built in -- started building in inventories given the higher transit times for the incoming material.
So we do see that we have a good probability of have been getting recouped, but we'll keep our figures crossed in the sense that we would like things to work out the way that we anticipate, but things are looking much better than what it was during the previous investor call.
Okay. Sir, my second question is on to the competition. Sir, we knew that -- so one of our competitors is doing a huge investment into the oleochemicals business. How you see, sir, for the next 2 to 3 years of competitive intensity into the export market from India will go up and which companies might gain some market share going ahead?
I don't -- we are not in the all oleochemicals, first of all. So we are actually into oleochemical derivatives. So in oleochemicals, obviously, I would wish them the very best. But if you look at our product categories, our competition export market is not even from India, we compete with all our major competition from all over Europe and Asia Pacific and Americas. So our ability to engage with competition is a much higher order. And we do welcome good competition because that gets the best out of us.
The next question is from the line of Rohit Nagraj from Centrum Broking Limited.
First question is, during last con call, we also had mentioned that next year, we are expecting a volume growth of 8% to 9%, which was above our normal band of 6% to 8%. So what has changed in the last couple of months in terms of a broader picture that we have again resorted to 6% to 8% volume growth guidance for the next year?
No, we have said very clearly that we want to be looking at exceeding our 6% to 8% volume growth, but we are keeping the guidance at the same range. given that there are a lot of moving parts. But, yes, as we said last time, we want to be looking at breaching the higher end of the band in terms of volume growth.
It's only that the guidance, we are keeping it at 6% to 8%, but our intensity to do beyond that is very high. But you only want the external environment to be operative, correct, which is what we said last time as well.
Sure. Got that. The second question is, we had also mentioned that in the developed markets, we have started seeing green shoots in terms of restocking. So how is the progress now given that you mentioned that restocking probably will happen in second half of this financial year so...
So there are two things. One is what happened was given the way the demand really tanked vis-a-vis what they had anticipated and with high inventory, they have built foreseeing a tight supply chain situation. When all of this got resolved and they were -- all the customers were saddled with excess inventory, you have a situation where the destocking was happening across the value chain, at my customers end, at the consumer end and even at, say, the ingredient manufacturers end.
What we are seeing is that people have started ordering for material, as you said last time so that means that they have exhausted whatever inventory was there earlier, and they have started being cautious in terms of building the pipeline. Once the consumer demand momentum is very clearly established, we see them coming to increasing the stocking in the channel, which is very important because the channel stocking has actually got depleted significantly.
Now that restocking, as we call it, we expect it to happen in masstige, although the orders have started coming in, we had a situation where 6 months, none of them are ordering in the material. That from January, we saw people coming back in terms of ordering, but restocking, we see happening from H2, wherein they'll start rebuilding the inventory pipeline significantly higher.
Sure. And just I can squeeze last one. In terms of AMET market, what are we currently seeing in terms of the historical issues and the latest issue in terms of the Israel war. So how people got acclimatized in terms of the ongoing issues and the normalcy in terms of consumption is returning? And a live question to that in terms of the incremental cost because of the higher freight rates, whether that is also being absorbed by the market?
Yes. So Vaijanath Kulkarni will respond to this. Yes, Vaiju?
Yes. So situation geopolitically has not fully normalized. We are very clearly seeing a good normalization of rhythm in terms of business with our customers and in the consumption market. There are still a little bit of stress because of Red Sea supply chain issues because there are longer lead times and supply chain times are longer debt.
To that extent, we have not yet reached to the full equilibrium, as Mr. Natarajan said, which should be fully in place in coming few weeks. And then we see that are able to service effectively the demand, which we are clearly seeing a sign of a good normalization as far as the AMET market is concerned.
So the issues are not really impacting. Also related to the currency in Egypt, has completely normalized. It has gone to free float. The availability of foreign exchange is extremely normal there. So the rest of the trade also has quite eased out. And that will also should have a positive impact on the establishing of equilibrium that we talked about.
[Operator Instructions] The next question is from the line of Sanjesh Jain from ICICI Securities.
I got two questions. First on this quarter, can you help us with the growth rates across the region and category? That's number one. Number two is...
Sir, Can you please speak a bit louder sir?
Can you repeat the question, Sanjesh, I couldn't hear it properly.
Okay. First one is for a bookkeeping question, sir. In the presentation, we have shared the growth rates only for the full year. Can you give us growth rates for this quarter, Q4, which is for performance specialty, AMET India and ROW? That's number one.
Number two is on the EBITDA per kg for this quarter, excluding other income. We were at INR 16.90. While sequentially, there is an increase in the gross profit, but I think there is significant inflation per kg which is driving down the EBITDA. What is driving sharp inflation in operating cost per kg in this quarter?
Yes. So first is you want the volume growth rates for the quarter?
For the quarter, yes, for Q4 Y-o-Y.
Yes. So if you look at the total volume grew by almost 5.5%, but majorly led by a good 25% growth rate in our specialty care ingredients, whereas performance surfactants because of the Egypt issue that we have, where Egypt majorly does performance surfactants, we actually degrew by 5%.
India grew by about 4%, AMET actually degrew by 12.5%, which is what I told you. Whereas rest of the world led by our specialty ingredients, grew by almost 32%.
Now coming to the other question in terms of what has been the impact in terms of costs relating to. So what has happened is, as we said, the Red Sea blockade resulted in a significant increase in freight costs. And many of those freight costs, we were not able to pass it on in the Jan-March quarter, but freight costs have really -- whereas the previous corresponding period, that was not the case. So we have to actually observe a good amount of the increase now which obviously, we have started passing on the new ones only from this financial year. So that has been one major impact.
That's the only impact.
Yes, sir.
Okay. One last bit. India suddenly appears to have decelerated from mid-teens kind of a growth to low single digits why -- because I don't think India has heard by the externalities because it's largely a local market for us. What has led to a sudden...
So if you see, India, we have overall grown by 11%, which is much ahead of the market growth rate. So it is only in terms of the, what you call, quarter-on-quarter stuff. So that's the only thing. There's nothing significantly to look into that because we have grown 11%, is the question of there are -- always there is quarter-on-quarter some customers start buying lower in 1 quarter, higher in 1 quarter some -- those sort of adjustments.
Because we grew very, very sharply this year versus what industry has grown...
Correct.
So how sustainable is this kind of a growth because it appears that it is decelerating, right, by the numbers?
No. If you look at only last quarter, it gives you the impression. But what I can say is that it is more in terms of the way customers adjusted their buying. So we don't see anything significant as far as decelerating in terms of how are we seeing in terms of growing ahead of the market. So even this 300% is ahead of the market, because all of them have reported negative volume growth rates.
If you look at it, all our customers have reported negative volume growth, okay, in the Jan-March quarter, whereas previously they were reporting at least 2% or 3% growth, but in Jan-Mar quarter all of them reported negative volume growth. So that also has to be considered.
The next question is from the line of Arun Prasath from Avendus Spark.
Sir, my first question is on the -- again, on the guidance at 6% to 8% volume growth. I'm just curious to understand how much of this is dependent on the macro sustenance or -- and then how much of this is dependent upon, say, our new molecules or new capacities or a new unit coming on stream, because it seems like we have done around INR 450 crores of CapEx in the last 3 years.
At some point of time, this should result in couple of molecules scaling up and gaining traction. So how much of this volume growth depends upon the CapEx that we have done in the recent times? That's my first question, sir.
Yes. So if you look at my major capacity additions that happened over the last few years has been on the specialty ingredients. So if you see that we have started seeing good traction there, okay? The only thing that we want to look at is how does the mix change more towards the premium specialties that we have, which is what is depending on U.S. and Europe coming back from what they have been into in terms of destocking.
Plus, also, there have been -- last about 1 year because of the high inflation situation and the demand coming down, many of the customers, the project in pipeline got pushed. So we're seeing that getting revived in terms of their work -- recommencing work on that.
So we see that it's going to be something where we're able to drive what is there on performance surfactants where we have capacities both in India and Egypt. Whereas for specialties, we're looking at how do we start our -- whatever investments we have done, it started to see a good amount of results in terms of the way the volumes are growing there.
Sir, I have to understand the specialty is where you have done a lot CapEx and when that recovers, you are saying that we should see a lot more growth than what we are.
Yes.
But in terms of volumes, actual volumes, we are at around 80, 85 KT -- 85,000 tonnes of roughly is our volume in specialty. So what is the max potential it can go up to before we start investing once again in specialty?
See, it maybe can go almost up to 100,000 to 110,000 clearly, okay? But then we also need to know that in terms of what capacities we have currently, okay? But we also look at, there are certain super specialties for which we are in the process even setting up capacity, some of it is already set up. Those will start getting -- once the projects in pipeline starts getting matured. We see those results as well coming in. So we are well positioned to be able to start capturing to any spike in demand that we see, okay, on the specialty front. We are fully prepared.
Sir, your 105,000 tonnes is based on 75% utilization? Or is that is peak utilization...
No, we're talking about something like [Technical Difficulty]
The management line got disconnected. We'll reconnect them.
We have connected with the management line. Over to you, sir.
Yes.
Yes, sir. So you were talking about the 85% is specialty volumes reaching up to 105,000...
Correct.
So my clarification on that is that we usually put CapEx on reaching certain utilization. So this is your -- this volume is based on that utilization or is the peak 100% utilization?
No, no. We -- typically, it will be at about 80% to 85% capacity utilization.
Okay. So 105,000 will be equivalent to the 85% utilization?
Correct.
Right. Sir, but you also attributed in your opening remarks that the demand for the masstige categories are growing up. Is that a behavioral change in the -- on the consumers in the rest of the world, especially in the developed market portfolio? And if that is the case, this specialty care products going up isn't that there is a disconnect between this -- if the masstige continues to do very well?
Yes, yes. So that's why. So it's important that -- if you look at world over, I think all the consumers have become very aspirational. So depending on what their per capita income is, you would see that there are some economies that are still majorly onto just the mass products, whereas some like India typically is moving majorly into a masstige.
It's straggling all the 3 segments very, very properly, both mass -- we see a good momentum happening into masstige. And we also see equally good space available for prestige and premium products. We're also seeing those trends in, say, the other development economies as well. So that's why you see that specialty ingredients, we need to have the entire basket available, both what is required for the masstige and what is required, okay, for the high-end premium specialties, which you call a prestige.
Okay. Any new molecules, you're hopeful, will break and become significant and can start contributing much more than in the past, sir? Any such molecules in pipeline, which can be...
We have molecules in the pipeline, which we are working on. Some of them are -- we are at probably the large stage of establishing capability. Some of them are where we should be looking at how do we set up commercial capacity. So that's the ongoing process so like -- where we introduce mild surfactants, various categories [indiscernible]. Similarly, we did on non-toxic preservatives. So they have been -- constantly keep [ preserving ] the portfolio of premium specialties and specialties given the clear understanding what we have the consumer trends.
Right. And finally, once again, on the Red Sea escalation, sir. It seems like the consumption is not impacted in those geographies, just that our ability to place volumes is impacted because of the longer route. So essentially, what we understand is that we have lost market share temporarily. So how we are hoping that we will gain back those, especially if the local suppliers are active and competitive?
Given that the suppliers are constrained in terms of the [indiscernible] Africa, Middle East and Turkey is majorly import-intensive market. Many of the ingredients get imported. Many of the feedstocks get imported. Okay. So what we're saying is that how well you are able to manage your incoming supply chain and outgoing supply chain and have the ability to be able to have headroom in capacities to cater to what demand doesn't get served.
Because if we are unable to serve, every person is in the same boat because all of them are exposed to the same supply chain constraint in terms of incoming raw material. So how well we are able to manage the incoming material and how well our supply chain is geared to be able to quickly get in the material, produce and send it out is what is going to determine. And we are pretty well positioned as far as that is concerned.
So that means essentially, you're saying in these markets, there is a destocking has happened because everyone couldn't supply...
Yes, because that is the 4th destocking you may say because people want materials, but they don't have material. They're not able to get it. It's not question of losing share, it's a question of -- the market is not being served because of the supply chain issues.
And the restocking that we are...
Sorry to interrupt, sir. I just request to return to the question queue.
The next question is from the line of Abhishek Navalgund from Nirmal Bang Equities.
So my first question is on the operating cash flow generation. So we have almost generated more than INR 500 crores. So assuming this run rate continues, so how are you planning to deploy the excess cash going forward? I mean there can be acceleration in case rates? Or are we considering any M&A going forward?
No. So as we have said, we have a CapEx of close to INR 100 crores to INR 200 crores. So that's also there. So we have a very clear visibility on the CapEx. We also know that we have a good position in terms of looking at certain very, very viable inorganic growth opportunities in line with our strategic intent.
So that's also something we keep scanning. So what is clear is that we are in a good position to be able to capitalize on opportunities to grow our capabilities pretty well. We're also going to be investing on certain digitalization agenda that's very critical on some infrastructure, on some people infrastructure. So that's something -- the good cash position enables us to be able to really plan and recoup ourselves for the long term.
Sure. And my next question is on Tri-K. So possible to share the full year EBITDA and PAT number for FY '24?
No, we don't share the numbers. I think that probably will come during the annual report that we churn out. Right now, we don't have that. .
[Operator Instructions] The next question is from the line of Karan Gupta from Varanium Capital.
So I would like to ask question on a broader perspective, as you also said in your opening remarks that you are very much optimistic about the long-term picture. So that's one thing. The second is our financials always be dependent on this fluctuation of this raw material kind of thing and how we are positioning ourselves in the global market, right?
And that's the demand side. And supply side, how the supply side is coming into the industry, overall globally and also in the India? And what's the demand scenario you're seeing for the next 4 to 5 years? I know the product significance is very much high, as we are moving into the premiumization of the products in any -- in all the categories, right? Whether it is health care, your oral care, home care kind of thing. So how we are seeing the demand scenario and the supply side?
Yes. So as we said, when I said my -- we are extremely positive and extremely, what do you say, exuberant as far as future is concerned because the industry is a very exciting industry. All that we see in terms of destocking, whatever happened and then certain consumer trends in terms of looking at things coming down or a supply side issue is only temporary.
So now every time something like this happens, we end up getting equipped further in terms of tackling these sort of challenges and enables us to be one step ahead. We have others to be able to capitalize on the opportunities. So that is what gives us the confidence in terms of the structurally this industry is in a fantastic position.
Coming to the ability to be able to manage our business, because it is subject to a huge raw material volatility, that's something we have demonstrated over the last 10 years, the way that we have managed significant volatilities, both in terms of frequency and intensity. And that's enabled by the very robust risk management system that we have in place.
With regard to the third, what do we see as the growth rates in the coming 4 to 5 years, our this thing is to grow at 6% to 8%, okay? The global growth rates, we didn't know because that will be what we are aiming is in terms of -- it's a combination of how well we are able to grow our footprint for our Performance Surfactants and Specialty Ingredients. And how well we equip ourselves internally in terms of our operations capability and people capability will determine as to how well we are able to exceed this target number of 6% to 8%.
Okay. And every year, we are increasing on number of patents. It's how these patents are competitive in terms of price and quality that you are delivering?
All my patents have patents which are all process patents. We have patents from product, patents on application. What is to be -- what is clear is that there are patents which are known, what do you say, advantageous and there are some of the patents, which essentially enable us to be able to cater to products in line with the consumer trends.
Some of it will be work in process in terms of commercialization. So it's good that we have so many patents and so many product possibilities that we can get to the market.
The next question is from the line of Gokul Maheshwari from Awriga Capital Advisors.
Yes. My question is on the AMET business. Over the last few years, your volumes peaked in '21 where you were close to 95,000 tonnes. And this year, you are close to around 70,000 so that's like 25% or so lower than that number. Now there have been external macro issues with that region. So could you just give a perspective for the next 2 to 3 years for this region that once your volumes are down. Because of this, is that an opportunity lost or you can recoup that ground and achieve those peak volumes in the near future?
Yes. So see, AMET, obviously, is we know that we -- all of us know that it has been at the epicenter of lot of geopolitical tensions and that has own challenges in terms of both impacting demand and supply. So as of now, we see that -- post the Israel-Hamas conflict, we see that things settling down.
And from here on, if you look at it, we -- but for the Red Sea blockade and everything, we had actually gathered a good momentum, okay, to be able to exceed our last year number of 71,000 tonnes. So we were actually looking at close to 74,000 metric tonnes this year. But the supply chain issues actually prevented us from catering to that -- to reaching that number.
To see that the demand -- see the impact and preparation in terms of meeting that demand in terms of both capacities and our supply chain capabilities is very much intact. We will see that -- this year, we will see things getting significantly better in terms of the approaching, okay? The higher numbers of the previous years are all close to 80,000 to 85,000 tonnes.
So in that context, then you can go back to your peak volumes in the next couple of years?
Next couple of years, if you look at the peak volume, which was in '21 of 95,000 tonnes, I would not want to other any guess there, that looks steep, but then we will be into a proper trajectory to get there in the next 5 years, the way I see it.
And lastly, on your working capital, there has been some improvement in your working capital this year...
I'm sorry to interrupt, sir. I just request you to return to the question queue for follow-up question.
The next question is from the line of Shalini Gupta from East India Securities Limited.
Sir, first question is on the revenue. So if you could just please give the volume growth for the quarter as well as the realization increase because lauryl alcohol prices have been flat during the quarter, sir -- I mean, Y-o-Y flat?
Correct, but then the pricing does not impact immediately. So there are a lot of things in terms of the mix that will be there, plus also in terms of certain contracts of products of the feedstock much earlier. So the flow is not exactly how the prices correlate. It all depends on how the contracts flow in, what we have done previously. So it'd be difficult to correlate quarter-on-quarter in terms of -- with the feedstock price.
Okay. But what was the volume growth during the quarter?
So we grew by about 5.5%.
Okay. And sir, my second question, I mean when I just look at my sheet, the quarterly growth for Performance Surfactants is at 6% decline. And the same for -- Specialty Chemicals is at 10% increase. Am I in range or am I out of range or if you could give the growth figure of Performance and Specialty Chemicals?
Well, I just -- I think I answered to Sanjesh, that particular question. So I think in the quarter-on-quarter, I think we grew our Specialty Ingredients to about 28%, whereas Performance Surfactants we grew by about 5%, giving us an overall growth rate of the quarter-on-quarter of 5.5%.
Sir, Performance Surfactants was 5%. And sir, I think he himself has asked you...
Sorry to interrupt ma'am...
Yes. But this was a question asked earlier. So I'm just asking that again what is the EBITDA per kg for the quarter?
EBITDA per kg for the quarter? Yes, we said it's about 20,600 per metric tonne.
The next question is from the line of Nilesh Ghuge from HDFC Securities.
My question is on customer split. So if I look at this quarter number, within the T1 and T2 customers, the contribution from T1 and T2 customers has gone down over the last 4 quarters. While the T3 local and niche player, the contribution has gone up significantly, Y-o-Y also and the quarter-on-quarter also.
But at the same time, we are mentioning that the specialty care business is going up. So are the local and niche players moving towards specialty care? Is my understanding correct?
No, no. That may not be the right understanding. If you look at, it's also in terms of how is our customer acquisition plan, how do our business team acquire new customers, how do we broad base our customer profile and portfolio because that is a very critical that -- how do we grow the existing -- grow our wallet share with existing customers and how do also get you customers onboarded.
So if you see this particular improvement in Tier 2, Tier 3 that you're seeing in these in terms of the actions we initiated almost for the last 3 years, which is practicing in terms of that particular category of customers growing. There's nothing in terms of looking at -- saying that whether T2, T3 are more looking into specialty, that's not a good correlation to have. That is not the case at all.
The next question is from the line of Sudhanshu from Marcellus Investment Managers.
Just two quick questions. This quarter, we are seeing significant increase in other income. Can you help me understand what drove that? And secondly, what is the sustainable tax rate because every quarter, we have seen the tax rate come down for the company. So going forward, what should we assume the sustainable tax rate for the company?
Yes. Abhijit?
Yes. So other income basically will comprise of certain treasury income and also some foreign exchange benefit that we are having. And the tax rate, what you are saying, will basically be impacted by some permanent differences leading to a lower average tax rate.
So this quarter's tax rate should we assume that to be sustainable or it could fall further?
It will be sustainable. The only thing is -- I mean, it will certainly be impacted by the composition of different subsidiaries because one of the subsidiaries, which is Egypt. It has a 0 nil tax rate. So to that extent, the tax rate will also impact on the contribution that is driven by the subsidiary in the overall consolidated numbers.
Understood. And just on the other income piece, you mentioned that its treasury income and FX gain. Now in treasury income -- so would it be primarily because of treasury income or primarily -- because FX being largely have been consistent for last, say, few quarters, so what should be attributed to?
So you're saying for the quarter?
Yes.
For the quarter, it will majorly be the foreign exchange income.
[Operator Instructions] The next question is from the line of Rohit Nagraj from Centrum Broking Limited.
Just one clarification on EBITDA per metric tonne. So during FY '24, the EBITDA per metric tonne has close to about INR 20,000, including the other income. If we knock off the other income of about INR 1,500 per metric tonne, the EBITDA per metric tonne comes to around INR 18,500. And next year, we have guided for INR 20,500 to INR 21,500. So does that also include the other income part, which is closer to INR 1,500 during FY '24?
Sir, all you need to -- see what needs to be understood is that when we got the other income, last quarter, we also had the freight impact cost that was there, correct. So what we're saying is that now the freight costs, which we've started passing on, so we would expect that now normalcy to get restored. So we're not looking at other income being significantly higher or whatever. We are looking at things in a very normal way, getting us to close to INR 20,500, INR 21,500 per metric tonne.
The next question is from the line of Aditya Khetan from SMIFS Institutional Equities.
Sir, in FY '24, we have granted 6 new patents and 5 are in India. So these 5 new products -- so the 5 new patents will be converted into products. And when will be supplying to our final customers on this? And what are the -- so these patents all?
So those molecules, which are just into the patent process, generally, they have a time to scale it up and go to the market. So it depends on the type of the patent. But typically, in a time frame of about 1 to 3 years, they will blossom into the market opportunities.
Okay. And how many patents are in the pipeline right now for the next 2 years?
I think we are -- in fact, we are working on that. So there is nothing in pipeline because we constantly keep evaluating whatever we work on in our innovation lab, whether it is work patenting. Sometimes we have molecules where we have a good intensive property, but we decided not to patent. So we have, in the pipeline, evaluation being done as to whether at all we need to patent and whether it is patent double. So that is the ongoing process.
[Technical Difficulty] volume?
I didn't -- I lost you. I think your voice was breaking.
Sir, for the domestic surfactants industry volume for FY '24?
So we said, India grew by about -- in fact about 3.5% in the quarter.
But 3.5% for full fiscal FY '24?
No, full fiscal was 11%.
The last question is from the line of Arun Prasath from Avendus Spark.
Again -- once again, on the freight rate that you couldn't pass it on during this Q4 because of the Red Sea. When you are recovering it from the customers in this fiscal, that it also -- you will recover the retrospective cost that you couldn't pass it on or only from going forward, you will be doing that?
No, no. So we -- our -- first thing is to ensure that we are able to pass on the new freight rates, okay? So we also -- typically, this in terms of trying to -- this is essentially telling customers about the situation and then prevail -- appeal to them to see whether some parts can be recorded or what we incurred, okay, in the previous contract. So that's ongoing. Somewhere it happens, somewhere it doesn't happen, but the most priority stuff is to pass on this thing from the new contracts, which we have already done.
Most of our contracts is on a landed basis, not on the FOB basis. Is that...
Yes. I think 90% of what we do is all either GDP or CAF.
And is there any way to move away from this and go into, say, FOB-based contract, so that in the future, this kind of issues will be sorted off? Is it -- clients are not warming up for that?
So one of the key delivery -- value delivery is that -- as to be done to customer is how do you manage and give them as good as a local supply chain. The more I try to get into FOB, I may end up solving one problem because this doesn't happen every time, but then you will become not that relevant to your customer, right, because if everything they have to do, then what is our value delivery to them.
And this new guidance that we are talking about 20.5 to 21.5. So how much of this is based on this additional fleet that you are assumed to pass down. So it's not for that, what it will look like, sir?
Okay. There is no new additional freight. I'm only saying whatever freight rates increase are even passing on the actual rates that are applicable from April. That's what I'm saying. It is not in terms of trying to recover more or earlier. So that is not going to be possible. It's only in terms of earlier, I couldn't pass on the increased rates because the contract is already in place. So there was a hit to the P&L. Now I'm saying from April onwards, I'm able to pass on what the freight rates -- actually freight rates are.
And for some reason, if the freight rate goes down, still we will be able to command the same price at which you went in to contract or immediately, we'll have to pass it on?
So there again, it depends on what is the contractual stuff. So it's more to do with how the contracts are structured with the customer, but in most cases, it will be -- the freight rates are fixed. And typically, we don't do anything beyond 3 months or 6 months at max.
As that was the last question for the day, I now hand the conference over to the management for closing comments. Over to you, sir.
Thanks to all of you, and I appreciate the interest that each one of you have shown in our business and our performance. I look forward to meeting you all and engaging with you in the conference call in the month of July -- August that we will have for our Q1 FY '25 results. Thank you and all the 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. Thank you.