Aspiring for a volume growth of 6-8% in FY 23-24: Unnathan Shekhar, Managing Director, Galaxy Surfactants

  • June 15, 2023

2023 global trends in Performance Surfactants and Specialty care products?

Globally, we are seeing a shift in consumers’ preference towards products that not only deliver functionality but also promote healthy lifestyle and focus on sustainability. Most FMCG companies are focusing on premiumization of their portfolio because of this change in consumer behaviour. For e.g. people are incorporating skincare regimes as part of their daily personal care routines. Similarly, consumers are gradually shifting from laundry bars and powders to premium powders and laundry liquids. This has led to a positive momentum in demand for premium products in many markets across the globe. This shift is expected to change the product mix of performance surfactants while boosting the need for specialty care products in 2023.

How would you rate the company’s financial performance in FY 2022-23? Forecast for FY 2023-24?

FY 22-23 has been a year of challenges on the macro-economic and geopolitical front. We had significant demand cutbacks and deteriorating economies. Despite the multifold challenges, we have consistently grown and achieved our FY 22 profit in the first 9 months of FY 23. For FY 23-24, we aspire for a volume growth of 6-8%, EBITDA growth higher than volume growth and PAT growth higher than EBITDA growth.

Performance of the company in different segments - Performance Surfactants and Specialty care in FY 22-23. What’s the future roadmap?

While we did face demand cutbacks largely driven by the volatile macro-economic factors for major part of the financial year, with raw material prices stabilizing and most geographies having undertaken the necessary inventory corrections, we expect the degrowth in Performance Surfactants volumes of previous quarters to abate in 4Q FY 23 and begin the new financial year with the same momentum.

Our Specialty care products are largely driven by the export market (Europe, USA, and China). The Russia - Ukraine war and the resulting energy crisis had resulted in an overall slowdown in the European market. In China, the COVID induced lockdowns had an adverse impact on demand while the USA market was still sitting on higher priced inventories. All these factors impacted Specialty care volumes this year. Looking ahead, while we expect inventory corrections in the USA market to be complete by 4Q FY 23, the recovery of Europe and China will lead the way for volume growth of Specialty care products in FY 24.

Capex investment in FY 2022-23 and projects/facilities where the company invested? Capex plans for FY 2023-24 and how will it help the company in the long term?

Our annual Capex is around Rs. 150-200 crores and we have spent close to Rs. 120 crores in the first 9 months of this year. We do see a growth Capex of Rs. 150-200 crores per year continuing for the next 2-3 years. Typically, Capex is a combination of capacity enhancement as well as maintenance. During the year, we completed our additional capacity enhancement at Jhagadia.


Environmental clearances for expansion and additional land available at Jhagadia and Suez plants. What’s your expansion plan?

We have the necessary statutory permissions for capacity enhancement at our Jhagadia and Suez plants. Our capacity expansion plans are always ahead of demand growth.

Update on expansion projects for Specialty care products at Jhagadia and Tarapur plants? What is the total installed capacity across and how much additional capacity was added during FY 2022-23?

Our pilot plant at Tarapur for new molecules commenced operations in FY 2022-23. This will help us in seeding the market for new applications in Personal care and Home care. At Jhagadia, we have completed our expansion project for various Specialty care ingredients in FY 2022-23.

Major product launches in Performance Surfactants & Specialty care products categories during FY 2022-23? Expected value addition and impact on overall revenue? Any major additions into your portfolio on cards?

In FY 2022-23, we marketed Taurates & Sarcosinates along with new grades of Isethionates. Our application team works very closely on joint development projects with our customers which allows them to offer products with unique benefits to the consumers. Galaxy also helps in customization of these compositions to give them exclusivity and help them maintain confidentiality of their products.

The constant endeavor of Galaxy has been to offer safer products to consumers. Accordingly, last year our team successfully improved the existing SLES process to consistently obtain the product with less than 5 ppm dioxane with our GalEcoSafe range.

Sustainability is a key focus and acceptance of sustainable formats in Personal care is rising among consumers. Shampoo Bar is gaining good traction. Combining our capabilities and competencies in Syndet & Hair care science, and with our comprehensive range of Mild Surfactants we have launched a Conditioning Shampoo Bar Syndet base for ready preparation of high conditioning shampoo bar.

Driving sustainability and convenience, we extended the range of Liquid Capsules/pods concentrate for floor cleaner. This ready mix allows customers to make concentrated liquid floor cleaner capsules for DIY or Unit Dose use and save on utilities, fuel, water, and plastic.

Company's performance in global markets, especially Europe and China in FY 2022-23? How do you look at the future market potential in the emerging and mature markets?

Europe, one of the key mature markets for us, was reeling under the impact of the Russia - Ukraine war and the resultant energy crisis throughout 2022. As a result, there was an overall slowdown in Europe. While the global markets steadily recovered from the pandemic, China was still reeling under the impact of COVID-19. Recovery was much slower than expected as many cities continued to be under strict lockdown for long intervals thereby impacting business negatively. Several emerging market countries were under financial stress in 2022. This was primarily on account of surging energy prices as well as high food inflation.

For 2023, progress on climate policies, financial policies and multilateral issues will be critical to ensure we overcome the geo-economic pressures. In the long term, we do see a growing demand for Personal care and Home care products.

In recent times, the company has won the Best ESG Initiative to Improve Access to Clean Water Award and Golden Peacock Eco-Innovation Award 2021. How these achievements strengthen the company's commitment towards future ESG goals?

The Best ESG Initiative award encourages us to scale greater heights in corporate responsibility. The Golden Peacock Eco-Innovation award gives an impetus towards our Mission 2030; to serve customers with value added products, manufactured responsibly.

In 2022, the company has achieved water positive certification and become 1.4X water positive. How did it become possible and what does it mean to you and your customers?

More than a billion people across the globe lack access to water and nearly 2.7 billion face water scarcity at least one month in a year. At Galaxy, we are cognizant of our water footprint. Reducing water consumption in operations and improving water quality have therefore been important business objectives for us. Guided by our Sustainability cell, the working committees across locations measure, monitor & review water related topics, both within the company and community areas. We define water stewardship as the usage of water that is socially equitable, environmentally sustainable, and economically beneficial, achieved through a stakeholder inclusive process.

All our sites in India are zero liquid discharge facilities. We are carrying out a substantial number of activities through CSR projects to conserve water. Rainwater harvesting within the company boundary and in community areas, check dam creation and desilting of water bodies are undertaken to improve water availability. These conscious and consistent efforts have helped us in achieving water positivity of 1.4X. As customers are also enforcing ESG measures, they need a mind partner to provide less water intensive solutions.

How is the company strengthening its in-house R&D capabilities to expand customized solutions to its customers? How many new products are expected from the innovation funnel in FY 2023-24?

The company aims to grow faster than the market by retaining existing accounts and by introducing new and differentiated products to capture new opportunities and newer areas of applications. The speed of launch of new products is critical for the growth in market share. Keeping that in mind, the company has invested in expansion of R&D capacity and building a dedicated plant for R&D product incubation to accelerate commercialization. These expansions are already bearing fruit. The expanded capacity will also support ramping up the strength of scientists to increase the rate of product introductions. We have also started providing unique customized offerings to our customers in the form of product/concept/formulation so that we are able to grow and be a part of their growth journey. In

FY 2023-24, we will continue to introduce products in the Personal care and Home care segments in line with customer trends.

Automation and digitalization projects carried out in FY 2022-23? What's the plan for brownfield and greenfield projects?

Our company has always worked to be contemporary in the application of technology for its business processes and its interface inter and intra organization. Towards this end, review of business processes, applications available, and digitization of processes with adequate controls is an ongoing work in progress. We have been working on the best known SAP ERP for over a decade, with substantive utilization of its features and are striving to move subsidiaries on the same to enable seamless availability of real time data on consolidated operations. Cyber security is at the heart of effort with a 24x7 surveillance mechanism in place to thwart any infringements in collaboration with renowned professional names in the domain to remain abreast with the technological advancements accessible.

When is Galaxy Surfactants planning to achieve Net Carbon Zero and milestones set up by the company to achieve it?

At Galaxy, we have integrated sustainability into our day to day working. We have adopted Science Based Target Initiatives (SBTi). Science based targets provide a clearly defined pathway to future proof growth by specifying how much and how quickly companies need to reduce their greenhouse gas emissions. Currently, we are in the process of target validation. We are sourcing renewable sources of energy – Almost 18% of power sources are renewable in FY 22-23; We are committed to using RSPO certified material; and number of energy efficiency projects are driven to ensure we are using resources effectively and efficiently. There is a long way to go in terms of creating an opportunity to make carbon capture and use feasible technologies. Removal of hurdles for shifting to a 100% renewable source of power will be key to achieving Net Carbon Zero.

CSR projects executed in FY 2022-23 and plans with respect to FY 2023-24?

At Galaxy, we believe that it is the society that makes us and therefore it becomes our responsibility to give back to the society. Our CSR activities focus on five critical areas that shape the society we live in today: Health & Hygiene (Aarogya Vardheeni); Education (Gyaan Sanjeevani); Community Development (Samajeek Utthan); Environment Protection (Vatavaran Suraksha); and Women Empowerment (Stree Unnati). Primary health center, building toilets, vocational skill development, watershed developments, tree plantation and community hall for women self- help groups were some of the key projects undertaken this year. Cumulatively, we have reached around 150,000 beneficiaries through our initiatives this year. For the coming year, we will continue to focus on these critical areas and reach out to a larger number of beneficiaries.