Galaxy Surfactants Limited — Q3 FY26

Galaxy Surfactants Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=8jm7vqKA4F0 Published: 2 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to Galaxy Surfactance Limited Q3 and 9month FI26 earning conference call. 0:09 9 seconds This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectation of the company 0:16 16 seconds as on date of this call. These statements are not the guarantee of future performance and involve risk and uncertainties that are difficult to 0:24 24 seconds predict. As a reminder, all participant line will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation 0:33 33 seconds conclude. Should you need assistant during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please 0:41 41 seconds note that this conference is being recorded. I now hand the conference over to Mr. Kat Rajan, managing director from 0:48 48 seconds Galaxy Sectants Limited. Thank you and over to you sir. Thank you. 0:56 56 seconds A very good afternoon ladies and gentlemen. 1:00 1 minute Thank you for joining our third quarter earnings call of financial year 202526. 1:08 1 minute, 8 seconds If the first half was about resilience, our Q3 has been a quarter where multiple 1:15 1 minute, 15 seconds headwinds converged testing our agility, execution and resolve. 1:22 1 minute, 22 seconds Before delving into the specifics, it is essential for us to understand the broader context and the developments 1:29 1 minute, 29 seconds over the quarter and the year-to- date period. 1:33 1 minute, 33 seconds The major factors that have shaped our performance since last two quarters can be enumerated as below. First 1:41 1 minute, 41 seconds reformulation pressures arising from reformulation of a key ingredient by one of our key tier one account in India within our performance affectance 1:49 1 minute, 49 seconds segment due to persistently high feed stock prices. 1:54 1 minute, 54 seconds This continues to weigh on volumes and contributions since last two quarters. 1:59 1 minute, 59 seconds Second, in India, the GST rate rationalization while a long-term positive for the 2:06 2 minutes, 6 seconds fastmoving consumer goods value chain, it caused a temporary demand reception from end of September and spilled into 2:14 2 minutes, 14 seconds October month due to deferment of purchases and inventory adjustments. The after effects of which were seen into the festive period in the upstream value chain. 2:24 2 minutes, 24 seconds Third, the reciprocal tariffs imposed by the US on Indian exports as we arated in Q2 continue to impact the contribution 2:32 2 minutes, 32 seconds of a specialty segment originating from India and affected the pace of conversion in some pipeline projects 2:39 2 minutes, 39 seconds from Q3 onwards and fourth the dynamics of fatty alcohol pricing which have stayed buoyant at a very high level since last year. 2:51 2 minutes, 51 seconds Amidst this, it is important to highlight a significant cost development on the tariff front. Following the recent bilateral update between India and the United States, the reciprocal 3:00 3 minutes tariff on Indian exports have been reduced from 50% to 18%. 3:06 3 minutes, 6 seconds While we await the fine print of the announcement, Galaxy strongly welcomes the state development. As global supply chains continue to evolve, this tariff 3:14 3 minutes, 14 seconds normalization restores competitiveness and creates a more level playing field for us in the US market. Lower landed 3:22 3 minutes, 22 seconds cost and improved pricing flexibility will not only help us rebuild traction in the near term, but it will also strategically strengthen our long-term position in North America. 3:33 3 minutes, 33 seconds We also believe this move will support the reinstatement of our existing customer pipelines, accelerate penetration, high value specialty 3:40 3 minutes, 40 seconds opportunities and unlock new avenues for growth. 3:45 3 minutes, 45 seconds While the past two quarters reflected temporary hiccups due to the tariff disruptions, this development is a major structural positive for us going forward. 3:54 3 minutes, 54 seconds While holy chemical feed stocks saw a brief suffering driven by sharp trough in November on account of record palm oil production and stock buildup the easing was shortlived. 4:05 4 minutes, 5 seconds Market participants expected further declines and therefore stayed cautious resulting in an average basket correction of about 18% for Q3 in our India business. 4:15 4 minutes, 15 seconds Unfortunately, the unusually wide and prolonged spread between fatty alcohols and crude petroleum as communicated earlier 4:23 4 minutes, 23 seconds also a phenomenon rare over the last three decades has kept reformulation this elevated and this played out adversely for us in India again this quarter. 4:32 4 minutes, 32 seconds Coming to the numbers in specific for Q3 contracted volumes were stable on year-on-year basis. The performance 4:40 4 minutes, 40 seconds affectance portfolio experienced a high singledigit decline. How this was offset by sing high singledigit volume growth within the specialty segment. The 4:49 4 minutes, 49 seconds specialy segment's resilience delivered growth despite tariff induced uncertainties and this was primary primarily supported 4:57 4 minutes, 57 seconds by continued momentum in our non US markets in the rest of the world bucket. 5:03 5 minutes, 3 seconds Our Q3 F5 2526 IBIDA before exceptional items increased by 13% year on year to 5:10 5 minutes, 10 seconds 124 cr versus 110 cr in the similar quarter last financial year. 5:17 5 minutes, 17 seconds Consequently a bit of permetricton improved to 20,156 per metricton compared to 17,527 for metric in the 5:25 5 minutes, 25 seconds previous year. This uplift was driven by strong volume growth from our from our non-T tire customer accounts, 5:33 5 minutes, 33 seconds improved contribution realization from the mastit segment in India and specialty prestige specialty products in rest of the world. Incremental service 5:42 5 minutes, 42 seconds income from our ongoing EPC project, lower logistics cost and the successful execution of multiple cost efficiency initiatives across the group. 5:53 5 minutes, 53 seconds Our YTD 9 month financial year 2526 IBIDA before exceptional items remain flat year on year at 376 crores versus 6:01 6 minutes, 1 second 375 cr in the YTD 9 months FI25 and consequently our YTD 9 month FI26 6:11 6 minutes, 11 seconds metric 10 before exceptional items should at 19,126 for metric 10 versus 6:17 6 minutes, 17 seconds the last yeard 9 months number of 19,272 per metric During the quarter, we also recognized 6:25 6 minutes, 25 seconds exceptional items related to the new labor code to the extent of 11.9 crores towards the enhanced impact due to 6:34 6 minutes, 34 seconds revised calculations of graduity and leave and cash. 6:38 6 minutes, 38 seconds These are though one-time adjustments and do not reflect underlying operating trends. They all necessary 6:45 6 minutes, 45 seconds and hence provisions have been made aligned to the new statutory regime. 6:50 6 minutes, 50 seconds Moving on to the regions first India our domestic growth engine 6:57 6 minutes, 57 seconds the volume grew by mid single digit year on year for Q3 FI26 within this the 7:04 7 minutes, 4 seconds performance segments performance affected segment D group by roughly 4% yearon year largely reflecting the continued reformulation in few tire one 7:13 7 minutes, 13 seconds accounts whereas our specialty business delivered more than 35% volume growth yearon-year basis 7:20 7 minutes, 20 seconds The GST reset led to inventory adjustment by all over customers in October month which created 7:29 7 minutes, 29 seconds a temporary blip in the uptake and the US tariff overhang continue to weigh on our specialty business volumes 7:37 7 minutes, 37 seconds exported out of India. That said, the broadening of our franchise with non-tier one customers cushion the impact and help sustain overall 7:45 7 minutes, 45 seconds momentum. As shared last year, we have already undertaken capacity enhancements and development surfactant systems 7:53 7 minutes, 53 seconds aligned to the new reformulations by C some of our customers. Approvals are underway and we expect commercialization 8:01 8 minutes, 1 second to start in Q4 FY26. With the normalization of GSC adjustments, continued specialty strength and the planned 8:09 8 minutes, 9 seconds commercialization of alternators, we remain confident of a gradual improvement in our India growth trajectory. 8:17 8 minutes, 17 seconds Coming to amend, the market conditions remain challenging. During Q3 FI26, the region recorded a double-digit 8:24 8 minutes, 24 seconds year-on-year decline in high teens driven largely by market share losses in key tier one accounts amid heightened competitive intensity including pressure 8:32 8 minutes, 32 seconds from Blackwood integrated and local players. However, we have a we have an update based on 8:41 8 minutes, 41 seconds some recent uh developments. We have recovered significant volume traction in Q4 2526 from most of our customers which 8:50 8 minutes, 50 seconds will get reflected in the upcoming quarter's performance. Our teams remain deeply engaged with customers strengthening our value proposition and 8:57 8 minutes, 57 seconds actively working to rebuild our position across both tier one and non-tier one segments in the region. Coming to rest of the world, it performed well and 9:06 9 minutes, 6 seconds helped balance the portfolio on a yearon-year basis. The rest of the world volumes grew mid-s single digit with Latin American and Europe posting growth and sustaining healthy demand across both performance and specialty segments. 9:17 9 minutes, 17 seconds These gains partially offset the tariff indu softness linked to the North American specialty experts from India and they underline our strategy of 9:25 9 minutes, 25 seconds geographic diversification and discipline market development. 9:30 9 minutes, 30 seconds Trik our super specialty business segment catching to highend high-end prestige 9:38 9 minutes, 38 seconds products delivered a strong performance enhancing the bida profile of the group. 9:44 9 minutes, 44 seconds Coming to innovation as for the strategy 2030 that we announced in capital market day in June 9:52 9 minutes, 52 seconds 25 we are pleased to inform that we have launched five new products in gap sunliss range in sunare segment in 9:59 9 minutes, 59 seconds November month and in cosmetics tank these second generation molecules are designed to offer high photo stability strong efficacy at low dosage 10:07 10 minutes, 7 seconds broadspectctrum UV protection including blue light defense and improved sensory performance while meeting evolving safety A and environmental standards. We 10:16 10 minutes, 16 seconds have received very federal response in this regard and these products will be commercialized from Q4 FI26 onwards. 10:26 10 minutes, 26 seconds An update on a rebranding initiative which most of you would have uh seen. Uh in January 26, Galaxy refreshed his band 10:33 10 minutes, 33 seconds identity after 43 years as part of its ongoing strategic evolution. Guided by the purpose, 10:41 10 minutes, 41 seconds chemistry creates care. The new brand identity reinforces the company's focus on long-term partnerships, responsible innovation, and sustainable value 10:50 10 minutes, 50 seconds creation. Alongside this, Galaxy is expanding its portfolio beyond home and process into beauty, derma, and wellness segments. While the visual identity has 10:58 10 minutes, 58 seconds evolved, Galaxy's core strengths that is quality, reliability, and technical expertise remain unchanged. 11:06 11 minutes, 6 seconds The request identity clearly position G positions Galaxy as a trusted future ready partner for customers and all external stakeholders. 11:15 11 minutes, 15 seconds Coming to outlook on the cost and supply side we saw a few moving pieces. Freight 11:23 11 minutes, 23 seconds offered some relief but operational frictions like port condition persisted in raw materials. Despite a brief softening of all chemical inputs, the 11:32 11 minutes, 32 seconds quarter's average price correction was not significant. And as we entered January, the fatty alcohol prices began to form again consistent with seasonal 11:39 11 minutes, 39 seconds patterns and festival link demand. While new fatty alcohol while new fatty alcohol plants are coming up should improve availability, pong oil remains 11:49 11 minutes, 49 seconds uh a factor that we need to be uh looking at and planning with what we 11:57 11 minutes, 57 seconds expect as the uh way the market would move forward. On demand side, India performance volumes are expected to 12:04 12 minutes, 4 seconds increase incrementally in both tier one and non-tar one accounts and we do see a double-digit volume growth on the specialty segment. Okay. 12:13 12 minutes, 13 seconds To continue at volumes seems positive from P4 onwards and be of high priority 12:21 12 minutes, 21 seconds for rest of the world. Performance subractance growth will continue to be driven by the momentum as was evident in Q3. 12:30 12 minutes, 30 seconds And as regards the specialy segment, our existing customer growth pipeline projects are expected to get good push 12:37 12 minutes, 37 seconds as regards our North America business thanks to the tariff reduction and will start reflecting from late Q4 and start 12:46 12 minutes, 46 seconds of Q1 next year. In conclusion, I would like to say that we are confident that the worst is behind us with the India 12:55 12 minutes, 55 seconds growth story improving a volume gradually recovering, incremental profitability expected from the recent US India tariff reduction announcement 13:02 13 minutes, 2 seconds and a sustained improvement in our premium specialty product mix. We are confident of regaining our growth momentum in the coming quarters. 13:11 13 minutes, 11 seconds Thank you for your continued trust. I now open the floor to questions. Thank you. Thank you so much sir. 13:20 13 minutes, 20 seconds Ladies and gentlemen, we will now begin with the question and answer session. 13:24 13 minutes, 24 seconds Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question Q, you may 13:32 13 minutes, 32 seconds press star and two. Participants are request to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question Q assembles. 13:43 13 minutes, 43 seconds Our first question come from the line of 13:55 13 minutes, 55 seconds Sanjay Jen from ICC securities. Please go ahead. 13:59 13 minutes, 59 seconds Uh thanks for the opportunity. I got two sets of question. Uh first on the regional performance. Um on the MT we 14:08 14 minutes, 8 seconds said that there's a competitive intensity which has increased in Q3 but at the same breath we said that Q4 we 14:15 14 minutes, 15 seconds are looking at uh the volumes to come back. What has changed just in a matter of a quarter uh which is giving us a 14:23 14 minutes, 23 seconds confidence and and in EMTT we are already down 35% from our peak quarterly volumes. know how much of that uh we can 14:31 14 minutes, 31 seconds recover say in next one one and a half year that's on the MAT on India um we were supposed to adopt the new changes 14:39 14 minutes, 39 seconds in the formulation with new product introduction uh where are we in that process and uh when should we see volume 14:46 14 minutes, 46 seconds from that segment coming and on the rest of the word uh you sounded quite optimistic on US trade deal and you did 14:55 14 minutes, 55 seconds mention that you expect specialtity volumes to grow at double double digit it is more like FI 27 or you expect for next few years the specialtity should 15:04 15 minutes, 4 seconds grow in double digit. So this is on the demand question side of the thank you. 15:08 15 minutes, 8 seconds Yeah on the Amed side what has changed between Q3 and what will happen in Q4 is in terms of certain of the uh businesses 15:18 15 minutes, 18 seconds that were in pipeline and we have discussing with certain new geographies there. uh we have been able to uh complete that towards end of last 15:26 15 minutes, 26 seconds quarter because although the competitive intensity is there we do have to keep rejigging in what pockets we need to be uh catering to within a and I think that 15:35 15 minutes, 35 seconds we did a good job towards in quarter three but we we expect those volumes to start flowing in only from Q4 that is as 15:42 15 minutes, 42 seconds far as AIT is concerned with regard 75% down from the peak uh now where do you expect that to reach do you expect 15:50 15 minutes, 50 seconds to reach that peak in next one one and a half year or will it take more time? 15:54 15 minutes, 54 seconds No, we don't we don't expect it to reach the peak because we very clearly have told that uh we we have had a newity where you have a person who is backward 16:02 16 minutes, 2 seconds integrated and who has also taken share from the S1 customers there with all that has happened over the last two years as far as the currency 16:10 16 minutes, 10 seconds availability and the depreciation is concerned in the key market of Egypt. So that is something that will not come back. 16:17 16 minutes, 17 seconds Okay. Okay. So but we will we'll get back to the growth mid mid. 16:21 16 minutes, 21 seconds Yeah. So what we are essentially doing is that we are trying to see with the new uh normal how are we able to uh you 16:28 16 minutes, 28 seconds know look at other markets in amat the way that we are able to balance it out with the uh credit risk. So that's what the team is working on because we can't 16:36 16 minutes, 36 seconds say that what has gone we will not recompensate. uh that's why the team is working but to compensate within the existing scheme of things it's not going to be possible that's why it's taking 16:44 16 minutes, 44 seconds time but in next one and a half if you ask me today I don't see that that we'll be able to come back to the speak volumes very clear on India 16:54 16 minutes, 54 seconds on India with regard to the uh new this thing as we are ready but then what also happened was last this thing our 17:01 17 minutes, 1 second customers uh you know the key customer who reformulated was very busy with you know 17:08 17 minutes, 8 seconds battling the GST rationalization and in adjustments. So we are in the process we expect the approval to happen anytime 17:15 17 minutes, 15 seconds and business should start uh anytime now but the major impact of that will be felt only in the next year. 17:23 17 minutes, 23 seconds Got it. So we will be back so double digit growth in India with that product coming. should be but we also had said last time in terms of 17:31 17 minutes, 31 seconds reformulation there have been also uh uh activ you know the the active adjustments that have happened okay so 17:39 17 minutes, 39 seconds it all depends on what's going to be uh the way that they're going to look at in terms of continuing with that or trying to alter it further so which we don't 17:47 17 minutes, 47 seconds have any idea but if the current situation continues we need to see uh the growth momentum coming back because the double digit growth can happen only 17:55 17 minutes, 55 seconds if the market is growing India market even today if you see all of them are reporting uh you know uh 2 to 4% volume growth underlying volume growth so that really 18:04 18 minutes, 4 seconds needs to come back everyone all our customers are saying that the GC dash nation should bring that up to that level and they are working towards 18:11 18 minutes, 11 seconds making that happen but it has to get reflected in the actual numbers that they're going to be selling got it and on the US 18:20 18 minutes, 20 seconds yeah on the US obviously so uh if you see the tariff actually created an issue for us in terms of the way that we are running the customer projects there 18:29 18 minutes, 29 seconds because the customers were essentially very very apprehensive in terms of uh whether they want to continue working on the projects in pipeline. Now with the 18:37 18 minutes, 37 seconds way that things have got settled on it is not only in terms of the tariff but also uh the uh way that India and US 18:44 18 minutes, 44 seconds have warmed up. So customers do feel that this would be a uh stable situation to move forward and uh we are seeing 18:52 18 minutes, 52 seconds that you know based on the last two weeks of discussion with our customers there's a positive momentum in uh uh you 18:59 18 minutes, 59 seconds know restarting evaluation of various production pipeline there were suspended. So that gives us the confidence in terms of it's trying to 19:06 19 minutes, 6 seconds start uh it's it's starting to show uh uh certain uh uh you know uptick in demand for those products that got 19:15 19 minutes, 15 seconds impacted uh due to tariffs from uh end of this year end of this year and more it will be seen in the next year. 19:24 19 minutes, 24 seconds So we should be growing for double digit volume growth in speciality. It should be seen there. Yes. Yes. Yes. 19:30 19 minutes, 30 seconds But then it's all a question of it's all a question of how uh we are uh the customers are going because it's it's 19:38 19 minutes, 38 seconds also a situation where uh we do not know what contrast customers have done for the products already when those contacts are expired because everything went into 19:47 19 minutes, 47 seconds a limbo. Now the team is uh with all the customers we trying to understand that but initial thing indicates that it looks positive to what extent be 19:55 19 minutes, 55 seconds positive. We'll get to know probably in the next call I'd be able to give more clarity. Yeah, very clear. My second set of question more like bookkeeping. 20:04 20 minutes, 4 seconds Natraan, you said that the margins were also boosted because of EPC uh segment. 20:09 20 minutes, 9 seconds Can you give more detail on that? And and and the second question. 20:12 20 minutes, 12 seconds No, I can only tell you suggest that if you look at uh it on a YD basic uh since it is with a single customer 20:20 20 minutes, 20 seconds and with confidential confidentiality arrangement with them, we are not able to reveal the actual number. But it is I can say that it has not been significant. 20:29 20 minutes, 29 seconds Got it. Got it. And and just one bookkeeping question on the there is a significant jump in the other 20:36 20 minutes, 36 seconds comprehensive income um for last two quarters uh from a from a from a line item where 20:45 20 minutes, 45 seconds we need to recognize it into P&L in a later date. What what exactly is that? 20:50 20 minutes, 50 seconds No, those are basically coming from your exchange rate movements coming from subsidiary adjustments. 20:57 20 minutes, 57 seconds So why should it get recognized later in the P&L in that sense? I think that so those are these are the items which get only uh that can only come to P&L 21:06 21 minutes, 6 seconds once you sell your investments in subsidiaries or or get back that money into subsidiary back to India. So these 21:13 21 minutes, 13 seconds are it's a foreign currency translation reserve sort of Okay. Okay. Okay. Got it. Got it. Yeah. 21:22 21 minutes, 22 seconds Uh that's it from my side. Uh thanks Mr. 21:24 21 minutes, 24 seconds President for all those updates and uh best of luck for coming quarters. Thank you so much. 21:31 21 minutes, 31 seconds Thank you. 21:34 21 minutes, 34 seconds Ladies and gentlemen, anyone who wishes to ask a question may press star in one. 21:40 21 minutes, 40 seconds Our next question comes from the line of Arun Prasad from Evidence Park. Please go ahead. 21:46 21 minutes, 46 seconds Uh thank you for the opportunity. Good morning. Uh good morning. Uh uh first question is on this tariff uh 21:54 21 minutes, 54 seconds uh related to us. Have we shared any tariffs with the customer uh during this 22:01 22 minutes, 1 second uh intervening period and uh if so uh with this update uh on the on the trade 22:09 22 minutes, 9 seconds should we see some kind of a gains coming back in terms of uh marches? 22:16 22 minutes, 16 seconds No, I didn't I didn't understand. When you say shared with customers means so lot of companies have indicated their tariff burden is shared equally between 22:24 22 minutes, 24 seconds that's what we said. So what we had done was that to respond to that there are certain businesses that we could actually cater to from Egypt we moved it 22:32 22 minutes, 32 seconds to Egypt. What we couldn't move we had to take either some of it at 50% it didn't make any sense to do the business at all because you can't be cash 22:41 22 minutes, 41 seconds negative. So we didn't do those businesses in which products where we could absorb some portion of it we took that call to keep the volumes going. So 22:48 22 minutes, 48 seconds as we move forward we what we would see is that we we we the major uh outlook for us the major outcome that 22:58 22 minutes, 58 seconds will be good for us is where we able to build the volumes okay in terms of always calling which can which we can only do from India and that's what we're 23:05 23 minutes, 5 seconds focusing on now to the extent that we have taken some calls on some products where we took a margin call you know to the extent that the duties have come 23:12 23 minutes, 12 seconds down from 50 to 18 once my current contract gets over we can start reinstating So your confidence that rest of the 23:20 23 minutes, 20 seconds world should grow in double digits is it's more backed by the return of the volumes from those geographies which we 23:29 23 minutes, 29 seconds couldn't uh uh deliver because of the cat is the right understanding. 23:34 23 minutes, 34 seconds No see right now even without us we are growing well in west of Google because we started pivoting to other locations like uh in the rest of the world. Okay. 23:43 23 minutes, 43 seconds Now that momentum we want to maintain and we also want US now to come back okay after satsum start warming up with 23:52 23 minutes, 52 seconds the new reality on tariff and the way that India and US are warming up that is going to be a plus for us but the product categories are very different 24:01 24 minutes, 1 second it's not that whatever volumes I couldn't place in US we could place elsewhere in rest of the world because there's also a mix that has changed so 24:08 24 minutes, 8 seconds all these will get reset the moment we move into the next 24:16 24 minutes, 16 seconds Hello. Okay. Okay. Okay sir. Um second on this uh EPC uh revenue and earnings. 24:25 24 minutes, 25 seconds Uh will it be similar to uh what we have seen in this year going forward also where there are small amounts will be 24:33 24 minutes, 33 seconds keep booked uh each quarter or will we see some kind of a bulk or a major significant uh revenue and earnings to 24:42 24 minutes, 42 seconds come in say spread out because we expected to be completing this by uh Q4 of next financial year. Okay. So it'll 24:51 24 minutes, 51 seconds get recognized in small pockets. Not that there'll be anything that's significant that will come in one quarter. Okay. 24:59 24 minutes, 59 seconds Okay. Because when we initially announced what the what I remember is uh uh there will be some uh significant 25:08 25 minutes, 8 seconds amount which will come at one go. U so that's not going to be the case uh in that it's a question of what we receive and 25:16 25 minutes, 16 seconds what we recognize. Recognition happens based on the way the accounting standards uh uh mandate. Correct. So we 25:24 25 minutes, 24 seconds are recognizing income based on what the accounting standards mandate and that will be evenly spread out linked to the percentage of completion of the project. 25:31 25 minutes, 31 seconds Correct. Right. Yeah. That's what we do. 25:37 25 minutes, 37 seconds If this entire philosophy is not giving us uh say meaningful uh earnings even in 25:45 25 minutes, 45 seconds any single year what is the benefit that we are actually going to get I understand we will be improving our 25:52 25 minutes, 52 seconds relationship with the customer and at some point of time that may result as a better volume but what is the tangible 25:59 25 minutes, 59 seconds benefits we are going to see in the say what we said first is we are with our customer as part of that strategic 26:06 26 minutes, 6 seconds intent to backward integrate and that was not the only reason it's also in terms of we getting access to volumes to 26:14 26 minutes, 14 seconds uh for our performance affectance uh in the biggest market for home and personal care that is the US North America that 26:22 26 minutes, 22 seconds is the prime uh move that we are doing and it is not that it is not significant okay it is it's not that it is something 26:32 26 minutes, 32 seconds that is going to change because it is not a based on what I have it is not something significant from that context 26:38 26 minutes, 38 seconds but from this project as such it will be you need to we need to understand the context in which we are saying this okay and we are not doing this because we 26:47 26 minutes, 47 seconds want to get into the business of ETC no we did this because it's going to give us a a link to our strategic market of 26:55 26 minutes, 55 seconds North America have we already started getting some 27:02 27 minutes, 2 seconds benefit uh because of this in terms volumes or margins or mix at least we are not able to see this in 27:11 27 minutes, 11 seconds the numbers you can't see that because this is in the performance segments performance effect segment and the project will be 27:18 27 minutes, 18 seconds commissioned only in Q4 of next financial year it is not a commission where the volumes come 27:26 27 minutes, 26 seconds okay understood sir but anyway those project that that plant will be operated by the 27:34 27 minutes, 34 seconds customer right we will not be reporting numbers. 27:37 27 minutes, 37 seconds No, no, we will not be we'll only report numbers which are in terms of what volumes you are going to be uptaking for our requirement in North America. 27:46 27 minutes, 46 seconds Okay. Understood. Understood. Yeah. And uh uh one more question on the gross margin this quarter. If you see in the 27:54 27 minutes, 54 seconds first half uh on a per kg basis we are clocking close to around 49 uh cities per kg and Q3 suddenly we are looking at 28:04 28 minutes, 4 seconds 50 53 53 and off per kg. I'm looking at the reported per kg translated into 28:11 28 minutes, 11 seconds gross margin per kg. So this first half to uh first half of 49 to Q3 53 53 and 28:18 28 minutes, 18 seconds off again is dramatic shifting the mix or or our pricing the l effect how 28:26 28 minutes, 26 seconds should we look? No this as I said in my opening remarks one is our key which is into prestige specialities did very well 28:34 28 minutes, 34 seconds so that is one of the reasons okay and the other one is also what we sell from India okay there is a mixed impact okay 28:43 28 minutes, 43 seconds but as you said our trike business which is into specialies had a role to play in terms of this being better than what it 28:51 28 minutes, 51 seconds was in first okay 28:57 28 minutes, 57 seconds But but from last year's say 20 cumulatively we had close to around 52 29:04 29 minutes, 4 seconds and half rupees per k of gross margin from there the first off reduction to uh 29:11 29 minutes, 11 seconds 49 48 49 that was primarily driven by the our uh mix but again from the 29:20 29 minutes, 20 seconds I tell you what happened was the major reason in first round was when the tur announced for US some of the businesses 29:27 29 minutes, 27 seconds just got stalled yet also take time to be reing business from India into Egypt whatever we can do the mix also had to 29:35 29 minutes, 35 seconds undergo a change because certain products we couldn't sell out of India and then we had to be seeking other markets like in rest of the world okay 29:42 29 minutes, 42 seconds where we had to place it in a sense of urgency so it's not that we could get time to be able to get the pricing we want so it was all about how do we 29:50 29 minutes, 50 seconds rejick our portfolio in terms of our locations and geographies based on what the tariff situation presented that's what explains that 29:59 29 minutes, 59 seconds right sir so this gross margin per kg sorry to interrupt you sir but uh you may please rejoin the queue for more questions thank you 30:07 30 minutes, 7 seconds can I answer this what I think last question that you had so that we we don't lose sir this is a sustainable cost margin uh 30:13 30 minutes, 13 seconds unless and until we see some before we see some kind of we I will have clarity because my US 30:20 30 minutes, 20 seconds thing has to sustain because I'm also seeing that the US market based on all that my customers like when one of our key customers who has a big presence in 30:28 30 minutes, 28 seconds beauty and wellbeing in US has flagged concerns in terms of the demand issues in US. So that means we need to see how Trike uh shapes up. But I don't see that 30:38 30 minutes, 38 seconds as a big concern the way that the Trike business is performing. But I need to make it clear only when I go into the next uh uh quarter uh you know our call. 30:48 30 minutes, 48 seconds The other thing is with our tariff getting releasing we also see that if all my customer projects that were put on hold and business that we actually 30:56 30 minutes, 56 seconds are suspenders once they start coming in it will turn to state the margin profile. So I would urge you to wait till uh May when you will have our call 31:04 31 minutes, 4 seconds for the full year. I can give better clarity. 31:07 31 minutes, 7 seconds Understood sir. I I'll just rejoin the queue and all the rest here. Thank you. Thank you. 31:14 31 minutes, 14 seconds Thank you. Our next question come from the line of Arshi Jooshi from Noama Wealth Management Limited. Please go ahead. 31:24 31 minutes, 24 seconds Hi very good afternoon sir. Uh thanks for the opportunity. Uh I have a few uh first one uh we have been hearing from 31:31 31 minutes, 31 seconds you about the reformulation strategies adopted by our customers. Uh sir uh my uh my question was whether have we seen 31:40 31 minutes, 40 seconds this happen in the past. Uh is that like a uh permanent reset to a particular surfactant being used in a lower 31:49 31 minutes, 49 seconds quantity? Uh bases there cost structures of course and should that reverse sometime in the future? uh what have 31:57 31 minutes, 57 seconds been our experiences when uh when such a shift happens uh at the customer's uh uh uh side. 32:05 32 minutes, 5 seconds So I'll tell you so it's not that it has happened for the first time uh it's happened earlier but then uh uh the tenure for it the the price delta 32:14 32 minutes, 14 seconds between fatty alcohol and crude petroleum derived uh derivatives have been not this prolonged. Okay so that's one change that has happened. 32:24 32 minutes, 24 seconds Second is any deformulation in terms of activity adjustments or uh your uh 32:33 32 minutes, 33 seconds alternatives being used uh typically are something that is not our customers would do in the normal course they're 32:41 32 minutes, 41 seconds they're doing it because they forced so I can tell you that once price start getting corrected to some reasonable levels okay we would see that they would 32:49 32 minutes, 49 seconds revert to what the original formulation was so these are all temporary adjustment that they're Okay. Uh and that's what even a dialogue with the customers tells us. 32:59 32 minutes, 59 seconds We are hopeful that the fatty alcohol prices should start getting corrected say from May onwards because we do see 33:07 33 minutes, 7 seconds that uh uh you know uh structurally with the high season months coming in of palm and palm kernel okay it should start 33:16 33 minutes, 16 seconds reflecting uh but yes you know we don't have a crystal ball in front of us but this is what is expectation based on uh what we have seen in the earlier years 33:24 33 minutes, 24 seconds so we need to wait for that uh if I understand correctly. Long story short is that there is a chance that uh 33:32 33 minutes, 32 seconds the activives used in any formulation can go back to the same levels that uh earlier they uh used to use. Yeah. Uh of course uh timelines not withstanding. 33:43 33 minutes, 43 seconds Yeah. When it will happen is all a lot of imponderables around that but yes. 33:49 33 minutes, 49 seconds Got it. Got it. Got it. Uh sir uh secondly uh I remember uh you know uh speaking to you on uh the mix that we 33:56 33 minutes, 56 seconds have amongst our customers and uh uh we are definitely seeing some shift uh of 34:03 34 minutes, 3 seconds uh you know some uh uh uh local niche kind of players uh who have gone up in the total uh salience of our total 34:12 34 minutes, 12 seconds revenue mix. Uh so in this quarter as I can see from the presentation 40 is going to 47 and on a 9month basis also 34:19 34 minutes, 19 seconds we have jumped from 39 to 44. uh how should we read this s is it that uh because of these reformulation things uh 34:28 34 minutes, 28 seconds the MNC customers have dropped significantly in volume and because of this there's an optically uh higher 34:35 34 minutes, 35 seconds number seen in the mix of uh these local and news players or we have actually seen uh local news players grow significantly in volumes 34:44 34 minutes, 44 seconds is percentage obviously also know that denominator has an impact so if the denominator comes down the percentage goes up but that's 34:52 34 minutes, 52 seconds explanation but more importantly which we have been constantly saying is that we are very deeply entrenched okay and a 34:59 34 minutes, 59 seconds huge amount of engagement with all our tier 2 tier 3 and D2C customers which is what enables us to ensure that we were 35:07 35 minutes, 7 seconds able to uh mitigate a good portion of the impact because of the reformulation by T 1 customer with what we could do 35:14 35 minutes, 14 seconds with the T3 and the D to consumer brands okay and that particular intensity to grow that segment uh is not something 35:23 35 minutes, 23 seconds that we are doing now. It has been a stated strategic uh agenda for us and we'll continue uh to maintain and build 35:30 35 minutes, 30 seconds on their momentum that we are very clear and we also know that the way the markets are looking at it you know you'll have uh D2C brands uh are here to 35:39 35 minutes, 39 seconds stay. It's all important as to how we have a business model that enables to address it very effectively and sustain 35:46 35 minutes, 46 seconds whatever growth that we achieve with the business with them. 35:51 35 minutes, 51 seconds Understood. So uh would that be fair to assume sir uh there will be a gradual pivot uh towards these uh local niche 35:58 35 minutes, 58 seconds regional kind of players uh and that should uh uh any any number as a percentage of mix that you would be targeting over there. 36:07 36 minutes, 7 seconds See one thing that I'd say percentage derivative it is not that we are deliberately pivoting towards tier two tier three and deping tire one that is 36:15 36 minutes, 15 seconds not the way that we will do business. If the turn happens in the end market, we are well ready because the way that we engage with all types of customers. 36:22 36 minutes, 22 seconds Okay, that's the way it has to be understood. There is our strategy is not to dep prioritize. Okay, we have to have the ability to serve all the segments 36:30 36 minutes, 30 seconds and in a way that they would want it the way that the market configuration uh happens and that what we've been doing for last quarter days. We'll continue to do the same thing. 36:41 36 minutes, 41 seconds Good sir. Uh one last uh small one on this uh extremely welcome uh development with regards to commercialization of five new products under the D1 category. 36:51 36 minutes, 51 seconds Uh uh hearty uh congratulations on that and since we are we are hoping to ramp up uh production sales and 36:59 36 minutes, 59 seconds commercialization from next quarter onwards. uh would you sir uh like to give us some more understanding with regards to uh its potential from from an 37:08 37 minutes, 8 seconds export perspective or whether it'll be domestic or uh any particular customers would there be MNC or regional players 37:15 37 minutes, 15 seconds anything on that account that would be helpful thank you yes it will be essentially we launched in November we are able to see a good 37:23 37 minutes, 23 seconds amount of response and that is very heartening uh it will be in India and out of India both because it is in the Leon segment it is in Sunare 37:31 37 minutes, 31 seconds Okay. And obviously uh it is we don't have any specific focus on uh uh we say that uh you know it's not that we want 37:40 37 minutes, 40 seconds to focus only on tier one or tier two tier three customers. This is a product we have got interest across all types of customers and our objective is how we 37:48 37 minutes, 48 seconds are able to progress well and convert all these uh positive inquiries into business. That's what we working on. 37:58 37 minutes, 58 seconds Understood sir. Uh so this would have a significantly higher eida per uh ton right compared to our uh existing or blended number that we reporting close to 18 20,000 tons. 38:08 38 minutes, 8 seconds Yes it should it should correct. Understood. 38:12 38 minutes, 12 seconds Understood sir. Thank you sir. Thanks a lot and all the very best. Thank you sir. 38:18 38 minutes, 18 seconds Thank you ladies and gentlemen. In order to ensure that the management will be able to address all the question from the participant, we request you to 38:26 38 minutes, 26 seconds kindly limit your question to two question per participant. If you have a follow-up question, please rejoin the queue. 38:34 38 minutes, 34 seconds Our next question come from the line of Adit Ketan from SMFS institutional equities. Please go ahead. 38:41 38 minutes, 41 seconds Yeah, thank you sir for the opportunity. 38:43 38 minutes, 43 seconds Just a couple of questions. uh sir when we say so we are pivoting to other regions for growth in export market so 38:50 38 minutes, 50 seconds compared to US market also whatever benefits which we had got in US are the other markets similar in terms of the 38:58 38 minutes, 58 seconds reminerative prices or they are below or they are higher so whatever markets like we have explored during this tariff 39:05 39 minutes, 5 seconds journey how you see that journey to build upon or like so US will come back to normal see first of all the it's it's not that 39:13 39 minutes, 13 seconds in the rest of the world on our specialities we are focusing on all the markets North America, Latin and Europe but then when the tariff situation 39:21 39 minutes, 21 seconds presented to us in Europe then we had to be looking at how do I start seeking more business from those segments and 39:28 39 minutes, 28 seconds obviously uh we had to even do certain things which were because what option we had either to take those huge margin rate in terms of continuing to sell that 39:35 39 minutes, 35 seconds into the US or look at other markets where the impact can be lesser than what margin impact will have in the US with the tariffs incorporated so that will 39:44 39 minutes, 44 seconds ensure So there's no question of saying that whether I plan to have what margin I need. Now whole thing was to ensure that you start pivoting because we never knew how long this US situation will 39:52 39 minutes, 52 seconds continue. Correct. Now this positive development has happened in terms of the tariffs getting reset and we don't have any compet we don't have any comparable 40:01 40 minutes, 1 second disadvantage with the others in the world almost everyone is at 18 19%. 40:06 40 minutes, 6 seconds Okay. So this gives us the confidence to restart okay the strategic pipeline projects we had with the customers in US 40:15 40 minutes, 15 seconds which was what originally intended okay so we'll then start once those things starting we start rejigging back into the US those volumes 40:23 40 minutes, 23 seconds got and this customer which you mentioned US customer has stated like demand is an issue uh so how you see the uptake would be gradual or it would be 40:32 40 minutes, 32 seconds very easy for us to uh take back the lost the first And if you see the for the first time uh two of the biggest guys 40:42 40 minutes, 42 seconds one of them is the biggest in the US the other one is very big as far as uh you 40:49 40 minutes, 49 seconds know your personal and home your beauty and wellbeing is concerned therefore the first time flag concerns with regard to 40:56 40 minutes, 56 seconds the demand side in the US we haven't heard this till now when we see the uh you know commentary of some of our 41:03 41 minutes, 3 seconds competitors in the US and Europe they are all pointing ing towards a huge uh you know concern okay on the robustness 41:12 41 minutes, 12 seconds of demand. Uh the first time when customers are flagging this okay is when you know we say fine if they're saying 41:19 41 minutes, 19 seconds that they're probably much nearer to the consumer side uh of the business. So we said let us take this uh input and keep 41:27 41 minutes, 27 seconds it into our mind. Okay that's what I communicated. So when someone asked whether we expect the US business to be continuing into double digit, I said 41:36 41 minutes, 36 seconds this aspect has to be factored in although everything continues as normal things would be much better given that the tariff situation also has got resolved uh in a very positive way. 41:48 41 minutes, 48 seconds Got it. So sir uh despite uh this slowing uh what suppose if that issue persist on the demand side we still like 41:55 41 minutes, 55 seconds sir maintain our volume guidance of uh whatever for the next 2 years is that maintained or like there is would be again some cut 42:04 42 minutes, 4 seconds see volume guidance we talked always about 6 to 8%. Okay. So, see it is it's actually very dangerous to uh change 42:12 42 minutes, 12 seconds guidance when things are in such a state of flux. That's the reason why I I I don't uh I'm not courageous enough to do 42:19 42 minutes, 19 seconds that because uh I don't want to be my revising the guidance has to give more clarity. It's not confused. Correct. 42:27 42 minutes, 27 seconds That's the reason I'm not doing it. Now, there are too many things that are happening on the positive side in the geopolitical situation. And if all that 42:35 42 minutes, 35 seconds falls in place okay we do see okay that things should start looking up and take us uh closer to that 6 to8% because what 42:44 42 minutes, 44 seconds is very commendable as far as the performance is concerned is that despite so many challenges in India which has been the biggest market for us with the 42:53 42 minutes, 53 seconds tariff in US and with what is happening in Europe okay we've been able to you know have a positive volume growth okay 43:02 43 minutes, 2 seconds and also able to keep our profit numbers flattish okay by combination of how do we reject our 43:10 43 minutes, 10 seconds demand and also in terms of how we took care of cost. So this essentially again is a uh is a very clear demonstration of 43:17 43 minutes, 17 seconds the very very uh robust business model that we have across customers and across geographies and across product segments. 43:26 43 minutes, 26 seconds Yeah. Just one last question sir if I may. Uh to the EP EPC business any sort of an guidance like for the next one 43:33 43 minutes, 33 seconds year or for the next two years how much contribution we can see from this business and how much aid the diversification will happen from base 43:41 43 minutes, 41 seconds business to this any sort of a number considering next two to five years. 43:46 43 minutes, 46 seconds So first of all I I just said if I can give next two years I would have given as to what we have recognized in this year. That's why I said it is not 43:53 43 minutes, 53 seconds significant and then I was asked if it's not significant why did I do it which also explained okay so I can only tell you that in the coming years also it's 44:01 44 minutes, 1 second it will be there but it not be significant in terms of what we're doing with this customer since I'm born a confidentiality agreement with this customer I'm not able to disclose 44:09 44 minutes, 9 seconds otherwise you know that as an organization I'm very transparent okay we would have disclosed 44:16 44 minutes, 16 seconds okay thank you sir listen thank you Alex Question comes from the line of Du Muchell from HDFCMC. Please go ahead. 44:26 44 minutes, 26 seconds Uh yes sir, thank you so much. Uh so first question is uh is it possible to share how much portion of your India business is getting influenced by this 44:34 44 minutes, 34 seconds reformulation and u uh to some degree is it already I mean is it there in the Q3 numbers or more can happen? 44:46 44 minutes, 46 seconds As of today whatever has happened is fully reflected in my Q3 numbers. 44:50 44 minutes, 50 seconds Okay. And if you if you look at the entire degrowth that has happened in India, if you compare with last year to now uh can uh which we have been able to 44:59 44 minutes, 59 seconds mitigate with some uh uh good business uh growth that we had with our two tier three customers has ently be due to this 45:07 45 minutes, 7 seconds reformulation. So we don't see the base getting altered significantly if the current situation continues. But if the 45:15 45 minutes, 15 seconds you know if you have the fatty alcohol price and food petroleum prices further diverging. Okay then we we cannot make 45:22 45 minutes, 22 seconds any statement on because then we need to go back to the customer but as of now what has happened has happened. Okay so we don't see that uh increasing further. 45:32 45 minutes, 32 seconds Sure. So I'm asking why because u there would be some products where the formulation can never happen. I'm assuming there could be some products that the formulation reformulation can 45:40 45 minutes, 40 seconds never happen. So uh so from that angle I was trying to understand. 45:45 45 minutes, 45 seconds Yeah correct. So whatever I think uh most of what could have happened are happened. So customers also are they very they do give us advanced 45:54 45 minutes, 54 seconds information but they will not tell us into every detail that they're planning but based on whatever discussions we have had with their top leadership uh I 46:02 46 minutes, 2 seconds think uh most of what they had to do they have done. 46:06 46 minutes, 6 seconds Got it. Sure. And sir secondly uh that we are seeing this uh uh this reformulation strategy of yours will start to play out from Q4 uh and 46:14 46 minutes, 14 seconds gradually from Q4 and also the AMIT growth uh we'll start to see I mean at least the base is there now we'll start to see volume growth back uh but just 46:21 46 minutes, 21 seconds trying to understand uh how is this business uh from a profitability perspective both India and the uh new growth that we are seeing in Amit I mean is it meaningfully different than what 46:30 46 minutes, 30 seconds you were historically doing and initially there there will be some learning curve and uh some market share uh gain related uh you know push which 46:38 46 minutes, 38 seconds will influence the uh margins or the embiders uh versus what you you know typically used to do historically or they are broadly similar as what was 46:47 46 minutes, 47 seconds earlier. Yeah. So the the first objective we have is to be meaningfully present into certain 46:56 46 minutes, 56 seconds reformulations that have already happened to the extent that we need to that is the first objective. So once we get there we also know that uh you know 47:04 47 minutes, 4 seconds uh because the pricing is what uh there is in the market it's not not a new product okay it's something that is already existing and then we obviously didn't get into that because is a 47:12 47 minutes, 12 seconds petrochemical based feed stock so we said let us first prepare ourselves to participate in this reformulation 47:20 47 minutes, 20 seconds and Ahmed and those new countries that we're looking at okay we are very clear that we will not get into any country where we have significant credit risk 47:28 47 minutes, 28 seconds but we are also looking at taking appropriate margin calls to get the volumes because first objective is to get the volume traction back. 47:35 47 minutes, 35 seconds Okay. But it is not that we taking calls that are going to be injuring us in terms of margins but yes these actions that we're taking are not going to be uh 47:44 47 minutes, 44 seconds super margins that we'll make. Okay. So it's going to be something very normal. 47:49 47 minutes, 49 seconds Sure. And the last question a quick one is uh when I do a console minus standalone I see the subsidiaries uh 47:57 47 minutes, 57 seconds which effectively I believe is Egypt and the US and some other businesses uh seems to be doing well and this is despite Amit uh you know not uh doing as 48:05 48 minutes, 5 seconds well for the last few quarters and probably few years. So is it primary driven and particularly this quarter seems to be uh strong. So is it primary 48:14 48 minutes, 14 seconds because of the US uh because of the trike or the other other factors probably mix and lame is improving and all those is just trying to understand 48:21 48 minutes, 21 seconds the major here if I can say is that uh of your uh US I said in terms of is a bit better but the major impact in terms 48:30 48 minutes, 30 seconds of standalone being low is because I said India has been significantly impacted due to the reformulation. 48:35 48 minutes, 35 seconds Yeah standalone low is understood but the gap seems to be okay. I mean that would mean the subsidies are doing well. 48:41 48 minutes, 41 seconds I think uh is also majorly what I said in terms of what is happening in our trike business where it is able to give us uh some good growth in terms a 48:49 48 minutes, 49 seconds profitable growth which is able to compensate. 48:52 48 minutes, 52 seconds Okay. Got it. Sure. Great sir. Uh thank you so much and all the best. Thank you. Thank you so much. All the best. Yeah. 48:58 48 minutes, 58 seconds Thank you. The next question come from the line of Sha from Banyan Trees Advisor. Please go ahead. 49:06 49 minutes, 6 seconds Hi sir. Uh thank you for the opportunity. Uh so I just had a question on uh Amit. Uh you said that I mean you mentioned in the press release uh that uh there was a lot of local competition. 49:17 49 minutes, 17 seconds Uh is this costbased competition and do you think it is sustainable? 49:23 49 minutes, 23 seconds So see this competition is not coming now. In fact it has happened when San also said the peak volumes that we had was all when uh Egypt was in a very 49:31 49 minutes, 31 seconds steady state. Currency was uh ruling at something like 15 16 to a dollar. Today 49:38 49 minutes, 38 seconds it is at 45. Okay. And uh inflation they have passed through some 100% inflation. 49:44 49 minutes, 44 seconds Today they're at 40%. So now with all this what has happened is that there have been some local players who have taken advantage of the situation and 49:53 49 minutes, 53 seconds have come up with uh uh product formats and pricing that have been significantly cheaper. Okay. And they're also backward integrated. That's what resulted. Okay. 50:03 50 minutes, 3 seconds in now because when my my customers there my T one customers lose share it sely reflects on us and there is no way that I can gain back that share with 50:11 50 minutes, 11 seconds others who are now taken the end market share because they have integrated so that is something that is not something 50:19 50 minutes, 19 seconds that has happened now that has happened over the last 3 years got it got it very useful sir and the 50:27 50 minutes, 27 seconds second question is after a long time there has been a declining raw material prices uh strate alcohol prices on a quartonquarter basis. Uh do you see the 50:37 50 minutes, 37 seconds price increases uh impacting or benefiting the EBIT taper per ton? 50:43 50 minutes, 43 seconds No, no, no. Actually, whenever prices decreases, it decreased briefly. But then uh uh we were also very cautious because when prices start decreasing now 50:51 50 minutes, 51 seconds when alcohol was at $3,000 and it went to $2,500 $2,600 typically my the problem is the risk we 50:59 50 minutes, 59 seconds have to manage is is a very high intensity because customers then expect it to come down further don't do deals but we need to buy to continue 51:06 51 minutes, 6 seconds production. So we are very very conscious now how do you manage the risk now after all of them wanting that then 51:14 51 minutes, 14 seconds they will do their deals once it comes down further. Now it has start going up. 51:17 51 minutes, 17 seconds So now customers again are coming uh to buy. Okay. But again are doing deals which are short-term because they say it has gone 51:26 51 minutes, 26 seconds up mean it will come down. So this aspect of it it's not a question if it has been secular into a particular rising situation or a fall I think it's 51:34 51 minutes, 34 seconds very easy to manage the business. If it is a situation where it keeps fluctuating very frequently. The frequency is what is a problem today and 51:43 51 minutes, 43 seconds the issue it reflects in terms of the way customers are looking at doing deals because they're being very shortterm. 51:48 51 minutes, 48 seconds You know they're looking at deals for doing one month, two months and 3 months. Okay. That means your risk profile increases because you have to manage the raw material risk with in 51:57 51 minutes, 57 seconds that frequent way in which customers are doing the deals. 52:02 52 minutes, 2 seconds Got it. Got it. Got it. Sir but I I had assumed that we had an automatic quarterly price increase that you are passing on to the customers in performance segment. 52:12 52 minutes, 12 seconds So that is for our contractual customers but I think I have a good we have a good business happening with our non-contial customers. No that is tier two tire three I'm talking about. 52:21 52 minutes, 21 seconds Yeah. 52:21 52 minutes, 21 seconds Got it. Got it. So the tier two tier three they don't have any price increases. It's a basically the negotiation on a quarterly basis. Correct. 52:29 52 minutes, 29 seconds How frequently would that be? 52:32 52 minutes, 32 seconds quarterly, some of it is monthly, some of them do six month deal depending on how they see the raw material situation. 52:38 52 minutes, 38 seconds So one is what we give them information as far as what we know, other is what they know and finally add a happen. So some of them do a six-mon deal. Even today we have people who are doing a six 52:47 52 minutes, 47 seconds month deal because they expect prices to stay firm. There are some people who are going short, they're only doing it for 2 months. So it's a combination. Got it. 52:55 52 minutes, 55 seconds Got it. Got it. Got it. Thank you so much. Thank you. 53:06 53 minutes, 6 seconds Thank you. 53:09 53 minutes, 9 seconds Next question come from the line of Dyanch Gupta from latent PMS. Please go ahead. Uh hi sir, am I audible? 53:16 53 minutes, 16 seconds Yes, you are. 53:18 53 minutes, 18 seconds Yeah. Uh sir, regarding the uh alternate formulation that we have developed. Uh some questions regarding that. So is my 53:25 53 minutes, 25 seconds assumption correct that this is not a supply constrainted uh situation? 53:31 53 minutes, 31 seconds as in the T1 customer or other customers would have enough decent supply of uh players providing them with the reformulation. 53:42 53 minutes, 42 seconds Uh and therefore the question is that given that we have developed a technical formulation to serve the customer what 53:49 53 minutes, 49 seconds is going to be our uh edge to grab any market share as you also mentioned that majority of repopulation has already happened. 54:00 54 minutes So there's no question of grabbing market share. It is that that we lost volumes to the reformulation. 54:06 54 minutes, 6 seconds My customers obviously they reform it because there's someone else who was making that supply and the reason why we are confident that we'll be able to get 54:13 54 minutes, 13 seconds a good portion of the volumes back is in terms of uh the strategic uh arrangement we have with the customer and the volumes that went out from us would come 54:22 54 minutes, 22 seconds back once we are ready with that particular alternate feed stock alternate uh you know uh formulation. 54:29 54 minutes, 29 seconds That's it. There's nothing of trying to grab market share. 54:33 54 minutes, 33 seconds I just replace whoever they were buying from. Yeah, correct. 54:39 54 minutes, 39 seconds Understood. And we realization for this would be lower than a performance of patents or largely similar should be largely similar. 54:50 54 minutes, 50 seconds What? 54:52 54 minutes, 52 seconds Just last question with the UK FDA and the EU FDA does it benefit us in any 55:00 55 minutes which way with respect to pure cost competency? 55:04 55 minutes, 4 seconds No. So you're I don't know with UK there is nothing much that happens in UK the business. So we probably it's not that 55:11 55 minutes, 11 seconds the duties are very high. Okay. But UK as a market most of it is to get done in the other parts of Europe and getting into UK. So our team is now working with 55:20 55 minutes, 20 seconds some customers in UK. So the UK FTA is not something that's going to be of any great significance to us. But the UFA 55:27 55 minutes, 27 seconds Yes. because what is important is that even earlier you had uh uh you know the again GSP uh your general system of 55:35 55 minutes, 35 seconds preferences you used to have duties of 4 to 6%. Now that is going to go to zero that it's not that the duty rates are very high. 55:45 55 minutes, 45 seconds Got it. So it's not going to make us marginally any more compet large competition is not there. Yeah. 55:54 55 minutes, 54 seconds Unders. That's all. Thank you. And thank you. Our next question comes from 56:05 56 minutes, 5 seconds the line of Rohit Nagaras from 361 Capital. Please go ahead. 56:10 56 minutes, 10 seconds Uh thanks for the opportunity. So the first question is on the uh you know palm corn oil prices fatty alcohol 56:17 56 minutes, 17 seconds prices given that in the last one one and a half years the prices have been hovering more than say $2,000 per ton. 56:24 56 minutes, 24 seconds Uh is it a structural shift that has happened where earlier the prices used to be about say 1,500 plus minus dollars 56:32 56 minutes, 32 seconds per ton and now moved uh you know consistently at $2,000 per ton. 56:40 56 minutes, 40 seconds No, I think whether it's the structural shift, we'll have to wait uh at least for the next 6 months to understand because it has run through a cycle of 56:47 56 minutes, 47 seconds close to 15 months. So we need to see it up at least up to next October. 56:54 56 minutes, 54 seconds Okay. And then we because there there have been too much too many amount of uh uh you know uh what do you say external 57:02 57 minutes, 2 seconds stimuli that is causing prices to respond. Okay. So now with uh all that is happening in terms of the geopolitical situation crude petroleum 57:11 57 minutes, 11 seconds prices because one thing we see is that the crude petroleum prices correct significantly okay there can be an implication for the farm value chain 57:18 57 minutes, 18 seconds because we have always seen a positive correlation between crude petroleum prices and farm oil prices. Okay so that is something that we need to keep a 57:26 57 minutes, 26 seconds watch on. Okay. Uh we need to also keep a watch on in terms of the production numbers. Our initial 57:34 57 minutes, 34 seconds uh uh you know discussions with the marketplace tells us that this year they expect the production to be good to the 57:41 57 minutes, 41 seconds recent palm oil conference where my colleagues attended I think it is pointing towards a good production scenario in this year which can also be 57:49 57 minutes, 49 seconds bearish for the market but how much bearish we don't know and whether if there is any other external stimuli that's negative it can keep the prices 57:56 57 minutes, 56 seconds high but the way I look at it is that the probability of prices going up further from here is low as compared to prices coming down to what extent 58:04 58 minutes, 4 seconds they'll come down we'll have to probably wait till May June sure got that and second question in 58:10 58 minutes, 10 seconds terms of the BT and personal care u you know we have been more and more focused now on the lean category than the rinse 58:19 58 minutes, 19 seconds off just wanted to get a perspective maybe five years back where were we in terms of the proportion of rinse off and 58:28 58 minutes, 28 seconds leave on uh and where are we now because I Last year when we had uh incorporated the 2030 vision we had categorically 58:36 58 minutes, 36 seconds stated that this is the area which is going to be the area of growth for us over the next 5 years. So just to get a perspective I mean the number 58:45 58 minutes, 45 seconds look at the entire HPC market okay traditionally and for years to come it'll always be very highly skewed 58:51 58 minutes, 51 seconds towards applications because I think cleaning is what is the biggest part of the home and personare 58:59 58 minutes, 59 seconds market. you see it's fabric cleaning or it's your uh surface cleaning or it is your dish cleaning or it is your u you 59:08 59 minutes, 8 seconds know uh institutional cleaning. So that will always be the case. So essentially our focus is going to be continuing to be very intense on the soft segment. 59:19 59 minutes, 19 seconds What we're doing is we are adding an additional listing on the Levon segment which is more focused on what you call as the beauty segment. Okay, which is 59:27 59 minutes, 27 seconds more to skin creams, skin lotions and all that coming up with ingredients for that. Okay, so that is why moving so essentially uh it's it's not that even 59:36 59 minutes, 36 seconds moving forward you know in terms of volumes they can be significantly as higher percentage but we need to be very choosy about which product categories we want to get into as far as Leon is 59:44 59 minutes, 44 seconds concerned that's why we see we we launched what we call as the uh sunare ingredients gal got bliss that we 59:54 59 minutes, 54 seconds launched in in cosmetics in November. So we'll be very particular as to what sort of ingredients that we get into because it has to be ensuring that we are able 1:00:02 1 hour, 2 seconds to sustain uh you know the growth and the profitability. 1:00:07 1 hour, 7 seconds Sure. God thanks a lot and all the best sir. Thank you. Thank you. 1:00:14 1 hour, 14 seconds Thank you. 1:00:18 1 hour, 18 seconds Our next question come from the line of Aditan from SM if institutional equities. Please go ahead. 1:00:25 1 hour, 25 seconds Yeah, thank you sir for the followup. 1:00:27 1 hour, 27 seconds Uh, so my question was onto the fatty alcohol prices. Uh, so considering the inventory, what would be the inventory position today of RM considering at 1:00:36 1 hour, 36 seconds $2,800 per ton versus $1,500 per ton prices? Is the inventory cycle shortened and by how much days? If you can 1:00:44 1 hour, 44 seconds quantify that and secondly adding on to that so hypothetically assuming if RN prices decline by 20% just 1:00:52 1 hour, 52 seconds hypothetically assuming it how much hit to bida we can attribute it to and uh also s third onto this if you can also 1:01:01 1 hour, 1 minute, 1 second quantify the differential between fatty alcohol and the crude petroleum prices like what was it what is it today and 1:01:07 1 hour, 1 minute, 7 seconds roughly so one year back so you're actually a lot of question that I asked my sourcing head okay in 1:01:15 1 hour, 1 minute, 15 seconds terms of how he's planning so I can't be answering in this detail but I can tell you that we have a very robust risk management framework in place which ensures that even if the prices fall 1:01:24 1 hour, 1 minute, 24 seconds sign if they rise there is no risk if they fall significantly okay our hit to the P&L will be minimal that is how we have structured a risk management 1:01:33 1 hour, 1 minute, 33 seconds framework that is one the second is in terms of food petroleum to this I don't think as of now I have any specific response to give you these are all some 1:01:42 1 hour, 1 minute, 42 seconds data points that we need to get into so I don't have it readily available to respond on that. 1:01:48 1 hour, 1 minute, 48 seconds Okay. And so just the trend like current because for the last one two months crude prices have went up most of the crude related derivative whether lapsa 1:01:56 1 hour, 1 minute, 56 seconds that is to make surfaces that might have also moved up. So differential ideally would have been shortened any trend if you can also highlight the trend is 1:02:04 1 hour, 2 minutes, 4 seconds shortening and that would benefit more towards fatty alcohol players. Any sense onto that? 1:02:10 1 hour, 2 minutes, 10 seconds No I don't think I'm able to see any trend. the lab prices going up is all related to some shutdowns that are happening now and lab entire complex is 1:02:18 1 hour, 2 minutes, 18 seconds very differently structured. So there are more details. I don't think I'll be able to uh explain that in detail. Okay. 1:02:25 1 hour, 2 minutes, 25 seconds I think my uh sourcing can have a conversation with you okay in more detail. Okay. But uh right now uh I 1:02:33 1 hour, 2 minutes, 33 seconds don't see any trends that we can relate to. Okay. They're all more short-term in what is happening in lab and what is happening in fatty alcohol is something that is there at least for the last 15 1:02:41 1 hour, 2 minutes, 41 seconds months. We need to wait till October to understand whether structurally something has changed. Inventory cycle of RM sir if you can at least quantify that how much would it be? 1:02:51 1 hour, 2 minutes, 51 seconds My inventory cycle is is is a is is a derivative of how we want to manage risk. So there's nothing specific like 1:02:59 1 hour, 2 minutes, 59 seconds I'll only run with 15 days inventory or 3 months inventory. We need to be having inventory to the level that we can continue production uninterrupted at the 1:03:06 1 hour, 3 minutes, 6 seconds same time not as significant impact on the panel in case the prices correct uh all of a sudden and significantly. So that that is one of the differentiating 1:03:15 1 hour, 3 minutes, 15 seconds this thing the way we manage our performance affectance business. Okay. 1:03:19 1 hour, 3 minutes, 19 seconds And uh uh so it is suffice to say that we do not we will not have any significant impact to our P&L. Even if the prices correct significantly it 1:03:28 1 hour, 3 minutes, 28 seconds starts coming down we manage our risk very very prudently. 1:03:35 1 hour, 3 minutes, 35 seconds Got it sir. Thank you. 1:03:38 1 hour, 3 minutes, 38 seconds Thank you ladies and gentlemen. That was the last question for today. I would like to hand the conference over to the management for the closing comments. 1:03:46 1 hour, 3 minutes, 46 seconds Thank you and over to you team. 1:03:48 1 hour, 3 minutes, 48 seconds Thank you ladies and gentlemen and thank you for the uh huge interest that you have in terms of understanding our business and our performance. Uh I look 1:03:55 1 hour, 3 minutes, 55 seconds forward to seeing all of you and uh uh you know answering all your questions and giving you an update on fully performance 3 months from now. Thank you and all the best. 1:04:06 1 hour, 4 minutes, 6 seconds Thank you. 1:04:07 1 hour, 4 minutes, 7 seconds Thank you sir. Ladies and gentlemen, on behalf of Galaxy Surfance Limited, that conclude this conference.