Galaxy Surfactants Limited (GALAXYSURF) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Galaxy Surfactants Limited Q3 and 9M FY '22 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Unnathan Shekhar, Promoter and Managing Director, Galaxy Surfactants Limited. Thank you, and over to you, sir.

Thank you. Ladies and gentlemen, a very good afternoon to all of you. I'm delighted to welcome you all to this first earnings conference call of the year 2022. Let me take this opportunity to wish you all a very happy and a prosperous year ahead and a healthy year ahead. Hope the year 2022 brings success, good health and fortune for all of us. Before we run into details, I would like to remember author Charles F. Glassman's famous quote, "Short-term pain leads to long-term gain." This quarter required the company to take certain quick and strategic decisions, the decision to either go for short-term gains or take the pain but ensure steady long-term gains. We chose the latter. In a quarter marked by significant volatility on account of rising feedstock prices, supply chain constraints, we have the option to either declare force majeure and not clear the pending backlog of previous quarters or service our customers first. Rising feedstock prices and freight rates meant we had to choose between rediscussing the concurred contracts, which contribute nearly 60% of our business, and seek price hikes or take the short-term pain and seek the increase in the coming quarter. In line with Galaxy's motto of customer first and considering the long-term strategic relationships that we have built over the years with our customers, fulfilling our commitments made to them was our first priority. By sacrificing the short-term gains, we believe we are fortifying our long-term goals. Yes, we do agree this did impact our performance in the quarter 3, but I'm pleased to share the qualitative gains we have made with all our customers on account of this that will yield significant fruits going ahead. It gives me immense pleasure to share with you that all our key customers have acknowledged and appreciated our commitment. We, therefore, believe, this quarter, in turn, has laid the foundation for our next decade of growth. As they say, without commitment, you cannot have kept in anything, whether it is a relationship or a business. Coming to the business performance, the scenario in this quarter was like that of the previous one. Supply had volatility continue in the quarter 3. The sudden surge in prices of fatty alcohol, crude and freight rates, especially in the developed markets in the October, November we saw this September accentuated the situation. While volumes have remained flat year-on-year, the decline in EBITDA per metric ton impacted our overall performance significantly. Both these factors need to be understood in the global context. Crude derivatives, fatty alcohol and fatty acids constitute nearly 80% of our raw material buy. Compared to September, each of these rallied anywhere between 10% to 47% in the October-December quarter. Given that bulk of our business was contractual by nature, the pricing mechanism in place will ensure that these incremental costs get passed on with the lag of one quarter. While specialty products and the rest of world markets reported a growth, the sudden surge in freight rates for Europe and U.S.A., along with unavailability of containers, adversely impacted margins. A significant share of specialty business is contractual with a quarterly lag. Nearly 1/3 of our specialty business in U.S. and the European Union are [ GDP ] transactions and our [ ability to attract ], along with port condition issues, led to additional detention charges, which further dented margins. Export incentives realized in Egypt in quarter 3 FY '21 to the tune of INR 14 crores was not realized in the current quarter. The decision to honor our contractual commitments in choosing short-term pain over short-term price hikes or force majeure adversely impacted our EBITDA by approximately INR 5 crores. This quarter also saw your company moving towards natural gas instead of coal at our Tarapur plant. This, again, was a move made in keeping in mind our long-term sustainability goals despite [indiscernible] the high natural gas prices. This so adversely impacted our EBITDA for this quarter by approximately INR 2 crores. While raw material availability improved in this quarter, vis-à-vis quarter 2, container and availability resulted in delayed shipments, which resulted in loss of volumes compared with previous year in our major surfactants. This again adversely impacted our EBITDA by another INR 5 crores. Despite all these challenges, ladies and gentlemen, there were many, many bright spots. The structural uptick we have seen post-COVID as far as our India business is concerned continues with our volumes rising by 11% vis-à-vis the pre-COVID average, barring any demand cutback or drown trading on account of inflationary pressures, we remain optimistic. Though the supply-led volatility continues, we see the same improving quarter-on-quarter. Adaptation and experience will ensure better response and execution going ahead. We do believe the worse is behind us. And while this has been a difficult place for us, we, at Galaxy, believe the execution challenges we are facing today are laying the foundations for our next decade of growth. We should see better quarters going ahead. I can confidently say this, as the decline in EBITDA per metric ton has been arrested with the quarter 3 EBITDA per metric tons coming in around INR 13,468 per metric tons versus INR 12,900 reported in Q2. We see this further improving towards stated band of INR 16,000 to INR 18,000 per metric tons in the coming quarters. Robust risk management system and adequate pricing revisions will ensure that the surging feedstocks and freight rates will be taken care of in the prices in the coming quarter. With the availability [ serially ] improving, barring any global slowdown due to inflationary pressures, we are equipped to cater to the robust underlying demand. The pace-wise operationalization of our new CapExs remains on track. The same will be completed by 1st April 2022, and this should again aid our performance in financial year '22, '23. Ladies and gentlemen, to sum up, the current scenario reminds me of a famous quote by Joyce Meyer, "If you're strong enough on the inside, you can handle anything that comes at you on the outside." While the external scenario remains extremely uncertain, internally, we are taking the necessary steps to enhance our performance, stability and delivery. We shall become stronger and more resilient to battle the challenges coming on our part from here on. Thank you, ladies and gentlemen.

Sir, should we start the question-and-answer session?

Yes.

[Operator Instructions] We have the first question from the line of Rohit Sinha from Sunidhi Securities.

My first question is on the volume side, as we have seen in the business recovering well as well as the volume has also done well in volume and growth. So [ am I seeing ] -- apart from this logistic issue, is there any other concern which is denting? And when we expect this volume to be on the positive side?

One moment, Rohit. I think your voice is not clear.

Sir, you just appear to not be very close to the handset a little, have you?

Okay. Is it okay now?

Yes, it's better.

Yes. So as I was saying that since we have shown good volume growth in India business as well as in the rest of the world segment, just on this AMET region, when -- I mean apart from the container issues and logistic things, what -- is there any other issue which has impacted the volume? And when we expect this volume to be on the positive side going forward? And is that -- I mean the recovery would help us to regain our EBITDA per tonne above INR 14,000 in coming quarters -- 1 or 2 quarters?

Yes. So first, I'll answer your last question first. So obviously, very clearly, okay, we will go back to the band of INR 16,000 to INR 18,000 per metric ton of EBITDA from the coming quarters. So we -- that's what Shekhar said that the worst is behind us. Again, then we have force with us as well to be able to respond to the market situation. As regards your question with regard to the volumes in AMET, apart from the supply chain challenges that we are in terms of incoming raw material majorly into our Egypt location, on the demand side, I think there was a listing on -- with refer to Turkey volumes, okay? That was because of the local issues in Turkey in terms of the exchange and depreciation. Barring that, all the other markets, the demand is pretty robust. Within Egypt, also, we're seeing that things are better. So we don't see anything significant moving other than this in terms of the demand side. And we do see demand coming back progressively from the coming quarters. The challenge is in terms of the incoming supply chain, has to improve better. We're already seeing some green shots. We expect that this would sustain.

Okay. Okay. So just -- I mean in terms of our performance in specialty care segment, so do we see a recovery in both the side? I mean, what kind of traction we are expecting both these segments?

See, on the specialty, if you see rest of the world has raised a very good growth despite the supply chain challenges that we had. We are also seeing, in terms of our new products and the projects that we're commissioning in Jhagadia and [indiscernible] -- in Tarapur. We do see that already good amount of traction in terms of the orders. So we are now working at full steam to be able to meet those particular demand, which already were delayed because of the project getting delayed due to COVID. And with regards to the exclusivities component of our specialty segment's portfolio, we have done exceedingly well, and we see this particular momentum continuing.

Okay. Okay. And lastly, on the margin side, I mean, obviously, this is -- this -- I believe it would be worse -- I mean would be over for us from here on. So just on the costing side that fatty alcohol prices are still on the higher side. And I think India has also filed for [indiscernible] review on this alcohol -- fatty alcohol product. How we are -- I mean as you are seeing that one quarter lag is there for pass on, so do we expect from the -- all the contracts, which were already in -- I mean, how many contracts, I would say, has been revised and is yet to be revised, so that from the coming quarter, there would be impact on the margin as well?

So one of the thing is that with regard to the increase in fatty alcohol prices have been very significant over the last 30 days with -- as crude continually has moved. So in terms of -- so we also got pretty experiences of the way things are moving. So when we are getting into contract, we're ensuring that appropriate calls are taken on the pricing and the contracts get tied up. With regard to the other minor feedstock costs that are there, those also have gone up significantly and have stabilized at that high level. So we do not see any additional challenges moving forward. So quarter 3, as you rightly said, was because everything happens suddenly and significantly in terms of price increases for a period of 45 days, beginning September till almost end of October. Everything went up. You take crude, petrol, and you took any minor raw materials, like you take caustic, you take sulfur. So everything moved up significantly. So those things are still higher, but they're stabilized at those high levels. So then once you stabilize our ability to be able to manage, repricing is significantly superior, and that's what is happening.

[Operator Instructions] The next question is from the line of Sanjesh Jain from ICICI Securities.

A few questions. First, on the price hike itself. If I look at the gross profit per kg, we are already at INR 44 per kg, which is probably among the highest. Does it indicate that we are able to pass on most of the raw material inflation? Is it just a freight cost, which is hurting us to reach the EBITDA per kg? Or do you see there is a combination of both, so reaching EBITDA per kg will be incrementally easier? That's number one. Number two, on the volume side, though this quarter has been flattish, that's predominantly because of the AMET, do you think from here on, the volume should increase with the supply chain easing out? I don't know what's the situation of ethylene oxide available. I think that was one of the things which was hampering us in terms of volume growth because our -- we have been consistently talking of demand being robust and we having a delayed supply. That means there is a good order book, which is pending and execution of which will accelerate. How should we see volume growth? These are the two initial questions.

Yes. So Sanjesh, firstly, the ethylene oxide situation has started improving from December. So we -- as of now, we don't see any further cost of concern, okay? So it has improved. That is one. Secondly is with regard to question on the gross profit per kilo going up, we have been -- as we said, we've been able to pass on increases, but [indiscernible] is a lag. So it's not that you're able to pass some increase as the moment they happen. So that is a challenge where -- because as things go up month-on-month, it's also important that we are able to properly calibrate the price increases. So that's very important. So as we see moving forward, we do see that our ability to pass on the cost increases is pretty much good. With regard to the volume growth, we do see that things are improving, okay? And the only -- and we are already seeing that if you look at, say, Africa, Middle East or rest of the world, you said the demand -- underlying demand is robust. But the supply chain challenges -- but if you look at Latin America, if you look at North America, North America, the local trucking and everything is a significant challenge, okay, and port clearance and local trucking. Europe is much better than North America and Latin America. Asia Pacific and AMET have improved quite a bit. So if this is the sort of traction we have, I think the volume growth should be picking up moving forward with the supply chain challenge easing.

And we are seeing the sign of supply chain challenges easing out, right?

Yes, we are. So as I told you, in North America, the challenge is not to reach the ship -- with the ship reaching the port, but the major challenge is the internal transportation because of lack of availability of trucking. So that is -- whenever we have delivered duty-paid shipments, delivery terms of doing it in a customer's factory, there, the challenges are significant. So if you look at Latin America, Latin America is still pretty bad in terms of transit terms and availability of freight space on the ships. Europe is much better, okay? Australia has improved, and our AMET also has improved.

And then we said that we would take a price hike post quarter and we are already probably mid of February 1.5 month into this quarter. Have we seen that flowing into our margins? And are we getting that early signs of recovery of the market we have done?

Yes, we have. Very clearly, we are getting those early signs, very clear.

Very clearly, right?

Yes.

Got it. The next question is on the new CapEx that we are hoping to commercialize from the one [indiscernible].

We don't hear you, Sanjesh. There's a disturbance. We couldn't hear you.

Is it good now?

Yes, it's better.

Okay. Okay. Just wanted to understand on the new product commissioning, the commercialization, we are hoping from the Q1 FY '23 onwards. Now have we fully utilized the existing capacity? So is it fair to believe that the ramp-up in this capacity will be much faster because the commissioning of these plants are happening with 6 or 8 months delay, right? So how is the situation of existing facility? And is it fair to assume that the ramp-up in this will be earlier or slightly faster than what have we been doing historically?

Yes. So if you look at the plant that we commissioned in Jhagadia, I think the existing capacities have been -- capacity has been very well utilized so that the ramp-up will happen fast. But if you look at, say, especially at Tarapur, which is a process of commissioning, that actually is a new plant more from an innovation-led requirement and certain products that we're building in, in terms of certain market-set capacities. There, the ramp-up will be slower than what it will be at Jhagadia. But it will certainly be much better, but it will be slower than what it is at Jhagadia.

Does the capacity issue hampered our growth in the specialty part, particularly in the preservative now that we have been running [indiscernible] fairly high level for last 1 year? Do you think commissioning of this preservative plant in Jhagadia will now only some of the growth in the specialty -- would it be a fair assumption?

So we have -- in terms of the way that we're going on preservatives portfolio year-on-year, we have capacity sufficiently available to cater to this level. That's why we've been able to partake in the growth. With regard to the certain new capacities setting up with regard to certain new specialties, that is why the commissioning will enable us to get in a better product mix.

Got it. Got it. Got it. And last from any future CapEx plans we are now doing now that these planned ones are ready to commission, what is the plan for FY '23 and FY '24 in terms of product [indiscernible] and CapEx?

Yes. Sanjesh, the CapExs will continue. The CapExs will continue. We will continue to spend approximately INR 150 crores to INR 200 crores every year. At least, we are able to see the visibility of this for the next 2 years.

Even this year for the 9 months period, we have already -- we're at outlay of around INR 150 crores.

Yes. We have already made an outlay of INR 150 crores for this first 9 months.

And can you give some color on the...

Sanjesh, I'm sorry to interrupt, sir, but we do have to...

Sir, this is just the last one, a follow-up one. Can you just give us what are the products which we are looking to and -- expand in FY '23 and '24?

This will be across all the ranges, both -- but mainly specialty -- mainly specialty products.

[Operator Instructions] The next question is from the line of Rohit Nagraj from Emkay Global.

So the first question was whether there were any orders which were postponed to Q4 due to force majeure and other reasons and probably that may have some impact in terms of volumes and revenues for Q4?

Firstly, Galaxy has never declared any force majeure, okay? So the force majeure is not in our dictionary. We stand by our commitment. Certain orders will get deferred to this particular quarter in terms of fulfillment, okay? So they will get fulfilled with the lag, primarily only because of the delay in the arrival of the raw materials.

Right, right. Got it. Sir, the second question, you mentioned about your availability improving from December. But given that crude prices are increasing, again, your prices also must be increasing. So whether we have the ability to pass it on? And secondly, the same question on LA. In terms of last 1.5 months, how the pricing movement for lauryl alcohol or lauryl acid has been and whether, again, that will have an impact in terms of pass on with a lag of 2 to 3 months or so?

So Rohit, see, passing on is a matter of only contract, okay? That will be done. But what is important is that whether this passing on to [ our team or ] consumers is going to be attainable, okay? Now that is where we need to be very clear in the sense that now the entire industry has to, what you call, calibrate itself into ensuring that the final consumer is not impacted much. Otherwise, he is going to resort to cut back in his own consumption or down trading.

Right. Got it. Sir, just last clarification on volume growth guidance. Now given that in 9 months, we have done about 2% volume growth, what will be the volume growth guidance for FY '22 and next year, FY '23, given the conditions that are prevailing now and probably the long-term orders in hand, whether we will again scale back to our previous guidance of 6% to 8% volume growth?

We always aspire to be at our volume growth of 6% to 8%. That will be our attempt. And at this point of time, we are pretty buoyant about it.

Yes. And for FY '22?

FY '22, I think we would possibly close at about maybe about 3% or so.

[Operator Instructions] The next question is from the line of [ Mayur Liman ] from Profitmart Securities.

I just want to ask, what is the outlook for the next quarter? How do you see quarter 4 now? And what is your CapEx plan for next quarter?

Yes. So actually for next quarter, as I said, if you see the quarter 3 EBITDA per metric ton improved vis-à-vis quarter 2. And as we explained, moving forward, we expect for the next quarter, the EBITDA per metric ton to be in the guided range of INR 16,000 to INR 18,000 per metric ton. As regards CapEx for the next quarter, there is -- it's only what we are commissioning. As we said, one is Jhagadia and one at Tarapur. And as we said for the next year for the -- we are having almost a CapEx of INR 150 crores, which we already committed.

[Operator Instructions] The next question is from the line of Nakshita Mehta from Credent Info.

So my first question is on the entire specialty chemical space. I mean almost all of the companies have been affected due to the raw material prices, the input prices, right? So how do you see the situation right now? And how do you see the situation moving forward, say, FY '23, if you can just give us an overview of the industry?

Let us -- we need to admit that there has been hyper inflation with respect to feedstocks across categories, across ranges. Crude has shot up, and the [ oily ] chemicals have shot up. And not just [ oily ] chemicals and crude but all the derivatives. So we have seen hyperinflation with respect to the raw material prices in the last year. Similarly, we have seen hyperinflation with respect to freight rates across the world, okay? So this is something that -- we expect it to continue till supply improves, which possibly should happen maybe a number about a year or 1.5 years or so. But in the short term, we do expect these high prices to continue. And we need to certainly manage this particular situation.

So a follow-up question on this, have we entered into any contracts with suppliers for the pricing? Or how are we tackling this pricing issue?

See, there are no long-term contracts in these situations, okay? There are only short-term contracts. [indiscernible] an uncertain situation, there are only short-term contracts, not very, very long-term contracts. No.

[Operator Instructions] We have the next question from the line of Dharmil Shah from Marcellus.

I just had a question on the Specialty Care Product portfolio. What has been the product mix within the specialty care? Over the years, the mix for performance and specialty care has been somewhere around 65% to 35%. But what about the product mix within the Specialty Care Products? Is it -- has anything improved? Or how do we see doing it forward for the next 3 to 5 years?

Now as you know, our specialties consist of various categories. Almost all the categories are growing pretty well. That's what we should -- we would like to sum up. And we are setting up capacities to increase the capacities further. So that's a clear direction that we see in the coming few years. So we also know that we have had our new product that we introduced, which is our nontoxic preservative range, our GLI 21, which is a significantly superior mild surfactant. So this is all something for which we are setting up commercial scale capacities at that area, and that is what is going to be driving the growth moving forward, in addition to our traditional preservatives, okay, and mild surfactants.

And my second question was on accounting related. So the tax concession that we are enjoying for us, is it subsidiary? So does it come with a [indiscernible]? Or will you be having the concession right now?

The Egypt tax, that thing will continue till when?

Till -- 24 years. How many now?

It is for 25 years from the beginning.

Another 15 years...

So which means another approximately 14 years since...

14 years.

[Operator Instructions] The next question is from the line of Vijay Karpe from Bryanston Investments.

What was our specialty care capacity at the end of financial year 2021? And where will this move to post the commissioning in April?

Can you repeat your question? I didn't get it properly.

My question is, what was our Specialty Care Products capacity at the end of FY '21? And what will it be post expansion in April?

So that will be a question that will be difficult to answer because we have different products within the portfolio. And there are some products for which we are selling capacities where we have tested almost 90%, 100% of the capacity utilization. So post new commissioning, obviously, the capabilities will come down, but that is to prepare ourselves for the future demand growth.

Okay. So according to your RHP, I think so -- your specialty care capacity was somewhere close to INR 1,12,000-something. So what kind of number is it at the end of '21?

So it's almost similar. So there is -- it's almost similar.

Okay. And where will it go to in April?

These are -- see, these are all -- this is all something that we not like to divulge because there are products where the capacity per se doesn't matter. It is a product that we set up the capacity for. So these are pretty confidential in terms of what are the volume capacity increases that we are doing. So we will not like to mention that.

Of course. Okay. Okay. No problem. So we talked about our CapEx, and we'll be doing somewhere close to INR 150 crores to INR 200 crores for the next 2 years. I just wanted to understand what kind of CapEx will you be doing post this in, if you suppose, FY '24, FY '25? Will we continue on this similar rate?

Yes. See -- if you see our track record, we typically do INR 150 crores to INR 200 crores every year in terms CapEx. So that will continue.

Got it. And the fatty alcohol prices were at $2,600 in Q3. Where are they now?

It is at almost $3,000 -- upwards of $3,000.

And lastly, what was our capacity utilization in the current quarter Q3 and also, if possible, for FY '21?

I think for this 9 months, I think it was about 67%. 67%. And for the previous year, it was about 65%.

Yes, and for the full year also, we'll be around the same 67%, 68%.

[Operator Instructions] The next question is from the line of Rohit Sinha from Sunidhi Securities.

This is regarding our R&D segment. I mean, how much we are spending on R&D? And what is the strength, the team stand there?

The team stand of our R&D is approximately 70 people, made up of a number of PhDs and masters. The R&D expenditure comes to approximately INR 40 crores to INR 50 crores every year.

Okay. So just wanted to understand when we are looking into new products and launching or targeting new products, so how is our approach in terms of finalizing the product? Is it from the customer side? Or is it what we are trying to create a new product? Or it is the overall -- I mean the market demand, which is moving more towards -- or you can [ follow up ] something like that?

Good. Yes. So it is on many fronts. One is, of course, what we call consumer to chemistry. We see what are the consumer trends and, in a way, to respond to these consumer trends. Examples of these are what we did with respect to a number of mild surfactants as well as nontoxic preservatives. Secondly, we take certain specific innovation or development customized to certain customers -- specific customers. Third is we have certain joint development programs with our customers. Fourth is in terms of audio, what you talked about, the movement towards sustainability and green offers opportunities in terms of new products based on renewable and green feedstocks. So our innovation program gets drawn from -- through all these fronts. And so to sum up again, consumer to chemistry, joint development programs, customized to work for specific customers and the drive of sustainability and green.

Okay. Okay. Okay. Fair enough. And one thing, I mean, obviously, it is not easy to compare, but still if we compare ourselves the global player in terms of, again, targeting new products or targeting the addressable market, where and which company we should be most like, you can say, compared to?

No. So this is -- as I just said, we are a global supply, which has global brands in the home and personal segment. So we have projects on various trends running with various customers in the home care and the personal segment. So in some cases, some of them are very, very focused on home care. In some cases, they're very much focused on personal care. So it's a combination of approaches we have. So it is not that we pick in with this customer. Ultimately, it has to be our own focus on the home and personal care segment, which is what is important, [ basis ] at whichever customers are going to be interested in them and who would have -- we have a reasonable listing of succeeding. That's how we approach the projects.

Okay. And I mean I'm just looking at the competitor we have to compare with.

See, we are -- I mean, possibly, our entire focus is on the personal home care industry. Possibly, we are possibly the only players. Whereas all our competitors are in multiple industries, we are possibly the only company which is only focused on the personal home care industry.

[Operator Instructions] The next question is from the line of Anubhav from MC Research.

A couple of questions. One is, given the new price range for all the feedstocks, I wanted to understand, what is the raw material mix in terms of cost? I mean, how much do you do with fatty alcohol? And how much may be due to crude derivatives?

So typically, the [indiscernible] and derivatives contribute about 70% of our buying portfolio, and the balance is contributed by the pet chem portfolio, which is linked to crude petroleum.

Okay. So I mean the ratio remains the same.

More or less. More of less.

Okay. And sir, if you could talk about the supply situation from Malaysia and Indonesia with respect to fatty alcohol, how is the situation now in terms of production and all? And when do you think the prices cannot [indiscernible]?

So can you repeat the question, Anubhav? I didn't get your question clearly.

Yes. Yes. So basically, regarding supply from the source countries, Malaysia and Indonesia. So I wanted to understand what is the situation there in terms of supply. And when do you think the gap between supply and demand can be [indiscernible]?

Yes. So the suppliers actually if you look at it, we have strategic vendors for this, and the issue never has been in terms of their ability to produce and sell it out of the factory. The issue has been the logistics in terms of the container availability, which, as we said, we are seeing improvement happening in the APAC region from the month of December. So things are getting much better. Things are getting much better. The issue never was in terms of the ability to produce. They've always been producing, but it was typically lying at their port for 2 weeks and 3 weeks and 4 weeks for want of space availability on ships. That was the issue. That is getting much better.

Okay. Okay. And I mean, if I could just say that compared to prepandemic times, how is the manufacturing of those alcohol -- fatty alcohol from Malaysia and Indonesia? Has it reached to similar level?

Yes, they have. They have.

They have. Okay. Okay. And lastly, sir, just wanted to understand your CapEx focus for coming 2 to 3 years. I mean you mentioned you will continue with the same run rate of INR 150 crores, INR 200 crores. Which are the areas we would be looking at?

So as Shekhar said, this INR 150 crores to INR 200 crores are in terms of my existing products capacity enhancement in terms of the way the market demand is coming out. Second is in terms of the products coming out of the innovation funnel. So essentially on the 4 things that Shekhar spoke of in terms of products coming out of joint development arrangements with the customers, with regard to our approach to consumer to chemistry, where you come up with the product solutions and molecules. The third is on sustainability agenda and both process-related as well as product-related. So this will typically be -- this will be the sort of why vertical investments will happen.

[Operator Instructions] The next question is from the line of [ Nitesh Dutt ] from [indiscernible].

So I got a bit late. I'm not sure if this was already asked, but if you could just let me know whether recent restrictions imposed by Indonesia on export of palm oil and palm oil derivatives, how is it going to impact us?

So first of all, this -- the way we have understood, we've spoken to all our strategic partners in Indonesia. What we understand, okay, is that this particular thing, which was only for palm oil per se, getting exempt the palm oil derivatives as well is something that is not tenable at all because the local consumption in Indonesia is significantly lower than what we're expecting in terms of 20% being sold locally before they start exporting. So this is something that they are representing the trade ministry, and I think they are at a very advanced stage. We do hope that better sense prevails and things would get resolved, okay, early next week. That's what is the update that we have from our strategic partners in Indonesia.

The next question is from the line of Nakshita Mehta from Credent Info.

So I had a few follow-up question. One is the volume growth as compared to pre-COVID level. Are we expected -- are we expecting it to stay the same as now because in COVID season, home care and personal care have grown. So are we expecting that to remain on that level? Or was it just the COVID rush?

Yes. So one is the base has gone up significantly in terms of the products per se. That's because the hygiene habits of people post-COVID has changed irreversibly, okay? So that is very clear. Now the growth will happen on that higher base. That's the way things are. That is the fact rollover. And that's what we are also experiencing.

Right, right. Okay. And the next question was on the environmental clearances, have you received them for Jhagadia and Suez?

Yes, we have.

You have, right? Okay. Okay.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Yes. Ladies and gentlemen, thank you very much. Once again, wishing all of you a healthy year ahead. See you again in the month of May. Thank you.

Thank you, and wishing you all a good day. Bye-bye.

Thank you. On behalf of Galaxy Surfactants Limited, that concludes this conference. Thank you for joining us. You may now disconnect.