GALAXY WITH ITS EXISTING SPECIALTY CARE PRODUCTS viz.
MILD SURFACTANTS SUNSCREENS
non-toxic preservatives SYNDET and transparent bathing bars
IS WELL EQUIPPED To CAPITALISE oN THE EMERGING TRENDS.
It gives me immense pleasure to welcome you all to the 33rd Annual GeneralMeeting of your Company - Galaxy Surfactants Ltd. According to leadership Guru StevenDenning the life expectancy rate of Fortune 500 companies has reduced from around 75years in the 1950s to less than 15 years now. As Galaxy enters its 40th yearwe believe innovation creative disruption consistency integrity and governance will bethe key creators and drivers of value over the next decade.
This year's theme: Value Creation through Innovation & Sustainability has been thebedrock of our existence.
'Innovation' means the process of translating an idea/invention into a good/servicethat creates value and satisfies the needs of the customers. Right from our inceptionInnovation Research and Development of new products and technologies have been one of ourkey strengths. At Galaxy Innovation has driven Transformation and Growth and enabled usto create value for our customers.
But what is value?
Value has many dimensions and one of them is convenience. Convenience that enriches theexperience and enhances the standard of living of the end consumer convenience that issustainable clean and environment-friendly and finally convenience that is customised andinnovative.
Today E-Commerce has not only ensured greater awareness among consumers but alsoenabled companies to easily forge one-on-one relationships with end consumers thus givingthem the scope to deliver tailor-made customised solutions thereby enriching the consumerexperience. This is value value for which consumers do not mind paying extra. But at theheart of this 'Value generation' lies Innovation.
Home and Personal Care Industry
Globally the Home and Personal Care Industry is witnessing the following trends:
2. Safety 'Sulphate Free - Paraben Free'
3. Natural Organic Green & Ayurveda
4. Water-Efficient convenient Home Care Solutions
5. Sensory Feel
Consumers see significant value in milder safer greener and sustainably manufacturedproducts.
This transformation has only been possible due to the innovative products launched bythe Home and Personal Care companies in the last few years. Particularly in India theemerging categories of Baby Care Facial Care Men's Grooming Premium Fabric CarePremium Home and Beauty Care have premiumised and re-energised this space.
While multinational companies continue to dominate the Home and Personal Care Industryinnovation has enabled the emergence of niche specialised players catering to the varioussub-segments of the Home and Personal Care Industry. These new players also known asmicro-market players are companies that have found a clear position in the Beauty andPersonal Care industry and have been able to reach out to the nation as well as the worldat large through the E-Commerce channels. With E-Commerce expected to double in the next 4years globally these companies stand to gain significantly.
Galaxy's Positioning: Capitalising on the Emerging Niche
Galaxy with its existing specialty care products viz. Mild Surfactants SunscreensNon-Toxic Preservatives Syndet and Transparent Bathing Bars is well equipped tocapitalise on the emerging trends. While Mild Surfactants and Preservatives have grownfrom ? 20 Crores in 2009 to ? 350 Crores in 2019 major growth for these has come from thedeveloped markets. When it comes to India these are growing though the demand is stillin its infancy thus offering your Company significant room for growth.
As premiumisation and growing awareness for milder paraben free products picks up inthe emerging markets going ahead our existing portfolio of products shall drive growthfor us.
Premium Fabric Care e.g. concentrated detergents have outperformed in the Home Carecategory globally. Galaxy with its premium performance surfactants has been able tocapitalise and grow through this. As the migration from bar soaps and cheaper detergentsto premium fabric care and liquid detergents gains traction our premium performancesurfactants shall also witness healthy growth.
Innovation has been the bedrock of our position and growth in the Home and PersonalCare Ingredients industry. Creating and launching products in response to the markettrends offering customised solutions and technical support has been Galaxy's way ofworking and creating value for its customers since inception. Continuing this practiceGalaxy launched -
GLI 21 - Our unique patented green mild amino acid based surfactant (mildest ofall) which shall find application in the Baby Care Facial Care Premium Beauty Care andMen's Grooming categories
Galguard Trident and NT - Our range of Paraben Chlorine & Formaldehyde FreeNon Toxic Preservatives
LLDC - Eco-friendly liquid laundry detergent formulation for the Home Caresegment
Galaxy today is working very closely with multiple start-ups e-commerce players andhome and personal care companies catering to the emerging categories of baby care facecare men's grooming and premium home and personal care segments. The efforts expendedtoday shall bear fruits in the coming 2-3 years.
Business Performance: 2018-19
Galaxy's Robust Business Model is based on the following strategies:
1. Mutually complimentary two-pronged strategy to drive growth in both the productsegments - Performance Surfactants and Specialty Care Products
2. Continue to focus on R&D and Product Innovation as part of our 'Consumer toChemistry' approach
3. Increase wallet share with existing customers and continued focus on expanding ourcustomer base
4. Mutually complimentary two-pronged strategy to drive growth in both the emerging andmature markets
5. Continue improving our Financial Performance through focus on operationalefficiencies and functional excellence
The Home and Personal Care Industry is a stable growing industry that offerssignificant opportunities for your Company in various markets - developed evolving aswell as the emerging markets. Galaxy is present in all these markets and it is this acrossthe globe presence that has enabled your Company to register a healthy volume growthdespite the sudden slowdown in its home market Egypt on account of down trading as wellas overall decline in end user demand.
Your Company logged in an 8.8% (adjusted volume) Y-O-Y volume growth with the SpecialtyCare segment logging in a healthy 18.8% growth. Work done over the last three years alongwith a diverse customer base across geographies enabled us to outperform the industry.
India logged in a healthy 12.1% volume growth with H-2 being comparatively slower.This was well ahead of the market growth rate of 7-9%. While we remain optimistic aboutthe India Consumption Story temporary slowdown in consumption shall impact 1-2 Quartersgoing ahead. Monsoons shall play a critical role in India's growth story.
Rest of World driven by Specialty Care Products was an outperformer clocking 29.2%growth. While the growth percentage is expected to taper off due to the base effect wesee these volumes growing sustainably as per the historical trends going ahead.
Broad slowdown exhibited by the Africa Middle East and Turkey markets which recorded adecline of 4.7% in volume terms (Y-O-Y) on the back of a broad slowdown in Egypt. Demandin Egypt saw a significant decline on the back of slowing local demand and down trading bycustomers. Egypt for the year under review has recorded a decline of 30.6% in volume terms(Y-O-Y). While Egypt reported a decline the other markets barring Egypt grew 17.4% involume terms despite the overall AMET market growing in the 1-2% zone as far asperformance surfactants are concerned.
To summarise Galaxy registered growth on all counts:
Volume Growth of 8.8%*
EBITDA Growth of 20.2%
PAT Growth of 20.9%
ROCE of 26.8%
EBITDA/MT of ? 16676 (improvement of 10.5% over previous year)
Cash Flow from Operations of ? 283 Crores
We incurred a CAPEX of ? 169 Crores in 2018-19 primarily for our performancesurfactants and debottlenecking for some of our products. This shall yield an additionalcapacity of 50000 MT going ahead from Q-1 FY 2019-20.
Sustainability: The Way of Life
The recent developments in China have disrupted supplies globally thus opening upopportunities for countries like India underscoring the importance of commitment toenvironment and regulatory compliance. 100% compliance and commitment to environmentsafety and health standards is the way forward for sustainable growth. The cost ofnon-compliance is significantly high due to the losses that occur due to supply chaindisruption and damage to one's brand equity. Customers therefore prefer partnering withcompanies that are compliant with all the environment regulatory and safety standards.This shall not only ensure uninterrupted supplies for them; but shall also ensuresustainable growth and development.
Your Company is committed to promote a cleaner and safer environment which is alignedto our business strategy. Combining power of science and technology with passion toinnovate the Company aims to advance sustainable development by collaborating with itsstakeholders. At Galaxy we aim to create a positive impact through our sustainabilityinitiatives. Your Company focuses on improving energy efficiency increasing renewableenergy consumption reducing waste generation reducing water consumption climate changemitigation projects and life cycle assessment.
Your Company continuously engages with its supply chain partners to improve operationalefficiency and integrate sustainability considerations into the value chain. The focus inthis year was to increase the strategic engagement with our global suppliers onsustainability agenda and develop sustainability awareness among the local suppliers. YourCompany conducts periodical site assessment as well as reviews the performance ofnon-financial indicators of its suppliers. Your Company has initiated interaction with itssuppliers for mutual value creation on the sustainability front. Our manufacturing sitesin India and Egypt are RSPO certified which reflects your Company's commitment to asustainable palm oil supply chain.
People: Our Assets
Galaxy is committed towards building talent and a high performance learning culturewhere our employees feel creative challenged and rewarded and have comprehensiveopportunities to demonstrate their skills and abilities. The Core Culture (Motto MissionVision 4 Cs and Values) along with the Identified 6 Leadership Pillars known as theGalaxy Way of Leading is one of our key levers for creating an engaging environment forour Employees. In line with our People Strategy we launched the Career Development Plan(CDP) which is part of Galaxy's commitment to recognize coach and invest in ouremployees' current and future developmental needs. CDPs are a key component of Leadershipand Talent Building Program which is devoted towards improving the organizational andindividual performance.
Corporate Social Responsibility
Significant work was done by your Company in the areas of Health-Hygiene EducationWomen Empowerment and Community Development in 2018-19:
Building check dams for water conservation and improving the accessibility ofwater
Providing infrastructural help in order to make pure drinking water accessible
Construction of community household toilets
Provision of E-learning kits career assistance for underprivileged students
Providing financial support for Divyang people and
Awareness about menstrual hygiene among girls and women income generationthrough vocational training and distribution of sewing machines were some of the majorinitiatives undertaken by your Company in this year
Awards and Recognitions
Your Company won many awards in 2018-19 primarily for its path-breaking innovationsand winning partnerships we share with our customers. To name a few:
1. Award: ICIS Innovation Award 2018 in the Best Process Innovation Category
a. For: Green Process for the manufacture of Amino Acid Surfactants
2. Award: Innovation Award - Silver at HPCI Mumbai 2019 a. For: Galguard NT
3. Award: Outstanding Contribution to "Partner to Win" by Unilever ACI 2019
The Competitive Edge
Finally to Conclude: What gives us the edge. Galaxy is the only company that is whollyand solely focussed on catering to the Home and Personal Care Industry. The dedicated andrelentless commitment demonstrated by your Company over decades has enabled it to becomethe 'mind partner' to some of the leading global multinational customers as well as theregional and local giants:
Customers prefer a one one-stop for every requirement - be it in terms ofproducts for multiple categories in terms of innovation or be it in terms of technicaland formulation expertise and support - Galaxy offers everything. Our wide product basketand ability to develop products in response to the emerging trends gives us the edge.
Our 1750+ customer base is not only spread across the globe but also spreadacross various customer categories. MNC's make up for 42% of the global home and personalcare share we are present across the globe with them. We have the regional leaders aswell as the local emerging niche players - a diverse customer base has enabled scalabilityand consistency when it comes to growth for us.
Sustainability forms the bedrock for us be it in sourcing manufacturing ordeveloping environment-friendly products. Our practices and core beliefs engulfsustainability in our working. In recent times given what is happening globallycustomers are attaching significant weightage to this aspect.
Finally it's all about having the right product - be it performance orspecialty. Creating the right product and solution for customers and partnering with themin their growth journey is - The formula for our sustainable growth.
With the right products committed and competent people expertise and deep knowledgeof the Home and Personal Care Industry - We at Galaxy are confident about enhancing ourstakeholders' value sustainably and consistently.