Galaxy Surfactants Ltd Management Discussions

% Lower due to lower profitability in current year

The Home and Personal Care industry continues to witness strong growth driven by premiumisation, wellness, sustainability, and science-backed formulations. According to Fortune Business Insights and Grand View Research, the global personal and home care market reached a valuation of approximately USD 772 billion in 2025 and is projected to grow at CAGR of 7.2% by 2030.

India continues to remain one of the fastest-growing markets globally. According to Economic Times, the Indian beauty & personal care market is expected to grow from USD 27 Billion in FY25 to USD 39 Billion by FY30, driven by Gen Z consumers, digital commerce, rising incomes, and premium aspirations.

As a leading performance surfactants and specialty ingredients company, Galaxy continues to align its innovation pipeline with emerging trends across beauty, personal care, home care along with derma and wellness inspired solutions.

1. New Consumer Era Shaped by Aspiration and Demographics

India continues to be the fastest-growing major economies globally, supported by strong domestic consumption and favorable demographics. According to United Nations Population Fund, over 65% of Indias population is below 35 years, creating a young, digitally connected, and aspiration-led consumer base shaping future consumption trends. Consumption patterns are shifting from basic need to fulfilment toward aspiration-led purchasing, with a greater emphasis on value, quality, and personal identity.

2. Gen Z at the Core of Market Transformation

India has one of the worlds largest Gen Z populations, with approximately 377 million consumers (ET-Snapchat Gen Z Index). Gen Z plays a disproportionate role in shaping category trends. These consumers are increasingly influencing demand across beauty, wellness, and home care categories through preference for self-expression, science-backed formulations, sustainability, and premium experiences. The market is gradually shifting from traditional brand-led consumption toward platform-led, creator-influenced, and digitally driven purchasing behaviour across categories.

- The working-age population is set to grow from __? million (_ >>) to ___.? million (_ __).

- Today, _ ._% of Indians are of working age-and for the next decade, this share will stay close to _?%, giving India one of the worlds most favorable demographic profiles.

Source: Ministry of Statistics & Programme Implementation

3. Skinification of Beauty and Personal Care

Skinification continues to be one of the most important trends shaping the industry. Consumers are expecting skincare-like benefits across hair, body, intimate hygiene, and sun care. This has led to a convergence of categories. Colour cosmetics are evolving to include skincare benefits, while haircare is increasingly focused on scalp health and targeted solutions (Entrepreneur India, December 2025).

At the same time, consumers are moving away from harsh cleansing agents toward sulfate-free systems and amino acid-based surfactants, alongside low pH, barrier-friendly formulations that support long-term skin health. Rising sensitivity concerns and advances in skin science are further accelerating the shift toward microbiome-conscious, preventive care solutions.

This trend is particularly relevant for Galaxy, as brands increasingly prioritise mild, high-performance ingredients that deliver effective cleansing without compromising skin and scalp comfort.

The Beauty and Wellness industry is increasingly being shaped by a convergence of science, self-care, and preventive health. Consumers are moving beyond cosmetic enhancement toward holistic well-being, seeking products that support long-term skin health, protection, and overall wellness. Trends such as skinification, ingredient transparency, personalized care, and wellness-led beauty are driving demand for mild, high-performance, and multifunctional formulations. According to McKinsey, the global wellness economy is valued at nearly USD 2 Trillion, reflecting growing consumer investment in products that combine efficacy, safety, and wellness benefits.

4. Rise of the "Skintellectual" Consumer

The beauty consumer is becoming more informed, ingredient-aware, and science-led. Consumers are increasingly reading labels, understanding ingredients, and seeking products backed by credible claims. This trend, often referred to as "Skintellectualism," is shifting beauty from superficial claims toward evidence-led, formulation-led performance.

McKinseys wellness research highlights that consumers are increasingly asking, "What does the science sayRs" while evaluating wellness and beauty choices. Trust, therefore, is increasingly driven by science, transparency, and demonstrable outcomes, rather than brand legacy or perception.

For Galaxy, this shift strengthens the relevance of specialty care ingredients that deliver efficacy, safety, and mildness through advanced formulation science, supporting the development of differentiated, consumer-centric solutions.

5. Role of sensoriality in elevating experience

While efficacy has become foundational, the importance of sensorial experience has increased significantly, particularly in driving repeat usage and long-term loyalty.

Consumers increasingly associate product quality with superior sensorial experience, including foam texture, fragrance, spreadability, transparency, and after-feel. Innovations in water-based formulations and invisible filters are enabling products to align more closely with consumer expectations of comfort and usability. Sensoriality is now a key dimension of premiumisation, enhancing both perceived value and consumer satisfaction.

Home Care is increasingly evolving from basic functionality toward performance-led, premium, and care-oriented consumption. According to Fortune Business Insights, the global household cleaning products market is projected to exceed USD 252 Billion by 2032, driven by growing consumer demand for hygiene, convenience, premiumisation, fragrance-led experiences, and sustainable cleaning solutions.

Consumers increasingly seek products delivering superior cleaning, fabric care, fragrance enhancement, safety, convenience, and sustainability. Home Care is gradually being reframed as an extension of personal care, with an emphasis on care, comfort, and sensorial engagement.

Consumption growth is expanding beyond metros into Tier 2, Tier 3, and emerging urban centres. According to Kantar, smaller households now account for 50% of India compared to 37% in 2008, supporting higher per capita spending and accelerating penetration across premium and convenience-led Home and Personal Care categories. The rapid adoption of digital platforms has enabled deeper market penetration, bringing new consumers into organised consumption channels.

Premiumisation in India is scaling in a distinctive manner. Rather than being confined to high-income groups, it is expanding through accessible formats and price-point innovation, enabling broader participation. Smaller pack sizes, optimised formulations, and targeted offerings are making premium experiences more attainable. This has resulted in the emergence of a mass premium segment, where aspiration and accessibility coexist.

Preventive care and daily protection are emerging as high-growth segments across Personal Care. According to Grand View Research, the global sun care market is expected to exceed USD 15 Billion by 2030. Consumers are demanding formulations that deliver aesthetic experiences, including lightweight textures, rapid absorption, and residue-free finishes. This is particularly evident in categories such as sunscreens, where historical barriers such as greasiness, stickiness, and visible residue are being addressed through advanced formulation technologies.

Galaxys next-generation sun care platform, GALSORB? SunBliss, built around the concept of "Blissful Endurance," is closely aligned with the rising demand for high-performance, long-lasting, and sensorially superior sun care solutions, tailored to evolving consumer lifestyles and diverse climatic conditions. The platform is designed to deliver broad-spectrum protection, including UVA defence, while enabling water-resistant formulations and addressing emerging concerns such as blue light exposure, meeting the need for comprehensive, multidimensional protection in daily use.

Formulation paradigms are undergoing a significant shift, driven by the increasing complexity of consumer expectations and product performance requirements. Formulators are progressively seeking multifunctional ingredient systems that can deliver enhanced efficacy, mildness, transparency, and superior sensoriality, while simplifying development processes.

Galaxys Galsoft? Lumithic platform enables faster formulation cycles, cold-process manufacturing, and greater flexibility, while addressing critical requirements such as formulation clarity, foam aesthetics, and viscosity management. Positioned around "Effortless Elegance," Galsoft? Lumithic delivers self-thickening at low pH, mild cleansing systems that bring clarity and stability to formulations.

A young and digitally connected population is accelerating adoption cycles and shaping demand. Consumers are increasingly informed and selective, prioritising efficacy, transparency, and performance. At the same time, premiumisation is extending across segments, supported by accessible innovation.

This convergence is positioning India as a high-growth, structurally resilient market, where scale is complemented by evolving consumer expectations and increasing demand for differentiated, performance-led solutions.

6. Co-creating Care for Indias Emerging Beauty Entrepreneurs

Indias D2C beauty and personal care ecosystem has evolved significantly over the past decade, led by a new generation of innovative brands that have brought fresh thinking, sharper consumer understanding, and differentiated products to the market. Brands such as Mamaearth, mCaffeine, Plum, Foxtale and many others have helped shape this journey, inspiring a wider wave of entrepreneurs to build purposeful and sustainable beauty businesses.

Galaxy has been privileged to be part of this evolution. Over the years, we have worked closely with emerging and established D2C brands, supporting the launch and scale-up of products across categories such as body washes, face washes, soaps, cleansers, and other formats. While Galaxy may not be the brand name visible on the shelf, our ingredients are present in many of the trusted products that consumers choose every day.

As new entrepreneurs enter the ecosystem with strong ideas and consumer insight, we seek to play an enabler role through our dedicated D2C vertical. The objective is to help translate concepts into market-ready, scalable products with end-to-end development support. This initiative reflects our continued efforts to embed our brand philosophy of Chemistry Creates Care into practice, by strengthening our role as a co-creator across the value chain.

Our engagement spans concept-to-prototype development, customized formulation and blend solutions, inventory-efficient ingredient management, technical guidance, regulatory awareness, quality and safety support, structured knowledge-sharing sessions, and commercialization assistance. For founders from non-technical backgrounds, we place special emphasis on education and capability building, helping them make informed decisions with confidence.

Backed by our distribution network, reliable supply chain, and application expertise, we also support shorter development timelines and faster speed to market. This enables emerging brands to respond quickly to consumer needs while maintaining the quality and consistency required to build long-term trust.

Through this approach, Galaxy continues to be a trusted co-creator for Indias emerging D2C beauty and personal care brands. From concept to shelf, our role is to enable brands to move faster, build better, and scale with confidence. In doing so, we bring our brand essence to life: co-creating care that helps our customers create consumer loved products.

Fatty Alcohol and Fatty Acids accounted for the majority of our raw material purchases. Fatty Alcohol is sourced from South East Asia, with multiple suppliers in Indonesia, Malaysia and Thailand.

On the supply side, fatty alcohol raw material markets remained structurally tight and elevated through the year, reflecting a confluence of feedstock constraints, capacity dynamics, and geopolitical disruptions. While availability improved during the early part of the year, oleochemical prices stayed firm despite the harvest season, as PKO production lagged expectations, keeping feedstock costs supported. A brief correction in Q3, driven by record palm oil output and inventory build-up, proved transient as market participants turned cautious amid expectations of further declines and absorption of new fatty alcohol capacities that were still stabilizing. Thereafter, prices re-firmed as seasonal supply tightness in Southeast Asia, front-loaded restocking, and geopolitical tensions in the Middle East led to higher freight, insurance, and logistics costs, tightening effective supply.

Petrochemical feedstocks, while relatively stable for most of the year, saw sharp cost pressures towards the end due to supply disruptions and availability constraints in key inputs, exacerbated by elevated crude prices. Overall, supply conditions remained volatile and skewed towards tightness, underscoring the persistent impact of feedstock limitations, logistics challenges, and global geopolitical uncertainties on raw material availability and pricing.

The IMF and World Bank both indicate that crude oil prices are expected to remain elevated in 2026, but with significant uncertainty driven largely by geopolitical risks. According to the IMFs April 2026 World Economic Outlook, oil prices are projected to average around $82 per barrel in 2026 under its base scenario, assuming that current Middle East disruptions ease by mid-year; however, the Fund highlights a wide range of outcomes, with prices potentially rising to around $100 in a prolonged disruption scenario and up to $110-125 in a severe supply shock case. In contrast, the World Banks April 2026 Commodity Markets Outlook projects a slightly higher average of about $86 per barrel in 2026, reflecting a sharp increase from 2025 due to supply shocks and shipping disruptions, particularly in the Strait of Hormuz, but it expects prices to moderate to around $70 by 2027 as supply conditions normalise. Overall, both institutions agree that oil prices will be volatile and relatively high in the short term, driven by geopolitical tensions and supply constraints, but are likely to ease over the medium term as disruptions subside and global supply-demand balances stabilise.

-Global Risks: The global economic environment remains volatile, with several significant risks on the horizon. One of the most pressing concerns is the ongoing geopolitical tensions, particularly the escalation of conflicts in regions like the Middle East and the Red Sea area. These conflicts can disrupt global supply chains and trade routes. Additionally, the recent trade tariff war between major economies, such as the US and China, continues to create uncertainty and could lead to increased costs and supply chain disruptions

-Climate Risk: Delay in Monsoons or Below Average Monsoons in India may halt the growth momentum. Rural recovery critical requisite to ensure demand momentum in India. Catastrophes on account of climatic disasters pose the risk to global supply chains and while the risk cannot be quantified; it does adversely impact consumption

-Operational Risks: Unavailability of Key feedstocks / Constrained availability of critical raw materials or slower than expected recovery in demand may have a bearing on volumes which may adversely impact our FY 2027 performance

-Gestation Risks: While Destocking cycle has ended, delay in new launches or slower than expected restocking / recovery cycle of Premium specialties will adversely impact profitability going ahead

-Logistic Risks: Container unavailability or sudden increase in Freight costs or increased lead times due to sudden change in routes as seen during the Red Sea crisis pose risk to volumes and overall profitability

Looking ahead to FY27, the Company remains cautiously optimistic, with early indicators pointing to a recovery in India, underpinned by resilient consumption trends and increasing momentum in specialty and premium segments. LATAM and APAC markets are also showing signs of improvement, as customer demand gradually stabilizes following macroeconomic and supply-chain disruptions. For our AMET business, the evolving geopolitical situation in West Asia will remain a key area of focus, and the Company will closely monitor developments and their potential impact on regional demand, feedstock availability, logistics networks and broader supply chains. While uncertainty persists, the Company remains committed to maintaining operational agility and ensuring continuity of supply to customers across markets. In the United States, the reversal of earlier tariff measures is expected to open incremental opportunities in specialty care ingredients, supporting traction in higher-value offerings.

WhileFY26wasshapedbyextraordinaryexternalchallenges-including geopolitical conflicts, logistics disruptions, elevated petrochemical raw material prices and supply constraints-we continue to remain confident in the structural strength of our business, underpinned by resilient customer relationships, a diversified geographic footprint, a strong India franchise, and a disciplined operating approach.

During the year, the Company articulated its long-term strategic roadmap through its Capital Market Day, reafirming its commitment to delivering sustainable, profitable growth while strengthening its position as a globally relevant specialty ingredients player. Vision 2030 builds on the Companys established philosophy of investing ahead of the curve in products, people, and infrastructure, followed by phases of superior performance, a model that has consistently enabled value creation across cycles.

As part of this strategic evolution, the Company has expanded its Vision to explicitly include Beauty & Wellness alongside its core Home and Personal Care focus. This refinement reflects the Companys intent to broaden its participation within the same value chain, enabling entry into faster-growing, premium and innovation-led segments such as skincare, sun care and derma-based actives. The revised Vision represents an expansion within the core rather than a diversification away from it, thereby preserving strategic focus while unlocking new growth opportunities across high-value segments

To achieve Vision 2030, the Company has defined a comprehensive growth framework built on five strategic levers that collectively drive both scale and quality of earnings. These include growth through premiumisation and penetration, expansion into new categories and applications, increasing engagement with D2C brands and private labels, strengthening sustainability and clean beauty capabilities, and leveraging partnerships and inorganic opportunities.

Growth in emerging markets will continue to be driven by penetration, supported by improving consumption trends, while developed markets will provide opportunities through premiumisation and higher-value formulations. The Company is also expanding its application base into newer categories such as skincare, sun care and wellness-linked segments, thereby enhancing its addressable market. The increasing importance of D2C brands and private labels is expected to create opportunities for deeper collaboration, supported by the Companys strong formulation capabilities and customer-centric approach. At the same time, sustainability and regulatory evolution remain central to the strategy, with focused investments in green chemistry, safer ingredients and regulatory-compliant solutions. In addition, the Company intends to actively pursue partnerships, alliances and targeted acquisitions to accelerate entry into new technologies, markets and segments, particularly within Beauty & Wellness.

The execution of the Companys strategy is supported by a strong framework of qualitative enablers, which are embedded across the organisations operating philosophy. These include a continued focus on innovation-led growth, a customer-centric approach aimed at enabling customer success, development of a strong talent pipeline, disciplined execution with calibrated risk-taking, and a deep commitment to ESG principles and responsible business practices.

These enablers, referred to internally as the Companys governing leadership pillars, ensure that strategic initiatives are translated effectively into operational outcomes. They enable the Company to balance growth ambitions with execution discipline, build long-term relationships with customers, and sustain its competitive positioning in a dynamic global environment.

A key shift outlined under Vision 2030 is the Companys enhanced focus on expanding from its traditional strength in rinse-o_ categories to a broader participation in leave-on segments. Historically, the Company has built leadership positions in applications such as hair care, bath and shower, and oral care, with a strong foundation in surfactants.

The leave-on segment, which includes skincare, sun care, cosmetics and derma applications, represents a larger and more value-accretive opportunity globally. These segments are characterised by higher innovation intensity, greater technical complexity and superior margin profiles. The Companys growing capabilities in specialty ingredients, combined with its strong formulation expertise and customer relationships, provide a robust platform to expand its presence in these high-growth areas. This transition is expected to enhance both the scale and quality of growth over the medium to long term.

From a geographic perspective, the Company has adopted a differentiated strategy across key markets to optimise growth opportunities while leveraging its established strengths.

In India, which remains the primary growth engine, the Company will continue to focus on defending its leadership position while driving growth through deeper penetration, premiumisation, and expansion across customer segments including D2C brands. Structural tailwinds such as rising disposable incomes, increasing consumption and expanding digital ecosystems are expected to support sustained growth in this market. Similarly In the AMET region, where the Company has a strong presence supported by its manufacturing footprint and customer base, the strategy remains focused on defending and growing its position through improved competitiveness, enhanced customer engagement and operational resilience.

In the Rest of the World with Strategy of Winning in the Americas and Europe, the Company is pursuing a more targeted expansion strategy. The Americas market offers significant opportunities for growth through deeper penetration and leveraging the TRI-K platform, while Europe represents a key geography for specialty-led growth supported by localisation initiatives and increased on-ground presence. These markets provide access to higher-value segments and are expected to play a critical role in the Companys long-term growth trajectory.

The Company remains committed to delivering sustainable long-term value creation for its shareholders through a combination of consistent earnings growth, improvement in product mix, expansion into higher-margin segments, and disciplined execution. The focus on specialty ingredients, premiumisation and operational excellence is expected to drive margin expansion and enhance overall profitability.

Value creation will continue to be underpinned by a balanced approach that combines organic growth, strategic investments and selective inorganic opportunities, ensuring that growth is both sustainable and value-accretive.

The Company follows a disciplined and balanced capital allocation framework aligned with its long-term strategy. Capital deployment is guided by a clear prioritisation of growth investments while maintaining financial prudence and shareholder returns. A significant portion of operating cash flows is allocated towards organic growth opportunities, including capacity expansion, innovation and capability building, while maintaining adequate headroom for inorganic initiatives such as acquisitions and strategic partnerships.

At the same time, the Company continues to maintain a commitment to shareholder returns through dividends, while ensuring that its balance sheet remains strong and resilient to support future growth.

As part of its strategic roadmap, the Company has articulated clear financial aspirations for 2030, including a doubling of volumes, 2.5 times growth in EBITDA, and sustained return on capital employed of over 22 percent.

These targets reflect the Companys confidence in its strategy, the strength of its competitive position, and the underlying growth potential of the industry in which it operates. By combining the strength of its core business with strategic expansion into high-value segments, supported by disciplined execution and capital allocation, the Company is well positioned to deliver sustainable growth and create long-term value for all stakeholders.