U.S. Markets closed
  • S&P 500

    3,351.60
    +53.14 (+1.61%)
     
  • Nasdaq

    11,117.53
    +203.96 (+1.87%)
     
  • Russell 2000

    1,510.34
    +35.43 (+2.40%)
     
  • Crude Oil

    40.59
    -0.01 (-0.02%)
     
  • Gold

    1,885.90
    +3.60 (+0.19%)
     
  • Silver

    23.86
    +0.26 (+1.11%)
     
  • EUR/USD

    1.1671
    +0.0003 (+0.0233%)
     
  • 10-Yr Bond

    0.6630
    +0.0040 (+0.61%)
     
  • Vix

    26.19
    -0.19 (-0.72%)
     
  • GBP/USD

    1.2845
    +0.0003 (+0.0257%)
     
  • BTC-USD

    10,818.32
    +39.51 (+0.37%)
     
  • CMC Crypto 200

    224.73
    +0.81 (+0.36%)
     
  • FTSE 100

    5,927.93
    +85.26 (+1.46%)
     
  • Nikkei 225

    23,511.62
    +307.00 (+1.32%)
     

Edited Transcript of NOCI.NS earnings conference call or presentation 25-Aug-20 5:30am GMT

Q1 2021 Nocil Ltd Earnings Call

Sep 1, 2020 (Thomson StreetEvents) -- Edited Transcript of Nocil Ltd earnings conference call or presentation Tuesday, August 25, 2020 at 5:30:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* P. Srinivasan

NOCIL Limited - President of Finance & CFO

* Sudhir Ramchandra Deo

NOCIL Limited - MD & Executive Director

================================================================================

Conference Call Participants

================================================================================

* Aditya Khetan

East India Securities Ltd., Research Division - Equity Research Analyst

* Aniruddha Naha

* Anubhav Rawat

Monarch Networth Capital Limited, Research Division - Analyst

* Avishek Datta

Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst

* Dhavan Shah

ICICIdirect.com, Research Division - Research Analyst

* Kaushal A. Shah

Dhanki Securities Pvt. Ltd., Research Division - VP of Equity Research

* Nav Bhardwaj

Anand Rathi Financial Services Limited, Research Division - Research Analyst

* Nirav Jimudia

* Pavan Kumar

* Praveen Kumar

* Ravi Mehta

Deep Financial Consultants Pvt Ltd - Research Analyst

* Rohit R. Nagraj

Sunidhi Securities & Finance Ltd., Research Division - Senior Research Analyst

* Shivan Sarvaiya

* Srihari Chintalapudy

PCS Securities Ltd., Research Division - Equity Fundamental Analyst

* Sunil Kothari

Unique Investments (Private) Limited - Partner

* Tarang Agrawal

Old Bridge Capital Management Private Limited - Investment Analyst

* Udit Gajiwala

SMC Global Securities Ltd., Research Division - Associate

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, good day, and welcome to Q1 FY '21 Earnings Conference Call of NOCIL Limited.

This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not 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. S. R. Deo, Managing Director of NOCIL Limited. Thank you, and over to you, sir.

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [2]

--------------------------------------------------------------------------------

Thank you. Good morning, and very warm welcome to everybody present on the call. Along with me, I have Mr. P. Srinivasan, our CFO; and SGA, our Investor Relations advisers.

We hope that you and your families are safe, healthy and secure. Hope you all have received our investor presentation by now. For those who have not, you can view them on stock exchange and company website. This COVID pandemic has not only impacted us today, but it looks like we have to learn to live with it in future also. Apart from health care, which was a major concern, the economies across the globe were impacted. The lockdown imposed by countries across the globe as well as by India, from end of March, was mainly to protect human lives, but significantly affected the livelihood of many. Business operations of all essential services were adversely impacted with us being no exception. Lockdown imposed by government due to COVID-19 completely wiped out manufacturing activities for the month of April and early May 2020. The manufacturing started from mid-May and picked up thereafter. The impact of the same is visible in our Q1 results, where due to restriction, our ability to service got severely constrained.

Further, the sub-optimal level of operations at the customers till end June, did impact our manufacturing activity. The net result of this factor obviously led to drop in sales by about 50% compared to the last quarter. Fortunately, we did not experience any adverse impact on our sales realization for the quarter. All of you are aware that in case of lower operating activities leads to lower absorption of fixed cost which happened in our case as well. As volume picks up, we are confident to improve the absolute EBITDA of the company in the coming months and quarters.

Despite such an adverse environment, we are continuously working on the strategy of maintaining volumes, market share from our customers and exploring the option of seeking additional volumes wherever possible. Our production level has started ramping up month-on-month basis, and pace of degrowth has slowed down to a large extent. From July onwards, we are running at a higher level. Our sales in July have been much better than June and the first 3 weeks of August as of today gives us confidence that the momentum picked up from end June is still sustaining. With the given outlook, we do believe that if these indicators sustain, the sales volume level of pre-COVID level are quite achievable. This, of course, does come with a rider, being any interruption happening at our end or customer end or vendor's due to COVID, will definitely impact the operations parameter.

As government relaxes the lockdown phase and more sectors of the economy starts getting into action, the replacement tire business is expected to pick up and this is -- this obviously forms 70% of the tire business. OEM volumes are still reeling from the impact of COVID, resulting in sluggish vehicle manufacturing, although the month activities are an increasing trend from data released by SIAM. As stated in the previous con call, the restriction on tire imports has led to many tire majors ramping up their utilization, giving an indication of pickup in volumes in the coming months. We have resumed operations at all our manufacturing facilities and are making concentrated efforts toward ensuring we are ready as the demand picks up. Export segment continues to grow, and our efforts in this segment is to widen our spread across different customers with a global presence.

Just to reiterate what we shared in our earlier con call, even during this time, some reputed international customers have approached NOCIL and have started discussion with us to be their global supplier across all continents. This is a huge opportunity for the company. By virtue of our long association with most international tire majors, the company also enjoys a preferred supplier status with their Indian operations. With increasing presence of these players in Indian market, NOCIL stands to gain significant leverage as a domestic supplier to these plants as well. With expanded capacity, the company is well prepared for meeting the increasing requirement.

I think this is the brief from my side. Now I would like to hand over to Mr. P. Srinivasan to give you update on financial performance. Over to Mr. Srinivasan.

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [3]

--------------------------------------------------------------------------------

Thank you, Mr. Deo, and good morning, everyone. Hope you all are doing good. Just to reiterate or run through the brief financials of this quarter ended June '20. To start with the performance of Q1 FY '21, obviously, it's not an indicator of a normal quarter or operations, and therefore, it's not strictly comparable with any other previous periods. As already informed by Mr. Deo, the revenue for the quarter got impacted by COVID, lockdown as was explained. Therefore, the revenue from operations stood at INR 107 crores, maybe around 50% of normal level as our manufacturing facilities were shut for the month of April and mid -- until early May 2020. With ease in lockdown restrictions, our manufacturing operations resumed from 8th May in a phased manner with strict safety and hygiene protocols. As Mr. Deo said, on a month-to-month basis, the production levels are increasing trend and it is continuing now.

The value addition for the quarter ended June is at INR 55 crores, which is about 48.6% of sales. This was an abnormal quarter where we had legacy cost of inputs booked during pre-COVID times, temporarily impacting our value addition.

On the operating EBITDA, it was subdued due to the under absorption of fixed costs on the back of some optimal operating levels. Therefore, EBITDA stood at INR 7 crores at a margin of 7.4%. We are confident to improve our EBITDA margins as sales starts picking up, volumes start picking up which are already being getting reflected in July numbers as well as the first 3 weeks of August performance. PBT for the quarter as a result is at INR 9 crores, which includes an income tax interest refund of INR 9.5 crores. That also fortunately helped us to show a profit before tax. The profit after tax is at INR 12 crores with margin at 11%. The profit -- the tax, we got a credit due to the previous year's income tax refunds. So those orders came in June, and therefore, we could recognize that.

Just to reiterate, the company continues to be debt-free and has sufficient liquidity to take care of its working capital requirements.

With this, I would like to open the floor for question and answers.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question is from the line of Nav Bhardwaj from Anand Rathi.

--------------------------------------------------------------------------------

Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [2]

--------------------------------------------------------------------------------

Sir, one -- my first question would be on the employee cost. Like in this quarter, we were at 16.5, and this is somewhat back to our Q3 '19 levels. So if you could shed some light as to how do we manage this? Is there a contractual labor involved? Or how does this move? And how should we expect this going forward, assuming that our revenues are going to improve from here?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [3]

--------------------------------------------------------------------------------

Basically, whenever operations are subdued and in the way COVID started, the pandemic started, most managements preferred to -- some managements preferred to go for an employee pay cut, job losses and other things. As a company, we decided not to offer increments this year, and to that extent, there is an effect on the incremental -- on the payroll staff cost as well as the retiral funds. Basically, what happens is when your increment is sanctioned, the retiral funds also gets added into the employee cost. So because of these 2 factors, we could probably save some cost for the quarter.

--------------------------------------------------------------------------------

Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [4]

--------------------------------------------------------------------------------

All right, sir. And in terms of the other expenses, sir, what would be a workable number, a normalized workable number?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [5]

--------------------------------------------------------------------------------

Nav, I think if you are looking at the conversion cost, basically other expenses are INR 28.5 crores as against INR 50 odd crores. Basically, during this period, almost for 1.5 months there was no activity. So therefore, there were expenses like plant maintenance, spares, there could be some contractors service-oriented jobs, which were not there. Therefore, we could save it. But I think on a -- if you are running the operations on a full scale basis, I think those costs will come back to normalcy, maybe some changes here and there will be there, we will definitely look into that. But I think one should not take INR 28 crores as a reference point in the future.

--------------------------------------------------------------------------------

Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [6]

--------------------------------------------------------------------------------

Right, sir. About -- regarding the volumes, as in -- we are almost a few months into the next quarter, as in like -- but could you give us an indication as to -- of the old capacity, what kind of utilization levels are we at? And the new capacity that we have? If not right now, how do we see it shaping during the current financial year for the new capacities?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [7]

--------------------------------------------------------------------------------

Nav, I think -- Nav, Mr. Deo very categorially stated to start, the volume is on an improving trend, increasing trend. We might (inaudible) it's not right on our part to say that we have achieved this volume and we are in the right zone. No, let's not -- let's watch the progress in the next 2, 3 months because more importantly, we have to see how far this is sustainable, how the suppliers are functioning, how the customers are functioning and how we are functioning. So the COVID impact can -- possibly, if there's no COVID impact on the business operation, the volume is definitely going to improve. And Mr. Deo gave a very specific indicator that if everything goes well, we are -- our -- actually the pre-COVID level is a distinct -- it is a virtual reality, which can come in. But let's keep our fingers crossed. But at this moment, it's not appropriate to talk about volume numbers.

--------------------------------------------------------------------------------

Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [8]

--------------------------------------------------------------------------------

Point taken, sir. One last point would be, sir, on depreciation that this is -- we've accounted for everything, right? I mean, this is a workable number for sure?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [9]

--------------------------------------------------------------------------------

No, depreciation, you have INR 150 crores capital that we have made. For that depreciation is likely to come in, which will have a INR 2 crore impact per quarter or INR 2 crores, INR 2.5 crores. So the workable number post capitalization of INR 450 crores, we are looking at INR 45 crores or INR 46 crores per annum.

--------------------------------------------------------------------------------

Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [10]

--------------------------------------------------------------------------------

And any indicative time frame by when will we start that?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [11]

--------------------------------------------------------------------------------

That, I think we have already mentioned in the previous call, by October '20.

--------------------------------------------------------------------------------

Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [12]

--------------------------------------------------------------------------------

October '20, maintain the same guidance.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

The next question is from the line of Pavan Kumar from Ratna Traya Capital.

--------------------------------------------------------------------------------

Pavan Kumar, [14]

--------------------------------------------------------------------------------

Sir, can you give us an indication of what would be aniline cost as a part of our raw material? And how are we planning to cope with the challenges that they are there in sourcing in the present context?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [15]

--------------------------------------------------------------------------------

We have always mentioned aniline, acetone, MIBK, and nitrobenzene constitute about 65% of raw material cost. That's number one. Aniline is available from India, Europe, China, and it is universally available. So it's not that one needs to worry about. And we have been sourcing from other markets as well.

--------------------------------------------------------------------------------

Pavan Kumar, [16]

--------------------------------------------------------------------------------

Okay. But any rough estimate, maybe it is 10%, 20% to aniline as the entire raw material cost?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [17]

--------------------------------------------------------------------------------

That is not appropriate at this stage to share it. We have already shared the major divisions, 65% of the 4 major divisions. I think, let's keep at that.

--------------------------------------------------------------------------------

Pavan Kumar, [18]

--------------------------------------------------------------------------------

Okay. Okay. And this quarter's, volumes from what I understood, sir, 50% of the volumes of Q4, right?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [19]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Operator [20]

--------------------------------------------------------------------------------

The next question is from the line of Rohit Nagraj from Sunidhi Securities.

--------------------------------------------------------------------------------

Rohit R. Nagraj, Sunidhi Securities & Finance Ltd., Research Division - Senior Research Analyst [21]

--------------------------------------------------------------------------------

Sir, first question is in terms of imports of rubber chemicals from China and the current inventories in the domestic market. So what is your view on this thing?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [22]

--------------------------------------------------------------------------------

Mr. Deo would like to answer that.

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [23]

--------------------------------------------------------------------------------

See, basically -- Rohit, it's very difficult to gauge what's happening in this because if you really see the overall mood, I think on one side, the government is propagating the self reliance. There is also a China Plus One strategy, which lot of people internationally are planning. Both these things are positive signs for NOCIL, but these are only indicators. When these indicators get converted into a business, okay, has to be seen. And between the indicators and the actual business realizations, there are lot of constraints and unforeseen situations, like what happens to COVID, okay? What happens to the overall economy? So overall, it looks positive. But that positive indication should get converted into business. And I think it's very difficult to guess.

--------------------------------------------------------------------------------

Rohit R. Nagraj, Sunidhi Securities & Finance Ltd., Research Division - Senior Research Analyst [24]

--------------------------------------------------------------------------------

Okay. That's fine. Sir, the other part, sir, last con call, we had indicated about the restricted tire imports. So what is your sense since then in terms of the domestic market? So has there been any increase in inquiries from our existing customers? And what is the sense you are gauging from that?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [25]

--------------------------------------------------------------------------------

I think Mr. Deo answered it in his earlier speech. The operating levels have been on an increasing trend right from mid-June onwards, and still continuing and sustaining. So that answers that operating rates of the tire manufacturing industry in India has increased.

--------------------------------------------------------------------------------

Rohit R. Nagraj, Sunidhi Securities & Finance Ltd., Research Division - Senior Research Analyst [26]

--------------------------------------------------------------------------------

Okay. And one just last clarification. Last time, we had indicated that we developed one new accelerator, which is an import substitute, and it was sampled out to the customers, and we are expecting some commercial quantities soon. So any update on this one?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [27]

--------------------------------------------------------------------------------

Yes. Yes. It's already on. It's significantly -- I mean, it's improved. I must say that the operating of that particular accelerator is on an increasing trend.

--------------------------------------------------------------------------------

Operator [28]

--------------------------------------------------------------------------------

The next question is from the line of Nirav Jimudia from Anvil Research.

--------------------------------------------------------------------------------

Nirav Jimudia, [29]

--------------------------------------------------------------------------------

Sir, my question pertains to the speciality sales for our company. So like what proportion of our sales last year would be considered as a specialty sale because you have mentioned sometimes earlier in a call that we are also selling some of our products that are categorized as a specialty chemicals. So if you can just share your perspective on that side of the business? And how it has grown over the last 5 years? So let's say, if you consider a base of 2015. So on a base of 2015, how it has grown, both in terms of sales, operating profit. If you can just throw some light on the same it would be very helpful, sir?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [30]

--------------------------------------------------------------------------------

Nirav, just to clarify, we are selling conventional rubber chemicals as well as chemicals for -- meant for specialized applications. Now in the rubber chemical industry, these constitute about 10% of the overall demand. In case of NOCIL basket, this constitutes about 25%.

--------------------------------------------------------------------------------

Nirav Jimudia, [31]

--------------------------------------------------------------------------------

25%?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [32]

--------------------------------------------------------------------------------

25%, number one. The advantage in this, it's not a high-value or a high-margin sort of thing. It is relatively a specialized technical application where not many competitors -- or not many players are there. So the competition is relatively minimal. So therefore you are virtually getting into a sort of cost cut scenario sort of thing. Second aspect here is that in the last 5 years, this was -- largely it is sold in the export market. Same way, last 5 or 6 years before, this was probably constituting 30% of export sales. Today, it is constituting 65% of export sales.

--------------------------------------------------------------------------------

Nirav Jimudia, [33]

--------------------------------------------------------------------------------

Okay. Okay. If you can just explain more in terms of how has been the margin profile over these 5 years? So is this business a more stable business in terms of generating the EBITDA percentage margins? Or there is also a volatility in this side of the business in terms of the margins moving up and higher? So if you can just explain on that?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [34]

--------------------------------------------------------------------------------

I think the margin profile on the whole has been -- if you look at the average margin profile, we think more or less, we'll be meeting that criteria, maybe plus or minus 10% of the margin, that's not a problem. But otherwise, everything is okay.

--------------------------------------------------------------------------------

Nirav Jimudia, [35]

--------------------------------------------------------------------------------

Okay. And sir, last question would be, so on that side of the business, are we almost running at the optimum level of capacity than in this new expansion, we have factored in capacity expansion for that side of the business also. If you can...

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [36]

--------------------------------------------------------------------------------

Just repeat your question, please?

--------------------------------------------------------------------------------

Nirav Jimudia, [37]

--------------------------------------------------------------------------------

Sir, I'm trying to say whether that part of the business, that is specialty chemicals, so are we operating at almost optimum level currently from the old capacity, which we were having, before this expansion?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [38]

--------------------------------------------------------------------------------

Yes, yes, definitely.

--------------------------------------------------------------------------------

Nirav Jimudia, [39]

--------------------------------------------------------------------------------

Okay. And in the expansion also we have taken care of this side of the business also (foreign language) in the expansion also?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [40]

--------------------------------------------------------------------------------

Yes, yes. I think the previous question was asked about the new product, there also we have started operating at a decent level. I'm not saying optimum level, but decent level.

--------------------------------------------------------------------------------

Operator [41]

--------------------------------------------------------------------------------

Next question is from the line of Kaushal Shah from Dhanki Securities.

--------------------------------------------------------------------------------

Kaushal A. Shah, Dhanki Securities Pvt. Ltd., Research Division - VP of Equity Research [42]

--------------------------------------------------------------------------------

Sir, some thoughts on the opportunity for us in U.S., where we have kind of done some work and we are also trying to export a significant number?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [43]

--------------------------------------------------------------------------------

U.S. is a large market. It's world's #2 market in the hierarchy of rubber consumption -- or rubber chemical consumption. We are targeting in that market definitely. With the China trade sanctions coming in against Chinese exports, we have got an opportunity and we have started doing that business from 2019 onwards. And so far, the trend has been good. Basically, I think in the earlier calls, we have been discussing or we are communicating that to establish volume, it's a long-drawn game because you have to establish your credentials in terms of delivery, quality and your pricing approach. It's a combination of 2, 3 -- 3 or 4 factors before the consolidation of volume happens. So we are going through an evaluation process and we are pretty confident that it will pick up in the coming years.

--------------------------------------------------------------------------------

Kaushal A. Shah, Dhanki Securities Pvt. Ltd., Research Division - VP of Equity Research [44]

--------------------------------------------------------------------------------

Sure. And sir, there was an earlier question also on this. So in terms of this prevailing kind of anti-China sentiment, both in India as well as in the U.S. We've also, I think, a few months back, made an appeal for the ADD to be kind of resumed. So any thoughts on that, sir? Meaning, does it open up any possibilities for us?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [45]

--------------------------------------------------------------------------------

See, we -- I think that we have already answered in the earlier call as well as the annual report which has been circulated. Basically, what we have stated here -- there is that we made an application for a product, one of the main antioxidant for anti-dumping petition. The government first examines the application, whether there is a prime facie injury. And once they are convinced there is a prime facie injury suffered to NOCIL, they have initiated a case. Now the investigation process will go on as per the DGTR rules. And hopefully, I would say, 1 year's time, maximum 12 months' time, the notification should come favorably. That's what we are hoping for. Let's keep our fingers crossed. But yes, we have taken action to initiate anti-dumping and we felt it was injuring our performance by excessive dumping by China and other competitors.

--------------------------------------------------------------------------------

Operator [46]

--------------------------------------------------------------------------------

The next question is from the line of Shivan Sarvaiya from JHP Securities.

--------------------------------------------------------------------------------

Shivan Sarvaiya, [47]

--------------------------------------------------------------------------------

Sir, couple of questions. One is on the value addition. Sir, you said that there has been certain legacy costs which have resulted in the temporary reduction. Sir, if you could just give some -- if you could just quantify the same and give some color there? And sir, qualitatively, sir, what would be the levers that the company is targeting to go back to the 52-odd percent margins that we used to do? And sir, the second question is on Slide #19. Sir, you have shown the reduction in the global rubber consumption. And the reduction is extremely huge where it goes back to 2013 -- and goes below 2013 levels. So sir, how do we look at our capacities getting filled in this environment? And how do we achieve growth and by when?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [48]

--------------------------------------------------------------------------------

I will answer it in few stages. One is on the value addition part. What we have lost, we have been giving a guidance of 50%, and I believe this quarter, we are at 48.8% or 48.6%. So effectively, we have lost INR 1.3 crores or thereabout. So it's not a significant amount, though for the quarter it looks significant, but in terms of overall thing, it's not a significant overall raw material cost. So basically, we have booked certain raw materials in January, February. And those consumptions took place in April, May, June when the current crude price fall and thereafter it happened. So that's the explanation for value addition. And our belief is that if we operate at reasonably good capacity level, we are confident of maintaining that 50%, unless we decide to go aggressively for volume increase or a price increase -- or price reduction, et cetera. As far as the rubber consumption is concerned, this is more -- I think the Slide 19 very specific states that this is a January-March annualized data. This is the January-March IRSG data, which has been released. From that, it has been annualized. And there, we find there is a 13% drop in consumption, largely in China which was 26%. So we believe this year, yes, there will be some reduction in the negative growth, but typically, in the last call, we have mentioned that general historical trends is whenever these sort of debacle happens, the next year will be robust once things settle down. I think we may have to visit 2008, '09 and '10, during the Lehman Brothers crisis, how it happened. Maybe that will give you an idea of how the business is likely to bounce back.

--------------------------------------------------------------------------------

Shivan Sarvaiya, [49]

--------------------------------------------------------------------------------

Okay, sir. And one last question, sir. In terms of any -- have you heard of any additional capacity is coming in China? Or are they going to be coming in? Any latest news on that?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [50]

--------------------------------------------------------------------------------

Yes. We have heard from China Sunsine, they are coming in accelerators. They have indicated something in antioxidants, but we are not aware of when exactly it is going to be commissioned. I think by the end of this year is what we understand. And something on (inaudible) But anyway we are not in (inaudible)

--------------------------------------------------------------------------------

Operator [51]

--------------------------------------------------------------------------------

The next question is from the line of Tarang Agrawal from Old Bridge Capital.

--------------------------------------------------------------------------------

Tarang Agrawal, Old Bridge Capital Management Private Limited - Investment Analyst [52]

--------------------------------------------------------------------------------

Just carrying on from the previous participant's question, sir. Sir, what is the -- maybe perhaps once the pandemic is over and things resume, internally, is there a benchmark that you'll have probably set up in terms of when you'll can -- when you'll are planning to reach 100% utilization?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [53]

--------------------------------------------------------------------------------

I think that this question has been answered during the last call. We had mentioned, originally, we had a plan of 3 years, but because of this 1.5 years sluggishness or restrained conditions, we are still believing 4, 4.5 years, we should get it. So by 2024, we are pretty confident to touch 100% capacity utilization.

--------------------------------------------------------------------------------

Operator [54]

--------------------------------------------------------------------------------

The next question is from the line of Dhavan Shah from ICICI Securities.

--------------------------------------------------------------------------------

Dhavan Shah, ICICIdirect.com, Research Division - Research Analyst [55]

--------------------------------------------------------------------------------

So I have a question on the incremental CapEx. So on the Slide #20, you have mentioned that the asset turnover would be around 2x of FY '18 price. So what is the price level right now versus the FY '18? And you also mentioned that the realizations are more or less stable now. So how do you see the realization will pan out over the period of time?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [56]

--------------------------------------------------------------------------------

Dhavan, the current -- if you look at current prices, I think we are looking at 1.85.

--------------------------------------------------------------------------------

Dhavan Shah, ICICIdirect.com, Research Division - Research Analyst [57]

--------------------------------------------------------------------------------

Okay. Okay. Okay. And is there any scope of improvement? Because you mentioned that the volumes are picking up. So are you seeing some green shoot in terms of the realizations?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [58]

--------------------------------------------------------------------------------

Not really, no major change. But what we are seeing is the volume has picked up. The operating level, I must say that for Q2 FY '21, will be in absolute terms, higher than Q2 FY '20. Whether we will touch the pre-COVID level, that's the second issue, but as compared to Q2 FY '20, Q2 FY '21 will be on a higher level.

--------------------------------------------------------------------------------

Dhavan Shah, ICICIdirect.com, Research Division - Research Analyst [59]

--------------------------------------------------------------------------------

Okay. Okay. And one last question is on the other income and the other expenditure. So this quarter, we have seen some INR 7-odd crore increase in the other income. So is there any exceptional over there?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [60]

--------------------------------------------------------------------------------

I think that we have already announced during the speech that this is the income tax -- old income tax refunds and interest thereto that has been recognized. So therefore, you are able to see a credit in other income by INR 7.5 crores. And also you are seeing a credit in taxation provision of INR 5 crores.

--------------------------------------------------------------------------------

Dhavan Shah, ICICIdirect.com, Research Division - Research Analyst [61]

--------------------------------------------------------------------------------

Okay. And in terms of the other expenditure, can you share how much is the variable and fixed cost over there, I mean the proportion?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [62]

--------------------------------------------------------------------------------

I think, in this quarter, it's not a representative one. But generally, we are talking about 50:50. The entire conversion cost, which I'm saying.

--------------------------------------------------------------------------------

Operator [63]

--------------------------------------------------------------------------------

The next question is from the line of Aniruddha Naha from PGIM India.

--------------------------------------------------------------------------------

Aniruddha Naha, [64]

--------------------------------------------------------------------------------

I just wanted to understand this tie-ups that you're talking about with global players. What are the kind of -- without naming clients as such, what kind of modalities are you talking? Are these long-term contracts or pricing fixed? If you could give some idea of how these contracts will shape up in terms of pricing and -- periodically?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [65]

--------------------------------------------------------------------------------

I think it's a process. Basically, when you are a supplier -- you intend to be a supplier to a tire customer, they first evaluate you. Now I'm just getting into the basics just for understanding -- clarity. There is an approval process. The approval process gets triggered if you're a new supplier, if you are an existing supplier with a new location, if you are an existing supplier with a new product, and if you are an existing supplier with an existing product with a new technology. Any of these 4 parameters gets touched, then the approval is required. These tire companies come and visit your plant, examine your records, understand the process, and they fix you -- they grade you as per their auditing standards of safety, quality, technical competency, there are so many things. Thereafter, we have to send samples. And only after the samples are evaluated, maybe sometimes some companies even manufactures tires also out of it, test those tires in different conditions before giving accreditation to them -- to NOCIL as their approved vendor. Only then the commercial trial starts -- the commercial order starts. Typically, these commercial trials are discussed on a quarterly basis. Unless we establish our consistency track record over 3 or 4 quarters, then only the business starts picking up in a bigger way. I hope I've answered your question.

--------------------------------------------------------------------------------

Aniruddha Naha, [66]

--------------------------------------------------------------------------------

And sir, how long does this process take? I mean, within this thing would it be -- if you can give some time frame of when, if at all it fructifies, how long will it take?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [67]

--------------------------------------------------------------------------------

If it is a new product, it may take 18 months. If it is an existing product in the market, maybe 6 months.

--------------------------------------------------------------------------------

Operator [68]

--------------------------------------------------------------------------------

The next question is from the line of Udit Gajiwala from SMC Global.

--------------------------------------------------------------------------------

Udit Gajiwala, SMC Global Securities Ltd., Research Division - Associate [69]

--------------------------------------------------------------------------------

The questions related to the anti-dumping duty. Sir, this time we have filed up for one product, if I'm not wrong. And how much that contributes to our top line?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [70]

--------------------------------------------------------------------------------

I would say, I think I've already answered in the last time's call. I think this is very sensitive today with the investigations going on. So I would not like to divulge this thing. Apologies for that.

--------------------------------------------------------------------------------

Operator [71]

--------------------------------------------------------------------------------

The next question is from the line of Anubhav Rawat from MNCL.

--------------------------------------------------------------------------------

Anubhav Rawat, Monarch Networth Capital Limited, Research Division - Analyst [72]

--------------------------------------------------------------------------------

Hello, am I audible?

--------------------------------------------------------------------------------

Operator [73]

--------------------------------------------------------------------------------

Yes, sir, you may go ahead.

--------------------------------------------------------------------------------

Anubhav Rawat, Monarch Networth Capital Limited, Research Division - Analyst [74]

--------------------------------------------------------------------------------

Just wanted to know, sir, there is this chemical called insoluble sulfur. So why don't you manufacture it? Have we ever tried or do we plan on doing it?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [75]

--------------------------------------------------------------------------------

Mr. Deo would answer.

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [76]

--------------------------------------------------------------------------------

I think this is one product, which we have never looked at it because I think, overall there seems to be an oversupply in this product. And we have concentrated more in terms of antioxidant, accelerator, specialty chemicals and have not looked at it, and we also don't intend to look at it.

--------------------------------------------------------------------------------

Anubhav Rawat, Monarch Networth Capital Limited, Research Division - Analyst [77]

--------------------------------------------------------------------------------

Okay. Okay. Sir, is it only because of oversupply? Or is the chemistry a bit tricky, I just wanted to understand that?

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [78]

--------------------------------------------------------------------------------

Basically, I think when you look at the feasibility, you look at everything, you look at technology, you look at quality, you look at the pricing, you look at the margins. So it's a combination of the oversupply, the next 5 years' demand in the business, the replacement, all these things you look at and then you decide whether the product should be looked at or should not be looked at. So it's not one parameter, it's various parameters, which sums up the strategy for a particular product.

--------------------------------------------------------------------------------

Operator [79]

--------------------------------------------------------------------------------

The next question is from the line of Ravi Mehta from Deep Financial.

--------------------------------------------------------------------------------

Ravi Mehta, Deep Financial Consultants Pvt Ltd - Research Analyst [80]

--------------------------------------------------------------------------------

Just 2 quick questions, sir. Where do you think...

--------------------------------------------------------------------------------

Operator [81]

--------------------------------------------------------------------------------

Mr. Mehta, can you speak closer to the handset, please? Your voice is not audible.

--------------------------------------------------------------------------------

Ravi Mehta, Deep Financial Consultants Pvt Ltd - Research Analyst [82]

--------------------------------------------------------------------------------

Now is it fine?

--------------------------------------------------------------------------------

Operator [83]

--------------------------------------------------------------------------------

Yes sir.

--------------------------------------------------------------------------------

Ravi Mehta, Deep Financial Consultants Pvt Ltd - Research Analyst [84]

--------------------------------------------------------------------------------

Just 2 quick questions. Do you think -- where do you think you are in the journey of the feeding process from the new plant? So I think that would be at a fairly advanced stage. So are we expecting some decent-sized orders, number one. Number two, in terms of gross margins, you already explained that by and large we will make a comeback. So given the entire mix of the accelerators and the specialty chemicals, where do you think will the gross margins reside? I mean, steady state it will be down from the previous years, but maybe 100, 150 basis points lower than the previous years, but say around 23%, 24% would be the corresponding EBITDA margins, would it be fair to say that?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [85]

--------------------------------------------------------------------------------

Gentleman, as far as the EBITDA margins are concerned, I think it's too premature to talk about it because the way the current situation is happening, we are unsure how long or how far the operations will sustain and how long customers are operating, what is the demand of automobile. There are so many challenges. The momentum has picked up, we are not denying it, and that is showing you that's a healthy sign. And we are likely to do a performance in Q2, better than last year's Q2. So that's a good sign. As far as the pricing approach is concerned, it all depends on what is the volume you're getting in. So it depends on the offers coming at that time, at that relevant point of time and how the competition is working. The major issue here is that the competition continues to experience -- the prices are little aggressive. So one of the competitors recently have announced their results and they in their summary, they concluded that the market conditions are likely to be challenging for the next 6 months. They also added that the prices seems to have bottomed out. It is supposed to bounce back, but we are waiting for the good time.

The question is when and how who will bell the cat. The other issue which is happening is in the -- on the market front, there are 2 challenges which the customers are facing. One is a China situation and a non-China situation. So we being a non-Chinese player, we seem to have an opportunity to ramp up our capacity utilization because inquiries are coming, discussions are happening. These all things will take some time before it fructifies into a series of business volumes or operational improvement. So that's what I can say, it's more qualitative, but we cannot be getting into some objective numbers or quantified numbers.

--------------------------------------------------------------------------------

Ravi Mehta, Deep Financial Consultants Pvt Ltd - Research Analyst [86]

--------------------------------------------------------------------------------

Yes. I appreciate that. But given the mix of now that you have all the 22, 23 kind of rubber chemicals that are possibly available in the market and be present in all the categories, do you think there are certain categories where we could have advantage over competition or even that's not fairly clear?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [87]

--------------------------------------------------------------------------------

I think each player in the market has different philosophy. We have certain Chinese competitors who are more interest in volume and they operate their plant fully and -- regardless of what is the price. Whereas we believe to approach the business as a one-stop shop with 22 products to the customer. So we are not discriminating only a customer A or customer B, we want to satisfy and service all customers. So the approach from our side relatively is different as compared to a player like maybe a Chinese competitor. So that's the first part. The second part is we still feel that we are likely to get opportunities and we are waiting for the right time.

--------------------------------------------------------------------------------

Ravi Mehta, Deep Financial Consultants Pvt Ltd - Research Analyst [88]

--------------------------------------------------------------------------------

Yes. But in some of the categories, do you think we have a distinct advantage or even...

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [89]

--------------------------------------------------------------------------------

Yes, yes, definitely. Especially in certain specialty chemicals, we are much ahead. Mind you one thing, in all these parameters, the important fact, which we have never -- we don't intend highlighting, but I just want to bring it to your attention, these margins are reflecting net of anti-dumping duty. There is -- no anti-dumping duty is there. But you have a Chinese competitor who is enjoying a benefit of serious subsidies and other government protections. So when we are able to compete and match the Chinese price in our selling prices and still making margins, it gives us confidence that our technology, our business approach is quite robust, and we are -- and with the blend of 22 products, we are able to manage it quite well.

--------------------------------------------------------------------------------

Ravi Mehta, Deep Financial Consultants Pvt Ltd - Research Analyst [90]

--------------------------------------------------------------------------------

Perfect. And last thing, sir, if I may. I mean, you alluded to 2008, '09, '10 being a historical time line from which we can possibly draw. Do you think next year, we are fairly, fairly decently placed to possibly play out the...

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [91]

--------------------------------------------------------------------------------

In fact, I think in the coming times -- in the coming months and the coming quarters, which basically you have the capacity setup. It is just that you have to play the volume game. You need to just encash each opportunity, which comes across your way. Maybe it may even tantamount to some aggressive pricing. Fair enough. You have to -- Mr. Deo outlined the conference with a statement that it's important to capture volumes because that is where the plant utilization comes in. Unless the plant utilization happens, then the optimization and other benefits of -- manufacturing benefits will come in. So therefore, it's important to ramp up the capacity. That's our focus. And we will continue to adopt that approach to increase our capacity quarter-after-quarter is what our goal is.

--------------------------------------------------------------------------------

Ravi Mehta, Deep Financial Consultants Pvt Ltd - Research Analyst [92]

--------------------------------------------------------------------------------

Yes. Sir, my question was more from the point of view that you had alluded in one of our meetings that the foreign suppliers, particularly the U.S. guys want a decent supplier, #2, and that should be non-Chinese. So given that fact and given that background, I think the tailwind is significantly in our favor in this kind of scenario. So from that point of view, you see reasonably solid volume growth at least next year, if not this?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [93]

--------------------------------------------------------------------------------

Next year and next 2 years, I'm expecting a reasonable volume growth.

--------------------------------------------------------------------------------

Operator [94]

--------------------------------------------------------------------------------

The next question is from the line of Aditya Khetan from East India Securities.

--------------------------------------------------------------------------------

Aditya Khetan, East India Securities Ltd., Research Division - Equity Research Analyst [95]

--------------------------------------------------------------------------------

Sir, my question is on the free cash flow. Sir, for the next 2 to 3 years, a good amount of free cash flow would be generated. So how are you planning to utilize the same since we have no major CapEx plan as of now?

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [96]

--------------------------------------------------------------------------------

See, basically, you are aware that we will be finishing our CapEx plan maybe by Q3 of this financial year, okay? Because if you really see, INR 150 crores still continues to be in capital work in progress. Now having completed the plan, as we have been saying, the emphasis will be on increasing the volumes in the market. Obviously, as an organization, we are never static. We continue to evaluate various avenues, okay? But it's too premature to talk about anything at this point of time. But as an -- only one thing which I can say that, yes, we continue to evaluate the opportunities which are available in the market. And when we have a right opportunity and a right plan, we would like to share it with you.

--------------------------------------------------------------------------------

Aditya Khetan, East India Securities Ltd., Research Division - Equity Research Analyst [97]

--------------------------------------------------------------------------------

Okay, sir, okay. And sir, on exports outlook, sir, some of the export geographies like Japan has witnessed severe impact of the COVID-19. So how -- so what is your export outlook considering we have witnessed good growth in exports over the last year?

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [98]

--------------------------------------------------------------------------------

I think the export outlook, yes, I agree that the countries like Japan are severely affected. But one thing I can say that our export volumes are more or less same or they are increasing, okay? Now the tire industries which are existing in Japan, they are -- they have worldwide operations, and they always would give a business at some other location. So we are very confident that our export volumes will definitely continue to grow. But the rate of growth will depend on the pandemic, the specific countries. But we are confident that we will have that share in the export market.

--------------------------------------------------------------------------------

Aditya Khetan, East India Securities Ltd., Research Division - Equity Research Analyst [99]

--------------------------------------------------------------------------------

Okay. So we had given a guidance earlier of reaching 40% by FY '22 or FY '23. So does that guidance sustain?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [100]

--------------------------------------------------------------------------------

There, actually, we would like to clarify. We said export will constitute 40% of the revenue basket at peak levels. We are going to achieve peak level in '23 or '24, more possibly early, we will be touching 40%. Rather, I would like to add, we were prepared for 40% export basket and 60% domestic basket. But if situation changes, domestic market increases, we will not mind it.

--------------------------------------------------------------------------------

Aditya Khetan, East India Securities Ltd., Research Division - Equity Research Analyst [101]

--------------------------------------------------------------------------------

Okay, sir. And just the last question from my side. Sir, would it be possible to share the U.S. volumes for FY '20?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [102]

--------------------------------------------------------------------------------

No, no, I think that's -- it's a small volume. It's not an absolute -- it's not a great volume. We are about 1,000 tonnes thereabout, 1,000, 1,500, each one.

--------------------------------------------------------------------------------

Operator [103]

--------------------------------------------------------------------------------

The next question is from the line of Sunil Kothari from Unique Asset Management.

--------------------------------------------------------------------------------

Sunil Kothari, Unique Investments (Private) Limited - Partner [104]

--------------------------------------------------------------------------------

Really a great job you are doing on cost measures. Sir, my first question is to Mr. Deo. During last 5 to 7 years, what we have tried and done is we backward integrated with some intermediates, we previously may not be doing and we've added some products, we added. So now onwards what we are doing is we are adding some specialized products, accelerators and all. So any major area over which you will be working for next 3, 5 years, where we are lacking or maybe we want to add some product basket or some opportunity on which you would be working on strategically, sir?

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [105]

--------------------------------------------------------------------------------

Yes. Okay. First and foremost thing, I think, you have understood it rightly that as a rubber chemicals business, we always decided that we will not depend on buying intermediates because buying intermediates is something where you are actually buying your own raw material from your own competitor because once the intermediate is manufactured, the intermediate manufacturer has always a capability to manufacture finished product. And that's the philosophy on which we have been always working. And that's what exactly we have done. For antioxidant and accelerator we are 100% on our own, and we will never buy intermediates. We will manufacture intermediates and then we will convert it into finished. So that philosophy continues. As far as the future is concerned, I think I mentioned 5 minutes back, as an organization, our first goal is to consolidate the CapEx which were invested, that means, look at additional volumes, look at how best we can shield the capacities at the earliest. Simultaneously, yes, the work continues to happen in terms of business strategies, products, new products. But as I said, I think this is too premature to talk and at the right time when we have the right plans, we would definitely share it with you.

--------------------------------------------------------------------------------

Sunil Kothari, Unique Investments (Private) Limited - Partner [106]

--------------------------------------------------------------------------------

Great sir. And sir, my last question is to Srini. Sir, during -- just ballpark or some indicative feed on the pricing trend. During last, say, 1 or 2 years, per tonne realization, because we are adding some qualitatively better product or maybe some specialized product. So overall, how is the pricing trend? Because raw materials are moving, so we are maintaining very good gross margin and valuation. But the overall price trend of our products, just any indicative understanding?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [107]

--------------------------------------------------------------------------------

Just to give a flavor of it, one of our Chinese competitor has given an announcement the prices have decreased by 24% -- or 22%, whereas we have said in the -- from the peak levels, we have lost 15%. That's the peak of the price effect because when -- we never touched the peak level of pricing and the Chinese went full house consequential scarcity of product on account of pollution control. We never touched that peak. So therefore, we have reached minus 15%, whereas they have reduced minus 24% from the peak level.

--------------------------------------------------------------------------------

Sunil Kothari, Unique Investments (Private) Limited - Partner [108]

--------------------------------------------------------------------------------

Okay. And now we are seeing stability in the pricing?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [109]

--------------------------------------------------------------------------------

At least this quarter, we witnessed stable prices. So -- when we have to look at every quarter, it's a battlefield every quarter which our marketing chief encounters. So obviously, he will try his best -- he and his team will try its best for the best realization, but you have to understand how the competition is working.

--------------------------------------------------------------------------------

Operator [110]

--------------------------------------------------------------------------------

Next question is from the line of Srihari from PCS Securities.

--------------------------------------------------------------------------------

Srihari Chintalapudy, PCS Securities Ltd., Research Division - Equity Fundamental Analyst [111]

--------------------------------------------------------------------------------

Actually on the Dahej facility, could you please explain the OpEx differential between this facility and your Mumbai facility? And in terms of capacity, what is the share currently? And what will it be once the entire CapEx is done? And secondly, if you could talk a little about the product pipeline, new product pipeline?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [112]

--------------------------------------------------------------------------------

I think if I understood the question correctly, you are asking about the capacity? Our manufacturing facilities presently before the expansion was 43,000 at Navi Mumbai and 12,000 at Dahej. Post expansion of this INR 450 crores, it will be 55 55, 50% each, as far as the capacity is concerned. The second question on new products, I think, Mr. Deo has already briefed the previous (inaudible) have already answered it. There some work is going on. But this is not an appropriate time to announce it. As and when some substantial progress is there, we will definitely announce it. I didn't understand your OpEx -- the third question, the OpEx question. What was that question?

--------------------------------------------------------------------------------

Srihari Chintalapudy, PCS Securities Ltd., Research Division - Equity Fundamental Analyst [113]

--------------------------------------------------------------------------------

Yes, yes, yes. Since your Dahej facility is fully automated, I wanted to understand how is the operating expenditure different? And to what extent this defers compared to your Mumbai facility?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [114]

--------------------------------------------------------------------------------

I think in terms of OpEx, what happens is the maintenance per se the old plant in Navi Mumbai is much more older and the new plant in Dahej is new. So obviously, the maintenance will undergo a change. Similarly, the overheads of labor, et cetera, in Dahej will be relatively lower as compared to Navi Mumbai. However, the new -- Dahej will have the new plant depreciation, the entire say INR 400 crores or INR 600 crores CapEx additional depreciation will come in Dahej as compared to Navi Mumbai. These are the distinct analysis -- features of business variations. I don't think so we can share anything beyond this.

--------------------------------------------------------------------------------

Operator [115]

--------------------------------------------------------------------------------

The next question is from the line of Chirag Patel, an individual investor.

As there is no reply from the current participant, we move to the next question from the line of Rohit Nagraj from Sunidhi Securities.

--------------------------------------------------------------------------------

Rohit R. Nagraj, Sunidhi Securities & Finance Ltd., Research Division - Senior Research Analyst [116]

--------------------------------------------------------------------------------

Just one clarification. So in your opening remarks, Mr. Deo mentioned that the global customers are classified mostly from regional to global supplier. So anything which has commenced -- process that has commenced post this or any validation process which has started in the last quarter or 2, 3 months?

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [117]

--------------------------------------------------------------------------------

Rohit, as I mentioned, these are the statements or the strategic statements made by the customer. So of course, this strategic statement does not get converted into business. But the positive thing which has happened is they have started sampling our product. Now between the sampling and the actual business, the gestation period could be anywhere between 9 months to 12 months. It is -- this segment was made just to give you a strategic indication how the business is moving. But it will take maybe anytime between 9 to 12 months to get converted into actual business.

--------------------------------------------------------------------------------

Operator [118]

--------------------------------------------------------------------------------

The next question is from the line of Chirag Patel, an individual investor.

--------------------------------------------------------------------------------

Unidentified Participant, [119]

--------------------------------------------------------------------------------

I have one question. With respect to the anti-China sentiment, which is gaining momentum with this pandemic, so how are we looking ourself to get market share in restricted products, particularly to the chemical sector?

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [120]

--------------------------------------------------------------------------------

I think, yes, I agree with you that there is anti-China sentiment. And if you really look at it outside China, NOCIL is one of the largest rubber chemicals manufacturer with a basket of 22 products. So it looks positive. Could be an opportunity. But these are all qualitative statements which we're making because at the end of the day, how long these sentiments continue, whether this sentiments continue into business or maybe after a year, it dies down, these are the questions for which I have no answers. But if you really ask me, I think if it continues, NOCIL has a much better prospect in terms of rubber chemicals business.

--------------------------------------------------------------------------------

Unidentified Participant, [121]

--------------------------------------------------------------------------------

Okay. So in our CapEx plan and which are estimate in terms of volume and turnover expectation internally, did we incorporate this sentiment or even though the sentiment will not get (inaudible) expectation, we wouldn't have any change in our guidance?

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [122]

--------------------------------------------------------------------------------

No. In fact, I think as we have been saying that we have adequate volumes, okay? And if this sentiments get converted into volumes, we can look at it very differently. So if there is an immediate need for volumes, I think the volumes are available with us, practically for all the major products like accelerators and antioxidants. So as we walk along, we will have to observe how these sentiments get converted into actual actions and business, okay? No worry in terms of volumes. I think volumes, we'll be able to supply if it gets into action.

--------------------------------------------------------------------------------

Operator [123]

--------------------------------------------------------------------------------

The next question is from the line of Praveen Kumar from Equitas Capital.

--------------------------------------------------------------------------------

Praveen Kumar, [124]

--------------------------------------------------------------------------------

I had one question on the capacity -- incremental capacity plans of the Chinese competitors. Apart from China Sunsine, players like Kemai Chemicals and Shandong Huatai. I just wanted to understand, do you have any sense of whether they are progressing with those plans? Or do you think they are on hold in your view?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [125]

--------------------------------------------------------------------------------

If you can look at the press release of China Sunsine or investor call, probably there is a reference to that. I think in that reference, they are saying one of the competitors had IPO plans, it has failed. And the second competitor is operating below 50%. That is the news we got from China Sunsine's press release. To get information from China is a big challenge. But this is what we could get the information from the conference call. So maybe you can have a look at that.

--------------------------------------------------------------------------------

Operator [126]

--------------------------------------------------------------------------------

The next question is from the line of [Chirag Tekriwal], an individual investor.

--------------------------------------------------------------------------------

Unidentified Participant, [127]

--------------------------------------------------------------------------------

Sir, my question is, what was the estimated demand-supply ratio pre-COVID worldwide? And what do you expect demand-supply ratio to be 3 years from now? From your previous presentation, it was inferred that 40,000-tonne demand increases every year.

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [128]

--------------------------------------------------------------------------------

Yes. I think that this year will be an aberration, 2020 will be an aberration. We are not denying it.

--------------------------------------------------------------------------------

Unidentified Participant, [129]

--------------------------------------------------------------------------------

Sir, I'm not asking for 2020, post-COVID, I am not asking. I am asking pre-COVID, what was the estimated demand-supply ratio? And...

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [130]

--------------------------------------------------------------------------------

We were always looking at 3% to 4%.

--------------------------------------------------------------------------------

Unidentified Participant, [131]

--------------------------------------------------------------------------------

3% to 4%. And what was the demand-supply ratio? I mean, was it at 90% capacity worldwide, 95%, 100%, what was that?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [132]

--------------------------------------------------------------------------------

I think in 2018, the market became supply short and demand excess. In 2019, because of the slowdown in the automobile sector, there was no new additions to the capacity, but the supply became excess, demand became short -- demand stagnant. So I think what is more important is once the economic conditions improve, we can expect supply to be shorter, I mean, what we understand. But it's too early to talk about it, but this is what the outlook is because as of today, only 2 players have announced expansion plans out of 3, (inaudible) Worldwide little bit, NOCIL and China Sunsine. Others, we are not that aware of how much they are expanding. So any corrections in demand or any improvement in economic activity will create a problem. And otherwise, there cannot be any rational for any investment by China Sunsine in this -- to announce for such big investments in the last around 6 months.

--------------------------------------------------------------------------------

Unidentified Participant, [133]

--------------------------------------------------------------------------------

Okay. My second question would be, what would be the CapEx outlook for the next 3, 4 years? Only the maintenance CapEx for NOCIL. I'm assuming there would not be any growth CapEx in the foreseeable future?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [134]

--------------------------------------------------------------------------------

I think Mr. Deo already answered. We are working on something. As and when an appropriate time, we will announce it. That's one part. Maintenance CapEx is not more than INR 10 crores a year.

--------------------------------------------------------------------------------

Operator [135]

--------------------------------------------------------------------------------

The next question is from the line of Avishek Datta from Prabhudas Lilladher.

--------------------------------------------------------------------------------

Avishek Datta, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [136]

--------------------------------------------------------------------------------

Sir, when you say that your Q2 volumes will be higher than last year numbers, so what kind of price drop which we have seen from -- on a Y-o-Y basis on a Q2-to-Q2 basis?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [137]

--------------------------------------------------------------------------------

I don't have that number right now, Avishek. But on the whole, we have said in '19, '20, the price dropped by 15%. That's broad number we can give. But if you're looking at sequential quarter, that is Q1, Q2, there could be marginal corrections here and there, but nothing great.

--------------------------------------------------------------------------------

Avishek Datta, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [138]

--------------------------------------------------------------------------------

Okay. And sir, this Q1 revenue drop of 50% on a sequential basis, there is no price correction. It's only volume correction which we are seeing?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [139]

--------------------------------------------------------------------------------

it was only -- mainly volume corrections. There were few price corrections, but it was not material to be talked about.

--------------------------------------------------------------------------------

Avishek Datta, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [140]

--------------------------------------------------------------------------------

Okay. And lastly, sir, any time line when this anti-dumping duty, whatever notification is likely to come out, any time line on that, sir?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [141]

--------------------------------------------------------------------------------

See, that we have already announced. That is about, maximum time is 12 months. We are in touch with the government authorities, let's see.

--------------------------------------------------------------------------------

Operator [142]

--------------------------------------------------------------------------------

The next question is from the line of Pavan Kumar from Ratna Traya Capital.

--------------------------------------------------------------------------------

Pavan Kumar, [143]

--------------------------------------------------------------------------------

Sir, what would be the demand -- the breakup in terms of volumes, exports versus domestic in Q1?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [144]

--------------------------------------------------------------------------------

Q1 actual sales?

--------------------------------------------------------------------------------

Pavan Kumar, [145]

--------------------------------------------------------------------------------

Yes. Actual sales, what would be the proportion of exports and domestic?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [146]

--------------------------------------------------------------------------------

In Q1, I think we have 50-50 sales volumes, domestic and exports.

--------------------------------------------------------------------------------

Pavan Kumar, [147]

--------------------------------------------------------------------------------

Okay. And what was the CapEx we executed in Q1? And how much of CapEx is pending until Q3?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [148]

--------------------------------------------------------------------------------

I think we have entire INR 150 crores, it will be capitalized by October. I think somewhere in October we are going to capitalize.

--------------------------------------------------------------------------------

Pavan Kumar, [149]

--------------------------------------------------------------------------------

Okay. So it is already done?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [150]

--------------------------------------------------------------------------------

No, no, October '20, it will be capitalized. And we said that will be a quarterly incremental depreciation of INR 2 crores per quarter, INR 2 crores, INR 2.5 crores something like that.

--------------------------------------------------------------------------------

Pavan Kumar, [151]

--------------------------------------------------------------------------------

Okay. Fine. And what would be the cash on the balance sheet right now, sir?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [152]

--------------------------------------------------------------------------------

Which period?

--------------------------------------------------------------------------------

Pavan Kumar, [153]

--------------------------------------------------------------------------------

Excuse me?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [154]

--------------------------------------------------------------------------------

Which period cash balance?

--------------------------------------------------------------------------------

Pavan Kumar, [155]

--------------------------------------------------------------------------------

Yes. As on June?

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [156]

--------------------------------------------------------------------------------

June, I think that's not appropriate to share right now. We will share the cash balances of September. We've already shared as of March, I think. What's not required, we'll not share, please.

--------------------------------------------------------------------------------

Operator [157]

--------------------------------------------------------------------------------

As there are no further questions, I now hand the conference over to Mr. S. R. Deo for closing comments.

--------------------------------------------------------------------------------

Sudhir Ramchandra Deo, NOCIL Limited - MD & Executive Director [158]

--------------------------------------------------------------------------------

Thanks a lot. I take this opportunity to thank everyone for joining the call. I hope we have been able to address all your queries. For any further information, kindly get in touch with our CFO or Strategic Growth Adviser, our Investor Relations Adviser. Request all of you to be safe under the given circumstances. Do take care of near and dear. Thank you, once again.

--------------------------------------------------------------------------------

P. Srinivasan, NOCIL Limited - President of Finance & CFO [159]

--------------------------------------------------------------------------------

Best wishes to all of you.

--------------------------------------------------------------------------------

Operator [160]

--------------------------------------------------------------------------------

Thank you. Ladies and gentlemen, on behalf of NOCIL Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.