GHCL Ltd

NSE:GHCL

Earnings Call Transcript 2021-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Q1 FY '21 Results Conference Call of GHCL Limited, hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Rohit Sinha of Emkay Global. Thank you, and over to you, sir.

[Rohit Sinha, Research Analyst]

Thank you. Good evening, everyone. I would like to welcome the management and thank them for giving us this opportunity. We have with us from GHCL, Mr. R.S. Jalan, Managing Director; and Mr. Raman Chopra, CFO and Executive Director of Finance. I would now hand over the call to them for the opening remarks. Over to you, gentlemen.

[Ravi Shanker Jalan, MD & Executive Director]

Thank you, Rohit. Good evening, and a warm welcome to all of you on today's earning call of Q1 FY '21 results. I'm joined by Raman, our CFO; along with Sunil and Abhishek from Finance team.As the global COVID crisis evolves even further, we are now witnessing a much wider impact on the economics around the world. These are the trying and uncertain times and understandably, there is a sense of unease and concern. The lockdown has resulted in suppression of the demand at large and more severely in nonessential categories. However, since the last month, we are witnessing improvement in demand outlook in general. This will have a ripple effect, which will help in revival of economy. The economic crisis due to COVID-19 has impacted soda ash market around the world due to demand erosion in downstream sectors, especially glass industry. The manufacturers worldwide are sitting on inventories and had to resort to cut down the production level. The situation was no different in India where owing to subdued demand Indian industry also had to lower the plant utilization. Due to focus on hygiene, detergent sector in India had witnessed the fastest recoveries with improved offtake.The flat glass industry has now started back with some construction and auto industries commencing operations. Currently, they are reportedly working at around 70% capacity. Accordingly, we expect overall, soda ash demand to recover by at least 10% to 15% in the coming quarter with the progressive improvements in the next 2 quarters. However, until the situation of oversupply persists, there would remain a pressure on the pricing. We are positive that the impact of the same will be partially mitigated by focus on the operating efficiencies and cost consciousness. In textiles, the first 2 months witnessed huge demand contractions due to lower retail activities due to COVID outbreak. Both apparel and home textile initially witnessed a lower offtake as consumers remained away from the marketplace. However, it is believed that the pandemic would result in a shifting of supply chain from China to India that will benefit both the spinning and the home textile. Also with the restrictions now easing out, it is likely to improve demand for the garments and the home furnishings. We expect a quarter-on-quarter improvement beginning Q2 this year. I would now request Raman to take over to discuss this quarter's financial performance. Thank you.

[Raman Chopra]

Thank you, sir. Good evening, and a very warm welcome to all of you in our first earnings call for FY '21. The performance has been significantly impacted during this quarter due to COVID in terms of both top line and profitability. Revenue for the quarter is INR 440 crores as compared to INR 879 crores of Q1 FY '20, which is down by about 50%. This is primarily due to lower operations because of COVID-19 and lower selling prices as compared to Q1 FY '20. EBITDA for the quarter is INR 84 crores as compared to INR 222 crores of Q1 FY '20 and is down by 62%, mainly due to lower volumes and pricing due to COVID in both the segments. Consequently, EBITDA margin for the quarter is 19% as compared to 25% in Q1 FY '20. The profit after tax for the quarter is INR 17 crores as compared to INR 103 crores of Q1 FY '20. Overall, net impact on profitability is around INR 100 crores during the quarter due to COVID.In chemicals segment, the soda ash sales volumes have been impacted by about 34% due to demand disruption in downstream sectors that is detergent and glass, as the country remains in lockdown mode for over a month in the quarter. Oversupply and slowdown due to COVID further impacted the soda ash pricing. There has been a 14% decline in realization over Q1 FY '20, where as a major part of which has already happened last year, which has been informed then. The April-June quarter saw a decline of about 2% over Q4 FY '20. Accordingly, the quarter registered a revenue of INR 346 crore in chemicals as compared to INR 588 crores of Q1 last year. EBITDA for the quarter is INR 80 crore as compared to INR 188 crores in Q1 FY '20, and the EBITDA margin in the chemical segment has come down to 23% as compared to 32% in Q1 FY '20. In the textile segment also witnessed severe impact of COVID outbreak as there was no major activity for the first 40 to 45 days, and the revenue for the quarter is therefore INR 94 crores as compared to INR 292 crores in Q1 of FY '20. EBITDA for the quarter was INR 4 crores as compared to INR 34 crores in Q1 FY '20, registering EBITDA margin of only 4.8% during the quarter. The ROCE for the quarter is 13% and ROE 15%. We generated a cash profit of INR 50 crores from the operations, and we lowered our debt by INR 48 crores during the quarter. We now welcome discussions on the performance and would be happy to take up all the questions that you may have. Thank you so much.

[Operator]

[Operator Instructions] The first question is from the line of [ Saket Kapoor ] from [ Kapoor & Company ].

[Unknown Analyst]

Hope, sir, everyone is well, and I pray to god that things should improve from here so that things normalizes for everyone, everyone's life normalizes, has not been the case for last 4 months.Sir, firstly, sir, this time, we have not come up with the volume data. So sir, if you could share what the production and the sales number? I'm not looking for comparison, I'm looking only for this quarter data.

[Ravi Shanker Jalan, MD & Executive Director]

See, as you know that there is a severe competition in the market at this point of the time. So it is always advantageous to us for at this point of the time, we give you a guidance on the or the number on the basis of the utilization. As we have indicated that production almost around 50% and on the capacity, and the demand is down by 34% as compared to the same quarter last year.

[Unknown Analyst]

Right. Sir, I'm just putting emphasis on Page #25 of your -- Page 25 of the presentation sir. Sir, it points to a much grimier picture globally, sir, if you could dwell more on the same, sir, you have given the reasons like the specification there on Page #25. So if you could dwell more on it?

[Raman Chopra]

Yes. See, first of all, let me give you our views in terms of the overall soda ash business globally. As you know that the COVID had made an impact to the across the globe. No country has been spared from this pandemic. And therefore, the impact of this has been felt in across the world. All the major soda ash producers or the consumers everywhere, there's an impact. If I start with the largest producer and the largest consumer, China, you'll find -- of course, we don't have the exact data from the China and from any source, we don't have any other countries, also the data, at this point of the time, because everybody is restricting their data at this point of the time. However, my understanding at this point of the time is that China had reduced their production recently, and their demand is also down by almost around, if I can say, in the first quarter for them, which is the second quarter, I think their demands are almost down by 30%. However, all these data, I'm saying, based on my experience and based on whatever the discussion we have off-line with many of the representatives of China or the global soda ash experts. A similar situation you will find in every part of the world, and therefore, everywhere, you will find the demand has been reduced. Now people have started reducing the production also, but by the time, some inventory buildup will happen globally. Same thing applies with the Turkey, same thing applies with the U.S., same thing applies with other parts, Europe and everywhere. Our understanding and 2 things that I want to highlight. Now what we are seeing is, gradually things are improving more than what we expected in the beginning of the pandemic. And what our sense is that because of this production cut, the excess supply situation which has been built will get neutralized over a period of next 2 quarters. Probably, you will find a more demand supply balancing happening after that. And that will help you in terms of, if you look at, things will be improving significantly beyond that. And probably '21, '22, probably will be a much better year because one thing also is happening is that everywhere the investment which was happening or was committed to the soda ash has been withheld at this point of the time. Therefore, when the demand recovery will take place, I think supply enhancement will not happen. All the investment, which was planned in the U.S. or in China, whatever the information we have that has all been put on hold. Probably, that will help the recoveries faster in the next year. Same thing applies with the soda ash in India. And just, I want to give you a small update on this. If you look at the quarter 1, you will find chemical demand de-growth was around 40%. Glass was 95%, if I am talking about the glass bangle; if I am talking about glass container, 45%; flat glass was 60% down. So therefore, all along, there was a demand de-growth. However, I'm seeing a clear recovery in the quarter 2 and quarter 3 and going forward. Now if I can say, for India, you will find that all the glass plants are almost now started, flat glass I'm talking about. Bangle has also started. So probably, by end of this quarter, probably, to some extent, a large portion will kind of a -- will get to a normal situation. This is what my understanding. Of course, this all depends on reoccurrence of the pandemic and things like that, I don't know. But otherwise, we see a good recovery going forward.

[Unknown Analyst]

Sir, on anti-dumping duty part.

[Ravi Shanker Jalan, MD & Executive Director]

Yes, anti-dumping, I just want to update you. Anti-dumping, as I've informed in the earlier call, on the 2 countries, specifically to Turkey and U.S. was filed, and interim reliefs are waiting to be at the highest level of anti-dumping department. That may happen, I don't know when it will happen. But it is only waiting for the final concurrence from the highest level.

[Unknown Analyst]

And sir, on REKOOP, if you can add some point on it, that it is one of our venture, which we had done with Reliance, I suppose. So if you can throw some light on it, what is the development on that front on the REKOOP? What is the business they have done?

[Ravi Shanker Jalan, MD & Executive Director]

Yes, REKOOP, in the textile, we have launched this REKOOP with a lot of expectation out of this REKOOP. And we have been able to place that product also in one of the retail -- very prestigious retail in the U.K. But unfortunately, the customer expectation or the customers offtake has not happened the way we thought of. So sales are down in the REKOOP, and probably that is giving a little bit of a de-motivation to us along with that retailer also, because the customer somewhere has not -- is not willing to give kind of a premium for the sustainability. And second, somewhere, the reluctance on the part of usage of the polyester, recycled polyesters somewhere is not being seen. So probably, it is -- at this point of the time, I would not say that I have good news on this, but we will keep on pursuing this. And whenever -- now based on this pandemic, maybe that some more focus comes on the sustainability, and that can give some upside on that brand, probably, time will tell. But at this point of a time, I don't think we have good news to say.

[Unknown Analyst]

Sir, flue gas opportunity, sir, last point, flue gas opportunity and glass panels were used for solar panels, are we into it, that if you can just take into context what has been told in the Reliance AGM by Mr. Mukesh Ambani as far as flue gas, using them, they are also going to track carbon dioxide. So are we working on this partner because REKOOP, if I'm not wrong, Reliance was our -- one of the partners. So are they looking to this flue gas opportunity? Because if that happens, we will get a very sound partner with deep pockets, and we can leap forward where we can -- where -- what we did -- to achieve the INR 10,000 crore enterprise value target, which you have, if you can throw some light or views or thoughts on it?

[Ravi Shanker Jalan, MD & Executive Director]

See, flue glass, as I have been telling in the last -- some of these calls, we are very excited about the flue gas overall opportunity in that. And that is where the sodium bicarbonate are being used to neutralize the flue gas. And that -- at this point of a time, there were some trials which have started in some of the government PSUs where some material of sodium bicarbonate is also gone. But because of this pandemic, some trial has not happened. Probably that is taking some time. In the meantime, we did a complete detailed study, marketing study by some of the experts, and we definitely see a big opportunity in the flue gas where the sodium bicarbonate, and we are ready for our plan once the opportunity comes on making investment because there's not going to be a very large investment on that opportunity because sodium bicarbonate has to be produced from soda ash, so we are ready with the plan and everything. The question is only when this demand comes. So far as the partnership is concerned, at this point of the time, it will be premature from my side to speak about this partnership. But definitely, we are looking at some opportunity of a partnership, it is something which is under discussion, it happens.

[Unknown Analyst]

You are in talks with EFG funds like in -- okay, okay, I got your point.

[Ravi Shanker Jalan, MD & Executive Director]

It will not be possible for me to speak more on this.

[Operator]

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

[Rohit R. Nagraj, Senior Research Analyst]

Sir, we have seen that there is substantial cost reduction during the quarter, other operating expenses. Certainly, it will be a concern to the plant utilization level but how much of this cost saving has occurred, which is probably onetime in nature and which can -- which is permanent reduction in terms of cost due to certain measures that we have taken at our end?

[Ravi Shanker Jalan, MD & Executive Director]

See, very valid question. Let me -- as you rightly said, the cost reduction, which you are seeing in the figure is primarily to a great extent it is relating to the lower activity which is happening in the plant. However, some [Technical Difficulty] like interest costs. One of the prime focus for us is the interest cost, where we see definitely a good improvement happening going forward on that. So we have taken a lot of initiative on the interest. Similarly, on the overheads, on the employee cost, and all those things, wherever it is possible we are taking that.In terms of the number, at this point of a time, I don't think I will have a specific number to give it to you. But management is very, very focused on -- we are spending a lot of time on looking at every opportunity as a cost. Because we understand on one side, our revenue because of the pandemic has been impacted, so therefore we have a responsibility to look at all the costs, where detailed exercise is going on, everywhere. We have created a team for this. We have created a group of people where lot of new ideas have been compiled with. The work is going on this. In the first quarter, I don't think you will find too many numbers -- too much big number on the cost reduction, but lot of initiatives have been taken on this.

[Rohit R. Nagraj, Senior Research Analyst]

Sir, another question is in terms of Q1 performance. So if we look at the utilization level it was about 50%, however, demand is down by about 34%, which implies that probably we had some kind of inventories at our end during the end of March, and we have consumed those inventories during the quarter. So how is the situation in terms of inventories for us and generally in the industry?

[Ravi Shanker Jalan, MD & Executive Director]

See, you are very right. On one side, the inventory reduction happened across the industry, okay? Like production, in our case, is around 50%, whereas the demand de-growth is around 34%. So obviously, this 16% of reductions has happened to the inventory. So surely, the inventory at the end of the March was much higher as compared to that, in the end of June, the inventory has gone down. And probably, this will -- I can say at this point of a time, it's reasonably at a optimum level, maybe a few hundred thousand -- maybe a few thousand tonnes more. But same thing will apply to the other competition also. So overall industry's level has gone down in the industry.

[Rohit R. Nagraj, Senior Research Analyst]

Okay. And sir, just last clarification. In terms of imports, has there been any reduction in imports in Q1 because of the COVID-19 issue? And how we expect the situation to go ahead from imports perspective?

[Ravi Shanker Jalan, MD & Executive Director]

Very important question and very valid questions. Almost the import is down more than 50%. If I remember the number 260, something was there against that, which is around 110 or 115, something of that number. So I have a number in front of me. My colleague has given me the number. I think this quarter, the number of imports is roughly around 115,000 tonnes, against last year, the same quarter was 260,000 tonnes, so almost more than 50% reduction. And we expect that the further -- of course -- and this reduction is primarily also, as I said, the glass industry has been very severely impacted, and the major imports comes in the glass industries.Now the glass industry will improve, so automatically the number of -- import number will also increase. However, our understanding is, overall this year, the number will be much lower as compared to the last year, which will be -- my understanding is not less than 30% reduction should be there.

[Operator]

[Operator Instructions] The next question is from the line of Sarvesh Gupta from Maximal Capital.

[Sarvesh Gupta, Founder]

Sir, first question on the utilization guidance for quarter 2, you are saying that 50% will go up to 70%, which means that INR 350 crores of revenues will go up to around INR 500 crores. And that would mean because of the cost saving on imports et cetera, so we will broadly be at the same EBITDA level at Q1 of -- at Q2 of FY '20. Is that understanding right?

[Ravi Shanker Jalan, MD & Executive Director]

See, like I said, at this point of the time, our understanding is that utilization level will be much better than the quarter 1. It should be around 70%. Obviously, on the other side, the cost will also go up because variable cost and your fixed cost, there are many costs which are linked with the operations of the higher capacity, will go up. How the number will pan out at this point of a time, it will be very difficult to speak about that number, but yes, this number will be reasonably better than this quarter.

[Sarvesh Gupta, Founder]

No, sir, as per the presentation, you are saying that the sales number for inorganic chemicals segment can increase by around 40% from Q1 to Q2. Is that understanding right?

[Ravi Shanker Jalan, MD & Executive Director]

Which page number you are referring to, in the presentation so that we can refer?

[Sarvesh Gupta, Founder]

Sir, Page #10 of the presentation.

[Ravi Shanker Jalan, MD & Executive Director]

One second. Let me open that.

[Sarvesh Gupta, Founder]

Q1 utilization is 50%. You are saying next quarter it can be 70%.

[Ravi Shanker Jalan, MD & Executive Director]

One second, let me open that. So that we are -- see, if you look at this slide, what we are talking about is, the revenue down due to the lockdown, its impact on the downstream sectors saw a decline of 34%, revenue down by 41% due to COVID. Consequently, EBITDA is down by so and so. Utilization levels are expected to be in the range of around 70%. That is what we are saying. So I'm saying the same thing that my utilization level in the second quarter should be in the range of around 70%. How that number will be pan out, EBITDA number will be pan out, that probably we have to kind of it. You can -- that number, will be coming out in actual numbers.

[Sarvesh Gupta, Founder]

Okay. And secondly sir, on the textile segment. So if we forget about Q2, but for the second half of this year, if you can give us some guidance on how the revenues can be for both the segments, textile and inorganic chemicals, that would be helpful?

[Ravi Shanker Jalan, MD & Executive Director]

At this point of a time, we can only give you a broader understanding, like I told you, on the inorganic chemical, as I said, inventory level should be maintaining at the level where we are. So probably you can make that number of 70% utilization probably will be sold. On the other side, if I look at -- in terms of the pricing of soda ash, as I mentioned last time, if you remember, I said that the pricing will be slightly marginal, could be down. In this quarter vis-à-vis the March quarter, there was a drop in the prices by 2%, okay? I don't know because of this oversupply situation of import and whether the further price softening is there. If you remember my speech, I've said, we definitely look at some possibility of a further price reduction, may happen. How that will shape up, at this point of a time, not very clear to me also, honestly, because situation is very volatile.

[Operator]

Sir, sorry to interrupt, but for any follow-up request would you rejoin the queue, please?

[Sarvesh Gupta, Founder]

So let me complete this, so that we can...

[Operator]

Sir, we actually have participants waiting in the queue. The next question -- [Operator Instructions] The next question is from the line of Shikha Mehta from Equitree Capital.

[Shikha Mehta]

I was just wondering, so historically, we've been at around between INR 80 crore PAT to around INR 100 crore PAT. So listening to your guidance, is it prudent to think that in the second half, we'll reach at least that INR 80 crores, INR 90 crores PAT that we used to do earlier? Or is it still -- are we still not sure about something like that sir?

[Ravi Shanker Jalan, MD & Executive Director]

Very valid question. But like I said, situation is so volatile at this point of a time. It is very difficult for me to kind of -- at this point of a time, give you any number on that. So probably you have to wait for this quarter, let the situation be more stable in this quarter. Then probably in the next quarter when we have a call, probably it will be more prudent for me to talk about that number. But, yes, I can definitely say one thing. Things will be much better than what the number is, in this quarter. That much I can say.

[Shikha Mehta]

And sir in the Textile division, do we have any idea of when we'd be positive? Because I think this quarter, again, we've had a loss. So next quarter in Q2 or Q3, are we seeing any sort of change?

[Ravi Shanker Jalan, MD & Executive Director]

Yes, surely, definitely, there will be a significant improvement in the textile business going forward. Because, you see, in this quarter, one thing we must remember that one month was completely stopped, which is not the right scenario for the next any quarters, at least I'm assuming at this point of the time. So definitely, the numbers will be significantly better as compared to...

[Shikha Mehta]

Can we expect a positive number or a neutral number next quarter?

[Ravi Shanker Jalan, MD & Executive Director]

Definitely, it should be positive number, my guess, at this point of the time.

[Operator]

[Operator Instructions] The next question is from the line of Sarvesh Gupta from Maximal Capital.

[Sarvesh Gupta, Founder]

Actually, we could not finish the discussion on the textile segment. If you can give us some color on the performance that we can see in the second half for the textile division.

[Ravi Shanker Jalan, MD & Executive Director]

Yes. Like I said just now that what -- in the first quarter, what you have seen is that the plant, both the locations was -- for more than a month was stopped. And definitely, we are seeing 2 things. One, on the home textile, we are definitely seeing, at this point of a time, some demand upside is there. Of course, there is one challenge in that business at this point of a time, is the labor availability because of the migrant labor. But demand upside definitely is there in that business. How long that it going to be sustainable is a question, which I don't know right now. Because, see, the people are, at this point of a time, are living in the home, and they are spending money on their home furnishing, okay. So therefore, that demand upside is there. Going forward, my understanding is that definitely the neutralization should take place on this, once the situation becomes little normal. On the spinning side, definitely because of the garment is not picked up yet, so therefore, some challenge which I see until the garment situation improves. But overall, like I said, overall, I see the numbers are much better as compared to the quarter 1. And probably overall, also, I would say the number will not be very -- I would say that not very difficult numbers on the textile side as compared to last year as well.

[Sarvesh Gupta, Founder]

Understood, sir. And on the demerger side, are we planning to do some more formalities from our side because since March we haven't heard anything on what is happening on that. So have we put the process on hold as of now or we are working behind?

[Ravi Shanker Jalan, MD & Executive Director]

No, no, we are working behind that completely. And let me update you on that. And I think we have updated on our presentation that we have already filed our application to both the stock exchanges. As you know, the process is, first, we have to file the application with the stock exchange, which we have filed. We are in the process of filing with the CCI. And the schedule is going. Of course, because of this pandemic, some delay has happened. But still, our internal target is to maintain that 12 to 15 months time target, which we have kept from the date the Board has approved, we are still holding that. So we have not put that process into hold.

[Operator]

The next question is from the line of Rajeev Agrawal from DoorDarshi Advisers.

[Rajeev Agrawal]

My first question is just understanding your thought process around the greenfield project for soda ash, right. So given the overcapacity in soda ash, can you just update where you are and how are you thinking about that?

[Ravi Shanker Jalan, MD & Executive Director]

Very, very valid question, Rajeev. If you remember, I have -- in a couple of quarters back, I have -- a detailed thought I have given. But still, let me repeat that thought. See, at a short period of time, probably you can say that is an oversupply situation. However, if you look at the number of years of the data, and you try to collate that data, you will find that demand supply has always been in a balanced situation on a longer period of time. Keeping that long-term objective, what we did is -- and when you put up a greenfield project, the first thing what you require is lot of time required for buying the land as well as the various environmental approvals, the government approvals, that takes maybe 2 years, 3 years, you don't know. And along with that, lot of associated activity like salt field, limestone mining, and all those things. And there, your capital cost is almost very small. We have started that exercise 2 years back -- around 1.5 years back. Still, we have not been able to cover the entire land. We have not been able to bought the entire land. So our first objective is, we want to complete the land buying and get all the environmental clearances, and that may take another 1 year time. After that, we will see that how the demand supply situation is there. And then only after that, we will be committing any capital to the greenfield project. This project, which we are doing, we are buying the land and taking all the environmental clearances will be very handy for us whenever we want to decide for going for this project.Second thing, I just want to highlight is that also, we have, at that time we thought is that we will try to do 2 things. One, on one side, we will go on in a manner so that the capital investment in one go is not a very large investment. Second, our debt equity ratio or our leveraging, will not go beyond the level of 1:1. Keeping both these things together, we will take a right decision once the land thing is completed, and we see that clearly that next few years, how the demand projection looks too.

[Rajeev Agrawal]

Got it. Got it. That's very helpful. Can you just talk about the CapEx requirement for this year across various businesses?

[Ravi Shanker Jalan, MD & Executive Director]

See, broadly, my understanding is that whatever the projects which we have taken last year, probably some investment will be required on that. On the other side, like I said, land, some investment on the land, balance investment on the land will also be required. My guess is, it will not be more than INR 100 crores, INR 110 crores kind of investments into the entire CapEx. And that is largely on the unfinished project of last year as well as the greenfield project and some margin investment into our normal CapEx, routine CapEx, which happens in all the 3 businesses. Still, let me tell you one thing, we will still be in a position to reduce our debt significantly this year.

[Rajeev Agrawal]

And so would you have some sense of where our debt would be by end of the year?

[Ravi Shanker Jalan, MD & Executive Director]

My sense is, I will be in a position to reduce my debt by another INR 150 crores to INR 200 crores.

[Rajeev Agrawal]

Got it. So maybe below INR 1,000 crores by end of the year?

[Ravi Shanker Jalan, MD & Executive Director]

Because in this quarter itself, we have been able to reduce the debt by INR 50 crores. And also, we have paid INR 100 crores of our LC, which was, what you call non-fund uses of the bank limits, that also we have paid. Overall, we have almost reduced our debt, including the LC by INR 150 crore this year itself -- this quarter itself. Of course, when the activity will start, LC usage will start again. And probably, therefore, I said INR 150 crores to INR 200 crores kind of a debt reduction, we had a plan for this year.

[Operator]

The next question is from the line of Sumant Kumar from Motilal Oswal Asset Management.

[Sumant Kumar, Research Analyst]

Sir, could you discuss more about the import scenario in India and the price, so what is the price decline in spot market and in contract market?

[Ravi Shanker Jalan, MD & Executive Director]

See, at this point of a time, different countries are exporting to India. And like I said, just now that in this quarter, there was more than 50% reduction in the import. And going forward, also, we are definitely looking at a much lower import. However, on the other side, the demand will also be lower overall for the year as a whole. If you remember last time I had indicated that overall demand contraction will be roughly around 12% to 15% overall demand in India because of this pandemic. Now having said that, in terms of the pricing, there's a different pricing for the different countries. There are a few countries which are very small in their volume. Their prices are much cheaper. But on the other side, their quality is also not as good. And they are not a regular supplier to this market. So they are just like simply dumping the material since they have this thing, which prices are not sustainable, and we are not at all looking at those prices as a competition to us. But regular exporters from the U.S. and Turkey and all those things, I think they are in the range of around $200, in my sense, $200, $205 is the price at this point of a time, which they are offering at this point of a time with all other costs and things like that.

[Sumant Kumar, Research Analyst]

Okay. So how much decline is there?

[Ravi Shanker Jalan, MD & Executive Director]

See maybe $10 to $15 kind of a thing, if I look at in the last 2, 3 months, maybe $15 to $20.

[Sumant Kumar, Research Analyst]

Okay, 5% to 7% and 7.5% kind of?

[Ravi Shanker Jalan, MD & Executive Director]

Yes. And 2% price reduction I just said, in our case, has also happened as compared to the March quarter.

[Sumant Kumar, Research Analyst]

So a 2% decline in particular month or overall quarter, you are talking about?

[Ravi Shanker Jalan, MD & Executive Director]

No, I would say that will mainly happen in May and June.

[Sumant Kumar, Research Analyst]

So what is the price reduction pre-COVID and post-COVID, I am talking about?

[Ravi Shanker Jalan, MD & Executive Director]

Look, price, like I said, 2% reduction in the price.

[Sumant Kumar, Research Analyst]

Post-COVID?

[Ravi Shanker Jalan, MD & Executive Director]

Yes. Post-COVID, yes.

[Sumant Kumar, Research Analyst]

Compared to pre-COVID?

[Ravi Shanker Jalan, MD & Executive Director]

Yes. If you look at quarter 1, 2020, versus this quarter, this price drop is around 11% to 14%. Because in the peak, quarter 1, 2020, the price was at the peak, let me put that way.

[Sumant Kumar, Research Analyst]

Okay. Okay. So what is -- what about the contractual, you have more than 50% also of the contract. So what is the price reduction there?

[Ravi Shanker Jalan, MD & Executive Director]

No, contracts. So they are -- it will be only when the contract gets over.

[Sumant Kumar, Research Analyst]

Right. So we have quarterly contracts. We have a 6-month and annual also.

[Ravi Shanker Jalan, MD & Executive Director]

So the 2% reduction I'm talking about is the overall reduction in the overall because every customer has a different pricing. Depending upon their volume, depending upon the location which they have, depending upon the competition, there are many things are there in that.

[Sumant Kumar, Research Analyst]

So this 2%, you are talking about spot market reduction or blended?

[Ravi Shanker Jalan, MD & Executive Director]

No, I'm talking about overall -- our price has been reduced by 2%. Price realization has reduced by 2% in this quarter as compared to last quarter.

[Sumant Kumar, Research Analyst]

Okay. That's why I'm talking about, can you bifurcate the contractual or whatever the contractual is going to come for contract, that price, how much it is going to decline when it is coming for the negotiation?

[Ravi Shanker Jalan, MD & Executive Director]

I have a ready answer on this. I can only say that because like I said, there is a volatile market at this point of a time. It is very difficult at this point of a time to predict that how the likely scenario will be there in the price.

[Sumant Kumar, Research Analyst]

Okay. Okay. And if the spot market, any -- yes, so you said the 2%, it will be higher, right? Pre-COVID and post-COVID price reduction in the spot market?

[Ravi Shanker Jalan, MD & Executive Director]

No, I don't think there's a big difference between the pre-COVID. This 2% which I'm talking about is primarily, maybe slightly more in the spot market because of the contracting but not a very significant difference if my understanding is correct.

[Operator]

[Operator Instructions] The next question is from the line of [ Chirag Singhal ] from [ First Water Fund ].

[Unknown Analyst]

Most of the questions have been answered, just one question. What is the maintenance CapEx?

[Ravi Shanker Jalan, MD & Executive Director]

See, maintenance CapEx at this point of a time, Raman, you have the number? See, last year, we've spent roughly around INR 50 crore, right, Raman?

[Raman Chopra]

Yes. Yes, INR 50 crores. And that we charged to revenue, not -- we don't do it as a CapEx. And this year, approximately, if I see the -- if I look at the number, it will be around maybe INR 5 crores or INR 7 crores lower, not much difference as compared to last year.

[Ravi Shanker Jalan, MD & Executive Director]

Because see, we never want to compromise on the maintenance. That's what is our philosophy is, because our best utilization, our most efficient plant that is primarily because of our focus on the maintenance. And we charge all these costs to the revenue.

[Operator]

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for closing comments.

[Ravi Shanker Jalan, MD & Executive Director]

Thank you. As I have been always saying, from our side, we are trying our best to do the best in terms of the productivity, in terms of the overall profitability. Of course, this quarter has been a challenging quarter, but I'm sure that we will be -- we'll be doing a much better performance in the remaining 3 quarters. And thank you very much, Rohit, and the team for your wonderful job. Thank you very much.

[Operator]

Thank you.

[Rohit Sinha, Research Analyst]

Thank you, sir.

[Operator]

Ladies and gentlemen, on behalf of Emkay Global Financial Services, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.