Galaxy Surfactants Limited (GALAXYSURF) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Galaxy Surfactants Limited Q1 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Unnathan Shekhar, Promoter and Managing Director of Galaxy Surfactants Limited. Thank you, and over to you, sir.

Thank you. Ladies and gentlemen, a very good afternoon to you. As we begin this first con-call of financial year 2021, I do hope and trust that you and your families are safe, sound and healthy. The famous author, Roy T. Bennett has said, "You learn something valuable from all the significant events and people, but never touch your true potential until you challenge yourself to go beyond the imposed limitations." The quarter gone by has been just that. Challenges kept emerging from all ends. The situation kept changing daily. But what remained constant in this dynamic and uncertain environment was our determination, focus and vigor to stand up to the challenge and discover our true potential. Ladies and gentlemen, this has been a challenging, yet satisfying quarter for us. I would like to acknowledge our team for having stood up to this challenge despite the numerous headwinds and uncertainties that marred the quarter. The relentless determination and unmatched focus demonstrated by Galaxy family ensured that we not only faced these uncertainties with confidence, but also emerge stronger. I would also take this opportunity to acknowledge all our stakeholders who have ably supported and equipped us to fight this battle with sheer confidence. Their support has been significant. The quarter 1 of this financial year 2021 has been a unique quarter in many ways. The unfortunate incident at our M3 unit at Tarapur and the sudden imposition of lockdown 1 and 2 impacted the supply side of the business. Be it in terms of people, production or operations, business in India and U.S.A. slowed down in April and the first half of May. But things are getting back to normalcy, though the situation is changing dynamically. Momentum picked up in June, and we believe this momentum should continue into the next quarter. But the key here will be how the supply side factors pan out. Demand visibility for our Performance Surfactants, which grew at 7.8% in volume terms for this quarter, driven by the healthy 10.2% growth, registered by the AMET market, remains robust. No shutdown in Egypt meant growth momentum continued from quarter 4 FY '19-'20 to quarter 1 FY '20-'21. The Specialty Care Products, due to the cutback in discretionary consumption and overall slowdown in the developed markets, saw a decline of 26.2%. We believe this is a temporary short-term blip. And with the revival of the consumption cycle, we do see normalcy returning in the coming months. India business though declined by 2.3%, a good monsoon followed by pickup in rural consumption, along with the growing awareness for hygiene and cleanliness has the potential to result in an improved performance going ahead. The challenge, though, will be the potential impact on operations due to the intermittent lockdowns, variability of restrictions and the challenges on account of rising COVID cases. This can delay the recovery. Numerically, the revenues for June constituted for 40% of the total group revenues for the quarter gone by. While the mix gravitated towards Performance Surfactants, the EBITDA per metric tonne remained resilient at INR 17,561 per metric tonne as against INR 17,779 per metric tonne reported in Q1 FY '20. Ladies and gentlemen, given the headwinds, agility and adaptability combined with customer centricity, will hold the key. With the resilience demonstrated by our business and people over the years, we remain confident of winning together once again. On that note, I wish your families and you good health and strength to cope with this new normal and emerge stronger. Thank you, ladies and gentlemen.

Thank you very much. Ladies and gentlemen, before we start the Q&A session, I would like to make a statement. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. We'll now begin the question-and-answer session.

[Operator Instructions] First question is from the line of Mike Sell from Alquity.

Could you please give us some more color on the unfortunate accidents. What's actually caused it? You have some of the most stringent procedures in terms of safety, and this is your first major accident for many years. So I'm slightly confused at what went wrong. And how you can ensure that it doesn't ever happen again?

Yes. Thank you. The description of the accident is that there was an intermediate vessel inside the plant. And that -- this -- there was a blast in that particular tank, which resulted in the death of 3 people. Now there has been, what is called -- we have various, what is called, alarm systems. So this particular -- an alarm went off. And what is required in the emergency response is that people who are not in that particular plant, except the supervisor of that particular plant are supposed to move away and come to the emergency response area. However, I think 2 people out of the 3, I think, out of maybe enthusiasm, chose to remain with the supervisor and -- or maybe out of curiosity, went over to that particular place where they were not supposed to be there. Now the supervisor went there and I think in that particular heat of the moment, he closed a particular valve, which was not supposed to be closed, which aggravated the situation. I think it only points out to possibly a small, what I call, confusion in the mind at that particular point of time to be -- not to be able to, what's called, very -- think clearly and do what needs to be done. And I think that particular action without a full thinking resulted in an explosion or a blast which happened, and this resulted in the death of all these 3 people, out of which 2 people had an instant death and then 1 on the way to the hospital. Now subsequent to that, very obviously, we -- when we reflected on that, possibly, we said, are we -- do we have distance to cover with respect to the emergency response training as far as where people are concerned, one. And number two, we -- what we did was we created a task force to go through the entire factory, equipment by equipment, process by process, plant by plant. And once we reconstructed that particular place, every single product had to go through this, what we call, PSSR, pre-start-up safety review. After having restored the safety aspects of every single unit, then only we started it. I think the starting of this particular plant happened only in late June, as far as this plant is concerned. Now the plant is, of course, running. And this is -- as you rightly said, this is a big, big setback as far as our safety record is concerned over the last 40 years. And it has brought in a deep reflection into ourselves, looking into ourselves, and then questioning and examining every single facet as far as our plant and process is concerned.

And a quick follow-up question. Can you confirm that all your plants are now fully operational? As in there's no lasting damage from this? And secondly -- and that includes any regulatory issues? And secondly, have any of your customers who are very big on ESG curtailed their business with you as a result of this problem?

Can you repeat, with respect to the customers, what did you ask?

Have any customers ended their relationship or reduced their relationship due to the accidents?

No, no, no. I think we informed all our customers as soon as the incident happened. We fully, what's called, kept them updated with respect to whatever has happened. All our plants are, as of today, running in terms of their -- the only bottleneck is with respect to our internal situations with respect to sickness of people. What we do is we need to plan almost on a daily basis. So it's very, very difficult to plan even for 3 days because this -- the COVID sickness seems to impact us in very uncertain ways.

[Operator Instructions] Next question is from Nilesh Ghuge from HDFC Securities.

Sir, my -- yes, and my question is related to per unit EBITDA margin. Sir, sequentially, if you look at, as well as Y-o-Y, the company is able to maintain per unit EBITDA at above INR 17,000...

Nilesh, sorry to interrupt you. May I request you to speak a little louder, please?

Yes, sure. Sir, my question is related to per unit EBITDA margin. Sir, sequentially -- if you look at -- if I look at the sequentially as well as Y-o-Y, the company is able to maintain per unit EBITDA above INR 17,500 per tonne. And if I look at the volume mix in the current quarter, particularly, it is tilted more towards, traditionally, what we call as a low-margin Performance Surfactants, given the low volume from Specialty Care. But despite of that, the company able to maintain per unit EBITDA margin sequentially as well as Y-o-Y. So -- which implies that there's a change in customer mix. So can you tell us what was the customer mix in 1Q? And also throw some light on the sustainability of it in the near term?

Yes. So Natarajan here, I'll take this question. See, first of all, I'd like to correct your -- this thing in terms of that all Performance Surfactants are low margin products. See, the Performance Surfactants, the way we have to manage is in terms of the raw material risk that you manage. The way that you manage that also is critical. And the way that you are able to understand the market situation and able to take advantage of the geographical presence -- spread that we have in terms of managing the customer as well as the geographical portfolio, okay, of -- for these products. So what -- to answer your question, whether going forward, okay, this would be sustainable? I would like to be a little bit guarded because we do see the sort of uptick that is happening into the Performance Surfactants, okay. Although we would -- we are -- we want to be cautiously optimistic on this front, and we would like to be still sticking towards this thing in terms of our overall EBITDA margins being in the range of INR 15,000 to INR 17,000 per metric tonne. That's what I would like to say.

To answer your question further, I think the last quarter, there has been -- the sales mix has been more towards T1 customers because T3 customers faced more disruptions compared to the T1 customers. And I think we have repeated this many times and still this question comes up, where the perception seems to be that the Performance Surfactants are low margin products. This is not so. We have classified Performance Surfactants as Performance Surfactants only because they are all -- they are dependent on the raw material lauryl alcohol, okay? And since the lauryl alcohol as a feedstock is quite volatile in terms of its price over periods of time, we -- the entire business demands that we manage the risk of raw materials. And that's the reason why we have classified them as Performance Surfactants. The only -- as I said, the only common thing of this Performance Surfactants is lauryl alcohol as its raw material. Yes.

Okay.

Yes.

And sir, my second question, if you could able to give the geographical revenue breakup in terms of percentage?

Approximately, I'll tell you, it was -- I think AMET was 42%, India was 37% and Rest of the World was 21%.

Next question is from Anupam Tiwari from Axis Mutual Fund.

Sir, to -- just to understand it little better, is there any one-off kind of traction or temporary traction that you are expecting in AMET? Or you think this demand is sustainable?

See, as far as AMET is concerned, see, if you remember correctly, about 3 years back, when the devaluation happened in Egypt as a country, there was, let's say, contraction of the market, one. And there was also a shift between T1 and T3 customers -- I mean T3 customers at that particular point of time in the local Egyptian market. However, over a period of time, the T1 -- our T1 customers or the T1 customers there, T1 players there, have slowly regained their position and particularly their share. And the market has also come back to its own. So what we would say is that, that entire 3-year period was a slow period for Egypt. And then Egypt has suddenly come back to normalcy now. So as far as AMET margin is concerned, as we have said, whatever we are seeing now, we expect this particular sort of position or the market position to continue. Yes.

Okay. Okay. And in case of Rest of the World, can you comment anything on when you see demand recovering? What is the trend that you are getting?

See, let us say that this is a highly uncertain time. I think we can't even see what will -- we can't even predict what will happen the next day. Because -- and if you see the entire, except a few countries in the world, almost all the countries are still in the grip of COVID, okay? So we are still in a very, very fluid situation. So -- but as I mentioned in the beginning of the speech, for us, we take every day as it comes and fight our best.

If this decline in ROW volume is due to the fact that our plant was not operating and maybe client has to ship to somebody else for immediate supply?

No, no. As I said -- and see, if you look at the last quarter, the April month, actually the entire country was at a standstill, okay? Now the blast at our factory did certainly impact us. But slowly, we are now regaining our position with our customers.

Okay. So this volume decline is not having any structural impact because of our issue in the plant? It's purely a demand issue?

No, no, no. Not at all. Part of it -- I should say that, I think you all will be quite pleased to know that we are surrounded by demand, okay, as far as this industry is concerned. What has happened is that the people's habits with respect to their personal hygiene and cleanliness and home hygiene and fabric hygiene has heightened during this particular period of time. So across the world, not just in India, I think demand is extremely what is called buoyant and robust. What is now determining our business will be how we are able to respond consistently and continuously with what is called 0 disruptions. But the fact is that there is quite a bit of disruption with respect to our people getting sick. So people get sick or their neighbors get sick as a -- or their society gets sick. As a result then they get quarantined and they are unable to. For your information, I think we have estimated that roughly 20% to 25% of our people force is unavailable at any point of time, and this has been the case for the last now 4.5 months or so. So we do hope that this number will reduce to 0 in the coming months. I think that can enable us to respond better with respect to the demand requirements that the market imposes on us.

Okay. Okay. Great, sir. And sir, there is no extraordinary pricing benefit that you have got in this quarter, right, because of early supply or emergency supply? So it is all normal pricing behavior that you have seen, normal pricing practices than to the early...

Yes. We have always said that we have really, really long-term relationship with our customers, okay? The entire business over the last 40 years has been built on strong and abiding relationship with our customers. So there is always predictability and consistency that we have to promise with respect to our dealings and our association.

[Operator Instructions] Next question is from Sanjesh Jain from ICICI Securities.

A couple of questions from my side. First, on the realization. If I look at the realization for this quarter, the realization for Performance Chemicals was like 30% higher than Specialty. I know that we don't have any correlation in the realization. But just if you can provide some color on the product mix on the Specialty side? And should we see this realization also catching up as we see volumes come back in the Specialty side? That's my first question.

Raju?

Yes, Sanjesh. So I'll take this question. Natarajan here. So first of all, as we explained, I think when the initial this thing on this in terms from when the same question was asked, what I said was with the Specialty momentum picking up, okay, which Shekhar explained is more in terms of how we are able to manage the operations and the supply side. We do expect that things should start improving in terms of the realization. But whatever we have seen in terms of this particular quarter has been a combination of various factors in terms of the way we've been able to manage risk on the raw material front and in terms of the way that we were able to manage the geography and the customer profile mix, okay? So as I said, we are cautiously optimistic that we will be able to maintain this particular trend. What is critical in terms of how we are able to respond in a very predictable way with regard to the operations in the supply side, which is unfortunately impacted in terms of the COVID sickness that we are having with -- in terms of our people. That's the only thing.

Let me proactively answer the group's questions. I'm sure, I think all of you are anxious with respect to the Specialty Care Products. See, as I have mentioned in the previous quarter, this industry is driven by consumer needs and wants. And for consumers, the various, what is called, top of the line priorities are, one is protection and safety, which I said is driving the move towards nontoxic preservation. The second is mildness, which is driving the mild surfactants. The third is sustainability. Now all these are very, very critical and important. And the last is, of course, sensory. So the basic structure or movement of the industry with respect to the consumer lines is not at all interrupted. What is important is the priority has changed in this time, where the customers are remaining at home. So what they are more bothered about is not beauty as of today, okay, because they're all inside their houses. They are more bothered about personal cleanliness, personal hygiene and to protect themselves further, so which is what is happening now. So there's more -- people are cleaning themselves and cleaning their homes, clearing their dishes or cleaning their fabrics, clearing their floors much, much more frequently than what they have been used to before, one. And we do believe -- and as you would have listened to con calls of all our customers also, we do believe that this habit will stick in the sense that once they are into this particular habit, this habit will stick. So you have -- you are seeing some significant growth as far as hand wash is concerned, okay? Now the growth will taper down, over a -- I mean, whatever -- some of our customers have mentioned that their sales of hand wash has multiplied by 3x. Of course, they don't expect this momentum to maintain once normalcy comes in. But they are certainly sure that the market will expand by not less than 2x, one, even after this COVID fear goes away. So what is to be understood is that whatever we are seeing with respect to Specialty Care Products is entirely due to, one, a lot of disruption caused by COVID in all the countries, one. And number two, shift in priorities in the short term.

Got it. Got it. Sir, one related question on the Specialty, again. Sorry to touch it upon again. How are we seeing this with the opening up of the economy? Now that we are -- the Specialty is generally more dependent on U.S. and Europe, and there the economy is opening up much faster than India. Have you seen any sign of revival there at least? Has the order or the inquiry inflow increased on the Specialty side?

Yes, yes. Yes, certainly, certainly, certainly. I mean they -- see, the interest on the Specialty remains. See a lot of our customers have also lost production, okay, because of COVID, okay? As I told you, the demand is -- demand as a parameter is pretty robust. So when you talk about the decline in the last quarter, it is also not just entirely due to demand, it's also partly due to us, where we have not been able to aggressively respond to fulsomely. And which is what I mentioned right at the beginning that the blast at the M3 unit also was one of the reasons. Apart from the fact, lockdown was also -- lockdown 1 and 2, and furthermore, the sickness and absenteeism, which is -- which has happened because of this pandemic. All -- supplies there also has been a cause of this particular decline in terms of Specialty.

Sir, just to clarify. Now that Tarapur -- yes, just I'll complete this and...

[Operator Instructions] Next question is from Ritesh Gupta, AMBIT Capital.

Just one, when you say that your EBITDA per tonne range is INR 15,000 to INR 17,000, and last [Technical Difficulty] at about -- I mean, I think you've been around INR 17,500 per tonne, right? So do you -- would you like to revise up the guidance from INR 15,000, INR 17,000 to, let's say, closer to INR 17,000?

So we will still maintain whatever we have talked about before. Okay? It will still be that INR 15,000 to INR 17,000.

So then like -- is it largely because of the lower palm oil prices in the last 2, 3 quarters that you are exceeding INR 17,000? Or is it product mix? Or is it something else?

We have said multiple times that we don't play on our raw materials, okay? We always -- let us say, we have an opportunity to pass it on. And that's the reason -- because if we are playing on our raw materials, possibly then the range that we would have talked about will be some, say, INR 13,000 to INR 20,000. So we have mentioned INR 15,000 to INR 17,000.

Next question is from Bharat Sheth from Quest Investment Advisors.

Sir, on the Specialty Care side, just 1 question is on the Specialty. Our volume decline is 26%, whereas value decline is 39%. So can -- just can you explain, is there any product mix change? Or how -- or geography change has really played out this? That is one question. And second question, sir, related to our lot of, I mean, Performance product, where we have to go and work with the customer for application and then develop the new application. So is there any setback because of the COVID, because of nontraveling and all? And third is on the CapEx side that we -- if you can give some color?

Okay. So I'll take your first question. Natarajan here. I'll answer the first question. The first is on the -- the reason is because what got impacted in terms of the demand side also was the high-end categories in terms of beauty products. So obviously, the volume reduction, okay, was lower than the revenue reduction because the products that were in the mix impacted within Specialty. That is -- that explains as to why the revenue impact was more than the volume impact, okay? Coming to your second question in terms of our engagement, okay, with our customers, given the situation, nontraveling, we are -- right from day 1, we have used technology to ensure that we are connected virtually with all our customers, including their innovation team, so that -- and we see a good amount of traction happening, and we have got adjusted to this new norm of working and doing meetings virtually, okay? So the customer connect has only got enhanced, okay? And the third one -- I think third one you asked in terms of -- I forgot that question. What was your third question?

CapEx.

CapEx. CapEx.

CapEx. I mean over -- that we were looking for a large amount of CapEx over the...

Yes, correct. So there was -- because of the COVID situation with the labor availability, the implementation time has got pushed by about 6 months. So we could have -- we should have probably been commissioning it in the -- by October this year. We'll get down to April next year.

So will that affect our supply chain? I mean, again, I mean if demand revives then supply will be a constraint in that case?

Yes. Certainly, yes, because whatever plans we had, had, obviously that got pushed by 6 months because of COVID. So it is going to result in some disruption? Yes.

Okay. So currently, sir, what capacity are we operating?

I'll tell you what I was mentioning yesterday -- see our capacity utilization in terms of number is 57.6%. But for your benefit, let me say, the effectiveness quotient for all of us, I was mentioning yesterday, would be around 60% to 65%. I think if the sickness were not there, and I assume that if everything was, let us say, as before normal pre-COVID, if we take that as 100%, okay, I think against that we are today at 60% to 65%. So for various reasons, the effectiveness quotient is getting impacted, okay? That is a ballpark number, okay? Am I conveying -- am I reaching you?

Next question is from Rohit Nagraj from Sunidhi Securities.

Yes. Sir, you had talked about the supply side challenges in terms of manpower. What were the other challenges that we have faced? Was it because of maybe raw material availability, exports from India to other geographies? And how have you rectified them in the current scenario?

Yes. So I would explain this. So initially, if you look at from -- which is, the lockdown was announced on March 23 till almost end of April, the issue was in terms of ability to clear material from the port, okay, the local transportation, everything had got impacted. It started reviving post after lockdown, from lockdown 2, okay, when it was announced. And post May 15, all this started settling down, okay? And we -- in any case, during that time, people availability was anyhow reduced because the government had put restrictions in terms of how much can be the sort of number of people you can have at your plant in terms of operationing, ensuring social distancing. Now once -- then we started operating well, okay, from the month of June, okay? But then we realized towards end of June that with the lock -- on lockdown 1 that was announced, okay, people started falling sick because the amount of moving around increased. And although there is no restrictions in terms of lockdown now, the restriction is happening in terms of people availability because they are falling sick or we are taking cautious action in terms of ensuring that people are quarantined, even if they report a normal fever, okay? So that is impacting effectiveness as of now. But we are seeing as to how best we're able to manage with these given constraints, okay, in a very, very -- what do you say, in an innovative way. So that's what we're doing to ensure that operations impact is restricted to the least, okay? So we have been able to mitigate almost all because our team has been constantly ensuring that we are able to ensure that we have our material moving out pretty properly, getting the planning rejigged almost every third day, okay, to ensure that we are able to service our customers well. The only challenge we see as of today is the rising COVID cases. So we need to be a little bit more cautious because for us the priority is our health and safety of our people. That's important, okay? So that is what is the only constraint we see today.

Right, sir. Sir, so due to the supply side constraints, the amount of revenue lost is permanent in nature for this financial year or part of it can be recouped in subsequent quarters?

Yes. We have the ability to recoup. It's only that the -- we would expect the consumer demand. See what demand was lost in the first quarter, if it comes back in terms of consumer demand, that's what will flow back. So what we need to be very this thing is that the consumer demand remains intact. So they start buying more in the coming months, which means the demand for our products will go up. And we are pretty well positioned in terms of responding to that, okay? The only challenge being, if the number of cases continue to be the way they are, then our people availability will be a question, and you will ensure that -- we need to ensure that, that is properly taken care of. Otherwise, if the demand comes back, we are well positioned. Everything remaining same, to be able to respond to that. And in that case, yes, we can start recouping. If not, everything, at least a portion of what we have lost in the first quarter.

[Operator Instructions] Next participant is Dhruv from HDFC Asset Management.

Sir, if I look at the realization of Performance segment -- Performance Surfactants segment, it has increased about 3-odd percent Y-o-Y basis. And the number that you have given for fatty alcohol prices in your presentation, it seems that has declined by about 6%. So on a 6% decline, our realization has increased to about 3%. I understand raw material is pass-through. So is it fair to assume this is largely due to mix? And if you can give some comment on, is this mix because of the post-COVID situation and can this continue? I'm coming from, because if this continues, I would believe that as the Specialty recovers, we could see probably better numbers as we move ahead. So just some thoughts there.

See, there has been a shift with respect to the mix in this quarter. But as we have always mentioned, you can -- we can -- we would always strive, and it would remain -- this particular mix of, what is called, 60% to 65% of Performance, and 30% to 35% of Specialty will always remain, okay?

Sorry, sir. Within -- I was mentioning within the Performance, because the realization has increased despite the fall in raw material, so on that basis. Within the Performance, is the shift changed for something better and can this continue because of COVID?

There are -- yes, yes. Within the Performance, I think there are shift changes, but that would be temporary. That would be temporary.

Okay. Got it. So this should normalize and -- okay, got it.

Yes. I think we need to -- see, obviously, we should not take this quarter as the standard at all, okay? The -- I think -- obviously, I think as long as COVID remains in the world, I think this particular quarter will be the standard for the subsequent quarters, but not over the long-term. Once COVID stops, everything will come back to normal, okay? So I think it will be -- it will not be proper to extrapolate from whatever has happened in this last quarter, okay?

Next question is from Rohan Gupta from Edelweiss Financial Service.

Yes. Congrats on a good set of number despite challenges of COVID. First is on the clarity on this other expenses. So it has come down significantly from the previous quarter, I mean, Q4 and also from the last year. So I understand that one may be the travel-related expenses. But is there any significant cost savings we have done, which is likely to continue?

Yes.

Basically, the reduction is on account of 3 account. One is power and fuel, where actually it is affected by volumes, right, okay?

Yes, volumes have...

Yes, second is administrative; and the third is repairs, which is essentially availability of the people and the...

Yes, yes.

These are the 3 factors, okay?

Yes. Yes. So I think whatever expenses that you have seen reduced is only because of what one would expect because of COVID. Yes, your travel has been very obviously impacted.

Exhibitions, travels.

Yes. Exhibitions, travel.

Travels, CSR.

C -- I mean, all these things have come down.

Yes, all this.

Yes. Admin, you said?

Yes.

Power and...

Sir, second question is on our customer mix from -- in the current scenario, as you also mentioned that we have seen shifts from T3 customers to Tier 1. That is also visible in the current scenario. But these are the T3 customers who used to give us the high margin and because we were giving them a complete service and more value-added products. So how you see that the current scenario has panned out because we had not seen that any such impact on our margins? So despite T3 customers concentration coming down, so just wanted to understand a little bit more explanation towards this? And how you see this trend going forward?

See, again, as I said, if you look at all the previous quarters, see, we were wanting to have our T1 customers around 50% to 55%, okay? And our T3 used to be something like around 35% or so. And balance used to be T2, okay? So this is what we would want to have over the long term. See, we -- in 2018 itself, we had mentioned that our strategy will be on the pillars of growing both on Performance Surfactants as well as Specialty Ingredients then. Number two, growing both in emerging markets as well as developed markets. Number three, increasing the share of wallet with all our customers. Number four, continue to innovate products for our customers and create value for them. Number five, have a broad basing of our customers in T1, T2 and T3 across various geographies. And number six, focus on operational excellence. These continue to our -- be our mantra, okay, as far as Galaxy is concerned.

And so whatever happened in the first quarter in terms of the change in the profile mix, okay, that essentially mean because I think the Tier 1 and Tier 2 customers were actually able to come back fast, okay, in terms of operations despite the lockdown. Whereas Tier 3 customers were finding it difficult. So what we see is that all the Tier 3 customers from June have started their operations, okay? So we do see that this particular thing was more not by design, but by default because of the situation that was there, okay? So we expect all the Tier 3 customers to come back, okay, well, because all of them have started operations.

[Operator Instructions] Next question is from Lakshmi Narayan from ICICI Prudential Mutual Fund.

Sir, if you look at your volume mix, India, AMET and Rest of the World, right? What has been the volume mix for FY '20? And in addition to these external reasons like COVID, do you actually see any stress in a particular geography or a particular customer of yours where there is a pullback from the earlier committed volumes, which is quite visible and which you think would be the big risk factor in addition to the COVID things which you actually mentioned?

Frankly, no. See, whatever has happened, as I said, please do not come to any derivations as far as this first quarter is concerned. See, we are -- as I said, all of us are trying to plan for months ahead, but we're living by the day. I mean -- and as I was again saying, our mood swings from extreme optimism to sometime extreme pessimism, depending upon the internal situations, okay? So it is nothing to do with externally. Externally, the demand is pretty, pretty robust. No structural -- major structural change has been seen at all. There has been redefinition of priorities by individual customers in this particular period of time. As I said, they are more focusing on cleaning, personal hygiene, and they are living at home. Everybody is operating from -- living only in home. They are not even going outside. So in that particular context, there is a small reduction with respect to their focus on beauty, okay? But all of us know that this will remain -- not remain permanent. This will come back, once the situation regularizes. So we would continue to say, whether it is our shift -- the mix between Performance or Specialty, will continue to remain the same. Our geographical mix also will more or less remain the same. And that's the reason why, as I always said, we are building our CapEx or building capacities in anticipation of, let us say, what we see going forward. What is significant as happened, which is what we have wished all along, it is that people are, in a way, realized the need for cleanliness even much, much more -- possibly it was there in their consciousness, but it has got deeply embedded now in this COVID situation, which is good for this -- for people in terms of their health and for this industry in the long run.

Next question is from Abhilasha Satale from Dalal & Broacha.

Yes. Sir, I -- as you mentioned that some of our clients have -- are seeing very good growth in their health and hygiene products. So are we also seeing that kind of buoyancy in our orders picking up and all for the Performance Surfactants, like as you said that some of the hand wash -- this client they have posted 3x growth in their hand wash sales and all. So in Performance Surfactants, how much is going towards these products? And are we seeing that kind of buoyancy in our order book because of the current situation?

Yes, yes. We -- I did mention that. And that is partly the reason why your company has performed the way it has performed in the last quarter, okay? So -- but as you always say, the caveat is that we should be able to be able to what is called respond, okay? So that is where, what is called, a bit of cautiousness that we are expressing. So let us see as it goes. I think when we meet 3 months, hence, I think we will have possibly some more interesting stories to share.

[Operator Instructions] Next question is from Dhiral Shah from PhillipCapital.

Yes. Sir, I have 2 questions basically. Sir, in our Performance Surfactants basket, so what percentage of product is of high margin in nature? We have more than 45 products, wherein realization is higher than the average basket realization?

No, we don't share those information. What is important is that our -- in terms of volume mix, 60% to 65% of our -- is Performance, and the 30% to 35% is Specialty.

Okay. And sir, one last question. Sir, as you mentioned earlier regarding cost saving in the other expense category. So what percentage of cost will again bounce back with the improvement in Performance and what will not?

Yes. All the administrative expenses, which are currently affected by physical restrictions, right, and volume being lower will bounce back.

We will bounce back.

It's only disruption related, no?

So all these are disruption related. These reduction in expenses is disruption related. And once the disruption sees us, I think everything will get restored back.

Even business will bounce back and the effect of the lockdown.

Yes. Yes. Yes.

Okay. So this is one-off in nature?

Yes, yes. Yes.

Yes. Yes.

Next participant is Nav Bhardwaj from Anand Rathi.

Congratulations on a great set of numbers, sir. Sir, I had a short question, trying to understand your client mix. When we say that we had incremental orders from T1 customers, my belief was that we usually have long-term contracts with them. So is that in the same product line or even there orders were more opportunistic and in different product lines?

I think the orders were from our Performance Surfactants. Because, as you know, the Performance Surfactants find application in a variety of categories, including hair care, including hand wash, including fabric wash, et cetera, et cetera. So I think our Performance Surfactants have a wide application in various categories of personal home care products.

Okay. So the point being that it was beyond their current product line that they were acquiring from you earlier before this?

See, if you see there -- as we -- as I mentioned there, Egypt has only shown growth in volume. See, compared to FY '20 -- quarter of FY '20, as a matter of fact our volume has been lesser in India, okay? So it has not seen a jump in terms of volumes, okay? So yes, only our Egypt volumes have increased. Otherwise, if you see India, we have declined in this first quarter. The -- and as I always said -- as I also said, that we have not been able to fully respond to our customers in this particular quarter, primarily because of lockdown, okay? Now see the consumers' requirements have remained stand, even when they were sitting at home, okay, there remain -- their need has remained the same or their need has increased. Whereas, let us say, both of our customers as well as us, because of the lockdown, because we were unable to produce, we haven't been able to what is called fully respond to our customers -- the final consumers' needs, who are sitting at home. So there is still, what is called, a pent-up demand. And that is what you would have experienced, our customers. For example, when you -- if you have attended the conference call of, say, Dabur or Unilever, they would have mentioned that a lot of pantry stocking took place in the month of June.

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

So thank you, ladies and gentlemen. I think thank you for your support, and let us meet again 3 months later. Thank you.

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