Kuantum Papers Limited (532937) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 Conference of Kuantum Papers Limited. [Operator Instructions] I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Good afternoon, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Kuantum Papers Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the fourth quarter and the financial year ended 2025. Before we begin, a quick cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Pavan Khaitan, Vice Chairman and Managing Director; Mr. Vikram Khaitan, Chief Financial Officer; and Ms. Prachi Sharma, VP, Corporate Strategy. Without any delay, I request Mr. Pavan Khaitan to give his opening remarks. Thank you, and over to you, sir.

Thank you, Purvangi. A very good afternoon to everyone. It's a pleasure to welcome you all to this earnings conference call for the fourth quarter and financial year 2025. Let me begin by settling the context with some broad industry trends before diving into our operational and CapEx highlights for the year. Following that, our CFO, Mr. Vikram Khaitan, will take you through the financial performance in detail. As most of you are aware, the Indian paper industry continues to face strong headwinds, primarily due to rising raw material costs, expensive wood pricing and the growing influx of cheaper imports from China and ASEAN countries. These factors have put significant pressure on paper mills in terms of lower realizations and subsequently lower margins in '24-'25 financial year. Despite these challenges of global economic uncertainties and shifting market dynamics, the Indian paper industry continues to demonstrate resilience. The demand for writing and printing paper remains stable, supported by steady consumption from the education, publishing and corporate sectors, although partially offset by digital substitution and increased imports. The specialty paper segment is witnessing a growing demand, particularly in packaging and labeling grades, which is driven by a steady growth in e-commerce. Moreover, sustainability imperatives and regulatory changes are accelerating the industry shift towards eco-friendly and agro-based paper products, especially in food-grade packaging applications. We believe that a well-planned product mix, along with continued investments in advanced technologies, will be a key enabler for margin recovery and future growth. Against that backdrop, I'm very pleased to inform you that our company has maintained its sales and production volume in Q4 FY '25. And although the revenues declined due to lower realizations versus the same period in the previous year, our margins were amongst the best in the industry. This is a big testament to the strategic initiatives that we have taken to improve cost efficiencies, along with our ability to hold pricing steady despite dynamic market conditions. One such initiative is Project Nirmaan, which is central to our long-term strategy, aimed at enhancing operational excellence through the Industry 4.0 tools and automation. We have made significant progress here with sensors being installed for APC control in agro-cooking section to control chemical bleaching costs, as also our largest paper machine PM 4 for overall efficiency improvement. Our mill expansion and upgradation project with an outlay of INR 735 crores is well underway, and we remain firmly on track to complete the project within our stated time line of March 2026. I'm pleased to share that we have already issued purchase orders worth approximately INR 540 crores for this project and the balance is in the final stages of techno-commercial closure. We've commissioned new closed hoods with integrated heat recovery systems on our paper machines. These upgrades are already delivering tangible benefits, including steam savings, improved productivity and enhanced product quality. Additionally, we have installed a new clarifier for wood chip washing treatment -- water treatment, leading to better wood pulp quality and greater process consistency. Sustainability continues to be a key focus area for us, and I'm happy to report that we achieved the highest-ever biomass usage this quarter at 48%, well above our annual average of 35%. This reflects our commitment to greener operations and efficient energy usage. Our in-house clonal sapling capacity has now reached 40 lakh saplings in FY '25 with additional infrastructure for 8 lakh saplings being added in Q4 alone. This will support raw material self-sufficiency and enable us to become wood positive in the coming years. On the product development front, we have developed a new copier grade paper that uses a higher proportion of agro pulp, a step aligned with our broader vision of sustainable and responsible manufacturing. We will be launching this product in the market soon, and it will further strengthen our product portfolio. With that, I'd now like our CFO, Mr. Vikram Khaitan, to walk you through the financial highlights for the quarter and the full year. Over to you, Vikram.

Thank you, sir, and good afternoon, everyone. I would like to take this opportunity to share a summary of our financial performance for the fourth quarter and financial year ended 2025. For the fourth quarter under review, our operational income stood at INR 277 crores, reflecting a year-on-year decline of 7% and a quarter-on-quarter growth of 3%. EBITDA came in at INR 60 crores, down 6% on a year-on-year basis but up 19% quarter-on-quarter basis. EBITDA margin were reported at 21.6% for the quarter. Net profit was INR 26 crores, marking a decline of 23% year-on-year basis but a robust 24% increase quarter-on-quarter basis. PAT margins were reported at 9.4%. For the financial year ending 2025 under review, our operational income stood at INR 1,107 crores, representing a 9% decline compared to the previous year. EBITDA was INR 243 crores, down 27% year-on-year basis with EBITDA margins reported at 21.9%. Net profit for the period stood at INR 115 crores, reflecting a 37% decline year-on-year with PAT margin at 10.4%. With this, we can now begin the question-and-answer session.

[Operator Instructions] We take the first question from the line of Shasank Agarwal from Cisco.

Sir, am I audible?

Yes, please. Go ahead.

Sir, I have a couple of questions. Sir, first, there was some reports that you eucalyptus trees that the paper companies use are not actually good for the environment and they degrade the water table. So how is the company dealing with that? And second, sir, how is the overall pulp availability looking forward in India?

Okay. Thank you, Shasank, for your questions. So I would like to clearly offset that narrative, whether paper manufacturing is against environment. It is not. Even though we consume a fair amount of water in our pulp and paper processing, all this water is actually treated by us in our state-of-the-art effluent treatment plants and is then given through a network of pipelines to all the surrounding villages for their irrigation requirements. So we are in a water deficit or a water -- low water table kind of situation. But had we not done this, the farmers in the area would have been bereft of any kind of water availability. So we are actually helping their cause. And now what we've done is that we've established a connection with the water dam, the Kandi dam, which is near us. And our pipeline has been taken to get canal water for our usages. So we've reduced substantially our groundwater requirements and shifted it over to surface water requirements, thereby doing our bit to reduce our impact on groundwater drawl. So I hope that will summarize and sort of allay that narrative whether paper production sort of degrades the water table. It is not. The second question is pulp availability. We are in an area where enough raw material is available for our pulping facilities. We are an integrated pulp and paper operation plant, and we do our own pulping both for agro and for wood. And both these raw materials are available abundantly in our area, and we see no weakness, no sort of lack of availability of these materials for our pulping requirements. I hope that answers you question.

Sir, my question about the water table was the eucalyptus trees that you plant, that is actually bad, not the paper pulping part, but the eucalyptus trees that you plant. So are you shifting towards bamboo and other trees? That was my question, actually.

Sorry, but even that is a wrongful notion Shasank. Eucalyptus is not a water guzzler. The fact is that eucalyptus can sustain itself on very low volumes of water as well. But yes, the other part is that if it is inundated with water, it can consume higher volumes of water as well. But the fact is that it can sustain itself on lower water, so it doesn't really deplete the water table below. In fact, it sort of lives very well off lower water requirements, lower water quantities as well. And we are looking at a mix of wood requirements for ourselves. It's not only eucalyptus. We are growing Poplar and Subabul and Melia wood as well, which is a water-positive plant and a water positive plantation for the area.

Next question is from the line of Krushi Parekh from BugleRock PMS.

First of all, I'm just trying to reconcile the volume numbers that are being presented in this presentation. So is there any restatement of the previous quarter's numbers?

Yes. Maybe, Prachi can...

Yes. So until last quarter, we were also reporting a byproduct which is pulp into the sales. This -- from this time onwards, if you read the table, it says paper sales quantity. And hence, you would have seen a decline of 3,000 or 4,000 quantity with respect to previous years as well.

Okay. So what will be the byproduct?

That's pulp. So we've taken a conscious call to just report paper going forward. And hence, the table also states paper sales in metric tonnes.

Okay. So the previous presentation used to include the pulp as well, and now onwards, we just have the paper.

Yes. Just giving you the main product now.

Okay. So off-line, if I put an e-mail, is it possible to give at least last few quarters is a paper number?

I guess so.

Okay. My second question is that we are expected to complete our -- this expansion plan by March of '26. And then hopefully, by beginning of March '27 financial year, we should have this expanded capacity up and running. How do we -- how much time do we envisage for that new capacity to achieve some kind of utilization levels, whereby we would breakeven for that particular portion of the capacity?

So we -- the moment we are going to be commissioning all these machines, so they are going to happen over a period of time since we are upgrading all our 4 paper machines one by one. That's a process which will happen over a period of time, and all of them will get commissioned by March '26. So starting April '26, which means for the financial year, '26-'27, all the 4 machines will be running at full capacity. We see no problem in running them to the renewed capacity at which they will be established, and the returns will come in immediately thereon.

Okay. So we would have expanded our capacity from about 450 in the year to roughly about 700, right?

675.

675 to be exact, yes.

675. So we are envisaging that FY '27 onwards, the entire 675 would be utilized.

Correct.

Okay, okay. So it will straightaway start getting reflected in the revenue and the margin should be commensurate to what we have currently.

Correct.

Next question is from the line of Arihant from Bowhead India Fund.

I wanted to know like since start on this year since January, has there been any decline or increase in writing and printing paper prices? What -- can you tell some rough percentage of what change has been?

So the -- yes, there has been a decline in pricing for writing and printing paper. And from the start of the year towards -- that means Q1 and Q4, there has been a decline of approximately INR 3,000 to INR 4,000 a tonne for us, I'm talking about Kuantum Papers, and which reflects a reduction of about 6% to 7%.

Okay. And compared to 3Q, what would have been the decline, like the number at the end of December just in this year?

Yes. From Q3, we have actually been able to effect an increase, and we have increased our pricing by about 3%.

Okay. And then my another question would be regarding paper imports. So just wanted to know your view, like has the intensity increased or decreased in the last 2, 3 months? And whether the antidumping duty, whether it will be imposed or it looks unlikely that it will be imposed.

So what we are witnessing is that imports are not resurging, which is a good issue or a good point for the paper industry. It is being maintained at the levels at which they were, which means the challenge from imports is not growing. And we are actually seeing a waning off of this pressure for the paper industry at large, reason being that government has started the price import monitoring system and every importer has to declare the quantity as well as the price at which they are importing these quantities and also the destination from where they are importing. So I think it is tending towards a kind of regulation where all imports are being monitored, which is possibly leading to a reduction or maintenance of imports and not that imports are going to grow higher. And yes, as and when antidumping is required, we, as an association of the paper companies, we are in touch with the government. And they are alive to the situation and they will be in a position to take an urgent call if it is deemed that antidumping will be helpful and eligible for the paper imports.

Okay. And my last question would be just wanted to know your outlook just for short term. Do you think the writing and printing paper prices, will they increase from the levels currently? Or will they remain at current level for next 3, 4 months?

No, I -- we are sort of thinking and sort of espousing that pricing is going to go up. There is every likelihood of pricing going up, I think, on two accounts. One is international wood pricing has started going up, and that is a reflection of and will tantamount to and result in an increase in paper pricing as well. Secondly, board paper, kraft paper, packaging paper has already affected an increase of about INR 3,000 per tonne. So I think the turnaround has started. Signs are there that paper pricing should go up, and that's a good outlook for us.

So any percentage, like on percentage term, what is the increase you are expecting, single digit, mid-single digits?

No, I think even a single-digit increase will be very helpful. About 6% to 7% increase is there on the cards, is there in the offering. And that will help the industry to a big extent.

Next question is from the line of [ Jaideep Taparia ] from IDBI Capital.

Sir, I wanted to know the current global pulp prices.

Yes. Sorry?

I wanted to know the global pulp prices currently.

So globally, there are two kinds of wood pulp, one is hardwood pulp and one is softwood pulp. Hardwood is ranging at about $550 a tonne and softwood is at about $740, $750 a tonne.

Next question is from the line of Krushi Parekh from BugleRock PMS.

Just to follow up on my previous query. So for this expanded capacity that we'll be having, about 675, so do we have firm commitments from our existing customers? Or we are looking to -- or we have some commitments from the new set of customers as well to utilize the entire capacity?

We are fairly confident, Krushi, that we will be able to sell this increased quantity in our existing dealer network itself. Why? Because we have a policy that we do not sell more than 4-odd percent of our total production to any single dealer. We distributed almost equally, ensuring that even a dealer whose market potential is only 10 tonnes a day -- a month, sorry, is as important to us compared to a dealer sitting in Delhi who can sell 1,000 tonnes a month. So having this wide distribution network and a policy towards it, we clearly see that the existing network itself is well placed to take on additional capacity. There is no firm commitment, but there is a good sort of satisfaction and a good kind of confirmation, I would say, confidence that our existing network itself will be able to take on this additional capacity.

The participant seems to have disconnected. The next question is from the line of Deepak Lalwani from Unifi Capital.

Just wanted to know the current realization difference between the landed cost of imports and our current selling price.

So landed cost of imports will be in the range of INR 60,000 per tonne and our selling price is closer to INR 66,000 per tonne. But this landed cost of INR 60,000 is at the port, and they will incur a cost of about INR 3,000 to INR 4,000 per tonne to come invert inland to the large markets where we are selling. So the offset is lesser and, we, because of our quality, because of our marketing policies, because of our relationship with our customers, we see no problem in selling our product at a higher price than our competition.

Understood. And lately, so you mentioned that the wood cost has started going up. So which region the wood cost has started going up? Firstly that. And also, how is freight playing out? Is it increasing the landed cost or reducing the landed cost? So these two aspects, if you can cover regarding the imported price.

So wood cost is, by and large, on a country-wide phenomena. Wood pricing has gone up largely in all areas. It's not restrictive. So one is seeing the impact of increased wood pricing. What we as a company have done is that we have increased the usage of veneer chips, which is available at a lower rate than wood chips or wood logs. So we are offsetting that increased pricing by being able to use a higher quantity and volume of veneer chips in our pulp manufacturing. The second point is freight. I think freight rates are quite stable. As of now, there has been no impact. And I think with oil pricing going down, I don't foresee the freights to go up unfavorably for the industry.

Understood. Sir, secondly, on the paper prices that we have today, did I hear correct that you've taken a 3% to 4% increase and you expect another round of 6%, 7% increase? If you can clarify on that part.

Yes. Yes, our Q4 versus Q3, we've been able to effect a 3% increase. And I think in the next 6 months or so, we should be able to effect another 6%, 7% increase as an industry.

Okay. And industry-wide, the 6%, 7% increase, will it -- will the lower imported price still be a headwind? Or do you think that imported price will also start going up because of the global wood cost plus the monitoring by the authorities? So any thoughts on that?

Yes, correct. Your assessment is correct. I think because of increased international pricing in wood pulp, that is going to support the upliftment in pricing of paper as well. And I think globally, the freight rates of ocean liners and container freight rates are likely to see an upward trend because of the uncertainty in world trade at the moment. And that is sort of pushing up pricing of international freight. And both these will lead to a slightly increase in paper pricing internationally. And I think that is going to be helpful. And even if -- when they do land in and with the culmination of all this happening in India, I think India paper industry is going to be on a stronger footing and will be able to sustain and support a price increase. The fact is that even raw material costs, which is showing an unending trend towards an increase, that has to be offset by the industry at a certain point of time. And that will also be supporting an increase in pricing in the future.

Understood. And since you mentioned, on the raw material, I wanted to touch upon the wood cost that we have incurred -- that we are incurring at the industry level, what would be at a per tonne basis, if you can give some range? And how that has trended over the last 2 quarters? And what should be the outlook on the wood cost price that the industry is incurring?

So I think wood pricing, what it is currently is already at a higher mark. We do not estimate that wood pricing should go up much further. A small percentage change here or there is -- it cannot be commented upon. But largely because it's at a higher level, already at a high level, the wood pulp cost, the manufactured pulp cost for us is about INR 44,000 per tonne. And the fact that we are using about 40% in our paper making, the impact is accordingly. The balance, 60%, we are using agro pulp, which is at a very, very favorable cost of about INR 23,000 per tonne. And so I would like to mention here that with our extensive R&D that we've done, the kind of quality that we are getting from our own agro pulp is in no way inferior to the kind of quality that one normally gets from wood pulp and help -- hence, the quality of paper that we are able to produce from both mixing agro and wood pulp is of a superior quality and helping us maintain better pricing in the market and better margins as well.

Yes. Sir, one more question I wanted to cover. So since these tariffs have come in place, has there been more dumping by China, Indonesia? That is one. And the second related question is antidumping talk has been on for a long time, but we haven't heard anything from the government officials. So is there any time line on which -- that one should expect for a favorable outcome, if any, from the antidumping?

So point noted. The fact is that we are not seeing an increasing trend of imports. Imports are quite balanced. That is something which has happened out of -- a kind of geographical balancing that has happened across the world. And that is the reason why, at the moment, even though as an industry, we've been able to sensitize the government towards these higher volumes in the past. So we have made them aware of this condition. And hence, as I had stated earlier, they are very well aware that the moment antidumping is -- comes out as a requirement, they will be alive to the situation and will not lose time in implementing it. As of now, the government feels that antidumping is not really a requirement of the time because India situation being what it is, it can easily absorb the kind of volumes that are coming as of now, which are balanced.

We take the next question from the line of Akshay Kothari from Envision Capital. Participant does not seem to be active. We take the next question from the line of [ Shudha Dant ] from Goodwill.

Most of my questions were answered. Just one question on the debt level. What is the peak debt level do we expect after our CapEx? And what will be our interest cost in percentage in absolute terms?

So peak debt, we are envisaging at about INR 600-odd crores, INR 625 crores at the max will be our peak debt. Interest costs, I think as a percentage, it will be in the range of 8.25%. Max would be about 8.5%, which is a good cost of funding that we've been able to establish in a good line of funding from our banks. We enjoy very, very good ratings with them. And I think the overall interest amount can be calculated accordingly at INR 600 crores with 8.5% is about INR 50 crores.

Okay. That is useful. And just one more question. The [ ABD ] investigation was on the packaging board, right? There was nothing on writing and printing paper, right?

No, no, no.

Next question is from the line of Shasank Agarwal from Cisco.

Sir, just one last question regarding your dividend policy. So is there any concrete dividend policy in place?

No. There is no dividend policy as such. But yes, the Board is well aware of the requirement to give a good return to investors. And we take a call accordingly. And as and how the performance of the company is, if it is getting better, it translates into better dividends for the investor.

And sir, are you planning to enter the molded segment, the cutlery segment?

Not at the moment because we are already full up with this huge investment of ours that we've already lined up, INR 735 crores on upgrading our machines. So we will take this time out and show that we sort of do this project well for ourselves, ensure a good commissioning and only then take alternate steps towards further investment.

Next question is from the line of Akshay Kothari from Envision Capital.

Am I audible now?

Yes, please. Go ahead, Akshay.

Yes. Sir, I just wanted to understand, in one of the credit rating reports of one of the paper companies, they were mentioning, in July 2025, there is a lot of wood supply going to come in, which will drive the prices of wood much lower. So in that case, would the realizations come lower?

No, I don't think, Akshay, because we are already faced with the challenge of increased raw material costs for the industry as such. So I think a reduction in wood pricing will be helpful towards maintaining our costs or towards reducing our costs, if anything. And that should be helpful in sort of releasing the pressure on margins, which the industry has been facing in the last 6 to 8 months.

Okay. And sir, what is the current differential between -- differential of pricing between grade A paper and grade B paper? We are currently at INR 66/kg, you mentioned. So grade A would be at around INR 70/kg?

Well, some of the qualities do sell at about the mark that you have stated. But some of their qualities also sell in and around INR 66,000 or even INR 65,000. The fact is that Kuantum Papers has established itself as a frontrunner in pricing and we are being able to command higher pricing as compared to grade B, as you're suggesting, grade A is the wood-based large mills and the grade B is agro-based medium-sized mills. We have been an exception there and we've been able to create a price plan for ourselves, which is better amongst our peers and comparable to the A-grade players.

Sir, our CapEx per tonne, if I calculate, comes around INR 96,000. And it would be much lower -- it is much lower than the industry standards because we are doing basically debottlenecking.

Correct.

So if we were to put up a new plant of the same capacity, what -- according to your assessment, what is currently the CapEx per tonne in a brownfield or in a greenfield sort of setup?

So in -- the thumb rule is about INR 5 crores per tonne for a greenfield because that includes all your land as well, and land costs in India are very high. And then you are going into the complete and INR 5 crores per tonne is actually inclusive of pulp mill, paper machinery, utilities, everything. So in our case, we are upgrading primarily two big portions, which is the paper machines and the pulp mill. Two other utility sections, which is turbines, boilers and chemical recoveries are not needing an upgrade. They are of a sufficient capacity.

Okay. And in a brownfield set up, what would be the CapEx? Because INR 5 crores per tonne looks too high, actually.

No, INR 5 crores per tonne is for greenfield. So brownfield will be depending on the kind of upgradation that each and every player wants, the kind of existing infrastructure that is already there and what is the sort of end game, where all that we want to invest. Brownfield could be anywhere up to INR 2 crores to INR 2.5 crores per tonne.

Okay. Sir, lastly, we do mention about a lot of wood pulp pricing and everything. But wherever I see -- if you look at the larger companies based out of India as well as globally, all of them are actually integrated. So is wood pulp pricing actually relevant for paper companies? Because a lot of the wood paper companies having good balance sheets have actually backward integrated themselves quite a lot.

Yes, correct. So a good analysis. So I agree that a lot of large companies are fully integrated. They are buying wood as raw material and then doing their own pulping. But the fact is that today, wood material, wood raw material itself is going on a higher price trend. And that is what is impacting the costing of wood pulp for the Indian paper industry. So it is inching closer to the global levels of wood pulp pricing that is available to us. And I think that is something which, as an industry, if you're -- as is being suggested, that if higher volumes of wood is expected and that is going to impact favorably for the industry and bringing down these pricing, it's a good way to look -- to go forward and to look at things in the future.

Just to add to that, there are a few varieties of pulp which are not available to domestic markets, for example, softwood. So softwood pulp is required, though in lesser quantities, but it is required to make good quality paper. And that is an imported variety because that tree is not available in India. Also, there is another product called BCTMP which is also used by not writing and printing, per se, but a lot of paper corrugators as an industry. Again, that is not available in India. That's an imported kind of pulp. So these players do get impacted by international pulp prices.

Next question is from the line of Sanjeev Damani from SKD Consulting.

[Foreign Language] Sir, am I audible?

Yes, [Foreign Language]. Yes, you are. Please go ahead.

Sir, my question is whether we still import some pulp for our making good quality paper?

So Damani ji, we are importing softwood pulp for sure, which is required for the dimensional stability of paper. And softwood pulp is not a pulp which is available anywhere in India. So about 2% to 3% is what is added in the entire raw material mix. Other than that, hardwood pulp is not really a requirement for us, but we keep a kind of a stop gap and a storage availability for ourselves in terms of urgency requirements, but not something that we use continuously.

Right, sir. And sir, do we still export some paper?

Yes we do. We are exporting about 15%-odd of our total production in exports. We are serving the Gulf countries, the African countries as well as small players in Europe and America.

Right, sir. And that is a profitable business or just to maintain relationships, we are doing it?

No. I think overall, it is contributing to the overall business profit. Because of that -- because of the kind of volumes we push out there, it helps us maintain the kind of margins and pricing that we are availing within our country. So I think it's a good business decision to spread your market approach and to spread your market reach.

Last is regarding parali. Hello?

Yes.

Are we still using parali? Because it was mentioned earlier in earlier calls,that we are using parali for our boiler users for generating energy. So are we still using it?

No. We are not using parali. We are using rice husk, which is turri.

Sir, was it not mentioned by you that we have started using parali also?

We -- at some point of time, we were looking because if you need -- if you want to use parali, you have to have your boiler constructed with that technology, which we don't have. So at one point of time, which was way back in '21, '22, we were just exploring the possibility of putting up a rice straw fired boiler. And -- but I think in terms of the cost that we've already envisaged for ourselves, we are already taking this expansion of INR 735 crores. And that didn't really fit into our plans. And the fact is that our existing boilers are already so efficient, we didn't need the feel -- we didn't feel the need to put up another -- extra boiler for us.

Okay, sir. And are we planning to use some solar facility also for our energy requirement? Or have we already put?

No. At the moment, no, because was unfortunately or fortunately, our cost of electricity that we produce is substantially lower to any kind of another energy cost that we will be able to produce. So I think we are doing very, very well. We are running a very highly efficient boiler and steam turbine engines. And the fact is that in our boiler, we are using turri, which is the biomass. And as mentioned in my earlier statement, we've gone up to almost 48% on biomass usage for our boilers. So I think...

And congratulations for a very fine set of numbers. In view of the position of many other players in the field, our performance is very good. So congratulations for it, All the best for the future.

Thank you, Damani ji.

Next question is from the line of Krushi Parekh from BugleRock PMS.

Sorry, I got disconnected earlier. But I believe you were mentioning that our existing dealer network will fully absorb our increased production as well. So just to add up on that, is there something that the existing -- I mean, the dealer will be able to replace our product with that of competitor? Or of some -- they are already paying higher prices from existing supplier and ours would be cheaper versus theirs?

No, I think only time will tell. The fact is that we are going to be very, very proactive in all this. I'm not suggesting that we will not look at increasing our dealer network. We will, because we are going in for upgrades in our quality. We are looking at manufacturing food-grade wrapping papers also. And that obviously will require a separate network of dealers. So we have about 100-odd dealers who are working for us today. So if need be, we are likely to add 10-odd percent to this number. But what I am suggesting is that with the existing network, I see no problem in looking at selling my entire production as and when required.

Okay. Got it. Great. And my -- another question is that this new copier grade paper that we have introduced, what would be our selling point for this versus the regular copier paper available in the market? And who typically would we be targeting as customers for this?

So obviously, the USP will be that it is completely largely agro-based, which means not using wood pulp at all in this. And it's a much greener product for -- to be used by customers. We will be making an outreach in the market and seeing how we can target, how we can tap on this. I mean, the new generation is something which is very much open to using paper like this, greener paper, where the impact on environment is lesser. So I think those -- that's the kind of network we will tap. That's the kind of customers we will tap. And we hopefully will make good business sense and a good business model out of it.

We will also be exploring the export market because there is a lot of shift towards and there is a need for more sustainable, more green paper. And agro, per se, is associated with being more sustainable. So we are also looking at aggressively the export market for this product.

Right. And the pricing would be similar for -- as compared to the regularly available copier paper?

It would be in a similar price range. But once we launch, we would have more clarity on how it is getting priced.

Okay. Okay. And coming on to that same export point that you were mentioning for this new, last call I recollect that paper-based packaging for the food items is prevalent in the European countries but not so much in India. And there are no regulations also there in place as yet. So are we even looking to introduce products in this category for the European markets? Or we are still not price competitive as yet?

So at the moment, a lot of R&D is being done not only by the paper industry, but by a huge array of chemical suppliers who give the required food-grade chemicals for the lamination purposes. So a big R&D effort is already underway. We are also part of it. And we are going in to invest. We are going to invest in the relevant machinery, which will allow us to make these food-grade wrapping papers. So that's for sure that we are going to look at producing the paper and the product of the requirement for this kind of market. Time will tell whether we want to do it within India or outside. We are not going to leave any stone unturned. We will surely look at both options, both domestic and the markets abroad, to look at marketing this product line of ours.

And India has also put a ban on using plastics. So saying that the Indian environment is not open to this kind of paper would not be correct. With the plastic ban in place, you would have already seen the change in how plastic straws and paper cups, so plastic straws have been replaced with paper for everybody. And all these other cups have come down to paper cups. So there is a shift in the Indian mentality. And we are seeing that a lot of products are now getting packaged in paper instead of the original cling or plastic kind of format. So there is a shift in the Indian centricity of consumers also.

Next question is from the line of Deepak Lalwani from Unifi Capital.

Just a follow up on the prices. Between May -- like between today and the March quarter, if you can highlight what has been the price increase at an industry level? Secondly, the price of the import, has it increased/decreased between May and March? And also the global pulp prices, you mentioned $750 per tonne. How much was it in March?

So compared to March, which was 2 months ago, the wood pulp pricing would have increased by about $10 to $15-odd per tonne. And paper pricing, we -- though we were able to increase by about 3%, industry, per se, was able to affect a much lower increment, may be stable to, let's say, 0.5% to 1% increase. So we've fared far better than the industry in terms of being able to increase pricing of paper, which is clearly reflected in our results as well.

Okay. And did you take an increase in all categories of paper or only certain categories like writing, printing?

No, all categories, all categories.

Sure. And on the import side, sir, what has been the reduction or increase in prices between May and March quarter?

That's been very quite stable. No increase is currently visible. But future contracts, one is hearing that they are likely to happen at higher pricing.

Next question is from the line of Jayesh Lad from Centra Insights.

Am I audible?

Yes, please. Go ahead.

A couple of questions. Firstly, sir, on raw material side, I'm aware that even you provide saplings to the farmers and we grow it and after 3 to 4 years, they sell to us. But what I want to know is, is there any written contract? I mean, are they -- is it compulsory on their part to sell to us or they can sell to any other player?

So no, there is no -- there's a voice over here. I can hear my own voice. I hope it's not disturbing you.

No, sir.

Yes. So there is no forward contract or commitment on the part of the pharma to sell it back to us. It's an open-ended sort of scheme, where farmer can sell it to anybody at all. But we've given a guideline that we are willing to buy at the prevalent market price at the time of sale. So there is going to be no sort of price decrease or sort of no loss to him. He can easily -- and the fact is all these farmers are already in touch with us regularly by way of delivering the raw material to us. We are -- we maintain a good relationship with them and, hence, the option of selling to us would be the first to him because he's got a ready customer, and we are going to be looking at supplying or buying the material from him at the prevalent market pricing. So I think it's a win-win situation both for him and for us.

Understood. Understood, sir. And secondly, sir, are we facing any competition from the furniture industry, I mean, the MDF industry regarding the raw material procurement?

Yes, that's true. And I think that's one of the reasons why wood pricing across the country has gone up in the past few years. And MDF is also an industry which is garnering a lot of wood supply. But I mean, that is the case. I think industry is taking huge steps in increasing the overall wood supply by creating this network of saplings and helping farmers grow more and more trees.

Sir, last week, you mentioned regarding the outlook on prices of [ wood and agro ] which is around INR 23,000 per tonne and INR 40,000 per tonne. So what I wanted to understand was, are these wood and agro prices before converting them into pulp? Or this is after conversion into pulp?

After convert. It is a pulp cost.

Okay. And is it possible to know the before conversion rate, if it is at all possible?

So wood pulp as a raw material -- sort of wood as a raw material is at about INR 8,000 to INR 9,000 per tonne. And agro material currently is at about INR 3,000 per tonne.

Next question is from the line of [ Shudha Dant ] from Goodwill.

My follow-up, just a follow-up on the debt question. So we have our current debt of around INR 600 crores, right? And the CWIP is around INR 155 crores. So we'll be needing to spend around another INR 500 crores. So peak debt, you think it can -- it will stay at INR 600 crores, INR 700 crores?

Yes. Because by the time the further drawls come in, there is an existing loan of about INR 220 crores, which is getting repaid as per original line of repayment. So that is going to go off. And only that much or more will come in to implement the new project. So I am...

Expecting strong cash flows.

Yes, yes.

Okay. Just a follow-up question. So you explained the greenfield cost of setting up a plant. So essentially are -- setting up the Kuantum's capacity would be more than $1 billion, right?

Sorry, come again? You caught me offguard.

Yes. So INR 5 crores that you mentioned per tonne of setting up a greenfield paper mill, that would make setting up -- making a Kuantum type mill $1 billion, around something like that?

Well, I can tell you for the Kuantum mill you were saying 675 tonnes or only the addition of 225 tonnes.

No, existing capacity.

Existing capacity which is 450 tonnes, right?

Correct, correct.

So 450 would take about, I would say, INR 2,500 crores.

INR 2,500 crores. Okay. And if including the fresh capacity, it would be higher. Okay. So in that way, after this CapEx around, is the Board okay with considering buybacks over a dividend policy?

No, at the moment, we have not considered anything in that landscape. Nothing on buybacks. And as I had mentioned earlier, there is no sort of executed dividend policy in place. But yes, the Board does -- is mindful of the fact that investors need a fair return, and we are mindful of this need very clearly and we create a payout of dividend accordingly.

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

So thank you all, dear investors, for participating in this earnings call. I hope we were able to answer to all your questions satisfactorily and, at the same time, offer insights into our business. If you have any further questions or would like to know more about the company, please reach out to our Investor Relations Manager at Valorem Advisors. Thank you, and wishing you all a great day ahead.

On behalf of Valorem Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.