Satia Industries Limited (539201) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Satia Industries Limited Q4 and 12 months FY 2022 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have with us today from the management, Mr. Rachit Nagpal, CFO; and Mr. R.K. Bhandari, Joint Managing Director. With this, I now hand the conference over to Mr. Rachit Nagpal, CFO of Satia Industries. Thank you, and over to you, Mr. Nagpal.

Yes. Thank you. A very good afternoon, and welcome all participants. Thank you for your time and interest in Satia Industries Limited. Hope you have gone through our audited financial results, earnings update for quarter 4 and 12 months ending financial year '22. We are happy to say that we had an extremely good financial year in terms of reaching the highest ever revenue and production volumes boosted by that -- boosted by the newest paper machine and a sustained backward integration initiatives. Coming to the industry and company outlook. As we all know, the pulp and paper manufacturing sector, clean energy and raw material [indiscernible] the current quarter was challenging on account of increase in costs for both. The reduced availability of key raw materials have pushed up input prices exorbitantly. This has led to margin compression of most companies despite price hikes. Despite the macro cost headwinds, we continue to witness a [ weakly ] positive demand environment. Our company is an agro and wood-based paper plate producing company and is fully backward integrated. Our locational advantage in the wheat bales of India grows year round availability of raw materials and our in-house state-of-the-art clean energy production capability ensures cheap power availability throughout the year. [indiscernible] for the recovery facilities and [indiscernible] and managing our water discharges in a clean and efficient way. Looking to the uptrend in paper prices and stabilizing raw material prices, company focused on data uptrend [indiscernible]. Coming to the company performance, I hope all of you have already gone through the performance results of the company. So please allow me to skip repeating the same. Future outlook, the company expects further growth in volume for the financial year '23 as compared to financial year '22 and expects to produce over 2 lakh tonnes paper in financial year '23 contributing to total revenue of around INR 1,400 crores to INR 1,500 crores in financial year '23. The management has set EBITDA margin of around 20% in the coming year. [indiscernible] consideration of our environment to use clean modes of energy generation and produce responsibly without any harmful wastes being discharged into our ecosystem. With this, I request the floor for any questions on the same or about our company. Thank you.

[Operator Instructions] The first question is from the line of [ Ashish Bhutan ], an individual investor.

So I just wanted to know like what is the top line guidance for this particular year? And have you heard back anything with respect to the ban on plastics from the government in July?

Top line for next year?

Yes. That's it.

Yes. Next year, we expect to do over 2 lakh tonnes of paper. And with the current price rolling around INR 75 -- INR 75,000 per tonne, we should be doing anything near INR 1,400 crores to INR 1,500 crores top line minimum next year. And yes.

What's the margin guidance for the same?

Pardon?

The margin guidance?

Yes. And EBITDA, we are expecting around 20%, INR 300 crores plus/minus. And PBT of almost 12% to 13% and PAT of almost 10% plus/minus, yes.

Sure. And like anything on the plastic ban?

Yes. Plastic ban, because everybody is awaiting the date that government has announced of July 2022 because the people are holding back their decision to invest if government is really serious about it or not or they defer this stage further. So nobody knows as of yet. So we are also waiting with our fingers crossed. And once we get that news, then this cutlery segment could be the next first area in our future working, yes.

The next question is from the line of [ Manan Poladia ] from [ MKP Securities ].

Sir, am I audible?

Yes.

Congratulations on a good set of numbers, sir. I have a couple of questions. So primarily, what I wanted to ask all in the current quarter, we saw the interest and depreciation figures jump up by a bunch. So I'm guessing that depreciation is from the additional machine that you have put in?

Yes. In February, yes.

Okay. Yes. Sorry, please. Carry on. I didn't mean to cut you off.

Yes, the machine started in February. The new machine that -- it started in February, the capitalization was done on February 1. So almost 1.5 months that additional depreciation came, yes.

Correct. Also, sir, what about the interest, new debt has been added into the company over the last quarter?

New?

New debt has been taken on in the company?

Yes, yes, yes. The total debt figure as on 26th May was almost INR 376 crores, term loan.

Okay. Also, I think you said you're expecting 20% level EBITDA margins for the next year? Is that correct?

Yes. Yes.

[Operator Instructions] The next question is from the line of Sudarshan Padmanabhan from JM Financial.

My question is...

Sir, we're unable to hear you clearly. May I request you to speak closer to the phone?

Can you hear me now?

Yes.

So my question is to understand a little bit more on the cost side, specifically on the fourth quarter. I mean, one is you talked about the cost pressure, which I would assume would have impacted. The second one is when you started the new plant of that 1 lakh tonnes. I mean, I would just like to understand in terms of the margin fall or the cost pressure, whichever way you call it. How much is primarily because of the unabsorbed cost of the new facility? And how much is because of the inflation cost?

Yes. On the cost side, I will give the reply, and Rachit will give the second part. If we look at the last quarter of financial year '21, our cost increased by almost more than 50% over the last quarter of financial year '21 to last quarter of financial year '22. And the price increase was almost 36%. So if I talk about the numbers, the cost increase was almost INR 21,000 per tonne, and price increase was almost INR 18,000 a tonne. So that gap of almost INR 3,300 amounted to almost 800 basis point drop in the EBITDA margin. So the second part, I think, Rachit, you can explain better, I think. Yes.

Yes. Could you please repeat the second part of your question?

So the second part is when I look at the volume, I mean, our volumes have gone off of about 9,000 tonnes if I'm comparing it on a year-on-year basis. So I would assume that the part of it would primarily be because of the new facility, the PM4 coming in?

So yes, that I will explain. We started production in February. And in February and March -- in February, we were operating at 43% capacity. In March, we were operating at 63% capacity. So the number from the new machine was 8,328 tonnes, almost 8,300 tonnes. So the rest was from the old capacity. And today, if I talk of May itself, so we have already reached an average of 194 tonnes, which means we are operating at 68% capacity as on date.

Sure. And sir, just a little question on your guidance. I mean, it is quite interesting to note that we had an average realization of INR 62,000 for the full year. I would understand that it would be a little bit more towards the fourth quarter. But if I go with the guidance, I mean, we have talked about INR 750 crores more or less from the new capacity with higher margin, which basically means they are operating at INR 75,000 versus INR 65,000, INR 62,000. One is, is the new capacity coming with higher realization and better profitability? Or have you taken a price hike in May, which is primarily to INR 75,000?

Yes, it is both because the average -- if we look at our last quarter, prices was already at almost INR 67,000 a tonne. But if we look year-to-year basis, then there is almost 25% increase in prices as on date. So we are selling some of the varieties of lower GSM and certain special qualities of PM4, even at INR 80,000 a tonne also. So as you rightly asked, so even if I look at my April, May average price for PM4, the price that I'm getting is -- the realization that I'm getting is over INR 79,000 a tonne because of the better quality, better furnish and better finish. And overall average, we have taken at INR 75,000.

And with the prices, have we been able to pass on the entire cost? Or I mean, would be -- because you have given a 100 plus margin expansion guide?

Because we have presumed that the cost increase that happened in the last quarter which was almost INR 21,000 a tonne, so we have moved with the presumption that if our cost, which is passed on already to the customer is almost 22,000 tonne increase. And the prices, they remain stable on raw material side and chemical side at this level only. So we should be easily able to make the numbers -- achieve the numbers that we have given to you. So we have priced in the cost increase of the last quarter in the next financial year.

Yes. Just one question before I join the queue. I mean, this is primarily on the tie-up that we have with Zume, specifically for the cutlery business. If you can give some color on the unit that we have started there. How is this business expected to scale up? And also some color on the kind of contracts that we have with them. The minimum offtake contracts that they are giving with a minimum margin whether they're taking at a minimum EBITDA per case, something around that.

On the cutlery side?

Yes, on the cutlery side.

Actually, on the cutlery side, to be very frank, we have been moving a little slow at the moment because we have been already too engaged with our new INR 500 crore expansion. And afterwards, now our total focus is, as we have been explaining in our earlier calls, to increase our straw pulp production, #1, from existing 200 to almost 300 tonnes and then wood pulping capacity to -- from 150 to 300 tonnes. So both projects, straw pulp expansion will come in June-end -- mid-June, and wood pulp will come in September. So that was the priority area, number #1. So that was the reason we were going a little slow on the cutlery segment, though 2 machines have been installed. Approvals that different tests are to be done, that approvals we have received recently, all the tests have we -- clearance has been given. So we are now waiting only for -- because the raw material prices have increased, the margins have definitely reduced in this cutlery segment. So we are just waiting for the government stance on July 1 this year. And then we will decide to add new machines and go further with strengths in this segment. Until then, we are keeping our fingers crossed.

[Operator Instructions] We have the next question from the line of Vaibhav Badjatya from Honesty and Integrity.

So in the press release, you have mentioned about raw material price hike. For agro, you have mentioned 65%, for wood chips 5% and for waste paper 6.5%. So this is like year-on-year number or Q-on-Q increase that you have mentioned?

I do not know where we have mentioned that, but -- I know that -- yes, yes. We know that raw material prices, if we look at on quarter -- last -- fourth quarter to this last quarter, the raw material prices have gone up almost by 24%. And fuel cost has gone because we are not using any coal. So in our case, it has grown up by almost 7% to 8% and chemical has grown up by almost 11%. And the rest is the other store spares and other rates, et cetera. So our total cost has gone up almost by 44%.

Right. No, what I was trying to understand is that among the mix that we use, so agro waste that we use and waste paper that we use and wood chips that we use. So which has seen highest inflation year-on-year basis and Q-on-Q basis? Is it agro or actually which is...

Yes. It is -- yes, you are correct. It is agro. You have rightly said the agro was -- earlier average was almost INR 6,000 a tonne. Now in the last quarter, the price was anywhere around INR 12,000 a tonne. And even in this year, normally during the procurement period, the price is anywhere in the range of INR 3,000 to INR 4,000 a tonne. But this year, we started with INR 4,000. And at the present moment, we are buying at almost INR 9,000 a tonne. So the major cost increase has been in the right -- reached down. But since it is almost 40% of our total raw material mix, so the cost impact is proportional only, yes.

Correct. And as compared to that, I mean, how much would have been the prices in waste paper? What I'm actually trying to understand is that because we use agro actually when price rise has been exceptionally higher or because of alternative uses of agro residue in power plants, is it that we are facing more cost pressure as compared to other mills who don't use agro residue? And that's why I want to know what is the kind of inflation in waste paper procurement that you have seen in agro chips that you use?

Yes, definitely, the big mills which have to their disposal, vast land bank of good trees, big jungle at their disposal. So they are definitely at an advantage at the moment because the wood prices haven't increased to that extent though may -- for them. But even if we look at the cost of the agro-based pulp, even at these increased prices, it will be still cheaper than the wood pulp price that we make in-house. Earlier, let's say, we have been -- our cost of straw pulp would have been anywhere around INR 28,000 a tonne. So now maybe it is INR 40,000 a tonne. But if we look at the wood chips pulp made in-house, so the cost would anywhere be around INR 50,000 a tonne. So it is still cheaper than them, number #1. And number #2, presently with our start of new paper machine and with scarcity of paper in the market at the moment, maybe the price realization that we are getting is sometimes even more than A-grade mills in certain grades. Earlier, the gap was minimum between INR 5,000 to INR 10,000 a tonne, but now that gap is not there.

Okay.

Yes.

Got it.

So we are not at any disadvantage. But definitely, they tend to gain by virtue of lower pulping cost. Their cost hasn't increased. And they are also increasing their prices. So B grade -- agro base, they have been increasing much earlier because of the compulsion that they have. But wood based mills are now [indiscernible]. So all are -- have increased their prices in May, June. In June, they are announcing further by INR 5,000 to INR 7,000 a tonne, in that range, yes.

Right. And secondly, because of this capacity, which is now we have added -- we have basically actually doubled the capacity mostly. So that will, for sure, increase the requirement of agro residue. So within our catchment area, is it sufficiently available? Or do we have to go more far to get the required agro residue?

No, there is no issue on that account because even today, even if we need almost 500 tonne of agro raw material, our average intake is almost 900 to 1,000 tonnes every day. And we have had a good stock of almost 15,000 tonnes of wheat stock at the moment. So we are building up that stock. We are doing the -- making the bales of the wheat straw so that stocking is easy, and we are able to ensure that we do not face any problem later on. Yes. So this is not an issue at the moment, yes.

The next question is from the line of [ Manan Shah ] from [indiscernible].

Sir, you mentioned that our per day capacity has now increased to around 700 tonnes per day. So what is the normal number of days that we should count while calculating our capacity?

Yes, normally, the downtime that we take is 6% to 7%. So if we take 7%, so you can easily take 340 days. And this 700 tonne capacity is at an average GSM of 64 GSM. So if we make lower grammage paper, then production reduces. If we make higher GSM paper, like when we make government paper, 80 GSM or 70 GSM, then production increases. So normal average GSM is around 60, 61. So the average comes anywhere near 650 or something like that at full capacity utilization, which is not being done at the moment. This year, we are taking almost 70% capacity utilization for the new machines, yes.

Okay. And also on the guidance in the press release, we mentioned that we planned to sell additional 1 lakh tonne. And considering that we've already sold 143,000 tonnes in the current year, so then the guidance you mentioned was 2 lakh tonne guidance, but additional you are saying on one hand, around 1 lakh. So just a disconnect on that side.

Yes. Because already 8,000 tonnes was already there in the last year figure. So if we subtract that, that comes to almost 92,000 tonnes. But the issue is presently, we are able to run the machine at 900 meters per minute only. The machine is designed to run at 1,100 meters per minute as per the original plan. So certain changes in certain roles and certain equipment has to be done [indiscernible] Company is doing. This may take some time, which we come to know only once we run the machine wherever you face certain [indiscernible] problem. So those correction, once done, and with that in view, we are now taking this conservative figure.

Okay, understood. And to make these changes in the machine, would we require the engineers from -- I believe you purchased the machine from France or the engineers are -- there locally?

No, no, no. They will be again coming from France only, yes.

Okay. Okay, understood. And I believe we would be making a higher-margin paper from a new line. And also considering you are talking about taking further price hike of around INR 5,000 to INR 7,500 per tonne. Then considering all these factors, any particular reason why we are projecting only 20% EBITDA margin as against, say...

No. I said A-grade mills, the big mills, they are -- they have already increased some -- they have already announced some increase in May, and some they are planning to do in June, which could be anywhere totaling around INR 7,000 a tonne. We have already increased our price to INR 75,000 a tonne for the lowest grade of quality. But for the higher grades, as I told earlier, for the quality that is made on PM4, even in April and May, our price realization was on average basis, INR 79,000 a tonne. So we have already priced in the increase at the moment. If there is any further increase in the prices, which may happen looking to the demand side from the market as on date in writing and printing segment, so we presume that there should be some increase in that deal or chemical prices also. So that is why we are taking that conservative stance, yes.

The next question is from the line of [ Manan Poladia ] from [ MKP Securities ].

Sir, am I audible?

[Foreign Language].

So what I wanted to ask was, let's say, you're producing 1 tonne of paper, how much agro and wood pulp do you use on average per tonne?

Per 1 tonne of pulp, straw pulp is presently almost 48% and wood pulp is almost 42%.

Correct. Also since you've done all the CapEx on the agro and the wood pulp side, next year, how much of your raw material requirement do you think you will have to buy from outside?

The wheat straw will be all available locally. And wood pulp -- wood chips and -- almost 30% will be from the local area and 70% from the [indiscernible] area like Yamunanagar, UP, J&K and all these areas, yes.

Okay. But sir, I'm asking like the outside of your capacity, basically, the 200 tonne per day agro-based and the 300 tonne per day wood pulp capacity, how much will you have to buy from outside, like from other vendors?

I can on the pulp, we will be only buying 5% to 10% of softwood pulp, just to give further sense in certain qualities, rest all will be in-house only, yes.

The next question is from the line of [indiscernible].

I want to know what is the current order book in hand with respect to State Textbook Corporation?

State Textbook Corporation, we have an order of almost 15,000 tonnes in hand. And we are getting additional orders for UP basic supply, which is the total tonnage required by the customer is almost 30,000 tonnes. So we will be getting 10% to 20% share from that. And we are expecting a big order from NCERT also in next 10, 15 days, which could be at a very good price also.

Okay.

So the present order is almost 10,000 to 12,000 tonnes in hand, which is from the online and 6,000, 7,000 tonnes from the market. So it is almost 45 to 50 days of our production capacity.

The next question is from the line of Sudarshan Padmanabhan from JM Financial.

Thank you for taking a follow-up. Sir, my question is to understand a little bit more on the...

Sir, we are unable to hear you clearly.

Can you hear me now?

Yes, yes.

Yes. My question is it looks like you understand this cutlery business or the replacement of single-use plastic a little bit more. I mean, I understand that I know Alex Garden, MD of Zume, had talked about explosive demand and probably replacing 10 billion to 20 billion in terms of opportunity. Just to understand a little bit better, I mean, in terms of wood price being such a big element when you're talking about such a huge market to be replaced? And second is, with respect to the agreement of Zume, I mean, is this something like you take the technology from Zume to basically convert the wheat into cutlery and sell specific quantity at a specific price back to them? So how does this entire thing work and if you can give some color on the macro side of it?

Zume has -- though I am nobody to comment on any other company, but Zume had their own vision with which that company started this business. Earlier, they were not into machinery making. So they were outsourcing the product from Taiwan and different others -- China and other countries. So they intended to set up shop in India. And ultimately, they entered into agreement with us with the presumption that we will scale up this production to a bigger quantity once we start the initial trials. So then the COVID came, the things got delayed. And in the meantime, they took almost 2 years and then set up their own shop in Los Angeles, where they started their own production. And then the same machinery, 2 machines with 2 tonne capacity were given to us, which we installed and commissioned. And we have been awaiting for this period, all health authorities and different tests being conducted on the product and hygiene, cleanliness of the total area, and that took some time further. But at the moment, if we see these machines that Zume provide, they are able to make complex design of products also. Normally, if we have 9-inch bowl -- 9-inch plate, 12-inch plate or a simple bowl or these kind of things, so these you can make even on semi-automatic and manual machines also, which are very cheap. But these machines are -- that they have installed in us, so they can give the products which can be filled also. Like we have 750 ml bowl and then the lid which seals the product inside the bowl to be a waterproof package for any even -- a curry product also. So that was their idea. And with that thought they had in mind, with this product, we'll be getting much higher price, which currently is not happening in India at the moment. So that price which we were expecting for complex items anywhere around INR 250 per KG, INR 200 per KG at the moment because of the number of players that have come in the market, #1. And #2, because there is still not ban on the plastic alternative available, which is much cheaper than this product. So that gap is further -- the availability of the plastic product at the moment, single-use plastic product at the moment is hampering the growth of this market at the moment. So unless government is serious and they implement that ban strictly from 1st July, only then this price will be remunerative. And the working of more and more entrepreneurs joining with additional capacity with like us, is likely to come in India as I foresee it. And moreover, Zume, they have different thoughts on this, also to make specialized products like mobile package or scoops for Maltova or certain other products, which could be -- which could not be made on the normal semi-automatic machines. So if we -- they are able to be successful once the single-use plastic ban is there, which is possible only after that, so maybe then the price will be much more remunerative. And we will not be in the normal line of business, where almost already more than 60 to 100 players in this small capacity with 10, 20 small 500 kg, 200 kg machines are operating and selling it anywhere between INR 160, INR 180, INR 200 or any price which they can command and with the much lower quality also. So that is the overall scene at the moment, which is quite confused. So once this ban comes on 1st July, I think the real shape will come after that only.

And what about exports, I mean, if India is not operating, was there an opportunity to export anywhere?

Yes. For export, we need to have different registration. For Europe, you need different registration. For U.S., you need different registration, #1. #2, we need much bigger capacities also because their demand is huge, and they want to divert from China to India. So at the moment, because India doesn't have that kind of capacity to relate the range and the quantity that is being looked after -- looked for by U.S. market, so maybe not so many people are coming in India. So like we are planning another 4, 5 machines. So we are already talking to one U.S. fellow, whatever 6 products that you want from us, you just tell us which will be a regular demand from your side, we will buy only those molds and continuously produce for you if you have some kind of arrangement based on the cost price relationship on a lower perspective. So that is how we are looking at this business. And the decision will be made after 1st July only.

And sir, on the profitability side, one, you mentioned that the remuneration is not as probably great as what you initially thought if [indiscernible] less. But even at that, I mean given the fact that it is on an ESG platform where people want to move towards green chemistry and green packaging. On an EBITDA per tonne or you talk about even margins, I mean, should the margins be much higher than the 20% what we are making currently?

Yes. earlier, the expectation was minimum 40% EBITDA. But with the almost doubling of the raw material price, pulp and everything, as everybody knows now, the final product price hasn't increased to that extent. So the EBITDA has come down in the recent time to almost 20%, 25% only, which is almost same as in paper product.

Okay. Okay. And one final question from my side is, sir, now that we have taken the debt of INR 500 crores, on the talks, how do we see the cash flow and the [ tax pay ] over the next 2 to 3 years? Because I'm sure that the numbers that you are talking about, you are going to see a fair amount of debt reduction in my opinion, at least close to INR 100 crores, INR 100-odd crores kind of cash that will be generated on a yearly...

Yes. I think, Rachit ji, you will be able to better explain, please.

Yes, yes, sir. As on date, the outstanding debt is INR 410 crores, out of which term loan is around INR 370 crores, and INR 40 crore some relate to short-term debt. So coming to the next 3 years, we have an average repayment of around INR 100 crores each year. So by the next 3 years, we are able to reach INR 30 crores debt. And coming to the disbursement side, pending the disbursement, it is almost INR 80 crores to INR 90 crores. So we are at the peak debt as of now. So our next year debt -- I am expecting debt levels at around INR 370 crores or below.

And what will be the interest cost for us, sir, on the debt, the new debt?

It is somewhere around 7%, 6.5% to 7%.

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

My first question is regarding the CapEx. For how long will the capacity of 2.05 lakh tonnes suffice to meet customer demand? Secondly, the asset turn in FY '23, so we are likely to clock INR 1,400 crores to INR 1,500 crores revenue in FY '23 against plant and machinery of around INR 880 crores, including capital work in progress. Essentially, during our favorable commodity cycle, we expect to have asset turn of 1.7x. Is this the best case scenario for the near future? And where can the number go by FY '25? And my last question, what is the capacity utilization level we are targeting for FY '24 and '25, assuming current capacity doesn't increase by then?

Rachit ji, there?

Yes, yes. Answering your fixed assets turnover question, like as of now, we have 1:1, like our fixed asset is almost INR 900 crores, and that is the turnover. So coming to the next year, as we are expecting a turnover of around INR 1,500 crores and fixed assets would be around INR 850 crores, including the next year depreciation. So that would be around -- somewhere around 1.3x to 1.9x. So this would be the -- and the best ratio we can achieve is 2.2:2.5 in the coming financial year '24. So -- and what is the next question you have asked?

It was about the capacity utilization level that we're targeting for FY '24 and FY '25?

Yes, that will be -- this year, we are taking almost 70% capacity utilization. So next year, we presume we'll be using 100% capacity, 1 lakh tonne from the new machine and 130,000 tonnes, 135,000 tonnes from the old capacity. So it should be anywhere around 235,000 tonnes to 240,000 tonnes in financial year '24 and '25. It should be then almost consistent from that period onwards. Unless some CapEx in years to come is done on PM3, where there is margin far improving -- far increasing the speed and increasing the production. But those plans are not yet on.

So would it be right to say that in the near future, the capacity would go up only marginally from the current 2.05 lakh tonnes?

No, it will be almost 20% up. It is not marginal. It is quite significant.

[Operator Instructions] The next question is from the line of Mr. Maheshwari from Strategic Advisor.

This will be a question in detail. I would like to congratulate the management for [indiscernible]. Sir, just wanted to understand a couple of points. The first one is what will be the breakup from the PM4 in terms of production [indiscernible] or whether it will be a result of a [indiscernible] that PM4 would achieve. So the second question would be on biological assets, I see a significant increase in the biological assets. So just wanted to understand whether it represents that the company, the biological assets have been [indiscernible]. Would it be a better deal in terms of cost savings [indiscernible] better revenue that related with this upside? And the third one will be on the backward integration [indiscernible] enhancement of the capacity [indiscernible] credit that we have got. So can I have a brief overview on all the things?

Yes. Regarding the breakup of PM4 products. Yes. So we plan to make with us -- we have seen that our new machine runs fantastic even at very low GSM. Normally, no big mill with good furnish makes paper of 45 or 50 GSM. This is in very good demand in export market. So we plan to have almost 20% production of paper below 50 GSM. And then secondly, there is a very high demand of surface size paper in 54 GSM, which only Ballarpur was making earlier. No other mill is making surface size paper in 54 GSM. So we are planning to introduce surface size paper even in 52 GSM. 54 GSM, we have already introduced surface size paper, and we are planning to introduce surface size paper in 52 GSM also, in lower GSM also, which is again a very potential market in publishing and as well as in notebook -- high-price notebook segment. And third is the surface size paper in heavy GSM, which is 70, 80, 90 and 110. So that will be another 20%, 25%. And then we may make copier paper another 10% to 20% on PM4. And maybe the cup stock paper, we may stick to PM3, which was the old machine. So that product is already very well accepted. So we may continue with the cup stock paper on PM3, the old machine. So this is -- this will be more or less 20% lower GSM, below 50 GSM, 20% to 25%, 52 to 54 surface size and rest [indiscernible] copier paper. And as far as your second question, biological asset, this value has grown up because as the age of the plant matures from 3 to 4 years to 4 to 5 years or 4 to 5 to 5, 6 years, it grows in size. So we have almost 2 lakh plants. The value that we have given is almost INR 37 crores. So per plant cost comes to -- since the age of the plant has increased, so the per plant value is almost INR 1,850 per plant. So the weight of per plant is almost 3 quintal -- 300 KG. So the cost is almost INR 6 a kg as on date for the raw wood. So that is how this price calculation is done and -- depending upon the age and the maturity of the wood. So we -- as per [indiscernible], they increase the value of these biological assets. And the third, you asked about the backward integration. So presently, since we are operating at lower capacity, as far as PM4 is concerned at only 70% capacity. So we have 200 tonnes of agro average and the 150 tonne of wood average -- wood pulp average. So which we are increasing to 300 tonne, wood pulp. And agro, we are increasing to 250 to 300 tonnes. So with this 600 tonne in-house pulping capacity, we don't need any outside buy of pulp substitutes. Only pulp if we want to add to the quality we may require is softwood pulp or BCTMP pulp, which is used in the copier paper.

As there are no further questions from the participants, I now hand the conference over to Mr. Bhandari for his closing comments. Over to you, sir.

Yes. Thank you. Thank you very much, and thank you for your participation, and we assure that we are doing our best. And I think since there hasn't been much investment in writing and printing segment in the recent year, and markets both in big industry and exports as they have -- you must have read in the paper also the export demand has increased tremendously, almost by -- almost 30% to 35%. And the major part is coming from writing and printing also, which has increased by almost 90% to 100% over the last year. So I think we have entered the market at the right time. Our total production is already absorbed from the day 1. We haven't lost a single tonne of paper made on this machine. We haven't repulped anything. So that way, we hope that we come up to the expectation of the market and the investors. Thank you. Thank you for your interest.

Thank you, members of the management. Ladies and gentlemen, on behalf of Satia Industries Limited, that concludes this conference call. Thanks for joining us, and you may now disconnect your lines.