Satia Industries Limited (539201) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Satia Industries Limited Q4 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Runjhun Jain from E&Y. Thank you. And over to you, ma'am.

Thank you, Muskan. Good afternoon, everyone. We hope you would have got the chance to review the results, which are available on exchanges and on company's website. To discuss the company's performance in the quarter gone by, we have with us Mr. R.K. Bhandari, Joint Managing Director; and Mr. Rachit Nagpal, Chief Financial Officer. Please note that Mr. Chirag Satia couldn't join us as planned due to last minute exigency. Before we proceed with the call and disclaimer, please do note that anything said on this call during the interaction or in our collateral, which reflects the outlook towards the future or which should be taken at a certain forward-looking statement, must be viewed in conjunction with the risk the company faces and may not be updated from time to time. More details can be found on the company's website. Should you have any queries or need any further information at the end of this call, you can reach out to us on the e-mail addresses mentioned in the company's earnings presentation. With that, I now like to hand over the call to Mr. Rachit Nagpal. Thank you. And over to you, sir.

Thank you, Runjhun. Good afternoon, everyone, and welcome to Satia Industries annual call of financial year '25. Before we discuss our company's performance, let me first outline the broader trends shaping the industry. So financial year '25 proven to be a challenging year for the Indian paper industry and for Satia too, primarily due to increased imports from ASEAN countries affecting adversely our net realization across the industry leading to a decline in margins for financial year '25. However, we were not only able to -- however, we were not only able to maintain our volumes for the year, but also saw a marginal improvement in quantity sold as a result of our strong distribution network and goodwill. Now let's look at our operational highlights for Q4 and the full fiscal year '25. Our Q4 financial year '25 revenues declined 8% year-over-year to INR 3,967 million, largely due to those pricing headwinds. However, we did see a 6% improvement Q-on-Q, indicating a positive shift. EBITDA for the quarter, while down year-over-year, grew by 16% sequentially to INR 615 million. Our profit after tax for the quarter stood at INR 354 million. For the full financial year '25, our revenues were INR 15,120 million, a 12% decline year-over-year. The primary impact of the lower realization was felt on our EBITDA margins too, which was down 35% year-over-year to INR 2,703 million. Profit after tax for the year was INR 1,186 million. Despite the challenging market, we currently hold a healthy order book of over 1 month. For financial year '26, we are planning a critical capacity enhancement of our PM3 plant. This will necessitate a planned shutdown for almost 6 months. A new chemical recovery boiler is also planned and will be commissioned in the year financial year '28 with full benefits realized in financial year '29. So these investments underscore our commitment to long-term growth and operational efficiency. Financially, we continue to strengthen our position by repaying debt of INR 1,340 million during financial year '25, maintaining a healthy balance sheet. Finally, we are pleased to announce that our Board of Directors has approached a dividend of 20% as a final dividend for the last year, financial year '25. So with this we open the floor for your questions. Thank you.

[Operator Instructions] The first question is from the line of [ Shasank Agarwal from Seaco ].

Sir, there is a small complaint from my side. Sir, for the past 2, 3 quarters, the company was not holding any con call, which I can understand, sir, but I had mailed the company 5 to 6 times, but there was no reply. I mean no written confirmation whether the mail has been received, we will not reply or we will reply, sir, nothing of that sort. That is a small complaint from my part.

Well, we are so sorry for that. I really apologize. But on which e-mail ID you have done that? Like I have not received any e-mail. Like can you -- or you can reach me separately for that, I will answer if you have any questions. And now going forward...

Sir, the e-mail ID was [email protected].

Okay. Maybe due to some filters issue, it may be in spam. I will check and revert you immediately. But going forward, we are planning to hold calls. So...

Sir, what will be your capacity expansion regarding the PM3 that you have just said?

PM3, we are shutting this machine in most probably in the month of July, and we are doing 2 major exercises. One, the present machine width is around 2.85 meters finished deckle. And second, we are increasing that width of the machine by almost 10% and present speed of the machine is 650 meter per minute, which we are planning to increase to 900, 950 meter per minute, almost 50% increase in the machine speed. So presently, this machine is making almost 160 ton per day. So we will be increasing the per day production of 50 to 60 ton, almost 20,000 ton a year. Yes.

Okay. Sir, what is the CapEx for this one?

CapEx for PM3 is over INR 200 crores, almost INR 225 crores. So part of it has already been done, almost INR 100 crores, and the rest will be incurred in this financial year. Yes.

Okay. And sir, your company has been reducing the share of agro pulp used in the paper production. Sir, what is the reason behind that?

No, we are not reducing, but wood pulp share is increasing because we have certain limitations that how much we can produce depending upon the capacity of the straw pulp. So that capacity, whatever is, we are using 100%, which with present production comes to anywhere around 50% to 55%. So that we are maintaining, rest, we are using wood pulp. Yes.

So it is not because you want to create better quality products, it is only because of the...

Because once you put up a new machine as we did put up PM4, the speed of the machine is over 1,000 meter per minute. So if you are making paper at that speed, then you need good quality fiber to run on that machine. The strength of the pulp should be on the higher side. So having more wood pulp is a compulsion also and leads to better quality and better realization also in the market. Yes.

Okay. And sir, the new boilers that you are putting up, sir, there is no problem for the raw material availability for those, right?

New boiler, the CapEx you are talking, CapEx is far -- or you are talking of rice straw boiler?

Rice?

You are talking of soda recovery boiler that we are...

No, no, no. Sir, the boiler that you had put up in the...

Steam boiler, yes. Yes, yes. Yes, there is -- yes, there is no problem. We have -- we always buy -- even in this year also, we bought almost 3.25 lakh ton of rice straw and which we store all around the factory in different places, in different store houses. So that is not a problem. So we are presently using almost 85% to 90% of rice straw only and 10% to 15% of rice husk. So that is the major reason for our fuel cost savings this year.

Okay. And sir, one small thing, sir, I know that Kraft Paper is a worse product for you. But if you were to make it, is your plant capable to do that?

Kraft Paper?

Yes, sir.

We can make. But we are -- we don't make this. We make it -- we don't make -- we do make some packaging paper for our own use. But we normally don't make kraft. But we can make. That is not an issue.

And sir, on the cutlery business shaping, sir, you have added quite a few machines and you're planning to do more in that side. So how is your current machines shaping up?

Presently, 9 machines are running. We already have in-house 5 new machines more. So within 1 month, we should be running almost 14 machines. And as we committed long back, so whatever we committed now we are executing that. Yes.

Sir, what is the revenue potential for this?

Revenue, almost once we are at full capacity, I think it should be touching anywhere between INR 15 crores to INR 20 crores every year, depending upon the price of the product because that price is varying quite a lot. Yes.

And sir, how much is the headroom there? How much can you possibly do in the future if your products are successful and the market is good?

In the cutlery segment...

Yes.

Cutlery segment, if the government is serious on ban on single-use plastic, I think the earlier projection with which we started was to have almost 30% to 40% EBITDA in this segment. But if government is not that strict and they are lenient and plastic products are still available as you might have seen abundantly in the market, that is putting a lot of pressure on the margin in this segment. Yes. So it depends upon how the circumstances emerge and how is the awareness among the common public. So that will ultimately decide the margin in this industry. But we're looking to our commitment to sustainability. We have this done in this investment, though we are not making much money out of this presently. Yes.

[Operator Instructions] The next question is from the line of Madhur Rathi from Counter Cyclical Investments.

Sir, this PM3 expansion that we are doing, sir, we are investing INR 225 crores and it will give us additional 20,000 metric ton of capacity. Sir, so are we going to manufacture much higher margin products or what is the payback period? Because if I consider that the INR 70,000 current realization for the current year, the payback period is very large. So if you could just help on that?

Yes. After we do this expansion, quality definitely will change, because like PM4, where now we are making -- we have introduced copier paper in a big way, and we are increasing our share in the copier market also. And this machine too has the same potential. This will have the same potential to make high-quality SS Maplitho paper. That is number one. Number two, that machine has other possibilities also, which we'll be exploring maybe at a later date, which is to make chromo paper and hardboard paper also, like the paper that is supplied to gutka manufacturers. So that paper gets a very high realization of almost INR 90,000 to INR 100,000 a ton. So those are our plans for PM3. And we will be diversifying our sales on that machine towards higher-end products in the open market, from the present focus of government segment, that too, we will be retaining, but ultimately, we'll be finding our strength and place in the open market also. Yes, that is the plan.

Got it. Sir, so if I consider the revenue potential of this [ INR 225 crores ] CapEx, what would that be? And what would be the margin potential for the same?

Actually, you know, okay, when we did put up PM4, we never thought we'll be getting the return so fast. So since that time, market went up to almost INR 90,000 a ton, so the total investment was covered very fast. So even in this, if we see the cash accruals on this machine, so we should be able to cover the total cost in 3 to 4 years if -- at the current margins. So if the margins improve maybe earlier, that is number one. Number two, we have to simultaneously see the longevity of the equipment also because this machine was put up in 1998, and it has dryers -- the drying section in this paper machine, the dryers were of the smaller size, almost 1.25 meter [ dia ] size. So normally in industry minimum size is 1.5 meters. So with new machine, we'll be having dryers of 1.8 meters. So we'll be increasing the drying capacity, life of the machine, higher speed, better quality and better long-term future prospects also. So that too has to be seen, as Mr. Rachit said in the opening remarks, our commitment to long-term performance and our answer to the market also. So that -- with that view also that machine work has been done by the promoters. Yes.

Okay. Sir, what would be the -- so the pipe that is used, sir, what would be sold in-house and what would be -- how much would be sourced from imports or other sources?

You are talking of pulp?

Yes, sir.

Yes. Pulp, we have already in-house capacity, additional wood pulp, we can go up to 250 ton easily. And whatever additional -- depending upon the price of the imported pulp, like hardwood presently selling at a very cheap price, $530 per ton. So if it is viable at that time, we can buy that also because both options are open.

Sir, our capacity will go to 250 tons per day.

For wood.

For wood, yes.

Yes. Either we use in-house or we use imported pulp, depending upon the cost that we pay for imported or indigenous pulp.

Got it.

Yes.

Sir, if I look at the cost of production, sir, with this new boiler coming in and new chemical recovery plant that we are planning to see full benefits in FY '29, sir, what is the cost of production -- reduction in our cost of production can we expect over the next 2 to 3 years?

I think Mr. Rachit can better explain this question. Rachit ji...

So you are asking about soda recovery boiler, how much saving it will bring?

Yes, sir. So, overall, considering the new boiler us using this rice straw, sir, on an overall basis, what is the reduction in cost of production...

Actually, Rachit ji, actually, you cannot say what will be the -- because if we use hardwood pulp more on PM3 in future, the cost of production may go slightly up. Number one. Number two, but price, the paper realization will be on the higher side, number two. Number three, fixed cost per ton of paper will reduce. So number four, efficiency in soda recovery boiler presently, we are recovering almost 92% to 93% of efficiencies there in the soda recovery boiler. With the new soda recovery boiler, our efficiency will go above, number one, 95% to 96%. Secondly, the steam that we produce presently in soda recovery boilers, that is one boiler is producing at 42 kg per centimeter square and second one is producing at 62 centimeter -- 62 kg pressure. So the new recovery boiler will be giving steam of higher capacity, which will lead to higher production of power also. So these are -- there are too many interlinks in this. So -- but overall profitability should increase, I think, for this segment by minimum 7% to 10%. Yes.

Okay. Sir, so considering only the fixed cost of production, can we expect it to be much higher than the 7% to 10% on the overall basis that we are expecting?

Fixed cost of -- pardon, I could not get your question.

Sir, so, we said that based on the product that we manufacture, the cost of production and the savings might be different. But sir, if I consider only the fixed cost of production that we have, sir, what would be that reduction overall -- on an overall basis per ton that we can see?

That I cannot say for certain right now. But overall, as I said, there will be definitely an overall cost reduction of almost 10% minimum. That's what I can say at the moment.

Okay.

Yes. I do not want to give any wrong figure.

[Technical Difficulty] what is the replacement or maintenance CapEx per annum?

Sorry, Rachit ji, please.

It is somewhere around INR 30 crores to INR 35 crores.

Right, sir. And sir, I could not understand that captive consumption of biomass par. Sir, are we basically -- is there any benefit in the cost of production? Or is there any edge that we enjoy? Sir, because the realization for paper is a commodity and it's the same for everybody. So sir, in terms of cost of production, in terms of sourcing of pulp, sir, due to our location, are we able to buy biomass cheaply or rice husk or sir, various other biomass? Or sir, are we also importing it like everybody else and hence, our cost of production is also -- we don't have any edge basically. That is what I'm trying to understand.

Actually, if you see the price reduction itself, so if there is -- there has been almost 14% to 15% reduction in the price realization. So if we look at the loss on account of that only in profitability, it comes to almost INR 200 crores plus over PBT of last year. So unless -- but we switch to rice straw as fuel and due to the low cost of procurement of wheat straw, we could save a -- make a saving of over INR 70 crores in the raw material and chemical consumed last year only, which could lead to the present PBT that you are seeing. So that advantage if we did not have and if we would have been using rice husk only and we haven't replaced rice straw as fuel. And number two, our wheat straw buying is almost INR 400 to INR 500 per ton cheaper than anybody in the Punjab region and all over India. So only those 2 savings are ultimately leading to -- could lead to this kind of margin of 7% to 8% despite 14% to 15% decline in the sales realization. So that is the advantage that we have when we do invest on certain new things, and we are the first one to do that. Maybe people are now following us. Yes. So we cannot take -- yes.

So sir, basically, what I understood is that we have a edge in terms of procurement of raw material and fuel for our captive power plant, which basically leads us to lower cost of production versus the...

Yes, that's true. That's true.

So sir, last year, we did 2.15 lakh tons. So this year, FY '26, sir, will there be any -- sir, what kind of volumes are we expecting?

In the next year?

So this FY '26, what is the volume that we are expecting?

In the next year, in the coming year.

In the current year.

In the current year, yes, this financial year '26 only, as Rachit ji told, we will be shutting PM3 in the month of July. And if the shut remains anywhere around for 6 months, so we will be -- this year, we made almost 2,15,000 ton paper. So this will reduce the production by almost 25,000 to 30,000 ton this year. So some, we may make up some -- if the machine starts well in time in December itself, so maybe with higher speed, we are able to make up some of the loss. So -- but this year, that loss of production is likely to come of almost 30,000 ton. So in pricing terms, it should be anywhere around INR 400 crores -- INR 500 crores.

Sir, I got it. Our -- basically volume will reduce by 10%, 15% year-on-year. So what about [ FY '27 ]...

Sir, I just request you -- Mr. Madhur, I just request you to follow with the queue, please. Yes. The next question is from the line of Karan Bhatelia from MAIQ Capital.

Yes. A couple of questions. Sir, why is the depreciation so high for this year, FY '25?

Rachit ji, please?

So, yes. So the depreciation for this year is INR 157 crores. And the last year, it was INR 151 crores. So the reason of increased depreciation is our multi-fuel boiler was installed in March '24. So that was of around INR 96 crores. So the higher depreciation is the reason for that commissioning of that multi-fuel boiler only.

But we've also reduced the fixed assets, right, compared to FY '24?

Yes. So the reason is account for this only. If we calculate, we are taking a depreciation of around 18% on the machinery. So this is the base of this calculation.

Okay. So straight line since we have taken, so last month, you have taken a depreciation is what you're trying...

No. The depreciation is on [ WDB ] only. The rate is -- the life of the machinery is taken at 12 years, and so the depreciation rate is coming at 18%. Yes.

Got it. Got it. So of the 1-month order book, which you have stated, 1 month, so how much is government and how much is private product?

It is almost 50-50.

Okay. Thirdly, it would be really helpful if you could give me a cost breakup of like how much of wheat straw, wood pulp, chemicals and power we have used to produce per ton of paper.

Rachit ji, you can give some result.

Well, I don't have the figures right now for the exact breakup. So it would be better if you can connect our IR and I will provide the same.

Done. Done. Can you provide me the e-mail, like what is the...

Yes, yes. So the e-mail ID is mentioned in the investor presentation itself.

Okay. I will connect.

The next question is from the line of [ Subu Murugesan ] from -- individual investor.

So my question was you said that this year, the volume will be lower by around 10% because of shutting down this machine, right? So assuming the realization is the same that you're expecting, so by how much would the revenue decrease this year?

By almost [ 15% ], by almost -- we should be doing anywhere around INR 1,200 crores to INR 1,300 crores.

Okay. And can you give an idea about what you're seeing in the market since March? So I guess these results will show the picture till 31st of March, right? And now we're already in sort of end of May. Can you give some idea about like realizations how they have been for the last couple of months and then going forward for the next 6 months? Or do you have any sort of import pressure? Yes.

Yes, last 2 months are better than the last quarter that we had. They are up by -- prices are up by almost 10% to 15%. So let's see how far this trend continues. We think that till June, this trend is likely to continue, the first quarter. And let's see what happens in the second quarter, depending upon the international situation, because at the moment, China situation is a little bad. So there is a lot of uncertainty in the market at the moment. But till June, the first quarter should be better than the last quarter, price-wise.

Okay. And has there been any lobbying by the paper industry because almost everybody in the industry has been affected, right? So is there any sort of lobbying efforts to the Indian government to sort of prevent such cheap imports coming in? What's your view on that?

Actually, government has their own thinking, but definitely, all association, IARPMA and Indian Agro and Waste Paper Recycle Association, they keep on representing to the government from time to time. So it's up to the government the view that they take. Yes.

Okay. One question I had was on the tax. So I can see that your tax keeps changing and especially March '25, you had a benefit due to the tax rate. So can you explain how the tax works, like sometimes it is very low and sometimes you get a benefit?

Sure. Sure. So -- sure, yes. So our company is continuously availing the benefits under Section 80IA, which is for power generation since we are generating power, so we are eligible for the 80IA deduction. So as a result, we are primarily taxed under the Minimum Alternative Tax, which is MAT, which is around 17% to 18%. So in the last financial year, the major fuel cost was rice flour, which was rice husk, if I talk about last to last year. So this shift has led to reduction in power generation costs like Bhandari sir has already said to almost 30% to 35%. So since our 80IA deduction was linked with the cost plus margin methodology earlier, so the lower generation cost has directly impacted our -- this profits. So to ensure the arm's length price on a reasonable basis, we have engaged to transfer pricing consultants. And upon their recommendations, we have incorporated certain changes with respect to the calculation methodology. So which has resulted in some higher eligible profits, which are eligible for this 80IA deduction. So this has some impacted in the tax calculation in the last quarter. So this is the reason so far.

Okay. And this has been approved by the tax agency or do you think that could be a challenge in the future?

So see, that -- no, no, it's not a challenge. It is within the range of the arm's length price only. We have taken advices from 2 consultants before doing that. So I don't see there is any challenge in that.

Okay. And my last question is on the net profit for next year, right? So you said that the revenue might be lower. So can you give us an idea of how the net profit might -- would the net profit also be lower into a similar amount of 10%? Or do you think you could have higher margins and you're aiming for to be more or less flat compared to this quarter -- this year, yes?

So since the shut is on the cards this year, so the PM3 will be going to be shut for 6 months, that will definitely impact our margins so far. So I think that would be somewhere in the range of 8% to 10%.

So we can expect an EPS decrease of also around 8% to 10%?

Yes, some marginal decrease we can expect. Yes.

Okay. And what's the reason for shutting this down? So is it like every few years you have to shut it down? Could you give us like an idea of how frequent you'll have to shut it down?

No, it is not -- we are not doing it that frequently. It is being shut the way it is being shut after 1998 only. So it has been almost 27 years, it has been running and giving good production. We started with 65 tons. And today, we are at 165 tons. So whatever shut we have been doing earlier was minor changes, but this one is the total sea change of the total machine itself. We are -- as I said earlier, we are increasing the width of the machine, and we are increasing the speed of the machine also. So both. And almost every part will be -- the major parts will be new only. So which -- this will sustain for another 25, 30 years, good to -- without any major change. Yes.

The next question is from the line of Manu Jindal from Thorin Technologies (sic) [ Technology ].

Just had 2 small questions. Out of the [ 2,19,000 ] metric tons of capacity, how much of it is from wheat straw and how much of it is from pulp? You mentioned 55%. Am I correct? Just wanted to reconfirm.

Yes, that's true.

Got it. And sir, about the net profit margins, net profits, say, once the PM4 machines are up and running, barring the fact that, say, PM3 machines are shut down for 6 months and after that, once the PM4 machines are up and running, given the same margins which we are currently seeing, what are your expectations about the net profit margin? What is the range which -- on which we can see net profit margins?

Rachit ji...

Well, it depends on the market dynamics also. Well, if I talk about the current prices, so I think it would be in the range of 8% to 10%. So well, I think market will determine this broadly. So looking at the current scenario, I think it would be somewhere around 8% to 10%.

And currently, without this machine, how much are we getting? Like I think it is in the range of 8% only. With the new machine also, you are saying it's 8% to 10%.

Yes, yes. Yes, yes. But quantity will increase, but the overall quantity will increase.

Okay. Okay. I get it, sir.

Yes. So that will be reached over and above that. Yes.

The next question is from the line of [ Mustafa Khedwala from Cube Investments ].

Sir, the new education policy was supposed to generate some demand for our particular products. So are we not seeing that happening on ground?

No, definitely, it is happening because presently, the major demand is coming directly or indirectly from government purchases only, which is almost over 50% to 60% of the total market. So the labor change and then the publisher changing that normally, by this time of the season, starting from January, it used to be a low demand period. But presently, we are having very robust demand, and we are not able to fulfill the demand of the market because of the increase in demand from the market because of new education policy only because a lot of labor changes are happening. Similarly, the publishers, they are changing their books and government is spending a lot on Sarva Shiksha Abhiyan. That budget is also increasing. So definitely, the robust demand presently in India is mainly because of the new education policy only. But the effect is being felt slowly. So there is not a sudden outburst of demand that you can say. Yes.

Which is why we are planning to focus more on the private market, I'm assuming?

Yes, yes. Because even government because they are publishing, they are getting books printed from private printers only. So ultimately, you got to make your reach to all those people who are printing books for in India or for other countries also. So naturally, we have to upgrade our quality, we have to increase our capacity. We have to see if we are able to manage. Like recently, we had a big demand from Bangladesh. So they want over 10,000 ton paper, let's say, in 2 months only. So since we are booked for almost more than a month, we are not able to fulfill that. But all these demands are coming from all over the country. And recently, we had a major demand from Nepal also 3,000 tons to be supplied in the next 2 months. So all this is coming from focus of different governments and our government also on improving the literacy rate in the country. Yes. So that is leading to better market for writing printing paper and as you might have seen than the other segment in the paper and paperboard industry. Yes.

So sir, what would be our capacity utilization, sir, as of last quarter? Because clearly, we have more demand than we can supply.

Our capacity utilization will be almost 90% plus.

Okay. Okay. And sir, for this capacity -- for this CapEx that we are going to do in PM3, I think part of it we have already spent. So the remainder INR 150 crores, are we planning -- how are we planning to get these funds? Are we planning to raise money from the markets?

Yes, Rachit ji. Rachit ji?

Yes. So yes, we have been sanctioned a term loan of INR 150 crores for the PM3 project. Out of that, we have availed almost INR 53 crores and the rest of the loan will be used for this CapEx.

No, no. What I meant was, okay, you're planning to take debt from banks to finance this project, you're not planning to sell shares or do an QIP or something in the market?

No, no, no, no. We will be sourcing from this term loan only.

Okay. And lastly, sir, one suggestion or it might be just an observation that, sir, the company had stopped doing con calls in the recent past just after the promoter sold some shares in the market. And after that, there was a silent period from the company. So now the company has again come back with con calls. So by corollary, can we expect a further stake sale from the promoter?

I think that promoters can only tell, but definitely, there have been interest and we'll definitely remain in touch with the market. We'll be doing con calls regularly now. Yes.

Okay. So promoter sale can be expected in the future?

No, no, no. I don't -- I said the promoters may buy something. That is up to them. I can't say for them, but we -- I said we'll be in touch with you more often. That's what I said. Yes.

[Operator Instructions] The next question is from the line of Shasank Agarwal from Seaco.

Sir, you said that you are not able to fulfill the demand, but still the PM3 is going and the CapEx, is that the right time to do that?

Actually, if you have to do some work on the machine, so you have to stop it at some point of time or the other, because we -- earlier, we were planning to shut this machine in the month of March. So we already extended that period just for this reason only by almost 3 months, 3 to 4 months so that we could fulfill our obligation. Now we are telling our dealers and all the stakeholders that we'll be shutting and we'll be planning our market strategy accordingly. So we have to do that at some point of time or the other. Like everybody who has to renovate maybe in step one has to take that call at one point of the time or the other. Yes.

Okay. And sir, are you also selling power to other customers? Are you producing extra power?

No. earlier government had that plan when captive generation was promoted in paper and sugar industry. But then Punjab government, they backed out, they are not buying our power. So we have that capacity we can give to them, yes, but we are not selling presently.

Sir, are you looking at private customers who will be ready to pay you for power?

If there is any customer and the price is remunerative for both the parties, so definitely, it can be done. It can be looked at.

Can you not sell at exchanges, like there are companies like IEX that energy exchanges. Can you look at those also?

And there are so many charges and permissions required for this. So that is a problem at the moment. Yes.

Sir, the trees that you plant, the eucalyptus trees, are you also diversifying into other kinds of trees because there were some problems with the environmental friendliness of the eucalyptus trees?

Other, I could not -- there are mainly 2 kinds of trees that are planted One is popular and second is eucalyptus. I don't know what kind of problem you are hinting at.

No, actually, in Karnataka, there were some problems like they were removing the eucalyptus trees because they were water-guzzling.

Yes. That is why they are planted because they are water-guzzlers, because we have a lot of water and eucalyptus tree has that property to take a lot of water through their stem and out through their leach into the environment, evaporating that. So that is the reason that this plantation is done. But if you plant it in an area where the water level is on the downside already, then there is a problem, yes, as you are right there.

So there is no water problems in the area that you have planted?

Because we are discharging our water into that area itself for this purpose only. We want the eucalyptus plant to take the water from the land and vapor it into the atmosphere.

So there is also a similar company called Kuantum in your vicinity only, but they are supplying the water to the farmer fields. So can we look at that option also?

We do that also, but Punjab, in Punjab, you have only 2 crops, 2 major crops, one is rice and other is wheat. So wheat doesn't need much water. And rice, since our area is fully backed up with the canal system, so in Punjab, there is no shortage of water and people have -- people are getting free power supply for fuels also. So there are many reasons that they are not that encouraged to take. But still we are supplying water to the farmers directly and indirectly. We are doing it for almost for the last more than 20 years already.

Okay.

Yes. But whenever there is demand, it is not consistent throughout the year. Yes. That's the problem.

Okay. Sir, one small thing, please look at the power selling to private customers, if you -- if it is feasible.

Yes, we will definitely look into this and explore this. Yes.

The next question is from the line of Madhur Rathi from Counter Cyclical Investments.

Sir, I wanted to understand what would be the volume growth that we can expect in FY '27 once our PM3 is commissioned again?

It will be almost 20,000 tons to 25,000 tons, almost 10% increase in our present production. Presently, we are making 2,15,000 tons. So from this renovation, we will be adding 10% to 15% in the total capacity, depending upon the GSM that we make on that machine.

So we could expect it to go to 2,40,000 tons would be a fair estimate.

Yes, definitely. 2,40,000 tons to 2,50,000 tons. That is what we are targeting.

Got it. Sir, my next question was, sir, if you could just provide me the mix of different paper that we -- what will be the sales mix or the volume mix for the different types of paper that we manufacture currently?

Sale price?

So mix of paper, what would be writing and printing, what would be other categories that we manufacture?

In writing printing, we made all kind of variety like copier paper, then Maplitho paper, then normal cream wove paper, paper for notebooks, high bulk paper and then color printing, ledger, railway bond paper. So all these varieties we are making. It's already there in our presentation also.

So writing and printing is the major paper that we manufacture in that subcategory might change from time to time, right?

Yes. But our main focus is on now printing paper, which we make on our PM3 and PM4. And for notebook exercise book, we make paper on PM1 and PM2.

Got it. Sir, if I look at Satia on a 3-year basis, sir, what is the volume mix or value-added product share that we expect we can increase from current basis to next -- over the next 3 years?

Yes. The high-end ultra print quality and super printing paper, that is almost equivalent to any A-grade paper mill. So our ultimate focus is to increase that share to almost more than 30%, 40% of the total production because PM4 is already capable to make that -- we are already increasing our quantity of photocopier paper every year, and then high-end printing paper, whatever be the name. So that is the second segment where we get one of the best realization. So PM3 after modification will come at the same level. So that segment will be more than 50% after 1 or 2 years. Yes.

So currently, it is 30%, 40% and that should move to 50%, right?

Yes.

And sir, what is the realization difference between this paper and our overall company realization of INR 70,000 currently as of today?

Our realization in these segments is almost 5% to 10% on the higher side, depending on quality to quality. Yes.

The next question is from the line of [ Moksh Ranka from Aurum Capital ]. Yes, Mr. Ranka, go with the question please. There is no response from the participant, we'll move to the next. The next question is from the line of Manu Jindal from Thorin Technologies (sic) [ Technology ].

Actually, my question got answered in the previous 2 questions about the specialty paper. So no more questions from my end.

The next question is from the line of Subu Murugesan, an individual investor.

So just a quick question. So you said that the plant will be shut down from July for 6 months, right? So July to December. So I'm guessing then your July, August, September quarter should probably be down about, like, say, INR 100 crores. And then October, November, December quarter, the revenue should also be down by about INR 100 crores, right? Is that a reasonable expectation?

Yes, yes, yes.

The next question is from the line of Sudharsan from Prosperity Wealth Management.

Yes. You mentioned there was a realization increase of 10% to 15% in this 2 months. Is it from the March month price? Or is it year-on-year increase you mentioned?

From here on, yes, from the last year average.

Okay. Okay. And what is the current market scenario? How about the dumping of -- from the Asian countries and the demand in the market?

That is continuing and still -- but the prices are in the range of $710 to $720. So I think with the -- still the Indian mills, they are having good demand. So I think this scenario is going -- likely to continue for times to come, and we have to survive within this only. So they are doing their job, we are doing our job. So we cannot expect to -- those to international market. So I think industry has to live with this.

Okay. Okay.

Yes.

And we have seen news of like MDF poaching into our wood plantations. And we see year-on-year, your RM cost has been stable, given that 50% comes from wood pulp. So could you please add more on this? Is there any RM pricing on wood pulp and wood chips?

Yes. We control our wood pulp pricing by using veneer waste, number one, then bamboo, number two. And then we -- whatever rest of the quantity, then we buy wood logs or wood chips from the market. So we try to put this into 3 segments, almost 30%, 30%, 40%. So our fact -- total fact of high price of wood is -- we try to reduce that by segmenting our raw material in the wood section only. So that is how it is controlled. So -- and we have to continue with that. Yes.

Okay. And this tax benefit, which you mentioned earlier, is it going to continue in the upcoming financial year? Or we're going to see the normalized...

[indiscernible].

Yes, it will continue for next 6 years.

Okay. Continue in the sense, you will see a normalized tax rate from Q1, that [ 17%, 18% ] post MAT?

Sorry?

So this quarter, I think we adjusted our incremental...

Yes, yes. So yes, yes, the reduction will continue for the next 6 years. So this will be the entire -- the profit will be -- and profit of cogeneration unit will be eligible for the reduction.

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

Thank you. Thank you, everyone, for the interest in the company, and we promise that we'll be interacting with you more and more in the future. And thank you. Thank you once again for your best wishes. Bye.

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