Kuantum Papers (NSE:KUANTUM) Q1 2027 Earnings Call

0:00 Good afternoon, ladies and gentlemen. Welcome to the Kuantum Papers Limited Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participants will be in the listen only mode. There will be an opportunity for you to ask questions after the management's opening remarks. Please note that this conference is being recorded. I now hand the conference over to Mr. Anat Jayaram from SKP Securities Limited. Thank you, and over to you. Good afternoon, ladies and gentlemen. It's my pleasure to welcome you all on behalf of Kuantum Papers and SKP Securities to this financial results conference call.

0:49 We have with us Mr. Pawan Khetan, Vice Chairman and Managing Director Mr. Jagdeep Hira, Hold Time Director and CEO, Operations Mr. Vikram Kumar Khetan, Chief Financial Officer and Ms. Prachi Sharma, Chief Strategy Officer. We will have the opening remarks from the management followed by the Q and A session. Thank you and over to you, Pawanji and Vikramji. Thank you. Good afternoon, everyone. It's a pleasure to welcome you all to our earnings conference call for the first quarter of financial year twenty twenty seven. I would like to thank all participants for joining us today.

1:36 The paper industry saw a healthy demand supported by education, publishing, office consumption and broader economic activity in the first quarter of the financial year twenty twenty seven. This enabled the company to sell good volumes in the market and also improve the net sales realization of our products. However, the West Asia conflict intensified cost pressures, particularly across fuel, chemicals and other raw materials, while also affecting freight and logistics cost. This created a challenging margin environment for paper manufacturers even as demand conditions improved.

2:23 Going forward, we believe the key factors for the industry will be the trajectory of raw materials and energy costs, paper realizations and the competitive intensity from imports. While some near term volatility may persist, we expect demand to remain supportive. We also continue to see opportunities in higher value paper applications, particularly as customers increasingly look for sustainable alternatives to plastic based products. This makes cost efficiency, product differentiation and a greater focus on value added products increasingly important for us.

3:09 Moving to Kuantum's operational performance. The quarter saw several important initiatives across capacity enhancement, product development and sustainability. We successfully commissioned the DDS double displacement digester system for wood pulping, which will help optimize pulp quality and yield while reducing utility, chemical and overall pulp costs. We also commissioned an advanced native starch system on paper machine two and paper machine three aimed at improving paper properties and reducing uncooked starch losses. During the quarter, we installed a state of the art folio ream wrapping machine to automate the wrapping and packaging of high folio sheets.

4:02 The system has integrated labeling and stacking capabilities, which will enhance packaging efficiency, streamline material handling and improve the overall operational process of our finishing house. Further, Paper Machine 3 has been shut for the time being for a major rebuild, which will lead to enhanced production capabilities and improved quality in the final product. On the product development front, we successfully produced oil and grease resistant paper, OGR, for food food wrapping and application on our PM2, adding another high value specialty and sustainable product to our portfolio.

4:48 On the sustainability front, the company achieved its highest ever quarterly production of 17.28 lakh clonal saplings in our in house clonal propagation center during the quarter. We also added almost 1,300 acres of social farm forestry, taking the total area under plantation to about 19,650 acres. With that, I would now like to invite our CFO, Vikram Ketan, to share the financial highlights for the period under review. Thank you, sir, and good afternoon, everyone. Let me now take you through the financial performance for the first quarter of financial year twenty twenty seven.

5:37 Despite the macroeconomic challenges, operational income for the quarter is to date INR $30.04 crores, registering a year on year growth of 36%, supported by a 35% year on year growth in paper sales volume. The paper sales volume for the quarter stood at 42,922 metric tonnes. During the quarter, we were able to command higher NSR in both the domestic and export markets supported by improved demand. However, the improvement in blended NSR by approximately INR 3,400 per tonne was more than offset by an increase in cost of around INR 4,200 per tonne on quarter to quarter basis, driven by higher raw material, chemical and fuel prices amid the ongoing West Asia conflict.

6:29 As a result, EBITDA stood at INR 40 crores, broadly stable year on year basis with EBITDA margin at 13.20%. Profit after tax stood at INR 6 crores. With this, we can now begin the question and answer session. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Session. And gentlemen, each participant is requested to limit himself or herself to a maximum of take the first question from the line of Jidem Parmar from Aurum Capital. Please go ahead.

7:29 Afternoon, Pawanji and Vikramji and the whole Kuantum team. Yes, my question is on the guidance for current year. Are we maintaining it? Or what is the new guidance? And what about EBITDA margins? What is it that we think we can achieve? So I think the guidance clearly is positive. We are upbeat that with the commissioning of our last machine on our upgradation program, which is our PM3 that is going to be coming on stream within this month in about a week or so. With that, having completed the entire upgradation program, we are going to be syncing all our operations and verticals in close coordination with each other, thereby getting the benefits of overall syncing of our operations and obviously overall profitability is likely to increase.

8:31 On our EBITDA margins, I should say that even if things go along the way they are, we should be reaching closer to about at least between 16% to 18% by the year end. Okay. And what about that? What will be I mean, I think major CapEx is over. So what will be the peak debt? And what will be the debt reduction guidance for the next three years? Peak debt, we are currently looking at about INR $7.60 crores or INR 70 crores maximum. And we have repayments of about INR 170 crores, 75 crores for the next two to three years.

9:17 And by the next three years, we will be at very, very manageable levels of debt under INR300 crores. It's going to gradually reduce keep reducing over the next one, two, three years. And what about the raw material sources, the split between waste and wood, if you can quantify that? So we have a mix of two pulps that we use, which is almost fifty-fifty percent in content, 50% is agro pulp, 50% is wood pulp. Sourcing for that is primarily all in within the state of Punjab or neighboring states. So raw material sourcing is not an issue for us Other than the vagaries of sort of pricing, sometimes it's wavered, but availability is not an issue at all for us.

10:12 Perfect. And if you can throw some light on my final question, if you may please allow. If you can throw some light on what is the situation with imports right now, are there with Yuan depreciating so much, what is the situation of imports? I mean, as the import intensity reduced and price wise, what is there any difference or landed imports are at similar prices or something? If you can throw some more light on this, that will be great. So what we are observing is a diminishing trend in imports, which is a good positive for the industry. And largely, it's the challenge that the world is witnessing in terms of shipping costs, container availability and logistic costs.

11:03 So, I think primary reason is shipping and that is leading to the situation of diminishing imports into India. Pricing is again very stable. They are not reducing from last periods. So that again is a positive and I don't see too much competition staring at us from imports of material in the future. Perfect. I wish you all the best. You've gone on a bold program of revamping the whole machinery and also increasing the capacity. So I wish you all the best. Thank you so much. Thank you. Thank you so much.

11:49 Thank you. We take the next question from the line of Madhav Jawad from SKP Securities. Please go ahead. Hi, sir. Thank you for the opportunity. So my first question is on capacity that was about to come. Now you mentioned that what capacity has come in, but what about the agro capacity which is about to come? So our pulping capacities, we are at a level of about 200 tonnes each of agro and wood. And that is consistent with our even paper production capacity. That's all that we will need to run all our core machines adequately.

12:34 They are already in place. Pumping capacity is already in place. Yes. Okay, okay. And what about the EC clearance? Did you get the EC clearance for the PM3 machine upgradation? No, that's already been filed, and we are awaiting that very, very shortly. Okay. And so the raw material costs, for example, chemical costs and all had gone up quite significantly here in the world. So has the chemical costs affected along with any other major chemical or other raw material that you use? So there was an interesting sort of trend here that we saw. The escalation was primarily due to the West Asia conflict.

13:24 And as you would reckon that we did see instances of the war getting declared as over, and we actually saw those prices coming down for a while before they started shooting up again once the trending of the de escalation and war was over. So they quite remained in tune with the situation of the war. As it currently stands, they are higher than they were in Q4. And but I guess they've kind of stabilized at these levels. And we don't see any further rise in the prices of these chemicals and inputs going forward. And sir, so a lot of CapEx has been done on upgraded value added segment of the paper, right? So will that help in, let's say, realization per tonne and EBITDA per tonne?

14:24 Yes, for sure. We already have taken the commercial runs also, like initially, it was told that we have produced OGR also. And we are looking on the specialty grade where we can get plus 20% EBITDA on the particular quality. And how much realization can we expect incremental realization? On the top line, if we say Yes, on the top line. Yes, we target around 5% to 6% initially moving forward for the next years. And that will be a base creation for this year. And then we will be more moving into a specialty grades of paper.

15:14 So right now, last year was around so Q1 was around INR 70 per kg. So you're saying 5% from INR 70 per kg? That was on the top line, I said. 5% will come from the specialty grades of paper. Okay. Realizing in this market what Anesa will be sustaining is a bit tough. But again, the EBITDA level on the particular quality, we are aiming above 20%. Okay. Got it. And one last question. On the raw material side, do you see any price correction in the quarter and wheat straw? Yes.

16:00 Wheat straw seems to be coming down, and we see the next quarter also. As of now, it's a bit stable or lesser, I would say. But going forward, it will come now. And we have the infrastructure created where we can store the bulk of the agro raw material. Okay, sir. That's it from me. You. Thank you. We take the next question from the line of Rajesh Bandhadi from Nakoda Engineer. Please go ahead. Good afternoon, sir. Good afternoon. Yes. Kuantum as such has a very good name in the market. But my only worry from the point of view of the shareholder is that somehow the profits are getting eaten up in terms of interest.

16:55 And our debt is very, very high. When can we expect that debt reduces and the profit also goes up and interest comes down? Connected with that, what can we expect our turnover by 2028 and 2030? Yes, sure. The debt will come down gradually in next two to three years. As earlier, Pansar told that during 2627, we have debt repayment liability of around INR170 crore. But in next two to three years, it will gradually come down and peak debt will be around INR300 crores to INR350 crores in next three years. I would add here that this is a step that we took for charting out a growth prospect for ourselves.

17:50 If you don't take debt, you don't grow. If you want to grow, you have to take debt and you have to bite that bullet for some time. We have to allow all our investments to bear fruition. And once they start giving the returns, as and how the debt repayment happens, the interest cost will keep coming down and thereby allowing us to retain our profits. Yes, I agree with you, sir. From INR 1,000 crores, you said it is INR $3.30 crores. In how many years we can expect? Every year you take about INR 175 crores reduction in debt. Okay. Every year INR 175 crores? Yes. Okay, okay. There is a possibility of even prepaying if we are able to generate higher than expected profits for which the situation is positive, we can prepay and get our debt level reduced earlier than later.

18:51 But sir, our yearly turnover is approximately INR 1,200 crore. Yes. Out of that, and 18% you are saying EBITDA, will we be able to reduce by INR 175 crore per year? No, 1,200 crore is the current top line. We are expecting this to grow between INR 1,400 crores to INR 1,500 crores. So even if it's 18% to 20% EBITDA, we should be getting an EBITDA of close to INR 300 crores generating that kind of EBITDA every year and enough to take care of our debt and interest repayment liability. INR 1,400 to INR 1,500 crores by next year or in this year itself? This next year for sure, 1,400 to INR 1,500 crores. This year will be INR 1,300 crores plus.

19:45 Okay, sir. Yes. Thank you. Thank you. Thank you. We take the next question from the line of Anubhav Parakh from Anandrati Shares and Stockbrokers Limited. Please go ahead. Yes. Good afternoon, sir. So my first question is, our average paper realization is relatively flat on a Y o Y basis in Q1 FY 'twenty seven despite an 11% increase in the Chinese BHKP prices and weakening of rupee by another 11% in Q1. So can you please provide some color on reason for the same? So I think I would beg to differ that our pricing is flat.

20:31 Our NSR has increased by about 3,400 per tonne in Q1 as compared to related period. Does that answer your question? So prices are flat on a Y o Y basis. So if you are comparing it with Q4, is it? Last year same period. So last year same on Y o Y basis, it is around 4,000 more. NSR is more 4,000 on Y o Y basis. Over last quarter, 5% plus and Y o Y basis, it's around 7% plus.

21:22 Understood. Sir, what should be the ideal paper realization as per you assuming the Chinese prices settle at $550 to $600 per tonne over the medium term and rupee remains at the 95 level? So I think every product is not comparable to the kind of imports that the country is doing from China. We have our own product profile and everything cannot be correlated to the Chinese import price per se. And the fact is that we've been able to create a big marketing strength for ourselves, locationally, position wise, our sort of depth of market. So because of that, we are able to realize a better price for ourselves as compared to others in the industry.

22:13 So currently, we are at about $6,869,000 per tonne level. Ideally, going forward, sensing of how the market is growing and the kind of positivity that positive sentiment that we are getting, our price increase is likely to touch and reach about to INR75000 level in the next four, six months. Sir, on the Maplito side, the segment has been severely impacted due to inverted duty structure post GST rate change last year. Do you see any possibility that the government is likely to do any rectification in the GST rate or provide some form of protection to the domestic mills in the coming months?

23:03 No, I'm afraid the government is quite strong in their conviction by sort of having implemented that. I think the industry has to move forward. The fact is that this implication is only and only if you are producing and selling paper for notebook segment. So we have we, Kuantum, we've taken a conscious call to reduce, if not eliminate over a period of time, our foray and marketing of notebook paper. So that impact will be negligible for us. And even for the product that we have sold for notebook in the last six months, we have added on the loss of GST that we've had on this such production.

23:55 And we've been very, very clear on charging our customers for the loss that hasn't been incurred by us. So it's not really in real terms, it's not really a complexity here. And if the fact is that we if we are strong enough to charge our customers the loss that we are incurring, it happens to be a win win case for both. Understood. So you said that the realization has gone down to INR 68 per kg. So whether the paper prices have corrected in Q2 FY 'twenty seven as the realizations were around NOK71 per kg in Q1? Well, I don't know where are you getting your figures from.

24:45 I won't say they've gone down to INR68 crores, they've come up to INR68 crores from a level of INR66 crores or even INR64 crores. Okay. I think some yes. Lastly, on the imports from many countries like USA, Australia, South Korea have imposed tariffs on paper imports from China and Indonesia. So why have we not yet filed a case with DGFT to initiate any investigation on ADD or CVD on copier and Maplito paper till date? We have. We have already done that. We are already in close coordination with the government where our applications for antidumping duty and antisubsidy duty has already been filed, and it is being looked at by the government. We are very hopeful that we will get some positive feedback from them and something favorable should be implemented.

25:57 So this actually arose all right. Yes. Thank you. We take the next question from the line of Purva Anil Sharma from Raas Capital. Please go ahead. Hi, am I audible? Yes, please go ahead. Thank you so much, sir, for the question. My first question is in regards to can you throw some a little light about your volume growth for this quarter? For this quarter, which is Q2 or Q1, which one are you asking? Q1, Q1, Q1. Q1, we've seen a growth because frankly, last year, Q1, we had a shutdown of one of our machines and that led for upgradation purposes and that led to a kind of notional loss on off production.

26:52 But as against even Q4 of last year, we have increased our production slightly and that is largely due to efficiency of our machines getting better. And we are now with the upgradation of our last fourth machine, which is PM3, which is underway and that is getting commissioned within this month, we should see a bump up in our production and sales volumes going forward. Thank you so much. Sir, another question. I just wanted to understand the landscape about the ADD so far that has been implemented by the government, one on paper and one recently on the Virgin multilayer paperboard. Now both these are basis the GSM in the ADD, right? One is from 40 to 130 and the version one is from 140 to four fifty.

27:48 Now going forward, if we are working very closely with the government in getting the new set of ADDs, would the new ADDs cover the GSMs that Kuantum is selling right now? Yes, for sure. So what we filed is in the Writing and Printing Paper segment, and that clearly covers all GSMs that Kuantum is making. It is covering all GSMs between forty and one hundred forty. Okay. And when and if this thing comes, it stays for the time period of five years, am I right? That's yes. That's what we're expecting. All right. And sir, in last quarter, you had indicated about the realization going back to 69,000 to 71,000 per tonne.

28:39 Are still online, aligned with that? Yes, yes. We are maintaining those realizations. You so much for that question and all the best. All right. Thank you. Thank you. We take the next question from the line of Arjun Vinay Sambe from Auriva Crest. Please go ahead. Hello, am I audible? Yes, please. Sir, last call guidance 1,400 to 1,500 FY twenty seven thirteen hundred plus. Right. So the 1,300 plus EBITDA were 18 to twenty percent two forty to two sixty.

29:28 Alright? Correct. Correct. So 300 crores $1.75 crores of prepayment. Right? Right. So and guidance revised $141,513 100 cash. So please explain to that. So what has happened is that the earlier guidance was basis of certain sales realization that we were expecting. Those are not staying at that level. They are running below those expected levels. And even furthermore, EBITDA margins are further getting strained by the increased cost of operation due to the West Asia crisis.

30:18 Nobody could have imagined like a war starting in a part of the world and impacting sort of pricing here in India. But the fact is it is happening. So nobody could have imagined such a situation. All this is collaterals and which is impacting EBITDA margins at the present. But nonetheless, we are looking at figures as they are, and they are conservative figures. We are still ensuring that we take care of all our repayment liabilities on both interest and term loan even in this very, very competitive time line. All right. And one more thing, AI integration production manufacturing process and that would be done in around FY 'twenty eight, right? Sure.

31:13 Abhijit, Yes, that's a continuous process that is continually being looked at, continually being done, executed and improved upon. That's a long term kind of contract that we have engaged with our supplier. And that is how, as I said mentioned earlier that by March 28, we will be concluding this exercise and getting the relevant returns. So incrementally, what would be the OpEx reduction from it? We could target between 4% to 5% additions in or reductions in costs. Got you. Okay. And just one last question.

32:02 Your product segmentation, in the last quarter, you had mentioned around 25% to 30% of your entire revenue was contributed by specialty needs. Right. So, Abhi, contribution We are working towards reaching that target. Right now, our contribution from specialty paper is just under 20%. It's about 18%, 19%, but we will surely be making our efforts to reach that level of 30%. All right. All right. Or last week competitor results but our EBITDA margin year on year. Our So what would be the main reason, the West Asia crisis or any other risk?

33:01 No. So I would assume that the West Asia crisis has impacted everybody uniformly. For us, we are located in a state where our raw material input cost has risen a little abnormally, and that is impacting only the operators in Punjab and which is where we are facing a competitive landscape on our procurement of raw material costs. So but I think over a period of time, we are already seeing a reduction, a gradual reduction in these costs of procurement. And over a period of time they should level out. Okay. Thank you so much. That was all from my colleagues. All the best. Okay. Thank you.

33:54 We take the next question from the line of Moksha Rankha from Aurum Capital. I wanted to ask what would be the lead turnover when all our plants are running based on current realization? And also what could be the peak turnover based on realizations we had in like 2023, FY 2023? Well, very extremely interesting question, I must say. On current realizations, we should target about between INR 1,400 crores to INR 1,500 crores turnover. And based on realizations of '23, we will cross INR 1,800. Okay. And that is based on all your four plants running at peak capacity?

34:42 Yes. Okay. So FY '27, we should be able to run all our plants at full capacity, right? Yes. So post the commissioning of our fourth machine, which is now happening in the within this month, we will be running our entire plant at peak capacity. Okay. Okay. Okay. That's it from us. Thanks. Thank you. Thank you. We take the next question from the line of Madhav Jawad from SKP Securities. Please go ahead. So so you mentioned earlier in the call that you are targeting to repeat that, but your audio is muffled out. Could you please repeat that, sir?

35:29 Sorry. It's have to come again. Hello? Go ahead, please. Yes. Earlier in the call, mentioned 15% to 18% of EBITDA is targeted. So right now, when can we expect this quarter can we expect that kind of EBITDA? I think Q3 onwards because even in Q2, we are sort of undergoing expansion, modernization, some of our machines are closed, some of our boilers are getting maintenance. So Q2 would not be the right time. Q3 onwards, we will see the operations at full efficiency and that's when these kind of margins should be visible.

36:24 Okay. That's it from my end. Thank you. Thank you. We'll take the next question from the line of Shyam Khan, an individual investor. Please go ahead. Hello. I just have one question. So could you help me break down the significant growth in other income this quarter, like what's exactly driving that increase? It is due to sale of plantations and scrap sales. So in a way, they are all operational related. All the other income that we generate is as part of the operation. And if we add that to our EBITDA margin, which it should, we actually get an EBITDA margin of 14.4%.

37:18 Okay, understood. Thank you. Thank you. We take the next question from the line of Arjun Vineeth Prambe from Aurivacrest. Sir, just a ballpark figure. FY 'twenty nine or FY 'twenty, FY 'thirty, what should be the range of our revenues at peak capacity and at the realization, what do you expect? I think a good conservative figure would be about INR 1,500 crores top line and a INR 300 crores to INR $3.50 crores EBITDA.

38:08 FY 'thirty? Yes. That's why I'm saying very conservatively. I mean, the market is helpful and we see an average of pricing of about 75,000 kilo or INR 71,000 a ton, it could be closer to INR $16.50 crores. All right. But last call mentioned FY '28, INR 1,600, 1,700 And now you're saying FY '30, that's 1,500 conservatively. So still stand by that. In our last Q1 call, we had thought downturn had petered out and we would see a surge in our pricing, which unfortunately hasn't happened because of a couple of things.

39:05 The environment has not been favorable, but I'm sure by that time, by '28 or '29 FY, we even now I'm saying that 1,500 is a conservative figure based on current pricing. But if the pricing goes up, which it should, being a commodity cycle and it should see the improvement happening, we could reach between INR1600 crores to INR1650 crores as well. So do you believe that the industry has bottomed out in terms of input costs? Or is it still to bottom out?

39:54 Well, input costs actually are on a rise, so they haven't really bottomed out. Price line, I would say, has bottomed out. Bottomed in terms of our margins, like you said, all you can see is an uptick. Yes. Yes. We are positive about that sentiment. We are looking at uptrends happening on our margin and that should clearly show upward trend. Okay. Thank you so much. That's all from my all the questions. We take the next question from the line of Rohan Chokshi from RAS Capital. Please go ahead.

40:49 Hi, Yes. Am I audible? Yes, please go ahead. Yes, sir. So you cited as INR 4,200 tonne cost increase against the INR 3,100 MSR gain. How much of that INR 4,000 is from the West Asia war specifically like steel chemical versus wood and all that? And can that gap be passed through? So I would say about 50 odd percent of the increased cost is due to the West Asia crisis. Rest of it is more local depending on the state in which we are operating and the cost of raw materials that we are procuring. That has seen a price rise in this quarter.

41:41 And the question of passing it on, there is no direct correlation between increased cost and increased selling price. But yes, the fact is that out of the 4,200, which has increased as cost, INR3400 has been passed on by way of increase in our pricing if you see quarter to quarter. Right, sir. Okay. And sir, you said in the peak capacity said all the four plants will be up and running into peak capacity. Yes. And if we even get the realization, then wouldn't the revenue be much more than 1,600 or even 1,800?

42:28 Sir, first of all, what is the capacity? Like is it 80% or No, we are calculating everything at 100%, but the fact is that in a paper machine, it cannot operate all three sixty five days. The normal working in a paper machine one gets is about three thirty days working because you have to take machine downtime for changing of consumables, which is wire part, press part, clothings and so on and so forth. So normal downtime, which is planned downtime is occurring and that contributes for about thirty five days in a year. So that effectively reduces the output of the operation.

43:15 And then depending on the GSM that we get for our orders, that helps decide what the actual output is. So taking everything into consideration, that is why I'm saying that on a conservative basis, we should touch levels of INR 1,500 crores top line revenue. And in case there are reasonable trendings on market pricing, which certainly there are signs for, we should touch between INR 1,600 crores to INR $16.50 crores. Got it, sir. And sir, right now, especially, it's 20% to 22%.

44:01 And I was just reading a Christian's report that said that writing in paper demand is only one to 3% CAGR up to 530. So do we have any plans of increasing in the packaging specialty, which are actually growing six to 8%, and a lot of them have ADD and support from the government as well as opposed to writing in paper. Because we spend so much on the CapEx. Will this move towards specialty and packaging? Or should we be doing that? Yes. Strategically, we are doing that as our CEO said that we are looking at increasing our specialty content by about 5% or so. So we will move up that ladder.

44:54 We are targeting reaching 30% of our production as specialty. But I would say that having remained in the Writing Printing segment, we have actually created a good mark for ourselves. So we cannot really write off that entire segment clearly. We have maintained a good strong position for ourselves. We are producing very effectively and reducing our cost of operation and have already gained a huge positive mark in the market for all our writing printing products. So it's legacy which has been born out of years and years of work and cannot just evaporate overnight.

45:42 Got it, sir. Yes. Thank you. Sir. You. We take the next question from the line of Anand Mundra from MyTemple Capital. Sir, just wanted to get a sense on how the prices of wheat straw are behaving right now. Have they cooled off? Yes. We are clearly seeing signs of them coming down. And I think the impact will be more visible in the next month or so because alternate fodder materials. So please understand that Bistro mainly the mainstay of Bistro is used as fodder for cattle in the state of Punjab and neighboring states.

46:31 Wheat straw being consumed by the pulp and paper industry is a very small part of it. So there will be alternate material available as hoarder in the shape of rice straw and corn cogs. Once those materials come in by, let's say, month of September and October, the force on wheat straw will evaporate, will come down and that we should see the leveling out of pricing in the commodity of wheat straw. All right. But as on date, the things I mean, as on date how things stand, the wheat straw prices are still higher and they continue to be at the same level as in Q1? No, they have come down. We are engaging with our suppliers and aggregators to see how we can moderate this pricing and we have been successful and we are seeing a reduction in feedstock procurement prices for ourselves in Q2 versus Q1.

47:36 All right, all right. So you mentioned that the price pressure, half of it was due to increase in local raw material prices. Were you referring to specifically wheat straw only? Yes, the local one the local content has been attributed to by. Right. All right. And sir, one final question was on how so while our paper capacity is going up, our bulk capacity is, at least in the presentation, it continues to stay at three sixty five PPD. So is there also going to be an increase there? Or we are going to rely on bought out pulp for the increased paper capacity? So pulp capacity should will increase to about four ten, four fifteen tonnes per day.

48:24 And that's all that we will require to produce the relevant quantities of paper because almost 150 to 180 tonnes of filler will be used to manufacture our paper and rest about 40 to 50 tonnes per day will be the imported pulp content, which is actually something which is required for the better stability and a better product quality for our paper and the kind of segment that we are in, it will be very helpful to have that kind of volumes getting used by using imported wood pulp. All right. Got it, sir. That's it from my end. Thank you. Okay. Thank you.

49:16 We take the next question from the line of KUTSKAR SHINOPANI from Anantwati Shares and Stock Brokers Limited. Go ahead. Afternoon, sir. So my first question is regarding the paper price movement in the September quarter. So like we believe that September quarter is a seasonally weak quarter for the printing and writing paper segment. So just wanted a sense from you whether the industry has seen any correction in the paper prices in this quarter versus June quarter or any discounts have gone up in September quarter period? So I would like to sort of slightly make another statement that September is not a good quarter for the paper industry. September, in fact, the Q2 is amongst the leanest part of the years, the leanest quarter for the industry. It's only post September, which is October onwards that the industry starts looking up as it starts preparing for the new education year of the next financial year.

50:16 But having said that, our pricing has remained stable. We haven't seen any downward impact on pricing of our product and it's in good stead for us. Okay. So the prices have remained flat on a Q on Q basis despite a weak demand in the September quarter. Is that Yes. The correct And sir, if you can give some sense of what will be the imported paper price of copier and mapleto near port area at present, if you can give some sense? So imported price, we are currently seeing trending between $610 and $620 per tonne. Okay. And sir, volumes are not large enough to create any kind of negative impact.

51:07 And sir, what has been the change in the timber price in Q1 on both Ub Q and BioWise basis for you? And what would be your outlook for timber price over the next twelve to eighteen month period? So I think we have a positive trend on timber price as in they are largely remaining stable, if not reducing by about 5% to 6%. And that is what we see going forward also with the kind of social forestry programs even that we are conducting. We are helping regenerate and grow regrow the availability of timber in our area through our clonal saplings initiative that we are doing. And so are we seeing that even other players are doing similar instances and helping grow the timber availability in our area.

52:02 Okay. So, sir, timber prices are not likely to correct, say, over medium term, it is likely to remain stable only? I think, yes, this is the kind of price line, give or take a few percentage points here or there. This is the kind of price line that we see going forward because handling costs, labor costs, transportation costs, that is something which is increasing. So even if the basic price of timber reduces, which it will, it will be offset by increased labor and transportation costs. Okay. And sir, lastly, like how would be the paper inventory in the channel that is with dealers, is it at normal level, below normal or above normal level at the moment? My personal opinion is that there is a slag there.

52:52 The volumes as being stored by dealers is minimal now. Pipelines are relatively empty and which suggests that there is likely going to be a surge towards a surge of demand in paper and which is likely to impact our pricing also positively. Okay. Thanks a lot, sir. Yes. Thank you. Thank you. We take the next question from the line of Arjun Vinayatambe from Oliver Crest. Please go ahead. Sir, last call mentioned you're coming up with two seedlings, P29 and E2. So would you please just shed some light on that? And follow-up on that is how would that incrementally affect our P and L statement?

53:47 So we are looking at these high yielding, high growth varieties of saplings, and we are seeing an encouraging trend in terms of offtake. The fact is that we are being able to sell whatever saplings we create, and it is seeing an encouraging trend. We are in fact, our target is from the current level of about 40 odd lakh saplings every year. We are planning to achieve INR 1 crore saplings every year in the next three to four years. So it's on an encouraging and growth path, and we see that getting established very, very positively for us. Okay. That's great. But incrementally, how would that affect? So...

54:38 Yes, it's going to add to the sort of other income or sort of lateral income for us. And but we don't really want to budget that too much because our mainstay is paper. Whatever comes through that is going to be an added bonus. I will add to that, just for us, we don't look at it as a revenue stream per se. The idea is to grow seed of social farm forestry. What it really will help us in the future is it will help us reduce the cost of procurement of wood. We should not look at it as the top line item, but something that will help us secure our wood requirement in the future. And when supply goes up and we become wood positive, that means that our overall cost of procurement of wood will go down. So it's a future looking sustainability exercise rather than a pure revenue play right now.

55:33 All right. All right. Amazing. Thank you so much. Thank you. That was the last question in the queue. As there are no further questions, I would now like to hand the conference over to Mr. Pawan Kaitar for closing remarks. Thank you all for participating in this earnings conference call. I hope we were able to answer 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 Managers at Bararim Advisors. Thank you and wishing you all a great day ahead. Thank you, sir. On behalf of SKP Securities Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.