Financial Performance Highlights

Q4 FY26 (Quarter Ended March 2026)

  • Operational Income: ₹301 crores, representing 4% sequential growth (QoQ)
  • Net Sales Realization (NSR): Improved to ₹3,700 per metric ton
  • EBITDA: ₹48 crores, showing 22% growth quarter-on-quarter
  • EBITDA Margin: 15.90%, expanding by 234 basis points QoQ
  • Profit After Tax (PAT): ₹14 crores, registering 46% growth QoQ
  • PAT Margin: 4.75%, expanding by 137 basis points sequentially

Full Year FY26 (Year Ended March 2026)

  • Operational Income: ₹1,093 crores, reflecting marginal decline of 1% year-on-year
  • Production Volume: 1,62,885 metric tons maintained despite strategic shutdowns
  • EBITDA: ₹162 crores
  • EBITDA Margin: 14.80% (lower YoY due to market conditions)
  • PAT: ₹42 crores
  • PAT Margin: 3.84%

Margin Pressure Drivers: Reduction in NSR of approximately ₹2,000 per metric ton coupled with increase in cost of nearly ₹3,200 per metric ton. The decline in NSR was largely due to increased inflow of cheaper imports and the nil GST structure on notebook segment impacting market sentiment.

Operational and Capacity Updates

Completed Projects (March 2026)

  • Paper Machine 2 Rebuild: Completed with capacity enhancement to 75 tons per day through major upgrades including dilution control headbox, upgraded press section, wire part extension, DCS and QCS modules, additional dryers, Kusters calendars, tail shooters and dry end improvements
  • 2-Stage Recausticizing Plant: Commissioned at chemical recovery section, reducing silica load to lime kiln and improving process recovery efficiency
  • Synchro Sheeter: Installed with capacity of 80 tons per day for higher precision cutting and elimination of manual handling

Projects Under Implementation

  • Displacement Digester System (DDS): For wood pulping under extensive testing with commissioning targeted by mid-June 2026. Expected to enable lower temperature pulp cooking, resulting in higher yield, improved product quality and lower utility costs
  • PM3 Upgradation: Delayed due to global crisis affecting parts import from Germany, now planned for mid-June 2026 (previously May 2026). No significant cost escalation from original ₹140-150 crores estimate
  • Project Nirmaan: Industry 4.0 led innovation and AI-based transformation project implementing MACS Blend Control System on PM4 to optimize furnished mix across agro, wood, softwood and broke fiber

Production Performance

  • Post rebuild of PM1 in December 2025, average daily production increased by almost 20 tons per day in Q4
  • Overall utilization levels above 92% post expansion of all 3 machines (PM4, PM1, PM2)

New Product Development

Successfully developed and manufactured dye-free grade paper called Kappa Premium 3 with improved optical properties and high fastness OBA for enhanced color stability. Developed in collaboration with customers in high-end diary-making segment with good market traction.

Raw Material Cost Environment

  • Input Costs: Increased by nearly ₹2,000 per metric ton in Q4 due to higher raw material, chemical and fuel prices amid ongoing West Asia conflict
  • Wheat Straw: Prices increased by 50-60% YoY due to flood-like situation impacting crop availability and temporary usage as fuel in Punjab. Expected to normalize after rice sowing season begins in early June
  • Wood Chips: Prices remained stable year-on-year
  • Chemical Costs: Increased by 3-5% for some chemicals, difficult to pass through in current market scenario

Market Conditions and Challenges

  • Operating Environment: Remained challenging with steady demand offset by continued pressure on input costs
  • Energy Costs: Stayed elevated through much of the quarter driven by ongoing geopolitical conflict in West Asia
  • Import Pressures: Low-priced import pressures persisted throughout the year, resulting in lowering of domestic pricing
  • West Asia Impact: Conflict created risk of trade diversion with export-oriented paper producers from China and Indonesia potentially redirecting surplus inventories to India at predatory pricing
  • GST Impact: Nil GST structure on notebook segment continued to impact market sentiment
  • Pricing Trends: Began to firm up in Q4 supported by higher demand, though dampened by cost-led adjustments due to West Asia conflict. Company maintained pricing between ₹69,000-70,000 per ton

Regulatory Engagement

  • MIP for Paperboard: Minimum Import Price extension received for one year for paperboard segment
  • MIP for Writing/Printing Paper: Application lying with government authorities, expecting consideration
  • Anti-dumping Duty: Application filed but typically takes 1.5-2 years for implementation
  • Anti-subsidy Application: Submitted and expected to be processed faster, potentially by current financial year-end

Sustainability Initiatives

  • Social Farm Forestry: Added 854 acres during quarter, taking total area under plantation to more than 18,300 acres
  • Farmer Outreach: Benefiting over 19,100 farmers in the community
  • New Plant Varieties: Introducing Subabul, Melia and Casuarina varieties with shorter turnaround time and good pulp yields through farmer education programs

Capital Structure and Debt Position

  • Long-term Debt: ₹720 crores as on 31st March 2026
  • Debt Reduction: Planned reduction by almost ₹100 crores through repayment, though further disbursal of term loan for existing capex expected
  • Peak Debt: Expected between ₹650-675 crores by end of 2027
  • Debt Repayment Schedule: ₹170-180 crores per year in next 2-3 years
  • Cost of Funds: Average 8.5% for long-term funds, exploring cheaper options including FCNRB loans
  • Remaining Capex: ₹125 crores to be expensed during FY27

Future Outlook and Guidance

Volume Guidance

  • Target production and sales volume: 230,000 tons annually (40-50% increase from current 162,000-163,000 tons)
  • Expected top line: ₹1,600-1,700 crores
  • Target EBITDA margin: 18-20%

Capacity Utilization

  • Targeting 95%+ utilization as new capacities come on stream
  • Confidence in offtake through established dealer network of 90+ committed dealers and 20+ irregular dealers across country
  • Export markets in Gulf and Northern African countries to support additional capacity absorption

Product Mix Strategy

  • Planning 25-30% of capacity to cater to specialty paper needs with niche applications
  • Reducing exposure to notebook segment from 22% to 7-8%, planning to exit completely after machine upgradations
  • Increasing share of copier paper, high-end printing requirements (Maplitho grades), and specialty papers

Cost Efficiency Targets

  • AI implementation across all machines and operations (pulp mill, chemical recovery) targeted for FY28
  • Expected operational cost reduction: 5-8% of total manufacturing cost from existing levels
  • Overall cost reduction target: 5-7% through various efficiency measures

Future Projects

  • Tissue Paper Plant: Plans deferred (not shelved) until current expansion completed and debt under control
  • Next Expansion: Possible in another 2 years time for company growth

Q&A Session Highlights

  • Import Pressures: Q4 saw reduced import volumes due to West Asia conflict impacting freight costs, providing temporary relief
  • Global Pulp Prices: Current range $600-700 per ton, expected to remain stable due to new global capacity additions
  • Notebook Segment Exposure: Reduced from 22% to 7-8% post GST change, planning complete exit after upgradations
  • Chemical Costs: Top chemicals include fillers (integrated plant), AKD (sizing chemical), and chlorine dioxide (imported)
  • Social Forestry Procurement: Company associated with 19,000 farmers over 3 years, working to make vicinity wood surplus
  • Pulp Sourcing Strategy: For incremental volumes, will use combination of imports, domestic bagasse pulp, and higher quality pulp for specialty grades