Release Date: February 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kuantum Papers Ltd (BOM:532937, Financial) achieved healthy volume growth with paper sales volumes reaching almost 125,000 metric tons for the first nine months of the financial year.
- The company launched a comprehensive cost optimization plan targeting annualized savings of INR 40 crores, including savings from Project Nirman, an AI-driven initiative.
- Commissioning of twin roll presses led to a reduction in chemical consumption, effluent load, and fresh water usage by 1800 cubic meters daily.
- The mill expansion project with an investment of 735 crores is progressing as per schedule, expected to increase production capacity by 50% by March 2026.
- Kuantum Papers Ltd maintained a strong EBITDA margin of 18.66% for Q3 and 22.02% year-to-date, supported by lower costs of agropulp, improved product mix, and reduction in power and fuel costs.
Negative Points
- The company faced high levels of imports, supply chain issues, and correction in paper prices, putting pressure on the market.
- Operational revenue for the quarter declined by 3% quarter-on-quarter and 17% year-on-year.
- Net profit for the quarter was down 30% quarter-on-quarter and 41% year-on-year.
- The paper industry is experiencing a downturn due to increased imports and reduced export opportunities, particularly to European markets.
- The company anticipates a production impact in the first quarter of the next financial year due to machine upgrades and shutdowns.
Q & A Highlights
Q: What has led to the volume growth for Kuantum Papers when other organized players have reported a decline?
A: The volume growth is attributed to consistent operations and a strong market presence. Kuantum Papers collects orders in advance and produces accordingly, supported by a large product portfolio spanning over 18 varieties of paper. This strategy helps maintain larger volumes and meet market needs effectively. (Respondent: Vice Chairman and Managing Director)
Q: How is the demand scenario on the ground, and why is there so much pain for many companies in the industry?
A: The paper industry is experiencing a downturn due to increased imports and reduced exports, particularly to European markets. This has led to a larger supply situation in India compared to demand, causing a depression in prices. However, demand is expected to grow with upcoming government tenders and the new education policy, which will require new textbooks. (Respondent: Vice Chairman and Managing Director)
Q: Is there any progress on the anti-dumping duty front to address the import concerns?
A: The industry association has requested the government to consider anti-dumping measures. Some progress has been made, particularly for copier paper, and with major elections over, the government is expected to address these requests soon. (Respondent: Vice Chairman and Managing Director)
Q: What is the current status of the tissue paper plant project?
A: The tissue paper plant project has been put on hold. The company is focusing on renovating existing machines, which is expected to be more rewarding. The project cost is around INR 735 crores, and once completed, the company will consider setting up a tissue or specialty paper machine in the future. (Respondent: Vice Chairman and Managing Director)
Q: How is Kuantum Papers managing to outperform the industry on the costing front?
A: Kuantum Papers maintains a strong focus on cost control and operational efficiency. The team is dedicated to improving efficiency and reducing production costs, which helps maintain profitability despite lower market prices. (Respondent: Vice Chairman and Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
