Conference Call Details
• Date: May 21, 2024
• Participants:
• A.S. Mehta (President and Director)
• K.R. Veerappan (CFO)
• Archana Gude (Moderator, IDBI Capital Markets)
Financial Performance
• Q4 FY2024 Results:
• Challenges: Significant drop in prices for Packaging Board and paper products; rising wood costs (30-35% increase).
• EBITDA Margin: 26%-27%, above industry average.
• Outlook: Tougher year anticipated due to increased competition and potential dumping from ASEAN countries.
Key Discussion Points
• Acquisitions:
• Rs. 800 crores spent on acquiring three companies.
• Expected ROI: 14%-15%, above cost of capital (9-10%).
• Importance of customer acquisition in the corrugation industry.
• Import Concerns:
• High import intensity from Indonesia due to surplus capacity.
• Rising pulp prices may reduce imports; irrational pricing complicates the situation.
• Balance Sheet and Future Plans:
• Comfortable debt position; plans for packaging sector expansion.
• New mechanical pulp mill expected to reduce input costs and stabilize supply.
Market Dynamics
• Global Demand and Pricing:
• Complex situation influenced by global pricing dynamics, especially from Indonesia and China.
• Sluggish demand in Western markets may lead to increased dumping in India.
• Sustainability of Margins:
• Rising raw material costs and lower net selling prices (NSR) raise concerns.
• Potential stabilization of raw material costs; margins dependent on global pulp prices.
Growth and Capacity
• Growth Trajectory:
• Confidence in achieving double-digit growth despite industry trends.
• Current capacity utilization in the corrugated segment at 55%-60%.
• Pulp Sourcing:
• Fully integrated for chemical pulp; plans to meet 70% of mechanical pulp needs in-house by FY 2025-26.
Industry Challenges
• Impact of Imports:
• Dumping practices disadvantage Indian players; government intervention needed.
• Smaller mills may close due to inefficiencies, not just import pressures.
• Pricing Power:
• Limited pricing power in the fragmented corrugated box market; compliance with regulations may provide leverage.
Future Outlook
• Cost Savings:
• In-house pulp production expected to reduce raw material costs.
• Shareholder Returns:
• Free cash flow of approximately Rs. 500 crores; excess cash reserved for future projects or acquisitions.
• Openness to strategic acquisitions; commitment to operational efficiency and maintaining a return on equity above 20%.
Conclusion
• The call concluded with appreciation for participants and reaffirmation of the company's strategic focus and operational goals.

Conference Call Overview
• Date: May 19, 2023
• Transcript submitted on: May 24, 2023
• Key Management: A.S. Mehta (President), K.R. Veerappan (CFO)
• Focus: Q4 FY2023 financial results
Financial Highlights
• Record capacity utilization: 103.9%
• Turnover increase: From INR 4,244 crores to INR 6,772 crores
• PAT: INR 1,208 crores (more than double from previous year)
• Successful acquisitions in corrugated packaging sector
• Plantation efforts: Over 110 crores saplings planted
Q4 Performance Insights
• Corrugated packaging revenue: INR 190 crores, EBITDA: INR 18 crores
• Projected future contributions from corrugated business: INR 1,000 to 1,100 crores turnover, INR 100 to 120 crores EBITDA
• Consolidated revenue forecast: INR 7,000 to 7,500 crores
• Anticipated margin decline due to price volatility
Operational Efficiency
• Packaging and Sirpur units operating at 90% capacity
• Ongoing volatility in pulp prices affecting pricing strategies
• Scheduled debt repayment: INR 500 to 540 crores for 2024
Cost Management and Market Dynamics
• Rising wood procurement costs due to construction demand
• Finance costs increase attributed to currency fluctuations
• Cash reserve target: INR 1,500 crores for future investments
Strategic Plans and Market Position
• Focus on maximizing new packaging board capacity for profitability
• Cautious capital allocation approach
• Commitment to the paper industry while exploring related opportunities
• Growth potential in the corrugation business noted
Customer and Production Insights
• Added approximately 20,000 customers, current utilization at 60%
• Q4 volume drop to 191 KT, but overall growth expected
• Discussion on imported pulp versus local wood production
Pricing Dynamics
• Indian paper prices currently lower than international prices
• Pulp price stabilization expected around $600 in the long run
• Margins projected to remain between 20-25%
Shareholder Considerations
• Discussion on dividends versus buybacks based on investor preferences
• Confirmation of corrugated plant acquisition with a capacity of 260,000 tons
Conclusion
• Management expressed confidence in navigating upcoming volatility while leveraging company strengths.