Kuantum Papers Ltd (NSE: KUANTUM) Q3 2026 Earnings Call dated Feb. 09, 2026
Corporate Participants:
Pavan Khaitan — Vice Chairman and Managing Director
Vikram Kumar Khaitan — Chief Financial Officer
Prachi Sharma — Vice President-Corporate Strategy
Analysts:
Unidentified Participant
Navin Agrawal — Analyst
Madhav Jhawar — Analyst
Niteen S Dharmawat — Analyst
Manan Poladia — Analyst
Keshav Garg — Analyst
Madhur Rathi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Quantum Papers Limited Q3FY26 earnings conference call hosted by SKP Securities Private Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone form. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agrawal from SKP Securities. Thank you. And over to you, Mr. Agrawal.
Navin Agrawal — Analyst
Good afternoon, ladies and gentlemen. It’s my pleasure to welcome you on behalf of Quantum Papers and SKP securities to this financial results conference call. We have with us Mr. Pawan Ketan, Vice Chairman and Managing Director, Mr. Vikram Kumar Khetan, Chief Financial Officer and Ms. Prachi Sharma, VP, Corporate Strategist. We’ll have the opening remarks from the management followed by a Q and A session. Thank you. And over to Pawanji and Vikamji.
Pavan Khaitan — Vice Chairman and Managing Director
Thank you. Good afternoon everyone. It is a pleasure to welcome you all to our earnings conference call for the third quarter and nine months ended for the financial year 2026.
I would like to thank you all participants for joining us today. The Indian pulp and paper industry is navigating through a difficult operating environment. While underlying demand remains steady and we are seeing encouraging improvement in volumes. Realizations face pressure due to the influx of low priced imports which has weighed on the industry margins. The industry is actively engaging with policymakers on safeguard measures and we remain hopeful of a constructive outcome over time. In parallel, the possibility of moderation in wood pricing could provide some cost relief going forward. Although sustained policy support remains important for overall industry stability.
At the same time, there are several policy and trade developments that are directionally positive for the sector over the medium term. The India EU Free Trade Agreement provides for a phased elimination of tariffs on most goods. This is supportive of exports of Packaging Board and kraft paper while also easing imports of machinery. While the agreement will introduce higher competition from European players in certain specialty segments, it also incentivizes efficiency improvements and investments in low carbon technologies to meet CBAM requirements. The Union Budget 2026 has also provided meaningful relief to the industry. Temporary duty waivers on pulp and waste paper, streamlined customs procedures and adjustments in warehousing norms are expected to lower input costs and improve cash flow visibility.
In addition, continued thrust on MSMEs and urban redevelopment is supportive of downstream packaging demand, helping uplift the fortunes of the paper industry. Now coming to the operational highlights for Quantum for The quarter under Review on the mill expansion and upgradation front, I am pleased to share that the rebuild of Paper Machine 1 was successfully completed in December 2025. This upgrade has increased the machine’s capacity to 80 metric tonnes plus on a daily basis with the addition of a new dilution control head box, double doctoring dryers, QCs and a water heated calendar. Furthermore, we have doubled our PCC which is precipitated calcium carbonate capacity from 25,000 tons per annum to 50,000 tons per annum reinforcing our self reliance in high quality fillers and that is used in paper making.
Our operational efficiency reached new heights this quarter with regard making production across both our upgraded machines. PM4 achieved its highest ever monthly output of 87588758 metric tons in December 2025 while the newly upgraded PM1 set a historic benchmark with its highest single day production of 91.4 metric tonnes on the date of December 31. These achievements are a direct reflection of the enhanced reliability and efficiency of the projects we have undertaken as part of our mill upgradation and expansion program. In terms of product innovation, we have launched Quantum Copio, our new dedicated copier brand available in 65, 70 and 75 GSM which has been received very well by our dealer network and the consumers.
Additionally, we have successfully developed a new product on our PM3 with the name of Quantum Pura utilizing a 65% agro pulp furnished which further strengthens our commitment to offering sustainable solutions to our customers. Under Project Nirman, our Industry 4.0 led transformative initiative, we have successfully completed the Advanced Process control baseline study for PM4 with phase one rollout and the necessary test plan for Jan and Feb of 2026. Now simultaneously our Mac system is delivering stable operations in the wood and agro bleaching and we are currently progressing with the agrocook trials to further optimize our pulping yields.
With that I would now like to invite our CFO Mr. Vikram Ketan to share the financial highlights for the quarter and nine months. Over to you Vikras.
Vikram Kumar Khaitan — Chief Financial Officer
Thank you sir and good afternoon everyone. For the quarter under review our operational income stood at INR 290 crores reflecting a sequential growth of 4%. This was about INR 10 crore higher than previous quarter primarily driven by a modest increase in paper prices of around INR 850 per tonne. Production volumes during the quarter were also encouraging with higher sales volume by 1701 tonnes compared to the previous quarter. On the coast side overall cost Pattern remained largely stable as the increase in wheat straw prices of about INR 1500 per ton was offset by lower wood chip prices of around INR 800 per ton of production along with a reduction in chemical costs.
As a result, EBITDA for the quarter stood at INR 39 crores marking a 14% quarter on quarter increase with EBITDA margin improving by 125 basis points to 13.55%. Profit after tax for the quarter was INR 10 crore with paid margins at 3.38% and expenses of 131 basis points sequentially. With this we can now begin the question and answer session.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and one on Datastone telephone. If you wish to remove yourself from the question queue, you may press star N2 participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press Star in one to ask the question. The first question is from the line of Madhav Jawar from SKP Securities. Please go ahead.
Madhav Jhawar
Thank you sir for this opportunity. Sir, could you help us understand why. The raw material cost still remains elevated? Last quarter the floods had impacted Savitra prices. So what is the situation now?
Pavan Khaitan
So that situation is continuing for the time being. There is a scarcity of agro fibers in the state of Punjab that we are present in. And unfortunately that is going to impact fiber pricing. Agro fiber pricing for us in this quarter as well as the next quarter. Though we are witnessing a slightly reduction in trend in pricing for the next quarter. But overall it will the impact of the flooding and which has left a lowering in volume of the agro fiber pricing.
That is what is presently visible.
Madhav Jhawar
Okay. Got it sir. And the next question is, do you see any improvement in realization for the next quarter? Quarter four.
Pavan Khaitan
Yes, we are already observing a betterment in trend. As we have said that even in this quarter we saw a slight bit improvement in our sales realization by close to about 800 rupees per tonne. This trend we are seeing as continuing in the next quarter. And we are likely to see betterment in sales realizations going forward. Got it sir. And so the last question is. So the PM one upgraded. So that takes a capacity of the 540dbd. So which implies that we need additional EC clearances going forward for any further expansion. So when do we expect the clearances to, you know, the remaining clearances of our 135 CCD.
So we are already in the process and the application is going through and we are very confident that they will come well ahead of time of our proposed expansions.
Madhav Jhawar
Okay sir, thank you.
operator
Thank you. Next question is from the line of Nitin Dharamavat from Aurum Capital. Please go ahead.
Niteen S Dharmawat
Yeah, thank you for the opportunity. Am I audible?
Pavan Khaitan
Yes please. Yeah.
Niteen S Dharmawat
So sir, what is the plant utilization level now and what is the CAPEX plan going forward?
Pavan Khaitan
The plant utilization is close to 100% as we have always maintained that in the past so many years. And as far as the CAPEX Plan is concerned, two of our machines already stand upgraded which is PM4 and PM1. Next in line will be PM2 which we are going to upgrade in the month of February which is now and PM3 will be up for upgradation in the month of May this year.
Niteen S Dharmawat
Will there be any shutdown for this upgrade or will not be having any impact?
Pavan Khaitan
No. While the machines are getting upgraded, only that section of the machine will stand in a shutdown mode. So PM2 which we are going to upgrade now will remain shut down for a period of about 30 days and PM3 which is a larger upgrade will take about 45 days to complete.
Niteen S Dharmawat
Okay, so will there be any impact on the revenue and margin because of the shutdowns?
Pavan Khaitan
Very, very marginal. Because by now the additional capacities from PM4 and PM1 have already kicked in and PM2 shutdown will not be very heavy because currently we are producing only about 40 tons per day which is clearly and easily made up by the additional quantities we are getting on the balanced machine upgrades which have happened. And once PM2 also comes on stream, the PM3 while it remains shut, I don’t see an impact on volumes reducing and it’s only going to see a growth curve in future.
Niteen S Dharmawat
So how much is the total expenditure on this PM2 and PM3 upgrade? Sir.
Pavan Khaitan
PM2 upgrade is about 45 crores and PM3 upgrade will be about 140 crores. And this is part of the overall plan of 735 crores which we’ve already shared on several occasions in the past. And the entire upgradation sort of stands financed by banks and internal accruals.
Niteen S Dharmawat
My next question is about the pricing scenario of the raw material and our end products. So where do you see the pricing right now? As we are in the final quarter of the financial year, so how is the scenario right now and where do you see this for the next financial year?
Pavan Khaitan
So right now we are in a better position than Q2. Q3 has been better than Q2 and I think going forward Q4 will be margin if, if not at least marginally better than Q3. And the next financial year we are confident that the industry revival will happen and we are going to see pricing on a much better level than what we have observed in this financial year of 2526. So we are confident, I am confident personally that financials will get better. EBITDA margins and margins will get better for us and especially with increased capacities, overall economics getting better for us.
All these several cost initiatives that we’ve taken sort of will be coming to fruition. We are in for a better performance for the next year. 2627.
Niteen S Dharmawat
So 2627, what makes us confident about improvement in the scenario? Is there any specific thing that you see over there?
Pavan Khaitan
Well, nothing, nothing specific I would say. But historically being a commodity, the trends of and circles of evolution remain only present over a period of time. We’ve already seen a downtrend for more than two years and the turn has already happened. And we are, we have witnessed an uptrend in uptick in Q3 and which is continuing in Q4 and which is giving that sense of comfort and belief that things will be better in the future.
Niteen S Dharmawat
Perfect. So what is the revenue and EBITDA margin guidance for Q4 and for next financial year if you can highlight that as well?
Pavan Khaitan
Well, As I said, Q4 is going to be slightly better than Q3. So overall we should touch top line of about 1100 crores. And EBITDA margins as you’re already seeing, will be around that range. Q4, sorry, next year should be better, but I can’t reveal sort of exact figures or any numbers, but I can safely say that they will be better than what we’ve achieved in 25:26.
Niteen S Dharmawat
Got it. In case I have any other questions, I’ll come back in the queue. Wishing me best, sir.
Pavan Khaitan
Okay, thank you.
operator
Thank you. Next question is from the land of Manan Polaria from MKB Securities. Please go ahead.
Manan Poladia
Hi sir. Thanks for the opportunity. Sir, I’m sorry for harping on this but on the raw material side, I’m just curious as to what we think will the next year’s outlook look like and what specific feedstock is impacting our raw material mix this much. If you could shed some color on that, that’d be great.
Pavan Khaitan
So we are dependent on two lines of fibers for ourselves. One is the agro line and one is the wood line. For agro we are specifically relying on wheat straw which is very, very abundantly available in the state of Punjab. This year despite a very very heavy flood situation, we still had enough wheat available on the ground and wheat straw available for the paper industry. And that is reflective of the fact that wheat straw will always be available in this state in which we are operating. And I think the prime reason, please understand is that wheat straw also is a source of fodder for the entire cattle and animal husbandry industry in the state of Punjab.
So farmers are very, very keen that this produce always remains. And out of a total of 20 million tons of wheat straw that is created and generated every year in Punjab, all the mills put together, all the paper mills put together use no more than 2 or 2.25 million tons. So there is a huge gap which is available for procurement and in competition it is only this animal husbandry and cattle stock which is there. So I’m very, I’m very confident that agro fiber supply is never going to be in question. It is there. It’s only a question of how the pricing fluctuates that we are here to take care of.
Manan Poladia
Right. And so just another question. As far as our peak debt is concerned, I think a bunch of our capex is already in. Could you just call out our long term borrowing right now and what we. Think peak debt should be?
Pavan Khaitan
I let Vikram, our CFO answer that. Yeah.
Vikram Kumar Khaitan
Age of now the peak debt as you asked it will be not more than 750cr for long term loan and as the repayment of say around 30 crore per quarter will be repaid. So as of now it is somewhere in 600 to 650 crore. But big debt will be 750 crore, right?
Manan Poladia
Just a quick follow up on that. We’re already at 600 crore, is that. What you’re saying or where are we at right now?
Vikram Kumar Khaitan
600 as of now.
Manan Poladia
600 as of now is our big debt. So this is long term only. No short term.
Vikram Kumar Khaitan
No short term. We have working capital facility of fund based 100 crore and out of that utilization it’s 70, 80% labor.
Manan Poladia
All right, understood sir. Thank you.
Vikram Kumar Khaitan
Yeah.
operator
Thank you. Next question is from line of Rajesh Bandari from the Quran. Genius. Please go ahead.
Unidentified Participant
Good afternoon sir.
Pavan Khaitan
Yes, good afternoon. Yeah.
Unidentified Participant
[Foreign Speech]Marketing.
Pavan Khaitan
Marketing may koi issue naye whatsoever. We are very very sort of blessed to have the network that we have. We’ve created it over a period of time and we have with us about 100 plus functional dealers. We call Them our business partners now. And they are very keen to take up the entire additional capacity within their own network.
Unidentified Participant
[Foreign Speech]scarcity.
Pavan Khaitan
Which is about 30 km away only is a fairly large wood mandi. So a lot of wood is available from there. Then next Yamnanagar mandi is. Is the biggest wood mandi in India. And almost 10,000 metric tons of wood comes into that mandi every day. So it’s permitted by the government. Oh yes. Oh yes.
Unidentified Participant
Okay. Okay.
Pavan Khaitan
Legal and also what we’ve done is that we’ve started a social forestry program. And where we are growing as of now we are growing 40 lakh saplings every year which we are distributing amongst the network of all these farmers and suppliers who come in. And we are helping increase the growth of trees in and around the surrounding areas. And these 40 lakh saplings in the next three years our target is to reach 1 crore saplings every year. These saplings are of we have our own nursery where we are creating them. And these are high growth and high yielding varieties which have been taken up very well by the farmers and suppliers who come to us.
Unidentified Participant
Sir, quality wise agrofiber is better or wood and price wise also.
Pavan Khaitan
Well, it’s a mix of both. Wood fiber naturally is a better fiber for paper making. But for us because we’ve done a fair bit of R and D on agrofiber also the kind of quality of paper that we are able to fetch from agrofiber is very, very similar in specs to wood. And that is where the agrofiber pricing which is better than wood, it is cheaper than wood. It comes to our aid and help.
Unidentified Participant
Okay. Gigi. 26, 27 and onwards things would be far better.
Pavan Khaitan
Yes, I would say so. And yes, I would believe so.
Pavan Khaitan
Yeah. Expected to be naturally.
Unidentified Participant
Yes. Yes. Thank you sir. Thank you very much. Thank you, sir.
Pavan Khaitan
Thank you. Thank you.
operator
Rajesh, do you have any follow up question?
Unidentified Participant
No sir. Thank you. Thank you.
Pavan Khaitan
Thank you.
operator
Thank you. Next question is from line of Prashant Kale from Star Capital. Please go ahead.
Unidentified Participant
Good afternoon sir and thank you. For opportunity. Congratulations. For good set of numbers. We are planning for PM4 bump test and some phase one rollout. Do we expect any shutdown for PM4 machine for doing that?
Pavan Khaitan
No, not at all. These are regular testing that we do for embedding and making our AI program successful. These. There is no shutdown whatsoever for these purposes.
Unidentified Participant
Okay, sir. Wider paper industry is expanding like west coast Andhra paper. Uchira Paper, everybody is expanding jk so and the additional capacity is coming up in, let’s say, little bit in this year, but most of it in next year. So most of the new capacity coming into FY27, wouldn’t it create oversupply for already struggling industry?
Pavan Khaitan
Basically, yes, you’re right. A lot of capacity is coming up. But if you see some of the capacity is coming up in the tissue paper segment, which is one of the fastest growing segments in India at about 20% CAGR. So a lot of the new machines that are coming up are in the tissue paper segment. Some of the mills that you mentioned, which is like JK Paper, their focus is on packaging board. Again, with the increase in E commerce, there is a lot of demand for packaging. So that will also get absorbed companies like us which are focused on writing and printing paper, there is not a lot of new capacity coming in.
And the domestic market itself has a lot of ability to absorb this capacity. Given the fact that there is a lot of focus of the government on education and education is reaching the grassroots level where paper will always play a role in making sure that education is available right till the end, even till the village. So we always feel that this extra capacity will not impact us in any way.
Unidentified Participant
Okay, that’s good to hear. And sir, because of this, how the issue and attacking of the vessels in Middle East Red Sea, the freight cost towards Middle east and Europe through Suez Canal went up and it made export of bulk paper and all those things really expensive from India. Is that situation improving now or freight cost is still higher?
Pavan Khaitan
No, that situation fortunately has stabilized. We have seen a normalization in freight rates over a period of time and impacts of such events and situations are not felt anymore.
Unidentified Participant
And so in Q3, did we export anything to Europe and Middle East?
Pavan Khaitan
Our export we are doing to countries like Gulf, UAE and through there. We are exporting to the North African countries and we did not come across any such hindrances created by freight rates or exports.
Pavan Khaitan
Okay, okay, that is good because because of the freight rate, suddenly our export was looking expensive. And from Indonesia and all those countries it was easier to go through the Cape of Good Hope and to the Europe. But for us it was longer voyage. So yes, it’s good to know that. Okay, export opportunities will open up in next few months more
Unidentified Participant
. Yes, thank you very much.
Pavan Khaitan
Yes, thank you.
operator
Thank you. Next question is from the line of J Lad from Central Insights. Please go ahead.
Unidentified Participant
Hello, Am I audible?
Pavan Khaitan
Yes, please go ahead.
Unidentified Participant
Yeah. Good afternoon sir. Thank you for the opportunity. What is the Current procurement cost for wood and agro pulp, I mean wheat straw, currently.
Pavan Khaitan
Currently wheat straw is at the level of 6,000 to 6,400 rupees per ton. And wood, there is a huge variety of wood that we procure which is bamboo, wood chips, vineyard chips, wood logs, debark. So the average cost of wood is about 7,000 to 7,500 rupees per ton.
Unidentified Participant
Sir, what would be the conversion price? I mean if I have to make into pulp then what is the total cost that I have to incur?
Pavan Khaitan
So agro pulp is available at a cost of between 27 to 30 thousand rupees per ton and wood is between 42 and 44 thousand rupees per ton.
Unidentified Participant
Sir. Currently if I see our average NSR for last two quarters were around 60, 66 rupees, whereas EBITDA was around 88 rupees 9 rupees per kilogram. So what do you see? The normalized level would be in, you know, maybe next two to three quarters.
Pavan Khaitan
Well, I clearly see an incremental value in, in EBITDA margins. This EBITDA margin in Q4 should be enhanced by about to 2000 rupees per ton at least. And going forward it should climb to between about up to about 15 to 17,000 rupees per ton.
Unidentified Participant
Normalized level, EBITDA per kilogram you can make is around 15 to 17 rupees. That is, is the understanding, right?
Pavan Khaitan
Yes.
Unidentified Participant
Okay. And sir, lastly sir, what is the imported prices of the, you know, the imported prices of paper that the countries are importing at? I mean at the port and then the transportation cost till NCR?
Pavan Khaitan
Yeah. So this is varying between 680 to $750 per ton.
Unidentified Participant
Okay.
Pavan Khaitan
And this is all across the coastal areas of Navasheva. They’re landing in Navasheva. So they largely impact the, the west and the south market. And you have to add a freight of about four to five thousand rupees per ton while they come up to the northern part of the country, which is Delhi. And Delhi by far is the biggest paper consuming market in the country. And so we are insulated from the lower value exports that is happening and that is how it is impacting us lesser as compared to other players who are based in the south and the West.
Unidentified Participant
Basically you are not facing any that much competition from imported players, right?
Pavan Khaitan
Well, indirect competition is there. We are not directly getting impacted. The fact that imports of paper happens at such pricing, the sentiment of the industry goes and gets impacted accordingly. But while the value Chain sort of changes and with the impacts of freight and the costings, additional costing impacts coming in the territory in which we are there, the impact certainly is lesser and we are able to sort of compete successfully with our quality and assurances of our team and the kind of consistency in services that we are able to provide that helps us get a margin.
Unidentified Participant
Lastly, since you know, the GST rate on notebooks have been decreased to nil, that is nil percent. So sir, is the gst, I mean the ITC blocked there? Are we into inverted type structure there?
Pavan Khaitan
So this is quite a double edged sword because if we as a company or any company is working, wanting to sell notebooks at 0%, they are also forced to reverse the input tax credit that they have availed on their inputs as well as capital items that they have spent on. So for us as an industry, the impact is close to about 7,500 rupees per ton. So if anybody wants this kind of supply from us, the basic price we have enhanced by this same value to ensure that there is no direct loss coming to us on account of sales.
Of notebook,
Unidentified Participant
we are passing on the prices to the customers, the cost.
Pavan Khaitan
Yes, yes.
Unidentified Participant
Thank you so much, sir. All the best.
Pavan Khaitan
Thank you.
operator
Thank you. Next question is from line of Sanya Jain. Sorry, Saina Jain from CARE pms. Please go ahead.
Unidentified Participant
Hi, thank you for the opportunity. Our first question is on the global crisis. So could you provide an update on what the current global pulp prices are compared to last year and what where are they likely headed over the near term?
Pavan Khaitan
So we have clearly seen upward revision in the pricing of wood pulp, which is both hardwood pulp and softwood pulp. Hardwood currently is in the range of about 680 to $700 per tonne and which has seen an increase of close to about $100 per ton over the last year. Softwood is about 80 to $100 higher than hardwood and so will be in the range of about 780 to $800 per ton. And a similar price increment of about $100 has happened in the soft food as well over the past one year. Going forward, sorry, going forward we are.
This increasing trend is likely to be there, likely to be maintained, and I think it will somehow tend to balance out at about $850 per ton and or thereabouts.
Unidentified Participant
So this $850 is for hardwood or softwood?
Pavan Khaitan
Softwood. Hardwood should be at about 750 or 780 max.
Unidentified Participant
Okay. And on the price increment, I wanted to ask what would be the broad level industry hike and are we positioned to the lower end of the hype? And additionally they wanted to understand since quarter four is the strongest quarter seasonally for us what would this be the quantum of price hike for us?
Pavan Khaitan
Well I can’t, sorry but I can’t give you exact numbers but I can clearly mention that an upward trend is there. We could see a hike of between 2000-4000 rupees per ton and sort of and that would be an industry wide phenomena and that will be helping in uplift the status of the industry for at least Q4 if not more.
Unidentified Participant
So this 2000 to 4000 has happened or will happen.
Pavan Khaitan
2000 has already happened in the current month and we are expecting another hike of about at least 2,000 rupees to happen before this month end.
Unidentified Participant
So we have taken a price like hike on the lower side, right?
Pavan Khaitan
No, I wouldn’t say on the lower side. Industry wide hikes are happening. We are already highly priced in terms of competition. We are amongst the highest priced in the market. And yes, that is why we sort of even though other industry players are already probably raising it by three to four thousand rupees per ton but their pricing even despite this higher increase their pricing is still lower to us.
Unidentified Participant
Okay, got it. And just a clarification the 850 rupees per ton hike that we did this is over and about the GST 7,500 rupees per ton height.
Pavan Khaitan
Oh yes. Oh yes.
Unidentified Participant
Okay. Okay, perfect. Thank you.
Pavan Khaitan
Okay.
operator
Thank you. Next question is from line of bhavish individual investor. Please go ahead.
Unidentified Participant
In terms of debt how should we look at it in next two, three years? What is companies we company through on repaying of the debt. We will have enough strength and cash flow increments happening because of the project implementation that we are doing and we will be generating enough internal accruals to take care of all repayment liabilities which is interest and repayment of principal on our term debts. I see no sort of contentions in that. As per our plan also we are after once all the four machines come online we are targeting a top line of close to 1800 crores and a bottom line of or an EBITDA margin EBITDA level of close to 300 crores going into the future that will be enough to take care of our more than enough to take care of our repayment obligations.
But my question was that now we will move towards that 700, 750 crores of big debt and our capex will also Be behind. So will our focus be on to you kind of prepay and bring that down, bring the debt down significantly?
Pavan Khaitan
Sure, sure. We have done that in the past. We have sort of prepaid our long term debt when the industry performed exceptionally well in the year 2223. So we have that capacity, we have that capability and we have further strengthened ourselves from that exceptional year. So I’m quite confident that with all this strength building in our operations happening, we will be in a position to sort of generate enough to repay ahead of time as well.
Unidentified Participant
But in management’s mind there is nothing like new CAPEX that will be there after this one. This capex ongoing capex is complete?
Pavan Khaitan
Not at the moment. Not at the moment. But I will not say that we will not think of if. If the opportunity arises, we may think of something.
Unidentified Participant
Okay sir, thank you and all the best.
Pavan Khaitan
Thank you.
operator
Thank you. Next question is from the line of Keshav Garg from Counter cyclical pms. Please go ahead.
Keshav Garg
So firstly I wanted to understand that our full capacity is writing paper only.
Pavan Khaitan
No, it’s majorly writing paper which is a combination of wholesale paper, folio papers as well as copier. But we are making certain varieties of specialty papers also which are normally small volume, high margin varieties. They are in the shape of colored copier, they are in the shape of these paper for straws, for paper cups, for paper that is used in soap wrapping. So differential applications come about and we are making the base paper for all such applications.
Keshav Garg
Can we convert a part of our existing capacity into tissue paper manufacturing?
Pavan Khaitan
No, unfortunately not. For that a specific a specifically built machine is required which is a tissue machine. So we are looking forward to entering into that space also. And whenever that happens, a tissue machine is what is going to be set up.
Pavan Khaitan
This 1800 crore top line and 300 crore EBITDA we are expecting for FY27 or 2827.
Keshav Garg
Okay sir, FR27 actually part of it. Because once PM3 comes into operation, that’s the kind of figure that we will achieve. And that’s on an on annualized basis. So you may not see this figure actually in 2627 but on an analyzed basis those are the figures we are going to target. Right sir?
Pavan Khaitan
Answer. Peak sales volume. We did 1.6 lakh ton in FY25. So for FY27 or FR28 what will be the maximum production sales volume that we can achieve? If we operate at full capacity utilization post, all the capacities are over.
Keshav Garg
So once all these machines come on stream, we are likely to touch a figure of 2.35 lakh tonnes.
Keshav Garg
This is in FR28.
Pavan Khaitan
Yes,
Keshav Garg
right sir. And what’s the impact of free trade agreement with EU as well as the trade deal with us? Is India importing paper or pulp from these countries or are we exporting or do we stand to export in future due to favorable duty exemption and so on?
Pavan Khaitan
Yes. So opportunity clearly has been created. There is a betterment and marketing market space that has been created because of these free trade agreements. We will need to look at how this really evolves over a period of time and see how the market functions. Because you see we have China as a very big competitor to us. China total paper machine paper, sorry, paper industry volume is almost ten times our size. So it’s not going to be easy seeing that kind of competition. But yes, an opportunity does arise and we will be able to secure some better positions in both the US and the European markets.
But as far as imports are concerned there are primarily happening from the ASEAN countries, ASEAN countries which is Indonesia and of course China as well. So that is the kind of competition that is we are witnessing from the imports front. And as far as pulp import is concerned it is happening from both EU which is the Scandinavian countries as well as Canada. So US very small quantities of pulp comes in. Not, not anything much to talk home about.
Keshav Garg
Sir. And we have 259 acres land in our manufacturing facility where it is located. So can’t we plant trees and become self sufficient in pulp in let’s say next five to ten years or it’s, I mean what’s the issue with that?
Pavan Khaitan
So it’s a very good point. Thank you for highlighting for your information. Every square inch of our land which is available for this purpose we have planted eucalyptus there. But the other side is that entire plantation, even if we use it for ourselves will be helpful in producing pulp of no more than five days requirement.
Keshav Garg
Okay? Okay. And sir, is eucalyptus better, niper glass grass better or bamboo better for pulp manufacturing?
Pavan Khaitan
So each has its own facets. We are using about 20% bamboo mix in a pulping and rest all comes from a mix of hardwood and softwood in hardwood. Eucalyptus is by far the biggest constituent because it is what is abundantly growing in and around our area. We are also using poplar which is another hard variety of wood. So in combination these are used and we are also using veneer chips and wood chips. Again they are of both of eucalyptus and poplar which is the varieties which are predominantly grown in this area.
Keshav Garg
Sir. Lastly sir, recently government changed the taxation on share buyback and made it very like attractive. So and especially now with the promotion promoter shareholding in corporate structure. So the only 22% taxation is there in terms of buyback. So any thoughts on that? That. I mean since the industry is also turning around and we got good cash flows. So you think it’s an opportune time for share Baba?
Pavan Khaitan
I think I would want more our investors to be happy if they grow. I am happy. So I would not want to take away that opportunity from them. I’m happy where I am. In fact my focus is to increase shareholder value, investor value and going forward that ethos will remain
Keshav Garg
great. Sir, thank you very much and best of luck.
Keshav Garg
Thank you.
operator
Thank you very much. I request to all the participants, kindly restrict your questions to two per participant and rejoin the queue for a follow up question. Next question is from the line of Daisy Barucha, individual investor. Please go ahead first.
Unidentified Participant
Am I audible?
Pavan Khaitan
Yes, please go ahead.
Unidentified Participant
Firstly congratulations sir for such a good numbers.
Pavan Khaitan
So thank you.
Unidentified Participant
My question is with EBITDA margin slowly sight of recovery. So does the management believe that we structurally bottom up or do we expect turnaround or trend reversal given the imports pressures?
Pavan Khaitan
So we are clearly seeing an uptrend and uptick in our operations. Visibility is already there with what we have, how we have performed in Q3 and from how Q4 is looking like we’ve already seen one month go by, it’s clearly seeing an improvement over Q3 as well. So yes, you are right in stating that we have bottomed out as an industry in our operating margins. They should improve over time and future is certainly going to be better.
Unidentified Participant
Okay. Okay. Thank you sir.
Pavan Khaitan
Thank you.
operator
Thank you. Next question is from the line of Madhurati from Counter cyclical Investments. Please go ahead.
Madhur Rathi
So thank you for the opportunity sir. I wanted to understand that our gross margin compression is because of the wheat straw prices increasing because of floods in Punjab. And with new harvest season coming up in April, we expect these margins to go again to the 30% level that we did historically. Is that understanding correct?
Pavan Khaitan
No, I’m sorry, I won’t say that we’ll reach 30%. Yes, we are going to see an improvement because wheat straw pricing should come down during the harvesting season starting April. But reflection of that kind of margin will only happen once the market pricing of our product goes up to a higher level. A major erosion in our EBITDA has happened because the market pricing of our products has come come down quite substantially and we are seeing an upward trend. There so we are going to see EBITDA margins slowly inching up. Achieving 30% is a little bit of a big ask but yes, we certainly can see inching towards 20% thereabouts or 22% in the years to come.
Madhur Rathi
Right? Sir, I was asking about the material cost as a percentage of our revenue but it makes sense. 20%. Can we do a 360 to 3 because to the previous participants you mentioned that we could do 15 rupees to 17 rupees per kilogram. So are we conservative in our guidance of 300 crore EBITDA on 1800 crore revenue base?
Pavan Khaitan
Yes, I would say so. I mean these are the kind of numbers that we are wanting to target. Better is always better, higher is better. But yes, we should be able to achieve these numbers in the next years.
Madhur Rathi
Right. So a 362 crore kind of EBITDA. And sir, what is the capacity addition and writing and printing paper that has happened in India maybe over the past one year and how much is expected over the next one or two years and versus the demand? If you could just help us understand.
Pavan Khaitan
So demand is growing at a good and gradual increment of about 6% CAGR and as Prachi rightly pointed out earlier the focus of the government is on education and education is going to grow in our country. A vast bit of population is going to get added into this stream and which will demand more paper for their textbook and notebook requirement. So demand is for certain a growth of 6 odd percent is very, is quite substantial seeing the kind of figures and data we are already on. And I don’t see very many people investing in writing and printing paper capacities.
Paper capacity buildup will be there because there are large number of varieties. There is tissue paper, there is packaging paper, there’s packaging board, there’s specialty paper and of course writing and printing paper. So in writing and printing paper segment there are barely. I have, I know of only one which is Ruchira which is probably going to come up. I don’t see any other investment that has been announced.
Madhur Rathi
Got it. And sir, with this new education policy do we see the demand growing much faster? Based on your historical understanding and experience.
Pavan Khaitan
We had reckoned that happening but unfortunately it is not because the rollout of this new education policy is happening in phases. So we are also now quite comfortable that rollout will happen in phases. In fact it’s better for us because had it been rolled out altogether the industry may not have been able to capitalize on that. All that entire additional demand coming in Suddenly. So a gradual increase in demand will help keep the industry on a balanced track and a balanced and growth track. So which I think will be helpful for the industry going forward.
Madhur Rathi
Thank you so much and all the best.
Pavan Khaitan
Thank you.
operator
Thank you. I request to all the participants kindly restricted two questions per participant. Next follow up question is from the line of Rajesh Bandari from Nakura Engineers. Please go ahead.
Unidentified Participant
Thanks for giving me chance once again.
Pavan Khaitan
Thank you.
Unidentified Participant
But as you would be seeing that there was a temporary slide in the rupee to even 92 rupees. But that has appreciated now with all these trade deals happening and it has climbed back and inched upward back to 90 rupees 90.3 rupees. So I think these kind of variations will come in. But our import component is only for about no more than 4 to 5% of our entire requirement.
Pavan Khaitan
Okay, okay. That, that is the hardly it matters. Locally produced. So this rupee depreciation is not so much on us. I’ll let Prachi handle this question for me.
Unidentified Participant
Online business of education. Online education that is mostly in the urban centers. The access to that kind of digital framework is only to about the top 5% of the cities and probably top 5% of the population. And you know India’s population is fairly large.
Unidentified Participant
Yeah, yeah.
Prachi Sharma
Downstream availability to district level, nodal level or to the village level will never be there in India in the near future. So while digitalization has happened, we acknowledge it. Is there an impact on the paper industry, on the writing and printing segment? The answer is a clear no because we are a fairly growing industry. As sir mentioned, we continue to grow at about a 6% CAGR which is very healthy for us.
Pavan Khaitan
Both in terms for teachers as well as students. [Foreign Speech]That is why the connect, the person in person connect is almost irreplaceable. Schools, colleges, education institutions.
Pavan Khaitan
It’s really commendable. And congratulations from my side. Clarity or honesty.
Unidentified Participant
Thank you sir. Thank you very much sir.
Pavan Khaitan
Thank you.
Unidentified Participant
Thank you.
operator
Thank you. Next follow up question is from Learn from Nitendramawat from Aurum Capital. Please go ahead.
Niteen S Dharmawat
Yeah, thank you for the opportunity. So you mentioned about 1800 crore and 300 crores run rate. I am not using the target for next financial year. That is the run rate. So how much is because of the price hike and how much how much will be because of volume?
Pavan Khaitan
Very good question. I must say a lot of it is dependent on the price hike that we are visualizing for ourselves. If we take only the current pricing, the volume increment will give us a top line of between 15 to 1600 crores. But we are quite, we are quite confident that the price hike is going to come in and which will help us inch closer to the 1800 crore which I talked about.
Niteen S Dharmawat
My next question is you mentioned that China is about 10x our size. Okay, so what will be the impact of China’s anti involution drive which is going on currently over there? You see, did you hear anything about it from the market?
Pavan Khaitan
So we are sort of positioning ourselves quite strongly with the relevant government authorities to put in place the relevant measures to help insulate ourselves from such imports. What has already happened is in the packaging grades there is already an MIP in place and we have been given the sort of indication has been given that the next on the cards is the MIP for the writing and printing grades. So the government is looking at it seriously and I think it’s not far that this step will also be taken to help and to help the paper industry from this competition.
Niteen S Dharmawat
Do you see any possibilities of reduction in capacities over there?
Pavan Khaitan
No, I think that’s a way the economics work, business environment works, how China and Chinese investors and business owners take a call on how they want to conduct their business. They have a large market across the world so I think all that will play out and how they are able to operate profitably and I think only I don’t see that happening in the short term. I don’t see capacities coming down in the short term.
Niteen S Dharmawat
Got it sir, thank you so much for answering my questions.
Pavan Khaitan
Thank you.
operator
Thank you. Next question is from line of Prashant Kale from Star Capital. Please go ahead.
Unidentified Participant
Hello sir. This tissue paper plant has been lingering on our quarterly presentation for quite some years now. But as per your view the situation is not right for our company because we are only going to large capex. But in case the realizations improve and the cash flow improve and hypothetically if we decide to go ahead with the tissue paper plant, how much is the CAPEX needed and ballpark figure how much is the CAPEX needed and how much is the time for implementation of this plant up to commissioning.
Pavan Khaitan
So yes, you are right in stating what you have. Our next sort of upgradation of expansion as and when it happens will be through the tissue paper route. We are deciding as a company to go in for a 50 tonnes per day machine because a lot of additional capacities have already come in and are slated to come in over the next one to two years. Almost something like 6 to 700 tons per day capacities in a process of getting installed. So we are looking at installing a 50 tonnes per day machine. What we are going to be very careful about is that we will help set up a machine which gives the amongst the best quality of tissue papers and which will hold out our ethos of generating and producing the best quality of papers whatever they may be.
And the investment for this machine will be in the range of about 70 to 80 crores.
Unidentified Participant
And the implementation time.
Pavan Khaitan
Implementation time once we source the machine will be about 16 to 18 months.
Unidentified Participant
All right. Good to know. Thank you very much, sir.
Pavan Khaitan
Thank you.
operator
Thank you very much. Ladies and gentlemen. I now hand the conference over to Mr. Pawan Khetan for closing comments.
Pavan Khaitan
So thank you all for participating in this earnings conference call. I hope we were able to answer your question 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 Ballarum Advisors. Thank you and wishing you all a great day ahead.
operator
Thank you very much on behalf of SKP Securities Private Limited. That concludes this conference. Thank you for joining us. And you may now disconnect. Thank you.