Tamilnadu Newsprint & Papers Ltd (TNPL) Q1 FY23 Earnings Concall Transcript

Tamilnadu Newsprint & Papers Ltd (NSE:TNPL) Q1 FY23 Earnings Concall dated Aug. 18, 2022

Corporate Participants:

Ms. Sathya Ananth — General Manager, Finance.

Mr. Santosh Wakhloo — Executive Director, Marketing

Mr. SVR Krishnan — Executive Director, Operations.

Analysts:

Rabindranath Nayak — Sunidhi Securities and Finance — Analyst

Sudarshan Padmanabhan — JM Financial PMS. — Analyst

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Monish Ghodke — HDFC Mutual Funds — Analyst

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Abhishek Maheshwari — SkyRidge Wealth Management. — Analyst

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

Shivan Sarvaiya — JHP Securities Pvt. Ltd. – India — Analyst

Danesh Mistry — Invest First Advisors — Analyst

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Venkatesh Subramanian — Logic Tree — Analyst

Sharan Sharikar — Individual Investor — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, and welcome to the Q1 FY 23 earnings conference call of Tamil Nadu newsprint and papers Limited, hosted by Sunidhi Securities and Finance 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 [Operator Instructions]

I now hand the conference over to Mr. Rabindranath Nayak from Sunidhi Securities and Finance. Thank you, and over to you, sir.

Rabindranath Nayak — Sunidhi Securities and Finance — Analyst

Thank you, Michell. Good afternoon and warm welcome to all the participants in the call. First of all, I would like to thank the management of TNPL for giving Sunidhi Securities and Finance an opportunity for hosting the call.

From the management side, we have Mr. SVR Krishnan Executive Director, Operations; Mr. Santosh Wakhloo, Executive Director, Marketing and Mrs. Santhanam, CFO.

Without taking much time, I am handing over the line to the management for a brief remark on the given performance and business outlook going ahead. Post which, we will open the floor for Q&A.

Over to you, sirs.

Ms. Sathya Ananth — General Manager, Finance.

Thank you so much.

I welcome all of you to the conference call, where we are going to present the performance of our Company for Q1, FY ’23. This, I’m very happy to announce that this quarter has been good. We, our performance is better than all our previous quarters, thanks to a good demand scenario as well as the improved operational efficiency. Our turnover, actually, we have achieved the INR11.37 crore, this is the highest in any quarter, we achieved, excluding the preceding quarter, where it was INR13.88 crore, which had a liquidation of stocks of around 50,000 tons. So, coming to this 11 — this is around 76% higher than the previous year quarter-on-quarter turnover.

Coming to the EBITDA, in the quarter, we have achieved INR176 crore. Previous year being a COVID year, it was only INR77 crores, it is 128% over and above the previous year EBITDAS, and previous quarter — preceding quarter, it was INR126 crores, even though the turnover was higher in the preceding quarter, our EBITDA in this quarter is 40% higher than the preceding quarters as well.

Then the EBITDA in terms of percentage it is at 15.6% and if you see the split between the Paper Segment and the Packaging Board, Paper Segment has given us15.4% and the Board is at 20.9%, both performance has been really good. This is mainly due to the in-house pulp, which we could use from our new pulp mill. And the PBT is at INR93 crore vs loss of INR21 crores in the previous year. And the preceding quarter, it was actually INR34 crore.

So with this, I will hand over to our ED, Marketing for the remarks on the rest of the performance.

Mr. Santosh Wakhloo — Executive Director, Marketing

Overall, I would say that our performance has been pretty good over what we did in the last quarter.

If you look at the PBT, as Madam said, it has improved, despite having sold much much lesser [Technical issue] than the last quarter. Realizations have been good, operational efficiencies have been good, we’ve been able to get a good amount of pulp from our new pulp mill that was installed and while costs have definitely gone up, but we’ve been able to mitigate a lot of that through increased and improved realizations from the market. In terms of our overall credit control and systems also, our outstandings in the market have also come down considerably, whether it is for institutional sales all it is for the normal trade linked domestic sales and we have also limited, to a certain extent, the exports that we do that is to ensure that we are balancing and operationalizing, and making more effective use of capacity for markets or segments where we are getting improved realization. So overall, I would say, a good performance, but yes, definitely, we can improve and we assure we’ll show improvements in the coming quarters.

Ms. Sathya Ananth — General Manager, Finance.

Yes, Rabindra?

Operator

Ma’am, do you want me to open for the Q&A session?

Ms. Sathya Ananth — General Manager, Finance.

Yes, we can open.

Mr. Santosh Wakhloo — Executive Director, Marketing

Yes.

Operator

Thank you very much.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Sudarshan Padmanabhan from JM Financial PMS. Please go ahead.

Sudarshan Padmanabhan — JM Financial PMS. — Analyst

Good. Thanks you for taking my question and congrats on a good set of numbers. Despite a difficult and challenging environment. My question is to understand that a little bit more about the factors I mean we have consistently seen the prices going up on the back of pulp predominately prices to pulp prices as well as power prices. My question is on the demand side. What we also reduced a lot of capacity shut down that is happening in Europe because of the current gas situation. Does it provide number one an opportunity in terms of exports. And second is, you know, as far as cost is concerned, I mean, continuously, we are seeing the pulp prices going up back to China, where do we see the realization? I mean, how is the pass-through, is it something that is going to be possible for the foreseeable future given the market dynamics? Some color on this.

Mr. Santosh Wakhloo — Executive Director, Marketing

See, I would like to put it in context, if you look at [Indecipherable] that is happening, India has been fortunate to have a ocean freight differential advantage over China and other Southeast Asian countries, which are exporters to Europe and U.S. So not only — while, ye, base paper and packaging board exports has increased, but a lot of finished paper-based or packaging board based goods, the exports have increased to the international market. That is what has led to a favorable demand-supply situation in the domestic market.

As far as pass-through is concerned, I would say the past five months or six months, the increase is the cost of raw material and the fuel, we’ve been able to more or less pass through everything, and what has happened is that some segments where there is more of backward integration and there is a difference in the integration level of different Indian players, there, the pass through has been slower but where the integration level of the mills in India are more or less the same, there, pass-through has been much quicker. Just to put an example, like if we talk about Packaging Board, the level of integration amongst the Packaging Board guys is lower, the level of integration is lower as a result, pass-through of the increase in cost happened very immediately. Whereas if you look at the writing-printing segment, different players are differently configured, some have total backward integration, some have semi backward integration, so in such a scenario, pass-through was not immediate. But yes, over a period of time, pass-through has more or less matched or caught up with the increase in cost.

Sudarshan Padmanabhan — JM Financial PMS. — Analyst

Sure. And sir, my other question on my side is, we are talking about integration, I mean, when I compare the cost, landed prices of pulp versus an integrated player like yourself, I mean, I’m coming from the context that we have done a lot of capex and backward integration program, just to get an understanding, how much are we reaping the benefit in terms of cost at this point of time?

Mr. Santosh Wakhloo — Executive Director, Marketing

To mention that — we did substantial amount of capex to put up a new pulp mill, which is of bleached hardwood kraft line, at Unit II, at Mondipatti. Now, that’s just about started operation somewhere in the month of — trial production — somewhere in the month of February and we’ve been ramping up production day-on-day, month-on-month. It is still not reached reached its rated capacity. While, yes, there has been a considerable advantage of this. To mention that, if you look at imported BSKP current cost delivered in India would be somewhere around 88 rupees or INR88,000 rupees a ton as against domestic hardwood about INR30,000, INR35000 a ton. So, the differential is close to about INR50,000 rupees a ton. it is very, very substantial. So for people who are already integrated backward fully, it was a major advantage, for people who are just getting on to stream, the advantage is increasing by the day.

Sudarshan Padmanabhan — JM Financial PMS. — Analyst

Sure. And one final question before I move back into the queue, given that we are generating a lot of cash and we just completed this backward integration program, say in the next two to three years, what is it that we would be looking at in terms of adding value of putting the cash into good use?

Mr. Santosh Wakhloo — Executive Director, Marketing

No, see, looking forward, while I was — this is not the right time to comment on it, but we do have future plans to expand and get into related segments but expand, because see, what has happened is with the putting up of this pulp line, we have tried to optimize on the cost structures, wherein, getting backward integration to reduce costs, but the top-line has not increased. So we are looking at options of how to increase our top-line as the first phase of going forward.

The focus right now has been cost. So this investment that was done, was to reduce the cost and also reduced the variations in the cost. There are substantial spikes and downfalls that happen in cost, so that we have tried to reduce by this — by this recent investment. But looking forward, we are having plans to improve our top-line. So, whether that is through increase in operational efficiencies or putting new capacities, we would be working on both sides, both fronts.

Sudarshan Padmanabhan — JM Financial PMS. — Analyst

Sure, sir. Thanks a lot. I’ll jump back.

Mr. Santosh Wakhloo — Executive Director, Marketing

Thank you.

Operator

Thank you. The next question is from the line of Soumen Choudhury from Jet Age Securities Private Limited. Please go ahead.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Good afternoon, everyone. Thanks for the opportunity. And congratulations on significant improved performance in the current quarter. I had a few bookkeeping questions. Firstly, what was the volume of paper and board sales during the quarter and the corresponding realizations for the same?

Mr. Santosh Wakhloo — Executive Director, Marketing

We sold about 142,000 tons of paper and Board combined together. Out of that, it will be about 104,000 tons, 105,000 tons of paper and the balance was board. About, I — no, we sold a total of — sorry, I’m sorry, we sold about 151,000 tons, just a minute, I’ll give the precise figures.

Ms. Sathya Ananth — General Manager, Finance.

As I said, it’s about 142,000 tons of paper and board combined, out of which paper was about 99,000 tons, and the balance was board. In terms of realization, net realization to the company, paper was about INR72,000 a ton average for the quarter and board was about INR77,000 rupees, INR78,000 a ton.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay. And what was the quantum of pulp from the new plant and correspondingly, how has imports declined over the previous quarter?

Mr. Santosh Wakhloo — Executive Director, Marketing

See, I don’t — because of the quantum of pulp that is being used from the new plant, but just for your information, if you look at Q3 of last year, we were consuming close to — I mean, we were having imported pulp content of close to 53%, which dropped to about 41% in Q1 of this year.

Pulp assumption dropping means, effectively that we’ve increase the consumption of our own pulp production and consequent consumption. From a percent, imported pulp, we are down to 41%.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay. What is your current capacity utilization of the new plant, could it be about 60%-70% or less than that?

Mr. Santosh Wakhloo — Executive Director, Marketing

Upwards of 70%.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay. And what was the quantum of coal imports during this quarter and the value for the same?

Mr. Santosh Wakhloo — Executive Director, Marketing

I think if we can take this question offline, we can respond to it.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay, fine. I had a few more questions but I’ll get back in the queue. Thank you, Santosh.

Operator

Thank you. The next question is from the line of Monish Ghodke from HDFC Mutual Fund. Please go ahead.

Monish Ghodke — HDFC Mutual Funds — Analyst

Hello. Sir, what was the date of commissioning for the new pulp mill?

Mr. Santosh Wakhloo — Executive Director, Marketing

While we have capitalized it, but a formal date of commissioning is yet to be announced.

Monish Ghodke — HDFC Mutual Funds — Analyst

Because I can’t like — the depreciation is the same, around INR57 crore, quarter-on-quarter.

Mr. Santosh Wakhloo — Executive Director, Marketing

Yes, capitalize it from think 1st August this year.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay. So the margin, which we had, like 15% EBITDA margin, this can further improve in the Q2, right, because the full impact of the internal pulp will accrue in this quarter, right?

Ms. Sathya Ananth — General Manager, Finance.

Yes.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay. And one more thing, does this lead to change of raw material mix that we will use less bagasse and more wood pulp over time?

Mr. Santosh Wakhloo — Executive Director, Marketing

We might — over time, yes. But in the current context, say, one or two quarters, we will be using less of imported pulp and more of our indigenous pulp. There’ll be a slight impact on the less usage of deinked pulp rather than less usage of bagasse. We have, we have three sources of pulp, just for your information, we deinked pulp, we have bagasse pulp and we have wood pulp.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay.

Mr. Santosh Wakhloo — Executive Director, Marketing

So if you really look at it, we might reduce ours, in case based paper prices remain strong, we might reduce our deinked pulp rather than bagasse pulp.

Monish Ghodke — HDFC Mutual Funds — Analyst

So our new pulp mill would still consume the bagasse pulp, right?

Mr. Santosh Wakhloo — Executive Director, Marketing

No, no, no. New pulp mill is wood-based.

Monish Ghodke — HDFC Mutual Funds — Analyst

Totally? So I am saying — okay, I am asking, let’s say before commissioning of this mill, what was our material mix in percentage terms and after this wood mill, like, we will be reducing, we will be replacing the deinked pulp with this wood pulp, right?

Mr. Santosh Wakhloo — Executive Director, Marketing

First, we will be replacing imports. Step two, we be replacing deinked pulp.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay. So what would be our target import mix like? You said that it has reduced from 63% to 41%. What is our target, our long-term target?

Mr. Santosh Wakhloo — Executive Director, Marketing

This pulp mill is — the new pulp mill is for 200,000 tons.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay.

Mr. Santosh Wakhloo — Executive Director, Marketing

Sorry, 200,000 tons, it is 160,000 tons.

Monish Ghodke — HDFC Mutual Funds — Analyst

Hello?

Ms. Sathya Ananth — General Manager, Finance.

Yes. Can you hear us?

Operator

Krishnan, sir, you are connected now.

Mr. SVR Krishnan — Executive Director, Operations.

Yeah, because I was not at all on the line and I was trying to talk to them.

Operator

Yes, sir. I connected you back because your line has got disconnected. Sir, you can talk now.

Mr. SVR Krishnan — Executive Director, Operations.

Yeah, because there questions about the pulp mill commissioning and tonnage. Okay. Just for the clarity. You are able to hear me now?

Operator

Yes, sir. Please proceed.

Mr. SVR Krishnan — Executive Director, Operations.

Yeah, we have the hardwood pulp mill, which is right now commissioned for 145,000 tons per annum. And going forward, we would be doing almost like 170,000 tons per annum and this will be basically with almost 60% to 70% of Casuarina and balance with eucalyptus.

And somebody was asking about the commissioning of the plant? Yes, the commissioning of the plant is from end of July. And from August onwards, the plant is fully commissioned. And today, the operational efficiency and the capacity utilization in that plant is around 65% to 70%. And we’ll be ramping up slowly.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay. Sir, Monish here. Sir, I have one question. So what would be the change of raw material mix due to this commissioning of the mill?

Mr. SVR Krishnan — Executive Director, Operations.

Now, now only simple equation is, the plant for paper and plant for board cannot be compared, because that time, somebody was putting a question about bagasse. Will we be doing less with bagasse? No. Because the product mix in the Unit I, we have three machines: making, writing and printing, making some specialized low GSM publication paper and also making the office paper, for copier. So all the three segments, they require bagasse pulp of 30% to 40% and also the hardwood mix. And in some grades, like copier, we will have more hardwood fiber, okay? So the bagasse will continue to be supplying the full capacity to all the brands.

Now, coming to the board machine, the bagasse usage is hardly, for few grades, is practically nothing, though the maximum usage is going to be BCTMP, the mechanical fiber and also the hardwood fiber. And earlier, there was a question saying, what would be the import substitute or something? I think Mr. Santosh was answering that question. We used to import almost like 5,000 to 6,000 tons per month, we used to import hardwood pulp. Now that is totally stopped. Now we will be definitely making in that plant, when we ramp up, we will be making almost like 9,000 to 10,000 tons of pulp per month.

So this will be– only the balance will be the mechanical fiber, the BCTMP grey, which will be imported. For that also, there was an earlier question saying that, going forward, what would be the capex and things like that, Mr. Santosh had explained, along with the pulp mill expansion, we would also be thinking if it is prudent to go for one more paper machine or one more board machine, along with that, we are also thinking about the BCTMP mill, pulp mill. So that we capture that value also. Today, we are importing close to almost like 50,000 tons to 60,000 tons of BCTMP greys, stockpile.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay. Sir, is there — so one question related to that import of softwood pulp. Do we have the raw material availability, because I think you require pinewood to make softwood pulp, right?

Mr. SVR Krishnan — Executive Director, Operations.

Straight answer is no.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay.

Mr. SVR Krishnan — Executive Director, Operations.

Even the kind of bamboo what people are talking about, it comes only to 30% or 40% of the fiber length and the strength which is required from a pure pine spruce, softwood species.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay.

Mr. SVR Krishnan — Executive Director, Operations.

Whosoever be the person operating or whatever be the mills operating in the country, will continue to import softwood for their requirement, be it 5% or be it 20%.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay. And sir, one last question, any, any change of stance with respect to this barter arrangement? As you know, like some of the other private players, they are making EBITDA margin of 20,000 per ton. So we are at around 12,000. So is it, what is the reason, why our margins are low? Is it because of the barter arrangement?

Mr. SVR Krishnan — Executive Director, Operations.

So, it is not the barter. You are talking about the bagasse?

Monish Ghodke — HDFC Mutual Funds — Analyst

Yeah.

Mr. SVR Krishnan — Executive Director, Operations.

See, it is not due to the barter arrangement. Barter arrangement is because of the coal price flexibility, or the fluctuations whatever is happening. Now, today, because the coal is an high priced commodity now in the fuel mix, we are thinking about, why don’t we get out of the barter system? Average — practically if you see three years before, the coal prices never went beyond that $75 about $90. And today, the coal price, 6 months before, it went as high as $190 to $200, and now hovering between $90 to $115 depending on the GCV.

So we tend to think that we should come out of the barter system. It is not that easy to come out of the barter system because it’s a kind of mills, three mills that we have put are pilots and we are operating the pilots and giving the scheme to them. And then, definitely we need to do the coal exchange. In some places, we give them the coal and then they burn it and they get the energy, and we get bagasse fuel, which would be equal to coal whatever we give.

And also it is always barter system is working on the fuel efficiency and the calorific value equated upon. Let it be 1:1.5 or let it be 1.5:2, it depends on the coal mix quality and also the efficiency of the boiler and also the energy value what they get and that is equated to the bagasse.

So short-term gains, we cannot think, and very short shortsighted focus, we cannot think it is better we come out of the power purchase agreement or better we come out of barter system or something like that. We ensure that we don’t lose by exchanging coal by looking at, very carefully, the energy transfer.

Monish Ghodke — HDFC Mutual Funds — Analyst

Okay. Okay, sir. Thank you.

Mr. SVR Krishnan — Executive Director, Operations.

Welcome.

Operator

Thank you. The next question is from the line of Nitesh Mehta from Mahindra & Mahindra Financial Services. Please go ahead.

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Good afternoon, sir. And congratulations on a good set of numbers. This is a related question to the previous answer that you are giving. So my question pertains to this power and fuel cost of INR261 crore in this quarter, when we compare the same with other integrated paper mills like JK, which has a higher capacity of 7.5 lakh tons, whose cost was INR167, and West Coast with a capacity of 5.8 lakh tons was INR115.

Mr. Santosh Wakhloo — Executive Director, Marketing

You know, what has happened is the power and fuel cost has been wrongly computed, the way we look at it, because you know you can — we are using bagasse as well as coal. So when we exchange, here, while we are buying coal, technically, we are buying bagasse. Are you understanding what I’m saying?

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Absolutely.

Mr. Santosh Wakhloo — Executive Director, Marketing

Because I buy coal and I give it to somebody in exchange for bagasse. So I think it’s been wrongly added to the power cost, whereas that is the raw material cost. So allocation of cash, the way you look at it, is slightly different.

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Okay, got it. And sir, if you can give some breakup between our own coal consumption vis-a-vis the coal that we have purchased in the barter system for the sugar mill, that will be helpful for us to like understand what was our consumption, if possible?

Mr. SVR Krishnan — Executive Director, Operations.

No, but it is always compared from GCV to GCV, right? We don’t buy a separate trade of coal

For barter system or separate trade of coal for Unit I or Unit II. We have boilers of AFBC, atmospheric fluidized bed and combustion fluidized bed. it all requires a different moisture and different GCV grade coal. But we take the operational efficiency to almost like 82% to 81% in the boiler and then we go for the most suitable coal. It is not that one size doesn’t fit all, but generally, the particular grade of coal what we select it will be 4,200 Gar or 5,000 Gar, that is suitable for AFBC, CFBC and also the offset AFBC boiler. [Multiple speakers]

Mr. Santosh Wakhloo — Executive Director, Marketing

We will give you a rough split it was. Yes, we’ll give you a rough split.

Ms. Sathya Ananth — General Manager, Finance.

Yeah, so, if you’re looking at the consumption and then the barter consumption, if you say total quantity consumed is around INR155,000 tons, out of which for barter we have used 44,000 tons, which is roughly 28%, balance is for our fuel, if that is what is —

Mr. Santosh Wakhloo — Executive Director, Marketing

If that is what the question was.

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Yes, absolutely. And one last question, sir. Have we now, again started getting linkage coal? In between we were hearing that hardly any one was getting linkage coal from Neyveli or otherwise?

Mr. Santosh Wakhloo — Executive Director, Marketing

That’s the Government of India policy, where all coal was diverted straight to the power plants across the country.

So even people who have large linkages are not getting full quantity, we have full attempts to ensure that we get it while the quantity is still a trickle, but we are continuing with our attempts to get linkage coal.

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Excellent. This was my question.

Mr. SVR Krishnan — Executive Director, Operations.

And another thing is, the lignite coal of that moisture.

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Okay.

Mr. SVR Krishnan — Executive Director, Operations.

That lignite coal of that moisture of 50% to 60% cannot be used in a normal AFBC and CFBC as a whole fuel, as a single fuel. It can always be as a mix along with the;pw moisture coal of 25% to 30%.

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Okay, sir.

Mr. SVR Krishnan — Executive Director, Operations.

Lignite, per se, if you see, that the coal, it will be almost dripping with moisture when it comes out of the coal mine.

Nitesh Mehta — Mahindra & Mahindra Financial Services. — Analyst

Correct. Okay, thank you so much, sir. Thank you. That would be really helpful. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Abhishek Maheshwari from SkyRidge Wealth Management. Please go ahead.

Abhishek Maheshwari — SkyRidge Wealth Management. — Analyst

Yeah, hi, thank you for the opportunity and many congratulations on a good set of numbers. So my first question is regarding your margins. You were able to do around 15% EBITDA margin this quarter. So I think I was expecting that the benefit of the low coal prices will come in from Q1 itself, am I right or we seeing the benefits coming in from Q2? Because we were hoping that the margins would be around 20%.

Mr. SVR Krishnan — Executive Director, Operations.

No, it’ll come from Q2.

Mr. Santosh Wakhloo — Executive Director, Marketing

The margins will definitely improve in the next — in the coming quarter.

Ms. Sathya Ananth — General Manager, Finance.

Okay. So, because we’ll have the benefit of the pulp mill and lower coal prices, right?

Mr. Santosh Wakhloo — Executive Director, Marketing

It’s a mix of various factors, The ramping up production at our pulp mill, improved cost efficiencies, improved production efficiencies, improved market realization, so overall, we do expect a better quarter.

Abhishek Maheshwari — SkyRidge Wealth Management. — Analyst

Okay. And secondly, sir. So different grades of coal, as you mentioned, different grades of coal have different prices. Now we are seeing internationally, coal prices are moving up again, and strongly and sharply, so the grade that you use, I mean are you seeing a major movement in that also or is your grade stable?

Mr. SVR Krishnan — Executive Director, Operations.

We have been carefully selected the grade. I do not want to be much of the color of the balance and the internal study what we have done, we did lot of R&D work in this, we have selected a coal grade in such a way that we have a very minimum impact even if the coal price was more. We have altogether came for a different fuel mix now in both the factories.

Mr. Santosh Wakhloo — Executive Director, Marketing

I’ll address it within context, is that normally coal is calorific — is per calorific value, the rate is calculated. So one grade going up will automatically ensure that other grades also creep up to that, because it is a cost per calorific value. So in that sense, impact on everybody would be the same, except for those people who have large linkage coal, there the impact is not that substantial.

Abhishek Maheshwari — SkyRidge Wealth Management. — Analyst

Okay. So, but you are still expecting to maintain your margins, price hikes have been taken to accommodate the –?

Mr. Santosh Wakhloo — Executive Director, Marketing

We are very confident of improving on our margins.

Mr. SVR Krishnan — Executive Director, Operations.

Sir, one thing, you are only talking about the market realization and the coal, and the bagasse price. Now, you are also — the other side you are ignoring the internal efficiency factors. To touch about some of the internal efficiency factors of both the units. Typically, the losses, the finishing loss what people call in the paper industry, that have gone down by almost 3% to 4% from 3 years before what it was. The second one is the downtime on the machines or the uptime of the machines, I would put it this way. Uptime has gone up almost 3% to 4% on each machine. And the third is the manufacturing controls, the budget adherence or the consumption pattern. The way we use our DCS control system and QCS control system, leveraging on the IT side, those operational efficiencies have gone up. The consumption norms are being brought under a very strict focus and control. The losses have come down by 3% to 4%, that is why the team — as a team, we are very confident that we’ll contain the manufacturing cost and we’ll protect the margins.

Abhishek Maheshwari — SkyRidge Wealth Management. — Analyst

Okay, thank you very much, sir, for the broad answer. And just one last thing. Q4, we had around INR1400 crores worth of revenue. Now, CFO Ma’am said that this was due to liquidation of excess stocks. So going forward, can we expect INR1100 crores as around steady state revenues?

Mr. Santosh Wakhloo — Executive Director, Marketing

Definitely yes.

Abhishek Maheshwari — SkyRidge Wealth Management. — Analyst

Sorry?

Mr. Santosh Wakhloo — Executive Director, Marketing

Definitely yes.

Abhishek Maheshwari — SkyRidge Wealth Management. — Analyst

Okay, okay. thank you, sir. Thank you very much.

Mr. SVR Krishnan — Executive Director, Operations.

If fact, we’re looking better.

Abhishek Maheshwari — SkyRidge Wealth Management. — Analyst

Okay. Thank you.

Operator

Thank you. Before we move ahead, I would request Mr. Krishnan to talk little bit closer to handset please. Sir, your audio is not that audible.

Mr. SVR Krishnan — Executive Director, Operations.

Is it okay now?

Operator

Yes, sir. Please speak the way you’re speaking right now. The next question is from the line of Bajrang Bafna from Sunidhi Securities and Finance Limited. Please go ahead.

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

Congratulations for the good set of numbers to the TNPL team. Sir, my first question pertains to the sort of coal that you are going to get in this quarter that what percentage we are expecting to get from linkage and what percentage we are still will be dependent on imports, maybe from next one or two quarters’ perspective? If you could highlight, that would be really helpful.

Mr. SVR Krishnan — Executive Director, Operations.

The lignite and the local coal proportion will be around, maximum 30% to 35%. One is the usage pattern. The other one is the availability from the sources of the lignite, the Neyveli. We have lignite neighborly the Ignite anand the local source from Singareni Collieries. And as Mr. Santosh was telling you, that the more focus is given these two types for only the thermal power plants, not for other manufacturing plants. So given that scenario, now, what I am expecting that we can do up to maximum 28% to 30% on the local and lignite coals, and the balance 65% to 70% will stay with imported coal.

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

Okay, got it. And my second question pertains to, since this sugar season is ending, I know the crushing is about to end, how we are covered for the availability of bagasse for next one or two quarters?

Mr. SVR Krishnan — Executive Director, Operations.

We are very well covered at least for eight to nine months, and there is, there is definitely — there will be, when the season is ending, there appears to be a shortfall of two to three months of makeup because of the coal crisis, well, let’s be very clear, the entire country was going through the crisis. We have in fact, reduced the offtake of bagasse due to the non-availability of coal. When the main plant is starving for coal, I cannot give for barter system. Somebody was rightly mentioning, I can’t give it for getting bagasse. So we have rationed the delivery of coal to the off-sites, the sugar mills. So we have cut down on the bagasse procurement by barter system.

So there is a shortfall of almost two to three months, but there are staggered way of some other sugar mills in the border and then you are close by Andhra and Karnataka sugar mills also, and that is non-tied up sugar mills. It’s like a open market sugar bagasse, there we need to procure some 40,000 tons, 50,000 tons and we are quite confident and we have covered for the whole year, absolutely there’ll not be any shortage of bagasse pulp in the mill. Because the whole efficiency and the economy of TNPL lies with bagasse pulp.

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

And just one question to Santosh, sir. If you could give us some sense on the Board side because we have recently seen the plastic has been banned in our country across different categories and definitely, there is some demand which will percolate to the packaging side, which will be made through paper boards, so how are we seeing this change. I know it is nascent, just two months has happened, but some sense that you are envisaging on this aspect and what sort of price movement that has happened on both writing printing and board side? You mentioned 70 and 78 for the last quarter, where they are right now? That’s my last question. Thank you.

Mr. Santosh Wakhloo — Executive Director, Marketing

See, talking about the shift due to banning of plastic or the focus towards getting out of plastic, yes, there has been a lot of talk from the government and a lot of pressure being applied on converters and uses of plastic for single time usage. That has also led to you know, no government can implemented a policy all of a sudden, there is a shock and it takes some time to get absorbed, but yes, we find a lot of positive traction in cupstock, if you really see. Also certain segments where one-time use is there, like cartons and all, and instead of packing in plastic tubs all, it’s being packed in virgin fiber boards. So there are two advantages of this, one is, the industry will grow by leaps and bounds in the virgin fiber segment and cupstock growth, we’re anticipating upwards of 18% to 20%. That is very, very positive for the industry. Positive for the environment and positive for the country, per se.

Coming to your second question of realization, I would say that the market has been able to absorb price increases in both, paper and packaging boards. That is fundamentally because of a mix of two reasons, one is, as I said, converted or printed exports have also gone up from the country and compared to international paper prices, I would say domestic paper prices are reasonable. I don’t say they are very cheap, but they’re fairly reasonable, in the sense that somebody can buy Indian paper, convert, make it into a book or make a carton and export, and you can still make money. Same is for paper cups. That’s why demand has remained firm, and we’re expecting prices to remain firm and slightly improve

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Shivan Sarvaiya from JHP Securities Private Limited. Please go ahead.

Shivan Sarvaiya — JHP Securities Pvt. Ltd. – India — Analyst

Good afternoon, sir. Am I audible?

Mr. Santosh Wakhloo — Executive Director, Marketing

Yeah, very much.

Shivan Sarvaiya — JHP Securities Pvt. Ltd. – India — Analyst

Yes, sir. Sir, my question was on the power and fuel cost again. You spoke that coal — prices of coal increasing are one of the main reasons for the high cost incidents but sir, are there any other aspects that need improvement which could result in a lower power and fuel cost or are there any other internal efficiencies that we are working on?

Mr. Santosh Wakhloo — Executive Director, Marketing

There is always a possibility for improvement. Now —

Mr. SVR Krishnan — Executive Director, Operations.

Now — now the point what you have asked is, yes, the power cost has gone up by almost more than 100%, 150%. Now, the fuel, or the alternate fuels are only the [Indecipherable] or the shrubs or the paddy husk, or the oil brawn or things like that, because every boiler is not designed for that. Now the point is, how do we then reduce the fuel cost? Now TNPL has a significant advantage, like other guys, they have their coal mines nearby, they’re more dependent on the local coal, We also have the possibility and the facility of hiring our own pith, which is coming from the bagasse. So today, today, if you talk about almost like 15% to 20% of my consumption through the pith itself, which is coming from the bagasse as a unwanted material, okay That is also getting dried and then fried in the bagasse.

We also started almost like paddy husk. We started taking it in some of the boilers; and earlier, typically, 15% of the Indian fuel are lignite and I think we moved it up to 30%, depending on the availability. These are all the measures that internally, with respect to the fuel mix, you can do. The balance is, as you rightly said, the last part of your question is on the internal efficiency. You call it something like your carpet loss, to ask call it something like your carpet loss, you call it something like your handling glass, you call it something like your boiler efficiency.

Today, typically, good boilers are operating at the efficiency rate of 82% to 83%, or something like that. Today out of our 7 boilers which are running, five, six boilers are running at 82% to 83% efficiency, only the 30-year-old boiler, which is running at 77% or 78% efficiency and those boilers are discouraged to run. Only we are running with a high efficiency boilers, which are in operations and also steam [Indecipherable] and the steam consumption consumption and the power consumption, there are at many places we have done a staggered running of the plants. There are many places we have put DFTs in the plant. There are many places, we have put the time based control of the accelerator and the pumps and things like that. So a lot of energy control measures are — energy conservatory measures have taken in the plant. These things will reduce the power consumption and the fuel consumption per se. So there are a lot of internal measures taken and we also see the mix is also made suitably well, reducing the imported coal consumption dependents.

Shivan Sarvaiya — JHP Securities Pvt. Ltd. – India — Analyst

Okay. So, sir, if you could help us kind of quantify the benefits that we could accrue by these power saving initiatives that are being done, any ballpark figure that you could give us?

Mr. SVR Krishnan — Executive Director, Operations.

Almost 3% to 5% we have saved on power, which is also my PAT efficiency, which is Perform, Achieve and Trade. There is an incentive on these certificates, on which you have to perform there, and it is a PAT certificate, that is Perform, Achieve and Trade. And there is a target for every year that you need to do some

5% to 7% or 3% to 5% of energy savings. In TNPL, we’ve achieved almost like 4% to 5% of energy savings year-on-year.

Shivan Sarvaiya — JHP Securities Pvt. Ltd. – India — Analyst

Okay, so you you target another 4% to 5% this year, or anything more than that?

Mr. SVR Krishnan — Executive Director, Operations.

Hopefully, mostly 3% to 5%,

Shivan Sarvaiya — JHP Securities Pvt. Ltd. – India — Analyst

Okay. Okay, sir, thank you. That’s it from me.

Operator

Thank you. The next question is from the line of Danesh Mistry from Invest First Advisors. Please go ahead.

Danesh Mistry — Invest First Advisors — Analyst

Hello, hi, sir, and thank you for answering all the questions. Most of my questions are answered. I had just one basic question, what would be our debt, total debt as of the end of the quarter? That’s it. Thank you.

Ms. Sathya Ananth — General Manager, Finance.

Total debt? Okay. I’ll be answering that.

Danesh Mistry — Invest First Advisors — Analyst

Borrowing.

Ms. Sathya Ananth — General Manager, Finance.

Yeah. As of Q1, as of Q1, we have a total debt of INR2,170 crore. So we are not availing any further loan we have a repayment of another year. From Q4, actually, we have come down from triple two, like INR2,222 to INR2,170 crore, and this quarter, the total repayment is INR236 crore, out of which INR42 crore is already done in Q1, balance left out is INR196 crore, So if you remove that INR196 crore, I think we will be ending the year at INR2000 crore and not more.

Danesh Mistry — Invest First Advisors — Analyst

INR2000 crore? And any cash on the books Madam, which is there?

Ms. Sathya Ananth — General Manager, Finance.

Cash is very — actually, it’s not much, It’s around INR10 crore and INR11 crore.

Danesh Mistry — Invest First Advisors — Analyst

Okay, got it, madam. And just one related question. This year, are we plan to do any capex because we will get substantial cash accruals as well?

Ms. Sathya Ananth — General Manager, Finance.

There will be only a sustenance capital, actually, this year. Probably INR15 crore or so.

Danesh Mistry — Invest First Advisors — Analyst

All right, thank you, madam. Thank you so much. Thank you.

Operator

Thank you. The next question is from the line of Vaibhav Badjatya from Honesty and Integrity Investments. Please go ahead.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Yeah, thanks. Thanks a lot for providing the opportunity. I just have two questions. One is that, you earlier said that the imported pulp cost is around INR88,000 per ton currently and the in-house pulp cost us around INR33,000, INR35,000; so, before COVID, all these prices rise happened, before COVID, say in FY 2019 or early part of 2020, what was the difference between the two?

Mr. SVR Krishnan — Executive Director, Operations.

At that time, the prices of imported pulp were only at around INR60,000, INR64,000; and to that extent, it was not down INR35,000 — it was not INR20,000 or INR25,000, it was at INR31,000, INR32,000.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Okay, okay.

Mr. SVR Krishnan — Executive Director, Operations.

The cost has increased only by INR4,000 and what the imported pulp prices have moved up is almost from INR63,000 to almost like INR88,000, INR90,000.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Okay, got it, got it.

Mr. SVR Krishnan — Executive Director, Operations.

It’s not, it’s not almost maintaining the same gap.

Mr. Santosh Wakhloo — Executive Director, Marketing

The dollar is going to about $980, with a dollar exchange ratio of INR74 to INR80.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Right, right. Correct. Okay, got it. Understood. Secondly, if you can help us understand in terms of our input to output ratio, if you use the pulp bagasse, bagasse is a pulp and wood pulp. What would be the input-output ratio in all the three situations?

Just to understand, which one is the cheapest.

Mr. SVR Krishnan — Executive Director, Operations.

If you really see the plant capacities, it is not the input-output ratio, is we really see the plant capacity of 330 tons of hardwood plant and the 500 tons of bagasse plant, and 300 tons of this plant, it is designed for the requirements of 1,150 tons or 1,180 tons of everyday the pulp requirement, assuming some X percentage on each machine.

Ms. Sathya Ananth — General Manager, Finance.

To cut it short, I think 50% is bagasse and then 30% is our wood pulp.

Mr. SVR Krishnan — Executive Director, Operations.

The product mix keeps varying, it all depends on which grade what we make, you can roughly take it around 40% to 50% of bagasse will be there. And I don’t want to elaborate on the the individual product mix, how much is deinked and bagasse percentage.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

My question is different.

Ms. Sathya Ananth — General Manager, Finance.

Hello.

Mr. SVR Krishnan — Executive Director, Operations.

The question probably, what he wanted to know was the input-output with the yield percentage, right?

Mr. Santosh Wakhloo — Executive Director, Marketing

I think that was the question.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Yes.

Mr. SVR Krishnan — Executive Director, Operations.

If it is a yield is the yield percentage, typically and traditionally, the hardwood pulp will always have the yield of almost like 47% to 48%.

Mr. Santosh Wakhloo — Executive Director, Marketing

That kind of wood will give you 470kgs to 480kgs of pulp.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Right.

Mr. SVR Krishnan — Executive Director, Operations.

Absolutely.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Right. And what about bagasse and deinked?

Mr. SVR Krishnan — Executive Director, Operations.

And for the deinked pulp, it will be around 75% to 76%. It depends on the number of loops you have in the deinked pulp. Some people have two loop system, some people three loop system. We have three loop system, which gives the best brightness, when you process it more and more, there will be losses in terms of the ash and other contraries and things like that. So that yield will be around 76%.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

And what about bagasse?.

Mr. SVR Krishnan — Executive Director, Operations.

Bagasse will be around 55% plus.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Okay, bagasse is 55%. Okay, that’s it from my side. Thank you.

Mr. SVR Krishnan — Executive Director, Operations.

Yeah.

Operator

Thank you. The next question is from the line of Venkatesh Subramanian from Logic Tree. Please go ahead.

Venkatesh Subramanian — Logic Tree — Analyst

Good afternoon, sir. Thank you for the opportunity. Sir, I have two questions I not — first 10 minutes I missed, so I’m not sure whether it was answered. I’m actually looking for a slightly a big picture kind of view on what T NPL would look like in the next three years, because when I used to track it from 2011 to 2017, It was like a excellent period, top line went up, we almost clocked to INR270 crores of profits during that year, the operating margins were ranging between 21% to 26%, so can you tell us whether the conditions now are suitable for us to kind of have a repeat of that over the next few years, in terms of margins, in terms of topline, et cetera?

Mr. SVR Krishnan — Executive Director, Operations.

From the technical front of it and from the plant perspective, what you would be seeing, there will not be — or what we see, there will not be any doubt of achieving something similar performance of the figures, what you talked about in the next two to three years of time. Because in the next two, three years of time the production topline growth also will be for additional 1.8ton to 2lakh ton per annum. At that time, we will be having the top line production growth of almost like 8 lakh tons per annum. Today, we are at 6lakh or 6.5lakh. And we will be touching almost like 8 lakh tons to 8.5 lakh tons.

Ms. Sathya Ananth — General Manager, Finance.

To sum up, I think, yeah, I would like to sum it up. See, we are going to have additional production capacity and if the input costs were to normalize around the same, same levels, then I think with our improved demand, definitely, I think we will be able to reach the pre-COVID levels. I can say it was pre-COVID levels because in ’19, ’20, I think we had a good result. So going forward, yes.

Venkatesh Subramanian — Logic Tree — Analyst

Ma’am, particularly on operating margins, internally, would you have a target upwards of 20% going forward?

Ms. Sathya Ananth — General Manager, Finance.

Yes, 18% to 20% is what we are aiming at. We are working towards that.

Venkatesh Subramanian — Logic Tree — Analyst

Operating margins? And do you feel that the interest cost, since interest cost is going to be– your debt repayment for the next 3 years, can you give us an idea?

Ms. Sathya Ananth — General Manager, Finance.

Yeah, debt repayment actually, see, for the current year, I don’t know, whether — you probably missed out, it is INR236 crore. And the next two years, it is INR215 crore and INR364 crore.

Venkatesh Subramanian — Logic Tree — Analyst

INR215 crore, and INR300 crore?

Ms. Sathya Ananth — General Manager, Finance.

INR200 crore and INR364 crore, INR216 crore[phonetic] and INR364 for the next 2 years.

Venkatesh Subramanian — Logic Tree — Analyst

Okay. FY’23 you’re targeting INR236 crores?

Ms. Sathya Ananth — General Manager, Finance.

Yeah, that is the repayment schedule. That is what we need to repay.

Venkatesh Subramanian — Logic Tree — Analyst

Right, okay. Ma’am, and the last question from my side, the big picture is, say if I, over the next two, three years, is it considering everything goes well, in terms of our capacity, operating demand, is it farfetched to think about a topline of INR6,000 crore?

Mr. Santosh Wakhloo — Executive Director, Marketing

I would say, we have also, we are in the process of taking some more small steps to increase the production volumes at our end. We are currently as Mr. Krishnan said, we’re currently at about 6 lakh tons, we are expected to go to 6.8 lakh to 7 lakh tons in the next three years. That, combined with increased realizations should definitely give us a top line, as you think so. Somewhere around INR6000 crore.

Venkatesh Subramanian — Logic Tree — Analyst

Okay. I wish you the very best, sir. Thank you so much.

Operator

Thank you. There is a follow-up question from the line of Bajrang Bafna from Sunidhi Securities, please go ahead, Sir.

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

Sir, just one question. Of late, we are hearing the wood prices are also moving northwards because of the sizable movement that has happened in rice husk and wheat husk prices, so most of the mills which are based out of Northern side are also coming to the market to source the wood from open market. So is this applicable to us, that are we also experiencing the wood price increase for our requirement? If you could clarify, it will be helpful.

Mr. SVR Krishnan — Executive Director, Operations.

We are, we are foreseeing similar situation, we have not started facing it till now, for two reasons; one is, we have a very solid farm forestry and social forestry model, where we are looking at our relationship with the farmers with a very long-term. When I say a very long-term, we don’t squeeze the farmers when there is a downward trend in the market, people have squeezed them to INR2,500, INR3,000-a-ton and when the market is going up, it’s going up to even INR7,000-per-ton, that type of scenario does not happen with TNPL. TNPL being a Government of Tamil Nadu Enterprise, we very transparent. We have almost like 25,000 farmers lined up with us. So have a long-term strategy for helping them technologically and then, financially, and then having a very clear buyback arrangement of all their woods, which is all their wood from their forest and it is coming to the factory. So the price stability with which we operate is much, much better than what even the nearest competition is doing now,

Point number two, our 30% to 40% of the requirement as of today, it comes from a well-protected government forestry land, Tamil Nadu Forest Corporation.

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

Where the prices are fixed?

Mr. SVR Krishnan — Executive Director, Operations.

Where the prices are fixed and we’re able to seal it for the last 3 to 4 years, because it’s a question how the government forms, you know, the — the top bureaucrats are almost — they understand the situation, then we have the same piece of the wood coming from top front, the same for the last 3, 4 years. So the stability from that point of view also is protected.

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

Okay, sir.

Mr. SVR Krishnan — Executive Director, Operations.

Going forward, because it’s a new pulp mill in Unit II, we are also aggressively doing almost 22,000 to 25,000 acres plantation every year for the next five years. We have roped in another 10,000 plus farmers to our farm forestry model.

Mr. Santosh Wakhloo — Executive Director, Marketing

See, I’ll tell you what our effort is. We don’t want to reduce the profitability of the farmer by providing in good stock and good technology, we are trying to ensure that out of the same acre of land, he makes more money even by selling the wood at a slightly higher cost, but we are ensuring the profitability of the farmers improve, so that we also will continue to get wood at good prices. His yield, the farmer’s yield, we have made all efforts to ensure that their yields per acre go — are up and up.

Mr. SVR Krishnan — Executive Director, Operations.

The gentleman who has asked this question, this is what the answer is that, we don’t exploit the farmers, so we have a continuous supply of wood, at the same time, you don’t over pay them, we ensure that their interest is protected. So that they continue to do the farming for TNPL.

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

So it will not impact us basically, the rise that we are experiencing in wood prices.

Mr. SVR Krishnan — Executive Director, Operations.

[Multiple speakers.]

Bajrang Bafna — Sunidhi Securities & Finance Ltd — Analyst

Got it. Thank you, sir.

Operator

Yeah. Thank you. There is a follow-up question from the line of Soumen Chaudhary from Jet Age Securities. Please go ahead.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Thank you for the opportunity.

Operator

Ladies and gentlemen, we have lost the line of Mr. Soumen, We move onto the next question, which is from the line of Sharan Sharikar, an individual investment. Please go ahead.

Sharan Sharikar — Individual Investor — Analyst

Sir, just one question, I just wanted to understand more supply — the supply side situation in the printing and writing, and the packaging board, like what are the new capacity additions that are coming up from your competitors or something like that?

Mr. Santosh Wakhloo — Executive Director, Marketing

So, as far as the A-grade players are concerned, there have been no announcements of fresh capacity additions or expansions. Yes, everybody is actively looking at where to do and what to do, but there have been no formal announcements.

Sharan Sharikar — Individual Investor — Analyst

Okay. But what would be the time required for this — any new capacity addition, what will be the formal time to come into –?

Mr. Santosh Wakhloo — Executive Director, Marketing

[Indecipherable] from the date of actual start of procurement.

Mr. SVR Krishnan — Executive Director, Operations.

It’ll be 24 months, you can take it, from the project stage to the commercial production.

Sharan Sharikar — Individual Investor — Analyst

Okay. Okay. Sir, and what would be your peak revenue at full capacity utilization?

Mr. Santosh Wakhloo — Executive Director, Marketing

Our?

Sharan Sharikar — Individual Investor — Analyst

What would be the peak revenue at full capacity utilization?

Mr. SVR Krishnan — Executive Director, Operations.

[Indecipherable]

Mr. Santosh Wakhloo — Executive Director, Marketing

No, no, no, no, no. The question is that, what would be our peak revenue at full capacity utilization, is that the question?

Ms. Sathya Ananth — General Manager, Finance.

Yes. Yes. Yes.

Mr. Santosh Wakhloo — Executive Director, Marketing

See, as I said, our current capacity is 6 lakh tons.

Sharan Sharikar — Individual Investor — Analyst

Okay.

Mr. Santosh Wakhloo — Executive Director, Marketing

On that you are seeing what the revenue, we are getting. So we sell about, what, I mean lakh and a half tons every quarter, on which the revenues you’ve seen, roughly INR1200 crores, but going forward, as I said, our capacity is going to get debottlenecked and increased, that along with [Indecipherable] realizations should give us a top line of somewhere around INR6,000 crores going forward next 3 years.

Sharan Sharikar — Individual Investor — Analyst

Okay. And this pulp backward integration should also add to our EBITDA margin, so in Q1, what we saw is 15%. So how much more are we going to end with this year?

Mr. Santosh Wakhloo — Executive Director, Marketing

It will be, it will be definitely better than what we have done this first quarter. But we will have to prove it to you guys for the next quarter also.

Sharan Sharikar — Individual Investor — Analyst

Okay. Okay. Thank you, sir. Thanks a lot.

Mr. SVR Krishnan — Executive Director, Operations.

It’ll be better than this current quarter. Okay, okay. Thank you, sir.

Operator

Thank you. The next question is from the line of Soumen Choudhury from Jet Age Securities. Please go ahead.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Thank you for the opportunity. I got disconnected last time. We have heard that the paper companies have taken some price increase at the beginning of August. So can you confirm the same and the quantum of price increase taken by TNPL?

Mr. Santosh Wakhloo — Executive Director, Marketing

We have definitely increased in the beginning of this month. The quantum of increase would be somewhere around, I would say 5%.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay. This is both for paper and board, or only for paper?

Mr. Santosh Wakhloo — Executive Director, Marketing

Now, this is basically for papers; overall, aggregated for the company, board is less. But overall, aggregated for the company should be about 3%, 3.5%/

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay. And this is the only price increase taken in this quarter?

Mr. Santosh Wakhloo — Executive Director, Marketing

No, we had a price increase in July also.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay. Okay. And what was the quantum of that?

Mr. Santosh Wakhloo — Executive Director, Marketing

That was slightly less, might have been about 2.5% — 2%, 2.5%.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay, okay. So for the quarter, we are already up about 5% or so over Q1?

Mr. Santosh Wakhloo — Executive Director, Marketing

We are trying to maximize.

Soumen Choudhury — Jet Age Securities Private Limited. — Analyst

Okay, okay. Okay, sir. That’s it from my side. Thank you so much.

Operator

Thank you. Ladies and gentlemen, that was the last question that the management could take today. I would now like to hand the conference over to Mr. Rabindranath Nayak for closing comments.

Rabindra, sir, kindly unmute yourself and speak please.

Rabindranath Nayak — Sunidhi Securities and Finance — Analyst

Hello, hello. Yeah. So I thank the management of TNPL for the call. And all the participants for the valuable questions.

Sir. Do you want to give any closing comments?

Mr. Santosh Wakhloo — Executive Director, Marketing

I’ll definitely like to close this on a very, very optimistic note. I’d say with the —

Rabindranath Nayak — Sunidhi Securities and Finance — Analyst

Hello. Hello?

Operator

Sir, the line of the management is disconnected. I’ll connect them back, give me a moment, sir.

Rabindranath Nayak — Sunidhi Securities and Finance — Analyst

Hello?

Operator

The line of the management has been connected back. Sir, please give your closing comments.

Mr. Santosh Wakhloo — Executive Director, Marketing

Am I audible?

Operator

Yes, sir. Please proceed.

Mr. Santosh Wakhloo — Executive Director, Marketing

What I was saying was that we’ve got tremendous confidence reposed by all the shareholders and we have also delivered decent results in the first quarter. So much of teamwork happening from our end and the market is also supporting us. I’m sure we will be able to give you much better results for the next following quarters. And I think as shareholders, shareholders should be happy with our performance, going forward also.

Operator

Thank you.

Mr. SVR Krishnan — Executive Director, Operations.

And from my side, I would like to thank all of you and all the shareholders and all the financial experts and people who arranged this. And I’m really happy that many of the investors are more worried than us on the coal and fuel prices. It’s really fantastic to know about it.

And the second thing is, we, as a mill and as a company, we are doing lot of manufacturing excellence program, okay? This I would like to tell, you know, it is encapsulating the CPM model and 6 Sigma model, and the lean manufacturing model. So all the things are encapsulating — we’ve made it like a tailor-made capsule like, manufacturing excellence, and those initiatives are implemented in all the factories and we are seeing the results. Nicely, the results are following. And with all the input price coming down slightly in some cases, some cases going up and operational efficiency scaling up greater heights, and a very good team work all around and a very good committed team work with lot of traction. I think better days ahead and we are hopeful of that. Thank you so much for the opportunity.

Operator

Thank you. On behalf of Sunidhi Securities and Finance Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines