Kuantum Papers Ltd (KUANTUM) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Good afternoon, ladies and gentlemen. Welcome to Quantum Papers Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after management's opening remarks. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agrawal, Head, Institutional Equities, from SKP Securities Limited. Thank you, and over to you, sir.
Navin Agrawal (SKP Securities Limited): 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. Pavan Khaitan, Vice Chairman and Managing Director; Mr. Jagdeep Hira, Whole-Time Director and CEO, Operations; Mr. Vikram Kumar Khaitan, Chief Financial Officer; and Ms. Prachi Sharma, Chief Strategy Officer. We'll have the opening remarks from the management, followed by a Q&A session. Thank you, and over to you, Pavan ji.
Pavan Khaitan (Kuantum Papers Ltd): Thank you, Navin. Good afternoon, everyone. It's a pleasure to welcome you all to our earnings conference call for the second quarter and first half of the financial year 2027. I would like to thank all participants for joining us today. This quarter is traditionally the lean season for the paper industry, which was further impacted by a surge in cost of inputs. While domestic wood prices have softened due to improved availability, higher costs of agricultural materials and fuel costs, along with the impact of the West Asia War on chemical costs, continued to exert pressure on margins, reinforcing the importance of operational efficiency and cost optimization by the industry. Moving to Quantum's operational highlights, we achieved a key milestone in our ongoing modernization program with the successful commissioning of PM3 on 28th August 2026, completing the rebuild in a record 59 days against the planned shutdown period of 65 days. The upgraded machine incorporates advanced technologies, including a film press, i-table,
Pavan Khaitan (Kuantum Papers Ltd): Vision web break monitoring a state-of-the-art calender ring system and an automatic starch cooking module. These enhancements are aimed at improving production efficiency, strengthening process control and delivering superior paper quality, further reinforcing our manufacturing capabilities and product competitiveness. We are proud to share that with this commissioning, all four paper machines have now been successfully upgraded and modernized in line with our mill upgradation plan. The plant also made meaningful progress in the fine tuning and optimization of the double displacement digester system for wood pulping. The system has improved wood pulp yield by 1%, while we have seen a reduction in steam consumption from 1.8 metric tons to 0.8 metric tons per ton of pulp. These improvements have enhanced raw material utilization and reduced energy consumption, strengthening our cost efficiency and overall manufacturing performance. At the plant level, we achieved our highest ever monthly copier paper production of 4,482 metric tons in August of August of 2026, reflecting our ability to cater to market demand for high quality A4 paper. During the quarter, we also undertook a major overhaul of our 20 MW turbine generator and 130 ton per hour boiler with the objective of enhancing equipment efficiency, reducing energy consumption and ensuring reliable sustainable plant operations. Additionally, under our total cost management initiative, we implemented a single vendor chemical solution across both agro pulp mill and hardwood pulp mill delivering cost savings and further strengthening our focus on operational efficiency and cost optimization. On the product development front, our research and development team completed the development protocol for PFAS free 40 GSM oil and grease resistant paper for food wrapping purposes and this paper has been commercially launched in the market in Q3. This strengthens our specialty paper product portfolio and supports our focus on developing value added products for the evolving customer requirements. Sustainability continues to be integral part of our long term strategy. During the quarter we achieved our highest ever clonal saplings production of 17.93 lakh saplings. We also added about 2,300 acres under our social farm forestry program during this quarter taking our total plantation coverage to over 22,000 acres. These initiatives reinforce our commitment to developing sustainable sources of raw materials and responsible resource management. Going forward our focus remains on maximizing the benefits of our upgraded manufacturing infrastructure, driving cost efficiencies, and expanding our value added specialty paper portfolio to support sustainable profitable growth. With that, I would now like our CFO, Vikram Khaitan, to take you through the financial performance for the period under review. Over to you.
Vikram Kumar Khaitan (Kuantum Papers Ltd): Thank you, sir, and good afternoon, everyone. Let me now take you through the financial performance for the second quarter of financial year 2027. For the second quarter of financial year 2027, operational income stood at INR279 crores declining 8% quarter-on-quarter. This was primarily due to planned shutdown of one of our paper machine lines for upgradation and modernization, which impacted both production and sales volume. EBITDA stood at INR35 crores with EBITDA margins moderating by 84 basis points to 12.4%. This was primarily due to lower net selling realization during the seasonally lean demand period, coupled with higher raw material and fuel costs amid the ongoing West Asia conflict. Profit after tax for the quarter stood at INR2 crore with PAT margins at 0.8%. Now coming to the performance for the first half of financial year 2027, operational income grew by 16% year-on-year to INR583 crores. EBITDA stood at INR75 crores, broadly in line with the previous year. However, higher depreciation and finance costs
Vikram Kumar Khaitan (Kuantum Papers Ltd): impacted profitability with profit after tax for the period stood at INR9 crores with PAT margin set 1.5%. Going forward, our focus remains on improving operational efficiencies, optimizing costs and strengthening profitability through operational improvements. With this, we can now begin the question-and-answer session. Thank you.
Moderator: Thank you very much. We will now begin the question-and-answer session. Each participant is requested to limit himself or herself to a maximum of two questions. Time permitting, we shall revert for any further questions that you may have, that remain unanswered. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: The first question is from the line of Sania Jain from Care PMS, please go ahead.
Sania Jain (Care PMS): Hi, thank you for the opportunity. First one question on the side of costs. Could you quantify the amount by which the cost has increased specifically because of the West Asia war?
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