Kuantum Papers Limited , a leading player in the writing and printing paper industry, has announced significant changes in its credit rating arrangements and operational strategies. The company has withdrawn its credit ratings from CARE Ratings Limited and switched to India Ratings and Research, marking a shift in its financial assessment approach.

Credit Rating Transition

CARE Ratings has reaffirmed and withdrawn its ratings of 'CARE A-: Stable/CARE A1' for Kuantum Papers' bank facilities, effective immediately. This action follows the company's request and receipt of no-objection certificates from its banks. Additionally, CARE Ratings has placed the fixed deposit rating of ₹33.22 crore on notice of withdrawal for one year.

Financial Performance

Kuantum Papers experienced a challenging fiscal year, with its financial metrics showing some moderation:

The decline in performance is primarily attributed to the normalization of net sales realizations (NSR) following an abnormal post-COVID surge.

Q1 Performance and Strategic Initiatives

In the first quarter, Kuantum Papers reported:

• Total operating income: ₹222.92 crore (21% year-on-year decline)
• Production decline: From 41,315 metric tonnes in Q4 to 32,545 metric tonnes in Q1

The company underwent a strategic 35-day shutdown of its primary machine (PM4) from May 26 to June 29, for a comprehensive rebuild. This machine accounts for approximately 56% of the plant's total capacity.

Expansion Project

Kuantum Papers is undertaking a significant expansion project valued at approximately ₹735 crore. Key aspects of this project include:

• Capacity enhancement from 450 TPD to 675 TPD
• Upgrade of turbine from 38 MW to 41.5 MW
• Installation of new centrifugal compressors for power cost reduction
• Addition of 50 TPD specialty grade coated paper capacity

The project is being funded through a mix of term loans (₹535 crore) and internal accruals. As of March 31, about 45% of the project has been completed.

Environmental and Social Initiatives

Kuantum Papers continues to prioritize sustainability in its operations:

• Utilization of agro-residues like wheat straw, sarkanda, and bagasse
• Expansion of Social Farm Forestry Program to 13,870 acres
• Commissioning of a surface water treatment plant
• Implementation of AI-based process controls for improved energy efficiency

Outlook

While Kuantum Papers faces challenges in the short term due to its ongoing expansion and the recent production disruption, the company's strategic initiatives aim to enhance its long-term competitiveness and sustainability in the paper industry. Investors and stakeholders will be keenly watching how these changes impact the company's performance in the coming quarters.

Kuantum Papers Limited, a leading agro and wood-based paper manufacturer, has released its investor presentation for FY25, highlighting robust financial performance and outlining its future growth strategy.

Financial Highlights

The company reported operational revenue of INR 13,096.00 million in FY25, marking an 8.1% increase from INR 12,113.00 million in FY24. EBITDA margins improved to 28.96% in FY25, up from 27.49% in the previous year, demonstrating enhanced operational efficiency.

Paper sales volume reached 160,845 MT in FY25, showing steady growth from 153,033 MT in FY24. This increase in volume, coupled with improved margins, underscores the company's strong market position and operational capabilities.

Operational Strengths

Kuantum Papers operates an integrated manufacturing facility spread across 259 acres in Hoshiarpur, Punjab. The company's production capacity stands at 450 TPD, with four paper machines catering to various product segments.

The company's product portfolio includes:

• Maplitho
• Cream wove
• Value-added specialty products:
  • Thermal paper
  • Bond paper
  • Parchment paper

The GSM range of products spans from 40 to 200, allowing Kuantum to serve a wide array of market needs.

Market Presence and Distribution

Kuantum Papers has expanded its market presence, now operating through a network of over 100 dealers across India. The company has also increased its export footprint to 24 countries. Key clients include prominent educational publishers such as:

• Macmillan Education India
• McGraw Hill Education India
• Oxford University Press

Sustainability Initiatives

The company has made significant strides in its sustainability efforts. Kuantum's Social Farm Forestry Program currently covers 13,870 acres, with plans to expand to 50,700 acres by 2028-29. This initiative not only ensures a sustainable source of raw materials but also contributes to environmental conservation and supports local farmers.

Future Growth Strategy

Kuantum Papers has outlined a clear growth strategy focusing on several key areas:

1. Debottlenecking and upgrading plant operations to increase production capacity by approximately 50% and optimize costs further.
2. Leveraging the single-use plastic ban by developing a portfolio of specialty products for a sustainable future.
3. Harnessing Industry 4.0 technologies, including IoT, AI, and cloud computing, to enhance operational efficiency and optimize resource utilization.
4. Exploring technology in the specialty and tissue paper segments to diversify the product portfolio.

Management Commentary

Pavan Khaitan, Vice Chairman and Managing Director of Kuantum Papers, stated, "Our strong performance in FY25 reflects the success of our strategic initiatives and the growing demand for our diverse product range. We are committed to sustainable growth and are excited about the opportunities ahead as we continue to invest in capacity expansion and technological advancements."

Kuantum Papers' robust financial performance, coupled with its focus on sustainability and strategic growth initiatives, positions the company well for continued success in the evolving paper industry landscape.