Release Date: May 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Satia Industries Ltd (BOM:539201, Financial) maintained its sales volumes despite challenging market conditions, demonstrating the strength of its distribution network.
- The company plans a critical capacity enhancement of its PMC plant, which is expected to increase production capacity by 20,000 tons annually.
- Satia Industries Ltd (BOM:539201) repaid debt of 1,340 million during the financial year, maintaining a healthy balance sheet.
- The company announced a 20% final dividend for the financial year, reflecting its commitment to returning value to shareholders.
- The new chemical recovery boiler planned for commissioning in FY28 is expected to improve operational efficiency and profitability.
Negative Points
- Revenues for Q4 FY25 declined by 8% year-over-year due to pricing headwinds, and full-year revenues were down 12%.
- EBITDA margins were significantly impacted, declining by 35% year-over-year.
- The planned shutdown of the PMC plant for capacity enhancement will last six months, potentially affecting production and revenues in the short term.
- The company faces increased competition from imports, particularly from Asian countries, which has affected industry-wide margins.
- There were complaints from investors about the company's lack of communication, as it had not held earnings calls for several quarters.
Q & A Highlights
Q: What are the details and expected outcomes of the PM3 capacity expansion?
A: The PM3 machine will be shut down in July for upgrades, including a 10% increase in width and a speed increase from 650 to 900-950 meters per minute. This will boost daily production by 50 to 60 tons, adding approximately 20,000 tons annually. The CapEx for this project is around INR 225 crore, with INR 100 crore already spent. (Respondent: Unidentified_4)
Q: How is the company managing its raw material sourcing, particularly regarding agro-pulp and wood pulp?
A: The company is not reducing agro-pulp usage but is increasing wood pulp due to capacity constraints. The current production uses 50-55% agro-pulp, with the remainder being wood pulp. The shift is partly due to the need for higher quality fiber for faster machines. (Respondent: Unidentified_4)
Q: What is the impact of the new chemical recovery boiler and other upgrades on production costs?
A: The new soda recovery boiler will improve efficiency from 92-93% to 95-96%, and produce higher pressure steam, enhancing power production. Overall, these upgrades are expected to increase profitability by 7-10%. (Respondent: Unidentified_3)
Q: How is the company addressing the challenges posed by increased imports from Asian countries?
A: The company acknowledges the impact of imports on pricing but is focusing on maintaining a strong order book and exploring higher-margin products. They are also engaging with industry associations to lobby the government for support. (Respondent: Unidentified_3)
Q: What are the expectations for revenue and profit margins in the upcoming year, considering the planned shutdown and upgrades?
A: Revenue is expected to decrease by about 15% due to the PM3 shutdown, with a corresponding impact on profit margins. However, the company anticipates a recovery post-upgrade, with potential for higher margins from enhanced production capabilities. (Respondent: Unidentified_4)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
