Tamil Nadu Newsprint & Papers Ltd

Good morning Sir. Arun Kejriwal here. So | wanted to understand when you make paper from wood pulp you would get a much better quality paper. What kind of price realization increase would you get when you use it for making paper board? Page 6 of 14

Bagasse pulp cannot be normally used to make packaging board. So if we use recycled pulp the realizations would be lowered by at least 8 to 9 rupees, fundamentally, because that could be considered as a recycled. Whereas if you were to blend bagasse and wood based pulp, the realizations would be lower by one rupee, 21.50 paisa #2.

It would give lead to higher turnover, not production. Yeah, that was the point | also made saying that the significant change from previous years is that we have our own Pulp and the cost of that pulp is also because earlier depending partly on recycled material and partly on imported pulp. Now our dependence on imported pulp is lesser and therefore we should be able to make a significantly higher contribution during the current year. QUESTION 6:

So one more question, in terms of positioning of our paper, our quality, the price that we can generate. | mean we have one or two competitors who make quality, which would be acceptable either in the domestic market or in the export market. Where could you put us put us? Let me split it into different categories, one which gets it to the notebook segment and the other which gets into the books and the normal textbook segment. Looking at packaging boards in terms of price realizations as or take in the market, we would be the leader. | would say even better than the next best in the marketplace. In terms of writing printing in the book segment 1.5 to 2% lower than the competitor in terms of realizations. We are India's only Mill where we make close to about 1200 tons of paper every day, so if there's a large, tender or large requirement no mail in the country will be able to supply that kind of volumes to a customer. So one can definitely leverage that also to your advantage. Whereas our quality is not as good as our competitors but in terms of size we are able to command higher premium.

Today's world the fact that we use we recycled pulp, the fact that we use bagasse, the fact that we have more environmentally friendly option also gives us premium. QUESTION 7:

The mills in north and central India are able to use other Agri products. Is there any possibility of be exploring something on that front as well? Looking at the tight position of raw material. Page 7 of 14

See, | mean this is something which keeps coming up and this is something which we keep researching all the time, because like | said, we've already diversified into three and we don't want to just stay there. | don't want to rule out that possibility. There's also constant pressure because, you know, we are partly government owned, so you know people do come up and give us ideas. Saying can you use Rice straw? Can you use another material? So we keep testing and figuring. Out which other Material is possible to use and if something works. There's no reason why we won't. QUESTION 8: Yeah hi.

I'm Abhishek. Regarding the margins so prior to commissioning of your packaging board line, you used to make margins. And | understand that pipeline was not commissioned. So now in January you commissioned and | understand that the pipeline, and if you are seeing the full benefit of the pipeline from April. Yes, certainly the line is now finally stabilized on the production front. Everything is OK. There are wonderful mechanical issues which are getting resolved as we speak, so we are on a number of days able to achieve production in excess of 400 tons. And | am assured by the technical experts that the quality of the pulp which comes out is second to none. So we are getting very high quality pulp because the quality of the equipment is really cool. As was already established or emphasize, everything within that all the chemical processes are circular processes. So we are getting the desired production and we expect that's why we expect the contributions towards significantly during the current financial year we should see the benefit of that. See part of the benefit has also been offset cause of other costs like you know, various other factors and chemicals. Chemical prices have also gone up, | think we should see a substantially improved contribution because | think one of the reasons why EBIDTA margins during 21-22 were hit, not just because of covid problems but also with not having your own pulp, but also the fact that all other raw material costs also. QUESTION 9: Regarding supply chain and any turbulence in terms of sourcing wood chips or bagasse or water?

See wood chips are our own So that is not an issue. Water is also not an issue. Page 8 of 14

You know different years, different challenges are coming. A few years ago we had a challenge with water. Luckily, right now we have no challenges with water. Even this year, in fact, the main dam in Tamil Nadu Mettur Dam, water was released ahead of the normal date. | think we've insulated ourselves a fair bit on the waterfront, so right now for the next 18 months | don't see a real challenge on water and it has not been a challenge in the apast 2-3 years also.

On the wood chips front also we do not see a problem our plantation activity has been one of our real success stories in the Last 4-5 years, we've raised extensive plantations with farmers. Our relationship with farmers has also improved significantly And this on A very sound footing, and because we're able to pay promptly, and we prioritize that, it means there's no diversion of the wood which is grown for TNPL. Plus we have a steady source of supply from the Terminal forest Corporation and they have a program of actually clearing You know monocultures at different locations, including the eucalyptus and so on, which can which is Going to be useful for us. We also buy from Andhra, the AP Power Forest Corporation and the Kerala Forest Corporation.

So there's a fair bit of wood available from here. So | think on the wood chips side we are comfortable. There's no, we don't anticipate we have planned for it well and we continue to monitor it as well.

On the chemical side also, we've been sort of watching it closely. It's been the price which is the issue, but chemicals per say should not be an issue.

Pulp, the small quantity of pulp, which may we may have to import for certain grades of the packaging board may continue to be a bit of a challenge, but that we have taken a conscious decision if you want to dominate the market in certain segments then whatever the cost we will Import in coal. Coal, of course, is anybody's guess, and that is the real challenge. But there again, we're trying to diversify. As | said, various forms of buying mass domestic coal lignite and so on. These domestic coal they seem to be showing some signs of easing up.

Plus, you know we're we are also exploring imported coal from broader markets. We looked at possibility with the Australian Coal for the possibility with South African coal and with the Australian Coal an FDA will be signed. So the rate of possibilities which we are constantly exploring. QUESTION 10:

First question was on our overall requirement of the raw material, which you just informed so broadly.

Second was yesterday we met JK Paper and we're trying to understand on the packaging side of it. So the 40% of their raw material they are importing it from the colder countries outside because the requirement they don't get it. So for us. Are we doing that because there are prices have increased by 10-15% there? So how are? We placed there. And are we? Getting that much of price from the market? Page 9 of 14

I'll just quickly answer the broader points and then ask ED Operations to answer the rest. The broader point is, | think, with the increase in capacity right now we are comfortably provided for. We don't have to import any pulp at all, it's only for certain bands or certain types of packaging material where we may need the softwood pulp which we will have to import so that is where there is a requirement.

Pulping capacity in a future expansion to address that is also something which is in in the long term planning, but in the immediate term it is fundamentally making sure that we have a supply chain which is tide up and we get that. And as we've already emphasized. We are confident that at all costs is uniform to everybody in the market and we should be able to pass through that to be consumers. So that is where we stand. Yeah, if you talk about the raw material. OK, we for both the plants we require almost like 1,000,000 tons.

We have a very clear target with almost 2600 farmers and we have tie with all other government TAFCORN resources and we are quite comfortable and we also have captive plantation and using the farmers own land and we also take the land on lease and also we have a lot of plantation on the unused lands owned by various temples.

Answer to your question is also very similar now that we have an enhanced funding capacity of hardwood pulp, our cost structure should significantly come down and the contribution to the overall EDBITA should significantly increase. QUESTION 11: The second phase of expansion capitals would be towards the packaging both instead of paper, so can you give update on?

We have not yet taken any decision on that matter. The original decision of the board was that the second phase would be for a paper machine. But it depends on market conditions. QUESTION 12:

How much hard wood pulp is required for producing a board.

There are different types of paper boards. So there are different varieties for paper boats and based on that, our hardwood pulp is utilized in a particular mix. Page 10 of 14

QUESTION 13:

Help us understand the per ton cost breakup Wood would be somewhere between 32 to 35 rupees. Baggasse would be somewhere around 37 to 38 or 39 to 40 rupees. Important hard wood it would be somewhere around 80 bucks. And imported BCTMP would be something around 72 to 73 bucks. QUESTION 14:

Can you just share the outlook overall on the demand supply pricing environment?

How sustainable do you think this is the current tightness?

See your guess is as good as mine, but you know I'm just coming back from Europe and there were some things the general public feel that | get from people who are talking about it is that the outlook for the packaging materials definitely by brighter only outlook for paper | mean that Is the broad sense that | get Now how good your product is and you know what exactly is the demand and how which product prevails and things are difficult. But | think there's a significant opportunity and the opportunity is what the company is trying to make the best of.

So especially on the packaging board. There's a significant opportunity on the paper side again this year. We've, | mean, right now we see a boom in the market and we have a fortunately as TNPL. We also have a steady market in terms of the textbooks and so on, so that gives us a certain amount of stability. So | would say that broadly for the company. The outlook is. Very positive and | would. | would think that we are placed at about the best situation we've been in for the past three or four years and it's really up to us to actually make it work in our favor, provided of course that there are no external forces and suddenly there is not another any any of these. Could not have been anticipated last year.We could not anticipate covid we couldn't anticipate.

The geopolitical tensions in Europe, so we don't know what will play out at what time.

So even take out all those uncertainties right now, things. Are looking good. QUESTION 15:

Last year you had a good amount of export, what is the position this year? Do we have contracts with people? Page 11 of 14

No, we don't have contracts with people we would normally rebooking kind of one month, 1 1/2 months type. But overall, if you want to look at this year 22-23. You will find exports to have shrunk over last year. QUESTION 16:

In spite of the freight rates being so high, How come the demand in the market? Freight rates is the question of relative Freight rates and relative competitive intensity. Because landed costs over becomes cheaper for TNPL and the global shipping crisis has been extremely beneficial for the Indian paper industry. QUESTION 17:

What is the payback that we can actually see? See, | think the way to look at it is that a significant offsetting of imported pulp will take place for unit 2 which is towards the Board and that is where we will see the big cost saving. Some of the materials, some of the excess material beyond what we use here would be available for replacing either deinked pulp or bagasse pulp at Unit 1, but that will be the smaller proportion, but | think the big cost saving will actually take place in the board plant and that is going to be the significant gain that we will see.

We are looking at it fundamentally and is delivering significant positive benefits in the current year definitely and in the years to come yes certainly. Whether it will pay back within two years, | would not hazard a guess right now. It all depends on. As he said, relative prices, right but? Given the current scenario given. Where the prices are various items. If the current scenario continues. For a little longer, yes, the payback. Will be faster. QUESTION 18: Seeing all the lockdown restrictions being lifted, schools opening office places, opening, we see some kind of demand in the paper consumption. So sir if you could kindly on the goal part of volume versus value. What we can see in the current financial year? Page 12 of 14

Since then we can get volume growth. Increase in volume for writing, printing in the in India somewhere around 4% per annum. But the tonnage might not be 4%. It might be 3, three and a half percent, because people tend to downsize only GSM.

Value would have gone up by for first April you can say about 18 on somewhere around 260.00 that is 30% that's the value. Normally July, August are slightly lean for the writing printing season because all the textbooks, notebooks are all done and sent to the children from August May onwards, the next season starts. Packaging side is slightly more chaotic so typically increases every slightly more because the pulp prices gone up my side. QUESTION 19: When has the price hike has been? It has been done in the last two months. QUESTION 20:

What is your supply arrangement with the Kerala paper products?

We don't have a supply arrangement with Kerala Paper Products. We have our own requirements but since it was a specific request for assistance saying that we have to start it up and we desperately need some pulp to start the process, we sold them some pulp. QUESTION 21:

What was the quantum of price hike in Q4? About Five percent. QUESTION 22:

Is there adequate stock in the system or we are still on the lighter side? Page 13 of 14

At the trade level they would have about 6 to 7 days. That is also a lot of speculative stock. So we're just keeping three to four days inventory and at the at the end customer level which is a converter level of the printer level again there is virtually no stock.

Even to invest in one company and one paper Company about 40 or 50 of you and with such rapt attention is quite remarkable, so | must really complement each one of you for being thorough professionals in whatever you do, |. Only wish we. Had more of you to do broader. Investment issues and not just in in terms of stocks of one company, but. | mean I, | speak of that from a broader experience, but let me thank each one of you for the very, very perceptive and insightful questions, many of which we could not probably satisfy you with. The exact answer that you were looking for, but that is the nature of our business in. Terms of the limitations we face. Yes, but thank you again for everything that you've asked. | can only assure you one thing but didn't pull in spite of having a 35% shareholding from the government of Tamil Nadu is a completely professionally run company which is very, very conscious of the fact that it is listed on the stock market, very, very conscious Of the fact that it needs. To deliver value. To all its stakeholders which includes all the investors in the company. And it is. Is run with a very strong and independent board, which holds us to account at every turn, and they're very conscious that as a management team we need to deliver to all of these expectations and that is something that we will continue to be conscious of in the days to come. Thank you all once again.

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