Satia Industries to Upgrade PM-3 Paper Machine, Add Up to 20,000 TPA Capacity by FY27

Satia Industries Limited (SIL) is advancing a series of capital expenditure projects aimed at supporting medium-term growth, improving manufacturing efficiency, and strengthening its paper production capabilities.

The company will upgrade one of its four paper machines (PM-3) over a six-month period beginning in June 2026. The project is expected to increase consolidated paper production capacity by 18,000–20,000 tonnes per annum by the end of the third quarter of FY27, representing an approximately 10% increase in installed capacity.

During the upgrade period, PM-3 will remain temporarily shut, resulting in some production loss. However, the company's remaining three paper machines will continue operating without interruption. The project was initially planned for FY25–FY26 but was deferred from November 2025 to June 2026 due to prevailing market conditions and delays in the availability of machinery components.

Alongside the paper machine upgrade, Satia Industries is installing a new chemical recovery boiler, now scheduled for commissioning by the end of FY29 following changes in the pulping technology. The company also plans to invest approximately INR 1,300 million in property over the next five years, after investing around INR 300 million during FY26.

According to India Ratings and Research (Ind-Ra), Satia Industries' credit profile remains comfortable despite the planned investments. Net leverage stood at 1.4x in FY26, while EBITDA interest coverage was 5.7x. The company is expected to incur INR 4–5 billion in capital expenditure during FY27–FY29, primarily for the PM-3 upgrade, chemical recovery facilities, property investments, and routine maintenance.

Ind-Ra expects EBITDA to decline marginally in FY27 due to lower production volumes during the PM-3 shutdown. However, the rating agency anticipates a recovery from FY28 as the additional capacity is commissioned, production volumes increase, and fixed-cost absorption improves.

The agency also noted improving wood availability and expectations of softer wheat straw prices following improved harvests, which could support raw material costs. While chemical costs have risen due to geopolitical disruptions in West Asia, easing supply chain constraints are expected to moderate input costs over the near term.

Satia Industries continues to focus on operational efficiency and return maximisation, with no plans for major expansionary capital expenditure beyond its ongoing projects in the near to medium term.