Usha Martin Gdr 144A

Ladies and gentlemen, good day and welcome to the earnings conference call of Usha Martin Limited. As a reminder, all part of seven lines will be in the listen only mode and there will be an option at the end for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please email an operator by pressing star then zero on your dashed on phone. Please note that this conference is being recorded. And now I hand the conference over to Mr. Devishi Singh from CBR India. Thank you and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining us on Usha Martin's Q1 FY24 Earnings Conference Call. We have with us Mr. Rajiv Jhawer, Managing Director of the company, Mr. Anirban Sanyal, Chief Financial Officer, and Ms. Shreya Jhawer from the Strategy and Growth Team of the company. We hope all of you have had the opportunity to refer to the earnings documents that we had shared with you earlier. We would now like to initiate the call with the opening remarks from the management following which we will have the forum open for a question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation. I would now like to invite Mr. Ajit Jha to make his opening remarks.

Thank you and over to you sir.

Thank you. Good evening everyone. On behalf of the management team of Usha Martin, I would like to welcome you all to our earnings conference call. As I had mentioned in our last conference call, We remain committed to conducting such forums on a regular basis. Our aim is to foster transparency and strengthen the communication channels with the investor and analyst community. I would like to begin by sharing quick operational and strategy-related updates on the company, following which our CFO, Mr. Nirbhan Sanyal, will run you through the key financial highlights. We are pleased to report that all our strategic initiatives, including the emphasis on enriching our product mix by focusing on higher value added growth, have assisted us in reporting healthy profitability during the quarter. On a year-on-year basis, our operating EBITDA increased by 24.2%, with operating EBITDA margins improving by 2.4%. basis points to 17.9%. Furthermore, a better contribution from higher realization international markets supported margin improvement. The share of the wire rope in our consolidated revenue further improved to 68% in Q1 FY24 compared to 67% during FY23. The share of revenue from international operations also increased to 56% during Q1 FY24 compared to 55% during FY23. Further, the share of value-added industry segments in our consolidated revenue increased to 50% during Q1 FY24 as compared to 44% during FY23. Moreover, within the wire rope, the value-added segments constituted 71% during Q1 FY24 compared to 65% during FY23. The balance sheet continues to remain significantly de-risked with the net debt at Rs. 99 crores end of Q1 FY24 despite a capex spend of approximately Rs. 68 crores during the quarter. emphasizing the significant improvements in operating cash flows before tax generated during the quarter. As we have discussed previously, we aspire to consistently undertake efforts to increase market share in international geographies to further enhance profitability and our global market presence. We are already witnessing significant traction with international customers particularly for technical advanced wire roads. In line with this, the company is strategically focusing on higher value speciality grade roads. It is important to note that producing these wire roads requires substantial amount of engineering know-how and technical expertise. To maintain a competitive edge on the global stage, our global R&D center located in Italy plays a pivotal role in designing advanced YRO, utilizing proprietary software to develop products that meet and exceed global standards. Through our focus on R&D, we have been successfully competing with global competitors and garnering a growing base of direct international clients. This achievement stands as a testament to our capabilities and positions us among the best in the world. Our CapEx initiatives are progressing smoothly. The increased capacities will predominantly cater to diverse array of critical applications and value-added products, including mining ropes, non-rotating grain ropes, compacted ropes, and plasticated ropes. Our Wave 1 expansion at RACHI is on track and is expected to be substantially completed by end of Q3, supporting our revenue growth endeavors. In conclusion, I would like to express our confidence that the various strategic initiatives undertaken by Usha Martin will certainly yield positive results and drive significant growth for the company. Our team's dedication and hard work and their relentless pursuit for excellence has enabled us to achieve notable milestones over the last few years. The company remains guided by its core values of innovation, integrity, financial discipline and customer focus. These values have been the foundation of our success and will continue to drive all our future endeavors. With this, I would like to hand over to Mr. Anirban Sanyal our CFO who will present the operational and financial highlights for the quarter ended 30th June 2023. Thank you. Thank you and a very good evening to everyone. I will now briefly take you through the company's operating and financial performance for the quarter ended 30th June 2023. The consolidated net revenue from operations to that Rs. 814.4 crore in Q1 FY24 as against Rs. 758.7 crore in Q1 FY23. The company achieved a 7.3% year-on-year increase in revenue, largely due to improved realizations from our value-added and solution-based offerings. Our international operations also played a key role, recording a significant 13% year-on-year increase in their top-line performance. Our operating EBITDA for the quarter registered a healthy 24.2% increase on a year-on-year basis at Rs. 145.7 crores. Moreover, the operating EBITDA per ton also demonstrated 25.8% year-on-year improvement at Rs 32,227. The operating official margin of Q1 FY24 rose to 17.9% from 15.5% in Q1 FY23. This improvement in margin performance is also attributed to our strong focus on value added products as well as our efforts to enhance our international presence. Additionally, our FHR performance demonstrates the strength of our business model and the strong part-time mechanism for raw material costs that we have in place. Our net profit for the quarter stood at Rs. 100.8 crore, registering an increase from Rs. 82.2 crore in Q1 of FY23. On the balance sheet front, we have managed to reduce our net debt to Rs. 99 crore as on 30 June 2023 compared to Rs. 185 crore end of March 2023. Additionally, our cash flow from operations before tax was Rs. 177 crore for E1 SY24. The sharp reduction in net debt, robust operating cash flows and adequate working capital line headroom continue to support our planned capital allocations. We also remain committed to optimizing our working capital to reduce the overall cash conversion cycle. In conclusion, I would like to say that Pusha Martin's continuing focus on product portfolio enrichment, steady growth in our international operations, continuing leadership in India and a strong balance sheet will enable us to deliver steady and consistent growth in the future. This brings me to the end of my address. I would now request the moderator to open the line for the Q&A session. Thank you.

Thank you very much. We now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, We'll wait for a moment while the questions do assemble.

For example, you may press star and 1 to ask questions. The first question is from the line of Gunjan Kava from Nivesh. Please go ahead.

Thank you for the opportunity and I wanted to ask that from a beta per ton perspective, that in FY22 and if we compare FY23, you know, engineering the gender ropes, our share has reduced from 28 to 20% and our geographic revenue from India has decreased from 49 to 44%. And, you know, value-added products have segments have increased. So, we have seen quite a good EBITDA pattern expansion from 19,000 to 26,000 in FY22 to FY23. So, now, from your own, what kind of EBITDA pattern or if you can guide on how further this revenue mix you expect to change or do you see or do you change any product mix or geography rise? Are we focusing lot more on exports and not in India now? And how the share will reduce is what I wanted to understand from EBITDA pattern.

You see, the beta pattern has definitely improved because, as I mentioned, that the product mix has shifted more towards ropes and within ropes more into the specialty ropes. And that would continue, the progress would continue even after the expansion because most of the expansion is towards the wire rope and that too focuses more on the specialty wire rope. In India we have a market share of close to 65-70% which is a very healthy market share and that is something we would continue. Whereas our presence in the international market, we are at about 5% of the market share approximately and that gives us an opportunity to increase our presence in the international market and take more market share at a better value addition. So I would expect that we would continue towards achieving the what we had mentioned in our previous call towards 18% plus EBITDA margin on a on a on a ongoing basis. That is something and then slightly keep on increasing as the product mix improves.

Okay. So is it not a very conservative way because we are targeting export markets where realizations are a very high and value-added product as well. The expansion is coming in the value-added product. So, is it, are you very conservative in your estimates or how is it?

You see, these products, you see, while we are expanding and more and more into specialty, it takes time to enter into new markets and new customers. So as we are progressing towards it, as the percentage would increase, I am sure the numbers would be better. But it is better to be cautious and move on on a step-by-step because it takes time to open up new markets and new customers for these special products.

Okay.

We expect it to be better.

Okay.

as we enter into these new product segments and markets, we definitely expect it to be better. But this takes some time and we definitely would like to see things happen and improve from there on.

Thank you. So, how much time for a wire rope facility if you are starting a new capex which is, you know, in Q3, FY24. So, how much time does it take to ramp up because a new plant will definitely take some time to ramp up. So, how much, you know, if we have normalized demand. So, does it take, in how many months or quarters can we see the ramp up?

Now we will start seeing the ramp up from you know the most of the project would get completed in the phase 1 or wave 1 capex by Q3. So we will start seeing the benefit of volumes coming from Q4 and I would say that it would take 3 to 4 quarters to see that these not only from the production side but from the market side it would take 3 to 4 quarters to get the full benefit of the full capex start coming here.

Okay. And so, with respect to US and Europe, there would be a little slowdown in the business environment. So, I am even in talks with, you know, few customers in the US where you are trying to onboard them. And in the Europe last quarter, you already guided that we have converted to. So, how is this order traction going there and what kind of order visibility do you have from the export market right now?

Yeah, while the overall slowdown may be there, but the sectors and the new customers which we have worked on, particularly on the mining sector, oil offshore sector, and the claim and post sector, we see good traction from these markets. And all the proofs of the last one or two years of efforts by our team, plus we have expanded our team in Europe and U.S. we see a good traction from our products and our segments. So, while there may be an overall slowdown, but in our sectors, we are seeing that there is a reasonably good demand and we don't see much of a slowdown there.

Okay. Thank you so much and good luck to you and the team.

Thank you. Thank you. Next question is, from line of Aman Sundariya from AK Securities. Please go ahead. Sir, first of all, lots of congratulations for excellent set of numbers and you and your team hard work is reflected in the working of the company quarter after quarter. Sir, I have few questions. Recently, I have seen, sir, year on year, this is our employee cost has increased from 89.4 to 107.4. So, this is due to whether general inflation or we are investing in human resources for our future expansion and all.

There is in India the increase entirely on account of the wage revision which comes once in four years for the workers and the increment of officers. Increase in the international businesses on account of new recruitment particularly to enhance the marketing and R&D functions in Europe and America. So, these are the reasons and now that the new capacity is also getting, coming up in the next few months. So, we need to really build our international team to be able to, you know, focus more into newer markets and newer customers. So, that is the reason we have built this and that is the reason for this increase.

Okay, thank you. Yeah, just to add to that, Like you mentioned in the Americas, earlier we were focused primarily in the Houston area, but over the past... Here, we've also had a setup with people in the East region and the Pennsylvania region as well as the West in the Nevada region. So, I think because of our focus in the U.S. market, we needed to expand beyond just the center to both the coast to cover the entire spread, which is quite expansive. Thank you. Along with that, even in the Latin America region, we've put in not resources physically present there, but our team in the US and Europe also travels frequently to Latin America to cover that market as well. So, these are pretty new markets for us. The only way to grow is to hire talent that has familiarity with those markets and the network in those markets. And then on the other side, we've also hired some sector experts. So, because we have focused on the higher value sector. We want specialists in elevator ropes, in mining ropes, in fishing ropes as well. So, in Europe, we've hired more people catering to those specific markets such as fishing as well where we want to go. Okay.

Thank you. So, next question is, as you see in the video of Brendan's show, we have dispatched a rope I think 2 rope of 329 ton per rope. So, it is I think dispersed from UK to Brazil. So, what type of rope is it is and where it will be used and whether it is one of order or where whether we are getting regular order like this?

These ropes are very high end each single weight of 330 tons each. Brenton Shaw, we had the facility to produce rope, single length rope up to 400 tons. And these ropes are crane ropes which are used for basically lifting all platforms from one position to the other or even building big wind farms in the deep sea. And these are used in very high tech cranes and go 4000 meters deep in the water where they are doing all these installations. And these are very high tech ropes, very high safety requirements. And Brenton Shaw has a premium brand in this space. And these are just not one of orders. Brenton Shaw has been producing these. But last, I would say, 12 months, we have seen a good traction. And we have received quite a few orders. ranging from 150 to 350 tons per wheel and the interesting part is that while the ropes are produced there, the wires and strands are supplied from India, giving us a complete supply chain control of the entire product and thereby also helping us to get a better margin. So, these would be continuing. We have got some orders. This should be continuing over the next three to four quarters and I am sure with the few successful breakthroughs we have done, we should be able to do it on a continuous basis.

Sir, in which market we are getting the best section whether it is US market, Latin America, Asia or European market?

You see the strongest market for us you know the business for wire rope Europe is doing is growing well for us. Although the orders may be coming from Europe but supplies may be going to Australia, going to Middle East or going to Brazil as you mentioned. So, the growth is what we see the growth for different products in different markets and we see for fishing markets, Europe is going to be, we are seeing a lot of breakthroughs and growth expected in the fishing markets there. On the mining groups, we see good markets in South America, North America, Australia as well as South Africa. We have got some good breakthroughs and good business is being done there. And I would say the strongest market looking forward is Europe, US, South America and also we are looking at Middle East, particularly the Saudi Arabian market going faster in the coming quarters.

Sir, one last question that recently Sir, Tata Steel and GSW Steel has increased lot of capacity in LRTC. So, I think LRTC has become a accommodating market. So whether we are planning to go for value addition in this LRPC?

LRPC definitely it is JSW has come out with a large capacity a new plant and so has Tata Steel also plans to expand its capacity. The demand in India is growing but the margins are of course uh going to be under pressure because the steel companies like jsw would like to to to take market share as far as we are concerned uh our our the margins of course are under pressure on the lrcc but our strategy is to go into more value added almost 10 percent out of our five and a half thousand tons production about 500 tons per month, we would convert, we have already established markets into plasticated LRTC and galvanized LRTC, which both in the domestic market and some success in the export market. And over the next few quarters, our objective would be to continuously keep on increasing the share because they give you a much better value addition And those are again high quality, high technical products, just not selling LRPC as a commodity. That is a lot of engineering sales goes into that category. So, our focus would be to improve the percentage of plastic rated LRPC in the coming quarters.

And so, one last question, whether you have received the charter money completely?

We received, now total 78 crores is left and we expect some land transfers and some land lease transfers to be completed and we expect this money to be received by Q4 FY24.

Okay, so by that time we will be virtually debt free something.

Yes. We hope so. Thank you.

Thank you. Thanks a lot, sir. Thank you. Next question is from the line of Rajesh Majumdar from BMK Securities. Please go ahead.

Good evening, sir, and congratulations once again. Sir, I had a technical question on the segment-wise revenue breakup. If you add wire ropes, trans and LRTC, it's 90%. Now, what is this other 10% and what is the contribution of that to our every-tower pact?

That was the first question. Anirban, can we take this question please?

Yeah, sure. So the other 10% includes direct services as well as the sales from our subsidiary UNKB.

Okay. And the contribution of EBITDA or PEP from this?

We don't give out individual segment wise EBITDA, but services are always higher. that what is the blended EBITDA margins for the company as a whole. Euro table is obviously is little lower compared to the overall EBITDA margins of the company.

So how do we look at this 10%? Will it be growing with the company in an equal way or will it come down as you know the CAPEX gets completed and RACI starts delivering more business? How do we look at this number?

No, so FY23 you see, Rajesh, it was 8% and in Q1 it is 10%. So, it will be in this range because the UMKT is typically annually within the range of 100 to 110 crores of top lines and then it depends on the services which is primarily coming out from our European subsidies.

So, it would continue to be in the range to 10% range. Right, sir. And, sir, my next question was on the RACHI capex. What should be the asset term from this in terms of the turnover we anticipate to get from the 360 crore capex we are doing there?

And, you see, we are from the capex of 310 crores, we are building a capacity of almost 47,000 tons. So, if you look at the selling price, it would be a blended price, so it would be close to 900 crores. So, I would say that by the time we get the full capacity, it would be close to, I would say, between two to three times.

This is including the value at mixed change you are contemplating, right?

Yes, yes.

Okay. And this will be incrementally margin accretive in terms of the product mix as well?

Yes, because most of the almost 60 percent of the volume of 47000 is towards wire rope and more towards the higher value added wire ropes. So, so and the balance is LRPC plasticated and wires and that too in the higher segment. So, we expect the you know expect the the percentage of wire ropes to be higher in the overall mix even with the new expansion.

And sir, is it possible to give us a breakdown of the subsidiary performance for the quarter as you have given for the year for Pusha Martin International, Pusha Martin Singapore, Pusha, Sand, Steel and all these companies?

I mean, we are, yeah, yeah.

If we give the performance of the international operations, if you look at our presentation, but individual subsidiaries, we would have been giving on an annual basis, but we will consider yours, consider yourself. Sure.

Thank you.

Thank you. Thank you. Next question is from the line of Desi Faria from Clockwine Travel Advisors. Please go ahead.

Hello. Sir, thanks for taking my question.

Desi, the audio is not coming clearly. Can you please read through the answer?

Yeah, is it clear now?

Slightly better. Yeah.

Sir, you said that you want to gain market share in international markets. So, what gives you an edge to gain that market share? So, would you be, you know, pricing your products which are of similar quality to global wire rope majors at, let's say, a discount so that you will gain market share because of that? Or what would be your strategy?

You see, we have two, Usha Martin, it's a good question. We are, as we mentioned earlier, that our focus is to more and more increase our market share in the international market. And there we are competing with the largest players in this industry, in our industry. Our pricing would be, definitely lower than them because those are not significantly lower because it is just not the business you don't get only on reducing price by 3% or 5%. Our strategy is A, to not only be competitive because of our entire integration and cost advantage, so we may be 4-5%, some places 7% cheaper, but more important is the service we provide through our own distribution network and our own stock points in different parts and our own marketing and service team. So, being closer to the customer, we are able to get, to give you an example, in US, we got a big contractor, Mining Rope, and we started supplying to them small quantities. And they had a problem, may not be related directly to the wire rope performance, but they wanted our people to be flown in within few hours. So, our people went and we were able to resolve that and had a very good impression of the customer. So, we landed up getting a big contract versus some of the big American competition and which is valid for next three years. So, being close to the customer, taking advantage of our own distribution and service centers, Being competitive and getting some price advantage to the customer, I think the combination of this is helping us get more traction into the market.

Got it, sir. Got it. And so, you mentioned that you have started supplying raw materials to your UK subsidiaries to India. So, what kind of cost advantage has it given you in your UK subsidiary if you could quantify it in terms of dollar per ton or, you know, any cut measure?

You see, earlier we used to buy wires from the European sources for the ropes being produced out of our Brenton shop. But we have now integrated all our international businesses and we all run as a united team rather than running them in silos as it was when the company was with the field business. Now that we are focused on our wire work business, we all worked as one integrated team. So we looked at all the opportunities and what we did was looked at the, and we of course modernized our Ranchi plant facilities, particularly the wire drawing and the patenting facilities. Thereby building the capability to supply all these wires from India. So, having done that, we have got two advantages. Of course, the cost advantage, I would say it would be close to $300 to $400 per ton. But also, it gives a higher value-added wire product from India which is being supplied and that is also helping us to become overall more competitive. Earlier, buying wires from local European sources, in many cases, we were not competitive also. So, once the competitiveness has improved, the supply chain control is within the company and that is also helping us to get a higher market share for our product in the international market in a win-win situation for the standalone wires for our road plant in India which is supplying the wires and stands. And of course, giving a competitive advantage to our subsidiaries to get higher market share at competitive prices.

Alright sir. Sir, just wanted to understand the competition profile in your industry. So, let's take a large market in which you operate like Europe. Could you give us the market shares of various players in Europe?

See, every country, wherever you have your own manufacturing, I think Bryden, Bekaert and Wireco, which have got large manufacturing facilities, they would be having the largest market share. You know, Usha Marketing Group, we would be close to selling 25,000 to 30,000 tons into that market. I don't have that number with me. Let me get back to you with specific answers on that.

And are Chinese companies dominant in the export markets in this business?

No. We have not seen Chinese other than these very small pods which they supply in the US market and in some other markets, low-end products. It is mainly the Koreans which are dominant here from Asia in this market.

Got it, sir. Thanks a lot, sir. That's all from us. Thank you.

Parasathin, you must have started one to ask a question. Next question is from line of Dhara Mehta from Centrum Broking. Please go ahead.

Congratulations, sir, on the stupendous results that you've reported. Sir, I have three technical questions. One is, sir, how should one visualize your volume in perspective of these three divisions, given the fact that I'm assuming you've taken a strategic decision to show decline in the wire and strands division which has declined very sharply. So, how should one perceive your volume for FY24 and FY25, sir?

I would say that we are looking at 13 to 15 percent growth in our volume and overall I would say 15 percent growth overall between FY25 last year and this financial year. That is something what we expect to grow in this financial year. You are right, our focus is more and more to increase the percentage of wire ropes and within the wire ropes, the specialty wire ropes and that is something we would continue to grow. Our focus on wires And LRPC, as we discussed earlier, it is a commodity product. Margins are coming down because of this competition in the market. But our focus is to increase the percentage of or increase the classificated and specialized LRPC which gives us much better revenue. And on the wire side, we would continuously keep on adding higher value added wires, both galvanized aluminium zinc wires, as well as critical wire applications for the auto sector. That is something which we would keep on adding. Percentage-wise, it could keep on changing between quarter to quarter depending on how each sector is doing. If the demand of LRTC grows, we would look at even increasing our market share. While the margins may be low in LRTC, but still it adds to the bottom line. And we have a capacity of LRTC which increases cannot produce growth. So even if it is giving us decent contribution over our manufacturing cost, we would like to go ahead with that. In those quarters, our overall volumes may look higher, our overall profitability may look better, but our EBITDA person may be slightly coming down because the mix of LRTC has gone up. So we as a company would like to see that our capacity utilization particularly in the commodity product is there and we are able to make positive margins on that. But the long-term endeavor would be to keep on increasing the wire rope percentage and more so in the value-added prices. So, and to the, again to repeat the answer, about 15% plus minus we should be able to increase the volume in this financial year compared to last year.

So, sir, given the fact that you have seen a decline in this quarter, should I imply that the next three quarters, the volume growth will be upward of 20%?

I would say that overall, you know, there are seasonal issues in this business. With the heavy monsoons in different parts of the country, the construction activities have slowed down. So, you know, the LRPCs gets affected because of that. So, there are seasonalities, but I would say that let us look at it on an overall perspective, we should be able to still clock that kind of increase in the whole year.

Sure, sir. The second question is, sir, if I look at my EBITDA per ton, that has improved substantially and is actually reported the highest EBITDA per ton in this quarter, that is the quarter one. If I take that as a number, then my revenue growth is actually looking at a 22-23% upward because you just stated that a 15% volume growth can be accepted. So, should that be an accepted number for FY24?

As I mentioned to you, you know, we have three product portfolios. Wirego, LRPC as well as wires. Our LRPC and wires volumes have been lower and partly because of seasonality partly because of strategic reasons and converting into plasticated LRTC. So, it would not be proper to always say that the blended margin would remain the same. If the percentage of LRTC goes up because of the demand and volume or the wires go up, so your turnover may go up but your overall profitability may go up but your blended margin may be may be may be bit lower and if the percentage of wire rope as a percentage of the total volume goes up then it could be slightly higher so because we are in three different segments and and and and you know all three contribute at a different level of margins in the total turnover so depending on which one is having a higher percentage like in this quarter we have seen that LRCC and wires are lower and ropes have been higher so we have seen a bletted margin going up But I would say that overall, we would say that 15% increase and we should be looking at that only. I would not like to comment on any absolute EBITDA numbers for the whole year.

Sir, last question is, has he seen any facilities being modballed in Europe given the fact that we have all of a sudden gained a lot of market share across the world?

No, no, no, no capacities have been much broad, I would say, but definitely with a strong integration between our international subsidiaries, international money types and our parent company in India, we, and we have, as Shreya mentioned, that we have built a good marketing team both in Europe and US for these specialized sectors. We are being able to get a higher market share in some of these sectors like the large diameter ropes what we discussed earlier or the fishing ropes or the crane ropes and the new capacities which are going to be added, we see through our distribution network and the marketing team which we are creating, we should be able to get higher share from those markets. But it is not that there are capacities which are mouth-boiled, but definitely we are trying to be more competitive and take some share out of those people.

Sir, what will be the industry growth rates then in this particular industry? growth market of the world?

You see, the industry growth rate, you know, it is very difficult to say because each sector, you know, we are in about 8 or 10 different sectors, mining, elevator, fishing, construction, crane, sports, but I would say 4 to 5 percent would be the average growth, but certain sectors are seeing a much bigger traction, particularly the oil offshore sector, the crane rope and the mining sector, we are seeing a bigger fraction coming from these sectors.

So, this is the last one question, sir. So, should we, so we have a capacity of around 310,000. This quarter, we are running a run rate of around 177,000. Sir, what will be the optimum utilization for our segments, sir?

I mean, you have mentioned to you, as As I mentioned to you that over last year, last year against a capacity of 300,000 K we did close to 204,000 or 200,000. The new capacity which we are adding would be getting more and more by the end of quarter 3. Most of it would be done and getting some benefit of that from quarter 4. But assuming taking the last year 200 and 4000 as I mentioned to you we should be 13 to 15 percent higher overall volumes this year.

This means we still have room for growth that means in case the growth comes in we still have room.

The growth one is the manufacturing side other is it takes time to develop these new products and new markets and it is not that you set up the capacity and you have a market it is not a commodity you know it is a highly technical product It has safety issues. We have to have approvals from customers. So, those take some time. Having been in the industry for so many years, we have a good brand and a good name. And we have a better opportunity of doing it faster. But it does take some time to develop this. So, yes, we see over next couple of years to see decent opportunity out of the capacity what we have to increase it also.

Great. Thank you. Thank you. And congratulations once again. Thank you, sir.

Thank you. Next question is from the line of Aman, which from Institute Investment Management, please go ahead.

Good evening, sir. My first question is on the newer customers. So, I believe in the last 1, 2, 3 years, we have been able to break into number of big customers. So, and we would have also made some supplies to those customers. So, if you can talk about the what is the feedback you have received from such big customers and also if you have gotten some big repeat orders if they like that product, if you can talk about the same. Easy. First of all, I would not like to name customers for confidentiality agreements with these customers. But we have made some big breakthroughs with some big manufacturers of OEMs in Europe and some big contractors in Europe. They have not only, they were only buying ropes from the European and the American sources. So there have been series of visits to the plant, audit of our plants in India and Europe and some good breakthroughs have been made particularly in the large grain ropes and particularly large grain ropes and some big mining rope and also some train ropes, OEMs in America. So, we have been, as we have come, there was a very, I would say, intense review of the quality and the quality assurance system, the safety and other standards of the product. So, we are happy to say that the company has been able to successfully get as an OEM supplier to them We have made some, we have got some repeat contracts and repeat orders from them. And more important, we expect a lot of business on the replacement market having been successfully supplied to these unions in the coming time.

Sure, sir. That is helpful.

My next question is that we have talked about our global market share is around only 5%. in the next say 3-5 years, will you see Isha Martin having like 10-15% market share globally? You see, Viagra definitely, you see, we are definitely going to increase our market share but it would be more in the value, the 5% includes all categories of Viagra and we are not expanding and getting into every kind of Viagra. We are only focusing more and more into the high-end products which gives which gives good margins and you are competing mostly with the European and the Americans and the Koreans where you are able to get a much better price for your product. So, our endeavor would be to focus on these specific sectors like the mining sector, like the fishing growth in Europe, mining in South America, US, Australia and the South African markets. So, we would be focusing on these markets and for those specific high-end products. So, we are not targeting that I want to increase from 5% to 10% in every category of growth. And I would say that that is the better way we have seen because that gives you a healthier EBITDA per ton because you are able to get the service margins also because you don't only sell the product, you are able to sell services, you are able to work with the customers closely and build a long term relationship. And that is what is evident how we have been able to improve our margins. So that would be the endeavor. We may definitely increase from 5% to 7%, 7.5%, 10%. But that would be more sector specific than looking at the overall market share.

Yeah, and just to add to that, the top, say, four to five players in the market currently have about 20% of market share. So, I think to say around 15% would not be realistic because, like you mentioned, a lot of the market is also these general purpose groups. So, definitely, the endeavor is to get more and more players market share from the competition in Europe and America and continuously increase the international market share, which is currently, you know, 56% of our revenues to around, you know, upwards of 60%. But, like you mentioned, the market share globally would, you know, still we would target around, you know, 7-8% overall.

That helps. My next question is for

We talk a lot about value addition on the rope side. We talk about value addition on the LRPC side. But there is a very big opportunity in value addition on the wire side. A lot of our global peers do a lot of value addition in wire side. They also do some interesting products like synthetic rope. So, what are your thoughts on value addition on the wire segment as well as on synthetic rope? On the wire segment, we are definitely getting into niche markets of higher value-added wires. When we were part of the steel business, the objective was to evacuate as much as steel even in the form of wires. So, that you have seen over the last two or three years, we have slowly brought it down and focusing more on the value-added products. We are, as a part of our phase 2 project, we are setting up zinc aluminium 9 for higher value added wires, both in the domestic and the export market and we will see that coming into operations in the next financial year. Even on the other qualities, high end wires, we are looking at different opportunities and I would say that next two years, he would also focus on getting higher volumes of these specialized wires because there is a significant possibility of increasing the market share. The wire market is a significantly larger market than the wire rope market. I would say 8 to 10 times more and as you rightly said there are big players in this and I see an opportunity here to grow in this segment in the in the coming in the coming years.

And on the synthetic ropes. Pardon?

Sir, you missed the synthetic ropes part. On the synthetic ropes we are definitely looking not on the ropes part but on some synthetic products which could have a good good traction on the which could be complementary to our service business but right now we have no plans to get into synthetic ropes or anything of that sort for the time being. I think there is tremendous hope for us to focus and get a bigger share in our our our And I see that as a big opportunity and we have a lot to, still a lot to cover in the coming couple of years, two, three years. Okay. Final question from my side on the CAPEX. So, phase one is almost there for us in the next two quarters. And you have briefly alluded about phase two CAPEX. So, that will be around similar number of 200 to 300 crore is my understanding correct and will this also include we were also looking at expanding some capacities internationally. So, if you can talk about the next set of CAPEX and some timelines associated with them. The stage one is about 310 crores out of which close to 212 crores is completed. And the balance would be completed by most of it would be completed by Q3, little bit maybe in Q4. So that would complete the phase 1 part. Phase 2 part is 167 crores in India and 62 crores in our Thailand plant. And the 167 crores what we are expanding in India is Again focus on mining ropes and crane rope capacity increase and some infrastructure to integrate well with our international subsidiaries and manufacturing plants internationally so that we are able to serve them better and also get people benefit of the capacity integration between the two. And as far as the Thailand plant is concerned, it focuses to more train ropes and train ropes and some high quality wires and elevator rope with capacity enhancement over there. With all this value added and the timeline would be I would say the phase 2 would you would take once even at least next because some of the equipments have large delivery time. So, it would take about another 18 to 24 months the phase 2 in India to complete and Thailand would take about 18 months to complete. We are yet to start placing orders. So, it would take about 18 months to complete that first phase. Phase 1 and Phase 2 coming in, all these value addition which we are doing, do you think in the next 2-3 years, even margins upwards of say 20% is also possible? I am not talking about 1-2 years. I am talking when all this value addition is done. Maybe 2-3 years and it starts. Our, yeah, definitely I would say 2-3 years as we get into these higher value added products. and the service part of it, as they get added, which gives you a significant margin, our endeavor would be getting higher towards those numbers. But there is a lot of work to be done, and with the CapEx, as well as enhancing our international capability of our marketing and distribution network, our endeavor would be going towards that. Thank you, sir, for answering all the questions.

Thank you very much. Ladies and gentlemen, as I know for the questions, I will hand the conference to the management for closing comments.

Thank you to everyone. I would like to thank everyone for attending this call and showing interest in Usha Martin Limited. I hope we have been able to answer all your questions. The company is dedicated to creating value for all its stakeholders in a sustainable manner. Should you need any further clarification or would you like to know more about the company, please feel free to reach out to us or to CDR India. Thank you once again for taking time to join us on this call and see you all the next quarter. Thank you.

Thank you very much. On behalf of Usha Martin Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.