Usha Martin Gdr 144A

Ladies and gentlemen, good day and welcome to the Usha Martin Limited earnings conference hall. As a reminder, all parts and lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference hall, please signal an operator by pressing start then zero on a touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dev Rishi Singh from CDR India. Thank you and over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining us on Usha Martin's Q2 FY24 earnings conference call. We have with us Mr. Rajiv Jawar, Managing Director of the company, Mr. Anirban Sanyal, Chief Financial Officer, and Ms. Shreya Jawar from the Strategy and Growth team of the company. we hope all of you 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 Q&A 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. Rajiv Jawad to make his opening remarks.

Thank you and over to you, sir. Thank you. Good afternoon, everyone.

On behalf of the management team of Usha Martin, I would like to welcome you all to our earnings conference call. I will begin by sharing quick operational and strategy-related updates on the company. following which our CFO, Mr. Levan Kanyan, will run you through the key financial highlights. I am pleased to report that we have concluded the first half of this fiscal year on a healthy note, making significant progress in our various strategic initiatives. We have two key objectives as a company. One, enhance our product portfolio to value-added products. to increase volume and value through our CapEx initiatives. Our strategy to enhance our product portfolio has delivered positive results. Comparing figures on a year-on-year basis, our operating EBITDA increased by an impressive 24.8% and our operating EBITDA margins improved by 3.4 percentage points, reaching 18.1% during H1-FY24. Moreover, enhanced contributions from international markets with higher realizations have supported our margin improvements. The share of enviable revenue in our consolidated earnings has increased to 59% in HY-FY24, reflecting an increase from 66% in HY-FY23. International markets are also playing an important role in our growth story, contributing to 55% of our revenue during H1 FY24. While our revenue growth was muted in the first half, largely attributable to subdued performance in the wire and LRPC segments, we maintain a positive outlook for the business expansion in the later half. Our commitment to value-added industry segments has reached post-productive results, with the share of these segments in our consolidated revenue increasing to 50% during H1-FY24, up from 44% in FY23. Specifically, within the wire-rope category, value-added segment accounted for 70% during H1-FY24, reflecting an increase from 65% in FY23. I would also like to highlight that despite facing a decline in steel prices during the last quarter, our wire rope realizations have constantly trended upward. This positive trend is especially evident in our value-added wire rope products, which require significant engineering know-how and technical expertise. These products are enabling us to mitigate the inherent volatility in raw materials prices. Additionally, we make considerable progress regarding our CAPEX initiatives. Our Phase 1 expansion in RANCHI remains on track and it is expected to become operational in the coming months. We would start to feel the benefits of that in subsequent quarters. As a specialty wire rope solutions provider with a substantial presence in international markets, We are closely monitoring the evolving macroeconomic landscape, including current geopolitical issues. Today, we firmly believe that Isha Martim is well equipped to identify and navigate global business challenges that may arise. In conclusion, I would like to emphasize that our commitment to the strategic initiatives at Isha Martim remains strong, and we are confident that these efforts will yield positive results, driving growth for the company. 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 and half year ended 30th September 2023. Thank you. Thank you and a very good afternoon to everyone. I will now provide a brief overview of the company's operating and financial performance for the quarter and half-year ending September 30, 2023. The consolidated net revenue from operations stood at Rs. 784.7 crore in Q2 of FY24 as against Rs. 820.2 crore in Q2 of FY23. As the MD mentioned earlier, the 4.3% year-on-year decline in revenue was due to lower contributions from both the wire and the LRPC segments. However, as we assess the current situation, we maintain our confidence in improving our revenue trajectory for the second half of the year. Our revenue performance during the quarter was supported by an increased realization in the wire rope segment. Our operating EBITDA for the quarter registered a healthy 25.5% rise on a year-on-year basis at Rs. 144.3 crores. Moreover, the operating EBITDA per ton also demonstrated a 35.8% year-on-year improvement at Rs. 31,178. The operating EBITDA margin of Q2 FY24 rose to 18.4% from 14% in Q2 of FY22. Our next for the quarter stood at Rs 109.5 crore, registering an increase of 38.7% from Rs 79 crore in Q2 of FY23. On a half-year basis, net revenues from operations stood at Rs 1599.1 crore compared to Rs 1578.9 crore in H1 of FY23. During this period, we witnessed positive improvements in our value-added offerings, notably in the wire rope segment, along with a healthy fracture in various inductive segments such as mining, oil and offshore, fishing, elevator and crane. Rs. 250 crores for H1 of FY24 as against Rs. 232.4 crores in H1 of FY23. Profit after tax for H1 of FY24 so that would be 210.3 crore registering a 30.4% year on year increase. Our balance sheet position remains strong with our net debt to equity improving to 0.06 times in September 2023. The modest rise in absolute net debt is a result of our ongoing investments and the allocation of funds for dividend disbursement. With regard to our working capital cycle, we have strategically augmented our inventory levels during this period, preparing for the projected upswing in demand anticipated from new customers we have developed through our European operations. With our European operations now closely linked with Ranchi Factory for supply of wire and strand raw materials, it becomes essential to have the inventory in stock to meet customers' requirements and delivery times. Further, our cash flow generations have improved significantly year on year. The cash flow from operations before income tax for each one of FY24 stands at Rs 310.5 crore and at 107% of operating EBITDA. compared to Rupee's 95.6 crore during H1 of S523 and at 41% of operating EBITDA. Robust cash flow along with adequate headroom on working capital lines will continue to support our grand capital allocations. In conclusion, I would like to say that overall, things are moving in the right direction and Usha Martin remains optimistic that its business strategies and initiatives will play a pivotal role in further strengthening its leadership position. We expect that favorable industry dynamics, coupled with Usama Khan's inherent strengths, will enable the company to deliver consistent performance going forward. This brings me to the end of my address. I would now request the moderator to open the line for the question and answer session. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question may press star and 1 on the touch phone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Aman KR Sontalia from AK Security, please go ahead. Good afternoon, sir. Hello. Yes, Mr. Aman, may we request you to use your handset, please? Yeah, yeah, I'm talking over the handset. Yeah, good afternoon, sir. Good afternoon. Yeah. Sir, what would be the impact of slowdown in Europe? Is it possible for the company to grow at the rate 17% in volume term over the next 2-3 years?

So, on Europe, I just like to say that we did see slight slowdown in specifically the services part of the business in Europe in EMM and E-Reuters compared to last year. But we do think that with a healthy order book in a plunking store, UK taxi, we do have a positive outlook for especially the higher value rope for the second half of the year. And your second question was on overall volume. Is that correct?

Yeah, yeah.

So, on volume, so volume is obviously a very important factor, but not the only factor. As mentioned, with the capex coming in, the volume should improve, but we will have to continuously balance between the volume and the value aspects to see what would help us achieve our bottom line productivity targets as well.

Second question is that in Europe, I think there are lots of small rope manufacturers out there and they are not in a very good shape. So, since our company has very good cash flow and already we have a presence in Europe.

So, are we looking for any acquisition in the European market?

Right now, of course, Europe is going through recession and many of the companies are going through difficult periods. I think there are big opportunities for us with our current setup to gain market share between our integration with Usha Marti in India, as well as Brunton Shaw, as well as from Usha Siam and Brunton Shaw. And we have made major breakthroughs and progress with quite a large number of customers and the distribution network over here. And I feel that that is something which we would like to really ensure that we successfully develop this model and build a good brand for entire Risha Martin and Benson Shaw. And I think that is our first priority. Going forward, of course, if there are opportunities which would come, we would be open to have a look at those.

Okay, sir. And sir, one more question. Since the U.S.

economy is doing very well and we have already presence in U.S. market, so how much growth we are expecting and how big the U.S.

market would be for USA marketing in next two-three years? So the U.S. market definitely is a very important market for us.

In the first half of the year itself, we saw good growth in the U.S. especially on three key value-added segments that he was targeting. One is the elevator rope. For that, we did see an increase of over 50% in volume compared to first half of last year. In plain ropes as well, we were able to double our volume. And then finally, mining ropes for which we have had initial trials that have been good and because of those trials being successful, we have secured a long-term contract with a big customer that should help us get consistent volumes and value over the next few years. For mining ropes, again, it's not just the US, but it's also Canada and Latin America as well, including Brazil, Chile, Peru, which are very important. And Other than these three segments, we're also going forward looking to grow the market in stage rope as well as gondola ropes which are critical applications and again high value products. So that's going forward something that's a focus for us. That being said, I would just also say that for the general purpose rope market which is usually a lower value product but a high volume product typically, Right now, we have seen some competition in the U.S. market particularly and also some pricing pressure from other Asian manufacturers. So, while, you know, the high-value products, we are seeing continuous growth, there might be, you know, some impact of that, but overall, positive outlook for the U.S.

One more question might be that Saudi market is really a very exciting market.

Is the company seriously looking at this market, Saudi Arabian market?

Yes, definitely. So, like you mentioned, Saudi is a growing market and we do plan to increase our presence in this market for sure. And it will become a focused market for us, especially for, I would say, oil and gas ports as well as train groups. And to that effect, the activities to tap into this are already well underway. And, you know, you would learn more about that going forward.

Thank you, Madhavi. Thank you. Thank you.

Thank you. Before we take the next question, a reminder to all participants, you may press star and 1 to ask a question. Our next question is from the line of Kunjal Khabra from Navishal. Please go ahead.

Thank you for the question, sir. My first question is that, just in the follow-up to the last question, you mentioned that in Europe, they are not doing well, but their audiobook is very strong. So, are we like gaining market share from other players or the other players are operating at low capacity utilization or are we having any competitive edge in terms of cost? So, why is it that the market is not doing well but we still have a strong order book?

Yes, we have a strong order book and the efforts which were put in with the integration between Rankinshaw and our Usha Margin India operations we had made some good breakthroughs in our last year, second half of last year and those contracts have been well supplied and we have now got repeat orders and also getting more and more references to get more orders from other similar customers. This is helping us to have a strong healthy order book because these are long-term delivery because there are logistics issues between suppliers from India, UK and to the customers and these are all specialized, mostly all specialized roles. So, that is something which is helping. Now, to answer your second question, of course, it's a competitive market and we are competing with the Europeans and the Americans to get these market shares. We have some cost advantage but I think it is more that how you are able to place your normal Kenya brand along with our global development center, which is our R&D setup over there together, to help us get these orders. And to let me put it that our few successful supplies which we have made have been well appreciated by our customers. And this is helping us to get to bigger share of the pipe from the European market.

Thank you. Sir, and is the Capex plant the phase 1 was expected to start in few weeks, is that on time or how is this?

See, the Usha Margin Rashi plant which we have put in the major part of the phase 1 of the Capex, it's a brown field expansion Rashi plant. So, this is a combination of adding additional manufacturing equipment both in wire growing, stranding and clothing. and also increasing our patenting facilities to enhance the volume. While most of the equipments are almost in the final stages of commissioning, one important furnace which will help us increase the volume is getting commissioned in January. So I would say that we will be able to complete all of it towards the, and start getting the benefits of that from quarter four. Some we may get in quarter 3 but majority of that we start getting in quarter 4 once the entire thing is getting implemented.

Okay. Okay. And also I wanted to understand that in this quarters, volume quarter and quarters, I compared it with Q1. It was for higher and higher ropes, it was exactly the same and in the opening comments, you were guiding of higher realizations. With quarter and quarter, if you see a wire and wire, it's a realization that drop by 3.5%. So, what could be the reason for this? And also, if you can give us that, you know, how the volumes in the outside India, the volume number in outside India and versus the volumes in India.

Anirban, can you take this question, please?

So, are you talking about quarter on quarter development or year on year for the quarter development in terms of volume?

Quarter on quarter Q1 f by 24 and Q2 f by 24. If we see the volume, it has remained the same, which is 23,000. But your limitation has got various, if you see in H1, the prices of C have increased. So, why is that so?

No, no. So, prices of steel, you know, don't look at the purchase price. So, there are the consumption types. Quarter on quarter, we have actually got a benefit from the steel prices. So, we always have a 45 to 60 days of stock in hand. So, therefore, it is not a, you know, exact, you know, the purchase price is not equivalent to the consumption price. So, we have a benefit quarter on quarter for about 4000 rupees in the price of steel.

Okay.

And the realization in domestic terms also, we've got an improvement in specifically wireless to the tune of around Rs. 4,000 to Rs. 5,000 per time.

Quarter on quarter.

In the domestic market, Rs. 4,000 to Rs. 5,000 per time. Then why is the realization decline quarter on quarter by 3.5%?

No, so basically, you know, it is the drop in overall drop in LRTC and wires that has resulted in overall reliance.

Okay, I thought it's just wire and wire ropes I was actually calculating. No problem, we can get in touch offline, not an issue.

Also, if you can... You know, both in terms of volumes and realizations, it's LRTC that has been the... that has taken the biggest... decline.

Bigger decline. Okay. And sir, is it possible to share the volumes outside India and Indian volumes?

We can, sure. We will go step by step.

I mean, we generally put on standalone and confirmed numbers.

That you put, but yeah. Yeah. Okay. And also, I wanted to understand that, you know, with this new CAPEX is happening, which we are actually trying to cater to the export markets. So, are we really confident because Indian markets are doing sitting well right now in terms of capital goods and construction and oil and gas. But in the domestic, in the export markets, Europe is, sadly, we have a strong order book, but US, Europe, the activity is not that strong. compared to the Indian thing. So, are we very confident on ramping up at full capacity utilization in say 2 to 3 quarters?

See, demand in India is strong which is absolutely right and we are seeing that across because of the investment in the infrastructure which is taking place. So, we are increasing our market both in terms of we already have 65 to 70 percent market share but We are maintaining and increasing our volumes in the domestic market based on the overall growth. But our various initiatives in the international market, as we had mentioned earlier, that our share in the US market is only 2-3%. And even in Europe, it is around 8-9%. So, there is an opportunity for us to increase our market share in these markets. So, the new expansion which we are doing are two parts. One is, of course, we are increasing the volume. And secondly, it is also going to help us improve the capability of higher value added products in the mining, crane, elevator and all these sectors where we are reasonably confident of increasing our market share in the international market also. So, we don't see a problem in able to increase RAN public capacity in three to four quarters, which you want to know, it will be possible for us to do that.

Okay. Thank you so much and good luck.

Thank you. Thank you. Thank you.

Ladies and gentlemen, you may press star and one to ask a question. Next question is from the line of Rajesh Majumdar from BNK Securities. Please go ahead. Good afternoon, Rajiv sir, Anish Bhan, Shreya. I had a couple of questions. One was that if we look at the turnover growth in the first half, it is 1.3%. And you have guided for a 15% kind of revenue growth per annum. So now it looks unrealistic for us to expect that kind of revenue growth in the second half. without significantly increasing our LRPC sales which will be at the cost of margin. Is that a correct presumption? And the second point to this is how do we read into the margin in second half given that it's 18.4 in the first half with a lower proportion of LRPC sales? I think, you know, first question what you said is absolutely correct. The lower volume, the... although we got a 1.3% increase, there was almost a 20 to 25% lower sales in our LRPC and wire segment. The second half of the year, we expect it to be better because of now the, and there is a very strong demand coming from the infrastructure projects in India, which were affected during the monsoon period, particularly the segments in which we were selling our products. So we expect the second half of the year increased both LRPC and wire phase and also you should be and which is going to of course the blended margin is definitely going to be impacted because as we have even mentioned earlier that we have the operator 3 segment the wire rope segment the LRPC segment and the wire segment. So, these three segments will operate. Naturally, if the volume of the and the value of the wire and LRPC which is the lower end would be coming down, which has come down. So, although it has impacted the revenue, we have been able to get a better margin because the wire rope gives us a better margin. So, what we would suggest is that when the way we look at it is the absolute profitability. And I think the focus on wire rope would continue and that is something which we feel in the second half it should be better and with the project getting commissioned, the volumes and the higher value added product would keep on increasing on the wire rope segment. LRPC and the wire segment in the next three quarters before the monsoon, I feel that that should be coming back to its normalized level. And that is something which is going to at first get a higher top line, but it is going to have a blended EBITDA margin which would be there. But again, and because of repetition, we would focus to get a higher overall PVT in the company And that is possibly by utilizing all our assets to its fullest possible extent. Yeah, so in this connection, I had an added question. Is the return on capital on NLTC wires as lucrative as the wire load business? Because the margins are something. But basically, for a businessman, the main thing is the return on the capital employed. So is that a comparable across all the three businesses?

No, no, no, no, no.

It would be much lower. If you look at the, while we do about 23, around 23% ROC, the COOP ROC is much higher compared to the LRCC and WIRES. They would be significantly lesser. Okay. Okay. And so my second question is on the value addition from Rashi. So you have guided that 18% kind of margin and we are already at somewhere above 18 or maybe around 18 considering a drop in the second half. So is it safe to assume that post the Rashi expansion and full swing, say after a year or so, we can look at a slightly higher margin trajectory for our YRO business? Yes, of course, we expect the margins because the new capacity expansion is not only helping us increase the volumes, but it is also focused into the more higher segment of wire rows which we plan to increase our volumes. So, I am sure that is going to help us into wire margins.

Okay. Thank you so much. Thank you.

The reason written, you may press star and 1 to ask question. Our next question is from the line of Sarkis Kapoor from Kapoor & Co. Please go ahead, sir.

Yeah, namaskar, sir, and thank you for the opportunity. So, when we look at your employee cost as a percentage of sales, what should be their number? Currently, I think it is closer to 13%. on a top line of on a consolation top line of 785 crore the employee cost is around 105 crore so what should it look like going ahead and why any reason why the numbers look so high this includes all our international operations and India operations on a consolation basis we operate in different parts even in developed countries where the cost the manpower cost is higher the way we are planning to expand our the way we are planning to expand our volumes in the international market there would be marginal increase in our cost particularly on the sales force but the basic overhead would remain the same. I would say that going forward with the commissioning of the new capacity and increase activity of business in our Brunton shore and all the percentage should improve uh should come down as a percentage uh going forward by at least one to one and a half percent as you articulated to the point of uh the entire capital work in progress the amount is around 210 crore so what will get capitalized by the end of this year and uh Where are these money deployed to? Is it entirely to the RIT CapEx or if you could just provide the break-up? Anirban, would you like to take this answer? Actually, first half of the year, we spent about Rs. 136 crores in CapEx. That's been the CapEx spend. Out of which, all the various programs that we are ongoing, it's about Rs. 90 crores. during the first half and we expect that by Q4 the phase 1 of the cap-in should be entirely cap-line which would be in the range of 300 to 310 crores. But by end of Q4. So this entire amount is spent for the Rashi facility only. The closing balance of 210 crores also and the one which will be spent across till Q1 of next year. No, so don't look at closing balance. Closing balance includes lot of other capex also at topsoil level. You will have the SAP projects ongoing, other digitization projects ongoing. But from a, I am just telling, giving you from a spend perspective that, you know, almost of the total capex still days, we have spent almost 230 or so. And we will complete that, the balance spent by the end of the year related to the programs and it will be capsized. compares between 300 to 310 crores by end of June 4th. And that is entirely for the wave 1 and it is pertaining to the Rachi facility. Is this correct? Yeah, so when I am talking about 300-310 crores that is specifically for the wave 1 as we have guided and that is entirely in Rachi. two years or maybe one year down the earlier you have spoken in the agent that you were making some some inroads in some very new uh creation market uh in the export segment wherein it takes around three to four years to develop the product and once you get a certain and you are uh you are ready with the testing part then there is a series of orders flowing so where are we in terms of the work that we have done and when are we going to start bearing the truth whether we have already started or in which stage are we? We started this journey and we started getting some big contracts and trial orders more trial orders and big contracts in the second half of the last financial year And it takes almost 3 to 4 to 6 months because the wires and strings are produced in India then finally closed in Europe. These ropes are between 200 to 350 tons single reel. So I am happy to say that all the trial orders and the initial orders we received have all been successfully delivered to our customers. And now based on we have got repeat orders from the same customers as well as it has helped us to build a reference and we are getting decent, we have a decent order book now and the pipeline of inquiries is good, particularly in the oil offshore and wind energy sector, in the European, South American and some of them in the Australian market and I expect Benefit of that to start coming significantly in the coming quarters. So these all will add to the value-added segment? All these are in the value-added segment only. When we look at the numbers on standalone and consolidation, so in your presentation, sorry if I'm incorrect, correct me there also, if you can provide us what goes into consolidation separately explaining that that would be very helpful and also on account of this JV part, share of profit on JV, if these two aspects are more insights are provided, that would be more helpful if going ahead. So, sir, if you can share them offline, it would be good if you can share it offline with him. I think all these are... I would just like to add that on the share of the profits of our joint venture, we have one such joint venture, which is called Usha, Jopeng Usha. Jopeng Usha, which is a joint venture with an Austrian company, producing very high-end... wires which goes into the auto sector, oil-tempered wires which goes into the auto sector. This has done well. We have 40% of the shareholding and 60% is with Jopeng. It's got the plants in Ranchi. We jointly manage it and it is a profitable business and has helped us very well in improving our market share in this specialized wire market. So, this is something I would like to share. Yes, Anirban can share with you offline.

Okay, if I may add just a small point and then I'll join the queue if I'm allowed or shall I join?

May I ask one more question? Yeah. As you mentioned about the order book pipeline, if you could show some more color on the order book pipeline and also going ahead as the earlier participants suggested, was this question about our revenue growing by 15% so how should H2 is currently looking in terms of the top line I think the profitability portion we may match this 18% EBITDA number so what should be the ballpark number we should look forward depending upon the figures on the as you have spoken about a strong pipeline and do we have any order book number which you can share and the existing periods on the same? Let me tell you that as I mentioned to you that we are in the process of the final stages of improving implementing the CAPEX in Raji, the phase 1 which is getting completed by Q4. Also the LRTC and the wire because of the Second half, we expect the volumes to be better compared to what it was in the first half. So overall, I can say that we should be doing better in terms of the bottom line. Of course, the full benefit of that capex will start coming from Q4 and further quarters. I think what as a management we are focusing on Till the time the volume comes is how to maximize our profitability. And that is something by virtue of looking at how to improve our product mix, how to improve our share of value-added products and services. Till the time our volume starts coming in and we get the benefit of volume and value both. So I think in these two quarters, while I would say that we would have a higher stop line than what we did in the first half, The immediate task is to see that how we improve and get a better profitability out of our operations and followed by volumes coming in the subsequent quarter.

Okay. So, to push this... Okay, I understand. Yeah, yeah. Thank you, sir.

Our next question is from the line of Prateen Roy from BNK Securities. Please go ahead. Hi sir, I have two questions. Firstly, you said that Medicaid has gone up sequentially. So, if I am not wrong, just because of the working capital thing. So, how many days raw muscles, in fact, that we have currently for thinking? So, yeah, I am just answering. So, right now, you know, the although you see an increase in net rate, but I would say that if you look at the leverage ratios, they are very much comfortable. The overall increase in net rate has primarily occurred of two reasons. One is there has been a dividend payoff during Q2 and also because of the capital spend of almost 136 crores during first half. In terms of working capital, in terms of the working capital days here at 190 crores, overall NWP of which which is almost about 186 is pertaining to the inventory. It is slightly built up from the FY23 end levels for the simple fact that we are building up the inventory as the subsidiaries for the simple reason that we anticipate a higher you know rate of sales in H2 of this year. So, it's sort of planned and we hope that the inventory levels could reduce substantially over the next two quarters. Let me add a point to this is that you know our That is still very low despite the 76 crore of dividend and the capex outlay which is ongoing. Even considering everything, the company is highly delivered and of course our focus on managing working capital and generating free cash flows to make it better going forward.

Thank you, sir.

And second question is that, sir, is there any market share gain you have observed during the first half of the financial year in the international market? I couldn't get you. Can you come again, please? I am asking, sir, is there any market share gain that you have observed during the first half of the financial year in the international market? From international market? International markets, as I mentioned, have been... You know, of course, there are challenges in the European and the American markets in terms of the overall economic situation over there. But the company has been able to gain its or strengthen its position in the specialized roles as what Shreya mentioned earlier in the European and the American market. And we have started getting benefits and we expect that to continue Even in the coming years.

Thank you for the opportunity sir. Best of luck for the coming years.

Thank you.

Our next question is from the line of Arjun from Fordham. Please go ahead.

Sir, thanks for releasing such excellent results and I think you are among the few companies I track where the management has been so prudent and frugal in their capital deployments. Given this backdrop post the announced already CAPEX plans, do we have, will we have any more CAPEX other than the maintenance CAPEX for the next two or three years?

We have CAPEX phase one of which is getting completed of 310 crores and we have already announced another CAPEX which will be done over a period of next two years of 160 crores in India and around 60 crores in Thailand over the next two years. Other than whatever has been announced, we do not have any other capex plans and it would be more in, as of now, till we complete all these, we would, it would only be routine capex.

This is great news because if you are having a capex of this size, some it up, it would come around like 250-300 crores but we generated around 500-600 cash flows this year and maybe much more the next year. So can we safely assume that a major part of these cash flows would come as a dividend to shareholders?

You see, we have a dividend policy which is about 25 to minimum 25% of our profits. We will which is stated quality and I am sure if the company does well, it will reward its shareholders.

Okay, so because we will be generating around 600-700 crore cash flows is what we estimate given the growth rate what we have. So why can't we, because we don't have a great amount of capex after this, why can't we expect a 40-50% kind of a dividend payout?

See, let's look at all options.

You know, we will definitely look at all options depending on finally the estimation and data. So, this is what is currently stated. I'm sure the board will look at all these options and all these things once we get to those levels of data.

Okay, okay. So we could, as investors expected, there's not much of CapEx plans around the 50% dividend period.

That's the problem. I can only talk right now about the CapEx and that is what we have committed and that is what we have in plans to do and balance is within CapEx. And hopefully the things Some better things will, you know, I'm sure all stakeholders including our shareholders who are very important will definitely benefit out of that.

Okay. Thanks for that reassuming statement. So another question on your margins. Given now Q4 you'll start commissioning on those high growth, high growth, high margin growth business from Janchi. Can we, what kind of margins can we expect after this on an average from the company?

As I mentioned, the margin is also depending on how our all three segments perform. You know, it is we look at that. When we look at it, while of course margins of individual businesses are important, but we have the manufacturing capacity for all three products, which, as I mentioned, the rope of the LRTC and wire wear subdued in the last couple of quarters, we expect that to come back. So when the volume of those will grow, of course the overall profitability will grow, the blended margin may come down, marginally. But again with the increase in the wire rope of the higher value added, it will go up. So I think we should, we should, you know, we hope that we continue at these levels. It depends also, the margin going forward also depends on the weightage of the three segments, how much we are reproducing and how much we are selling, because all these three are totally disproportionate in terms of the margin between the wire and LRPC. But we expect it to be at similar levels or growing gradually as we go forward.

Yeah, because we are getting into high growth margins from Q4, natural expectation would be that we would be higher from where we are right now.

But if the volume of Avais and LRPC also grows significantly in these quarters, it will help us overall profitability, but it may have a blended effect on the overall margin. So, You see, it's a very dynamic business and if we expect the LRTC and wire because the demand prices are good, we would continue to increase our production and sales of LRTC and it may add a little dampness to our margin but it will improve the profitability. But on the other side, our effort to increase the wire rope value added as well as the volume would continue. So, what it would ultimately determine would also depend on the margin of all the three and the volumes of all the three coming. So, we are all working towards absolute profit and hopefully it should improve the margins.

Okay. Okay. So, I think this is really expecting that you go a little more aggressive. At least from my point of view, a little more aggressive in your dividend payout if there's not much of capital. Hoping that you'll help us with that. Thank you so much.

thank you our next question is from the line of anand jain who is an investor please go ahead uh thanks for the opportunity and congratulations on a good set of number uh my first question is uh you've been a remarkable job in uh wire rocks uh moving up the quality curve we also had similar plans for wires where are we on those plans and where can we see

significant developments in that direction.

The wire side of the business to be honest to you our focus has been in the last few quarters more on the wire group because we saw big opportunities and particularly through our integration. We have identified quite a few areas on wire a lot of which is awaiting the new packaging capacities which are getting added. One of them has just been updated and the other one is expected to get commissioned in January. So then we will see the volume of wires going up. So we have a focus is still there but I would say that it would start happening from next year because all the attention and capacity was primarily first given for increasing the rope products. So even this new increase in wire capacity that we will be looking for going ahead, maybe in Q4 or Q1 of next year, do we expect them to be at a reasonably higher margin than the current wires that we are doing? Yes, of course, because all those will be through the connecting route, which generally helps you get a better... margins than just pure straight drawing. On the volume side, Rajivji, so this quarter round, was it because that we wanted to have a higher volume of buyer groups and that is the reason that we had a lower volume of LRTC or is it because that, you know, we did not have orders for LRTC that our volumes went down? You see, the LRTC The wire rope and LRTC making capacities are completely independent of each other. So there was no loss of LRTC because of the focus on rope. So that is because we are two independent plants within a plant. The LRTC, the orders and the markets where we were operating were definitely affected in the monsoon period which affected. We are seeing upper traction from November onwards, partly in October, but November onwards. And the order book is also getting better. So, hopefully, the NRPC volumes we will see better in Q3 and, of course, should do well in Q4. And how about plasticated NRPC? Because I think that's a – how is that doing? That's a very specialized product right here. It is LRPC is, I am happy to say that the products which we have supplied have been accepted well by the customers. These are all project based. Some of the projects where LRPC plasticated, we have supplied, we have all been, both in India and we have done some internationally also, have been well accepted. The initial test results have been good. We have got a decent order book, but in this quarter, we would have had more, if I'm not mistaken, close to about 500 tons of resources. We could have done more, but those projects were affected because of the heavy monsoon in that area, and particularly in Bihar and parts of northern India. But this is an important project, important product for us, and we expect the volumes to be growing towards 400-500 tons a month in the coming months. Okay, thanks Radhiji and wish you all the best.

Thank you.

Last question for the question and answer session is from the line of Vivek Chaturvedi, who is an investor. Please go ahead. Hi sir, good afternoon, sir. of H2 wire rope and LRPC volumes would you be able to share that? I can only tell you that we are all pushing hard to do better and it could be better than the first half both the LRPC because now the monsoon season is over we expect the volumes to be higher in the quarter 2 in the second half of the year both on the wire rope and on the LRT. So, I can only say at the moment that we should do better. Okay, sir. And the EBITDA would also be broadly similar to H1 levels?

EBITDA per time you mean?

I mean? I think as mentioned before, the EBITDA would really again depend on, the EBITDA margins would really depend on the product mix. With regard to absolute numbers, the endeavor would be to continue to grow but at this point he will not be able to give any specific numbers on that.

Sure. Okay. Thanks. That's all from me.

Thank you. That was the last question of our question and answer session.

I would now like to hand the contents over to the management for closing comments. Thank you.

I would like to thank everyone for attending this call showing Interest in Usha Madin 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 CBR India. Thank you once again for taking the time to join us on this call and see you all in the next quarter. Thank you. Thank you. On behalf of Usha Martin Limited, that concludes this function. Thank you for joining us and you may now disconnect your lines.