Usha Martin Limited ($517146)

Ladies and gentlemen, good day, and welcome to the earnings conference call of Usha Martin Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Devrishi Singh of CDR India. Thank you, and over to you, sir.

Thank you, Rutuja. Good evening, everyone, and thank you for joining us on Usha Martin's Q4 FY '26 earnings conference call. We have with us Mr. Rajeev Jhawar, Managing Director of the company; Mr. Abhijit Paul, Chief Financial Officer; and Ms. Shreya Jhawar 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 shared with you earlier. We will initiate the call with opening remarks from the management, following which we will open the forum for Q&A session. Before we begin, 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. Rajeev Jhawar to make his opening remarks. Thank you, and over to you, sir.

Good afternoon, everyone. On behalf of the Usha Martin management team, welcome to our earnings call for the fourth quarter and full year ended March 31, 2026. I'll start with the financial results, cover the key drivers behind them and also share our outlook for the year FY '27. We closed FY '26 with consolidated revenue of INR 3,691 crores. Operating EBITDA grew from INR 597 crores last year to INR 705 crores this year, reflecting a margin of 19.1%. Operating cash flow conversion was healthy at 104% of the operating EBITDA. We ended the year with a net cash position of INR 332 crores compared to a net debt of INR 63 crores in the previous year. In Q4, revenue stood at INR 979 crores, up 9.3% year-on-year. Operating EBITDA was INR 212 crores, the highest since the sale of the steel business with margins at 21.6% and EBITDA per ton at approximately INR 39,500 per metric ton. So what drove these numbers? Our international rope business performed well, especially in Europe and the Americas. Segments like cranes, elevator and mining saw good traction. Over the past few years, we have invested in expanding capacity and deepening our technical capabilities of high-performance ropes in India. That groundwork is paying off. With Ranchi's upgraded manufacturing capability and Brunton Shaw's brand integrated together, we are executing larger, more complex projects for global OEMs and end users. During the quarter, we executed a landmark Oceanmax project at our Ranchi facility, including the largest single reel rope production ever undertaken in our Ranchi plant. This is a tangible example of the capability our recent capital investments have created. Alongside this, our One Usha Martin program continues to drive efficiency across the group. So our cost base has become structurally leaner while revenue is shifting towards higher-value products, geographies and applications, giving us clear operating leverage. Having said that, the operating environment did pose some challenges this quarter. The ongoing conflict in the Middle East led to slower customer activity and project delays in both Dubai and the Saudi Arabian markets. Supply chain in this region were also disruptive, affecting the timing of some shipments. Volumes in the Middle East came in below normal levels. The broader geopolitical situation also created tightness in raw material availability, putting pressures on input costs. However, we were able to manage through this effectively. First, we proactively built additional raw material inventory to ensure continuity of supply with no disruptions to production at all. Second, in wire and LRPC, we passed through the input cost increases, so margins were not impacted. Third, in rope, a better product mix with a favorable shift towards higher value-added applications improved realizations and margins while also helping manage volatility in rod and gas prices. Fourth, while the Middle East was softer, we continued to see healthy demand in other markets, which more than compensated. And fifth, faster decision-making meant we stayed ahead of the situation rather than reflecting to it -- rather than reacting to it. All in all, the way we navigated this quarter gives us confidence in the resilience of our business model, which is very diversified across products and industries and geographies. Looking ahead, growth remains a key priority. There are 3 areas that give us confidence about the next financial year -- this financial year ahead. The first area is value-added rope applications, oil and offshore, elevators, port cranes and mining. We have built references and field performance data in these segments over time, and the track record now lets us approach a wider set of customers. We are already seeing this play out with growing order book from new customers for H1 this financial year. In oil and offshore, specifically, there is an added tailwind. More countries are prioritizing energy security and that's driving demand that we are well positioned to capture. Beyond core rope, some of our newer business verticals are maturing well. OCEANFIBRE synthetic business and plasticated LRPC are 2 examples where the time we put to product development, technology work and customer approvals has created platforms that are ready for the next stage of growth. We expect meaningful scale up in FY '27 and beyond. And finally, from a capital allocation standpoint, with strong operating cash flows and a positive net cash position, we have the bandwidth to invest from internal accruals. We'll continue targeted capital expenditure where demand visibility is clear and we are also evaluating selective organic and inorganic opportunities in markets where our footprint is still limited. In summary, we enter FY '27 from a place of strength, a healthy balance sheet, a richer product mix and growth engines that are beginning to deliver. The hard work of building the foundation is largely done. Now it's about execution and scaling up. With this, I would now like to invite our CFO, Mr. Abhijit Paul, to take you through the financial highlights for the quarter and the year ended. Thank you.

Thank you. 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 full year ended 31st March '26. Starting with the fourth quarter, consolidated revenue was INR 979 crores, up by 9.3% year-on-year. Rope revenues grew by about 14.8%. Wire revenues saw a notable 31.2% increase while LRPC was lower by 20.4%. Operating EBITDA for the quarter came in at INR 212 crores, up 52% with margins expanding to 21.6% and EBITDA per tonne of nearly INR 39,500 in a challenging macro environment marked by supply chain disruption and elevated input costs. PAT from continuing operations stood at INR 155 crores. For the full year FY '26, consolidated revenue was INR 3,691 crores, up 6.2%. Performance during the year continued to be led by our core businesses. Wire Rope revenues grew by approximately 8% for the full year, while Wire segment saw strong revenue growth of around 24%. International revenues now account for 57% of total top line, up from 55% last year, reflecting good traction across global markets. Operating EBITDA grew by 18% to INR 705 crores with margins improving to 19.1% from 17.2%. Operating EBITDA per tonne also improved to approximately INR 34,100 for the year compared to around INR 30,100 last year. PAT from continuing operations increased to INR 491 crores compared to INR 406 crores last year. We have made meaningful improvement on the cost side this year. Our One Usha Martin program is now showing up clearly in the numbers. Fixed employee costs came down 3% and administrative expenses declined by over 7% year-on-year, even as we grew the top line by 6%. Our finance costs came down by around INR 10 crores as we repaid our debt amounting to INR 192 crores. The progress during the year is best reflected in the strength of our cash generation. Operating cash flow stood at INR 736 crores, translating into a conversion of approximately 104% of operating EBITDA. After funding CapEx of INR 198 crores, free cash flow stood at INR 457 crores. This was achieved despite consciously building inventory buffers to manage supply chain disruption due to the ongoing geopolitical situation. Even then net working capital days improved to 194 days from 199 last year and ROCE improved to 20.6% from 19.3%. As a result, we closed the year with a consolidated net cash position of INR 332 crores and with stand-alone operations now entirely debt free. This is an important milestone for the company. Over the last few years, we have moved from a phase of deleveraging to a position of balance sheet strength. This gives us the ability to fund growth through internal accruals, remain resilient in volatile markets and maintain discipline in capital allocation. To conclude, FY '26 has given us solid foundation to support the next phase of growth. We will continue to invest with a clear focus on returns, cash generation and long-term value creation. This brings me to the end of my address. I will now request the operator to open the line for the question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of Aman K Sonthalia from A K Securities.

First of all, congratulation to the management on delivering a strong set of results along with an attractive dividend payout. Sir, I've few questions regarding this quarterly result. The number one is, sir, though the profit is excellent, the margins are very good, but as far as volume is concerned, it is still concerning. I think the volume has not picked up. And what is the reason behind that?

Thank you for the question. So in terms of volume growth for this quarter, volume growth in ropes was at about 5%. Like we mentioned, the focus has increasingly for us moved towards specialized and high-performance rope applications. And in those categories, tonnage growth is not always linear, but we do have better quality of revenue with stronger realizations and healthier margins. That being said, in this quarter, particularly, the rope volumes came in lower than our expectations because in the Middle East, because of the crisis, we did see demand being impacted because of the overall geopolitical situation. So that did have an impact of about 900 tonnes or so for this particular quarter. Had we had that, we would have been at about 8% growth in ropes for the quarter. But that being said, in FY '27, the priority is volume growth while at the same time, maintaining the quality of mix. And with the groundwork that we've done over the past few quarters and over the past year in terms of market development with the capacities being commissioned in Ranchi as well, we are confident of stronger volume growth in the upcoming year.

Okay. Madam, the ongoing crisis in the Middle East, the war between Iran and other countries, I think it is not going to be last very long. So whenever the war ends, I think Iran -- the sanction on Iran will come to an end. And since there is a lot of disruption in Middle East due to this war, so I think a huge market will create. So how is the company positioned to benefit from this reason?

You are absolutely correct. Of course, we all are hoping and expecting that this should not continue and come to an end soon. If that happens, definitely, we'll see a huge opportunity, both from the reconstruction as well as from the production of oil offshore and all the reconstruction activities. So -- and we are well poised to take advantage of that situation. Also, we are happy to say while as Shreya mentioned that the demand has been affected in the fourth quarter because of this ongoing conflict, but I'm happy to say that our plant operations are normal and everything is safe. And once the situation improves, I think we should be able to get substantial benefit coming out of the opportunities arising there.

Okay, sir. And sir, the margin for the quarter was excellent. It was very, very healthy. But right now, the steel price is going up and at the same time, the gas prices are going up, logistic costs are going up. So whether we will be able to maintain the same margin or even better the margin?

Yes, you're right, steel prices, gas prices, they have been on an increasing trend since January. We are happy to say that so far, we have been able to pass on the increase for the wire segment, LRPC segment as well and that would continue. Similarly, Wire Ropes also, we, on the one hand, have been able to pass on a large part of the increases combined with the better product mix as well. So we've actually -- as you said, we've been able to expand our margins even in this situation where prices have been increasing. Our endeavor would be to continue to do the same in the coming quarters, and -- yes.

Yes, and we hope that, earlier we were thinking that -- earlier what we have been saying that between 18% to 19%, we feel that even with the product mix and everything, at least we should be able to look at minimum of 20% operating margin. And as also we have been mentioning even earlier, our focus would always be to improve the overall absolute EBITDA numbers. And these can change because of the product mix changing in a particular quarter. But overall, we are pretty optimistic that we should be able to improve our margins.

Okay, sir. And one more question related to, sir, synthetic [indiscernible] and plasticated LRPC. So any breakthrough or any meaningful growth we can see in the coming -- in this ongoing financial year?

Yes. On the plasticated LRPC, we have been working with a few customers for their approvals and I'm happy to say that we have progressed well on those. It takes some time to get those approvals. So we are working with a few of the global players and we are very close to coming to that. And once that is done in the next few weeks, we see the opportunity of getting into the global supply [Technical Difficulty] both in domestic and export market. So...

Sorry to interrupt you, sir, we are unable to hear you clearly. Your voice is breaking.

Can you hear me now?

Yes, please go ahead.

Yes. So we are expecting a healthy growth on the plasticated LRPC once these approvals are in place in the coming few weeks as well as on the synthetic sling, the very first year, we have been able to get some very good traction with approvals with customers and repeat orders. And we expect this also to significantly grow in the next -- in this year and the coming years.

Sir, the last one is how the European and U.S. market is looking for us?

So the European market is, as you know, a very important market for us. It's about 26% of our top line. It performed well in this financial year and the outlook is positive for the next year as well. All of the changes we made in terms of the integrated model between the Ranchi manufacturing and the Brunton Shaw brand, that has started giving us the dividends and it's working well for us. It's helped us increase our share with the premium customers, both the OEM and especially in the high-performance segments like cranes and mining. Second, we are [Technical Difficulty] in Europe. So that is helping us work more closely with the customers and we are providing them value-added services instead of just the standard product. So that [Technical Difficulty] and increases the stickiness that we have with customers as well. Going forward in FY '27 [Technical Difficulty]...

I'm sorry to interrupt you, ma'am. We are unable to hear you.

Hello? Can you hear me now? Hello? Yes. And going forward as well, the order book is looking strong, which gives us good visibility going into [ H4 ] also.

And what [indiscernible]?

In terms of the growth from 7% of our top line went to 9% of our top line for this year. So even though on the ground, it has its share of challenges around tariffs, trade uncertainties, et cetera, we do see good opportunities. It is a high value market. So elevator ropes, again, crane ropes, mining ropes, the work that we've done over the last few years did support us to navigate the challenging times. So going forward as well, still our market share in the U.S. is sub-5%. So there is tremendous opportunity for growth.

Sorry, Mr. Aman, may we request you to please...

Yes, that's all from my side.

The next question is from the line of Vinit Thakur from Plus91 AMC.

Congratulations on the recovering margin and the great results. I had a couple of questions regarding, there is an increase in our other income and reduction in our interest as well, even though the debt reduction is not that great. And we have also seen a higher realization quite a bit. So would you expect a similar realization going forward? Or would it be the same?

Abhijit, can you answer the debt and the interest costs?

So on the -- one question was regarding other income, right? So --

Yes, sir.

-- the other income for this current quarter includes the refund on which we have got interest, so that interest component of INR 19 crores is included in other income. So that is one. And on the interest cost, yes, there has been a substantial reduction compared to last year. So we have repaid around INR 193 crores in borrowings and we are debt-free across all the geographies, except one. So there has been -- that is the reason behind the decrease -- decline in the interest cost.

And in terms of the realization, as we mentioned in our opening remarks, we have been able to develop certain products in our international market and built up certain good customer base for oil, offshore crane and mining. And we have a fairly healthy order book in the first half of this year in H1. We hope the realizations would continue to be healthy.

And sir, for margins as well, will we kindly do 19% in a couple of years or it's going to be more than 19%, I mean to say? Can we do more than 19% going forward?

Yes. I mean, for this year, it was above 19%. And this quarter, we did close to 22%. And as we mentioned that we are confident of sustaining margins at the 20% range because of the overall better mix and the high-performance segment that we are targeting.

And we have mentioned that we are going to scale down LRPC and we are going to work on the plasticides as mentioned by a previous participant as well. So LRPC is going to reduce and we are going to -- the traditional one is going to be reduced to by what time, like what time would we assume that traditional LRPC contribution will be negligible, because we have been reducing on quarter-on-quarter as...

Yes. I mean, in terms of plasticated LRPC, first thing is that some of the major approvals are within a couple of weeks, which should be done. So that will help ramp up the volumes, both in the domestic as well as the international market. As those approvals come in and then also obviously, because it's a project-dependent market, as the projects materialize as well, we would gradually convert that LRPC into plasticates. We have a capacity of 6,000 tonnes per annum of plasticated LRPC. So to the tune of that, we would aim to convert over a period of time.

And the black LRPC, we will continue at the -- and we expect even this year to do around 48,000 tonnes what we did last year and the plasticated LRPC of close to 5,000 to 6,000 tonnes as the approvals convert into orders.

Okay. And sir, what are the CapEx guidance for next 3 to 4 years?

The next 2 years, we are looking at -- in next 2 years, we intend to spend close to INR 300 crores to increase our manufacturing capacity for elevator ropes and some more opportunities where we see for some specialized wires and also increasing our capacity of plasticated LRPC. So in next 2 years, we see a CapEx of close to INR 300 crores. In addition to this, as we mentioned in our opening remarks that we would also look at opportunities of some inorganic growth in areas where we want to expand our presence globally, particularly in the value-added and rigging and helping us to get close to the customers.

[Operator Instructions] The next question is from the line of [ Pranav Iyer ] from [ PN Capital ].

This is [ Tushar ]. Just wanted to know, you just said CapEx of around INR 300 crores that will be mainly for Wire Ropes and how much capacity we'll add present?

So we are planning to increase our rope capacity by close to 6,000 tonnes with this and almost 70% -- 75% of the CapEx would be going to expand this capacity. And the balance 30% would be augmenting capacity of specialized wires as well as the -- further increasing the capacity by some addition of few equipments and testing facilities for plasticated LRPC.

And plasticated LRPC, you said we can sell around 6,000, 7,000 tonnes per annum. Am I right on this number?

Yes, our current capacity is around 6,000 tonnes. So we should be able to -- but we would also like to -- once all the approvals are in place, we are able to also get to the export market for these products. So we will be able to -- once we are close to utilizing this capacity, we would take steps to further augment our capacity to 8,000 to 9,000 tonnes, but all those will come in steps. And those costs are included in the CapEx, which we intend to do over the next 2 years.

And can you also give some color on how is the demand in India for next, let's say, 1 or 2 years apart from plus whatever is going on globally in the rest of the markets like Europe and the U.S.? Do you expect any disruption of demand in next year?

No. Our demand, as we mentioned, that our demand from Europe and America is pretty strong, particularly in the segments of oil, offshore, crane, wind energy, so these areas we are seeing, because most of these countries are wanting to have their own energy security. So we are seeing a fairly strong demand and order book for -- and there are a lot of projects in the pipeline and inquiries in pipeline and we are having some good orders for the H1. We don't see any pushback in demand from these markets. As far as India is concerned, India, we are growing at 6%, 7%, 8% in the whole -- and we have a fairly large market share in India. And we would continue to grow based on how the country grows. We should be able to hopefully maintain and slightly increase our market share, particularly the elevator, the ports, these are markets in India, which are growing at a much faster pace. And we are building up capacities to ensure that we are ahead of the curve to take care of the demand.

The next question is from the line of Shraddha Kapadia from SMIFS.

Congratulations on the good set of numbers. So if you could help me with the current capacity utilization for the different plants?

In terms of capacity, the total rope capacity now is about 140,000 tonnes, out of which we are, say, at about 75% utilization. And in terms of wires, we are at about an 80,000 tonnes capacity also around 75% to 78% utilization. And LRPC, if you break it down, the normal LRPC is about 60,000-odd tonnes and the plasticated is about 6,000 tonnes. And even there, we are at about 70% or so utilization.

Okay. Sure. Also, if you could help or throw some light on the One Usha Martin initiative, so the benefits which we have realized till now and the future expectations?

So in terms of One Usha Martin, like we mentioned, Abhijit mentioned in the opening remarks that the benefits of that, we are already seeing in terms of one on the cost side, where fixed costs, fixed employee costs as well as the admin costs have come down substantially this year. That is on the cost side. And we feel that now we have a much stronger overall cost discipline in the organization as well and that is very well embedded both in India as well as our subsidiaries. Then on the revenue side as well. So as we're working as One Usha Martin, we have better working between India and the subsidiaries across all the high-value segments. So global references from one location is helping us build market in the others like we mentioned. So as we are working more closely, sharing references, sharing performance data, which [Technical Difficulty]...

I'm sorry to interrupt you, ma'am. We are unable to hear you. Hello? Are you able to hear me? [Operator Instructions] Ladies and gentlemen, thank you for patiently holding. We have management line reconnected. Over to you.

Apologies about that. So just back to your question, Shraddha, around the One Usha Martin. Like we mentioned, I don't know at what point we got cut. But on the cost side, we have been able to get significant fixed costs about 3%, admin cost about 7%, all in 18 months we've been...

We are losing your connection. Your voice is breaking in between.

Can you hear me now?

Yes, please go ahead.

Is it better now? Yes. So all we've taken at One Usha Martin, we've seen over the last 18 months, about INR 65 crores to INR 70 crores of cost savings that we've been able to...

Sure. If you could help with any future number or future guidance also, that would be great, with regards to the One Usha Martin?

Hello? Please stay connected. Please stay connected. We are reconnecting them. Ladies and gentlemen, thank you for patiently holding. Management line is reconnected. Over to you, ma'am.

Yes, apologies, apologies about that. Yes, I think we answered the question on One Usha Martin. So if there's any further questions, we'll be happy to take that.

Also if you could just help with any future guidance or future plans which you have with regards to this only, any quantifiable numbers or anything if you could help in terms of Usha Martin only, One Usha Martin?

This has become a discipline in DNA and we will continue to keep on working, getting more back-office services to India, further optimizing our cost. So this has become part and this will be a continuous way to look at efficiency. Yes.

The next question is from the line of Kartikeya Kumar Pandey from 360 ONE Capital.

Congratulations on a very good set of numbers. Sir, so my first question would be on the LPG cost. So can you quantify like what was the quantum for -- as a percentage of sales and what is the inflation on that? And are there any production disruptions that can happen if the crisis persists for some time, even after April that exists?

We use about 250 tonnes of LPG between -- close to 250 to 300 tonnes depending on LPG. So a few steps we have taken. a), of course, the cost has gone up from the earlier level of INR 60,000 per tonne to around INR 120,000 to INR 130,000 per tonne. We have been able to take a few steps. One is we have a line very close to our plant, which has just been completed and we are shifting part of our requirement to natural gas. The line is very close to our plant and 25% of our requirement, we will shift to natural gas, which is available in this part of the country. And the cost, whatever the increase has been there is close to about INR 2.5 crores to INR 3 crores a month because of the increased price of LPG and propane. We have been able to pass on the cost to the -- as a part of our product pricing to the customers. And we have taken advanced steps, as we mentioned in our opening remarks that we created enough buffer in our system and the supply chain management to book at the right time, even at these costs to ensure that there is no disruption and we don't expect any disruption on account of gas shortage.

Okay, sir. And sir, the 250 tonnes -- so the 250 tonnes, this is -- can you just help me understand like this is 250 tonne of LPG on like per tonne like what is the -- how should I model this if I want to understand apart from...

No, we -- you see there is nothing called per tonne because like LRPC doesn't require or certain wires don't require. So our total consumption is between 250 to 300 tonnes a month and that is across all our furnaces. So we cannot attribute it to any single product. So it is a total requirement. And if I look at it and our total cost is about INR 4.5 crores to INR 5 crores even at these inflated prices today. So it's not -- it cannot be attributed to per tonne of rope or per tonne of particular wire. It is used in a variety of furnaces. So we look at it as our total cost of 250 to 300 tonnes every month.

Okay, sir. So sir, I have a few more questions. So sir, like you just mentioned like previously, you were looking at 18% to 19% of stable operating margins. Now you're saying that this can inch up to 20% due to a better product mix. So if I'm not wrong, sir, if we push the product mix that we are looking at, so isn't that going to affect our volumes in general for the Wire Rope business? So what I want to understand is that what's the volume growth that you're looking at? Is it the same 10% to 12% that you mentioned last quarter? Or is there any change in that, that you're looking at?

No, we are looking at overall between our product mix, a growth of between 10% to 12% that would continue as well as our endeavor to move more and more towards specialized products would also continue. So it's going to be a mix of volume growth as well as continue to focus to build the higher value-added ropes. So it would -- both are independent and to some extent, interlinked. So both the targets are being simultaneously focused by us. And we would continue and we expect to -- barring some major geopolitical issues if they happen, we should be able to achieve the 10% to 12% volume growth and constantly push the value proposition also.

Okay, sir. But like if I'm not wrong, you had mentioned about some output drop if you venture into some kind of high-quality ropes like elevator and crane and mining option. So that's why I was just trying to bridge that pieces of that.

You see, you are right when it comes to certain compacted and high-quality ropes or some ropes which are running on the machine at lower diameter, so it's -- because the number of SKUs are pretty large in a plant like ours or in the rope industry, so yes, of course. But the kind of capacities which we have built in our plant now and the new CapEx, which has been implemented, we have the flexibility that within the volume to push higher value-added products as well as scale up our volume. So it is not that -- it's not a very simple calculation. But based on whatever infrastructure we have created in our facility, we feel confident that we will be able to manage both the value-added sector also, whereas at the same time, pushing our volume. So both will happen.

Okay, sir. Sir, I have just a few more questions, if I could just squeeze them in. So sir, what are your international market share as of FY '26, specifically in U.S., Europe and let's just say Middle East as compared to FY '25?

Overall, like we said, in the U.S. market, it's sub-5% share. In Europe, it would be higher with our service centers as well as our factory present about 10% to 12%. And in the Middle East, again, Middle East is a combination, there's a lot of general purpose ropes as well an unorganized market, but it would -- we are the only manufacturer of Wire Ropes in the GCC region. So that does give us a benefit and we probably have a larger share over there.

Sorry to interrupt, may we request Mr. Pandey to please rejoin the queue? We have other participants waiting for their turn. The next question is from the line of Kamlesh Bagmar from Lotus Asset Managers.

Very strong performance on the margins as well as a very good articulation of the outlook and the prospects ahead. Just one question, like, say, going forward, we can assume 6% to 7% volume growth on a like, say, CAGR basis for next 2 to 3 years Or like say, can we march ahead of that? Because honestly, like say, we have performed very well on the execution side. But like going forward, can we assume like, say, the growth will remain at 5%, 7%, given the fact that these are the industry where our product goes, there also the growth would remain at the similar levels?

It's a very good question. 6% to 7% growth is the normal growth what is for this industry globally, 6% to 7%. But as what Shreya mentioned that our share, particularly when you talk about Europe or talk about U.S., our base or our market share in those markets are very low. And once we have built our capacity as well as we -- based on the various CapEx, which we have already done and we have been able to make inroads, which has taken time for us to get into new customer approvals, new OEM approvals, even some of the new end user customers who we have been able to develop over the last 3 or 4 years, we have been able to build that kind of capability now and also the newer markets. We hope that both with a lower base and these product approvals and the markets which we have developed and the capability from the plant, we should be able to get to overall -- of course, it means Wire Rope as well as some specialized wires and plasticated LRPC in the entire basket, we hope to be able to get to that 10% to 12% volume growth for the next 2 to 3 years.

And second, as we ramp up our volumes, so our margins would remain at these levels or like because we want to capture higher volumes, so we have to take some hit on the margins or the product mix will take care of that higher volumes, how the things would be on the margin part?

Yes, as you rightly said, as the product mix is also getting better, we should be able to sustain at the 20% margin level. And our goal would be to continue to drive better mix and improve the margins going forward.

And once again, sir, a lot of appreciation, the way we have transformed our company since that exit of direct steel business, and wish you best of luck.

The next question is from the line of [ Diya ] from Sapphire Capital.

Sir, can you share your current order book and also provide a breakup of the order book?

You see, for the specialized projects, as I mentioned, we have a fairly healthy order book. We generally don't talk about any specific volumes because -- but we do have a fairly -- for these higher value-added products, a visibility for our value-added products for H1. 85% of our business comes through the replacement market. And we have a very strong dealer network in India as well as we have our own distribution arms and subsidiaries. So the kind of order book and the feedback what we -- based on all the inquiries, I think we have a fairly strong order book for the -- visibility for the rope for the next 6 months at least.

Sir, can you please quantify it?

No, sorry, we generally don't quantify our -- these quantities. We generally don't quantify these numbers.

The next question is from the line of [ Pavan ] from Viansh Ventures.

Congratulations on the result. I just wanted to understand the margin mix, basically we've been talking about increasing the value-added products. But if you see the value-added products from '25 to '26, it's pretty much the same at 53% in the oil offshore, crane and other value-added product lines that we highlighted. And still we've got a margin improvement and the gross profit per kg is largely the same in the last 2 years. So the margin improvement that we've seen is only due to Usha Martin, I mean, where can we see the contribution of value-added products coming in the margins?

No. You see, even in the quarter 4, we have seen the impact of the better product mix and our Wire Rope prices in the international market because of a better product mix, we have been able -- you can see it is over INR 300,000 per tonne for the first time. This is as a result of a fairly healthy product mix. And the gross margins have also improved over the last couple of years. So -- and also an impact of cost efficiency and as a part of One Usha Martin, that has also helped us to improve our cost structure. So it's a combination of the One Usha Martin where we have tried to optimize our costs between all our various subsidiaries and the parent company. And we have been able to also ensure that we have gradually moved to the value-added products. And as our export market also, our revenue, which used to be around 55% from the international business, that has also gone up to 57%. So a combination of all this has helped us to improve the margins to the levels what we are achieving now and hopefully, we should be able to be -- of course, it depends also on the product mix on a month-to-month and a quarter-to-quarter basis. But as we mentioned, Shreya mentioned that over 20% is the new benchmark we would like to hold for ourselves and try to see how we can continue to improve upon that.

And what you mentioned, the 53%, even if you look at within the value-added products, it's not that all of them would be at the same level. Fishing, for example, the share of fishing has decreased over a period of time, which is a specialized product, but it is lower value than, say, crane or mining or elevator, which has increased over time. Even within elevators, there are some which are more higher value realization products, there are some lower. So looking at this 53% in isolation probably is...

Understood. Understood, ma'am. And my second question would be on just more on the business understanding...

Sir, we have lost the line of management. Ladies and gentlemen, thank you for patiently holding. Over to you, sir.

Yes. So our focus is continuously to keep on improving the -- within the value-added into better product mix. And our endeavor would be to continue to improve our margins as well as at the same time, volumes are equally important. So it's going to be a balance between volume and value. And hopefully, we should be able to continue this journey as we have done in the last 2 to 3 years.

Understood. And sir, just one more clarification on the margins since Q4 is now the benchmark of, say, around 22% margins. And going forward, we are seeing healthy growth in volumes. We are anticipating healthy growth in volumes. We are anticipating easy pass-throughs of things. We have One Usha Martin which should continuously drive improvement. Why are we not expecting a growth in margins? Why are we expecting a decrease from 22% to 20%, like what is the link that I'm missing?

No, we are not saying that we are expecting to reduce it from 22% to 20%. Say for example, between last year and this year and even quarter 4 of last year to quarter 4 of this year, our LRPC sale is down by 20%. So if the LRPC, which is the lowest margin part of our business, if the volume of that has come down by 20%, that also improves the average of the EBITDA percentage or EBITDA per tonne. So our endeavor would always be like we used to say earlier that we would like to see that we are between 18% and 19%. We would like to see that, of course, we would be happy to see if it continues at 20%, but it is not a straight line because it also depends the mix between wires, between LRPC and within rope also, how much is of those big projects with value-added or of the different categories of rope. So our endeavor would not be to bring it down, as we would rather like to see it keep growing. But our minimum benchmark would be that we would like to see that, that push from 18% to 19%, at least to a minimum of 20%. And we would also like that we have a large capacity in the plant, we have put a large CapEx, that our absolute EBITDA numbers also keep improving. It's just not the EBITDA per tonne with the lower volume. We would like to also see that with all the fixed assets and the plants which we have created, the absolute EBITDA numbers also keep on improving. And that is something which we would be also focusing on.

Understood. And if I may just squeeze one more question. I was just looking on the realization of each of the subsegments, Wire Rope, wire and strand and LRPC and correlating it to the steel prices reported by the company. The value add really seems to have only been in the Wire Rope segment. The wire strand is almost 1.5x of the steel prices realization in that. So is it the right understanding to think that most of the value add going on is also expected in the Wire Rope segment?

You are right. In the normal wire and LRPC, it is the -- we are able to pass on the increase of steel and maintain that ratio what you mentioned. But within the LRPC, we are looking at developing more and more of the plasticated LRPC where the delta would be much higher and different. As well as on the wire side, the zinc aluminum wires, the GALSTAR, those products are also at a higher value. But overall, most of the value addition comes from the rope side.

The next question is from the line of Aman K Sonthalia from A K Securities.

Sir, one question relating to Thailand. So what is the update of that plant? And what are the products we will make there after the completion of modernization and expansion?

The Thailand plant is -- we are in the process. As we mentioned, the Thailand plant is fully integrated plant from -- starting from wire rod unlike Dubai and the U.K., where we start from wire and strands. So we have a similar plant to -- like in our plant in Ranchi and Hoshiarpur. So we are in the process of modernizing that plant and also have increased capacity for some very specialized cords and for specialized elevator ropes. So that would be our area of focus as well as we would also focus in getting more and more into the value-added products like fine cords for gondola ropes and for elevators and for port crane ropes. So this process has started. I would say next 18 months, we will see a significant improvement in the operations of our Thailand plant.

The next question is from the line of Kartikeya Kumar Pandey from 360 ONE Capital.

I just wanted to understand, sir, what's the current run rate of our cranes segment and plasticated LRPC? And when you say 10% to 12% of volume growth, is it including the Parvat Mala project or we are keeping it aside as some positive surprise come from that side in terms of volume?

You see, when we talk about 10% to 12%, it is across all segments, whether it is increase in plasticated LRPC or increase in our GALSTAR or some projects on the Parvat Mala. Parvat Mala project, there are a lot of activities going on. But I think the actual -- the real rope demand of this will come probably 2 to 3 years when the -- this is the last stage of the projects getting implemented. So we are -- when we talk about 10% to 12%, it encompasses and it covers all the different segments of our products. And overall, we look at the volume growth.

Sir, the point being is that I wanted to understand whether we will -- so I just wanted to understand the quantum of extra demand that we can see, because addressable market, I know you had mentioned that a few quarters back. But in terms of volume, will we be making a significant CapEx to address that because you mentioned that we are, I think, the only player with the certification that is required for such? So my question...

See, as far as plasticated LRPC, we are doing -- currently, we do around 2,500 tonnes a year. That will -- based with the various approvals, which we are hoping to get soon, we should be able to double our quantity of plasticated LRPC from 2,500 to 4,000, 4,500 tonnes, we should be able to go. The capacity is there. We need to ensure that those orders and those are project-based orders, but assuming those happen in the coming weeks, we should be able to push the volumes to almost double from the current level of 2,500 tonnes. And we have the capacity and capability created for that. Similarly, on the Parvat Mala, I told you that we have the capacity, we have the capability, but the execution of those orders, when those will be completed because those are all projects which take 6 to 7 years before we see these projects start getting commissioned. And the Wire Rope is the last part of the project. So those will happen, but it will take maybe a few years. And also, there are some delays what we talk to the various customers in terms of their approvals, in terms of this. So definitely, our capability is there. When these inquiries get converted and then supply comes, those will all add on to the volume of business.

Okay. Sir, if I could just squeeze in just another question, if it's okay?

Yes, please go ahead.

Yes, sir, so you mentioned 12% of market share in Europe. So what I understand is that a large chunk of European market is for general purpose. So in the market that you compete, like what is the market share in that segment like in the elevator, mining or the...

There is -- every market, whether it is Europe or U.S., there is a general purpose rope market. There is a market for fishing ropes, for ports, for elevators, for oil offshore for these bigger projects what we do. Our presence, as far as our company is concerned, we are more and more on the higher end of the products where we compete with companies like Bridon, Teufelberger, WireCo. And those are the markets which we want to expand and grow. On the GP rope, we are present there and those volumes are also there. But mostly, we try to sell those through our own rigging shops, which are using these ropes to finish this. So our increase in market share is more coming into those more premium sectors where we have worked over the last 2 to 3 years to build up capability, build up markets, get OEM approvals as well as new customers. So that is the area we want to grow. And there is -- we see a fairly strong demand and we expect that growth to be seen in the coming few quarters.

Ladies and gentlemen, that was the last question. I now hand the conference over to management for closing comments.

First of all, my apologies for the disruption and inconvenience caused to all of you. We'll make sure that it doesn't happen in the future. 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 the time to join us on this call, and see you all in the next quarter. Thank you so much.

Thank you. Ladies and gentlemen, on behalf of Usha Martin Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.