Usha Martin Ltd (NSE: USHAMART) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Rajeev Jhawar — Managing Director and Executive Director
Abhijit Paul — Chief Financial Officer
Shreya Jhawar — Director
Analysts:
Devrishi Singh — Analyst
Aman Sonthalia — Analyst
Dhaval Shah — Analyst
Rajesh Majumdar — Analyst
Unidentified Participant
Prolin Nandu — Analyst
Shraddha Kapadia — Analyst
Ishika Bajaj — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Earnings Conference Call of Usha Martin Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Devishi Singh of CDR India. Thank you, and over to you, sir.
Devrishi Singh — Analyst
Thank you, Sagar. Good afternoon, everyone, and thank you for joining us on Usha Martin’s Q3 FY ’25 Earnings Conference Call. We have with us Mr Rajiv Jawar, Managing Director of the company; Mr Abhijit Paul, Chief Financial Officer; and Ms Javar from the Strategy and Growth team of the company. We will initiate the call with opening remarks from the management, following which we will have the forum open for a 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 Rajiv Jabar to make his opening remarks. Thank you, and over to you, sir.
Rajeev Jhawar — Managing Director and Executive Director
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 some updates on operations and strategies, following which our CFO, Mr Bajit Paul, will run you through the key financial highlights. In Q3 FY ’25, Usha Martin achieved sustained top-line growth, delivering an eight year-on rising revenue despite a challenging global environment.
The wire rope division remained a contributor year, accounting for 73% of our total consolidated revenue and regists 9.8% the segment performed well at 17.6% due to increase in revenue. The LR business reporting a decline of 1.4% year-on-year due to softer demand. Within the wire division, value-added products accounted for 70% of revenue in Nine-Month FY ’25 with contributions from the elevator sector. International markets formed 55% of total revenue in nine months FY ’25.
However, pricing softness and margin pressures in geographies impacted our operating profits for the quarter, resulting in EBITDA margins of 16.6%. While these headwinds affected profitability, our focus on value-added segments have ensured steady contributions from core sectors position positioning us well for recovery in the coming fiscal.
During the quarter gone by, continued to make considerable progress in its strategic initiatives, working steadily to support overall business momentum despite facing certain challenges. Our ongoing expansion in our Rachi plant and Thailand plant remains on-track with expected volume ramp-ups, enhancing our market position in the coming quarters. We are also seeing steady progress in our digitalization and automation investments, aimed at enhancing productivity.
Our capital expenditure for synthetic production in the UK plant is also progressing well with commercial operations to begin in Q4 of FY ’25. As most of you know, Usha Martin has undergone a significant transformation in recent years by divesting its steel business. This strategic move not only reduced our debt, but also laid the foundation for a successful turnaround. Following this, the company refocused in its core specialty wire ropes segment, enhanced production capacity, improved our product mix and increased market-share in the international markets.
These steps laid the foundation for the turnaround we see today, enabling the company to deliver steady growth and operational improvements in the future. Building this foundation, I’m pleased to share with — share that we have embarked on the next phase of our transformation under the One Usha Martin approach.
This initiative is designed to bring greater efficiency across our businesses. The goal is to operate as one cohesive company rather than separate regional businesses, ensuring optimized costs and increased competitiveness leading to stronger financial performance and sustainable long-term growth. This strategy focuses on areas such as centralized — centralizing operations for certain functions and refining our manufacturing model.
On the operational front, we are consolidating certain functions across the geographies, example, centralizing procurement for various units under one umbrella to achieve economies of scale. Currently, each manufacturing unit is purchasing similar raw-material independently, consolidating the procurement requirements across the Group allows us to negotiate better terms with suppliers across geographies, unlocking cost-savings and standardizing input quality globally.
We are also streamlining our logistics function where we are taking a more centralized approach to negotiations, securing rates across the global supply-chain, and while execution remains local, the strategy allows us to optimize costs with better coordination, tracking and analytics, we can also improve delivery timelines for our customers. Additionally, we are also optimizing our back-office infrastructure by shifting certain support functions from our high-cost subsidiaries, locations to India.
On the manufacturing front, we are advancing our operations with the redefined UK model. In the existing model, we manufactures wires and strands in India and complete rope production in the UK. The model has been critical in establishing trust with premium customers, particularly in the specialized sectors like oil, oil offshore, elevators, etc. Now that we have successfully executed and built credibility with these customers, we are taking the next step-in integration.
Product categories, we will now supply finished ropes directly from India, leveraging our enhanced capacities and cost advantages here. However, for some specialized segments such as the large-diameter train ropes used in oil and offshore applications, the UK will remain a critical hub for final production. This enables us to achieve cost-efficiency while maintaining specialization and effectively serving premium markets across the globe.
The implementation has already started and we aim to complete this transition by September 2025. There are just — these are just a few examples of the many initiatives we aim to undertake in the coming months as a part of this approach. One, is a clear step towards future-proofing of our business, strengthening our competitive advantage, improving margins and increasing operating leverage by integrating our operations globally, we are creating a leaner, more agile business that it is better equipped to meet evolving customer needs while driving long-term creation. For all our stakeholders. With this, I would now like to invite our CFO, Mr Abajit Paul, to present you the financial highlights for the quarter ended 31st December ’24. Thank you, and over to you,.
Abhijit Paul — Chief Financial Officer
Thank you, and very good afternoon, everyone. I will now provide a brief overview of the company’s operating and financial performance for the quarter and nine months ended 31st December ’24. In Q3 FY ’25, the consolidated net revenue from operations stood at INR860.5 crores, registering an 8% year-on-year increase from INR797.1 crore in Q3 of FY ’24. This growth was primarily driven by positive performance of our core wire rope and wire and strand segments, which recorded revenue growth of 9.8% and 17.6%, respectively. While the LRPC segment continued to face challenges, we remain optimistic about its potential. With a steady increase in-demand for galvanized and plastic products, we anticipate improved performance in the upcoming quarters. During the quarter, our operating EBITDA stood at INR142.7 crores compared to INR157.1 crore in Q3 FY ’24. The operating EBITDA margin for Q3 FY ’24 ’25 was 16.6%, down from 19.7% in the same-period last year, primarily due to subdued realizations and market dynamics in the international markets. The net profit for the quarter stood at INR92.3 crores compared to INR107.5 crore in Q3 of FY ’24. For the nine months period ended 31st December 2024, the consolidated net revenue from operations rose to INR2,578.1 crores, a 7.6% year-on-year increase from INR2,396.2 crores in Nine-Month FY ’24. Our group segment accounted for 73% of the total revenue. The operating EBITDA for nine months FY ’25 stood at INR457.5 crores compared to INR447.1 crore in nine months of FY ’24. The PAT for the nine months stood at INR305.4 crores compared to INR317.8 crore in the prior year period, impacted by softer realizations and higher-cost in certain geographies. As at 31st December 2024, our net-debt stood at INR168 crores, which is 28% of our annualized operating EBITDA. Despite ongoing capital expenditure initiatives, including expansions in Nachi and Thailand and upgrades at the facility, our debt level remains well within manageable limits.
In conclusion, I would like to emphasize that the company remains confident in its ability to improve its overall performance going-forward. As we progress, we anticipate further growth in both production-driven volumes and value-add growth. Our strategic initiatives, including the One approach along with continued investments in automation and digitalization will further strengthen our competitiveness and improve operational efficiency across both global and domestic markets. Remained focused on achieving sustained growth and creating long-term value for all its stakeholders. This brings me to the end of my address. I will now request the moderator to open the line for question-and-answer session. Thank you.
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press and one on your touchstone phone if you wish to remove yourself from the question queue you may press R&D all participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Aman Kumar Sonthalia from AK Securities. Please go-ahead.
Questions and Answers:
Aman Sonthalia
Good afternoon, sir. Good morning. Sir, my question is that Indian market and European market both are having very sluggish demand scenario. So we have expanded our capacity and at the same time, we are seeing the margin pressure. So in this sluggish demand scenario, how we will increase our volume and at the same time, we will — how we will improve our margins.
Shreya Jhawar
Thank you so much for that question. So just answering it in two-parts. First, in — in terms of the India market, actually the volumes, which is the core segment for us, the volumes have gone up significantly this year. So if we look at the nine months, the volumes have gone up from about 28,000 to about 34,000 for the Nine-Month FY ’25. So we have been able to strongly focus on the domestic market, especially with the support of our dealer network. That being said, of course, to your point, there is an expectation of growth in India in terms of construction, infrastructure development, the waste projects, bridges, which do require both ropes as well as LRPC, but the on-the-ground execution of some of these projects in the market has been a bit slower-than-expected. So while in the short-term, that leads to certain slowdown compared to expectations in the long-term, we hope that we should still see this kind of growth. In Europe, on the other hand, you know, as mentioned in the opening remarks as well, we do see certain challenges, overall slowdown in the international markets, including Europe, which has led to particularly pricing and margin pressures. Our goal is in this market that we made the European setup more lean, more efficient so that we can optimize our costs and then in-turn become more competitive and then able to retain and gain our market-share.
Aman Sonthalia
Okay. Thank you. And our next question is regarding this LRPC. So LRPC market, I think is very competitive and I think it’s not very because lot of big players has come in and there is quite oversupply in the market and the infrastructure spending is not picking-up in India. So as far as I know that we have stopped the bidding for some, which is being used in coal India and some of the other mining area. Which is not as profitable as other ropes, but it is much more profitable than the — this LRPC. So instead of putting our energy in selling LRPC. If we concentrate more on selling in this market, so I think it will improve our profit compared to LRPC.
Rajeev Jhawar
So the LRPC plant is very different to the plant producing the haulage ropes. So as far as you’re right, the LRPC demand and markets are fairly subdued at the moment because of oversupply situation and the slow offtake of demand because of the slowdown in execution of these projects. However, our objective to continuously keep on upgrading our facility — using our facility to produce plasticated and galvanized LRPC continues to be our main focus. We have got certain orders both from domestic and export markets, which we expect to ramp-up in the coming quarters depending on the demands of these projects. And we feel that is the right strategy to improve the profitability of the LRPC. And the facility to produce these LRPC strands, particularly galvanized and the plasticated comes from our rope making facility, which is — which is having a big advantage to us and we feel that should — that should really go up in the next financial year. On the haulage rope as well as ropes for the domestic market for Coal India, definitely, we have started bidding for these orders also. And as Shaya mentioned that we have increased our market-share in India. We have been able to increase some of our volumes in these markets also. And as a part of our strategy, going-forward, at every market opportunity in India, we will try to increase our share. So your point is taken. In any case, that is a part of our plan.
Aman Sonthalia
And sir, next question is, what is the update of Gulfineware plant and synthetic slink plant?
Rajeev Jhawar
As far as the synthetic — as far as the synthetic slinks plant is concerned, it is — the plant is completely ready, including the most important testing facility of the 2,000 ton true testing machine in the UK. And we have started getting some small orders using our distribution and our service net deroiter and EMM, our subsidiaries. And we expect to start commercial production in this quarter itself in Q4. And next year would be the first year where we start working with all the end-users to get their approvals. There is the process of getting the approvals, especially for the specialized claims and our team is confident that we should be able to achieve that in the next financial year. Coming to the Galfan or our — we are naming it as Galstar, which is our zinc aluminum line. I’m happy to say that we have commissioned our plant and it is under — it is under trial production and we hope to stabilize the operations in this quarter and we should start getting the full benefits of this from the Q1 of the next financial year. And of course, some quantities of trial supplies will also be made in this quarter, but we expect this to get fully commissioned in the next financial year.
Aman Sonthalia
And sir, last question is what about the Saudi market?
Rajeev Jhawar
The Saudi market, we have all our team in-place, all the approvals in-place and we have started the our rigging facility and the distribution facility there. The feedback from the customers, we are very happy that we are there with all our facilities and we have started approaching customers and started getting orders. We have been supplying there through our Brenton Wire plant. But now having this facility, I think there is a fairly good demand and we expect good orders to flow-in. And next year, we should be having a significant increase in volume from that market.
Aman Sonthalia
Okay. Thanks. Thanks a lot. This is from my side. Thank you.
Operator
Thank you. The next question comes from Daval Shah from Capital. Please go-ahead.
Dhaval Shah
Yeah. Hi, am I audible? Yes. Yes, sir. Yeah. Hello, sir. Sir, just one question. Like if we compare to the last conversation we had in the last quarter call versus now today we seeing some sort of bearishness in terms of European and Indian markets. Indian markets, we can understand there has been the lack of spending and capex activity in the country, which is a direct and our company is a beneficiary of that at the impact on the volumes. But in Europe, if you could explain us more in detail you know, where are you seeing the slowdown? So if I understand, our key markets in Europe would be one would be the one application will be in the fishing application plus some in the rigs plus installation of wind, and yeah. So where-is the slowdown you are witnessing in which of these business segments? Secondly, come talking about US, so we are very close. We have started sending a material for the mining application and was a great achievement for our company. So was the progress there? And also in Australia, we had started sending. So is that segment giving a performing expectation. So overall, you know, where-is that growth going to come back because I was expecting a much better performance this quarter and for the year. So how — how could we meet the shortfall in terms of whatever guidance we had given? And going-forward, what sort of volume guidance would you like to share with us? Thank you. These are my questions.
Rajeev Jhawar
Yeah. First of all, let me tell you that while the domestic market, there is a slowdown in the infrastructure and project execution in India, but with our initiative to work with our dealer network to have a better penetration in the market, we have actually been able to increase our market-share in India and increase it almost by 18% year-on-year and that is something which has helped us to get a better market-share in India. We expect that in the coming — in the coming period, the domestic market hopefully should start getting better and we are well-prepared to take care of the increased market if that happens. Coming to your next question, as far — and we feel that focusing on our domestic market and keeping a very strong focus to ensure that we take the full opportunity of any growth taking place, we are well-prepared for that through our own marketing as well as through our distribution partners. Coming to the European market, I would say that there are three major segments which we operate apart from our rigging and servicing, which is there. One is, of course, the elevator market, which is — which is fairly stable. And as a part of the new model, which I mentioned in our — in our — in my opening remarks, that is something which we were supplying from India strands to our UK plant and then finishing and supplying the ropes to our customers in Europe. I’m happy to say that we have been able to convince them, they have come and looked at our facilities that, yes, we are equally competent to supply the entire products from India and that has already started from this month. So that is something gradually both the plants would be supplying. But as the India ramps-up, we will be supplying. So this is going to help us not only be able to get a bigger market-share, but also help us to reduce the working capital in the business as the double freight and as the — as the direct supplies improve from India. Secondly, on the fishing market, we have been able to establish a fairly strong market base through our facility. Those customers have also, 90%, 95% of them are ready to buy the products directly from India. So that is something also we have started gradually. And I think by September, we should be able to ensure that everything starts going from here. This is also going to help us to be more competitive, faster delivery and be able to be much a much more faster response to the customer needs. The oil and also this is also a stable market and a stable demand. The area where we see a lot of competition as well as demand challenges coming is the oil and offshore and that is something because the competition also because of the lower demand is being aggressive to trying to get the — everybody is trying to get a pie of the same market. So we have to be competitive and part of the — that part of the strategy is to supply directly from India and part would be continuously to be reproducing out of our UK operations.
Dhaval Shah
Sorry to interrupt. Sorry interrupt. So the competition which you’re mentioning, which geography are these competitors from? Is it coming from the South Korean and the Chinese market or these are the Chinese —
Rajeev Jhawar
Chinese are not there. South Korea is definitely an important player in this rope industry and it is also the European and the American — mainly the European manufacturers. Now the European manufacturers and the Southeast Asian. Chinese are not there in this market. So we don’t see any competition from them.
Dhaval Shah
And European — sorry European competition is so is competing against our cost base of Indian cost base, right, because we are doing part production here and standing there and then we are — are — so there is a cost — a cost of production difference which is coming in versus our compared to the European. And still they are competitive. Is my understanding correct?
Rajeev Jhawar
Yeah. So if they keep on reducing price, suppose they are supplying at INR100 rupees today and if at tomorrow and we are supplying say at INR97 and their plants are also getting — because of the lower demand, if their plants are also getting — so they want to be aggressive in the market, they also want to reduce their margin and obviously keep their plant running. So that will also force us to reduce and match prices. So in a demand-supply situation where demand is weak, the pricing pressures will come and we need to continue to keep our market-share and fight on price with them. So this is something which will continue in the marketplace. And this is a normal business phenomenon when everybody — when demand is strong, everybody is happy. When the demand becomes less, people try to pitch for a lower-price. So you have to compete with them. So our margins, what we were telling earlier will definitely come down.
Dhaval Shah
Okay. Okay. Okay. Got it, got it. Yeah, sir. And sir, I think with regards to the American Mining and Australian mining business.
Rajeev Jhawar
So the business is — our quality is well-established and the supplies are continuing and both to the American market and the Australian market. And our endeavor would be to slowly keep on pushing the volumes, but I’m happy to say that our quality is well-established now.
Dhaval Shah
Okay. Okay So sir, if we see then in terms of the guidance what we had given product-wise, we might be quite short of it in the wire and strand category. We are at — so that’s where you think the current — the run-rate of volumes what we are doing on a quarterly basis, you think next quarter we could see some improvement? How is it going?
Shreya Jhawar
Overall, on the volume front, actually for both ropes as well as the wire and strand category, we are over the nine months, we’ve done quite well. Even from a top-line perspective in wire ropes, we saw about 12% growth if you look at the nine months and about 10% for this Q3 and wires as well in the nine months about 14% top-line growth and strong volume growth as well. Over the next year as well with support from these core segments as well as some of these other initiatives we talked about that hopefully will reduce our cost base and make us more competitive, we do aim to grow by at least 12% overall.
Dhaval Shah
12% FY ’26.
Shreya Jhawar
Yeah. No, yes. The next upcoming year. Yeah.
Dhaval Shah
Upcoming year. On the — so this year we should be — overall, should we be touching around 1 lakh 190,000 tonnes in terms of total volume for the FY ’25, the current year-by March?
Rajeev Jhawar
Yes, we should be able to do that.
Dhaval Shah
190,000 and 12% volume growth on 1,90,000 base.
Rajeev Jhawar
Yes.
Dhaval Shah
Got it. But there could be some — yeah, double, sir. Sure.
Operator
Okay. Return to the question queue for follow-up questions as there are several participants waiting for their turn.
Dhaval Shah
Sure, sure. Thank you. Thank you.
Operator
The next question before we take the next question, requesting participants to limit themselves to two questions each. If you have any follow-up questions, please rejoin the queue. The next question comes from Rajesh from B&K Securities. Please go-ahead.
Rajesh Majumdar
Good afternoon, Rajesh jee, and. So I had a question on the margins. How do we read into the 16.6% number that we have got this quarter because if you are kind of restructuring the UK operations and sending from India, there would have been some impact on the employee expenses, et-cetera, but that hasn’t really come down. So I assume that this would also entail some kind of rationalization of employee costs in UK, which would actually lead to some more cost going-forward. So are we going to see more margin pressures on account of these things in the short-term before we go back to kind of 18% plus levels and — or have you seen the bottom of the margin?
Rajeev Jhawar
To be said to you, I think this is the bottom of the margin and with the various initiatives of One Martin where we are looking at rationalizing our cost across all our subsidiaries and looking at what I mentioned, lot of activity shifting as back-office to India as well as the new BSUK model where instead of taking wire and strand selling finished products, it should only help us get better from here. So it is a journey for about — from now up to September when we complete all these activities. There is a big digitalization program, everybody coming on a similar platform to ensure that all these initiatives are getting. So I see that things only getting better from here.
Rajesh Majumdar
Right. And my second question is, I think you have received some kind of certification — European certification for the project that India has been talking about. So any update on the Bharatmala project and where we stand-in that?
Rajeev Jhawar
Yeah. We have got the CE certification, which is the key certification for any of these manufacturers in Europe to start buying products from here — from us. So that we have been able to get it in just about a couple of months ago. So — and now we are in touch with all the various projects which are coming up. Having said that, let me tell you that while there is a big buzz that these projects will all be coming up and I’m sure that they will all come up, but there is a very big-time lag between the projects getting announced and getting all the approvals and the customers are ready to buy the products. But this is a major step, which was important to be able to enable us to get into this business. So having done that, we are now closely working with the various projects which are under tendering and the customers who are expected to get the orders and hopefully we should start getting the business in the coming — in the coming years.
Rajesh Majumdar
Just one added question, sir here. This certification, does it cover all the global Gondola project like US, etc., the gondola projects, etc., we are bidding for, does it cover that as well? The certification or does it?
Rajeev Jhawar
We have separate. We are — we are supplying mainly for the projects in India, but we supply Gongola ropes to the US market from our Thailand plant as well as to some of the European manufacturers through our Thailand plant. And there are lot of these special lock oil roofs if you supply to the American market US-Canada markets also. But those are for more for the mining projects, which require the same ropes, but not goes into the business. Our ropeway business focus is mainly in India.
Rajesh Majumdar
Thank you, sir. Thank you. Thank you so much.
Operator
Thank you. The next question comes from Zaki Nassar from an individual investor. Please go-ahead.
Unidentified Participant
Sir, and Shayah, congratulations on a very decent set of numbers in a globally competitive environment, sir. My question would more be a general question, sir, regarding your efforts to change Usha Martin from a metal converter to a global engineering company, sir. I think all your efforts are going behind this in terms of your sourcing, your certifications. I would like to have your thoughts on this. And since you have a new logo and got everything under one new logo, your thoughts on the transformation of, sir. Thank you, sir.
Rajeev Jhawar
Martin approach of our is that we have the manufacturing facilities in India and Thailand and then we have our distribution and our service and rigging facilities in different parts of the world. You know, they are all integrated with us as they are all 100% subsidiaries of Usha Martin. But our next step is to now even management-wise and try to see that how we can optimize our total cost. So that is something which is a major exercise we are taking, which will help us become much more competitive and be able to take on competition in a bigger way. Also on the engineering front with our global design centers working very closely with our manufacturing plants, we are working to see how we can come out with new, better design products, which can help us becoming even more close to the customer with giving them better features and better products, which will enhance their life of those products. And we also have a very strong machinery division in Ranchi, which is helping us improve all the engineering capability, help us in modernizing our plant over a period of time, and we are strengthening that and that is all helping us to ensure that our product quality, our ability to produce better products with better features and ultimately be better than the best-in the industry. So I think all these initiatives are at different stages of implementation. And I can only say that in the next 12 months, you will see some of these big, big improvements are showing up. So we are confident to become what you rightly said that what we wear a steel producer more on the steel side and the value addition, but now that we are focusing on this, probably we will only get better from here.
Unidentified Participant
Thank you, sir. And best wishes for you and the team sir.
Operator
Thank you. Thank you. The next question comes from Prolin Bi from Public Alternatives. Please go-ahead.
Prolin Nandu
Yeah. Hi, Mr. Thank you for taking my question. Few questions from my side. The first will be on competition, right? Now if we look at your numbers in terms of margin, both on percentage level as well as EBITDA per ton level and not on a quarterly basis, but let’s say from FY ’21 to FY ’24, large part of these gains came from some of your — our subsidiaries, right? And this gain also coincided with some of the European manufacturers maybe going offstream because of higher energy cost. Now the energy cost in Europe has far more stabilized. And if we look at some of the numbers of your competition as well, that has also improved a lot. So are you seeing the reverts of some of the trends that benefited us between that period of high-energy cost in Europe? And then is this competition going to be there for longer even if the demand factors or demand turned positive? I mean, how do you see that trend?
Rajeev Jhawar
The demand — the demand has — you know, the competition in any business competition is always going to be there. Last two years, we have seen the demand being fairly strong and that is why everybody was very happy and the prices were fairly decent. But when the demand comes down and everybody is well-prepared to take on to the competition, prices do come under pressure and ultimately the margins come under pressure for various people because everybody wants their plant to be running at optimum capacity. So having said that, this is what the reality of the business is, the European the European market as a whole and part of the other international markets are seeing some kind of slowdown, which is impacting the demand and naturally bringing in more competition. What we are doing is to see that where we can optimize our cost with all the various initiatives which we mentioned in the — in the different questions, which I’ve answered or in my opening statement, we expect to bring down our cost significantly through all these initiatives on one-side. And on the other side, with the various capex initiatives which are already underway, part of which is almost done and is done and the balance will be done within the next year, we should be able to prepare ourselves to be able to take more market-share from the competition from both in India and overseas. So what happens? If your cost structure, you’re able to bring it back to when you’re looking at bringing down your cost structure by different ways and you prepare yourself to take on to the next level of competition, which is happening. Having said that, we are going to ensure that with this cost-cutting, we are again more competitive than our Western as well as the Korean suppliers. However, if the market improves, the advantage of cost will continue to get what we have been able to do and we should be able to get fairly decent margins. So markets are dynamic. We need to put our house in order to be able to be ready for any kind of competition. And I’m happy to say that we are on-track to do that. And by September, all these initiatives will be in-place.
Prolin Nandu
No, so that’s appreciated. I understand that. My question was that has some of the competition which had gone out-of-the market because of high-energy costs have come back-in the market. And then on the margin also, right, Javaji, if I remember it correctly, you were always guiding that in percentage, we will be at 18%. Now when you are taking on this all these transformation journey, will — are you saying that you will recoup to 18%, which means that we will have to do all these cost-cutting just to get back to our original level of 18% or now we should think about the margin also in the next level, not in the next quarter, but let’s say, once say once all your transformation is complete in September of this quarter, should we be aiming for maybe a 18% to 20% margin higher than what we had initially thought about?
Shreya Jhawar
So if you quarter-on-quarter, of course, the situation is dynamic. But if you look at a Nine-Month for this particular year, we are still at about 17.7%, so at the 18% EBITDA margin levels. So — and as mentioned in one of the previous questions, the margins for this quarter, we don’t expect it to get any worse from here. We only expect it to get better with all of these initiatives. So I think that the guidance that we had given that still holds and with these initiatives coming into effect from Q2, it’s all — from now in phases, but up to Q2, we do expect things to improve.
Prolin Nandu
Understood. Can I push one more if that’s fine? Sure, sure. So yeah, yeah. So just on this demand as well, and Shaya ma’am, right? See, in one of the past calls, we had mentioned that maybe — I mean, I might be getting this number wrong, but 45% to 50% of our demand comes from replacement demand, right, which in a way has nothing to do with, let’s say, new capex coming up or in oil and gas, where-is the energy prices going to be. So does that mix still hold true? And large part of the this slowdown in-demand, are we seeing in new projects or is there something happening in replacement part of our market as well?
Rajeev Jhawar
Yeah. The replacement market is almost 80% to 85% of the demand. The replacement is not 50% 55%, 80%, 85% is the replacement market in most of the products. That is point number-one. Point number two, say, for example, in the oil sector, say Saudi Arabia, let me give you an example. If there are 350 rigs which are working last year, now based on the current global demand, almost 50 rigs have come down — they have put down 50 rigs out of operation. So naturally, the replacement market for that 50 rigs will not be there. It’s not a question of new-build. So when it comes to 85% of the market, which is — which is replacement holds true, but if the equipments which are in-service are taken out-of-service would definitely impact the replacement market demand. I’m just giving you as an example. However, overall, I would say the replacement market is fairly strong. As well as the new-builds for certain sectors like elevators, the new-builds are going all-out. Everybody in most of the developing world, the elevated demand is very strong. New-builds are doing well as well as the replacement market is doing well. So to answer your question, the 80%, 85% is replacement and it is a general slowdown in the economy where the demand is getting affected. You cannot say that it is new-builds are completely stopped. So new-builds are also there, but if there is a slowdown in any construction activity, naturally, the cranes will not be working in that area.
Prolin Nandu
Understood,. Thanks a lot and all the very best. Thank you.
Operator
Thank you. A reminder to all the participants, please restrict your questions to two each and you can join back the queue for follow-up questions. The next question comes from Kapadia from Share India. Please go-ahead.
Shraddha Kapadia
Thank you so much for taking my question. So I had a question with regards to the current capacity utilization. If you could provide it for your different segments also, it would be very helpful if you could give it facility yes.
Shreya Jhawar
So for ropes in Rachi as well as overall about 80% to 85% of our capacity would be utilized. When it comes to the wires segment, you know, over the years, we have gone out of some of the low-end wires that we were manufacturing when we had the steel business as well. So the capacity utilizations for those are you still lower about 50% or so. And for LRPC, our capacity utilization would be about, I would say, 70%, 75% and as we get into more plasticated LRPC as well, more of the capacity would shift to make those as opposed to the regular LRPC. So if you want a bit more detail on the breakdown, we can always take it offline for — for various different factories and different categories.
Shraddha Kapadia
Okay, sure. Thank you so much. That was quite helpful. Also, I just wanted to understand the project, which is expected to come up. So are we the only one having certification in India for this? And also how much would be approximate revenue potential, which we can expect for the project for us. We are the — as of today, we are the only a company which has the capability of the manufacturing facility to produce these ropes. And we are — to best of our knowledge, we are the only company who has the CE certification in India for this.
Rajeev Jhawar
Having said that, the demand-side, the — it all depends on how much the projects actually find the final approval and when the projects start getting to a stage where they start building these projects. I personally feel that, yes, there is a good demand, but it is more — it is not in the short-term. It would be more in the medium to long-term where you will see the — when you initiate such a project, it is three to four years before you even start supplying the first probe because that is the last part of the project, suppose a project needs wire road. So that is something which is required right at the end-of-the commissioning of the project. So this will all happen. We are preparing ourselves with the certification. We have the plant capability. We are talking to all these customers, including the government authorities and we expect to have a decent share, but those will all happen in the medium-to-long term, I guess. Y
Shraddha Kapadia
Es, sir. Thank you so much. If I could just squeeze in one question, would that be okay? Sure, sure. Yeah, so on we are doing this one Osha Martin initiative. If you could just give a ballpark number for the expected margin improvement which we expect it should not. It’s not like exact idea, but if we can just give a top number, that would be very helpful.
Rajeev Jhawar
Basically, you see these are — the margin just don’t come by reducing cost. It also depends on what is the selling price, what is the competition. As we said in our previous question that the — these numbers are ours, this quarter numbers are probably at the — at the bottom of it. Things will only start getting improved from here. But by cutting costs, margins just don’t improve. You need to continue to increase your volume, you need to continue to get the right price for the product, which also depends on the competition. So having said that, what Sreya mentioned that our average has been close to 18% — close to 18%. That is something which we feel that is the base at which we would be working. And let’s see how the end-market prices, how the volumes, how the demand and the benefit of these costs all ultimately a span off. So that is something that may not be proper for me to give you an exact numbers. It is best to see that how the — because we are in a very uncertain global scenario and which we all need to understand that we need to prepare ourselves to face this competition.
Shraddha Kapadia
Sure, sir, sure. So that was quite helpful. Just for my understanding, so if you are not giving margin numbers, but this will surely help us reduce the working capital today.
Rajeev Jhawar
Of course, it is going to help us reduce our working capital significantly.
Shreya Jhawar
Yeah. And did you add to that? Yes. Yeah, should we all please continue. Yeah, no, I was just to the working capital point, I just wanted to mention that as we said, we are optimizing the model, right? So earlier when you were supplying Wise and Transform India, then it would take the transit time to go to the UK, then be an inventory before it could get converted into rope. Now with the direct shipments that are — have started from India, we will obviously reduce the working capital cycle and also that would help faster deliveries to the customer. So working capital definitely is an important piece in this overall thing, which we are trying to optimize.
Shraddha Kapadia
So that was quite helpful. Thank you so much and all the best for future. Thank you.
Operator
Thank you. The next question comes from Ishika Bajaj from Helios Capital Asset Management Private Limited. Please go-ahead.
Ishika Bajaj
Hi, am I audible? Yes, ma’am. Please go-ahead. Hello. Yes. Yeah. Yeah. I just had a quick question. I just wanted to know if you’re getting any rupee depreciation benefits in the current quarter from exports?
Rajeev Jhawar
Abhijit, you would like to answer this question.
Abhijit Paul
So there was — in the standalone financials, there was some impact due to the GBP INR exchange rate. But overall on a consolidated basis, there was no impact. Actually, there was a slight gain in the CFS books.
Ishika Bajaj
Okay. Thank you. Thank you.
Operator
The next question comes from Dixi Jain from Invet Savvy PMS. Please go-ahead.
Unidentified Participant
Hello. Yes, sir, please go-ahead. Yeah. Good afternoon. So my question, I think part of the question is answered. But on the LRPC side, just wanted to know the margin profile and the asset turn. So because the LRCC volume is around 25% to 30%, right? And the sales is the margin.
Rajeev Jhawar
The material — the material margin is close to INR12,000 to INR13,000 per ton. And so the difference between the raw price and the ex-work selling price and our cost of production would be close to INR7,500 per ton, which includes the entire direct cost of production. So the margins are fairly low. If you look at it, the contribution itself is around INR4,000 to INR4,500 per tonne.
Shreya Jhawar
This is for the regular LRC.
Rajeev Jhawar
This is for the regular LRPC, which is the majority of the volume today.
Unidentified Participant
Okay. So in the LRPC side, if we can say fairly this is the kind of replacement of TMT bar or TMT kind of in the infrastructure over the buildings I don’t know what the TMT margins are, but these are the very, very thin margins.
Rajeev Jhawar
We are not into the TMT market. So I am not aware of what their margins are. But when it comes to our product, these are our margins.
Unidentified Participant
No, no, I’m saying replacement, not margins.
Rajeev Jhawar
No, these are two different markets altogether. Wherever the, it doesn’t replace. Saria has a much wider application. These are post-tentioning special applications, mainly for the high-rise buildings or for the — mostly coming for the big bridges or for the big railway — high-speed railway projects and also for the nuclear power projects. So these don’t replace Saria. These have got the — these are post — post tensioning designs, which are decided — they are designed by the contractors, mainly by the consultants for these applications and that is where our LRPC goes.
Unidentified Participant
Okay. Okay. And one broader question on the slowdown in-demand in Europe, Korea side and in our country also, what are the indicators you are seeing are that the demand will improve in future, what are the indicators you are seeing or watch out for?
Rajeev Jhawar
And I think the investment on infrastructure across the country is very important. The real-estate as well as the bridges, the projects which are there, we are seeing a slowdown in new orders or even the government implementation of these projects. So we have to see that when these projects get announced and when they start the activities. So we’ll have to wait-and-watch to see that how these things come up. Internationally, definitely with the — with the current slowdown, recession in Germany, in UK, we see that in certain sectors, the demands are low. So we have to wait-and-see whether these governments and these economies start again spending. And when those spending come, definitely infrastructure comes up and our business starts getting traction.
Unidentified Participant
Okay. And the margin side, I think you already alluded that we are at the bottom of the margin, right? So due to this cost-cutting measures and the further expansion in some facility, we can see the margin improvement, right, when the demand will pick-up.
Rajeev Jhawar
I think I’ve already answered this question that this is the bottom of it. Let’s see, based on all these initiatives and how the selling price and how the demand pans out, we expect this to be the bottom — bottom of as of today, we see this is the bottom. We should only see an improvement going-forward from here.
Unidentified Participant
Okay, okay. And just last question on the LRPC side, what are the initiatives that you’re taking to increase or increase the volume in this segment because continuously we are seeing year-over-year the volume is decreasing. So what’s your view on the LRPC kind of revival in the volume?
Rajeev Jhawar
I don’t see the LRPC is a commodity. Our whole objective is to convert as much into plasticated and galvanized LRPC, which is giving a much higher-value addition. And again, the LRPC demand is directly dependent to the projects and the various government projects, bridges and infrastructure projects going on, which is subdued and there are a lot of competition in this area and the prices are very, very competitive. I don’t see the company looking at this as an area for growth in the future. The — all the growth on margins for LRPC will come by how much we are able to convert into plasticated and galvanized LRPC. Having said that, plasticated and galvanized LRPC is not a commodity. It is all project-driven depending again how these specialized projects are getting commissioned in the country and overseas. So we are doing around 300 tons a month. We expect that it should improve in the next financial year. There are a lot of projects under inquiry stage, under finalization stage, but all that depends on how these projects finally get into order. So we don’t see a long future for simple LRPC as far as margin and volume is concerned, but definitely the more we are able to convert to the other variety, we will be better-off as an organization. We are not seeing the future capex also. No capex at all, zero capex.
Unidentified Participant
Okay, got it. Thank you. Thank you for the answers of all the questions. Thank you.
Operator
Thank you. Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to the management for closing comments.
Rajeev Jhawar
Thank you I would like to thank everyone for attending this call and showing interest in Hushamartin 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 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.
Operator
Thank you. On behalf of Usha Martin Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.