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, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded, and I'll hand the conference over to Mr. Devrishi Singh from CDR India. Thank you, and over to you, sir.
Thank you. Good morning, everyone, and thank you for joining us on Usha Martin's Q1 FY 2026 earnings conference call. We have with us Mr. Rajeev Jhaver, Managing Director of the company; Mr. Abhijit Paul, Chief Financial Officer; and Ms. Shreya Jhaver 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 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. Rajeev Jhaver to make his opening remarks. Thank you, and over to you, sir.
Thank you. Good morning, 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 the operations and strategy, following which our CFO, Mr. Abhijit Paul, will run you through the key financial highlights. We are pleased to report a stable start to FY 2026, with the consolidated revenues of INR 887 crore, driven by a year-on-year volume growth of 10.4% across our key segments. The wire segment registered a strong 32.3% year-on-year revenue growth, while the wire rope division continued to perform steadily, with a 7.9% increase in revenues, supported by encouraging contributions from the crane and elevator rope segments. The LRPC segment continues to face certain headwinds and recorded a 3.4% year-on-year decline, though strategic initiatives are underway to address these challenges.
Operating EBITDA for the quarter stood at INR 145 crore, with a margin of 16.3% and an EBITDA per ton of INR 28,502 per ton. Early gains from the One Usha Martin transformation supported profitability amid market-specific and global uncertainties. While the foundational phase of our initiative is largely complete, we expect more tangible benefits to emerge in H2 FY 2026, as mentioned on our previous con call.
A key measure of success will be our ability to scale while keeping costs in check, thereby driving better operating leverage going forward. Some of the key growth drivers for the business which will enable us to scale are: one, the new CapEx at our Ranchi plant is now operating at a much more stable level, with 70% commissioning complete and stabilized as of Q1. We are meticulously planning both factory and on-ground sales efforts to strengthen our product mix for this capacity.
Progress is being closely monitored on a daily basis to ensure we capture high-value opportunities which will drive EBITDA margin improvement. Two, with the CapEx on-stream, we have also successfully increased direct shipments of high-value segments from India to the European customers, which demonstrates acceptance of our products in these quality-conscious markets. It's encouraging to see that we have already started to get repeat orders, reinforcing our confidence in this model as a sustainable growth driver. Three, even with some uncertainty in the U.S. market due to tariffs, we are confident of our position in the U.S. market. Our focus has been on retaining and even growing our market share. We have secured a sizable tender that provides strong order visibility for the rest of the year alongside our regular business in the U.S.
Four, our synthetic sling solution, OCEANFIBRE, has gained faster-than-expected traction, with strong brand acceptance in a short period of time. The inquiry pipeline is robust across offshore subsea and heavy lifting applications, and our sales teams are actively working with potential customers to move these inquiries towards orders. Early trials and feedback have been extremely positive, and we are already seeing promising signs that OCEANFIBRE will become a meaningful contributor to our high-value product portfolio in due course. While these growth drivers strengthen our top line, we are equally focused on disciplined cost management to enhance margins. As a group, we are examining every cost line with the aim of improving efficiency and profitability. Some initiatives are already delivering results, while others will yield benefits in the coming quarters.
For example, employee costs have reduced from an average of INR 118.6 crore per quarter in FY 2025 to INR 113.2 crore in Q1 FY 2026, with further savings expected as we expand our shared services back office in India. Another example is on our finance costs. We have repaid the entire $3.4 million loan in Singapore and plan to fully repay EUR 2 million loan in Netherlands, with the impact of these transactions expected to reflect from quarter two onwards. All of these initiatives have led to strengthened balance sheet. Inventory levels have come down meaningfully from FY 2025 peak, driving strong cash conversion. Operating cash flow stood at 95% of operating EBITDA in Q1 FY 2026. Our balance sheet has also strengthened with the net debt-free position at both standalone and consolidated levels, giving us greater flexibility to fund future growth without leverage constraints.
Looking ahead, while Q1 FY 2026 reflects a steady operational performance, a stronger growth trajectory is expected in the second half as the benefits of transformation initiatives and capacity expansion gather pace. Better demand visibility, supported by improved competitiveness across global markets, positions the company to pursue market share gains even amid prevailing macro-geopolitical uncertainties. This approach is expected to strengthen leadership in core segments and deliver sustainable value for all our stakeholders. With this, I would like to now invite our CFO, Mr. Abhijit Paul, to present the financial highlights for the quarter. Thank you, and over to you, Abhijit.
Thank you, and a very good morning to everyone. I will now provide a brief overview of the company's operating and financial performance for the quarter ended 30th June 2025.
In Q1 of FY 2026, our consolidated net revenue from operations stood at INR 887 crore, reflecting a year-on-year growth of 7.4% over INR 826 crore in Q1 of FY 2025. This revenue growth was led by strong performance of our wire segment, which grew by 32.3% year-on-year. The core wire rope segment, which continued to be the largest contributor with 72% share of the total revenue, registered stable performance with 7.9% growth on a year-on-year basis and is expected to gain momentum from H2 of FY 2026, supported by recovery in demand and the ongoing One Usha Martin initiative. Operating EBITDA for the quarter stood at INR 145 crore as against INR 154 crore in the same period last year. While margins were impacted by market-led pressures, our continued focus on operational efficiencies is expected to aid recovery in the coming quarters.
Net profit for Q1 FY 2026 stood at INR 101 crore compared to INR 104 crore in Q1 of FY 2025. On the balance sheet front, I am pleased to report a significant strengthening in our financial position. As of 30th June 2025, we have achieved a consolidated net cash position of INR 14 crore compared to a net debt of INR 63 crore on March 2025. Our disciplined capital allocation approach ensures that both ongoing and planned growth initiatives remain well-funded.
From a cash flow standpoint, we recorded a healthy improvement. Operating cash flow before tax for Q1 FY 2026 stood at INR 137 crore, translating to approximately 95% of operating EBITDA compared to INR 102 crore, or 66% of EBITDA in Q1 of FY 2025. This improvement reflects our tighter operational controls and sharper working capital management. These strong cash flows, supported by adequate working capital headroom, provide a strong foundation for future investments and disciplined capital deployment.
To conclude, we remain confident that strategic groundwork laid under One Usha Martin initiative, combined with disciplined financial approach, positions the company well for the next phase of growth. Steady traction across markets, a sharper focus on operational agility, and a continued strength in the balance sheet cash flows.
Any other? Ladies and gentlemen, please stay connected while we rejoin the management back to the call. Participants, please stay connected while we rejoin the management back to the call. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, go ahead.
Yes, please. So can we start with the question-answer?
Sure. Thank you very much. Ladies and gentlemen, we'll now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from Aman Kumar Sonthalia from AK Securities. Please go ahead.
Yeah, good morning, sir. Sir, my question is related to the U.S. market. There's a significant hike in the duty in the U.S. market. So how will we grow there and how will we maintain our business there?
Thank you for the question. So with regard to this U.S. market for steel wire rope, which falls under the Section 232, the tariffs are 50% across the board. So the reciprocal tariff is separate, and this 50% tariff for our particular product category is different and applies to all countries except the U.K., which is at 25%. For us, so far, in terms of the impact of these tariffs, we have not seen a major issue because for most of our high-value products like elevator ropes, mining ropes, which we sell in the U.S., in most cases, we have been able to pass on a large part of the tariff increase to our distributors, Fort Wayne, and customers. And in some cases where we can't do that, we have to take a judgment call of how to proceed.
But our major focus has been that we don't want to give up our market share in the U.S. because we want to ensure that we don't lose our customers in the U.S. in the long term. And in fact, with our inventory on the ground, because we have a warehouse in Houston, with our inventory on the ground for our duty ropes, we have been able to actually get a better realization for our products and actually gain share in some cases. And one of the other positive developments has been that we recently won a tender in the U.S., which is a sizable tender, which gives us a good order visibility and a consistent order book for FY 2026. So all in all, while the environment still remains uncertain, we don't know how things will evolve overall in terms of the tariff environment. Things change every day.
But as of now, we are feeling cautiously optimistic.
Okay. My next question is related to the European market. So I think there's a huge geopolitical tension going on. So how do we see our European business going forward?
We are very positive on our European business. With our integration with India and our BSUK facility, we have been able to now start getting better direct supplies from our Indian plant on the BSUK brand to the European market. The supplies are going well, also getting repeat orders. This is helping us to even be more competitive in that market. We are able to make faster delivery to our customers. Both on the wind energy, renewable energy, as well as on the oil and offshore and the crane and elevator market, the demand is fairly strong, and we expect to have a decent growth in this financial year in Europe.
Okay, sir. Sir, I've seen a decrease in the manpower cost. But at the same time, I've seen that there is an increase in the other expenses. So whether we can expect further coming down in manpower cost and what is the reason for such a spike in other expenses?
That's a good question. So if we look at our other expenses, for this quarter, it was about INR 166 crore for the quarter. And if we compare it to the quarterly average for FY 2025, it was about INR 163 crore. So that is, as you said, there is a slight increase. There's a INR 3 crore increase. But if we look at break that down further, the other expenses can be seen as the fixed as well as the variable expenses.
So the fixed expenses have actually decreased from the INR 37 crore level to about INR 34 crore through all of the initiatives which we've been talking about under One Usha Martin. What has increased is the variable expenses, which has increased from about INR 126 crore- INR 132 crore. But a large part of that increase is the freight component of INR 6 crore, largely for Europe orders, which is actually recovered from end customers.
And the second part you mentioned, which was the employee expenses, the employee expenses have decreased actually from INR 125 crores in Q1. But that was slightly higher level on average if we see of FY 2025, which was INR 118 crores per quarter, which has decreased to INR 113 crores this quarter, which is on an annualized basis, a INR 20-crore decrease, which we do expect will further reduce with all of the initiatives and the back office that we are setting up in India. So as more of these One Usha Martin initiatives materialize, we will see expenses across the board come down. But the most important part is we have to do that without compromising on our growth, which we are confident of. And that is what will give us better operating leverage.
And by the way, as you, sir, have said in the initial remark, that we are seeing a very good traction in the synthetic sling business. So can you throw some light on that business?
Yeah, so as we mentioned in the opening remarks, the OCEANFIBRE brand, which is our synthetic sling brand, has picked up really well. We are getting repeat orders from our customers for that product in Latin America, even in Europe, and we thought that it would take a while to build track record and go into this heavy-lift synthetic slings market, but it's been great to see that we have already got success there and will be supplying heavy-lift slings for the critical offshore wind market, which is a high-value, high-margin product, and we've already secured the order, and we will be supplying it in the upcoming quarter.
While it's still early days, and we don't want to put a number to it, we definitely think that in 18-24 months, it will become a meaningful, sizable, independent vertical for our next level of growth that we are targeting.
Okay. Thanks.
Aman, can I have a request to come back, please?
Yeah, yeah. That's all from my side.
Thank you, sir. Next question is from the line of Pratim Roy from B&K Securities. Please go ahead.
Hi, sir. Thanks for the opportunity and congratulations on the set of numbers. I have just two questions. First of all, in that last quarter, there is one-off? So is there any one-off there in this quarter as well? That is my first question.
Yeah. No, this quarter, we don't have any.
Hello?
No, there are no major expenses, one-off expenses in this quarter.
Okay, sir. And secondly, sir, where you can expect that the INR 8 billion-INR 100 billion cost optimization strategy that we have, which should be reflected in our books?
It should reflect from quarter three onwards, quarter two, but we should be able to see full advantage from quarter three on.
Okay, sir. Thank you. And one last question, if I may ask. Just, like you said, that the U.S. tariff will impact is not that much as we can really pass to the tariff to the end customers. But in some cases, actually, Aman mentioned that we can't really have to take some other steps. So is there any—if you can quantify any number that that much fees we can expect from that U.S. tariff deal and all, any ballpark number on that side?
I think we are fairly optimistic, and we should be able to not only retain our market share and ensure our margin protection, and also we should be able to, in some cases, increase our market share. But with the way it is that the tariffs keep on changing fairly frequently, we are a bit cautiously optimistic, and we hope that if this status quo, what is being maintained, is maintained going forward, we should be able to, we should be able to maintain our margins and volumes in the U.S. market.
Okay, sir. Thank you. Thank you for your answer, sir. I'll be back to the beginning if I'm able to figure out. Thank you, sir.
Thank you very much. Next question is from Prolin Nandu from Edelweiss. Please go ahead.
Yeah. Hi, team. Thank you for giving me the opportunity. I'll continue with the last participant's question on tariff, right? Now, see, 50% is a very large number, and despite that, you are confident of you maintaining the market share as well as the margin. Can you help us understand how will you be able to do this? I understand that, see, domestic producers do not have the capacity enough to supply in the market, but with 50% differential, maybe they can also put up the capacity. And the larger question is that, let's say, for example, you being aware about this tariff thing before you thought about this restructuring, right, from U.K. to India, would your decision change?
Can you keep some capacity operational at the U.K. plant so that between India and U.K., right, you can take advantage of some of the tariff differential, right, when it comes to some markets like U.S.? This is the first question that I have.
Yeah. So why specifically the U.K.? It is the same for others as well. We compete with the Koreans, and we compete with other people in the India market. So for everyone, it is 50% as opposed to the reciprocal tariff, where it's different tariff for different countries, right? So in that way, it's a level playing. Secondly, when it comes to the U.S. market, the domestic market versus import, that is looked at very differently because the domestic prices, even with the 50% tariff in a lot of the major categories, will still be at higher levels. They do command a premium. So in that way, we are still overall competitive.
Thirdly, in your point around, will the domestic producers set up any capacity with the environment being so dynamic right now and uncertainty for them as well in the market as there are changes happening on a daily basis? Based on our initial analysis, they are also not feeling like it makes sense to put in more capacity because if things change in a couple of years, then they would be stuck with that additional capacity, and there might be an oversupply at that point. So while they don't have production capacity right now to meet the demand, import will always be a factor. We don't see any major CapEx plans for the major producers over there. And then to your last point, for the BSUK part, we still have our machines in BSUK. We've reduced our manpower, and we've reduced our production over there.
But we do have the flexibility where if we feel that this environment continues or changes, and in some cases, the unit economics makes sense for us to produce in BS UK for the U.S. market, we have the flexibility to do that.
That's very encouraging to hear. Thank you, Shreya. My second question would be on the domestic market, right? Can you just help us understand what is the competitive environment here? Because there are some other players who also have probably got approvals in some of the mining tenders, so on and so forth, right? And some of the domestic players are also putting up capacity for high-value-add wires. So versus, let's say, a few years back, has our competitive position in the domestic market taken a hit, or how should one think about competition in the domestic market?
Good question. Domestic market in the wire rope segment, Usha Martin has between 65%-70% of the market share, and we have a very strong dealer network, a very strong technical team which supports the services to our customers along with our dealer network, and we have been able to continuously maintain, and in some cases, are focusing to even increase our market share. The prices in the domestic market have also improved slightly, more on account of the improved product mix, and we are expecting to continue to maintain our market share, and we still enjoy a very strong support from our dealers and our customers. The competition in all the various segments will always be there.
We have to see that how we continuously improve, enhance our product, improve with our global design center and our R&D center in India to work closely with our customers to continuously upgrade the products to be able to improve the technical performance and the performance of our ropes. And that is really helping us to ensure that we keep our market share. On the wire side of the business, we have seen a 30% growth year-on-year on the wire side. And we are more focused to increase the production of the high-value-added wires, which is going to be helping us to improve the overall sales of our wires, but more focused on the value-added product. And we are not getting into the commercial wires, which have a large volume but low margins. So that is the kind of product which we are not in.
It's a niche market which we are focusing, and we expect to continuously grow in that market.
Thank you, Rajeev. I'll join back in the queue if I have more questions.
Thank you. Next question is from Jasdeep Walia from Clockvine Capital. Please go ahead.
Hello. Sir, can you hear me?
Yes.
Sir, thanks for taking my question. So with respect to products that you supply to U.S., are these being supplied by your India facility or the U.K. facility? And let's say if the tariff were to remain at current levels, would it be possible for you to shift the entire production for your U.S. market to U.K. plant?
Most of the supplies are taking place from India and our Thailand plant. We will continue to do so. As Shreya mentioned earlier, that if there is an opportunity for us to be able to supply from U.K., definitely 10%-15% of this quantity can be even supplied through our U.K. plant. But we don't see that situation happening in the near future. Going forward, we have that flexibility. We have kept the flexibility with our manpower, and we should be in a position to do that should the situation arise.
Got it, sir. And with respect to this flexibility that you mentioned, is it that the U.K. plant will require some manufacturing investments or modifications to be able to get to U.S. volume, or the plant is ready, and whenever you feel the time is right, the production could be comfortably moved to U.K. plant?
No, we don't need any more fixed asset investment there. Our plant and machinery is in good shape, and we have retained all the equipment in the U.K., not moved anything out of the U.K. And should the need be, we can quickly start production from that facility.
Sir, I'm just curious, given the fact that there's a large duty differential between U.K. and other manufacturing locations to the extent of almost 25%, why aren't you already shifting the U.S. volumes to U.K. plant? Because it will add a significant amount of margin to your U.S. sales, right?
Anything which goes from the U.K. plant, the wires and strands have to go first from India or Thailand to the U.K. plant. The U.K. cost of manufacturing is also not cheap with the cost of labor. And then the logistics also first going to U.K., then getting it converted, and then going back from there to the U.S. with the second leg of logistics. When you look at everything, it's still more competitive to supply from India and the Thailand plant.
In any case, in most cases, the distributors and customers are taking on a large part of the price increase. That is something that is also helping us retain our share.
Got it, sir. Thank you. That's all from my side.
Thank you. Next question is from Rajesh Agarwal from Moneyore Capital. Please go ahead.
We are seeing traction in the elevator or local domestic in that segment. Are we seeing traction? Because I read an article that the elevator segment is growing by double-digit. This is my first question.
The elevator is definitely growing fairly fast in the domestic market. And with the construction in the Tier 2, Tier 3 cities also of multi-storied buildings, we see that a lot of demand is coming up. Elevator is one segment which is at a strong growth in addition to the crane market, which is again related to construction, piling, mobile cranes, even ports. So these are the two segments which are growing fairly strongly in India.
Okay. And sir, second question, is there a possibility of working capital reducing further? And what will we do to increase the margin which we have guided to 18%? How the margins will come and how the working capital will improve?
Yeah, so definitely the working capital will reduce going forward. In September last year, it was at 209 days at its peak, and now it's come down to 196 days as of this last quarter. We are confident that this positive trajectory will continue. The second part is the EBITDA margin growth. Yeah, we definitely expect it to grow from the current 18.3% levels to an average of 18% for the full year, and we're quite confident of that both in the domestic and international market, so first, in terms of the domestic market, we do expect better product mix and realizations going forward. And we have seen already early signs of that from our order pipeline with our dealer network, so overall, from Q2, there we expect the margins to go up.
And then when it comes to the international business, one of the reasons the margin was also subdued was because in the Middle East, in the past quarter, we did see certain pricing pressures with GP rope. But even there, our focus is more on the high-value products now in elevators, piling, like we were talking about, even in the Middle East market. So with that, it might take a little bit more time, but in H2, we do expect the recovery to come in. And then, of course, with the European business initiatives, which we've already talked about, that would also lead to further EBITDA margin improvement. So all of this gives us the confidence that H2 should be at much better levels.
This includes, sir, any mitigation in steel price rise also?
Can you come again, please?
This mitigates, sir, any increase in steel prices also?
No, the steel price has been fairly stable, and in fact, we saw last two months a slight reduction in prices, and with the feedback what we have, we don't see a major increase coming up on steel, so it's more or less stable, I would say.
Okay. And the final question, what will be the maintenance CapEx and CapEx this year?
Maintenance CapEx would be close to INR 25 crores-INR 30 crores.
Okay. And fresh CapEx?
Fresh CapEx for the year is around INR 150 crores, close to INR 150 crores. So overall, we will.
Sir, sorry to interrupt you, you're sounding a little distant.
Yeah. The total CapEx expected to be maintenance CapEx INR 25 crores-INR 30 crores, and the total CapEx to be around INR 150 crores.
150 crores. Okay, sir. Thank you, sir.
Thank you. Madhusudan 's Zoom app has started and wanted to ask a question. Next question is from Shreyansh Shah from Fort Capital. Please go ahead.
Hello. Am I audible?
Yes.
Yeah. Good morning, sir. Congratulations on the decent set of numbers. So basically, I have two questions. One is in the wire segment, you reported a 32% year-on-year growth. So I just wanted to understand, is it driven by the structural demand or the short-term orders which we saw this quarter? And the second question is that in LRPC segment, volumes fell. This is due to temporary project delays, price competition, or a structural slowdown in the segment?
On the first question, the wire business, as we mentioned in our previous calls also, that we have started focusing to increase our wires in the markets, the auto sector, as well as the wires, as well as our on some of the niche products related to like door springs, etc. So this market, we have constantly started focusing to increase our wires, and we expect this trend to continue even going forward. Coming to the LRPC market, yes, the monsoon period, as well as the price and demand and price pressures are significant, and as we mentioned in our opening remarks, the volume as well as the margins are under pressure. Our focus would be to keep on increasing our focus on the plasticated LRPC business, which would help us to get a better margin for our product.
So this trend of pressure on the general LRPC is expected to continue more so on the margin front. Volumes may get better once the monsoon is over and the project activity starts one thing.
Just a follow-up question on the LRPC, sir, what you mentioned. So going forward, do you think that the revenue contribution of the LRPC segment would be declining from year-on?
Yes, we don't expect it. It could be at similar levels or would be declining. And the plasticated LRPC, which is the value-added, should gradually be going up. So that's what we expect. We don't see this as a very business which can add significantly to our growth going forward, the general LRPC.
Okay, sir. Understood. Just one last question. That post-year Ranchi expansion, what incremental capacity metrics and value add, and how quickly can it be ramped up for some sudden orders which we can expect?
Ranchi capacity, as we mentioned last call, so we have overall capacity increases around 40,000, of which rope will be around 20,000. Till date, we have already installed 70% of the capacity, and remaining 30% installation will be complete by end of Q2, around October. With this capacity, within this capacity, we are planning to develop new strands, plasticated ropes, arrange these additional capacities. This will give us good volume going forward.
Okay, sir. Thank you. Thank you so much.
Thank you. Next question is from Shraddha Kapadia from SMIFS Capital. Please go ahead. Shraddha, may I request to unmute your line and proceed with your question, please?
Hello. Am I audible?
Yes. Yeah, now yes.
Yeah, yeah. So thank you so much for the opportunity. So just continuing with my question on the participant, I would just like a brief opportunity to say.
I'm sorry to interrupt. Shraddha, sorry to interrupt you, but your audio is breaking.
Yeah. If you could give the new CapEx plans beyond Ranchi. Hello. CapEx plans for future.
Yeah. For the future, we currently have an INR 60 crore investment plan in Thailand, which is under implementation. In our Ranchi plant, once this phase is getting completed, as our CFO mentioned by quarter two, we would definitely look at opportunities to grow, particularly in our elevator rope and crane rope segment, because that is an area we are seeing a lot of traction coming, both from the domestic and international market. So as and when the demand situation, we see that it is growing, we would take advanced steps to increase our capacity. That would be in the Ranchi plant, as well as we could add some new capacity in our Hoshiarpur plant to be able to cater to some of these increased demand.
Sure. Thank you, sir. So just one more question from my end. So we have seen a good growth in the wire rope segment. So how much sustainable is this growth, and is it coming from new customer acquisition or any industry demand, if you could help us understand that?
It's a good question. It is getting new customers as well as increasing the volume with our existing customers. Having decided that this could be an important vertical for us, we have been working on this for the last few quarters, and we have been able to successfully develop this business. This is not a one-off growth. We will see this growth on a steady basis. Quarter by quarter, you will see volume growing in this segment. The areas where we are particularly working is one is the auto sector, which is fairly strong. We are also working on the door springs as one example, as well as on zinc aluminum wire, which is going for rockfall barriers, as well as some critical spring applications. So these are various areas we are focusing in. Now, this is going to be an important vertical going forward.
Sure, sir. Thank you so much for your detailed answer. That's it from my side.
Thank you very much. Thank you. Next question is from Sanjay. From ithoughtpms , please go ahead.
Hi, sir. I had a question on margins and EBITDA per ton. So we've reported INR 28,500 as EBITDA per ton in Q1. Is it possible to break this up into, say, wire rope domestic and wire rope exports?
We don't specifically mention about the EBITDA per ton. And so if we do a rough calculations for the wire ropes, it will be in the range of INR 55,000-INR 60 ,000 EBITDA per ton because we allocate most of the fixed cost to the wire ropes. On the wire and the LRPC segment, on the wire segment, EBITDA per ton will be between INR 12,000-15,000 . And LRPC will be on the lower side of INR 2,000-INR 3,000 margin will be there in LRPC.
Right. Right. No, the reason I was asking is I was looking at the wire rope realizations in the U.S., and they are as high as, say, $8,500 per ton. And WireCo does 12% EBITDA margin. So it looks like they're doing $1,000 EBITDA per ton. That's translating to INR 85,000 per ton. So are we also in the similar ballpark in our U.S. exports? And does it mean that as and when our U.S. share of U.S. goes above, margins can even increase going forward?
Yeah, so if wire rope, like Abhijit said, is on average INR 55,000-INR 60,000 per ton, but export is an international market, definitely you get a better EBITDA margin compared to domestic. We don't separate it out and share those numbers, but it would definitely be on higher levels, and if we increase our share in our international markets, whether it's U.S. or direct export to Europe from India, it would definitely improve the EBITDA per ton going forward, so we will do that.
So, post all the cost initiatives, One Usha Martin initiatives, what kind of EBITDA margin target do we have, let's say, for FY 2027?
At controlled level. As Shreya mentioned earlier, this year, we should be able to achieve 18% on an annualized basis for this financial year based on all the various initiatives of the cost initiatives which we have taken, which is under implementation and mostly gets implemented by Q2 of this financial year. The benefits of that we start getting. Secondly, the new CapEx which has been implemented as we improve the volumes coming from those, as well as some of the marketing initiatives which we have been able to for the new increased capacity. We expect the margins to, if we are expecting 18% for the full year, we definitely expect it to be going 18% upwards in the next year. 19%-20% is something which we feel that that is something which we should be able to achieve going forward.
Got it. Got it. If I can ask one more, so sorry to keep going back to that tariff thing, but say, Bridon-Bekaert, it's based out of U.K., so they might have that advantage over us. And even WireCo, which is based out of USA itself, can we compete with them despite making in India or Thailand? And is there any weakness that you see in WireCo because some credit rating reports are saying that they're struggling in the last two, three years?
Yeah. WireCo, we also hear that they are struggling, but I'm not having much details on that. But I can only tell you that our team is fairly confident, and we are also very confident that we should be able to maintain and grow our market in that region with our local presence, with our own distribution, our own warehouse, and our close working with the customers, and also being able to win a large contract. We expect to do well in that market. And I think with all other international players who are having a major market share, the Koreans, ourselves, the Turkish, all of us are on a similar tariff level. Chinese are giving slightly higher tariffs. So we are cautiously optimistic about our position in the U.S. market as we speak today.
Got it, sir. Thank you and all the best.
Thank you. Next question is from Jaishree Bajaj from Purnartha Investment Advisers. Please go ahead.
Thank you for the opportunity. As you mentioned in Q1, that it is nearing completion of the foundational phase of the transformation. So can you please provide some specific measurable operational KPIs which you expect to improve by the end of the second quarter? And what means how much percentage of cost-cutting is done or efficiency gain has been resulted so far?
Yeah, so in terms of the measurable KPIs, of course, we talked about in terms of cost reduction, the employee cost as well as other expenses, and we expect decrease in that, which would help us get at least 18%. The other is the working capital reduction, which came down to 160 days this quarter. Even the inventory came down to 175 days this quarter. We're tracking both of these, and we hope to reduce this further by at least 10 days over the next quarter. That is another KPI we're targeting. Third is looking at our cash conversion, so we converted about 95% of the operating EBITDA to cash, and by the end of the year, we are targeting to take this even more than 100% levels, which we're confident of achieving through overall better financial discipline and working capital management.
These are some of the KPIs that we are targeting. In terms of how far we are with this, we started this in around September, October of last year, and from Q3, we expect to see the full effect of it.
Okay. So right now, there is no numbers you can give or any numbers you can get for how it help in post-selling?
You will see from the coming quarter that the full benefits of what is articulated will start reflecting in our numbers. A few of the numbers she has already given. The rest, I think it is work in progress, and you will see it coming in the quarter two onward.
Okay. Thank you. That's all from my side.
Thank you very much. That will be the last question for today. I'll now hand the conference over to the management for closing comments.
I would like to thank everyone for attending this call and showing interest to 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 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.
Thank you very much. On behalf of Usha Martin Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.