Al Jazeera Steel Products Company SAOG (ATMI) Earnings Call Transcript & Summary

[Foreign Language] Welcome to all shareholders and all who are joining us. And we would like to negotiate about the financial 2024. We have Mr. Venkat, the CEO of the company; and we have Mr. Bejoy also, the CFO of the company. Now Mr. Venkat, he will read the report about what we are talking. After Mr. Venkat, you can feel free to ask any question, what you like. Please, Mr. Venkat, the CEO.

Good morning, gentlemen. Welcome to this investor presentation. Thank you for being on this call. We thank you for your continued patronage and support in terms of investment in our company. We are here to present the key highlights of last year and the financial performance of last year. So we'll go ahead with this. John, can you go ahead with the slide, please? Next one. I'm not going into too many details. I'm sure you know about the company. The company was established in 1996. We have crossed the 25-year mark. In fact, we had a 25-year celebration recently. The company has 2 lines of products. One is the ERW pipes with a capacity of 300,000 tonnes; and merchant bar mill, which is a separate product line and a separate plant, which again notionally is 300,000 tonnes. Please go to the next slide. Our products go into diverse applications, especially in construction, agriculture, so many areas are there. We are a key contributor to the economy in Oman, okay? Apart from Oman, the key markets of Jazeera are U.A.E., Saudi Arabia and North America, okay? Both manufacturing facilities are close to the Sohar port. The parent company has a subsidiary, 100% owned subsidiary, in Saudi Arabia, which is a distribution center. It is a key part of the strategy of the company. The parent company also owns 80% shares in Al Jazeera Products Company LLC (sic) [ Al Jazeera Steel Products Co L.L.C. ], U.A.E., which is a forward-looking investment. This is for a 450,000 metric tons per annum state-of-the-art new medium section mill in Khalifa Economic Zone Abu Dhabi. We are expecting to commission this plant by the end of this year. Can you go to the next one, please? In terms of highlights, I think last year was a good year. The profits of the company rose by around 93% over 2023. We finished the year -- the parent company's profitability stood at OMR 7.767 billion. We had record sales in 2024. We reached a sales of 480,000 against 476,000 in 2023. The very important achievement in 2024, which is important for the future of the company, is we got certified by the American Petroleum Institute. Therefore, we got their monogram, which we can use to cater to the oil and gas sector. This has been something on the cards for a long time, but the company was able to do the upgrade in the mill and move forward. There are 2 important upgrades we did in Jazeera last year. One was the upgrade of the existing merchant bar mill so that we could roll high sections and different kinds of channels, which is a very important thing, which helps us move slightly out of the commodity space we are in terms of merchant bars. And the other important upgrade was upgrade of mill #4, tube mill #4, to produce API pipes. We got our API monogram. We are targeting to sell PV also. Of course, that's an uphill task in terms of qualifications. We are working on it. In terms of corporate performance, we got multiple awards last year. We got the best performing company, was awarded the best performing company in the mid-cap category during the Alam Al-Iktisaad Awards held in Muscat, Oman. And we got the Corporate Excellence Award. Al Jazeera Steel Products Company was a proud winner of the Corporate Excellence Award in the mid-cap segment. This was done by a survey done by Moore. So it was done on very, very objective parameters, and Jazeera did very well. It goes to reflect the professional management of the company, the Board, the way we run our business. I had already talked about the company successfully upgrading the merchant bar mill. Another major milestone in the making is the commissioning of the medium section mill in Abu Dhabi, which is not only a geographical diversification for Jazeera, but also a major project product diversification, which is important to reduce the impact of volatility on our margins. It doesn't completely take it out, but it moves it one step higher and makes it less distinct. So the medium section, which we will produce in the medium section project, will go into civil construction and other load-bearing members in civil construction. Right now, what we produce are not load-bearing members, okay? So it's a step higher in terms of complexity, in terms of the product segment, in terms of the customer segments. As I speak today, the commissioning and machinery installation are going on, and we expect to commission, hot commission, the project by end of 2025. Can you go to the next slide, please? Next slide, yes. Bejoy, can you handle this, please, the financials?

Sure. Yes. Good afternoon, gentlemen. Here, we are going to give the highlights of '24 versus '23, just important highlights. And the numbers, if any queries after my explanation, you can shoot the queries. The first line item is the quantity. The total quantity, what we had done in 2023 is 476,000. And this 2024, we did 479,000, an increase of 1%. Here, I have to highlight that almost our merchant bar mill was under shutdown for expansion for 40 days. And in our 2 mills also for a month, one of the major mills was shut down. So in spite of all these shutdowns and all these maintenance, we achieved a 1% increase. And the revenue from OMR 140 million to OMR 145 million, which is an increase of OMR 5 million in absolute terms, an increase of 4%. The cost of sales increased from OMR 122 million to OMR 123 million, which is an increase of 1%, which is in line with the quantity increase. The revenue increase, you can make it out that, okay, this is because of the higher realization, which is reflected in the gross profit line. See, gross profit was OMR 18.6 million, increased to OMR 22.5 million, an increase of almost like OMR 3.9 million, which is 21%. Other income consisting of this OMR 414,000 versus OMR 464,000, an increase of OMR 49,000. Basically, 95% is consisting of the dividend income from our Saudi subsidiary. Selling and distribution expenses reduced from OMR 8.4 million to OMR 8 million and saving of OMR 387,000. This is because of the negotiations we did with the various providers. General and administrative expenses increased by around 5%, which is a normal one. Other operating expenses, which is very insignificant in value-wise, from OMR 15,000 to OMR 25,000, a OMR 9,500 increase, this is nothing but the wear and tear or the scrapping out of the rolls, which is a small amount. EBITDA (sic) [ EBIT ] increased by 68%, from OMR 6 million to OMR 10 million -- OMR 10.2 million. Interest expense also reduced substantially from OMR 1.3 million to OMR 1.1 million, in spite of the sales revenue has gone up. And we spent a lot of -- from the internal accruals, we spent a lot of money on the CapEx investments internally as well as we invested in our subsidiary company. In spite of that, we are able to -- we have not taken any additional loan in the parent company or being done from the internal accruals. Still, we are able to save around 20% when compared to the previous period -- previous year. Income tax, it's a normal scenario based on the higher profit, 90% has gone up. And the profit also increased from OMR 4 million to OMR 7.7 million, an increase of 93%. Can I come to the next slide, John? These are the major ratios. Inventory turnover ratio, 4.2, in 2023. Now it is 4.4. In days, it is 87 to 84. Debtors turnover ratio, 4.3 in 2023. In 2024, it is 4.6. You can see an improvement of 5 days here from 85 to 80 days. Similarly, in inventory days also, there is a small improvement from 87 to 84 days. Creditors turnover ratio, 19.3 to 27.2. There, the days is from 19 days reduced to 13 days. As you know, it's not easy to get the credit from the suppliers, but still we are constantly aiming for that. Current ratio, same; quick ratio, there is no change. Operating cycle, there is an overall increase. Improvement is from 154 to 151 days. Then capital employment ratio, 2.5 to 2.3. Return on assets is 4.2% last year, and this year, 7.8%, a substantial improvement. Also net profit, you can see 2.9% last year, this year, it's 5.3%. Thank you. Venkat, sir?

Yes. Gentlemen, if you have any questions, we would be glad to address them.

John, you can close the slides.

I request also feel free, please, and I need name and from.

Mr. Venkat, Mr. Bejoy, thank you for the presentation. As always, short, sweet, to the point, and congratulations on a fantastic year. Obviously, there is some operating leverage at play last year given that the sales were more or less flat, but you had this massive increase in the bottom line, a bit of operating leverage, a bit of financial leverage as well. Can you just talk about the industry dynamics? And in terms of outlook, the sort of 5% net margin for any commodity business, I think a lot of things have to go right for that to happen. Do you see any sort of sustainability in the industry dynamic? Because numbers are exceptional, no doubt about that, and you have this huge growth coming in as well. So first, I wanted to understand from the current business perspective. And then, of course, I wanted to see a little bit about the expansion, what sort of outlook you have in the first year. Are you expected to break even on an EBITDA level? And what sort of outlook do you have on that side?

You asked all the questions my Chairperson asked me over 1 year within 2 minutes.

I'm sure you have all the answers.

No, no, jokes apart, see, the point is, if you look at where Jazeera is today compared to where it was, say, 7, 8 years back, as a company, we were doing about 330,000 tonnes, I would say, 8, 9 years back. Today, the same facility, we are turning around 470,000 tonnes. And that too, you have to take almost 30 days off in merchant bar mill and 20 days off in tube mill because we had to take shutdowns for the upgrade. So I think there has been a consistent increase in capability and capacity, not just capacity, in terms of production, in terms of sales, in terms of everything we do, okay? So we have diversified the product portfolio. We have diversified the market portfolio. We have diversified the segment portfolio we operate in. So what I mean by product is we have increased the number of products within the existing mills. When I say we have increased our market portfolio, Saudi has become a very important market in the last 10 years, okay? When I say product portfolio, we have added a number of small, small products here and there. In merchant bar mill, we have added channels, some angles, some listing. And when I say segments, for example, we have added some key segments like transmission tower segments in MDM and other segments in tube mill. Now I'm not talking about the API or something because that was just done towards the end of last year. That will come later. So what we have basically done to achieve all this is incremental increases over a period of time, which accumulate into a much larger achievement. Now your second question, is this maintainable? I think with reasonable optimism, yes, subject to our friends from Southeast Asia, I don't want to name them, not inundating the market with extremely cheap products, which has happened in the last quarter, okay? That is the only rider in this. If they come and inundate the market because the Americans are putting some pressure in terms of tariffs and others, then there could be some ramifications on our profitability. I'm saying that in a very polite and nice way. That's the only headwind we are expecting. Otherwise, our market, we are mainly in our local markets, the construction segment here, if you take U.A.E., even if you take Oman, you take Saudi, it is buoyant. The only issue which you have is when you have an inundation of low-cost material coming in, your margins suffer. So even if you sell the same volume, your margins might get impacted. We are hopeful that we'll be able to weather the storm, and we work on that. That is one of the reasons why we are moving into API and other areas, which are more approval-based, which has less impact from outside imports. But these don't happen overnight. As they say, Rome was not built in a day, like that. Even the API portfolio or the sections portfolio, which we are doing, does not get built over a day. It's a 2 or 3 years' work. So that will take time. So all these strategies are in place. Our distribution centers in Saudi, in U.A.E., in Ma'abilah, in Muscat, have all started giving slow benefits to us in terms of additional volume, slightly additional margins. But these are the things which will keep us afloat in these difficult times of difficult times geopolitically. Hopefully, I think we are heading to a resolution in Europe. If that happens, I think there should be a general better feeling. Of course, we have to see how the interest rate scenario pans out. I think the company and the finance team did a fantastic job in keeping the interest costs lower even though the interest had generally risen. And the sales team had done a good job in their collections and everything, and the production team had done what they had to do. They have done a wonderful job. Thank you. I hope that addresses the question.

I mean no doubt in my mind, that it's probably one of the best managed companies in the country, for sure. And if you can just shed some light on the expansion project. Obviously, when you announced it, we did not get into too many numbers because it was 2, 3 years ahead. And now, from my understanding, it should go live pretty much early next year. And then maybe you break even on an EBITDA level first year, but what are your aspirations from this plant? And one thing commendable is that you've not done any rights issue. You've managed to maintain this healthy dividend payout, at the same time, depending on internal accruals and a very prudent financial management, I mean kudos to you and your team, for sure, it would not have been easy to do this kind of expansion with pretty much internal accruals, at the same time, meeting your dividend expectations with shareholders and sometimes exceeding them. This is something I wanted to state on the record.

Look, my boss is not on the call. But still, I will appreciate the vision of the Chairperson and the support of the Board in terms of professional management. I mean see, it is one thing in us, professionals, trying to manage a show. It's another thing to get the right direction and support. So I want to place that on record, as I speak, an exceptionally professional Board and Chairperson. At the same time, we are endowed with a fantastic team, okay? Now in terms of what the medium section mill is doing, you have to see it to believe it in terms of the scale of the project. It's a state-of-the-art mill. It has been supplied by POMINI of Italy. It's completely a Level 2 automated plant, AI-ready, if I have to use that word, well, I have to use that word, nowadays. If I don't say AI, people get shocked, okay? But it's actually AI-enabled in terms of certain areas, not everything, okay, certain areas like defect detection and stuff like that. See, the idea of putting that mill is, see, we are in a certain size range in terms of what we do, in terms of the merchant bars. This is the next set of sizes, which are load-bearing members. The current merchant bars we produce are not load-bearing members. They are simple structural applications like handrails, like this, that, small things. So we go on to the next higher range of sizes, but these sizes are lower than the size range of the big daddy there, which is Emirates Steel. So strategically, what happens is, along with Emirates Steel, our medium section mill and ourselves in Oman, there is a complete product range in the market. So that is one thing. Second very important thing for the medium section mill is the mill has a provision to roll rails, okay? Even though there is some additional investment required to roll rails, there are some additional facilities in terms of hardening and in terms of roll testing -- roll turning, sorry, I mean, rail turning and stuff like that, but the mill has been enabled to do that. And there are a lot of rail projects in the region and in the wider Middle East. So in terms of producing rails, we just need to put the investment and switch on and move on, subject to us having the steelmaking in place, okay? So we are also actively considering doing a feasibility study on putting up a backward-integrated steelmaking facility also in the same plot. So it's a long run. This project is not something which will make money, right, starting in the first year, start rolling out the cash. It's something we have to move patiently on and move forward. First year, obviously, we'll try to be EBITDA positive, but it remains to be seen because the issue with the section mill is it is not only what you are able to sell, it is also what you're able to produce. Sections typically, in that mill, we are supposed to roll about 40 families with multiple sizes inside it. So we have to roll, stabilize and then sell all that. So normally, a section mill takes about 2 to 2.5 years to stabilize. And this is my experience even previously when I was heading the sales function in Emirates Steel for the heavy sections and for ArcelorMittal before. So this is something which is a long-term project, but it's a very healthy project to have, okay? So this is my answer, if there is anything else I can add. Just be a little patient with us. In the first year itself, don't expect wonders in that plant. Please kindly be -- you've always been patient with us even in the worst of times, so be patient with us.

Of course. And just on that plant, when do you expect capacity to ramp up to like 100%?

About 3 years. See, the point is any section mill will have a nameplate capacity, Mr. Abbas. For example, it will have 450,000. But if you are able to produce somewhere around 350,000, 375,000, it would be assumed as nameplate capacity is achieved simply because that 450,000 is based on the biggest size you can roll in the mill, okay? But you cannot roll all the biggest sizes at the same time that the market does not take. So you roll smaller sizes, you roll bigger sizes. So you get a weighted average productivity, okay? For example, in simpler terms, if you have seen rebars in the market, you will see the thicker rebars and you will see the thinner rebars. Everything needs to be rolled, so that the customer can build a house. You can't build a house based on thicker rebars alone, okay? So somewhere around 350,000 tonnes would be the peak capacity of that. But theoretically, the mill can roll 450,000 tonnes. You can get the same. The same with even our merchant bar mill. The theoretical capacity of the mill is 300,000, 350,000, but we roll about 230,000 to 250,000 tonnes. We have done some augmentation to increase the capacity in terms of the furnace, work on the furnace, and other things this time. So that's how it works. You go from one step to another.

And typically, in this product line, are the contribution margins in line with what we've been seeing for Jazeera Steel? Or is it a more sort of specialized product with higher contribution margins?

Initially, the contribution will be the same. But as we develop value-added products, as we go along, as we gain comfort in rolling, the margin should increase. That is the whole idea, but it doesn't happen in the first 2 years. Let me be clear with that.

Sure. Of course, I understand the ramp-up and all of that, yes. I mean that's something -- it's well noted that the ramp-up would take time, absolutely. And the fixed costs have to obviously be allocated over a bigger sort of production base. That takes time as well. We understand that. But the guidance of being EBITDA positive in the first year itself is quite actually...

I didn't say that. You said that.

One thing that didn't alarm me, but you mentioned it in passing in your speech, saying that -- or when you answered my first question about the Southeast Asian countries being a challenge when it comes to the competitive landscape, right, especially when they have these tariffs. Now two questions on this point. I assume Oman, because of virtue of having an FTA with the U.S., we don't have to pay any tariffs, right? We're not subject to any tariffs from them. I mean, is that correct, that understanding?

Sir, can I answer?

No, no. You can answer, but where are you from Mr. Abbas?

From Vision Capital, sir. You and I have been chatting...

Where are you from?

India.

Sorry, gentlemen, if there is any Arabic gentlemen, I'll just use one word. We should not be in [Foreign Language]. See, the FDA has no role in our exports to the U.S. All the tariffs are applicable to us always, okay? FDA has no role to play. Whenever we talk about it, they don't even look at it. So we have been talking to the relevant authorities, but unfortunately, we have been working with these tariffs. I mean you have to live with them. We have no preferential treatment.

Yes, sorry. Got it. Understood. And the second challenge is that with China obviously being the recipient of the larger tariffs from the U.S., this problem of low-cost imports has plagued the ceramic industry. At one point, they were doing exceptionally well across the region. And now if you speak to the CFO, CEOs, you'll hear the challenge that they face. Now they were saying -- customs is obviously something that's already decided by the government, at the government level. But they're saying one thing that they would really appreciate is standards or quality standards, right? Because sometimes the products that come in don't meet the standard. And especially when it comes to steel and ceramic, these products are going into malls, people's homes, construction. Now do you see something of that happening in your industry where you can weed out the poor-quality products from the better-quality products? And maybe I'm delving too much in it. Maybe it's not such a big challenge right now. This complete inundation is the word you use of low-cost products coming in, low-quality products. I mean how big a challenge it is? Because for an operating leverage business, of course, I feel like your costs are fixed. So the impact is going to be much larger than any of us can appreciate right now if this continues to pose a challenge for you.

Obviously, it's a challenge, Mr. Abbas. The point is there are manufacturers, there are other manufacturers in China. you get good quality, but there are ones which are absolutely -- they can produce wind tolerance, but they'll produce a much lower tolerance simply because they want to lower the price. And their prices are so low that the duty, which is 5%, which we have here, even if you add that, my prices will be still 10% to 15% more. So I mentioned this in one of my other podcasts where somebody asked me a question, how do you survive? It is a quality plus service bundle with which we operate. We maintain our quality so that the customer trusts our material, especially for key projects. And there's a service bundle. You place the order with me today within the region, I supply within 45 days. And they know that once they place the order, they have a peace of mind that they will get the product which they ordered at the time they order. So this is the quality plus service bundle on which we are surviving. Honestly, otherwise, what is the differentiation between a merchant bar made in China and here, except for bad quality? If it is the same quality, there is no difference. And if they offer $100 lower to us, which they are doing many times, we are in a problem. But that, the authorities have to take the relevant steps. Now if you are not on this call, I will say a lot more things, I mean, one to one. But unfortunately, this is the situation we have to live in, and that is why we are trying to move up the value chain so that there is less and less competition in terms of there is more difficulty in getting approvals and stuff like that, so that day-to-day Southeast Asian product doesn't get in. Anybody else, please?

I just wanted to get some clarity...

Who's this, please?

Yes. I'm Shaoor from Vision Capital. I just wanted to get some clarity on the operations side of things. So if I understand it correctly, currently, your capacity is 600,000. And if you could just tell us, post expansion, what would the total capacity be for the merchant bar mill?

The capacity increase will be marginal. We call it an upgrade rather than a capacity increase simply because we are trying to drop some of the smaller productivity -- lower productivity products and produce higher productivity or more defined products. There will be minor increase in capacity, but reduce the -- as I told you, we produce products which are less volatile in terms of pricing. That's all. Okay? And similarly, in tube mill -- yes?

Excuse me, I think Mr. Shaoor is asking maybe after the [ MSM ] will start commercial production, isn't that...

No, no. I'm talking about upgrades in Sohar. He said 600,000. So he's talking of...

Okay. You were talking about in Oman.

Yes. In terms of tube mill also, what we have done is we have converted our tube mill #4 from producing only ASTM and BS pipes to also produce API, okay? So there will be a swap in volume, but we should try and move up the value chain. And that impact you will see in the next 1 to 2 years. It will not happen immediately. The volume might not go as much. There might be an increase of 4% to 5% of volume. But what is more important is we are trying to increase the margin, which we get with these products. That's our attempt.

Perfect. Now if I understand it correctly, you have the tube mill and then you have the merchant bar mills, right? Now from my understanding is, for the merchant bar mill, you would be using scrap as a raw material. While for the tube mill, you will be using HRC. Is that correct?

For merchant bar mill, we use billets.

You'll be using billets, okay. And you order the billets or you make the billets in the mill?

We buy the billets. We buy the billets locally.

Okay. You buy the billets locally and you do not import it?

If there is a good offer available, but almost nowadays, everything is bought locally.

Okay. And the pricing is similar to what importing a billet would be?

Yes. But certain sources, we cannot import anymore. So there's no question of comparison.

Okay. Perfect. And on the tube mill, your primary raw material, I'm assuming, it would be HRC that you import?

Hot-rolled coil, yes.

And could you tell me the region from where you import? I mean, is it Japanese HRC or Chinese or other peers?

Japanese, Chinese, Indian, depending on whichever price works out, Korean. So it depends on the pricing at that point of time. But we have vendors whom we are qualified in terms of their quality, and we just don't go into the market and randomly buy.

Right. Perfect. So from a product perspective, which of these 2 products would you say has better primary margins? I'm not sure how these work, but if you were given -- if one of the products is providing better primary margins, would you be able to switch? Or would you be able to change your production from one to another?

No, no. See, these are 2 different products -- these are 2 different locations and 2 different facilities, point number one. And if I suddenly find that the pipes is generating $50 more suddenly, I can't shut the merchant bar mill and convert this to produce more pipes. It's not possible. There is a separate capacity limitation for this. Yes, theoretically, let us say, the pipe mill suddenly the margin becomes, say, $100 negative, then we all have to look at shutting it down. Or it becomes $100 more, then we try and increase as much production as possible, okay? So these are not swappable volumes. Anybody else? Any other questions?

So there's a question in the chat from one Ms. Pushpitha. She has technical issues in connecting the mic. So her question is what kind of construction activity or demand do you foresee in the region, Saudi, U.A.E., Oman?

I think Zia can add more on the actual numbers, but there is a very healthy project pipeline in -- Zia is our General Manager, Marketing and Strategy. So there's a very healthy project pipeline in all these markets. And the best thing is, Oman, which is our own market, the fiscal situation has improved over the last 5 years, okay? So we are very positive on the local development. Zia, you can add on the project pipelines and stuff like that.

Yes. Thank you. CEO already alluded to the fact that we are cautiously optimistic. The local market is quite buoyant. And with the geopolitical -- I mean, hopefully that there is a resolution of the geopolitical tension, it doesn't escalate further. We hope that the trend will continue. Just for the benefit of the audience, last year, 2024 was actually a record award of projects ever in the GCC. So that was exceeding $250 billion. And as we speak, the pipeline of projects in the GCC region is exceeding $2.7 trillion. So that's a huge pipeline of projects, and it's a bright spot. In fact, GCC is a bright spot in terms of project award. The good part is that traditionally, the project award in the region has been either oil-driven, oil-related or the construction. Last couple of years, we have seen that there is a secular demand coming both from the construction sector as well as the oil and gas sector. So that again gives us a lot of optimism that this boom is going to sustain, other things remaining the same.

Bejoy, you want to add something?

Nothing, sir. He has covered everything, sir. And the second part is that there has been tariffs announced by the U.S. administration on steel imports. Will the company impacted by the tariffs? I think sir, you already answered that.

Yes. I don't want to jinx myself. As of now, it doesn't change anything. But with the current administration, we don't know what they will do tomorrow. So I don't want to hazard a guess. As of now, it's okay. Yes, Mr. Bishen, do you have a question?

Just a quick sort of query. On the dividend, we noticed that dividend was quite attractive. Just wanted to see, sort of check what the sort of rationale behind that. In terms of CapEx, to see a high dividend is extremely pleasing. So if you could just give some flavor on that, sir?

Bejoy?

So this year, basically, we did an outstanding performance, as you said rightly. There are a lot of spending we did last year also, and this year also, and we are spending in our subsidiary, which is in Abu Dhabi. It's well planned. We have taken steps to reduce the -- you have seen the reduction in the receivable days and in the inventory. So automatically, that we are planning to increase the cash balance and the cash position and assumption cushion is there.

Exactly, which is why I was positively surprised because knowing Jazeera Steel and knowing the prudence of Mr. Venkat and the team, you would be absolutely sure of your cash position and the overall sort of situation before declaring a dividend of that magnitude. So is that something that's a sort of singeing effect going forward if the circumstances and time is opportune?

See, as always, we want to -- you know that 60% of our profits we regularly distribute as a dividend. This is the pattern which we are following for the last almost like a decade. Abbas, you are aware, correct?

I think he's aware, yes. Please continue.

Bishen, you are also aware of this one, the path in which we are declaring dividend. This year, 10% more to the shareholders because we also made a good money.

Okay. Glad to hear. Next question, Mr. Venkat...

Do you want to see us reduce that?

If you can increase, very well, sir. No, no, it's pleasantly surprising. And the reason I wanted to specifically highlight is because you're one of the more professionally managed companies. So with due respect to every company that increases dividend, when it comes to Jazeera Steel, there's a confidence in the market that you're well aware of the overall cash situation. So it's not a one-off dividend in terms of just pleasing shareholders. You're well aware of the situation. You pretty much made your sort of provisions in terms of what the outlook is.

Yes. Mr. Bishen, there was a debate. In the Board meeting, there was some amount of thought before this was done, okay? And obviously, you don't expect 70% dividend each year, especially in a regime where there is a lot of CapEx. But the year we could and we knew the cash balances are okay, we said let's do this, okay?

Agreed. Fantastic. Just one last one. When it comes to technology, you mentioned there's a bit of AI that's happening there. And I think this was probably 2 years ago, in one of the calls you mentioned, in terms of live tracking, et cetera, there's some sort of capabilities over there. What sort of role do you see technology playing as we go along? And I do remember you specifically mentioned it doesn't have to be margin accretive. But do you think we're in a situation today where technology can significantly, or at least incrementally, improve margins as we go along?

100%. There is no doubt that technology will increase efficiency and optimization, okay? See, for example, one of the things I think Mr. Zia and Bejoy and all are doing is working on lean procurement and stuff like that enabled by some software. Even that is technology. See, if you want to optimize input and output, you have to use technology to make your decision. Everything is not AI, by the way. Most of what people call as AI, in our times, we used to call it mathematical modeling, okay? Everything, even to go to the loop, people say, "We have to use AI." That's frivolous, to be honest. What is very important is how do I optimize my cost, how do I increase my efficiency, how do I reduce my defects. These are three simple things. And how do I improve my decision-making, even if decision-making means I have to buy a few hundred tons lesser of coils and buy the right coils, that is also technology. See, look at the number of -- Zia, how many sizes of hot-rolled are we buying?

I mean in the system, we have more than 100, but we are now trying to curtail.

There are more than 100 sizes of hot-rolled we buy. So if I try and do this manually, beyond a point, it is prone to errors. So I bring in technology, bring in efficiency, okay? In terms of rejections, you have better -- you can use AI in future to look at and trace this thing. We are working on such area. We can even use AI for safety, okay, where you automatically detect unsafe acts and push it to the management, all the operating team, and say, "Look, this is what happened." Everything matters. In terms of the new mill, which you're looking at medium section mill, obviously, you can't go and retrofit some things in your old mills. We have something called automatic gauge control, okay? And it's a 4-stand automatic gauge control, meaning I can control tolerances of my material to almost precision. Therefore, what happens is I don't pump more raw material into the steel for which I don't get paid, in very simple layman terms. This is where technology helps. Technology always helps.

If no one has any questions, I have a couple of more questions, I mean, but I'd rather give the floor to someone else who's been waiting to ask.

Mr. Said, you had some questions.

I just wanted to ask about the breakdown of your geographical revenue exposure. Can you give me like the percentage rundown of your geographical revenue exports?

Are these data getting published on this thing?

Annual reports?

Yes, it's getting published. It's getting in the YouTube.

So we have to be a little...

Mr. Said, can you call us personally on this one? We don't want to...

There is a reason for this, Mr. Said. We can tell it to you one-to-one, if you don't mind. This is something which gets into the public domain, and it has competition issues and stuff like that, but we are happy to share with you on a one-to-one basis.

At least the U.S. markets.

That's exactly what we want to talk to you separately, please.

Okay. So can you comment on your operational plan for this year given that tariffs are really not that -- they're not showing that much of a shock when you look at the forward pricing of metal prices currently. So let me describe to you like what I'm looking at. So I'm looking at the LME settlement prices in the COMEX copper contract. And for the months of February, April, August, November 2025, we're not seeing implied shortages of metals. So the forward markets are not panicking. So are you going to be a little aggressive or you're going to be a little pulled back given the tariff talks so far in the media? What's your operational...

Our stated objective will be to increase our dependence on sales to Oman and sales to the region, okay? We will, on a continuing basis, reduce our exposure to export markets because, from our experience, everybody tries and protects their own markets, okay? And we depend on a certain market. Even for, say, 5% of our volume, if there is a sudden tariff or something which doesn't get reflected in the futures market because the tariff is a sudden decision, it's never a research-based decision, then we get impacted very strongly. So our method of operation will be -- in fact, that is why we are going into API and that is why we're going into merchant bar mill upgrade is to depend more and more on the domestic market.

Okay. So in other words, you are risk averse given the backdrop of tariffs?

Not really tariffs, forget tariffs. For me, it is not only tariffs. For example, there is some geopolitical issue, let us say, then the freight rates go up. Suddenly, you don't get boxes, you don't get this, you don't get that, your margins go down. So whether it is tariff or otherwise, as long -- if I keep my sales to geographically proximate markets, the lesser variation I have in my final margin projection. So the closer to home I sell, the better off I am. Forget whether there is tariff or no tariff. Of course, strategically, you need to look at our diversification of markets and other things. But this would be my -- it's not a question of risk averse, it's more, I would say, margin protection.

Okay. And what's your outlook domestically since you're mostly going to focus domestically? What's your outlook for 2025 at least?

Exactly what I told you. The market is in good shape as long as it doesn't get inundated with products from the source you all know, okay? The market is good. The Oman physical situation is good. Even with things like Haitham City coming up and others, we are seeing a small increase in volumes in Oman. We are seeing a tremendous increase in activity in U.A.E. and Saudi, and we are hoping there will be a huge increase in activity in Oman in the next 1 or 2 years.

Mr. Said, can we know you are representing which organization?

Buy side, asset management of U Capital.

Thank you.

Said, we can always talk one-to-one, and I'll explain certain other things to you, okay? We'll be happy to share notes with you.

Sure. Appreciate that.

Mr. Venkat, I just have one last question. When you were giving me a rule of thumb, when we were speaking about your U.A.E. expansion, you said that the nameplate capacity, let's say, 450,000 tonnes, but if you're working at 375,000, you're effectively working at 100% utilization level, right? And that's point is well taken. You've sort of repeated that over a period of time. Now my second question is a seasoned sort of CEO like you who's been in the industry for many years, a similar rule of thumb where you think this net margin or this EBITDA margin is a good margin for an industry, for a commodity industry that you're in. What sort of rule of thumb is that? Because I've seen Jazeera Steel's margins obviously fluctuating in this 2% to 3% gap, right, over the last many years. So what's the rule of thumb where you see that, hey, this is a good time?

See, the range in which we are for the kind of products we are is the benchmark. I mean, if we could achieve something more, we will certainly achieve more. But that is the range we are able to get for the products we have, which is merchant bars, small pipes. Bejoy, what is our typical EBITDA margin?

See, right now, this year, basically, if you see that EBITDA is in the range of around 8% to 9% at this time.

But normally, in a very normal year, a subnormal year, it will be somewhere around 6%, am I right?

Yes, 6% to 7%.

6% to 7%.

And if I may just add to the question. Look, you have to be also very cautious that you don't paint all the steel supply in the same brush because we are a reroller effectively right now. We are not an integrated producer. So that also, if you are comparing apple-to-apple, you have to compare the benchmark for the rerollers. Like, if you're an integrated producer, you have your own iron ore or you do your own steelmaking. And if you happen to catch a good cycle, a commodity cycle, then your EBITDA margins can be very different. But for us, where a majority of our costs are actually coming up from the raw material we purchase, so even when we are in a booming cycle, our raw material is also increasing. Our input costs are also increasing proportionately.

A point well taken. Of course, I understand.

Yes, I have one last question. So based on the discussion earlier, should we be assuming that the primary margins of the company should correspond to the primary margins between the HRC, CRC steel and the primary margins of billet to rebar? Is that correct?

I didn't get the question, Shaoor.

So I was asking that in order to ascertain the primary margins at a given point in time, when looking at the margins, CRC, HRC margins and the rebar, billet margins internationally would be a good way to look at it?

You have to look at the relevant markets. You can't look at different markets because in some markets, if there is tariff protection for the production of certain products, the margin for the same product will be more. For example, I'll tell you, I mean, I'll just give you a comparison. For example, if I go to Bangladesh and see what is the cost between billet and rebar, the margin will be almost double of what we are getting because they have a direct protection on rebar imports. So we have to be careful. You have to look within that market, what are the margins.

And what would be a good market in your experience to look at?

In terms of what?

The one that's closer to ours?

Look at our market, look at U.A.E., it will be very, very normal, this thing. Again, Saudi has huge protection. So looking at it, it will misguide you. And again, as Zia said, compare like-to-like, do not compare a reroller to an integrated producer because if you take somebody like Emirates Steel, they have DRI with very low-cost gas coming in. Their cost of billet is much lower than the cost of billets we buy. Anything else, gentlemen? Mr. Jayesh, do you have anything? Bejoy, can we call it...

Yes.

If there is nothing else, gentlemen, thank you all for joining the call and really appreciate your support throughout the year. And we will try and do our best this year also as usual. Thank you for your support. And if you need any further clarifications, please feel free either to reach me or Bejoy at any point of time or Yousuf or anybody in our team, please feel free. But first point of contact will be me or Bejoy, okay? Thank you, gentlemen.

Thank you.

Thank you.

Thank you.