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

Welcome to this negotiate time and this is the annual, and we are appreciated to joining us in this negotiate. And we have here from Al Jazeera company, Mr. Venkat, the CEO of the company; and Mr. Bejoy, he is the CFO, and we have other colleagues also and myself, Yousuf Al Kamali, Chief HR and Administration. And now I will give the time to Mr. Venkat to start the meeting.

[Foreign Language] Ramadan Kareem to all my friends, and good morning. Thank you, gentlemen. On the outset, I will introduce the company. On the outset, I would like to thank all the shareholders and all the stakeholders for all the support through the years and the last year. I think Jazeera had its best ever performance in its history last year. So that's thanks to the support of everybody, including the employees, the shareholders, the Board members, the officials in the government and everybody. Having said that, let me start with an introduction about Jazeera Steel for those who are new to this call or new to Jazeera as a company, okay? Jazeera Steel was established in 1996 and it's a Oman-based manufacturer of steel products. We operate 2 business lines, one namely tube mill and merchant bar mill. We manufacture and market various types of steel products, including black pipes, galvanized pipes, hollow sections, merchant bar mill products and rebars. Our products have diverse applications, including construction, scaffolding, irrigation, agriculture, engineering and so many other applications. Our tube mill has a capacity of 300,000 tonnes per annum. That's the nominal capacity. And merchant bar mill has a similar capacity of 300,000 tonnes per annum. Apart from Oman, Oman is our mother market. Other key markets for Al Jazeera include UAE, Saudi Arabia and other global export markets. Both the manufacturing facilities are based close to SOHAR port within 10 kilometers, providing a competitive advantage in terms of logistics and access to key markets. The parent company has the following subsidiaries, Al Jazeera Oman Steel Product Company, Saudi Arabia. The parent company holds 100% shares in Al Jazeera Oman Steel Products. It's a limited liability company. The principal activities of the subsidiary are import and sale of products manufactured by the parent company. The parent company acquired 51% shareholding in the subsidiary in 15th June 2015 and acquired the remaining 49% in 31st March 2017. Al Jazeera Steel Products Company, LLC UAE is the second subsidiary. The parent company holds 80% shares in this company, which is a limited liability company registered in the UAE. The subsidiary company is setting up a 450,000 tonne per annum state-of-the-art medium section in KEZAD. The subsidiary was incorporated on 4th of October 2022. Coming to the highlights, we have many highlights for 2025. I will go through the key ones. In line with our vision to move up the value chain in terms of products, we successfully completed the first API resurveillance audit. Jazeera is now fully capable of producing API pipes for line pipe applications up to 8 inches, okay? Another key achievement was Jazeera Steel Laboratory was accredited with ISO 17025, which makes it possible for us to certify our own material for supplies to key oil and gas companies like PDO and also test other third-party samples for compliance to PDO or other oil and gas requirements. So this is a very, very key what we call that win last year. And thirdly, lastly, not the least, is the tube mill was approved by supply -- by PDO for supply of line pipes after a very, very extensive audit. PDO helped us a lot, I have to say that. But it was a very, very extensive audit and that -- this has meant that the tube mill has moved a few notches in terms of the kind of material we can produce. The merchant bar mill was approved for supply of merchant bars to PDO. Again, this is again a very good achievement. And with the upgrade in facilities especially in tube mill # 4, we were able to produce API pipes and export it to the various markets outside the GCC. The company successfully achieved ECAS certification of supplies for rebars into UAE, and we have already started supplying rebars into UAE once again. We continue to maintain a strong presence in the retail segment through our yards in Sharjah, in Maabilah and in Riyadh, constituting about 21% of our overall volumes. So Jazeera Steel's medium section mill project in UAE is nearing completion. It's a landmark achievement and is expected to go on stream by Q2 2026. I mean just as a matter of history, the first filing was done in the project in May, June 2024. And we expect to commission by -- a hot commission by March. That means in less than 22 months, we are commissioning, which is a big achievement. Jazeera Steel was recognized as the winner in the Mid-Cap segment at the Alam Al-Iktisaad Awards in Oman, which is another very nice achievement to have. CEO of Jazeera Steel, which is myself, I presented a paper along with our technology partner at the prestigious AISTech Conference held in Nashville, U.S.A. In terms of performance and financials, I will hand over the floor to my esteemed colleague, Mr. Bejoy. Mr. Bejoy please go ahead.

Good afternoon, ladies and gentlemen. This slide is the snapshot of the performance. The details will follow in the subsequent files. The revenue increased by 2%, which is around OMR 145.8 million to OMR 149.3 million. Earnings before interest and tax increased by 25%. In financial year '24, we achieved OMR 10.2 million. In '25, we achieved OMR 12.8 million. Similarly, profit after tax increased by 30%. In financial year '24, we achieved 7.7%. In 2025, we achieved OMR 10.132 million. In case of return on asset in 2024, it is 7.8%. 2025, we achieved 10%. Similarly, net profit on sales ratio in financial year '24, it was 5.3%. We achieved in 2025, 6.8%. This is a detailed summary. I will just go line by line. Quantity increased by 9%, an increase of 42,000 tons when compared to the year 2024. 2024 was 479,000 tons. 2025, we achieved 521,000 tons. Similarly, revenue, the sales value has increased by 2 percentage from OMR 145 million to OMR 149 million, an increase of almost OMR 3.5 million. The cost of sales, this is what more interesting. The cost of sales has not at all increased by even -- only 0.1 percent. This is where the company made real profit. You can see a substantial profit came out of that OMR 7.72 million around OMR 10.2 million is on account of this one. We are able to get most of our raw materials on time and at a very good price. The gross profit has increased by OMR 3.7 million, around 16 percentage, which is around OMR 22.8 million to OMR 26.58 million. Other income is -- in 2024, the other income, OMR 464,000 is the income which we received as a dividend from the subsidiary. In 2025, we have not received any dividend from the subsidiary. This is the antidumping duty refund, OMR 259,000. Selling and distribution expenses increased by 5 percent. You can see in the first line, there is an increase of almost 9 percentage but the cost has really increased only by 5 percentage due to better negotiation of the transportation cost. General and administration expenses increased by a nominal amount of OMR 495,000, which is of 10 percentage. Other operating expenses by 7 percentage, which is a small amount. Then this is the expected credit loss. There is a release. Last year, the release was OMR 56,000. This year, we are able to reverse around OMR 30,936. Earnings before interest and tax increased by 25 percentage from 2024 OMR 10.25 million. In 2025, it is OMR 12.82 million, an increase of OMR 2.5 million. Interest expenses, we are able to save almost 22% when compared to the figure of 2024, around OMR 240,000 is a saving. This is on account of the better negotiations with the banks. Income tax, we don't have any control. If the profit is more, we had to pay more. 30% is the increase in the profit. Similarly, income tax also gone up by around 33%. So finally, the profit of OMR 7.7 million was the 2024. We achieved OMR 10.132 million, an increase of 30% in absolute terms, OMR 2.365 million. EPS over 62 baisa in 2024 versus 81 baisa in 2025, an increase of 19 baisa. Now these are the ratio analysis. Inventory turnover ratio, when compared to 2024, 4.4x to 4x in 2025. It is basically 84 days was the inventory turnover days. It has gone up by almost like 7 days to 91 -- 21 days. Similarly, debtors turnover ratio 4.6x to 4.7x in terms of days from 80 days to 77 days, there is a 3 days saving is there. Creditors turnover ratio almost the same 21x in 2024 and in 2025, 20x. In terms of days from 17 days to 18 days, an increase of 1 day. Current ratio 1.8x in 2024. In 2025 it is 2x, quick ratio almost same 1.1x both the years. So net operating cycle in days is 146 in 2024 and in 2025, 150 days, a slight increase of 4 days. Capital employed turn over ratio 2.3x in 2024. In 2025, it is 2.2x. Return on asset 7.8 percentage. In 2025, it is 10 percentage. Net profit in percentage is 5.3 percentage on the sales revenue in 2024 versus 6.8 percentage in 2025. Now the floor is open for the investors to ask questions. Venkat sir, you want to add further anything?

No, nothing. It's just that it's been an all-round performance. As you can see, the interest rates have been controlled very well. I think profitability has increased by better and sharper procurement. Transportation costs have been controlled, even though the volumes have increased. And it was not an easy market. There has been a huge dumping by -- from Southeast Asia. You know the big country, which was dumping material. In the face of that, I think the team has to be given credit for what they've done.

Mr. Rasheed?

First question on sales. Maybe I have missed it, but did you report any increase on sales over '25 compared to '24? That's the first question. The second question is why the very conservative dividends percentage, why are you retaining the profit?

Bejoy, you can answer that.

What was the first question, the sales?

Was there an increase in your sales per revenue based on sales...

Yes, the sales got increased by 2 percentage in terms of revenue. In terms of quantity, there is an increase of 9 percentage. Mr Rasheed, your second question is basically on the conservative dividend of 40%, right? 40 baisa?

Yes. It was not expected specifically that we are used to very generous dividends and you guys had the best year ever in performance 2025 according to your statement.

Yes. I hope you are aware of the massive expansion plans we have -- we are having in Abu Dhabi, and we had a couple of very good investment we did in our Oman plant also. And when we are going for this kind of massive expansions, generally, companies pay very less dividend because they are using this money for an expansion and for this will give a kind of a good return on the...

Mr. Rasheed, see the way the market is now that if we continue to remain in a commodity segment, we can -- maybe we'll make money for 1 or 2 years. But after that, the company will start facing trouble. That is why we did our own investment in Oman itself for upgrading to API and some investments in the Merchant bar mill to go up the value chain. And we have also geographically diversified as a company into UAE with a large investment in the Medium Section Mill. That in due course, will multiply the top line and also the bottom line. When we are doing all this, I think there should be some retained earnings in the company in order to sustain this ambition. I would assume that on an absolute level, the dividend given this year versus last year is not very different in terms of the overall dividend given. But yes, the percentage per se is lower, okay? But that was a very conscious decision of the Board and the management, okay? And it is -- I think it's a very healthy trend that the management is focusing not only on the present but also on the future of the company.

That's clear. So how do you envision the 2026, 2027, I mean newer investment, how do you envision the impact on the future profitability of the organization, at least in the near term?

See, the investments in Oman are a sustenance investing. For sustenance because we are facing more and more attack from commodity players, especially, I can use the name, especially from China. So we are trying to get into PDO. We are trying to -- in the Merchant bar mill, we are trying to get into sections so that our volumes and margins are protected. In a way, it will also incrementally increase, but that will come in 2, 3 years' time. It will not happen immediately because the API segment requires some amount of stabilization. Even now we are waiting for a trial order from PDO as I speak. So that is in terms of sustenance. In terms of the Medium Section Mill, we expect to start somewhere in the middle of the year in terms of commercial rolling, and it will take a year to stabilize and then you will see a growth there. See, if you take -- go back to history, till 2016, our merchant bar mill used to, even after 8, 7 years, it used to produce about almost 50%, 60% of what it's only producing now. So we don't plan to go at that slower pace. So there will be a certain learning curve after which it will really take off.

Second question is from Vision Capital.

This is Shaoor from Vision Capital. I have a couple of questions. Starting with, as you mentioned that 2025 was the best year for the company. During the last quarter, we have seen some significant jump in your gross profit. The gross profit for 9 months was, I believe, OMR 17 million in the last quarter, it jumped up to OMR 27 million. So that's a huge jump. So anything special happened during the last quarter of 2025?

See, we got an antidumping refund, which got accounted in the last quarter, which is almost $1 million. The others are the operational profit only.

Okay. So this is a one-off that will be.

That's a one-off. That's a one-off.

Taken off. Okay. And what's the contribution you mentioned, I'm sorry, for this one-off?

$1 million.

$1 million. Okay. Okay. Even then even if I account for this $1 million, the amount of profitability that has jumped in the fourth quarter is still significant. So there are no other one-offs. This is only...

Purely, we are able to sell more and we are able to capture that.

Perfect. Secondly, your other income was absolutely higher during the 9 months, and it was very a small number, close to OMR 200,000 during the fourth quarter. So I'm assuming that is there some reclassification from other income to something else that...

It's a reclassification of the scrap material actually, the sale in the final figures actually. It was previously shown as an other income. Now we have reclassified like 2024 same like -- it is in the cost of capital.

Okay. So now you have reclassified to cost of sales and you have reduced the cost of sales by that number, which has led to the jump in profitability during the fourth quarter. Perfect. Perfect. That helps. Number three, as you mentioned that there will be a learning curve on this Medium Mill, your KIZAD in Abu Dhabi Greenfield capacity. During the 2025 numbers, which of your 2 segments were exceptionally good? Or were both of them equally good, equally -- equal contributions in taking the profits up, your Tube or Merchant bar mills?

I think both of them are equally good.

Yes.

Okay. And I've witnessed the delta or the margins between CRC and HRC were particularly good close to $100 during the second quarter and third quarter of 2025. But since then, the margins have been on a declining number. Currently, they are close to around $55 or $60, if I'm taking the Japanese region. So is there a lag in which the company realizes these margins? Because I'm assuming that there would be a time, a delay from when you order the inventory and it arrives and you would be securing margins later on what the current numbers are. So should we expect a drop following the drop in the international CRC...

It's not that way, Shaoor. The point is we price based on the hot-rolled or the billets which we get into our stock. We don't future project price and sell today. We know what is the -- we exactly know what is the price hot-rolled is coming into our stock. We know what is the hot-rolled stock in our warehouse. We do a weighted average. And then we try and maintain the regular margin, which we require and price project -- product for that month accordingly, unless the market is in a very bad shape and we need to compromise on the margins. Okay?

Okay. So you basically operate on a cost-plus structure?

Yes, cost-plus structure. Yes.

Okay. Right. Perfect. And you don't face any competition in that area because obviously, this is a commodity market and you are the expert yourself. So if you operate on that, if internationally, the margin has come down.

I wish there was none. But unfortunately, there are too many. And that is why we are moving up. We are investing -- moving into API. We are moving up in the value chain in the Merchant bar mill. That is why we are trying to move to medium sections in Abu Dhabi. The reason why we are doing all this is because of that because the lower-end tubes, anybody can do. I remember when I joined this company 10 years back, there were far fewer tube mills than what they are today, okay?

Right. Perfect. And finally, you mentioned that because of the expansions, your dividends have obviously taken a hit, which makes sense provided that growth is -- has to be funded from somewhere. But this year, your expansion is complete. The capacity will come online. So should we expect increased dividends from next year onwards? Or do you have further plans?

We have to think about it when the time comes. Right now, our -- look, our objective is to have a balanced approach. In terms of the dividends, which we can give to our shareholders so that they are happy versus the needs of the company for long-term sustenance of the company. We are not an overnight company. We've been there for now almost 30 years, and you've seen what we have done. So whatever will be done will be done with the best interest of the shareholders in mind and the company in mind.

Abbas Ali Ahmed. Mr. Abbas, it's your chance.

Congratulations on a fantastic year. A couple of questions. If I just kind of ignore the numbers and because I always enjoy listening to you, Mr. Venkat, when you reflect on the sort of broader themes, the challenges, the opportunities and in terms of how you've changed the product mix, which has resulted in the sort of net margin going up to this 6.5%, 7% mark. So now when you're looking at the market and if you just had to reflect on some of the success stories that Jazeera Steel has done either in the product or the channel mix that has managed for you guys to come here when it comes to the net margin and reach this level of utilization. Just wanted to hear a couple of the success stories that you guys had for us and why you think that's sustainable going forward as well?

I hope somebody from the competition is not listening to this.

I'm sure they are.

So then why should I tell all the recipe for success of the call.

Because the shareholders are also listening, right? And at some point when the...

No, No. I told you in short, Mr. Abbas. See, what makes money in commodity steel, procurement, sales price, cost control and financial control. These are the 4 levers, which I know, which all of us know. So costs were controlled through very scientific mechanisms or cost of inputs through very scientific mechanisms of procurement. Well, if I meet you in person, I will tell you what exactly we did scientifically in terms of how to project what we required and procure it and then get it so that we don't have -- see, what happens many times is you have... So many times, what happens is you get material which you don't require at that point of time and you miss some material. So we have done some scientific technique of ensuring that we have material just in time and the material which we require, especially in the Tube Mill side. In terms of all other material which we buy, we have a bunch of guys who are constantly marketing -- monitoring the market and ensuring that we buy at the right price, okay? Even after you do all this, if there is a sudden correction in the market, then there is nothing which can help you. Suppose there is a sudden geopolitical issue and the price either crashes or moves up, it's very difficult to handle. But the best way to handle it is by having very judicious buying of material. Secondly, sales, as we mentioned in the highlights, our yards are doing very well. We have a very, very deep penetrating sales team, which over the years has honed its skills. Third, in terms of transportation rates, I think some of my team members have really worked on it to sort of optimize it so that even though our sales volume have increased, our transportation rates are that in total, in absolute terms have actually come down. And then in terms of interest rates, I think Bejoy has already said, in a market where interest rates is difficult to handle, we have made some substantial savings there. So there is a number of things. It is not one thing which makes -- it's an orchestra. Running a steel plant is running a successful orchestra. It's not about the master of the ceremony is doing it alone. It's the entire team working together.

Yes. And the result is quite visible to all the shareholders, of course. Now for us to appreciate 2026 better and 2027 specifically, now your utilization levels in the Oman plant and mind you, you also said you've done some optimization. You've done this API sort of expansion, which I'm assuming is a higher-margin sort of product. So if I have to break up the Oman business and the UAE business now, from the Oman business, do you feel you've reached the sort of peak utilization? Or you still think there's opportunity to sort of increase this from the 80% to 90% mark. The nuances of a steel mill utilization is a bit lost on me, so I thought maybe I'd be educated by asking this question. And I'll come to the UAE part...

The only thing I can tell you is the English is very good, Abbas. Anyway, so see, the point is we are almost at the edge of the capacity utilization. Maybe we can increase another 5,000, 10,000 tonnes more overall, but pushing volumes alone is not important, okay? At this point of time, because we almost -- see, there is a -- in a steel plant, when you're at 60%, 65% utilization, volume alone as a mantra helps you to increase the absolute profit numbers. But when you are at our levels of utilization, especially for a Tube Mill and Merchant bar mill, just increasing volume indiscriminately might land you up in a situation where you are compromising on the sales price. So I would assume another 5,000 to 10,000 tonnes of volume is more than enough across the 2 segments. But what we have to do and see, one thing which happened very positively last year, I mean people will not discuss this, the pricing of inputs was more or less flat. In many years, what happens is the price goes up in 2 quarters and then falls off sharply in another quarter. Last year, we didn't have that thing. So we just pray and hope that there are no geopolitical upturns and then we are okay, upturns or downturns. I mean downturns, then we should be okay with the existing volumes. We should continue to make similar margins and profits.

Just one specific question on when you said the price of inputs was mostly constant because what we do is we break up the model, the cost of sales into the different line items. And now when I just look at the raw materials costs assumed, it looks and if I scale it to the number of units that you produce in terms of the metric tons that you produce of steel, it seems that the cost actually came down by 9%. And even your selling price, if you just link it a simple formula when it comes to the tonnage produced versus the sales that you realize. So your revenue fell revenue per sort of...

As long as it is gradual, as long as it is gradual, it is manageable. But if this 9% happens month-to-month, you're in trouble. So this is sort of -- the hot rolled prices more or less have been in a band. The billet prices more or less have been in a band. It's manageable. over a period of time, but not if it happens in 1 month, you lose 20% or gain 20%, then you are in a big fix, okay? See, for example, the year when the Russian invasion happened or I should use the word, whatever, the issue, which happened between Russia and Ukraine, there was a huge increase in price because geopolitically, people thought that there'll be more no material available, nothing. Billet prices touched almost 4 figures. And then within 3, 4 months, it dropped like a dead wood. So that sort of variation, however, scientifically you procure, you will not be able to handle.

Now if you have to just reflect on the Abu Dhabi sort of plant, the Medium Section Mill that you're speaking about. Now it's a reality. You guys have done this in record time. Debt has been raised. You've not come back to shareholders for money. It's mostly been funded from internal accruals, fantastic. I think from the market's perspective, it's still a bit of a black box in terms of what's the revenue and the cash flow opportunity. Now we understand the debt, there's a moratorium period. You're going to start paying the principal only '27 onwards. Obviously, the interest is going to start accruing now. Just to appreciate this business a little more, what sort of utilization are we looking at for the year '26? Where do you see that going in '27? Is the margin profile, the net margin or the gross margin profile similar to the plant in Oman? Because now it's a reality and shareholders, at least I can't speak for everyone else on the call, but I'm finding it difficult to price this in your stock price right now. So just wanted a little more color on how do...

Let me give you a broad answer. In the first commercial year of production. If we commission in March, another 3 to 3.5 months will be hot commissioning, testing, this, that, settling down of the plant, another maybe 2 to 3 months of stabilization. And after that, we'll start what is called the first year of commercial production. We are targeting about 150,000 to 180,000 tonnes in the first commercial year of production, okay? Because this is a Section Mill. You can't roll all the sizes in the first year itself. So this is what we are trying to target. The margins of this product should be slightly better, if not much better, than our Merchant bar mill, okay? But I can tell you one thing because we are starting with the downright easiest commercial sections to start with in order to stabilize the mill in the first year. Second year, third year onwards, the mill will start producing all high-end sections. So then you should see a differentiation in margin between Merchant bar mill and this mill, okay? How much it is, what it will be, we have some idea, but I don't want to put it on pen and paper and tell you. But all this has been fit into the equation in terms of why we want it to be there. And that's what it is. So eventually, this plant should be producing about 300,000, 350,000 tonnes, okay in a matter of 2 to 3 years, maybe 3 years, 3 years of commercial production. So that should add substantially to the top line.

And technically naive like me, what's so special about this product? And what's the distribution channel mix? Is it going to be project based? Is it going to be a sales team sitting out of -- just for us to also appreciate operationally how -- what's so special? What are the applications of this product? How are you going to sell...

In simple terms, the product which we are rolling in Merchant bar mill in Oman is a purely commercial -- it is called Merchant bar mill because merchants trade those products, okay? It's a tradable product. You want to build, for example, the angles we produce there, go into hand railing in your home and stuff like that. Whereas the Medium Section mill is a mill which produces medium sections, which are load bearing structures. So they go in for much more, what you call, involved applications. They are load-bearing members, so they go in for oil and gas applications. They go in for load bearing, for example, for porta cabins for so many other applications. So the application is a little more evolved in terms of where they are used. Therefore, approvals are more difficult to get to supply everything. So the crowd becomes a little lesser in that market segment. And that's how slightly the margin improves because the financial barrier for putting up a plant like that is very high and also the technological barrier. So that's the whole idea. And it goes to oil and gas mainly, a lot of them go for pipe racks and stuff like that. So there is a quantum change in the segment we are operating. And we have a separate sales team for it. Of course, as you correctly said, there will be a lot of focus on projects. With our existing Merchant bar mill, the focus is not on projects. The focus is on distribution sector. But with the Medium Section Mill, of course, there will be distributors also involved, but there will also be a segment which will be focusing on projects.

And what's the geographical mix that you expect for this mill? Where you're going to sell?

Obviously, UAE because it's in UAE. UAE, Oman and the rest of the wider GCC and then exports, a little bit of here and there. Nowadays, exports is very difficult with all the tariffs going around the world. But that's what it is. And more importantly, this mill can also produce engineering products. For the sake of confidentiality, I don't want to say everything in terms of the engineering products, but there are wonderful engineering products this mill can make in due course. And especially after the second phase in case that goes ahead, then we'll be able to produce top-of-the-line state-of-the-art engineering products in this mill.

Sure. And one last comment, and this is someone who's been in the market from 2008 and talking to you and Bejoy for a while now. You guys obviously have been fantastic stewards of this company on behalf of both, obviously, the majority shareholders, but obviously, on behalf of the minorities, performance has been consistent and year in and year out, you've delivered fantastic numbers. First question is that -- is any part of your compensation related to stock prices so that we know that our interests are aligned because we don't have representation on the Board. But for us, stock price is obviously an indication of what the company is doing. So is any part of your compensation related to your stock price? And if it's not, is there any conversation at the Board level for that to happen?

I think you should tell this to my Chairperson. Now can I go and tell that this. What sort of question is this. Abbas, see, the point is this, our conversation, I have a very detailed KPI, which is given to me in terms of the financial metrics of the company. And that, in turn, gets deployed to the CFO and everybody else. And those financial metrics ensure that the company's profitability is high and beats expectations. Those are very, very strict this thing. While we have had wonderful support from the Chairperson and the rest of the Board. And however, when these numbers are given, the profitability is ensured, the share price has to move up. But to be honest with you, I think the Oman Stock Exchange had a different, what do you call, different dynamics to it. Even though our share price should have been much higher, it was not higher. Am I right, Bejoy?

I think let me reflect here, and this is -- I was hoping that you say that at least part of your compensation is linked to the net profits and eventually, that's a big factor. Net profits in the long run do determine stock prices. But if you will indulge me here, I think another important factor when the sort of divots between net profit and stock prices sometimes can come to things like stock split, appointing liquidity provider. One of the reasons maybe you don't command valuation that some of the GCC peers do, liquidity because the stock is not as liquid. For the retail investor, OMR 1 is perceived as expensive. So what I propose, and I'm happy to talk to Mrs. Bahwan or anyone else on the Board as well. We're obviously coming here with a lot of experience is that when part of management KPIs are not just linked to net profit, but also as the stock prices, you start considering other factors, like maybe we need to appoint liquidity providers to enhance liquidity in the name, which means you will get premium valuations. Maybe we look at stock split, which are not a very costly endeavor for you, but it encourages higher sort of retail and HNI participation. And that to me is a gap between getting part of your compensation linked to net profits and part of it to stock prices. Yes, I agree, stock prices are largely a reflection of net profits, but there's the 20% that you miss out when you don't consider other factors. Now I can't tell you how to run your business. Obviously, you guys have done a fantastic job. But coming from a market and coming with...

Abbas, can we have a separate a discussion on this. I get where you're coming from. But you can have a separate discussion on this when I come to Muscat and then we can take...

I just wanted to put it on the record so that...

Look, I think one of the reasons why the share price has also gone up is with the expectation of the UAE facility going in a big way, okay? I think that would also have been factored by the...

No, no. Stock prices are meant to -- see the idea of stock prices is they should reflect all future cash flows that the company can generate in perpetuity. That's the fundamental idea. What we are saying is, yes, happy to take you up on the offer. Let's discuss it offline. It's going to be the benefit of both minority and majorities for this to happen. So happy to talk about this further. But good luck to you guys. Fantastic job, and thank you for the call and being so transparent in your answers.

Bejoy, I hope I was not too transparent. Mr. Rasheed, please.

My network is not good. I mean, kept me sometimes out and in. So someone might have asked this question. So forgive me if this is a replication. I've got a question about some assumptions that you are making about the sustainability of your current profit margins. And how might that assumption be stress tested if the market conditions shift. Is that clear?

I didn't get the question. No, no. We are saying -- in fact, we are saying the reverse, Mr. Rasheed. In fact, we are saying the reverse. We are not waiting when I said sustenance of this thing, I'm saying there is a lot of competition which has come into the market. So how do we handle the competition is not compete on the commodity segment entirely as we used to do 10 years back because there were less number of players. So what we are doing is we are moving into segments which make it difficult for anybody from outside to come and compete. For example, if I have to supply to PDO, PDO is not going to entertain every Tom, Dick and Harry. They're going to take only people whom they have approved after extensive audits. And if you are a 100% Omani company, they are even more happy, okay? There is ICV, there is so many things. So that is the way we are moving. We are saying we are moving up the value chain so that we can sustain the profits of the company on a sustainable basis. That's what I meant. Yes. Any other questions, gentlemen?

Mr. Shaoor, Vision Capital. Again, he wants to ask us.

Apologies. I just had a follow-up question. You mentioned that the margins for the medium steel mills are expected to be better than your current Merchant bar mills. Now we have your margins on a gross level, but that's on a group level. Would you be able to give us some color on individual margins from these 2 segments, your Tube mill and your Merchant bar mill, it can be on a net level or [indiscernible] level.

Mr Shaoor, this is very -- this is something which is difficult to share in a public forum, okay, because this is something very integral to the competitiveness of the business. So this is not something which we would like to share, sorry.

No, it's okay. It makes sense.

Mr. Rasheed?

Yes, I'm sorry, I'm coming once again. I have -- I promise this is my last question. I was trying to read something in your report. I didn't say or didn't actually read any linkage to any major infrastructure project. I mean there is an ongoing Oman UAE railway. I don't know if you have taken a par from that one. That's a very strategic project. Are you guys into that?

No. In fact, we have an MOU signed with Etihad Rail, Hafeet Rail, everything is signed. See, again, I'm telling you our products which are there are commodity in nature as of now, the products which we have. So our products go to all these projects through our distributors. Every time they want to supply to a project, they come back, take the prequalification documents from us, take the authorization from us and supply to these projects. All these projects are addressed through our regular methods of sales and operations. In fact, we have opened a small office in Muscat to address all these major projects for a sales office, not an operations office. Anybody else?

Mr. Abbas?

Yes. I realize I was being a bit of a chair leader on the call without actually asking what risk do you see in the business. Now things are good, things are benign. We're all making money, everyone is happy. But just because you've been this -- you've seen different cycles in the industry. So as you, when you peak into the future, what kind of -- what risks sort of keep you up at night? What do you worry about, which could put a dent in your cash flows or sort of reverse the good work that...

Number 1 risk, geopolitical risk. Number 2 risk, if the GCC countries, especially Oman, UAE and all do not take any sort of basic protection action to protect the local industries, we will face issues because all other countries have raised tariffs around us. So this, of course, we are taking up with the government. These are 2 things which will -- which can potentially impact our margins straight away. There are a few other things, but these are the 2 main things because geopolitical risk has everything. It has to do with everything and then rampant tariffs from everywhere. That's another issue which is affecting the whole supply chain. Anything else Bejoy, which you can think of...

Bejoy is on the phone call.

Do you do back-to-back steel booking? For example, you said that your worry is not prices going up or down. Your worry is that if something too drastic happens very, very quickly, both on the upside and the downside. Does that mean you're exposed to raw material prices in the sense that there's no back-to-back booking of steel once you secure an order?

See, that is one of the things -- that is one of the problems in the commodity industry. The commodity industry does not have forward booking of orders. There's month-to-month order booking. Therefore, every day, you have to do and get up and do namaz or whatever so that when the material comes, your price is not already dropped in the market. So that is one issue, but we are managing that. We have been managing it for so many years. So that is one of the reasons why you move up the value chain. If you move up the value chain, for example, with PDO, they will give you a contract for 1 year at a price with a formula. So then you're able to manage your input material and output costs much better.

Clear. And you finally said a comment which kind of resonated with me is that some sort of protection for local industries. Now you know your friends over in the ceramic sector after a lot of lobbying and tough times, have finally got this antidumping duty. And finally, there's a quality standard that's coming in as well for any imports that come into Oman. Is there a similar conversation that are happening with you guys and the government, at least in this country to see if...

We just started it last month.

Okay. And when do you see a resolution happen, one way or the other, be like...

No clue. I have no clue. To be honest, you know how -- it's not in our hands, Mr. Abbas. We are working on it. In UAE, we are a little more advanced than this.

And is there a reason why it was only started last month but even ceramic sector happened? Like has something changed in the last month or so? Is there more?

The problem is there is only one manufacturer in us. So the -- now other people have also joined. So it's moving forward. We have taken it up in the past also, but it has not found favor. But now it is becoming more and more important because we are a very key employment provider.

And what is Oman sales as a percentage of your overall sales approximately?

15%...

Shaoor?

Yes, I'm sorry. Just a follow-up question from Abbas' recent questions regarding risk. Now you obviously have put up this thing with the authorities last month, as you mentioned. Should we be expecting because the volumes that your company is selling is already at very high capacity utilization levels. So why do you need to raise this in the first place? And do you see any competition coming in from across the border, which might dent your volumes this year if the authorities don't listen to you right away? I mean should we be expecting a decline in volumes this year?

No, no. See, competition is an ongoing activity. unless something happens in their country in a fashion they can't control and something unexpected happens, I don't know. But I would assume that already we are in a very, very competitive environment, and that will continue. And that is why I said we don't want to increase the volumes beyond a certain level. Maybe 5,000, 10,000 tonnes plus minus will keep happening, okay? So that's something which has to be kept in mind.

Okay. Right. So there's no new threat of any competition derailing the current...

Whatever threat is there is already there, Mr. Shaoor. I mean we don't need any more threats. The biggest threat is the biggest elephant in the room is China. I mean you need anything bigger than that?

And it's already there. And even it being there, you guys are managing this level of utilization. So we should be okay with these numbers.

I also hope so because my performance incentive also comes from producing profits. Thank you, gentlemen. If there is no other question, I think we are clocking 1 hour now.

Yes.

Thank you, gentlemen. Thank you for your kind support and fantastic questions.

Mr. Yousuf can conclude it actually...

[Foreign Language] Thank you so much to all our friends who is joining us, and we understand what they are also asking the question. Absolutely, we will also be happy to hear from you. Inshallah, we hope to see you next time with very good also -- with a very good also implement of the business. Thank you so much.

Thank you, Yousuf.

Thank you once again, Yousuf.

Thank you, sir.