Voltamp Energy SAOG (VOES) Earnings Call Transcript & Summary

[Foreign Language] I think we have taken 5 minutes to other people can join. So we are starting the meeting now. Welcome to Voltamp Energy SAOG Investor Meeting for 2024. We are going to present 2024, the performance of 2024. And after the presentation, you can have questions and answers. I hope you're able to hear me clear. Are you able to hear me clear?

Yes, Sir I able to hear you clear.

Can you see my screen?

Yes.

So this is Investor Relationship meeting 17th March 2025 for the full year performance of 2024 updates. If you see the key indicators what we say sales or revenue, we have done OMR 41.55 million in 2024, which is a growth of 36% year to year as compared to 2024. 2023-2024, there is a growth of 36%. Raw material cost its OMR 24.18 million, which is considerably lower than previous years. The gross profit is OMR 13.61 million, which is 32.76%. Again there is a growth of almost 105% over last year. From 2023 to 2024, we have a growth of 105%. And PAT is OMR 6.075 million, which is 14.61%. Again here the growth of PAT is 5.22%. We had a profit of almost INR OMR 960,000 last 2023. 2024 its almost OMR 6.075 million, there is a huge growth in that.  Order booking has been 159% more. We have done an order booking of OMR 99.47 million. When we compare last year, it was OMR 38 million. The order booking is very critical for a company like ours, which is based on order booking. Once you do the order booking, then you execute the orders. So we had a very positive and high number of order bookings done in 2024, which is OMR 99 million. Average operating working capital is also reduced to 1.8x. If you see this is the performance of order booking. And you can see 5 years of order booking and what we have done in 2024. You can see there is a huge growth in 2024. And from OMR 38 million, it has gone to OMR 99 million, which is a huge jump as compared to the previous 5 years also, this has been much higher.  When you see the distribution of orders, it is 58% in export and 42% in domestic. And when you see compared to last year 2023, it was almost -- export was higher, but in 2024, it has increased much higher. So the -- our exposure, our order booking for our export orders are increased considerably. When you see sales, sales has increased considerably from 2023 as well as previous 5 years. 2019 was OMR 42 million, but we were able to do OMR 41.5 million this year in 2024. Again, sales distribution if you see, domestic sales has been more as compared to export in 2024, primarily because we had huge order book domestic in 2022 and 2023, which were executed in 2024 as compared to what we did in 2023.  When you see raw material, this is how the raw material cost has dipped down. We were working at days like 2022 and all, it was 80%. Last year was 65%. It came down to 58% in 2024. If you see the reasons for this raw material cost reduction, primarily the key components, which are commodity price of copper, steel and oil. This has been more or less stable, you can say. There has been variation, plus/minus 10% to 15%, but still it is considerably stable as compared to previous years, specifically post-COVID. So that has been very key in terms of holding our raw material prices.  And wherever the price are specific to the transformer, we had strategic decisions, and we were able to make agreements with our supplier and ensure that the prices are not moving here and there, and we were able to have prices which are stable. So these are the reasons which was able to make our raw material cost considerably at control. Other direct cost is also lower compared to last year, primarily because despite the sales has increased, the freight outward for export orders have reduced. Since that has reduced in 2024, our cost has slightly come down. Otherwise, the direct cost is in control. We are having complete control over the direct cost.  When it comes to sales and administration cost, it has increased from 2023 as well as from previous years, primarily because a lot of effort gone in sales and administration, primarily on marketing, sales and activities where a lot of visits, a lot of customer growths, lot of customer visits were there. And that is the reason we had a higher order booking as well as the cost has also slightly increased. There were some resale provisions also, which are also provided so that we are able to be more just in our statements. If you see gross profit, this is how the gross profit has grown over the years. The company has been making gross profit for last many years. But when you see 2022, it was a dip, which was 3.3 million as compared to that, we were able to turn around in 2023 to OMR 6.6 million. And then in 2024, it went to OMR 13.6 million, which is almost double and this has been continuously going on.  When it come to PAT profitability in Profit After Tax, there is a -- there was a turnaround in 2023. Voltamp had a lull period in 2020, '21 and '22, where we had losses. 2019 was almost going at slight positivity. But 2022 to 2023, we had a turnaround and 2023 to 2024 is a complete change where we have increased of profitability 6x, almost 6x from OMR 977 million to OMR 6.075 million. The major contributor being the sales price, raw material cost and other cost which you control. When you see EBITDA, it is also giving the same indication, 202% over last year. Again, EBITDA has been consistently positive. 2022 was almost breakeven, but otherwise, the company has been making profit all along. 2024 has been a huge increase, as you can see from the graph. Average it was OMR 2.2 million to 2.5 million. From that, it went to OMR 8.7 million, which was a tremendous growth in 2024.  What are the contributors and what are the challenges we faced during 2024? If you see what are the positive contributors, power business has generated a large volume of business and profitability primarily due to increased demand and improved sales price.  Actually, power transformer market in the whole global area is in a different scenario as compared to what we used to have in '18, '19, '20, '21 and all. Post-COVID and a lot of changes in the market demand globally. There is a complete change in demand from customers, specifically from new countries like U.S.A., Europe and GCC countries also. And we were able to tap in at the right time, getting approval and all that has yielded us better results in terms of generating large volume orders.  Market dynamics, as I said, there's a huge demand change. There are indicators which shows that this demand is going to continue for some more time. But the whole thing is Chinese manufacturers are not getting allowed in U.S.A. U.S.A. demand is increasing rapidly, specifically because of energy transition. European manufacturers are fully booked. We have chances to go into this, and that's how the demand has increased. Large projects are there in GCC. We entered into Saudi Arabia. Saudi Arabia has got large projects. UAE has got large projects. Even Oman has got very large projects. These large projects are the reason which are adding to our demands as well as which are adding to our supplies.  Voltamp has strategically developed products like 220 kV, 400 kV renewable transformers. This has resulted into better positioning in the market. Because our product portfolio changed drastically from a 130 kV manufacturer to a 400 kV manufacturer from a regular distribution transformer manufacturer to a special transformer manufacturer, we are better positioned in the market to take strategic orders which are at good volume, where the competition is at a different level, where the technology is completely different. Here, we have advantage in terms of product portfolio.  Our quality and reliability is something which has been recognized by the market, and we get a lot of repeat orders. Customers are quite happy, quite confident about our quality and our deliveries. And that is one of the reasons why customers are very confident of giving repeat orders. We have customers who have been giving continuous repeat orders for 8 to 10 years, and that's continuing further. Stable commodity price as I said to you on RMC, there are stable commodity price, specifically for transformer copper, steel and oil are something which are key ingredients for the transformer. Copper has been fluctuating, but steel and oil are almost very stable. So this has also resulted into the risk which comes with the raw material cost variation has been absorbed well. Market expansion, what we did in terms of widening our possibilities. We went to U.S. last year, we went to Saudi, we went to UAE. These are markets which has given a big amount of orders to us. Kuwait has given a lot of orders to us. So this expansion also resulted into positive contribution. We did a lot of strategic planning, strategic direction this has been working for quite some time. We've been working on strategic direction for quite some time into where we should go in terms of market and product. And this market product, what we thought of the enhancement of product, this is what is yielding the result what we see today. Improved production efficiency and focused product mix. We are very aware of what type of product mix we should have so that we have better margins and better outputs. Based on that, we work very closely with our operation team, ensure that the production efficiencies are done and all this stuff. Income initiatives and localization push has been there. We have seen that previously in 2022, 2023, we had a lot of hard time in terms of utilities and customers pushing the local and local content and all. But we have seen that late 2023 and 2024, we have seen OIA, OETC, [indiscernible] have been very vocal as well as very positive in the direction of supporting the local manufacturer. And we have seen a lot of such initiatives has resulted into orders as well as execution from our side. So these are some of the key positive contributors, which have changed the complete scenario of our deliveries, our profitabilities in 2024. What are the negative contributors? Concerns are there in terms of supply chain issues. This is continuity -- continuing. There are -- they are impacting our production flow and utilization primarily because from -- you can say, from the war in Gaza to Ukraine to whatever is happening in the Red Sea, all are having concerns as well as supply chain is also affected because of a steep demand which has come in the market resulting into very [ level to our ] confirmation from supplier that this can't be done and all. These have -- these are serious challenges which we are having. We are doing a lot of actions there, but these are challenges which are there. Changes in regulation in some of the market like we see Kuwait has its own local content requirement of 20%, Saudi Arabia has got 15% of custom duty and all. These are also hampering some of the speed in which we wanted to go. Chinese expansion into the market is there. This is growing actually. And China did a lot of advantage in terms of their supplier base, in terms of their manpower base and all because of which Chinese suppliers are decently very competitive. And that price -- also they get lot of export benefit. These all benefits make them very competitive and here in Oman as well as in GCC. Chinese companies are coming primarily as developers. And since they coming as developers and they're putting the money, they are getting exempted from bringing this Chinese product. So we are fighting it out. We are seeing what best we can do, how we compete and all. And again finally the IPPs and large price driven projects even in Oman, where PWP is there and other projects are there. These are the price-driven projects where local preference are there, but still it is mandated with a number of percentage. So we fight on those things, which are there and try to do something to ensure that we get some orders. We have done those action in 2024 also. We got a lot of orders in 2023, 2024 despite of the challenges. But we are addressing this at multiple levels and developing strategies to see that these actions are mitigated, these actions are closed, and that's how we are performing for 2024 and 2025 going forward. So this is the presentation for 2024. If any of you have any questions specifically, please ask.

Am I audible?

Yes. I can hear you.

Perfect. Congratulations on the beautiful year. I had a couple of questions. In the presentation, you mentioned that Voltamp currently has an order book of OMR 99.5 million. So we should be expecting that this OMR 99.5 million is for what year? Is it for the current year or is it for the next year? What's the timing of these orders?

So if you see these orders are all based on project delivery requirement. Some are there in 2025, some are in 2026, some are there in 2027 also like for -- based on the type and rating of the transformer like for a large transformers the delivery times are sometimes 24 to 26 months. So when you see OMR 99 million, OMR 99 million is not all executable within '25 also and '26 also.

So could you give us a number, a percentage of what revenue of this year or what revenue of next year is already committed?

So, it's a mix actually to be very precise. I don't want to give a figure in terms of what is the value of it. Currently, what we're seeing is different, different entities in our company, power transformer, distribution transformer, all companies have got a different level of order bookings. And based on those order booking, we see there will be growth in terms of sales from 2024 to 2025. But again, project completion is very important. Customer take is also important. Some of the projects are fast track, some of the projects are slow track primarily because customers like U.S. and Saudi Arabia, they are actually targeting and ordering transformers and blocking the capacity for '25, '26 and '27 actually. So based on their readiness and all, we are trying to put and deliver to them.

Perfect. Makes sense. Okay. So it would be fair to assume that we should be seeing a revenue growth from 2024. Now my question comes on the margin side. We have seen very good margins in '24. Do you expect -- and you mentioned that there were some things that went into your favor during the year on the commodity pricing side. How is the market now? Should we be expecting the same margins this year as well?

I think that's very tricky at this point of time. The margins will be good, but I can't say whether it will be in line with what we have done in 2024, primarily because it all talks based on the mix what you have, okay? In 2024 also, the major reason for the higher gross margins and all are based on the mix what we have, the transformer is what you do, whether it's a large transformer, you have better margins. While lower rating has lower margins. Repairs get generally a better margin, non-repair gets a different margin. We have special transformer which get a better margin. Like if you do a special transfer, the competition is low, you get better margin. What we see here in 2025 is you should have a decent margin primarily because the order booking has been done. We hope the raw material costs are not fluctuating which was not there in 2024. If it continues, then we should have a decent margin.

Right. On the expansion side that you mentioned, obviously, you're working for on your export side as well. What is the capital expenditure? What the company expect the CapEx to be in the upcoming years?

If you see we are doing 2 CapEx expansion. We had one expansion for distribution transformer which finished last year. We are doing 2 expansion in power transformer in Sohar. One is 2.3 million, which we are doing for our capacity enhancement, primarily because the demand is growing. So we want to be ready so that we don't lose the order for the sake of deliveries. And we are doing 1 more expansion of OMR 1.4 million in the same facility for Shunt reactor. We have introduced a new product for Shunt reactor. This is a very special product. This is not there in you can say almost Middle East and MENA -- Middle East and Africa region, excluding Turkey and Iran, primarily because they are having a different setup altogether. But this shunt reactor is something which is very much required in terms of energy saving, energy potential and all. And maybe once we manufacture because this Shunt reactor because we already got approval as well as we have a order in hand, [Foreign Language] we should be able to deliver this transformer somewhere around August 2025. And this will be – we will be -- Oman will be the 17th country in the world. So you can imagine 17th country in the world is something which is extraordinary. So this is what we are seeing. And these are the 2 major expansion which we are going in terms of Oman for power transformer business. Apart from that, we have 2 joint ventures which are in Saudi Arabia. It's currently slowed down to extent that we are doing our documentation and other part of requirement. The transformer facility of Jeddah should be starting somewhere around quarter 2 of 2025 for construction. And the GCC lab, which we have done for [ Oman ] should be starting after 3 to 4 months after that.

Okay. Fairly [indiscernible] a lot of expansions that you just mentioned. So of these planned expansions, how much of these are already committed in terms of sales? So when you say that you have OMR 2.3 million expansion, my 2 questions would be what percentage would that of the current numbers? Would it be like 40%, 50%, 60% or less than that? And secondly, out of that capacity expansion, how much of it is already committed or already committed in revenue sales?

So if you see for our sales, we have seen into it that our facility expansion should be coming by August, September 2025 including the reactor testing. So these are the 2 ones which are there. Production-wise, we have almost, you can say, in the whole segment, almost OMR 5 million is what is connected with this expansion. That's all. The exposure of this expansion or the delay in expansion will have impact of you can say 10% of the sales what we are planning to do in 2025.

And my question was actually to the current -- so for example, your current capacity and if we include all of the expansions, what would your capacity go to?

If you see the production capacity for power was 7,500 MVA. It will go almost to 12,500 MVA. So there's a capacity increase by almost 5,000 MVA in power transformer. The new joint ventures are going to -- are new companies basically. They are joint ventures. Each company is -- the company in Jeddah is 5,000 MVA. We call in transformer, we call MVA. That's the production capacity is what we call it. And the GCC lab it is 3,500 MVA for repair. So that's how the capacities are.

Right. Could you give us any guidance on the transformer order that you had applied to the [indiscernible] of Saudi Electric and Dubai Electric?

Can you repeat please?

There was a tender that Voltamp entered to supply transformers to Saudi Electric [indiscernible]. Is there any update on that?

No, we are actually -- Voltamp has been doing sales in Saudi Arabia and UAE for quite some time now. And we don't get the advantage of a local manufacturer in Saudi Arabia. Saudi Arabia has a very strong localization committee, which they call it as LCGPA, which benefits 20% to a local manufacturer. The intent of going to Saudi Arabia is only to tap that market in large percentage. Currently, what we do from here is hardly 5% to 8% of our sales. But when we have a foot in Saudi Arabia, we can have a large growth with a better margins and better sales.

Congratulations on the fantastic set of numbers last year. Obviously, the question is last year was a substantial change compared to what's been going on in the company for the last 5 years, and the new management has done an excellent job correcting the cost and obviously delivering on the record numbers. So the question comes, how sustainable are the trends in the business, right? One is, of course, the profitability that you make? And second thing is when I read about what's happening in the transformer business globally and regionally, it looks like it's a 2- to 3-year bull cycle for sure. So I just wanted to understand your outlook, not for the next quarter or the next 6 months, just for me to understand what's happening over the next 2 to 3 years. You're obviously looking at this capacity expansion, which is not a short-term decision. And I wanted to try and relate that to the margins that are sustainable because we're trying to see if these numbers can grow from here on the top line, bottom line. You're doing this capacity expansion so clearly, you've taken a long-term view. So that's my first question, sir.

Yes. So if you see Abbas, what we do primarily is we have -- you see these are all capital products. These are not -- you can't manufacture this product for 1 year, 2 years and then just go into a different direction. So we have very, very strong market mappings. We do a strong market mappings. We do a very strong strategic mapping in terms of our product and market, which is very, very important to take any decision of this kind. So if you see there are some indicators and very solid indicators, which gives us a direction that the demand is going to be there for quite some time. Some people say 2 to 3 years, some people say 5 to 6 years. The current scenario of demand, what we have is, again, different to different product. So we have, you can say, a different product lines or different SBUs. The power transformer divisory is the one which is where the market demand is slightly going in a tangential direction, going up actually globally. The reason being multiple. The reason being energy transition from conventional energy to renewable energy, where companies which are -- countries which are already developed countries, they are going for replacement of transformers and going for high-efficiency transformers and all because the technologies if you take U.S., Europe and all almost you will find transformers and equipment more than 30, 35 years. And those technologies are outdated and those are inefficient technologies, and they're looking for changing those and better -- getting a better efficiency ones. So this is a change which is adding a huge demand in a certain fashion and this is not going to complete within 1, 2, 3 years. This should go 5 to 6 years. That's what we see in terms of power transformer. Distribution transformer is a business which is a stable business, which is a continuous business, which is not seeing that type of drastic change in today's time. But we see that in next 2 to 3 years, it will show because generally, that's a trend. Power transformers are changed first, then distribution transformer comes, then the switch will come. So we see that this trend should come up in 2026, 2027 for distribution transformer. These are demand driven. So what we are doing is for us, the most important thing is what are the countries which are going in this direction? And in case 1 country goes up, the whole thing is how much of kV will have. We used to have at one point of time, we used to do around 12 to 13 countries and our base was Oman centric. Almost 60% we used to do Oman, 40 whole percent used to do outside. And now we are increasing the countries. We are delivering now to 25 countries. So that means we have increased our market base. And 1 country not performing and 1 utility not performing has little impact on what we do, okay? And this increase in market sizes have considerably driven us chances of alternate orders which should be there. Like we used to supply 1.02 kV to Kuwait and we were dependent on Kuwait and Oman. Now we are not dependent on Kuwait and Oman. We have Kuwait, Oman, KSA, U.S.A, UAE and multiple countries, okay? So that's the reason we have a very solid footing in terms of having sustainability. Second most important part is we are not stagnant, okay? So as a -- just to give a feel of it -- this company was having like -- if you take distribution transformers, we used to make distribution transfer for quite some time, more than 30 years. We used to have products which are standard products and some oil and gas product. But during past 4, 5 years, we developed multiple products. We developed Inverter Duty Transformer. We develop other Pulse Transformer. We developed other fixed solutions and all. These are new products which are there. Same way in power transformer. We used to have our transformer to 132 kV. And 132 kV, you have, you can say, reputed manufacturers in the world, maybe more than 1,000, okay? When we ventured into 220 kV and 400 kV, that narrowed down to 50, okay? So we are venturing into new products, developing new products, delivering new products, getting experience on new products, and continuously developing it. It's not that we are stopping it. We are continuously developing new products so that we are 2 steps above our competition. So these are the 2 major areas, which keeps us ahead of the competition as well as gives us sustainability because if I don't get 132 kV, I get 220 kV. If I don't get 220 kV, I get 400 kV. If I don't get 400 kV, I get Shunt reactor. I don't get distribution transformer, I get a [ 220 kV ] transformer. So the mix is big. So I have a bigger mix of product, I have a bigger mix of market. And that will surely give sustainability to us.

What about on the margin side? Your EBITDA margins not of 20%? How sustainable is that?

What we see here is the margin that you saw in 2024 should not be kept as a benchmark and should not be also ignored. These are decent EBITDA, but these are not general market EBITDA because this is not a trend generally in the transformer industry, you don't get those type of EBITDA at all. But we were able to do in 2024 primarily because there were certain products that were high-margin products, which we were able to deliver. And even now we have certain mix of those products and all. What we see is whatever gross margins you're seeing there, plus/minus maybe minus 25% should be the least what I see in the next 1 or 2 years.

So effectively, if you're working at a 32% gross margin for last year, 25% of that would be close to the 24%, 25% mark. So you think those numbers could be sustainable? Of course, you still have the benefit of high-margin products this year as well. So you could...

Yes.

Okay. And the high-margin products, are they mostly power transformers? Is that the business that's generating high margins?

Mostly it is power transformers. But in distribution transformers, we have got special oil and gas transformers, which goes to -- which are specialized transformers, which are not available anywhere like we do earthing transformers. Earthing transformers are special transformers, which we supply to all new home in Saudi Arabia. And despite Saudi Arabia has got -- 7 large manufacturers they don't have this type of product, which is there. So we have different types of product in all type of ratings, which gives us. To be very -- in terms of gross margin, I'm just going back to gross margin. What I see is these products that we have 25% gross margin is a very decent gross margin, which globally companies like Siemens, ABB and all also does, okay? So if you see -- take that benchmark, 25% and up is what the gross margin we should see.

Understood. And in terms of revenue run rate, I know we had spoken earlier in the last call last year on the same forum. And I know your target is much bigger than this OMR 40 million revenue that you're doing. Now there are a couple of capacity expansions you've spoken about. One is in the Sohar plant and there's some debottlenecking in the Rusayl plant. Now with these initiatives that are in place, what sort of capacity growth are you looking at in terms of the revenue run rate going forward in the next 2 to 3 years? Average, if you had to work at 100% capacity utilization with the product mix that you have some sort of insight on, where could revenues go from this 40 million?

With the expansion and all, I see that it should be around OMR 65 million -- around OMR 60 million to OMR 65 million.

And is your order book visibility supporting that? Or is that you're hoping that you can -- I mean you've that kind of contracted revenues in place?

Yes. If you see, this was a question by the previous person. If you see we have booked the OMR 99.57 million order in 2024, okay? And we are continuously booking orders. We have large orders primarily because many of the large utilities as well as companies specifically in the power transformer region, they are asking for deliveries for 2 years, 3 years, and all because they're just locking capacities. Capacities are not available. If today, someone comes to me for a power transformer and ask me to give me in 6 months, I can't give it to them because it's not me in my capacity, it is my supply base also, okay? So that's the reason what large utilities are doing is they are booking orders for 2 years, 2.5 years and all. So I have a very decent order booking for 2024, which I have done. And we are continuously doing order booking for 2025 also. So we should be able to meet those requirements.

Okay. And I know my colleague asked you about this year's CapEx and last year's CapEx, and you gave a very detailed answer. What about in the next 2 to 3 years? What sort of CapEx needs are you looking at?

You see, we had -- we made a strategy during 2019, and 2020 itself, what products we are going to get in, and we picked it as we moved forward. And we are going to do continuously those process. So if you see in 2025, we have very clear understanding that what we are going to deliver in 2025, 2026, but we have certain other products also which are coming based on the requirement. Like based on what hydro is doing in Oman and based on what strategies Saudi and UAE are making. We're also trying to align those. Our objective is to see that when there is a vision going into a country, we should not be behind their vision. We should be ahead of time. Like if green hydrogen is coming in Oman, green hydrogen requires a rectifier transformer, okay? So I don't want to wait for 2 years to get a rectifier transformer from outside, and then I produce it. So I'm producing or I'm making a plan in a way that by the time this green hydrogen plant comes, my rectifier transformer is ready. So that's how we are changing our strategies also and direction also. Based on that, what we see is next 3, 4 years, there will be certain products which are long-term projects, which are currently there in our plan. There will be some other products also coming in during this period of time. So there will be continuous CapEx going in because that's how we are seeing to get the sustainability.

And if I can -- I have a few more questions. I'll ask you one more question, and I'll give my colleagues the space to ask you a question. Now let me play the devil's advocate. You and I have been speaking for a while on these calls. And one of the challenges you had when you took over was the legacy projects where there were, I think, some issues with the power transformers that you delivered in Qatar and you had to repair them, and that led to margin erosion and not just that, you have to take some losses. So my understanding is on the power transformer, it's such a specialized product that there are only 2 or 3 players in the region who are capable of delivering those kinds of kV power transformers. But that comes with a challenge that if something goes wrong, the cost to repair is very -- is extremely prohibitive for the company. So what sort of changes you've made to the construction process or the sort of old -- ensuring that these kind of issues don't come back in the future? Because clearly, you're very excited about the power transformer business and the proof is in the numbers. But if you have to take a step back, we have to understand the risk associated with this. And that's my last question for now, and I'll come back once everyone else has asked their questions.

So first and foremost, we need to have clarity on the subject. First thing is we did not supply power transformer to Qatar and the power transformer did not have any problem in Qatar. It was a distribution transformer. And [Foreign Language] for us, till now, whatever power transformer has been supplied for the last 13, 14 years, not even a single transformer has got any problem. So we --what we see is for power transformer, power transformer is large transformer, large capacities. It is done in a different way. So first question -- your question for risk on power transformer is not there primarily because it has not gone to Qatar, and it is not power transformer which has any issue. Second, coming to the problem in Qatar, we had a problem in distribution transformer in Qatar. And that distribution transformer, what we had, we already completed it. We finished it. We booked our concerns into it. We closed our tender in 2022. After closing the tender in 2022, we won a tender in 2024, which we are supplying. And everything is going fine without any difficulty. Already 4 lots have been accepted for Kahramaa and there is not even a single issue.

Congratulations on the good set of numbers. I think it's a record breaking profit for you guys in 2024. I have a few follow-up questions on this. We've been talking about your order -- order book position for 2024. You said that you had order book position. So can you tell us what is your order book position at the end of the year? How did you exit? And what are the [ APR ] and what are the order pros that are happening in the first 3 months of 2025?

So if you see -- I'll not tell exact figures, but I'll give you a feel of the things which are there. Every year, when we go into a new year, we call it UOB, that is Unexecuted Order Book. So when we went into 20 -- as I said, 2024, we did a order booking of almost OMR 99.47 million, out of which we executed some of the order. But in 2025, when we come in, we entered with almost OMR 70 million of orders, okay? And in 2025, in last January, February, we booked almost OMR 12 million of orders.

Okay. And you also mentioned earlier that now these orders are spread over the execution time line for these orders are spread over the next 3 years possibly. Would it be possible for you to give us a size down on how much of -- what percentage of this order might get executed during 2025, '26 and '27? Or at least during the first few years, what percentage of this one -- this will be get executed and how much will be remaining at the end of 2027 -- 2026?

You see we have for our transformers generally the deliveries are the contractual deliveries talks about 12 to 14 months or 6 to 7 months or 22 to 24 months from date of manufacturing clearance, okay? We don't manufacture transformer unless there is a manufacturing clearance. The orders, whatever we have, almost you can say 80% of the orders are based on manufacturing clearance. It doesn't --we don't start unless and until we have a manufacturing clearance. There are 20% of the orders which are standard orders, which doesn't require manufacturing clearance. Now the manufacturing clearance time depends on site condition, technical conditions and all. Generally, we see that this manufacturing clearance come within a span of 2 months to 6 months, some projects clears in 2 months, some project clears in 6 months. But when I see the order book what I have in 2024 when I entered in 2025, I suppose almost 50% of that will be delivered in 2025 and 50% will go in '26 and '27.

Okay. Got it. And what are the margin trends that you see? We have discussed about the margin and you have give us a -- gave us a good idea about the margin. But how do you see the competition -- the domestic competition, especially when I say domestic Oman and probably Saudi. You mentioned that the Chinese manufacturers are coming in more aggressively. And I think I think that probably they will come when they have a lost market in U.S. So how do you see the competition coming in? And how is it going to have an impact on potentially on your margins?

You see, we are -- it's a bit of -- maybe I'll take 1 of my experience only, but I'll just try to give a short answer on this. If you see every product what we have is at different competition level. If you see distribution transformers we have 4 manufacturers in Oman. We are almost 21 manufacturers now in GCC. Out of the 4 manufacture what we have in Oman, we are trying to get into products which are niche to us, like as I said, we want to go into products which are specialized products, which are not with the competition, where we have advantage. But we also do standard transformers, which are there where the competition comes in and where there is a price war, okay? So we try to move ourselves out of those price war and try to do as much as possible from the specialized product. When it comes to power transformer, power transformer we have -- we can say local competition is not there in Oman, but we have almost 6 manufacturers in GCC. And there is a competition. There's a good competition, but it is limited to 130 kV. When it comes to 220 kV and 400 kV, our competition is primarily with the European, Korean and Chinese manufacturer. Our prices are very competitive with European and Korean manufacture, but [indiscernible] are much lower in price because they are working in a different environment altogether. They have different supply chain system. They have a different taxation system, they have different manpower cost system. So that's a bit difficult for us. So if you see Chinese competition is what we see is very aggressive, which will hit the bottom lines. And we're trying to do whatever best we can do in terms of that area. And it come to switchgear, actually, switchgear there is unlimited competition because every area you will have 2, 3 manufacturers. We're trying to go there also. We have come out of LV switchgear in 2022 itself, primarily because there the competition level is too high as well as the margins are too low. And we are focusing now on Package Substation and MV switchgear, which had a different level of competition, and we are trying to add value technology into that so that we are able to still deliver something to customers which is not easily available for him.

Next question is on your performance in the fourth quarter of this year. We've seen tremendous growth in -- spike in revenue increased by 40% and your 9 months profit you achieved in fourth quarter. So that is a very tremendously super year -- super quarter in the fourth quarter. What are the reasons that led to this superlative performance in this quarter? And do you expect a similar performance to continue at least in terms of the revenue run rate and the margins you explained? But on the revenue run rate, do you expect this to continue for at least the next 4, 5 quarters?

Again, if you see quarter 4, the major contributor was power, primarily because power had a very slow start in quarter 1 and quarter 2, primarily because the metal flow was not there. There was a serious issue in terms of supply chain and metal flow was not there for us in power till June, July 2024, okay? Power transformers started getting the material in a smooth flow after Q3 only. That's the reason Q3 was better and then Q4 was much better. When it comes to subsequent year -- subsequent quarters, I see that subsequent quarters will also be good, maybe similar or maybe slightly lower than what we did in Q4.

Q4, right?

Yes.

Can you say the large utilities are booking capacities for 2 to 3 years down the line? How do you strategize on the risk aspect? Are there any possibilities that these orders might get canceled during the period if there is a downturn in the cycle or -- and also now that's on the order booking side. And also on the raw material price variations, how do you hedge the prices? Because I know copper probably there is some possibility for hedging. But steel and oil, how do you hedge these prices?

You see like Saudi Utilities company has come with 7 years contract, okay? TRANSCO in UAE has come with 3 years of contract, which are the major ones which are currently there. OETC [ DAMA ] has not come with such a long-term contracts, but we have a clear visibility of what they're going to do so that we match our planning as per that. Wherever the contracts are long-term contracts, actually, you have advantage in terms of planning properly and securing your contracts with your supplier, but you also carry a risk of delivery taking intake and all. But still, what we do is we make a balance of what is the demand, what is the market and all and try to put ourselves into that area. Apart from that, when you see for long-term contracts, there are price variation clauses which are there like in SEC, Southern Electric Company, there is copper and CRGO, electrical steel, which contributes almost 55% of the transformer cost is based on price variation formula. So whenever they give the order, there's a contract which is signed. Whenever they issue for request for order, from that order date, you have a price which is market price. So you secure the market price [indiscernible]. Wherever it is not there TRANSCO is not having those things, we generally hedge copper and we sometimes hedge copper fully or sometimes hedge copper in a standard manner while when it comes to electrical steel, we have contracts with our suppliers, with our mills where we discuss with them and secure the deliveries as well as price with them.

Okay. My next and last question is on your case with Credit Oman. So I just wanted to get an idea of this amount, OMR 3,000. Is it already provisioned or will it be -- when you get the money, it will only have an impact on the cash flow?

If you see in 2022 itself -- 2021 and 2022 itself, when this money was not coming as a prudent practice, we have already provided the whole MRF. So there's 0 exposure to us in terms of this UIG Credit Oman case. So whatever we win or whatever comes, comes into our cash flow as margin.

It's only cash flow, not on the P&L, right?

Yes.

And what are the next step to be taken for execution of this order or is there any possibility for them -- options for them to go for an appeal?

Yes, there is an option for appeal because after the judgment is done, they have 30 days to appeal and we have 30 days to appeal. So that 30 days time is yet to complete. Once it is completed, most likely they will appeal for it. Once they appeal, then we will also strategize what we need to do from our side. And then it will take its own time. There will be appeal, then they may take some more time. Then after that, the execution will be happening.

Okay. Got it. And wish you all the best.

Anyone else has any question? Abbas you have any questions further?

Yes. Just wanted to confirm, if I heard that right, did you say that the revenue run rate -- forget about the profitability because you've spoken enough about the margins and at what level you see them. Did you say the revenues run rate is similar to the fourth quarter because you did around $15 million in the fourth quarter. So is that what -- did I hear that correctly that that's the kind of revenue run rate, plus/minus 5% is what you expect in 2025?

What we said is our revenue, what we did for Q4 has been phenomenal as compared to what we did for Q1, Q2 to Q3.

Correct.

Going forward also, we see that we will not be -- we will be, you can say, to be very conservative it may be 70% to 80% of what we did in Q4 will be continued.

Okay. That's on the conservative side. Okay. Understood. No, this is fantastic. I mean you guys have -- I mean, I have to put it on record that the current management has really turned around this business and created so much value for shareholders. Let me ask you, is there any part of the compensation that's linked to the share price? Is there like stock options or deferred shares that you guys get? Because you have turned around this business and you guys deserve to be, in my opinion, compensated.

I think our [ AC ] Chairman is also sitting there. He can answer that.

No, because the reason is, obviously, every company's objective is to maximize shareholder value. And this kind of turnaround and even with the confidence that you've given us an outlook for the next 2, 3 years, really, it's commendable. It's just something we want to keep on the record. So a fantastic job. And of course, the Board is guiding your hand as well. So great job to them as well.

You're mute Mr. Marhoon -- you're mute.

Thank you very much. Of course, the Board has discussed this in its previous meeting, and they have recommended something. You will probably see it in the AGM, and we'll need your support by then.

When your aspiration, you're a career transformer man. From an aspirational point of view, do you see this company's revenue run rate going to OMR 100 million in the next 5 years? Do you feel that kind of growth is there? Because everything I read about the sector online with regards to Europe, U.S., it seems that this business is in a massive boom in the supply crunch. So while it is difficult for us to appreciate when a turnaround like this happens and the stock price goes from OMR 100 to OMR 500, it's very important to look in the future and not in the past, right? So from that perspective, if we can hear from an industry man, from a career transformer man, where do you see revenue run rate for a company like Voltamp going in the next 5 to 6 years? Is there opportunity? I just wanted to -- I try and understand a little bit about the outlook from you, sir.

I'll answer from Board of Director point of view, and then I'll leave it to Sayyid Aymen. As board of director we don't only see, we believe in it. We feel it. We can virtually feel it. We feel that we are living it all our strategic decision, all our meetings, all our business development strategy -- we're all towards that aim -- the aim that our ultimate goal for now is to reach that OMR 100 million. Of course, by the guidance of our Chairman Sayyid Aymen, he makes us live that dream and [Foreign Language] will make it come true. Then I'll leave it to Sayyid Aymen from technical point of view. But as a Board of Director we believe in it.

If you see to be very fair, there is actually growth potential. There is a big growth potential. And we already -- I don't say we are at the start of that road we already crossed the midway of the road. We see OMR 100 million is a possible target in the next 5 to 6 years.

If you allow me, this is such an interesting thing that Mr. Marhoon is on the call. I wish more Board of Directors were on calls like these because it's so important sometimes to speak to them. I have a couple of suggestions, Mr. Marhoon. One thing is for the retail investor, for the average investor, OMR 500, OMR 600 seems expensive. I know for sophisticated investor like us, it doesn't matter. I would suggest this if there is a way to split the share to make it more affordable in term -- perceived terms for the retail investor, you'll find a more wider investor base in your company, sir. This is just something I wanted to share as a market participant. I've been in Oman for 17-odd years. And companies like these, unfortunately, sometimes don't appeal to a wider investor base because they just think it's expensive, OMR 600 are expensive. But this is just a suggestion, sir. Now that you're on the call, I thought I'd share this with you.

Thank you very much for your suggestions. And I'm sure it came to our mind as Board of Directors and as the Chairman said, our aim is also to expand also in terms of our shares. This goes in line with our aim of OMR 100 million also to expand our shares and the shares of Voltamp Energy becoming more and more. Such thing is in mind. And hopefully [Foreign Language], by the AGM, you will get your support on that.

All the best to you look forward to interacting with all of you in the future. All the best.

Thank you very much.

Anyone else has any call? Any question? Any other questions? We have 1 more minute before the call is ending. If there's no question, I'll like to end the meeting here. Thank you very much.

Yes. I'd like to say one thing from Board of Directors point of view. Thank you very much for all the participants from the investors. Of course, thank you very much for the management for the outstanding and extraordinary performance. We promise you that we will keep supporting our management and I promise also our investors that Voltamp Energy will grow more and more, and we need your trust, your support. We are working hard with the management. We are working honestly as well. We in the -- as the AC Chairman, we are also ensuring that all our financial performance and financial reports are correctly recording and have the right and correct message, not misleading messages to all our investors and our shareholders. We are ensuring that we are giving all our maximum efforts to ensure that our company, all of us will grow and reach our objective at the end. Thank you very much for all of you. Thank you very much.

Thank you very much. Thanks a lot.