Gulf Oil Lubricants held a conference call on November 08, 2021 to discuss the results for the quarter ended September 2021 and way forward. Mr. Ravi Chawla - Managing Director & CEO and Mr. Manish Kumar Gangwal- Chief Financial Officer of the company addressed the call.

Highlights of the Concall

• Business has returned back to near normal levels post ebbing of the second wave towards the start of Q2FY22. This helped the company improve B2C sales from subdued Q1FY21 levels and it continued strong volumes in B2B segment reaching an overall double digit volume growth over last year Q2.

• Volumes grew 12% in Q2FY22 to 33,000KL compared to Q2FY21 as urban centres re-opened post the second wave lockdown.

• The company volume mix in Q2FY22 was 85% automotive and 15% industrial. Within automotive, 35% is DEO (diesel engine oils), 21-22% personal mobility and the balance is gear-brake oils & coolants.

• The company grew in double digits in commercial vehicle oil (CVO) segment where it undertook strong marketing initiatives and also in the higher margin passenger car motor oil (PCMO) segment as urban centres started showing increasing traffic in a return back to normalcy.

• The company saw strong growth in the Industrial segment with major growth coming from auto ancillary, engineering, metal, cement and construction segments

• Margin saw improvement compared to previous quarter due to better realizations as previous four price hikes taken in past 6 months have taken effect.

• The B2C:B2B mix returned in Q2FY22 to 60:40 broadly from to 50:50 in Q1FY2 as retail channel sales saw good bounce back.

• The company expects margins to stabilize at current levels. It is unlikely to take any more price hikes as lobs prices have largely stabilized and are on a downwards trend despite crude prices having jumped from USD70 per barrel to USD 80 per barrel.

• The company inaugurated a new adblue section in its chennai plant & another section for manufacturing metal working fluids (increased value add in industrial products) in its Silvassa plant. It recently entered into a tie-up with L&T to launch a range of genuine oils for their equipment and customers. It also launched a range of EV fluids for Hybrid/EVs.

• The parent has a range of oils for EVs and hybrids, and the company plans to leverage the technology and experience in the domestic market.

• The company has announced an investment of GBP 1.5 million in Indra Technologies for a 7.85% stake. Indra Technologies is a start-up focused on EV charging stations with a 5% market share in UK. The company is primarily focused on home charging stations and vehicle to grid technology. The company plans to leverage this partnership as EV demand picks up as the company believes that home charging will be a primary usage for consumers.

• The company anticipates stable growth for the next 10-15 years in lubricants owing to large new vehicle sales.

• The company sells VRLA batteries in the country after importing them. This contributed to Rs 18 crore of revenues and has a positive EBITDA.

• The company expects to incur Rs 10-15 crore of capex in FY22.