Gulf Oil Lubricants India Ltd Management Discussions.


Global Economic Overview

From 3.4% in 2015, the global economic growth is estimated to have come down to 3.1% in 2016. Thanks to the sustained improvement in activities, the second half of 2016, global growth forecast for 2017 and 2018 is pegged at 3.5% and 3.6% respectively, according to the World Economic Outlook, April 2017 released by the International Monetary Fund. The acceleration was visible among the advanced economies, especially in the United States, United Kingdom, Japan, Germany and Spain.

Emerging Markets and Developing Economies (EMDE) once again demonstrated their resilience in recording a moderate 10 basis point drop by clocking a growth rate of 4.1% in 2016. The agreed restrictions on oil supply drove the recovery of global commodity prices from their troughs at the start of the year.

Indian Economic Overview

Following an April-March financial year (FY), India continued to be topping the growth chart of major global economies. According to the estimates of countrys Central Statistics Office, Indian economy recorded a GDP growth of 7.1% in FY17. But for the sobering effect of the monumental step of recalling high denomination currency (demonetisation) in the third quarter, the GDP growth could have been even higher. Agriculture sector was one of the key drivers of growth, aptly aided by a normal South West monsoon of 97% to Long Period Average which led to an all-time high food grain production of 272 million tonnes. The Governments thrust on infrastructure creation continued to grow the Gross Value Added (GVA) in the Construction Industry and its momentum is expected to accelerate in FY18.

With Consumer Price Inflation contained within the target range, Reserve Bank of India responded with a 50 basis point reduction in Repo Rate undertaken in two parts during the year. The structural strengthening of the economy reflected in a favourable exchange rate, strengthening the Rupee (INR) by 2.1% to US Dollar.

The country continued to march ahead on the path of policy reforms with passage of Insolvency and Bankruptcy Code (IBC), Real Estate Regulation Act (RERA) and the most significant tax reforms of all times, Goods and Services Tax (GST). The net impact of all these reforms is expected to become visible on the ground with a lag effect. The country is undergoing a steady transition towards an organised, tax compliant, transparent and less cash economy. There is an equal focus on rural economy and inclusion of the less privileged sections of the society, a factor that would make the economic growth distributed and sustainable over a longer period of time. The fiscal discipline, coupled with higher accrual of tax revenues should further strengthen the health of sovereign exchequer.


India, the third largest lubricant market after the US & China, remains one of the fastest growing lubricant markets globally. The Indian lubricant market can be classified into three segments viz., automotive, industrial and process/white oils. Along with the long established dominance of national oil distribution behemoths, the Indian lubricant market comprises of more than 20 organised players including the MNCs and a few domestic companies.

The lubricant industrys prospects are directly linked with the overall economic growth of the country and that of its user segments such as automobile, chemicals, energy, railways, steel, industrial manufacturing, marine, etc. Over the past decades, the industrys growth has steadily been transitioning more towards value-led than volume-led. The untapped rural markets, rising consumer awareness and brand consciousness, evolving engine technology and focus on energy efficiency and meeting evolving environment norms are key drivers of the lubricants market in India.

The lubricant industry growth in 2016-17 is estimated to be positive at 2-3% in terms of overall volumes.

Automotive Segment

Automotive lubricants command a lions share in the Indian lubricant industry, with specialised applications for Commercial Vehicles, Passenger Vehicles, Tractors and Two-wheelers. Constituting a dominant 60% share, the Diesel Engine Oil segment leads the Indian automotive lubricant market, followed by Motor Cycle Oils (MCO) and Passenger Car Motor Oils (PCMO). The demand for automotive lubricants in the country is primarily dependent on the growth of vehicle population, which has continued to grow at a steady pace.

Domestic Automobile Sales: India

Category Domestic Sales
Segment/Sub-segment 2016-17 2015-16 % Change
Passenger Vehicles (PVs) 3,047,338 2,789,678 9.24%
Commercial Vehicles (CVs) 714,230 685,704 4.16%
Three Wheelers 511,512 538,092 (4.94)%
Two Wheelers 17,589,407 16,455,911 6.89%
Grand Total of All Categories 21,862,487 20,469,385 6.81%

Source: SIAM

Weathering the shock of demonetisation, the Indian automobile industry returned a healthy growth in FY17, riding on the improved consumer sentiments emanating from the benefits of Seventh Pay Commission, a good monsoon, lower cost of credit and fuel and a strong replacement demand in the aftermath of restrictions on diesel fueled cars. Recording an overall growth of 6.8% in FY17, the domestic vehicle sales volume reached 21.86 million vehicles, up from 20.47 million units in FY16.

At 9.2%, the highest growth was recorded in the passenger vehicles segment. Besides favourable macro-economic factors, a spate of new launches and tremendous growth in cab aggregator providers also contributed in this sharp growth. This growth in Passenger vehicle population is well reflected in growth of PCMO last year.

Two-wheeler, the traditional volume driver of the industry grew by 6.9% in FY17. Rural demand got dampened by demonetisation, leading to its below expectation growth. While motorcycles were severely impacted, the scooter segment registered a huge 11% growth. For the lubricant industry, two-wheeler oils registered a positive growth.

Commercial Vehicle segment grew positively at 4.1%. The growth was largely driven by light commercial vehicles (LCV) whereas medium and heavy commercial vehicles (MHCV) returned a muted growth after a record growth of about 30% in FY16.

The spell of good monsoon has always augured well for growth of tractor demand. With an estimated 18% volume growth, FY17 proved to be a year of bumper harvest for the Indian tractor industry. Tractor Manufacturers Association has estimated the tractor sales volume to be around 5,82,000 units in FY17.

Besides the overall growth in the sales of commercial vehicles, improved commercial vehicle movement at the back of pick up in construction and buoyant tractor sales led to a positive volume growth in DEO sales.

• Industrial Segment

Industrial automation remains the prime driver of growth for industrial lubricants. The ever-increasing focus on productivity enhancement in the manufacturing sector continues to lead the rise in demand of better maintenance lubricant products.

Industrial lubricants segment comprises of hydraulic fluids, metal working fluids, greases and industrial gear oil and find its application in construction industry, manufacturing, textile, power generation, mining, food processing, light heavy engineering, marine operations and metal working.

The demand for high performance lubricants in the industrial segment is driven by criticality of the application in which it is used such as compressors, textile machinery windmills, captive power plants and other such applications. The demand from power generation, automotive, infrastructure and construction sectors continues to lead the demand growth of industrial lubricants.


Gulf Oil Lubricants India Limited (GOLIL) manufactures and markets a complete range of lubricants and oils for automotive and industrial applications. During FY17, the Indian lubricant industry grew by about 2-3% in terms of overall volumes, with a slightly higher growth in personal mobility segment. However, with its focused segment wise strategies, suitably backed by differentiated customer value propositions, superior services, OEM tie-ups, brand/distribution building initiatives, your Company has once again been able to consistently deliver overall volume growth of 11%, at a rate which is more than three times the industry growth rate.


Automotive lubricants segment accounts for close to two-third of your Companys volumes. The Company distributes its range of automotive lubricants through various channels in the open market, namely Bazaar, which includes spare parts stores, exclusive lubricant stores, Independent Workshops/Garages, and OEM Franchise Workshops.


Your Company is one of the key players in the open market (Bazaar channel) through the distributor channel. Last year, your Company continued its growth momentum in all the 3 key automotive segments of Commercial Vehicles, Passenger Cars & Motorcycle Oils. Your Company has a strong network of more than 55,000 retailers, 300 auto distributors and 30+ depots across India.

Personal Mobility Segment – Two Wheeler & Passenger Car Motor Oils

Personal Mobility Segment continued its growth momentum at the back of growing vehicle population of Passenger Cars and Two Wheelers, especially Scooters. Your Company also recorded a growth in the segment, and the Synthetic and Premium grades launched by your Company gained traction in the market.

Your Company engaged in a range of customised promotions aimed at various customer segments and geographies during the year. A host of innovative brand promotion campaigns and activities helped brand Gulf to be amongst the leading Lube brands in terms of brand visibility and recognition. Gulfs global association with Manchester United Football Club was leveraged in strengthening affiliation with the upwardly mobile youth as well as channel partners. As a result, your Company clocked a high double-digit growth in Gulf Branded Passenger Car Motor Oils volumes.

Your Company continued to invest in its clutter breaking television campaign ‘Pick up your Ride featuring M. S. Dhoni and his gang of bikers. This film that served the MCO category well for your Company was run both on Television & Digital Media during the year. Through its association with ‘M. S. Dhoni – The Untold Story, your Company garnered good visibility with its smart in-film product and brand placement. Your Companys continued association with IPL franchise Rising Pune Supergiant team with an extensive 360 degree campaign was a big success across India.

The Companys mechanic engagement program, with the focus on incentivising range selling, yielded good results. The first phase of retail transformations in top 10 cities got completed, yielding significant jump to the brand visibility in the bazaar market. At the close of FY17, the Companys Gulf branded distribution assets included more than 6,000 bike stops, 850 car stops and 300 rural stockists.

Commercial Vehicle Oils

The year witnessed a 4.16% growth in sales of commercial vehicles. With the uptick in mining and infrastructure activities and the resultant movement in equipment led to an increase in consumption of Diesel Engine Oils (DEO). Your Company grew its DEO volumes by working together with its existing OEM tie-ups which resulted in a high single digit growth in OEM factory fill volumes and double digit growth in New Gen DEO. The Company carried out a slew of initiatives aimed at the channel partners and influencers of the CV segment.

OEM Franchise Workshops

OEM Franchise Workshops is fast emerging as a strong business segment for your Company. In FY17, doubling the growth of last three years, it recorded a strong growth in the OEM dealership business across all product categories. Forging a new OEM tie-up with Bajaj Auto Limited for 2-Wheeler Oils helped augment this growth further in the later part of the year. Ashok Leyland dealership business continued to remain a strong pillar of growth in the segment.


Your Company serves its industrial customers through direct B2B supplies and also through a dedicated distribution channel. The Company expanded its base of B2B customers during the year, resulting into higher sales of industrial lubricants. Sales through industrial distributor channel, which primarily serves the small and medium industries, recorded a very good growth during the year.

The Companys strategic tie-up with Whitmore had further helped widen the Companys customer base across construction, mining, steel, cement and power sector.

Infrastructure, Mining and Fleet continued to be a focus sub segment in the Companys B2B segment. In line with the uptick in countrys infrastructural growth, the Company recorded a healthy growth in this segment.

Your Company also gained good traction in the Marine lubricants

• segments during the year.

Impact of Crude Oil and Foreign Exchange

Crude Oil prices saw an upsurge from FY16 levels to end FY17 at above $50 per barrel. This upward trend resulted in an increase in Base Oil prices, with a lag, throughout the year. Base Oil is a significant raw material for Lubricants. Additives on the other hand, which constitute 30-35% of Raw Material Cost, also saw an increase in later half of the year. The Industry as well as your Company had to respond to these market dynamics by taking price hikes in order to pass on the rising input costs to the consumers in later part of the year. Increase in raw material cost was partially offset by the Indian Rupee appreciation.


Other than factory fill, OEM franchisee and B2B distribution, most of the retail distribution of lubricants including the Bazaar channel used to witness a significantly higher portion of cash transactions. The sudden nationwide recall of currency notes of higher denomination created a major cash crunch in the third quarter of the financial year 2016-17. Faced with severe scarcity of cash, consumers curtailed all the discretionary expenditure as the essential purchases of household items gained prominence. Consequently, the entire lubricant industry got impacted in the third quarter and partially in the fourth quarter by this temporary speed breaker called demonetisation.

Companys sales too were adversely impacted during this phase and recovered slowly towards the end of the financial year 2016-17.

Key growth and brand building initiatives during FY17

• Ashok Leyland continued to be Gulfs pillar of growth, with double digit volume gain in Dealership/Franchisee Work Shop (FWS) segment

• Entered into a strategic OEM tie-up with Bajaj Auto Limited to manufacture and supply lubricants

• Continued focus on relationship with Mahindra & Swaraj Tractors through distribution expansion initiatives & BTL engagements

• Big focus on strengthening the reach of our distribution network by increasing the Retail Touch Points, Independent Work Shop channel (Bike Stops & Car Stops) and Rural distribution

• New recasted PCMO range launched, which gained more traction in the market, leveraged through Manchester United global association

• Introduced Gulf Unnati, an exclusive reward Loyalty Program, for our trade partners

• Extending the association with our brand ambassador M. S. Dhoni, your Company associated with the highly successful Bollywood feature film ‘M. S. Dhoni – The Untold Story with smart in-film & multiplex product & brand placement

• Successfully leveraged the association with IPL team Rising Pune Supergiant with a 360 degree campaigns targeting Retailers, Mechanics, Consumers, Using Social Media, Digital and an innovative concept of a FAN BUS

• For fuelling future growth, extensive training initiatives were undertaken by the human resources department. Gulf Oil Learning & Development (GOLD) program was launched globally

• Construction of Chennai Plant is on track with a capex of Rs. 75 Crores already incurred

Manufacturing Plant

Silvassa Plant

Your Company has a world-class blending plant with a capacity of 90,000 MTPA, located in Silvassa. It is equipped with the latest PLC-controlled blending facilities and also houses a Quality Control laboratory. It has ISO 9001: 2015 & Technical Specification ISO/TS 16949:2009 certification for Quality Management System and ISO 14001:2004 certification for Environmental Management System.

The Quality Control Lab at Silvassa supports Indian as well as worldwide operations. The Lab is fully equipped with the latest instruments and is manned by highly skilled technicians for testing a wide range of products. These tests are carried out as per the guidelines of Bureau of Indian Standards (B.I.S.), American Society for Testing and Materials (A.S.T.M.) and other Global Standards.

Chennai Green Field Project Updates

During the year, your Company started the construction of its second plant at Ennore (Chennai). Envisaged to have a capacity of 40,000 to 50,000 MTPA, the plant will have the most modern blending, filling, material movement, material storage and retrieval systems along with an international standard safety practices, a high-tech fire-fighting and disaster management system. The plant will have a high degree of environment-friendly design with 100% provision for solar power, rain-water harvesting, and natural lighting throughout the day and natural air circulation. The main structural works for Pre-Engineered Buildings has been completed, and sheeting and floor concreting works are in progress. Besides, MS storage tanks fabrication work is also going on. The fire hydrant system work has already started. The equipment foundation work for installation of Plant & Machinery is in advanced stage of completion. Your Company aims to start the commercial production from third quarter of FY18. This will strengthen your Companys presence in South India.



• Steady increase in number of automobiles shall continue to drive growth of the Companys automotive lubricants segment

• The Company is closely working with OEMs to meet the future needs such as new emission norms, increased demand for fuel efficiency, evolving technology & consumer needs

• Increasing rural penetration of automobiles offers significant and steady growth opportunity to the Company

• Growth opportunity in the Passenger Car & Tractor segments where the Company has a relatively lower market share

• Growing brand strength provides an opportunity to your Company to increase the thrust on distribution across categories pan India


• Aggressive pricing and discount strategies from the competitors may affect the Company whereas the intense competition is expected to continue in the sector

• Rising cost of the raw materials may affect the margins of the Company

• Forex volatility and fluctuations in oil prices may also impact the industry as well as the Company


Your Company is fully geared up to tap these opportunities with well-defined strategies and thus expects to continue to outperform the industry growth by at least two to three times. Your Company will continue to further strengthen its strategies around segment-wise focus, investments in the brand and take initiatives to increase distribution reach and retain/acquire OEMs & other B2B customers.

Personal Mobility Segment – Two Wheeler & Passenger Car Motor Oils

The growth in two wheeler vehicle population is expected to continue in FY18. This, along with expansion of gearless scooter market, rapid shift to synthetic & semi-synthetic grades and increasing penetration in rural segment are the major growth drivers for demand in Personal Mobility Segment lubricants. Your Company will continue to focus on increasing its market share in consumer lubricant space of PCMOs & MCOs.

Commercial Vehicle Oils (Diesel Engine Oils)

Your Company is bullish on the demand of lubricant for Tractor, MHCV, LCV & construction equipment segment as the government is continuously focusing on increasing the investment in infrastructure sector. Increase in governments investments in Infrastructure & economic growth augurs well for growth of DEOs across segments. Your Company is well poised to grow in the Bazaar Channel & OEM related consumer/distributor channels.

Industrial Segment

The Central Governments initiative, ‘Make in India, is driving the growth in the manufacturing sector across auto component, machinery manufacturing, power equipment, etc. Manufacturing foray of Global OEMs in India for catering the domestic and international market will add fuel to the growth in the near future.

Impact of GST

The nationwide rollout of GST from July 1, 2017 is expected to consume additional management bandwidth of Indian businesses towards aligning with the new tax regime. Resultant changes in the effective tax rates are likely to spur a drive of inventory liquidation towards the end of the first quarter, whereas the replenishment of inventory positions to the pre-GST levels is likely to happen at a slower pace. The Company is likely to benefit from the implementation of GST as the effective tax rates and consequently the consumer prices are expected to come down, thereby creating a favourable opportunity for premium superior grade products. The impact of GST, like demonetisation from previous year, is expected to be fairly temporary with the overall impact being positive in the longer run.

GSTs impact on the automobile industry too is likely to be positive, which can further add to the Industrys accelerated pace of growth across all vehicle classes. The expected good spell of monsoon this year with an even distribution across geographies augurs well for rural income. A slew of government initiatives including the increasing budgetary support towards rural economy shall add to rural demand for two-wheelers and agricultural equipment including tractors.

The implementation of 7th pay commission coupled with accompanying disbursement of arrears, softening interest rates and a slew of new launches in personal mobility segment shall add fillip to automobile sales.

The Governments infrastructure program shall augur well for construction equipment sector. Various support policies under Make in India mission program e.g. steel and defence sector shall accelerate investment in industrial assets and activities. The resultant positive of GST for the logistics sector shall mark a new phase of investments for enhancing fleets.

In the light of all these supporting factors, the outlook for automotive as well as industrial lubricants appears positive in FY18. The Companys continued investment in market development and expansion by way of its range, reach and connect should continue to yield good results in FY18.


Today, businesses are operating in a dynamic environment. It is important for business houses to build a mechanism for proactively assessing and mitigating risk involving change in government policies, legislation, information technology, customer preferences, competitors, initiatives, financial markets, etc., A prudent risk management framework offers an organised platform to identify, asses and manage potential risks and tap the unforeseen opportunities. It enables the CXOs and managers to make wise management decisions. An effective Risk Management brings in sustainability and safeguards the stakeholders interest that is associated with the Organisation.

Your Company has put in place a comprehensive Risk Management Policy, which is framed around a common as well as industry specific understanding of various type of risks - Corporate Risk (Strategic and Residual Risk), Operational Risk (specific Business and Functional, risks including Economic, Market risks) Financial, Human resources, Legal and Compliance Risks, etc. Your Company has documented key identified risks in all of these and also put in place an effective Mitigation plan for the same. In order to ensure a widespread understanding, board members and all operational/business unit heads and managers are made familiar with and all staff aware of, the principles of Risk Management Policy and framework.

Your Company continued with the key risk mitigation actions identified in earlier years like putting in additional resources for recently launched PCMO range including synthetic oils, widening its distribution base to reach to more consumers on the back of improving brand recall, etc. Getting new OEMs and maintaining existing OEMs in a more structured is one of the key factors to success and this continues to be a focus area for your Company.

Your Company follows a structured forex hedging policy as per advice of forex experts and continuously reviews its foreign exchange exposures on a fortnightly basis. Implementation of legal compliance software with exhaustive coverage of laws for timely and proper legal compliance under various acts, laws, rules and regulations applicable to your Company, also helped the Company to mitigate its compliance risk more effectively.


Your Companys internal Control System has been designed to provide for accurate recording of transactions with internal checks and prompt reporting, adherence to applicable Accounting Standards and Policies, Compliance with applicable statutes, policies and procedures, guidelines, and authorisations.

In consequent to the implementation of Companies Act 2013 (Act), the Company has complied with the specific requirements in terms of Section 134 (5)(e) of the Act calling for the establishment and implementation of Internal Financial Control Framework that supports compliance with requirements of the Act in relation to Directors Responsibility Statement. The Internal Financial Control Framework document supports your Company in evaluating the operating effectiveness of the controls in a consistent manner.

Your Company through its own Internal Audit department carries out periodic audits at all locations and functions based on the plan approved by the Audit Committee and brings out any deviation to internal control procedures. The observations arising out of the audits are periodically reviewed and compliances are ensured.

The summary of the Internal Audit observations and status of implementation are submitted to the audit committee every quarter for its review and concerns, if any, are reported to the Board.


Salient features of ‘human capital strategy

i. Attract Talent

ii. Instill Leadership

iii. Develop a Culture

iv. Drive the Organisation Ahead

Your Company places highest importance in implementation of contemporary HR practices to enhance the overall employee effectiveness. With a strong governance mechanism at its core, the code of conduct has been communicated to and implemented for all the employees.

Being an equal opportunity employer, your Company strives to implement the programs to promote various initiatives including awareness of ‘The Prevention of Sexual Harassment at Work Place Policy. There has been no complaint of the sexual harassment at workplace in FY17. Your Company also consciously develops gender diversity through its campus relationship program. It takes pride to have complied with all the legal requirements. The continuous process of audits & gap analysis helps your Company to have better compliance.

It keeps its ‘human capital engaged with regular communication through town hall, various media such as e-mailers and CSR initiatives. The employee intranet portal has helped build an excellent work culture and a spirit of teamwork.

Rewards & Recognition

Your Company drives various Rewards & Recognition Programs. The human capitals extraordinary efforts are recognised and appreciated through various rewards and recognition aimed at boosting their morale. In FY17, total 100 employees were honoured under the ‘Long Service Award Programme for their loyalty and dedication towards the Company.

Employee Benefits Programme

Your Company has introduced a ‘Critical Illness Cover for all its employees to support the additional medical expenses on account of any critical illness. It covers both Mediclaim Policy and an optional Top Up cover of Employees, their families and parents. The term insurance & personal accident cover also continues to be in place.

Capability Building

Employee capability enhancement is of great importance to the Company. Launch of "GOLD" Academy (Gulf Oil Training & Development Academy) has helped to deliver the capability development initiatives with the blended approach.

Functional competencies are defined for all the roles of the organisation & integrated with various other HR processes. Specific capability development programs are also designed & implemented with the help of this competency framework.

Your Company continues to implement ‘New Ways of Working which helped the sales organisation and the channel partners to have a better alignment and process. Development of the internal trainers has also been the focus. The new ways of working modules have been successfully driven by such internal trainers.

Total 2700+ man-days were clocked during the year for training. Specific post-programme initiatives are planned so as to sustain the capability building initiatives.

Your Company plans to enhance its productivity across the Organisation through its new performance management system "ASPIRE" (Align: Strive: Perform: Inspire: Reward: Enable) to drive the required business growth.

Employee Stock option Scheme (GOLIL ESOP 2015)

Your Company believes that equity based compensation schemes is an effective tool to motivate and reward the employees. It creates employee ownership, attract new talents and retain the key resources in the organisation. It offers significant benefits to the present and future employees. In view of the above, the Company has instituted the ‘Gulf Oil Lubricants India Limited Employee Stock Option Scheme 2015 for its eligible employees last year. The Company has granted options as per the following vesting schedule –

Completion of Tenure Total grant of the eligible employees
1 Year 10%
2 Years 15%
3 Years 15%
4 Years 60%

The options granted under the scheme shall vest on satisfaction of vesting conditions which can thereafter be exercised resulting in allotment/issue of equity shares of the Company.

Employee Relations

Employee Relations at the Silvassa Plant remained cordial. This has helped to build a healthy relationship and resolve issues through mutual dialogue. The regular communication with the plant employees helps to create excellent team work & work culture.

Awards and Accolades

• One of the first Companies to adopt the new Quality Management System from ISO 9001:2008 to ISO 9001:2015

• Featured in D&B Top 500 Company List in 2017

Your Companys total ‘human capital strength comprised of 475 passionate resources for FY17.


Key Highlights:

• Revenue (Net) grew by 11.8 % to reach Rs. 1,13,106 Lakhs, up from Rs. 1,01,135 Lakhs in FY16

• EBIDTA reached Rs. 18,194 Lakhs, recording a growth of 13.4 % over Rs. 16,042 Lakhs in the previous year

• PAT grew by 20.7% to reach Rs. 12,108 Lakhs from Rs. 10,031 Lakhs in FY16

• Final Dividend of Rs. 5 per equity share recommended for shareholders approval, over and above the already paid interim dividend of Rs. 3.50 per equity shares

(Rs. Lakhs)
Particulars Year ended March 31, 2017 Year ended March 31, 2016 Growth %
Revenue (Net) 1,13,106 1,01,135 11.80%
EBITDA 18,194 16,042 13.40%
PBT 18,493 15,326 20.70%
PAT 12,108 10,031 20.70%
EPS (Basic) FV- Rs. 2 per equity share 24.41 20.24


Revenue (Net) grew to Rs. 1,13,106 Lakhs from Rs. 1,01,135 Lakhs in FY16. A double-digit growth in overall Revenues was well supported by volume and revenue growth across all key segments.

Breakup of various cost items as a % age of Revenue (Net)

Particulars Year ended March 31, 2017 Year ended March 31, 2016
Rs. Lakhs % Rs. Lakhs %
Revenue (Net) 1,13,106 100% 1,01,135 100%
Cost of goods sold 59,434 52.50% 55,090 54.50%
Employee Benefit Expenses 6,821 6.00% 5,744 5.70%
Manufacturing & Other Expenses 28,813 25.50% 24,385 24.10%
Total Expenses 95,068 84.00% 85,219 84.30%
Other Income 2,154 1.90% 1,793 1.80%
Reported EBITDA 20,192 17.90% 17,709 17.50%
Operational EBITDA 18,194 16.10% 16,042 15.80%
Finance Costs 974 0.90% 1,779 1.80%
Depreciation/ Amortisation 725 0.60% 604 0.60%
PBT (Profit before Tax) 18,493 16.40% 15,326 15.10%
Tax Expenses 6,385 5.70% 5,295 5.20%
PAT (Profit after Tax) 12,108 10.70% 10,031 9.90%

Cost of goods sold

Cost of goods sold increased by 7.9% to Rs. 59,434 Lakhs, up from Rs. 55,090 Lakhs in FY16 in line with volume growth. Cost of goods sold as a percentage to Net Revenue has decreased from 54.5% to 52.5% on account of continuous margin management efforts.

Manufacturing and other expenses

Manufacturing & other expenses increased by 18.2% to Rs. 28,813 Lakhs in FY17 from Rs. 24,385 Lakhs in FY16. Increase is mainly on account of increase in Advertising and Sales Promotion by Rs. 555 Lakhs, increase in Selling and Marketing Expenses by Rs. 2,285 Lakhs, increase in Royalty by Rs. 263 Lakhs and increase in freight & forwarding expenses by Rs. 627 Lakhs, which is in line with increase in volume/value additions.

Employee Benefit Expenses

Employee Benefit Expenses increased by 18.8% to Rs. 6,821 Lakhs mainly on account of increase in head count, usual increments resulting in increase in payroll cost by Rs. 985 Lakhs.

Finance Costs

Finance costs decreased significantly to Rs. 974 Lakhs in FY17 from Rs. 1,779 Lakhs in FY16 mainly due to net loss on foreign currency transactions and translations of Rs. 734 Lakhs accounted in FY16.

Depreciation/Amortisation charge

Depreciation/amortisation charges increased to Rs. 725 Lakhs in FY17 from Rs. 604 Lakhs in FY16 mainly on account of additions to fixed asset during the current year ended March 31, 2017.

Particulars As at 31.03.17 As at 31.03.16 Change
Sources of Funds
Share Holders funds/ Net Worth 35,367 24,854 10,513
Non-current liabilities 873 639 234
Current liabilities (including Short Term Borrowings) 36,887 39,36633 (2,479)
Total 73,127 64,859 8,268
Application of Funds
Fixed Assets 14,716 10,883 3,833
Other Non-current assets 1,599 1,175 424
Cash and Bank balances 28,909 23,506 5,403
Current assets 27,9033 29,2953 (1,392)
Total 73,127 64,859 8,268

Capital Employed

During FY17, capital employed increased from Rs. 64,859 Lakhs in FY16 to Rs. 73,127 Lakhs mainly due to increase in Fixed Assets by Rs. 3,833 Lakhs on account of capex spent at upcoming plant at Chennai and also increase in Cash and Bank balances by Rs. 5,403 Lakhs.

Net Worth

Net Worth at the end of FY17 increased by Rs. 10,513 Lakhs to Rs. 35,367 Lakhs from Rs. 24,854 Lakhs as at FY16.

The increase in Share Capital by Rs. 1 Lakh in FY17 at Rs. 993 Lakhs from Rs. 992 Lakhs as at FY16 is mainly due to issue of 61,300 equity shares under equity stock options. The Reserves and Surplus of your Company has increased by Rs. 10,512 Lakhs in FY17 at Rs. 34,375 Lakhs from Rs. 23,863 Lakhs as at FY16.

Non-Current Liabilities

Non-Current liabilities at the end of FY17 marginally increased by Rs. 234 Lakhs to Rs. 873 Lakhs from Rs. 639 Lakhs as at FY16.

Current Liabilities (including Short Term Borrowings)

Trade payables have increased by Rs. 341 Lakhs to Rs. 13,401 Lakhs in FY17 from Rs. 13,060 Lakhs in FY16. Short term borrowings were down by Rs. 1,623 Lakhs at the end of FY17 at Rs. 17,849 Lakhs over previous year of Rs. 19,472 Lakhs. The Company has net cash (net of short term debts) of Rs. 11,060 Lakhs as at March 31, 2017 as against net cash balance of Rs. 4,034 Lakhs as of March 31, 2016. This demonstrates that the Company is Net Debt free as at March 31, 2017.

Short Term provisions decreased by Rs. 2,266 Lakhs mainly on account of proposed dividend & Dividend tax of Rs. 2,387 Lakhs accounted during FY16, increase in provision for employee benefits of Rs. 9 Lakhs and increase in Income Tax provision of Rs. 112 Lakhs.

Fixed Assets

Net block of fixed assets (including CWIP) increased by Rs. 3,833 Lakhs to Rs. 14,716 Lakhs in FY17 from Rs. 10,883 Lakhs in FY16, mainly on account of capex spent at upcoming plant at Chennai and also few assets capitalised at Silvassa factory as a regular capex plan.

Other Non-Current Assets

Other Non-Current Assets at the end of FY17 marginally increased by Rs. 424 Lakhs to Rs. 1,599 Lakhs from Rs. 1,175 Lakhs at the end of FY16. Increase is partly on account of additional non-current investments of Rs. 2 Lakhs.

Cash and Bank Balances

Cash and Bank Balances increased significantly by Rs. 5,403 Lakhs and stood at Rs. 28,909 Lakhs at the end of FY17 as compared to Rs. 23,506 Lakhs at the end of FY16.

Current Assets

The overall inventory decreased by Rs. 696 Lakhs to Rs. 14,993 Lakhs in FY17 from Rs. 15,689 Lakhs in FY16.

Trade Receivables marginally decreased by Rs. 413 Lakhs from Rs. 10,643 Lakhs in FY16 to Rs. 10,230 Lakhs in FY17.


We broadly define liquidity as our ability to generate sufficient funds from both internal and external sources to meet our obligations and commitments. Our primary liquidity requirements have been to finance our working capital requirements for our operations and for capital expenditures and investments. We have financed our capital requirements primarily through funds generated from our operations.

Cash Flows

The table below summarises our cash flow for the periods indicated: (Please refer cash flow statement for more details)

(Rs. Lakhs)
Particulars March 31, 2017 March 31, 2016
Net cash generated from operating activities 14,403 11,783
Net cash used in investing activities (2,062) (327)
Net cash used in financing activities (5,865) (7,875)
Net change in Cash and Cash Equivalents 6,476 3,581