Gulf Oil Lubricants India Ltd Management Discussions.

Economic overview

Global economy

According to the International Monetary Fund (IMF), global economic activity grew by 3.6% in 2018, and was weighed down by multiple headwinds: US-China trade stand-macroeconomic stress in Argentina and Turkey, disruptions in the German auto sector, stringent credit policies in China, and financial tightening, coupled with the normalisation of monetary policy in the larger advanced economies. In addition, conditions worsened because of volatility in crude prices.

Registering an encouraging 4.5% economic momentum, emerging market and developing economies remained at the vanguard of growth during the year. However, the growth rate declined by 30 basis points vis-a-vis 2017, largely owing to the slow pace of growth in China. China off, and India continued to be among the worlds fastest growing large economies in the year.


While downside risks continue to pose challenges to global economic expansion, acceleration is expected in the second half of the year. This will be supported by significant policy accommodation by made possible by the absence of inflationary pressures, despite closing output gaps.

Indian economy

India, the worlds sixth largest economy, continued to be one of the fastest growing major economies in FY 2018-19. Extensive reforms undertaken by the Government of India, such as the Goods and Services Tax (GST), infrastructure creation, Ease of Foreign Direct Investment (FDI) norms translated into encouraging outcomes. Gradual upswing in private sector investment, strong gross capital formation and improved exports catalysed an acceleration in GDP growth in the first quarter of the year. Stronger momentum in private consumption, which grew in high single digits for most part of the year, and steady construction activity also facilitated economic growth during the year.


The Indian economy is likely to grow at a steady pace, driven by multiple factors: accommodative monetary policy undertaken by the Reserve Bank of India to inject additional liquidity in the economy, enhanced focus to drive rural infrastructure and consumption, and stronger regulatory oversight to strengthen the overall banking and financial services sector. The formalisation and digitalisation of the economy and surge in global investor confidence following the election of a stable government at the Centre are also big positives.

Industry overview

India is the worlds third largest lubricant market after the US and China. It is also one of the fastest growing lubricant markets worldwide. The market comprises three broad segments, namely, automotive, industrial including marine applications and process/white oils. Automotive and industrial segments together represent two-thirds of market volume. Automotive engine oils form the largest pie of the Indian lubricant market, excluding process oils.

Organised players (about 20) dominate Indias lubricant market with public sector oil marketing companies collectively owning a larger market share. Prominent multinational and private domestic companies are also present in the market. Over the past few decades, private players, who are investing significantly in expanding their reach and offering innovative products and services have been gaining market share. This trend is likely to continue in the future as well.

Automotive segment

Indias automotive lubricants market stood at $4.9 billion (2.7 billion litres) in 2017 and is projected to reach $10.3 billion by 2027 (Source: Automotive lubricants offer specialised solutions for (CVs), Passenger Vehicles (PVs) and two-wheeler segments. Diesel Engine Oils (DEO) contribute the most (~45%) to the automotive lubricant market, followed by Motorcycle Oils (MCO) and Passenger Car Motor Oils (PCMO). The demand for automotive lubricants has a direct correlation with on-road vehicle movement, as well as growth of vehicle population and automobile sales. Factors such as growing usage and number of vehicles, increasing need for personal mobility, better movement of goods/tipper, improving economic growth, healthy rural demand and a thriving replacement market are the prominent demand drivers for automotive lubricants.

Despite a slowdown, India remained one of the fastest growing automobile markets globally. In FY 2018-19, the overall vehicle sales in the domestic market grew by 5.1%, which is lower than the 14% growth seen in the preceding year. Large part of this slowdown happened during the fourth quarter of the year. In this scenario, growth of domestic lubricant industry is estimated at 3%, while the Bazaar segment growth pegged at 4-5% for the year.

Registering double-digit growth, CVs were at the forefront within the overall automotive sales for large part of the year. New infrastructure projects and fleet facilitated demand for CVs. Within the CV segment, medium and heavy Commercial Vehicles (M&HCVs) and Light Commercial Vehicles (LCVs) grew by 14.6% and 19.4%, respectively. Strong demand for tipper trucks from mining and infrastructure sectors aided M&HCVs sales. Growth in LCVs was fuelled by healthy momentum in demand from the fast-moving consumer goods, e-commerce and last-mile transportation sectors. Consequently, DEO products, performed well during the year.

Category April to March
2018-19 2017-18 % change
Passenger 3,377,436 3,288,581 2.7
Vehicles (PVs)
Commercial 1,007,319 856,916 17.6
Vehicles (CVs)
Three Wheelers 701,011 635,698 10.3
Two Wheelers 21,181,390 20,200,117 4.9
Total domestic sales 26,267,783 24,981,312 5.1

Passenger vehicle sales grew at a modest pace of 2.7% in the year. High vehicle prices, compulsory requirement of insurance and general elections were the key factors that impacted sales in the year. Historically, passenger vehicle Commercial Vehicles sales hits the slow lane in election year and tends to revive in the following year. This weakness was also reflected in the PCMO segment. However, higher replacement demand provided some support to PCMO sales.

Two-wheeler sales grew at just 4.9%, coming off sharply from the 14.8% growth registered in FY 2017-18. Decline in scooter sales, Kerala floods, IRDAs new norm to increase insurance premium of new two wheelers from two to five years were few of the dampeners for this segment; leading to high levels of inventory with dealers. This had some bearing on the MCO sales as well.

Industrial segment

Hydraulic fluids, metal working fluids, greases and industrial gear oil are important products in this segment. These products are used in the construction, manufacturing, textile, power generation, mining, food processing, light-heavy engineering, marine operations and metal working sectors.

These products are largely business-to-business in nature. Prospects of these products are closely aligned with economic growth, core industrial production and health of corporates in India. The demand for high-performance lubricants in the industrial segment is driven by the replacement criticality of the application in which they are used, such as compressors, textile machinery, windmills, captive power plants, among others.

Demand drivers for this segment include strong traction in IIP on the back of improved economic activity, higher investments in manufacturing, favourable policies and increased sophistication of machinery to drive efficiency.

Infrastructure segment

Lubricant products find application in both on-highway vehicles and off-highway construction equipment and are closely linked with developments in the infrastructure segment. Infrastructure creation remains one of the governments foremost priorities, which has implemented multi-faceted policies and reforms to bolster the sector in both rural and urban areas. The lubricant industry will be one of the key beneficiaries of improving prospects of Indias infrastructure sector.

Some of the key policy measures facilitating brighter prospects for these sectors include: Higher allocation to infrastructure development in the Budget through various road projects under the Ministry of Road (including NHAI) and Pradhan Mantri Gram Sadak Yojana

The Sagarmala Programme (involving investments worth around Rs.8.5 trillion) to set up new mega ports, drive modernisation of Indias existing ports, facilitate the development of 14 Coastal Employment Zones (CEZs) and Coastal Employment Units Favourable government policies and programmes, such as Make in India, Smart Cities roll out Adoption of new models, such as hybrid annuity model (HAM) to propel investments into the sector Modifying the Mines and Mineral Development and Regulation (MMDR) Act to usher in higher transparency Rising regulations to protect environment

Gulf Oil Lubricants India (Gulf Oil) – Company overview

Gulf Oil is one of Indias fastest growing major lubricant companies. Gulf Oil conducts its business under three segments of automotive, industrial and exports. Gulf Oil International has 72.73% stake in Gulf Oils total share capital, owning the distinguished Gulf brand globally (except the US, Spain and Portugal) and is present in 100+ countries worldwide. The parent company was acquired by the Hinduja group in 1984; and has been growing rapidly since then.

Gulf Oils quality products, including automotive and industrial lubricants are manufactured at its state-of-the-art plants in Silvassa and Ennore, Chennai. The Company caters to both OEMs and B2B customers and has a thriving distribution network in India for retail.

Business review

FY 2018-19 was one of the best years in the Companys history so far. It registered a remarkable 18% core volume growth, about five to six times higher than domestic industry volume growth of ~3%. Consistent expansion in reach, product & service improvements and distinct brand-building initiatives to engage continuously with consumers, mechanics and retailers, were the primary factors driving this robust performance. The Company has consistently outperformed the industry for the past decade now, leading to healthy and consistent improvement in its market share. In fact, during the year, Gulf Oil was estimated to be the second largest private lubricant maker, up from the third spot in FY 2017-18.

Notably, this outstanding performance has come in a year of weakening external environment, particularly slowing automobile sales, higher volatility in crude oil prices, sharp INR depreciation and low-single digit growth in domestic lubricants industry.

The personal mobility, infrastructure and industrial distributor segments registered double-digit growth and were at the forefront of growth. DEO sales grew in single digits owing to a slight moderation in factory fill volumes. However, impact on the Companys overall performance was limited as they form just 10% of total volume.

The Company focused on deepening its presence across all business segments and further fortifying its brand equity during the year. In fact, it was also able to implement calibrated price hikes to pass on rising input costs and forex pressures, thereby protecting its margins without hurting its volumes. It revisited customer value propositions across key products and brands, launched new and innovative products and strengthened its industrial and Infrastructure, Mining and Fleet (IMF) business by adding the requisite talent force.

The Company also elevated its services spectrum to better serve its customers and engage more with various distributors and channel partners. During the year, the Company started to maximise its digital outreach across all functions to achieve the two broad objectives of customer acquisition and operational efficiencies.

The Company registered an impressive financial performance with revenues growing by 28% to Rs.1,70,580 lakhs and EBITDA and PAT touching highest ever levels to reach Rs.28,305 lakhs and Rs.17,778 lakhs, respectively. To reward investors for their continued faith and support, the Company paid healthy dividend during the year.

Impact of crude oil and the exchange rate movement

Crude oil prices remained volatile during the year and were largely unpredictable. After surging to as much as . $84 in October, they closed the fiscal at lower levels of $69 per barrel. Prices of base oil, toed this trend, albeit with a lag. The INR was very volatile throughout the year and remained tepid for most part of the year, hitting an all-time low of 74.48 vis-a-vis the US Dollar (US$) during October 2018. This was due to higher oil prices, improving US yields, weak domestic fundamentals and outflows from domestic markets. The sentiments marginally improved towards the end of FY 2018-19 but still INR ended the year with considerable losses versus the US$. The Company continued to have a close watch on these developments and undertook prudent price hikes to protect its margins. With long-term sourcing contracts well in place, the Company also made progress towards improving the processes of procurement, inventory management, pricing negotiations, formulation optimisation and cost management.

Automotive segment

The segment caters to three major categories, namely DEOs, personal mobility (MCOs and PCMOs) and non-engine oil products. DEOs caters to CVs while MCOs and PCMOs cater to bikes and cars, respectively. Non-engine oil products include greases, coolants, brake fluid and other products.

These products are distributed via two primary channels:

1) Bazaar, which includes spare parts stores, exclusive lubricant stores and independent workshops/garages

2) OEM Franchise Workshops

1) Bazaar

This channel accounts for over one-third of the total lubricants market, excluding process oils. The Company continued to enhance its footprint in this channel during the year. Its retail outlets grew in double digits to a total size of 70,000 with over 300+ auto distributors and 30+ depots. The Company also has its branded Independent Workshops (IWS) for bikes called ‘Gulf Bike Stops and for cars called ‘Gulf Car Stops. Currently, it has 7,000 bike stops and 1,300 car stops, which saw double-digit growth during the year.

The Company continues to work towards enhancing the number as well as quality of offerings at these stops. This channel reported good growth during the year. The Company has a market share of about 7-7.5% in this segment.

Personal mobility

The Company registered impressive double-digit growth in the segment, despite weak sales of two wheelers and PVs during the year. This was achieved owing to the launch of innovative products, continued emphasis on growing reach, coupled with the implementation of multi-faceted branding and marketing campaigns targeting a wider audience of potential customers. The Companys influencer (mechanics, retailers and others) marketing campaign, for instance, led to a double digit-growth in both MCO and PCMO products.

The Company also launched two new products in the PCMO category during the year, namely, Multi G for CNG cars and Tata Motors Genuine Oil. It entered into an agreement with Tata Motors to launch a range of co-branded lubricants for the passenger vehicles section in the bazaar segment. These products offer distinct customer value proposition and hence have excellent scope, going forward. This segment registered volume growth of 20% during the year. Given the

Companys low market share in this category, there is significant potential to scale it up in the future.

The Company re-launched the high-performance motorcycle engine oil ‘Gulf Pride 4T Plus through the Insta Pick Up campaign and garnered an overwhelming response. The new ‘Dum Andar campaign for the Chennai Super Kings, Gulf Unnati dealer loyalty programme and Gulf Rural Stockists (GRS) programme further facilitated sales volumes of this business segment. The Company launched a loyalty app for mechanics which received an encouraging response. Additionally, the Company started putting QR codes on its product packs to geo-tag thousands of retailers and mechanics, thereby achieving valuable insights.

The Company launched the second season of #GulfFanAcademy in FY 2018-19 across five cities in India. This season too has been lapped up by fans of the legendary Manchester United football club. Post its success in India, this year, the Company took this campaign to 60 countries across the globe. It sent 11 of the top fans of the club to Old Trafford where they watched the match live.

During the year, your Company forayed into the upper rank of motorbiking racing segment by forming a new multi-year partnership with Aprilia Racing, Italy for the MotoGP Championship. This collaboration will enhance the Companys portfolio catering to adventure sports.

The Companys digital platforms, too, continued to grow from strength to strength and played a prominent role in fortifying brand Gulf.Another highlight of the year was the robust growth witnessed in the two-wheeler battery segment. Net revenues from this segment stood at Rs.5,360 lakhs and grew by 45%, compared to the previous year.

The replacement market continued to perform well during the year, notwithstanding the overall slowdown. Overall, the personal mobility segment registered 16% volume growth during the year.

Commercial vehicle oils/DEO

The Company has 8-9% market share in this segment and continued to strengthen its positioning during the year. Volume in this segment were supported by new product launches and investments in branding activities, and grew in double digits.

The Company launched three new products in this segment, namely Superfleet Turbo+, Cargo Power Pro and Force Genuine Oil range. These products are receiving encouraging market response due to the differentiated customer value proposition offered by each one of them.

The distinct heavy commercial vehicle fleet branding on highways, to promote the re-launched Superfleetrange of products, garnered a positive response from the trucker community. However,lowerfactoryfillvolumes had some bearing on the segment during the year.

The Company is focusing on its franchise workshops and is looking to capitalise on the advancement of vehicle purchases before implementation of BS VI norms (with effect from April 1, 2020). This trend is likely to aid factory fill volumes from the second half of the ongoing fiscal.

2) OEM Franchise Workshops

OEM Franchise Workshops is an important business segment for the Company and has been witnessing consistent growth in the past few years. This trend continued in the year gone by, owing to healthy momentum in the Companys tie-ups with leading OEMs. Existing tie-ups with Mahindra, Bajaj, Ashok Leyland and Swaraj registered an outstanding performance.

The Company also acquired new OEMs namely Force Motors, Tata Motors (Passenger Cars business unit), among others. The high OEM additions during the year will start generating encouraging results from the ongoing fiscal year.

Franchise Workshops or FWS is an important growth avenue for the Company, which will support the healthy momentum in automotive segment in the future. It is the constant endeavour of the Company to identify and capture potential for such strategic tie-ups and further strengthen this segment.

Industrial segment

The Company has a presence in the industrial lubricant segment with a thriving network of direct and indirect channels (distributors). At the end of the year, its industrial network spanned 200+ direct industry accounts and 50+ industrial distributors.

It registered healthy double-digit growth during the year. The Companys market share in the industrial business is estimated at 3-4%. Riding high on the traction in its branded products, the Company is fortifying its positioning in the segment.

The industrial business attained greater heights during the year. On one hand it launched a new range of long-life move to same line greases under the Crown Endurance Series, while on the other, it also launched new products in the synthetic gear oil category.

The Company increased wallet share with existing clients such as JSW Steel. It also added distinguished new OEMs such as Pulsarlube Korea, Windsor and Ferromatik. And new clients such as Pennar Industries (cold rolled steel strips), Himadri Chemicals, Shree Cement, among others. In addition, the Company achieved a breakthrough in the wind sector by bringing on board Wind World One of Indias major wind power solution provider. It also undertook total plant lubrication management for some of its key clients during the year and believes this sub-segment offers significant potential.

During the year, the Company launched a new distributor value proposition and started the Inner Circle Distributor Programme. It conducted the industrial distributors conference to engage with them closely and is conducting regular trainings to facilitate their growth.

The Company continued to engage with its customers and industry influencers regularly. On one such platform the Company presented a research paper on lubrication management programme to major steel manufacturers, including Tata Steel, JSW Steel, JSPL and SAIL.

Similar trainings were conducted for other mid and small-sized customers during the year. It also participated in important industrial exhibitions to increase its brand recall and engage with a larger number of potential customers.

The Company places high emphasis on training its B2B teams and undertook multiple initiatives in this direction.

Among key specialty products, AdBlue helps vehicles to meet BS IV emission standards. Healthy demand from OEMs fuelled performance of AdBlue. Specialty grease products (offered under the exclusive dealership with the US-based manufacturer Whitmore), registered an encouraging performance in the year. Domestic steel and coal companies continued to rely on specialty grease products to improve efficiency of their operations.

Infrastructure, mining and fleet segment

The infrastructure, mining and fleet (IMF) segment registered an impressive double-digit growth during the year. This segment caters to the unique requirements of clients across the sectors of infrastructure, mining and fleets. It provides them quality services and enriching customer experience. The Company has 750+ marquee customers in this segment, including industry heavyweights such as Larsen & Toubro, Dilip Buildcon, Punj Lloyd, Shapoorji Pallonji and Kobelco.

During the year, this business added two new OEMs (L&T Construction Equipment and Putzmeister Concrete Machines), even as it continued to witness healthy momentum with existing OEMs.

Exports segment

Following the commissioning of the Chennai plant, the Company doubled the volume share from exports to about 3-4% during the year. This plant addresses the demand in nearby countries efficiently and has also enabled the Company to enter into select, high-potential markets. The key countries that the Company caters to include Nepal, Bangladesh, Indonesia, Qatar, Africa, among others.

The Company is focusing on forming tie-ups with various platforms existing and new automotive OEMs that have large export volumes from India.

Opportunities and threats

Business Opportunities Threats
Automotive a) Healthy prospects of Indias automobile sector and overall economic growth a) Competitive intensity in the sector
b) Adoption of new emission norms and enhanced focus on fuel efficiency b) Slowdown in economy and freight movement
c) Evolving technology as well as customer requirements
d) Scope to increase market share in geographies with low market share and across segments c) Possibility of aggressive pricing and discounts being offered by competitors
e) Scope to improve the Companys market share in the PV and tractor segments
f) Expansion of the Companys reach across various channels and geographies d) Volatility in prices of key raw materials
e) Prolonged slowdown in domestic automobile sales
Industrial a) Scope to deepen share of wallet with existing customers a) Any slowdown in industrial activity
b) Opportunity to participate in the exponential growth of roads and infrastructure in India b) Slower growth of the infrastructure sector
c) Opportunity to take over entire lubricant management at plants of customers
Exports a) Potential to ramp up in existing markets and enter select attractive markets a) High volatility in the forex market
b) Chennai plant can cater to nearby countries more efficiently b) High competitive intensity


The lube industry witnessed a slowdown in the first quarter of FY 2019-20 due to weakness in the auto sector, industrial deceleration, liquidity crunch and elections. There was some pressure in auto sales, particularly new vehicles, but the Bazaar segment continued to see good traction.

Management expects industry volumes to recover in the second half of FY 2019-20 owing to pre-buying related to BS VI pre implementation, easing liquidity post elections and continuation of infrastructure reforms from the government.

The Companys management is confident of continuing to grow at least by 2-3 times of industry volume growth. Its growing reach and connect with customers, distributors as well as influencers, along with innovation focus will drive this momentum. The Company will focus on adding new OEMs as well as industrial customers and will continue to make the requisite investments in brand building activities. Continued market share gains, coupled with calibrated and well-thought-through price hikes will facilitate future revenue growth. The Company is looking to grow all segments and sub-segments.

The EBITDA margin is expected to remain stable in the foreseeable future, as it derives operating leverage and efficiency by keeping a check better operational on expenses on one hand and digitising its processes on the other. Rising product premiumisation across business segments is another enabler of the Companys profitable growth.

Automotive segment

Indias automotive industry witnessed tepid growth across most segments in the last few months of the year gone by. This moderation was a combined outcome of multiple factors such as weakening demand, rising cost of owning vehicles, selective funding and higher insurance costs. Industry experts believe most of these factors are likely to fade away gradually by the end of FY 2019-20. Most segments in the automotive industry are likely to grow by low-to mid-single digits in FY 2019-20. In the second half though, liquidity pressures are likely to ease and pre-buying related to BS VI adoption is projected to kick in.

However, the medium-term growth story of the sector remains intact. Rural economy, improving consumption demand and a favourable monetary policy environment would act as catalysts behind this growth. This trend is likely to rub off favourably on the lubricants market in India.

Personal mobility

As estimated by the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle volumes are likely to grow by 3-5% in FY 2019-20 and growth in two wheelers is pegged higher at 5-7%. The Company already has a prominent position in the MCO segment and is well poised to benefit from higher growth in the two-wheeler segment. In the two-wheeler space, momentum in entry and premium segments is likely to continue in the future.

While growth for passenger vehicles is likely to be subdued in the year, the Company has a lower share in this segment, and can still continue to grow at an encouraging pace on its lower base.

The trend of growing adoption of high-value, high-margin synthetic and semi-synthetic oil products is likely to continue in the foreseeable future and aid growth of lubricants in the personal mobility segment.

Another emerging business segment for the Company will be the two-wheeler battery business. The management seeks to leverage its existing distribution network to grow this business and is confident of achieving 30-35% growth over the next two to three years.

Commercial vehicle oils/DEOs

Upswing in construction activity and healthy prospects of the infrastructure sector are few enablers for this segment.

Stronger replacement demand and growing operational efficiency in transportation, logistics and supply chain activities and pre-buying of vehicles before implementation of BS VI are other long-term drivers of CV demand in India.

The Company has been growing its market share in this segment and figures among the leading lubricant players in the domestic market. It provides innovative products catering to the distinct needs of customers and is growing its reach across both Bazaar and OEM channels to make further inroads in this segment.

Industrial segment

The Company will continue to focus on auto, auto components, manufacturing and metals companies to grow this segment of the business. While there is immense scope to further the growth of existing products, it is also looking to ramp up the share of value-added specialty products in overall industrial revenues. Whitmore special greases, metal working fluids, long drain hydraulic oil and synthetic oils will drive growth of this segment in the future. Similarly, AdBlue will be a prime beneficiary BS VI norms in 2020.

The strategic priorities of the industrial business include:

• Enhancing the dealer network and the customer base

• Achieving higher stability and volume growth

• Capturing opportunities for total lube management at plants of customers

Infrastructure, mining and fleet segment

The infrastructure, mining and fleet business is well placed to benefit from favourable government policies. The focus is to increase the share of wallet of existing clients and add new clients to this business. The Company has set up dedicated teams to grow in each of these sectors and is looking to tap into all lucrative opportunities, and also fine tune its own processes to grow in a profitable and sustainable manner in the future.


Commissioning of the Chennai plant has unveiled the opportunity to grow in geographies with high potential. The Company believes demand for exports will be driven by countries such as the Middle East, the Philippines, Indonesia, and Africa.

The Company is looking to ramp up its franchise network and aftermarket channels in markets where its sees potential. It is confident of maintaining the growth momentum in these markets over the medium term.

Managing risks in a dynamic business landscape

The Company has set up a comprehensive Risk Management Policy, which is framed around a common and industry-specific understanding of various types of risks corporate risk (strategic and residual risk), operational risk (specific business and functional risks, including economic and market risks) financial risk, human resources (HR) risk, legal and compliance risks, among others.

The key risk mitigation plans identified by the Company in the earlier years were continued during the year under review. This includes putting in additional resources for the recently launched PCMO range, including synthetic oils, and widening the distribution base to reach more consumers on the back of improving brand recall, among others. Getting new OEM/B2B customers and maintaining existing OEMs in a more structured manner continues to be the Companys key focus area.

The Company follows a structured forex hedging policy according to the advice of forex experts and continuously reviews fromimplementationof its foreign exchange exposures on a fortnightly basis.

The 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 the Company also helped it mitigate its compliance risk more effectively. The Company is proactive while complying with legal requirements. The continuous process of audits and gap analysis helps it have a better compliance roadmap.

Empowered human assets

The Company puts critical importance on the 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 employees. Being an equal opportunity employer, the Company strives to implement programmes to promote various initiatives, including instilling awareness on the ‘Prevention of Sexual Harassment at Workplace Policy (POSH).

There were no complaint registered on sexual harassment at the workplace in FY 2018-19.

The Company encourages regular communication through townhall and various posters, danglers, digital platforms, communication meetings and e-mailers. The employee intranet portal acts as a credible platform for employee engagement and connectivity.


The Employee Self Service (ESS) platform enables employees to conduct their daily business on the go ASPIRE (Align Strive Perform Inspire Reward Enable), the Companys web-based performance management system, enables managers and employees to conduct periodic:

1) Role reviews

2) Performance reviews

Capability building

Employee capability enhancement continues to be of critical importance to the Company. Classroom programmes and the launch of the Gulf Oil Training and Development (GOLD) Academy have helped deliver the capability development initiatives with the blended approach.

The Company continues to train employees to implement ‘new ways of working, which have helped the sales organisation and the channel partners have better processes. The development of internal trainers has also been a key focus area. The ‘new ways of working modules have been successfully driven by such internal trainers. A total of 1,868 person-days were recorded during the year for training. Specific post-programme initiatives are planned to sustain the capability-building initiatives.

Employee Stock Option Scheme (GOLIL ESOP 2015)

The Company believes that equity-based compensation schemes are an effective tool to motivate and reward eligible employees. These schemes create employee ownership, attract new talent and retain the key resources in the organisation. They offersignificant the employees. In view of the above, the Company has instituted the ‘GOLIL Employee Stock Option Scheme, 2015 for eligible employees.


First grant of 6,06,990 ESOPs on May 26, 2015 Second grant of 1,12,225 ESOPs on February 8, 2016 Third grant of 1,01,913 ESOPs on May 13, 2017 The Company has granted options as per the following vesting schedule:

Completion of tenure Total grant of eligible employees
1 year 10%
2 years 15%
3 years 15%
4 years 60%

The scheme now covers several critical positions below senior management as well. The options granted under the scheme shall be based on satisfaction of vesting conditions, which can thereafter be exercised, resulting in the allotment/issue of equity shares of the Company.

Employee relations

Employee relations at the Silvassa and Chennai plants remained cordial during the year and most of the issues were resolved through mutual dialogue. The Companys total workforce stood at 575+ during FY 2018-19.

Internal control systems and their adequacy

Following the implementation of the Companies Act, 2013, 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 an Internal Financial Control (IFC) framework that supports compliance with requirements of the Act in relation to the Directors Responsibility Statement. The IFC framework document helps in the evaluation of the operative effectiveness of the controls consistently.

The Company, through its own internal audit department, conducts periodic audits at all locations and functions based on the plan approved by the Audit Committee and brings out any deviation in 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 is submitted to the Audit Committee every quarter for its review and concerns, if any, are benefits to reported to the Board.

Financial performance

Key Highlights:

Revenue from operations (net of indirect taxes) increased to Rs.1,70,580 lakhs from Rs.1,33,226 lakhs (up by 28.04%) EBIDTA stood at Rs.28,305 lakhs (up by 20.08% as against Rs.23,572 lakhs for previous year 2017-18). PAT stood at Rs.17,778 lakhs (up by 12.12% as against Rs.15,856 lakhs for previous year 2017-18).

Board has recommended final dividend of Rs.7.0 per equity share (i.e. 350% on FV of Rs.2 each). During the year, the Board declared and paid interim dividend of Rs.4.50 per equity share (i.e. 225% of face value). With this, the total dividend for the year stands at Rs.11.50 per equity share (i.e. 575% of FV of Rs.2 per equity share).

Rs. Lakhs
Year ended March 31, 2019 Year ended March 31, 2018 Growth %
Revenue (Net of indirect taxes) 1,70,580 1,33,226 28.0
EBITDA 28,305 23,572 20.1
PBT 27,507 24,286 13.3
PAT 17,778 15,856 12.1
EPS (Basic) FV- Rs.2 35.73 31.92
per equity share

Revenue (in Rs. Lakhs)

Revenue (net of indirect taxes) stood at Rs.1,70,580 lakhs in FY 2018-19 from Rs.1,33,226 lakhs in FY 2017-18. The Company achieved healthy revenue growth across all key segments on the back of an overall double-digit growth in volumes.

1. Breakup of various cost items as a % of revenue

Particulars Year ended March 31, 2019 Year ended March 31, 2018
Rs. Lakhs % Rs. Lakhs %
Revenue (net of indirect taxes) 1,70,580 100 1,33,226 100
Cost of Goods Sold 93,827 55.0 69,768 52.4
Employee Benefit Expenses 10,174 6.0 8,256 6.2
Manufacturing & Other Expenses 38,274 22.4 31,630 23.7
Total Expenses 1,42,275 83.4 1,09,654 82.3
EBITDA 28,305 16.6 23,572 17.7
Other Income 2,954 1.7 2,610 1.9
Finance Costs 1,516 0.9 853 0.6
Depreciation/Amortisation 2,236 1.3 1,043 0.8
PBT (Profit before Tax) 27,507 16.1 24,286 18.2
Tax Expenses 9,729 5.7 8,430 6.3
PAT (Profit after Tax) 17,778 10.4 15,856 11.9

a. Cost of Goods Sold

Cost of Goods Sold increased by 34.5% to Rs.93,827 lakhs in FY 2018-19 from Rs.69,768 lakhs in FY 2017-18 in line with volume growth. Cost of goods sold as a percentage to net revenue also increased from 52.4% in FY 2017-18 to 55.0% in FY 2018-19.

b. Employee benefit expenses

Employee benefit expense increased by 23.2% to Rs.10,174 lakhs in FY 2018-19 from Rs.8,256 lakhs in FY 2017-18 mainly on account of increase in head count, and usual increments resulting in increase in payroll cost by Rs.1,918 lakhs.

c. Manufacturing and other expenses

Manufacturing and other expenses increased by 21.0% to Rs.38,274 lakhs in FY 2018-19 from Rs.31,630 lakhs in FY 2017-18. Increase is mainly on account of increase in Advertising and Sales Promotion by Rs.1,177 lakhs, increase in Selling and Marketing Expenses by Rs.2,228 lakhs, increase in Royalty by Rs.418 lakhs and increase in freight and forwarding expenses by Rs.1,190 lakhs, which is in line with increase in volume/value additions.

d. Finance costs

Finance costs increased to Rs.1,516 lakhs in FY 2018-19 from Rs.853 lakhs in FY 2017-18 which is in line with increase in volume and also due to enhancement in import of raw materials to meet the requirements of the new plant facility at Chennai which became fully operational during the current year.

e. Depreciation/Amortisation charge

Depreciation/amortisation charges increased to Rs.2,236 lakhs in FY 2018-19 from Rs.1,043 lakhs in FY 2017-18 mainly on account of additions to fixed assets at newly set up plant facility at Chennai.

Balance Sheet Rs. Lakhs
Particulars As at March 31, 2019 As at March 31, 2018 Change
Fixed Assets 27,121 26,608 513
Other Non-current assets 3,732 1,365 2,367
Cash and Bank balances 29,260 32,619 (3,359)
Current assets 54,134 42,301 11,833
Total 1,14,247 1,02,893 11,354
Equities & Liabilities
Share Holders funds/Net Worth 58,674 46,742 11,932
Non-current liabilities 2,434 1,546 888
Short-term Borrowings 28,311 24,806 3,505
Current liabilities 24,828 29,799 (4,971)
Total 1,14,247 1,02,893 11,354

2. Capital employed

During FY 2018-19, capital employed increased from Rs.1,02,893 lakhs to Rs.1,14,247 lakhs mainly due to increase in Current Assets by Rs.11,833 lakhs which is in line with increase in volume.

3. Net worth

Net worth at the end of FY 2018-19 increased by Rs.11,932 lakhs to Rs.58,674 lakhs from Rs.46,742 lakhs as at FY 2017-18.

Increase in share capital by Rs.2 lakhs in FY 2018-19 at Rs.996 lakhs from Rs.994 lakhs as at FY 2017-18 mainly due to issue of 97,367 shares under equity stock options. Other equity of the Company increased by Rs.11,930 lakhs in FY 2018-19 at Rs.57,678 lakhs from Rs.45,748 lakhs as at FY 2017-18 mainly on account of PAT of Rs.17,778 lakhs for FY 2018-19 and net off dividend and dividend distribution tax of Rs.6,603 lakhs.

4. Non-current liabilities

Non-current liabilities at the end of FY 2018-19 increased by Rs.888 lakhs to Rs.2,434 lakhs from Rs.1,546 lakhs as at FY 2017-18.

5. Current liabilities (including short-term borrowings)

Trade payables decreased by Rs.2,692 lakhs to Rs.19,594 lakhs in FY 2018-19 from Rs.22,286 lakhs in FY 2017-18.

Short-term borrowings also increased by Rs.3,505 lakhs at the end of FY 2018-19 at Rs.28,311 lakhs over previous year of Rs.24,806 lakhs.

However, the Company has net cash balance (net of short-term debts) of Rs.949 lakhs as on March 31, 2019 as against net cash balance of Rs.7,813 lakhs as on March 31, 2018, which demonstrates that the Company remains net debt free as on March 31, 2019.

Other financial liabilities decreased mainly on account of payment of Capex creditors (for new Chennai plant) of Rs.2,242 lakhs, decrease in current tax liabilities of Rs.176 lakhs. Increase in other current liabilities was recorded mainly due to increase in statutory dues payable by Rs.334 lakhs.

6. Fixed assets

Net block of fixed assets (including CWIP) increased by Rs.513 lakhs to Rs.27,121 lakhs in FY 2018-19 from Rs.26,608 lakhs in FY 2017-18 and includes mainly capex spent at newly capitalised plant payment of facilities at Chennai and also few assets capitalised at Silvassa factory as a regular capex plan.

7. Other non-current assets

Other non-current assets at the end of FY 2018-19 Increased by Rs.2,367 lakhs to Rs.3,732 lakhs from Rs.1,365 lakhs at the end of FY 2017-18 mainly due to increase in prepayments of Rs.2,207 lakhs.

8. Cash and bank balances

Cash and bank balances decreased by Rs.3,359 lakhs and stands at Rs.29,260 lakhs at the end of FY 2018-19 as compared to Rs.32,619 lakhs at the end of FY 2017-18.

9. Current assets

The overall inventory increased by Rs.10,199 lakhs to Rs.33,879 lakhs in FY 2018-19 from Rs.23,680 lakhs in FY 2017-18.

Trade receivables increased by Rs.1,604 lakhs from Rs.13,462 lakhs in FY 2017-18 to Rs.15,066 lakhs in FY 2018-19.

10. Liquidity

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

11. Cash flows

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

Rs. Lakhs
March 31, 2019 March 31, 2018
Net cash generated from operating activities 1,704 11,008
Net cash (used) in investing activities (2,186) (5,085)
Net cash generate/(used) in financing activities (2,949) 892
Net change in cash and cash equivalents (3,431) 6,815