gulf oil lubricants india ltd profit loss cash flow Management discussions

Global Economy

The year 2021 started with the outbreak of the delta variant of COVID-19 across countries and continents, disrupting the mobility of people and goods substantially.

According to the International Monetary Fund (IMF), the global economy witnessed a growth of 6.1% in 2021. The increased rate of vaccination and reduction in COVID-19 cases led to the unlocking of pent-up demands and opening of markets across the globe. All major trading economies saw increased exports and imports and the numbers were above pre-pandemic levels. In addition, growth in 2021 was fuelled by a variety of fiscal and monetary measures that enhanced market liquidity and prompted investments in infrastructure development. Global trade grew despite a supply chain bottleneck caused by ports and factories that were not working at full capacity.

As the year neared an end, the rising geopolitical tensions between Ukraine and Russia escalated and by February 2022, it turned into a full-fledged war. This led to rise in crude & energy prices and inflation in many countries and it became their central concern. Inflation is expected to rise by 5.7% in advanced economies and 8.7% in emerging markets and developing economies. In emerging markets, the increase in food and fuel prices is becoming a cause of social unrest. ChinaRss Zero COVID-19 policy, which places key cities with large industrial centres under lockdown, is complicating an already disturbed global supply chain.

The US Federal Reserves has increased cumulative interest rates by 2.25% so far during 2022, which were near zero post onset of corona virus. The Federal Reserves have hinted on increasing rates further in 2022 to combat the 40-year high inflation that is slowing down the countryRss economy.

Despite the volatility and unpredictability, global economic growth is anticipated to reach 3.6% in 2022.

World Economic Outlook Projection

World Advance United Euro EMDE China India Russia Brazil South
Economiec States Area Africa
? 2022 6.1 5.2 5.7 5.3 6.8 8.1 8.9 4.7 4.6 4.9
? 2023 3.6 3.3 3.7 2.8 3.8 4.4 8.2 -8.5 0.8 1.9
? 2022 (P) 3.6 2.4 2.3 2.3 5.1 5.1 6.9 -2.3 1.4 1.4

Source: International Monetary Fund (IMF)


Despite the impact of the pandemic, the unprecedented collective policy efforts by governments and central banks, paired with the resilience and innovations of private enterprises, have helped minimise lasting economic and physical damage across the world. While the direction of the Russia-Ukraine crisis remains uncertain, its impact on the global economy will remain. Capital outflows and

sizeable currency depreciations have tightened external funding costs, pushed up debt levels and put their hesitant and incomplete recoveries in danger. In the near term, many governments will need to cushion the blow of higher energy prices, diversify energy sources, and increase efficiency wherever possible. Full economic revival seems to be further away, but when businesses and governments work in tandem, across borders and disciplines, we will be

able to weather this storm and come out stronger and more resilient by the end of it. The possibility of an acceleration in the US rate hike cycle to control inflation may increase volatility in the currency markets.

Indian Economy

The Government of IndiaRss plans of reaching the $5 trillion economy mark by FY 2024-25 is on course but with some pushback due to the pandemic. The government is taking various financial and other measures to hold up the economy and ensure that economic growth is achieved at decent pace in spite of slow down by the pandemic and external global situations.

According to the National Statistical OfficeRss (NSO) assessments of national income, the economy has grown by 8.7% in FY 2021-22, which has surpassed the pre-COVID level. This growth is driven primarily by improved performance, especially in the farm, mining,

and manufacturing sectors. The other factors that further contributed are increased export, investment, aggregated consumer demand and consumption as well as updated fiscal and monetary policies and improvement in employment rates.

According to the Centre for Monitoring Indian Economy (CMIE), there has been a boost in consumer confidence, among rural and urban consumers, which is at its best since the outbreak began. Since the slowing down of pandemic, there has been an increase in movement around retail and leisure activities, groceries and pharmacy, parks, and workplaces.


Overall, Indian economy is expected to continue its growth momentum in FY22-23 and may deliver one of the highest growth among major economies.

GDP trends in India

Year FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
IndiaRss GDP 7.0% 6.1% 4.2% (6.6%) : 8.7%

Overview of the Indian Lubricants Industry

India is the worldRss third largest and fastest growing lubricant market after the US and China. The global lubricant market size was valued at $125.81 billion in 2020 and is expected to grow at a CAGR of 3.7% between 2021 and 20281. IndiaRss lubricant market is expected to reach $48.22 billion, growing at a CAGR of 4.77% by 20272.

The overall lubricants market in India is estimated to be at ~2.7 billion litres, which is categorised into three broad segments of automotive, industrial, including marine applications and process/white oils, with automotive and industrial segments together accounting for over two-third of the total market. Automotive engine oils form the largest pie of the Indian lubricant market.

There are ~20 organised players in IndiaRss lubricant market and public sector oil marketing companies, together, cater to a significant portion of the market. Leading multinational and private domestic companies constitute the rest of the market and have been growing at a rapid pace by building brand and scale, launching innovative products and upgrading the various services offered to customers.

Future Growth Enablers

• Rise in domestic consumption

• Rise in the countryRss GDP

• Strong prospects for the rural economy

• Year-round use of tractors and vehicles

• Automative growth due to low per capita vehicle penetration in India.

• Rising brand consciousness

• Advancement of engine technology with newer emission norms

• Accelerated investments in infrastructure, which can also increase usage of construction equipments, a large lubricant consumption segment.

• Implementation of various industrial reforms

• Policy interventions to attract and encourage increase of manufacturing bases in India helped by global China +1 approach etc. This can make India an Export hub to

the world.

A major part of the demand is generated from the

automotive segment, as lubricant plays a critical role in

automobile. A lubricant reduces the friction between the

moving parts within the automobile, along with better heat dissipation. The oils are also used in hydraulic power transmission systems in an automobile. These lubricant applications make them an essential component in improving the efficiency and life of the automobile. Similarly, in the Industrial and Marine segments, the heavy machineries need lubrication to operate efficiently. It also reduces the noise generation in a system. Construction equipments used in infra can also lead to significant increase in consumption of lubricants for this segment.

At Gulf Oil, we cater to broadly two segments of the lubricant industry except process/white oils, the details of which have been elaborated in the respective sections.

Automotive Segment

The automotive lubricant segment constitutes a large pie of the Indian lubricant market, and its demand has a direct correlation with on-road vehicle movement, as well as growth of vehicle population and automobile sales.

The automotive sector picked up pace in 2021, with sales increasing across most categories, including personal automobiles, commercial vehicles, as well as three- wheelers and tractors. Despite the increase in demand, the automobile industry experienced stagnation in the second half of the year due to a global semiconductor shortage and increased steel prices.

Even before the pandemic, the industry had been experiencing few challenges due to the slowing economy, changes in emission norms etc. In turn the lubricant business also encountered challenges and in fact de-grew during last two years but came back to some positive growth during the FY21-22.

Personal Mobility

The total number of passenger vehicles sold went from 2,711,457 to 3,069,499 units. This increase in number corresponded with increased demand for Passenger Car Motor Oil (PCMO) and the demand for replacement oil. Within the passenger vehicle segment, Utility Vehicle (SUV) sales rose to 1,489,178 units, which led to increased demand for PCMO and Diesel Engine Oil (DEO). The newer vehicles are all compliant with the BSVI norm, which is set to pace the transition from BSIV to BSVI compliant vehicles to reduce emissions.

Compared to the previous year, the two-wheeler sales fell from 15,120,783 to 13,466,412 units. This impacted the demand for Motorcycle Oil (MCO).

Commercial Vehicles & Tractors

FY 2021-22 saw the growth in sales for commercial vehicles from 568,559 units to 716,566 units. This increased sales consequently reflected in increased demand for the DEO.

Three-wheeler sales increased from the previous year to 260,995 units. These increasing sales reflect the growing demand for PCMO and CNG engine lubricants.

However, tractor sales dropped significantly during the year. The high input cost due to rise in steel prices led to increase in tractor prices. During the year 636.12 thousand units were sold compared to 899.4 thousand units in FY 2020-21. The decreased sales of tractors have impacted the DEO sales in factory fill but this demand was mitigated by robust oil demand in replacement due to higher tractors sales in earlier years.

The automotive lubricant market is dominated by Diesel Engine Oils (DEO), followed by Motorcycle Oils (MCO), Passenger Car Motor Oils (PCMO) and other allied lubricants.

Auto Industry Domestic Sales Performance

(In Numbers)

2017-18 2018-19 2019-20 2020-21 2021-22
Passenger Vehicles 3,288,581 3,377,389 2,773,519 2,711,457 3,069,499
Commercial Vehicles 856,916 1,007,311 717,593 568,559 716,566
Three Wheelers 635,698 701,005 637,065 219,446 260,995
Two Wheelers 20,200,117 21,179,847 17,416,432 15,120,783 13,466,412
Grand Total 24,981,312 26,266,179 21,545,551 18,620,233 17,513,596

Source: Society of Indian Automobile Manufacturers (SIAM)

Tractor Sales Data

(In Numbers)

Years 2017-18 2018-19 2019-20 2020-21 2021-22
Units 711.4 788.4 709 899.4 ^ 636.12

Source: Statista, 2022

Industrial Segment

One of the critical success factors for the manufacturing industryRss performance, is the efficiency of machinery used. For smooth and continuous operation of machines, adequate lubrication is a pre-requisite. In short, the demand for industrial lubricants is influenced by the economyRss and industrial productionRss overall growth trends.

The governmentRss focus and encouragement towards local manufacturing (Atmanirbhar Bharat) and the RsMake in IndiaRs initiative are set to drive the demand for industrial lubrication and also India can be an Export hub for the world for manufacturing products also. In addition, the government is also promoting the expansion of renewable energy infrastructure especially the wind turbines that are installed to generate electricity using wind energy. With the increase in wind energy generation capacity, the demand for gear oil is anticipated to grow. Similarly, the countryRss heavy equipment usage needs have increased as construction and mining industries have grown. As the use of such equipment increases further, the demand for industrial lubricants will also increase. The need for agricultural equipment has risen in India as the sector has been undergoing continuous modernisation.

Infrastructure Segment

In this segment, lubricant products are used in both on-highway vehicles as well as off-highway construction equipment. Prospects of this segment depend on the progress of the infrastructure sector in India.

The vast Indian infrastructure segment comprises urban development and the real estate segments. The urban development segment broadly consists of urban infrastructure, ports, irrigation, civil aviation, roads (highways and bridges), railways, shipping, coastal waterways, oil and gas refineries, water transportation and other segments. The ambitious National Infrastructure Pipeline (NIP) has set forth in motion IndiaRss target to achieve $5 trillion GDP by investing over $1.4 trillion in the infrastructure sub-sectors.

Global industrial activities are still seeing the effects of the COVID-19 pandemic. While the pandemic impacted Indian industries, there has been significant improvement in FY 2021-22. Strategic and gradual unlocking of the economy, good rate of vaccinations, improvement in consumer demand, continued policy support towards industries by the government in the form of Aatmanirbhar Bharat Abhiyan and PLI schemes, and further reinforcements in FY 2021-22 have led to an upturn in the performance of the overall industrial sector of the country. Initiatives such as the National Infrastructure Pipeline (NIP) and National Monetization Plan (NMP), among others, have boosted infrastructure investment.

Impact of Raw Material and Exchange Rate Movement

Base oil is one of key our raw materials, and the prices of base oils depend on crude oil prices, and the fluctuation of prices has an impact on our margins. The uncertainty brought on by the pandemic and the Russia-Ukraine war impacted various commodities across the globe. The Brent Crude oil price, which forms the bulk of the Indian crude oil basket, has hovered between $105-106/bbl since April 1st, 2022, after having risen above $125 in the first/ second week of March from ~$95 just before the Ukraine crisis. The price of Brent is forecast to average $100/bbl in 2022, a 42% increase from 2021 and its highest annual average since 2013. Prices are expected to fall slightly to $92/bbl in 2023 but will remain well above their 201621 average of $60/bbl. Higher prices reflect the marked reduction in Russian exports and continued growth in oil consumption in advanced economies, despite the recent price increases. In addition, there have been continuous increase in additive costs, packaging and other inputs due to overall inflationary pressures.

The Indian rupee movement against the dollar was very volatile during the year, and it depreciated to an all-time low of T78.97 per dollar in June 2022. The rising crude oil prices and withdrawal of money from the Indian markets contributed to the volatility. This, in turn, has put further pressure on all imported raw materials.

For us, at Gulf Oil, our raw material prices have also risen due to the above factors. We have continuously monitored our margin management strategy through these inflationary times. We announced series of price hikes in retail segment through the year and took up price increase discussions with our B2B and OEM customers (mostly linked to price variation clauses) regularly to pass on parts of these increasing costs. However, our overall margin remained largely under pressure during the year. We are mitigating forex movements by adopting a hedging policy.

Company Overview

Gulf Oil Lubricants India Limited (Gulf Oil), a part of the Hinduja Group, is one of IndiaRss top three private-sector lubricant firm. Our business is divided into automotive, industrial, and exports. We offer products such as automotive and industrial lubricants, greases, Adblue?, and 2-wheeler batteries, among others. Our parent Gulf Oil International, owns the Gulf Oil brand, which has a presence in over 100 countries and is known for its rich history and affiliation with the world of motorsports. Manufacturing and marketing a wide variety of over 400 performance lubricants and related products for all market categories is the Gulf Oil International GroupRss core activity.

We have a solid and extensive distribution network with more than 75,000 touch points in India, including physical and digital platforms. We have a powerful brand which is among top 3 lubricant brands in the country.

We also have developed and nurtured relationship with more than 25 OEMs in India and several hundred B2B customers including many marquee names. We operate two cutting-edge manufacturing facilities in India, one in Silvassa and the other in Ennore, Chennai. These plants produce high-quality lubricants for all customer / consumer segments for India and export markets. Our Global R&D centres of which a large base is in India also works ahead of times to provide technologically advanced products.

Competitive Strengths

• Fastest growing lubricant player, consistently

outperforming the industry, growth rate y-o-y by 2-3 x over the last decade

• Strong pan-India distribution network reaching even the remote parts of the country

• Comprehensive, wide, and updated product portfolio across automotive, industrial, and marine applications with approvals from bodies such as API, JASO, ACEA, and leading global OEMs.

• Superior technology and continuous innovations to produce world-class lubricants

• Creation of a strong positions in the Diesel Engine Oil and 2-Wheeler Motor Oil markets by pioneering the Rsextended drain intervalRs value proposition. Long Drain products also benefit the environment by lasting longer.

• Focus on growing passenger car & industrial portfolio.

• Long-term partnerships delivering value propositions with key OEMs and B2B clients such as Ashok Leyland, Mahindra, Swaraj, Bharat Benz, Bajaj, Schwing Stetter, Piaggio, L&T, JSW and others.

• In terms of brand awareness, buying consideration, and other factors, the Gulf Oil brand is among the top three lubricant brands in India.

• Long history and ties to prestigious motor sports and other sporting organizations such as the McLaren Formula 1 Racing, Manchester United Football Club and the Chennai Super Kings (CSK) IPL Team etc. Long standing association with our brand ambassadors

Mr. M.S. Dhoni & Mr. Hardik Pandya has been a key success factor & added strength in our brand building.

• A growing 2W Battery business.

Manufacturing Capabilities

Silvassa plant

• Lubricants manufacturing capacity of 90,000 KL per annum

• AdBlue? manufacturing capacity of 12,000 KL per annum

• Dedicated manufacturing facility for specialised metal working fluids having capacity of 6,000 KL commissioned in FY2021-22

• Key certifications include:

- ISO 9001:2015

- ISO 14001:2015

- ISO 45001:2018

- IATF 16949:2016

- License to use the trademark AdBlue? provided by VDA QMC Germany

- BIS Certification marks license as per IS17042: Part I:2020

- NABL accredited QC lab with Standard ISO/IEC 17025:2017

• World-class fully automatic PLC-enabled blending operations

• High-speed end-to-end fully automatic Filling Machine

• Fully automatic Blow-Moulding machines including Recycler

• Fully Automatic Storage and Retrieval System (ASRS)

• Robust Safety and Disaster Management Systems and supports

• Installed and commissioned rooftop solar panels

• Advanced and fully equipped quality control laboratory

• Plant and exports approved by many Indian and global OEMs

• Awarded Runner-Up at RsThe Machinist Super Shopfloor Awards 2022Rs in the RsExcellence in Manufacturing-LargeRs category by Times Publication Group

Chennai Plant

• Lubricant manufacturing capacity of 50,000 KL

• Fully Automatic AdBlue? manufacturing capacity of 18,000 KL commissioned during FY 2021-22

• Key certifications include:

- ISO 9001:2015

- ISO 14001:2015

- IATF 16949:2016

- ISO 45001:2018

- IGBC Gold Certification

• State-of-the-art blending technology from ABB France- Simultaneous Metered Blender (SMB), Automated Batch Blender (ABB), completely piggable manifold, Drum Decanting Unit (DDU), all integrated by Lubcel TM Manufacturing Execution System

• Advanced Automated Storage and Retrieval System (ASRS)

• A high-tech firefighting & disaster management system

• 100% provision for solar energy for manufacturing, grey water recycling, rainwater harvesting and natural lighting through the day

• Advanced Quality Control Laboratory

• New global R&D Centre-GulfRss biggest facility globally

• Plant approved by many Indian and global OEMs

• Customer Experience Centre-the first of its kind in India

Opportunities and Threats

Business Opportunities Threats
Automotive Robust prospects of IndiaRss automobile sector and overall economic growth after 2 years of relative slowdown. Highly competitive sector
Possibility of aggressive pricing
Adoption of new emission norms and enhanced focus on fuel efficiency and discounts being offered by competitors
Evolving technology as well as customer requirements Sudden and sharp volatility in prices of key raw materials
Significant potential to ramp up rural penetration of automobiles
Prolonged slowdown in domestic automobile sales
Scope to improve our market share across growing segments including PV, LCV, Synthetic categories.
Growth of EV sector might lead to slower growth in the lubricants
Expansion of our reach across various channels and geographies as our brand strength is quite robust.
sector after few decades. COVID cases increase can bring lockdowns and market shutdowns for some period.
Development of innovative products to adapt to changing market requirements
Shift in customer preferences from public transport to private transport
New-age customers with an evolving mindset and brand consciousness.
India can be and export hub for many categories given decent push for manufacturing by the Government.
Recent Vehicle Scrappage Policy to replace old fleets with new requiring better lubricants.
BS VI lubricants is also a good opportunity.
Industrial & Infrastructure Scope to deepen share of wallet with existing customers and new customers - direct and via distributors to increase overall market share. Any slowdown in industrial activity can impact growth.
Slower growth of the
Opportunity to participate in the exponential growth of roads and infrastructure in India infrastructure sector
Slowdown in Auto Ancillaries
Atmanirbhar Bharat will increase industrial push significantly Aggressive pricing strategy by competitors
Opportunity for entire lubricant management at customersRs plants
Inability to continuously work on new product segments.
New customer acquisition opportunities in both direct and indirect business as currently relatively lower market share in this.
Exports Potential to ramp up in existing markets and enter select attractive markets Any slowdown in economic activities due to global adverse events.
Chennai plant can cater to nearby countries more efficiently
Opportunities of exporting products branded by Indian OEMs to their export markets. High freight charges for exports and disrupted supply chain.
India can be an export hub for many products given recent push for manufacturing by the Government Unprecedented high volatility in the forex market

Business Review

Our focus is on growth and transformation by further enhancing our brand equity, innovative products and offerings, and leveraging our robust network relationship with B2B /OEMs and with committed and passionate employees. This is reflected in the yearRss performance, where we continued to report excellent y-o-y revenue growth of 32.6% despite many challenges throughout the year. We saw an increase in market share in both B2C and B2B segments by delivering a yet another double digit volume growth during the year. This increase resulted from our tremendous growth in the Industrial/B2B segment,

OEM Franchisee Work Shops (FWSs) and customers in the infrastructure sector.

We continue to invest in brand building and driving a strong consumer value proposition for our sub-brands in each segment. By going more vocal for local we are engaging with our customers with a region-specific approach showcased in our engagement activities.

As a result, we are seeing improved demand pick up, including in rural, which lends the visibility of continued growth momentum. We are also focusing on improved customer satisfaction, creating more value, and ramping up digitisation, customer connection, and enhanced supply chain capabilities to bring more width and depth to product availability by driving distribution further.

Automotive Segment

We have developed a wide range of engine oil, gear oils, greases, Adblue? and specialities for bikes, scooters, cars, light and heavy commercial vehicles and tractors.


In spite of the challenges faced by the segment due to lockdowns mainly in the first quarter, there was gradual recovery as retail markets started opening especially showing high growth in personal mobility and the Commercial Vehicle Oil (CVO) segment. The growth was a result of the undertaking of strong marketing initiatives. In addition, the better margin is being contributed from the sales of our Passenger Car Motor Oil (PCMO) segment as urban centres started showing increasing traffic in return to normalcy. Our retail outlets stood at 75,000+, over 300+ auto distributors, and 30+ depots. In addition, we started to re-energise our independent workshops where we provided services through our 2000+ Car Stop and 8000+ Bike Stop locations during the year. We are also catering to the rural markets through Gulf Rural Stockists (GRS) at 1000+ locations. In conclusion we are successfully growing our pan-India distribution network by 10-15% annually.

Personal Mobility

We launched a limited-edition sports pack range across the Motorcycle and Passenger car segments featuring all o our sporting associations - MS Dhoni, Hardik Pandya, and Chennai Super Kings. With the introduction of Ultrasynth X Plus we targeted the high end passenger vehicle segment

We continue our relationships with service aggregators such as Zomato, garage aggregators, garage cum service aggregators, multi brand car service networks and e-commerce through Amazon and Flipkart.

Many such initiatives for brand and product promotions helped us grow this portfolio in a market, which has felt pressure during the year due to lockdowns, slower rural offtake etc.

We are gaining market share in Southern India in personal mobility also with a segment wise regional approach.

Commercial Vehicles

The diesel engine oils for commercial vehicles and tractors saw very good volume growth, as we increased market share in both B2C and B2B segments. In the Commercial Vehicle Oil space, we targeted Light Commercial Vehicle (LCV) owners for our product Gulf Superfleet Turbo Mini through the digital medium for the first time. The rising activities in the construction segment increased the sales of commercial vehicles and the demand for DEO. We have established ourselves as one of the leading top 3 players in the replacement markets.

Agri Segment

The second wave of COVID-19 initially slowed down the business in rural areas and for the Agri segment as farming activities, and networks were largely impacted. As the impact lowered, we undertook various targeted BTL, distribution and customer acquisition initiatives to grow ant retain our consumer bases in all key sub-segments and set up the platform to improve sales further. We launched a retail display contest for agriculture-related products like tractor engine oils, which received an enthusiastic response from our trade partners, with hundreds of retailers putting up displays of the packs and POSM (point- of-sale-material). This helped grab consumersRs attention right at the beginning of the agriculture season when tractors are utilised to the maximum across farms.


This is a complimentary offering to CVO mainly while its usage is also mandatory in all diesel BS VI vehicles. Its a water based solution which provides environmental benefits by reducing NOx from gases emitted by vehicles. With our 2 Plants and pan-India manufacturing

arrangements, we are focused on delivering a very high quality Adblue to all our customers.


Over the years of operation in India, we have grown this segment from 2 to 25+ tie-ups. Our OEM business witnessed double digit growth in FY 2021-22. Our tie- ups with Ashok Leyland, Bharat Benz (Daimler), Force Motors, Mahindra, Swaraj, Bajaj, Piaggio etc. and many Industrial and Construction OEMs to supply their franchise workshops and factory fill continues to contribute to our overall business growth. We successfully managed to renew our existing contracts and secure new ones. During the year, we also entered a strategic partnership with International Tractors Limited (Sonalika), for supply of lubricants for Factory fill, their Workshop and Distribution Channel, and co-branded retail sales. We even started factory fill supplies to Hyundai Motors for some grades.


With the rise in sales of passenger vehicles and commercial vehicles and improved economic activities the demand for our diesel engine oils and the personal mobility oils are expected to increase. The rising demand for heavy-duty vehicles will eventually drive the demand fo diesel engine oils. We are working to further enhance our distribution network and our products portfolio for newer norms such as BS-VI and benefits of fuel economy etc. in the segment.

The Personal Mobility segment comprising the Passenger Car Motor Oil (PCMO) and the Motorcycle Oils (MCO) contributes to ~20-22% of our sales. Since the Pandemic struck, the consumer shift towards owning a personal vehicle continues, and the increased sales number of 4-wheeler can validate that. With increased sales of automobiles comes a higher demand for the PCMO. We have launched Gulf Ultrasynth X Plus, a fully synthetic car engine oil, to address the rising demand. With this product introduction, we continue our efforts to gain market share in the passenger car segment.

The Indian commercial vehicle industry has seen a significant increase in sales, and it is expected to grow further in FY 2022-23. This increase in sales was driven by the increased activities in construction, mining, and increased infrastructure spending by the Government. The opening up of markets and institutions also contributed to increased sales of buses. The Union Budget 2022-23 stressed on developing 25,000 kms of new highways, which will further push infrastructure spending, thus resulting in an increase in the sale of commercial vehicles. Also, some traction is being witnessed in replacement demand after a period of two years. This rise in sales

of commercial vehicles will drive the demand for Diesel Engine Oils (DEO). The DEO sales contribute to ~37-40% of our sales.

The OEM business saw an excellent growth in FY 2021-22. We are improving on every aspect and working towards not only serving our current esteemed OEMs better but also adding new OEM tie-ups for the business. We aim to achieve this by building a long-standing relationship with our OEM partners.

With the recent introduction of the vehicle scrappage policy by the Indian Government, the demand for higher quality lubricant oils is also expected to increase, which augurs well for us.

As the markets are fully open, post two years of pandemic, our theme is to “Re-establish Connect and Re-energize Growth” by bringing back the personal touch at all levels and rolling out extensive outreach programs to gain distribution which is key to growth in B2C segment. Overall, we continue to aim for 2-3x market growth which has been our past track record.

Brand Building Campaigns and New Launches

We launched our 3rd season of RsSurakshaBandhanRs for truckers. The overwhelming response from the trucker community has bolstered us to carry out the initiative at a larger scale. We helped the truckers with the first and second dose of the vaccine to ensure their sound health. As on August 22, 2021, i.e., by Raksha Bandhan, 10,555 truckers across the nation were administered a vaccine dose under this initiative, making this campaign a resounding success. This helped us build a deeper bond with the community.

We also manufacture and market Adblue? for the diesel engine, commercial vehicles and cars, which uses Selective Catalytic Reduction System technology, to reduce emissions from the exhausts. Gulf Oil has been one of the pioneers in this diesel exhaust fluid in India and now we have our own worldwide VDA licence. With our state-of- the-art manufacturing and testing facilities in Silvassa and Chennai, we ensure that the best quality AdBlue? reaches our customers. Thus, helping bolster the trust in our brand. This product category is expected to grow significantly in coming years.

Industrial & Infrastructure Segment

FY 2021-22 proved to be an excellent year for the segment wherein the segment achieved its highest revenue. We further look forward to increasing our market share in industrial segment with a special focus on steel, metal working, textile sectors and also focusing on increasing our customer base with direct sales and industrial distributors.

Currently, our industrial network includes 200+ direct industry accounts and 65+ industrial distributors who supply our products to small and medium industries and users. In addition, we have a dedicated team that is responsible for catering to 500+ marquee customers at 3000+ sites in infrastructure, mining and port segments and this segment has shown consistent growth year after year for us.


We are continuously improving our supply chain, technical support, and management process, which is enabling us to gain an edge over competitors. The industrial segment proposes high potential for growth for us as we have relatively lower market share in this. This sector will act as a catalyst for nationRss growth and drive-up significant demand for lubrication need in the segment. With Government of India planning to spend significantly on building infrastructure over next decade, infrastructure segment has huge potential for lubricant growth for us.

Battery Business

The Battery Business saw de-growth by 24% due to the global supply chain disruption and bottlenecking of materials, which eventually led to stock unavailability. We sold 9.9 lakh units in FY 2021-22 compared to 14.2 lakh units in FY 2020-21. At the end of FY 2021-22, the pace of the business started to pick up compared to the first

three quarters. However,this lead to our increased focus on diversifying and developing our vendors base in India and fast track our localisation efforts. We also moved away from traditional database systems to newer systems for better stock visibility and improving on inventory management and servicing. We are implementing systems to track battery life cycle to ensure better battery management and servicing, which would eventually lead to better battery disposal practices at the end of its life.


We are optimistic about the future, and with the expected increase in two-wheeler sales, the demand for the segment is expected to rise. We are strategically investing in the business and developing our capabilities to offer excellent quality batteries with localised production to serve our customers better and rapidly ramp up our market share in 2W retail battery segment.

EV related initiatives

While its in very nascent stage in India, we are closely looking at all the value chain segments in EV ecosystem to look for areas where we can play based on strengths of our brand, distribution powers and OEM relationships. We have made two moves already by investing and partnering with Indra Technologies, UK who are into manufacturing of car chargers and Techperspect (Electreefi), a SaaS company providing software for EV Charging/ Battery swapping.

Risk Management

We have a risk management policy that comprises corporate risk, operational risk, financial risk, human resources risk, and legal and compliance risks. Our risks and mitigation strategy are summarised in the following table:

Risk Mitigation strategy Key stakeholders
Slowing demand in key business segments Some of the segments we operate in are cyclical, exposing us to volatility in demand. Overdependence on any of these segments, slowdown in demand, along with rising competitive intensity can affect our performance. We are focusing on achieving an optimum mix of products and business segments to continue to generate better margins and high growth. Business functions
Constant upgradation in technology Technological upgrades are disrupting businesses across industries with an increasing focus on achieving higher efficiency and launching environment-friendly products. Any delay in adapting to these trends can adversely affect our performance. We track these developments regularly and respond to them proactively. Our products imbibe superior and latest lubricant technology in line with global standards. Gulf has been, in fact, pioneer, in launching some of the superior quality long drain products in Indian markets. Technology, Global R&D
Rising prominence of electric vehicles Growing acceptance of electric vehicles around the world could have some bearings on the demand for lubricants. In India, though, broad based adoption and penetration of electric vehicles is still quite some time away given the issues around infrastructure for maintaining/charging them, high cost, limited government funding and selective regulatory push. Our perspective is that the overall lubricant demand is sizable and will continue to grow in India. We are increasing overall market shares across the core lubricant segments in India, including looking at higher growth rate in industrials and increasing specialty products in the bazaar market. We are also establishing a robust diversification strategy to capture opportunities related to allied products and electric vehicles value chain.
Our inability to diversify in a timely manner can put some segments of the business to long-term risk. Initiatives taken by Gulf Oil International to develop EV fluids and diversification into allied business areas will also help mitigate this risk. All stakeholders
Volatility in base oil prices and the INR Sudden, adverse movements in crude oil prices and consequently in base oil prices could adversely affect our profitability. We have more imports as compared to exports and hence, we are vulnerable to adverse movements in the INR. Continuously increasing additive prices also poses a threat to profitability. We have put in place a robust hedging policy designed by forex experts, which we monitor closely to make timely corrections, if needed. We are also increasing exports to partially have natural hedge. We established several options to source raw materials and are focused on adding new vendors to keep imported pricing under check. We are closely working with additive companies and customers continuously for better formulations. Procurement and Finance
Inability to maintain robust IT systems Any delay on our part in maintaining and upgrading high quality, timely and reliable MIS systems can affect our decision-making process. Delay in adopting digitalisation can impact customer satisfaction. We are adopting best-in-class, digitalised solutions across business segments to stay ahead of the curve and deliver superior service to our customers and enhance customer experience. Information Technology
Inability to keep teams motivated Employees with low morale cannot contribute to our success. Besides, they also tend to change organisations frequently. Such a scenario can affect our performance. We are committed to providing a growth- oriented environment for our people. We undertake several initiatives to motivate, train, retain and attract talent and have well- defined people policies in place with equal opportunities for all. Board and Human Resource
Weakening of brand reputation Weakening share of voice and fall in brand recall is a key risk and can affect our prospects and ability to gain market share. We invest continuously in strengthening our brands, improving brand scores, and creating high recall. We also undertake brand tracking exercises regularly. We strive to innovatively leverage our brand assets and brand ambassadors, in India and globally, to enhance visibility among customers. Marketing
Inability to comply with regulations and/or maintain high levels of governance Any violation of regulations causes reputation risks and impacts our ability to do business, besides affecting valuations. Weaknesses in tracking regulations, enforcing compliance and audits can lead to breaches and loss of reputation. We follow strict adherence to all applicable regulations and best-in-class governance practices. Board of Directors, Legal and Compliance, and Finance

Human Capital

We are dedicated to taking the measures and engaging in activities required to establish a growth-oriented culture where our workers can acquire new skills and become future-ready employees. Policies such as the Code of Conduct and the Prevention of Sexual Harassment in the Workplace (POSH) instil confidence in our employees. In FY 2021-22, there were NIL sexual harassment complaints. We often communicate via town halls and numerous digital channels. Posters, danglers, team meetings, and e-mailers are included in our communication strategy. The employee intranet site is a reliable platform for employee involvement and connection.

We are continuously integrating digitalisation into our business activity and working towards improving our efficiency of employees. We have Employee Self Service

(ESS) platform that enables employees to conduct all their employee related actions. In addition, we have a robust RsAlign Strive Perform Inspire Reward EnableRs (ASPIRE), our web-based performance management system that enables managers and employees to conduct periodic performance reviews in fully digital mode.

Capability Building

Capability development is a continuous effort at Gulf Oil.

We design and administer regular training programmes in various formats, including classroom sessions via the Gulf Oil Training and Development (GOLD) Academy and online training sessions.

Functional skills are developed for all organisational departments and incorporated into several HR activities. With the aid of this competence framework, particular skill

development initiatives are also devised and executed.

This methodology enables us to identify any gaps and plan development initiatives proactively. We continue to teach personnel to apply new methods of working, which increases sales and facilitates the implementation of procedures by channel partners. In addition, the creation of internal trainers has been a major priority. Such internal trainers have effectively encouraged the new methods of working courses. Throughout the year, a total of 1042 person-days were logged for training.

Employee Stock Option Scheme (GOLIL ESOP 2015)

We believe 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. In view of the above, we have instituted the RsGOLIL Employee Stock Option Scheme, 2015Rs for our eligible employees. We have granted options as per the following vesting schedule or as per modifications approved by the Nomination and Remuneration Committee from time to time:

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 the satisfaction of vesting conditions, which can thereafter be exercised, resulting in the allotment or issue of our equity shares.

In addition, the Company has also initiated Cash Based Long Term Incentive Plan (LTIP) for few selected key employees at various levels, those who are not covered by ESOP plan.

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. Our total workforce stood at 585 as on March 31, 2022.

Internal Control Systems and Adequacy

Our internal control mechanism is designed to provide accurate recording of transactions with internal checks and prompt reporting, adherence to applicable accounting

standards, compliance with applicable statutes, policies and procedures, guidelines, and authorisations. Following the implementation of the Companies Act, 2013, we have 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 DirectorsRs Responsibility Statement. The IFC framework document supports the evaluation of the operative effectiveness of the controls consistently.

Through our own internal audit department, we conduct periodic audits at all locations and functions based on the plan approved by the Audit Committee. We bring 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 are submitted to the Audit Committee every quarter for its review and concerns, if any, which are then reported to the Board. The statutory auditors review the efficacy and adequacy of the internal audit function as a part of their audit procedures and has full access to all the reports and findings of the internal audit.

Financial Performance

Key Highlights

Gulf OilRss revenue increased by 32.6% y-o-y to P 219,164 lakhs. We achieved a Net Revenue of P 219,164 lakhs and PAT of P21,108 lakhs for the year FY 2021-22 as against revenue of P1,65,221 lakhs and PAT of P20,009 lakhs, respectively, in FY 2020-21 despite partial impact of 2nd wave of Covid-19 in H1 and spiralling input costs, a sign of significant resilience in our business model.

The Board of Directors have recommended a dividend of Rs 5.00 per equity share (i.e., 250 % on the face value of Rs 2.00 per equity share) for the financial year 2021-22, subject to the approval of members at the Annual General Meeting. The Company has recently concluded a buyback of 14,16,667 fully paid-up equity shares of the face value of Rs 2/- at a price of Rs 600/- per fully paid-up Equity Shares in cash for an amount Rs 85 crores and with the Buyback Tax of Rs 19.80 crores paid by the Company, the total cash outflow on account of buyback was Rs 104.80 Crores.

The buyback process was completed subsequent to the year-end on April 25, 2022, and 14,16,667 shares have been extinguished.

Year ended March 31, 2022 (Rs in lakhs) Year ended March 31, 2021 (Rs in lakhs) Growth % y-o-y (%)
Revenue 2,19,164 1,65,221 32.6
EBITDA 28,549 26,519 7.7
PBT 28,434 26,874 5.8
PAT 21,108 20,009 5.5
EPS (Basic) 41.89 39.86 5.1


Revenue stood at R 2,19,164 lakhs in FY 2021-22 from R 1,65,221 lakhs in FY 2020-21. Covid-19 (2nd wave) induced partial lockdowns created a slight economic slowdown in Q1. However, we achieved positive Revenue even in this period, supported by a significant recovery in economic activities from quarter 2 of the year and due to excellent volume growth of ~17% and series of price increases due to input costs going up resulted in Revenues growing by 32.6%.

Breakup of various cost items as a % of sales

Year ended March 31,2022

Year ended March 31,2021

Rs lakh % Rs lakh %
Sales 2,19,164 100 1,65,221 100
Cost of goods sold 131,208 59.86 88,896 53.80
Employee Benefit Expenses 11,678 5.33 11,646 7.05
Manufacturing & Other Expenses 47,729 21.78 38,159 23.10
Total Expenses 1,90,615 86.97 1,38,702 83.95
EBITDA 28,549 13.03 26,519 16.05
Other Income 4,419 2.02 5,206 3.15
Finance Costs 962 0.44 1,464 0.89
Depreciation/Amortization 3,572 1.63 3,387 2.05
Profit Before Tax (PBT) 28,434 12.97 26,874 16.27
Tax Expenses 7,326 3.34 6,865 4.16
Profit After Tax (PAT) 21,108 9.63 20,009 12.11

a. Cost of goods sold

Cost of goods sold increased by 47.60% to R 131,208 lakhs in FY 2021-22 from R88,896 lakhs in FY 202021, mainly due to a sharp increase in base oil prices which is key raw material for lubricants manufacturing and significant increase in other inputs like additives etc. As a result, cost of goods sold as a percentage to Net Revenue has also increased from 53.8% in FY 2020-21 to 59.86% in FY 2021-22.

b. Manufacturing and other expenses

Manufacturing & other expenses increased by 25.08% to R47,729 lakhs in FY 2021-22 from RR38,159 lakhs in FY 2020-21. The increase is mainly on account of an increase in Advertising and Sales Promotion by R371 lakhs, an increase in Selling and Marketing Expenses by R5,426 lakhs, increase in freight & forwarding expenses by R2,667 lakhs.

c. Employee benefit expenses

Increased marginally by 0.27% to R11,678 lakhs in FY 2021-22 from R11,646 lakhs in FY 2020-21 mainly

on account of increase in usual increments resulting in increase in payroll cost by R226 lakhs.

d. Finance costs

Finance costs decreased to R962 lakhs in FY 2021-22 from R1,464 lakhs in FY 2020-21, which mainly includes a forex loss of R361 lakhs in the current year due to sharp rupee depreciation (post Russia & Ukraine war) as against forex gain of R358 lakhs in previous year. Also there was an increase in interest on short-term bank borrowings by R1,243 lakhs during FY 2020-21 due to higher working capital linked short term borrowings.

e. Depreciation/amortization charge

Depreciation/amortization charges marginally increased to R3,572 lakhs in FY 2021-22 from R3,387 lakhs in FY 2020-21, mainly due to depreciation charges on assets capitalized at both plant locations, depreciation charges on intangible assets capitalized during the current year & also due increase in depreciation in respect of the new right of use assets.

Balance Sheet

(? in lakhs)

Particulars As of March 31, 2022 As of March 31, 2021 Change
Fixed Assets 27,618 25,735 1,883
Other Non-current assets 6,904 5,937 967
Cash and Bank Balances 57,439 49,560 7,879
Current assets 87,281 63,321 23,960
Total 1,79,242 1,44,553 34,689
Equities & Liabilities
Share HolderRss funds/ Net Worth 104,270 86,938 17,332
Non-current liabilities 3,853 2,463 1,390
Short Term Borrowings 35,700 19,795 15,905
Current liabilities 35,419 35,357 62
Total 1,79,242 1,44,553 34,689

Capital Employed

During FY 2021-22, capital employed increased to ? 1,79,242 lakhs from R1,44,655 lakhs in line with surge in business operations due to normalcy post-pandemic and increase in working capital consequently.

Fixed Assets

Net block of fixed assets (including CWIP) increased by ^1,883 lakhs to R27,618 lakhs in FY 2021-22 from R25,735 lakhs in FY 2020-21, mainly due to the addition of tangible assets at both plant locations net of usual depreciation charge on tangible assets (PPE) and also major addition in “Right of Use Assets” net of amortization effects on “Right of Use Assets” due to Accounting Standard Ind-AS-116 on Leases.

Other Non-Current Assets

Other Non-Current Assets at the end of FY 2021-22 Increased by R967 lakhs to R6,904 lakhs from R5,937 lakhs at the end of FY 2020-21, mainly due to equity investment of ?1,450 lakhs made by us in TechPerspect Software Private Limited (TSPL) towards the acquisition of 3,699 equity shares representing 26% of Equity Share Capital (on a fully diluted basis) during the year. TSPL is a SaaS company (engaged in implementing software and IoT- based eMobility Solutions Electric Vehicle (EV)) segment.

Cash and Bank Balances

Cash and Bank Balance increased by R7,879 lakhs and stood at R57,439 lakhs at the end of FY 2021-22 as compared to R49,560 lakhs at the end of FY 202021, demonstrating a very healthy cash position & liquidity strength.

Current Assets

On account of increased revenues, higher inventory valuation due to rising input costs and liquidity challenges with channel / other customers, the Current Assets at the end of FY 2021-22 Increased by R23,960 lakhs to R87,281 lakhs from R63,321 lakhs at the end of FY 2020-21.

The overall inventory increased by R9,979 lakhs to R47,630 lakhs in FY 2021-22 from R37,651 lakhs in FY 202021. Trade Receivables increased by R10,697 lakhs from R18,896 lakhs in FY 2020-21 to Rs29,593 lakhs in FY 2021-22. Other Current Assets increased by Rs 3,214 lakhs from Rs 5,822 lakhs in FY 2020-21 to Rs 9,036 lakhs in FY 2021-22.

Net Worth

Net Worth at the end of FY 2021-22 increased by Rs 17,332 lakhs to Rs 1,04,270 lakhs from Rs 86,938 lakhs as of FY 2020-21.

Increase in Share Capital by Rs 2 lakhs in FY 2021-22 at Rs 1,008 lakhs from Rs1,006 lakhs as of FY 2020-21, mainly due to the issue of 1,17,746 shares under equity stock options.

Other Equity has increased by Rs 17,330 lakhs in FY 202122 at Rs 1,03,262 lakhs from Rs 85,932 lakhs as of FY 202021, mainly on account of Profit After Tax of Rs 21,108 lakhs for FY 2021-22 and net off payment of Final dividend for FY 2020-21 amounting to Rs 4,538 lakhs.

Non-Current Liabilities

Non-Current liabilities at the end of FY 2021-22 increased by Rs 1,390 lakhs to Rs 3,853 lakhs from Rs 2,463 lakhs as of FY 2020-21, mainly due to an increase in lease liabilities

by 71,490 lakhs & decreased in deferred tax liabilities by Rs 72 lakhs.

Current Liabilities (Including short term borrowings)

Trade payables have decreased by Rs 1,907 lakhs to 727,074 lakhs in FY 2021-22 from 728,981 lakhs in FY 2020-21.

Short term borrowings have also increased by 715,905 lakhs at the end of FY 2021-22 at 735,700 lakhs over previous year FY 2020-21 of 719,795 lakhs due to higher working capital as explained above.

Further, we have a net cash (net of short-term debts) of 721,739 lakhs as at March 31, 2022 as against net cash balance of 729,765 lakhs as of March 31, 2021 thus demonstrates that we continue to remain Net Debt free as at March 31, 2022.

Increase in other financial liabilities by 7294 lakhs to 71,929 lakhs in FY 2021-22 from 71,635 lakhs in FY 2020-21.

Increase in other current liabilities by 71,314 lakhs mainly due to increase in statutory dues payable by 7373 lakhs & also increase in Contract liabilities by 7991 lakhs.


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 flow

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

As of March 31, 2022 As of March 31, 2021
Net cash generated from operating activities 2,373 19,350
Net cash generated/(used) in investing activities 1,731 2,952
Net cash generated/(used) in financing activities 9,815 27,724
Net change in Cash and Cash Equivalents 5,712 5,422
Financial Ratios
Key Ratios As of 31 March, 2022 As of 31 March, 2021
Debtors Turnover (Times) 9.04 8.79
Inventory Turnover (Times) 3.08 2.52
Interest Coverage Ratio (Times) 17.41 15.80
Current Ratio (Times) 2.03 2.05
Debt Equity Ratio (Times) 0.34 0.23
Operating Profit Margin (%) 11.63 14.00
Net Profit Margin (%) 9.63 12.11
Return of Equity (ROE-%) 22.08 24.54

Associate Company

During the financial year 2021-22, TechPerspect Software Private Limited (“TSPL”) became as associate of the Company.

With an objective to enhance the CompanyRss presence and capabilities in the e-mobility, the Company has acquired 26% of the paid-up share capital (on a fully diluted basis) of TSPL during the financial year 2021-22. The acquisition has been completed on March 10th, 2022, making TSPL an Associate of the Company with effect from the said date.

Accordingly, the Company has first time prepared the consolidated financial statement. The performance and financial position of the Associate company for the financial year ended March 31st, 2022 in the prescribed format AOC-1 as per Annexure-II to the BoardRss Report.