Overall growth in demand for auto lubricants will not be affected for 10-15 years: Gulf Oil

'For the year 2020-21, the lube industry is estimated to have degrown (negative growth) close to double-digit in volumes whereas Gulf Oil has achieved similar volumes as 2019-20'

By:June 22, 2021 1:38 PM

The third wave of the coronavirus pandemic took a toll on several industries alike across segments, including the automotive lubricants industry. We got in touch with Ravi Chawla, MD & CEO, Gulf Oil Lubricants India to learn about how one of the key players in the market is dealing with the situation risen from COVID-induced restrictions. Moreover, Chawla also tells us that now with the popularity of electric vehicles gaining speed, what does it mean for manufacturers like Gulf Oil and how will the demand for auto lubricants be affected in the future. Ravi Chawla also lets us in on the areas on which the company is focussing on, which include B2B, industrial, infrastructure and more.

Substantial growth in PAT has been reported for March 2021 quarter, what has been backing this growth primarily? Which segment does Gulf Oil attract the most customers from?

The Company has been progressing very well right from June 2020 onwards by overcoming the market closure challenges caused by the first wave and the teams have delivered increased volumes with a fantastic comeback month-on-month, quarter-on-quarter.

In these challenging times we have reported a record profit in Q2 and Q3. There has been an overall improvement in lubricant consumption in Q4 due to better economic and industrial activities. There has been good demand traction till the middle of March when the second wave started to show up in Western region states and the resultant lockdown in Maharashtra and parts of MP, Gujarat lead to some moderation on the business sentiments/achievements.

Despite these, both B2C & B2B segments of the company and all key product categories recorded good growth including in the CVO and Agri segments. B2B, OEM related and industrial businesses also saw strong growth and record sales in this quarter on the back of significantly improved manufacturing activities and in particular Auto industry productions

What has been the impact of the current COVID situation on the lubricants industry in India? Do you expect this period to cast a negative effect on revenues for FY2021-22?

For the year 2020-21, the lube industry is estimated to have degrown (negative growth) close to double-digit in volumes whereas Gulf Oil has achieved similar volumes as 2019-20, continuing our market share growth trajectory across all our focus segment at more than 2-3X industry growth rates, which has been a testimony to our consistent and resilient business model.

During this second wave, unlike last year, lockdown was imposed in staggered manner across the country. Therefore, there has been some movement in the market versus last year. We have undertaken margin management initiatives for both B2B and B2C markets due to sharp and sudden rise in input costs, it usually takes some time to have recovery of the costs. However, we are positive that we will maintain margin between 16-18% going forward. With ease in restrictions this month, we are expecting that the markets will attain normalcy as lubricants are semi-necessity necessity and there could be some pent up demand.

Also read: Autonomous vehicles hold potential to revolutionise farming, mining sectors & more: Tata Elxsi

What actions and measures is Gulf Oil taking to deal with challenges posed by the coronavirus-led restrictions?

We have a structured approach to identify demand, with a continued focus on costs, improving supply chain efficiencies, while keeping the safety of our employees and associates as topmost priority. We are introducing value-added and competitive products to keep up with the market demands.

Our team works closely with our OEM’s, B2B customers, trade-partners, retailers, distributors and mechanics. I must say that the company is fully geared up for the current challenges posed by rising input costs and managing the 2nd wave of Covid19.

With the focus shifting on electric vehicles, what changes is Gulf Oil preparing for in terms of demand for lubricants?

We don’t see the overall growth of the lubricants demand coming down in the 10-15 years as personal vehicle and industrial segment continues to rise as the Indian economy will grow. While the long-term lubricants industry growth prospects remain intact, in the medium term, demand is largely dependent on vehicular movement, automotive, infrastructure and industrial activities.

Gulf being a strong player in the industry, especially in Bazaar segment, is well positioned to cater to the demand with our strengths in supply chain, brand and network. Our focus would continue to be on expanding our market share, providing distinct, need-based products, add more ’value’ and ‘premium brand’ conscious customers, and expand our distribution network across both physical & digital platforms. We are also focusing on increasing our market shares in the B2B, industrial, infrastructure and OEM segments in line with our segment wise strategies.

Besides the absence of engine oil and coolant that an ICE-powered vehicle uses, EVs will still require a set of lubricants. Will the rise of EVs bring a drastic change in business for the lubricant industry?

Engine oils consumption for the new Fully EV vehicles will come down, but the EV’s will requires coolants, transmission fluids. As the % conversion to EV will take time, the vehicle parc with ICE engines will continue to grow and be substantial for the lubricant industry.

Is Gulf Oil rolling out any new products after the lockdowns are lifted?

Gulf re-launched its flagship brand of Motorcycle engine oil as Gulf Pride 4T Ultra Plus with an upgraded product formulation that delivers longer drain, faster pick up and better protection, which is also BS VI ready. The CVP has also been upgraded from ‘Insta Pick-up’ to ‘Consistent Insta pick-up’.

The company also launched value-added products in the CNG segment for 3-wheelers under Gulf CNG Supreme+ brand & strengthened its presence in the coolant segment with the introduction of improved glycol-based coolants for passenger car segment, Gulf Kool Guard G48.

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