Gulf Oil Lubricants India Limited (GULFOILLUB) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and a very warm welcome to the Gulf Oil Q3 FY '22 Earnings Conference Call hosted by Yes Securities. [Operator Instructions] I now hand the conference over to Mr. Nitin Tiwari from Yes Securities. Thank you, and over to you, Nitin.

Thanks, Salim. Good day, ladies and gentlemen. On behalf of Yes Securities, I welcome everyone to Gulf Oil Lubricants India Limited's Third Quarter FY '22 Earnings Call. We have the pleasure of having with us today the CEO of Gulf Oil Lubricants, Mr. Ravi Chawla; and the CFO, Mr. Manish Gangwal. I will now hand over the call to Mr. Chawla for his opening remarks, which shall be followed by a question-and-answer session. Over to you, sir.

Thank you, Nitin. Good afternoon, good evening and good day to all of you. I hope all of you are well. Welcome to the Quarter 3 call. Let me start by sharing with you that for us as Team Gulf, it has been quite heartening for us to deliver the highest ever quarterly revenues of INR 600 crores for the first time. And of course, this has been achieved when the environment did have a lot of challenges in quarter 3. But we are happy to share that this growth has given us a market leading growth. And we have seen that quarter 3 has been similar to quarter 2 in terms of profits, but the volumes were higher at 36,000 KL in quarter 3, and that's 9% growth, which clearly shows market share gains for us when the market has been flat to minus 5%, minus 6% in various sectors. And definitely we have seen some challenges in the demand conditions while they improved for the B2B OEM segments and the B2C segments, some of them. We've seen that in the rural side, motorcycle oils and the agri lubricants, there was subdued demand there than what we expected. But certainly, we have seen the market share gains for Gulf which has gained and the reasons that we have seen is that also because some of the initiatives that we put in place helped us to reach these growths, some of the new customer acquisitions, OEM, for example, the franchisee workshop did very well. Industrial infrastructure did very well. We have seen very good growth in diesel engine oils and passenger cars, but motorcycle and agriculture are the two areas which we're hoping for growth. Overall with the mix we had, which is normally 60/40 for our B2C, B2B, that came down in quarter 3 to 55/45. But the numbers for B2C have remained the same as the previous quarter. Manish will highlight that, and what really affected the realization and of course the profitability was the segment mix as some bazaar sales saw lower offtake as explained in the rural economy. So that was the reason for that. And also, of course, the input costs that they have studied, we have taken all the prices up. So that's been very heartening for us. And we would also share with you that YTD 9 months, the volume growth is at 21%, revenue growth at 37%. And PAT has also grown in spite of the unprecedented rising input costs scenario. And these have been the heartening things for the quarter. And as we look at the markets, we are seeing that things are picking up even in the 2 sectors I mentioned. And I think for us also we have seen that with the price situation being stable, we look forward to the stable prices helping us to go to our margin levels provided the mix comes what we want. So all in all a very heartening quarter with the challenges. So we continued our brand investments, we continued to look at how because the sales team also could go out to the market and do a lot of activations. In December, we had a display contest for our motorcycle oil, which really made December do very well. So number of initiatives on the ground, which have helped us to deliver these highest revenues, and also good profits this quarter. I'll hand over now to Manish to take us through some of the other things and some of the other events in the company. Manish?

Thanks, Ravi. Good afternoon, everyone. As Ravi mentioned, the quarter saw for the first time INR 600 crores top line to be crossed, which was the highlight for us. And of course, we have been able to deliver same PAT as September quarter. Last year, December quarter had a lot of pent-up demand and the B2C sales volume was quite high, which as Ravi mentioned was to some extent moderated in this quarter, so that pent-up demand and the mix helped us deliver the record quarter in last year December. So from the base, of course, the quarterly profits are looking 8% lower. But on a Q-o-Q basis, we have been stable in spite of some challenges on the input cost side. Overall, I think working capital also, as we highlighted in the previous call, there was a pressure on the working capital because of the rising inflationary trend and nearly a series of price increases taken which increase the realization. So this time, this again, we have been able to realize our full price increases in this quarter, which you can see the per liter realization has gone up even on a Q-o-Q basis. Overall, we continue to remain net debt free. We carry more than INR 500 crores of cash on the balance sheet, which also -- and the kind of confidence the Board has in the earnings visibility going forward for a sustainable period of time, the Board was happy to consider and reward the shareholders by way of announcing the buyback, which is at 26% premium to the closing price. That decision I think has been made in the overall interest of shareholders, which we hope investors will appreciate. With these opening remarks, we would like to move to Q&A, and over to you, Nitin. Thank you.

[Operator Instructions] First question is from the line of Rohit Kadam from Entrust Family Office.

Couple of questions. Firstly, if you could elaborate the thinking on the buyback here and if promoters will be participating in this. And do we also expect more buybacks in the future? Because even after you will have a fair amount of cash build up on the books.

Yes. Thanks for the question. I think the buyback has been announced for all the shareholders. It is through tender route, which is considered the most transparent way of returning cash to shareholders. And yes, promoters have also found the intention to participate in the buyback. Whether we will -- there will be future further buybacks or not, it is a Board decision of course. But our philosophy has been to return cash to shareholders. We have been saying consistent dividends. Now buyback has been announced. We are also looking at various investment opportunities currently in electric vehicle space, EV value chain and allied activity, allied areas. So depending on the investment plans of the company and future growth, all options will be considered by the Board as and when appropriate.

Sure. That's very helpful. And the second question is, can you comment on the market gains in what -- which segments are we seeing this share gain? We've seen consistent share gains I think over the last few years, but which would be the major segments where you're gaining market share. Is it 2-wheelers, 4-wheelers or CV oil?

Yes. So overall, the market is, we would say, minus 5%, minus 6% also due to COVID, the retail markets have been closed. So in terms of our growth, what we are seeing across segments. Certainly, our passenger car motor oils are growing very well. So there, there is a gain happening. Diesel engine oils, we have been leading in some segments and the growth is coming well. Industrial B2B segments, infrastructure, these are the other pockets which are there. And the OEM franchisee workshop where we have a sizable presence with a lot of OEMs, our growths are certainly ahead of what we see in the industry. Also I would say the organized sector, which did very well when COVID came first in 2020, even in 2021, we will see organized sector products, which have come in OEM side also in terms of the higher grades that have launched, that has helped. So market share, I would say, in most of these segments. Motorcycle is one segment where the consumption has come down, especially rural. So there, I would say it's quite an intense competitive area. And agriculture demand itself came down in '21 and what we see now also in the seasons. So there again, I would say, a flattish sort of thing, but if you look at the OEMs we have, even on the agriculture side, they have done well in some months. So all around growth for us and market share gain, most of it end of year, we would know where we are end of March, but I would say good market share gains because if you have grown around 20% when the market is at flat to minus 5%, the gain is certainly there across segments.

Sir, allow me to slip in one more on cumulative price hike this year, which you've taken?

Sorry?

Sorry, we couldn't hear you.

What would be the cumulative price hike you all have taken over the last 3 or 4 quarters?

So there have been a series of price increases in various segments. In retail segment, we have taken at least 4 price increases over the last 8, 9 months. And in B2B, it is a bit a negotiation process. So it happens. In OEM business, mostly, it is formula-driven quarterly or half yearly formulas are there. So with every quarter or half year, the price increase happens based on global base oil indices. But across sectors, the price increases have happened. Yes, so if you say 8 to 9 months, there are 3 to 4 increases.

Understood. I would presume totally this would be amounting to high teens on a Y-o-Y basis.

Yes, it is.

It has covered the -- all the costs are covered, but currently, the mix is kind of -- a few of the mix has not happened the way it depends on the market demand. Otherwise, most of the cost increases are now into the price, of course, and we'll have to wait and watch what happens next.

The next question is from the line of [ Yash Singhi ], an individual investor.

Yes. Just a couple of questions. Firstly, what was the reason for a substantial increase in other expenses and like if you could please throw some light on advertisement and below-the-line promotional activities during the quarter?

Other expenses include, of course, as you mentioned, A&P, advertisement and promotion. That has also gone up because now that markets have started opening the activities where their ATL/BTL has been done. So -- and of course, the freight rates have gone up with the kind of increases in the diesel prices, so some of the freight increases also have come in. So -- and of course, one more important is the royalties to OEMs. So as and when the OEM share goes up, OEM component goes up, the OEM royalties go up and hence that also is a part of the other expense.

So there is a lot of servicing happening in the OEM workshops where we have tie-ups. So as you see, the older vehicles and of course vehicles servicing is more there. So that is also where the -- it is a good sale. And of course, that has also helped overall for us also. But the royalty payment goes up there as the volumes were.

Okay. And so what is the split between OEM and third-party service centers currently?

Overall, we -- our franchisee workshop services are in the part of B2C, which Ravi mentioned this quarter was 55% versus B2B 45%.

Okay. Okay. And would you see any impact of chip shortages in the coming quarters?

You see chip shortages impact OEMs to manufacturing. Our factory field component of the total business is less than 5% or around 5% today out of the -- and we are 95% replacement market. So directly it doesn't impact us because our factory fill business is only 5% of the total volume.

The next question is from the line of [ Mohit Kumra ] from [ Kumra Investment Company ].

My question is regarding -- in a way, it is a follow-up of the first question, which was given. So ever since you were listed in 2014, you have done excellently obviously, anybody can see. But your return on equity is falling consistently. It started off at like 40%. Now even after this buyback, plus if we assume that you continue your dividend, 35%, whatever. We are still in the very early 20%s. So does your management or your promoters have a range or a line in the sand regarding return on equity? Whether can your investors expect you to maintain a respectable 20% to 25%, is that in your mind? And another part of the same question is that organically speaking, do you have any investments organically speaking in the next 2 years, 3 years, 5 years to increase capacity or something? Is that in your mind?

On the first part, you see as a growing company when your investment goes up in working capital, our top line has delivered a consistently outperformance to the market, your deployment in working capital, et cetera, is needed in line with the top line growth. And that's where you will see the growing companies the percentage still of ROE, ROCE slightly keeps coming down to some extent. Of course, it is still in a high teens or about that, which is a decent one. But the effect of buybacks, et cetera, is also to increase that as the return ratios to improve over a longer period of time. Of course, the earnings -- as the earnings go up, it will also be here. Because last 2 years, if you see our profits have been because of COVID impact, the markets have been shut down every year to at least 2 months. And that has kept our profit impact profit also in a bank, which we feel when the market improves and we deliver improvement in profit, the ratios will further improve. Sorry, I missed your second question.

The second question was sort of a continuation. You have like INR 500 crores with you right now. Do you...

Okay. Yes, I got it. The...

Organic investments, are they required?

Understood. So we have 140,000 KL capacity in both our plants and that can be ramped up. These are on 2 shift basis. So we have enough lending capacity. We may have to do some sort of, I would say, balancing equipment, some filling lines, et cetera, to meet the increased space requirement from civil work, et cetera. But annually, we do not see more than INR 15 crore of CapEx in our current business for the next 3, 4 years.

Okay. Can I also just hook on to one of the points you were speaking about working capital. So your inventory is -- while the excellent performance by the company, you are growing very well, but your inventory is growing at a much faster rate. Now this is because of higher absolute levels or your inventory is growing at a much faster rate than your sales or profits or whatever. Why is this?

You are referring to the September figure of inventory?

Not specifically. But over the years, over the last 5 years, let's say.

Yes. So you see, one of the reason is that we started our second plant in Chennai 3 years ago, 3, 3.5 years ago. So with the second plant, you have to keep every grade of base oil there, you keep some finished goods inventories there to cater to the market. So that led to an increase in that year, which then stabilized. And in the last 9 months, I would say, supply chain disturbances across. And base oil for India as a whole is mostly an imported -- a large part of it is imported. And to mitigate the risk of losing on inventories or in terms of stock availability, I think every player has stocked up more of base oil and other raw materials to meet up the supply chain disturbances. The shipment times have elongated, overall, there are challenges on the additive supplies. So to mitigate that, I think everybody has increased the inventory for a short term till the time global supply chain scenario improves.

Am I allowed to ask another question?

Sir, may we request you to come back in.

No problem. No problem.

The next question is from the line of Sabri Hazarika from Emkay Global.

So I just have one question. This is to your EV investment. So the first investment Indra, it was that company was into home charging, is that right?

Yes. It is a car charging thing mainly catering to the home charging, but of course it can be -- because this is a slow charging, it's slow chargers. So ideally suited for home or destination charging.

Okay. And this second -- the recent one is basically into software solutions, right? Charging only, is that right?

Yes.

Okay. Sir, how are you like -- I mean, how are you like looking into this whole thing? It seems like that even like acquiring companies to build some sort of an ecosystem. So can you give us some idea how you are planning to take this ahead? And how much involved Gulf Oil Lubricants India would be in the entire thing going ahead?

Yes. Basically, you see, we are looking at participating in the EV value chain as we mention -- we have been mentioning to all of you that over a longer period of time, we believe that we should be in that sector somewhere in some way across the value chain. And we have the strength of our brand. We have the strength of our OEM tie-up and our distribution reach, which we would like to definitely leverage in the EV ecosystem. And hence we are picking up things which can be integrated. For example, the recent -- yesterday's acquisition into a SaaS platform will help us localizing the Indra chargers platform or charger in a way where we can -- if integrated properly, it can be because the software requirements and things will be different for different countries. So that is one reason that -- and of course, we want to overall leverage our distribution expense, et cetera. So that is why we are building up that ecosystem, as you rightly said, by picking up the niche companies in those sectors where -- which can help us on a longer-term basis.

Okay. So just another question I had, so I'll just end at. You mentioned that your B2C share actually from Q3 FY '21 to Q3 FY '22 has actually fallen. It has fallen to around 55%. I think in Q3 FY '21, it was around 65%. So that basically points that your B2C volumes have actually seen a Y-o-Y decline. But I think last year, there was a major growth also during Q3 FY '21. So is that the right assessment that after it may have grown by close to like 20%, 25% and because of the pent-up demand, and now it has actually fallen by around 7%, 8%, is that the right assessment? Because of the reversal of this pent-up demand and going ahead again, will be like back to the normal growth?

Yes. So you see there was a pent-up demand in last year December quarter and that helped us to deliver record of performance there in terms of profitability. As you know, retail, if there is a good share of retail in the overall mix, it boosts the profitability. And the percentage of 65% coming down to 55% is changing the mix. But overall, we are not degrowing that sector per se in terms of numbers because the volume has gone up as a percentage, it is looking lower, but we have been sort of flattish, I would say flattish to marginal growth is still in B2C. Is that only because the overall volumes have gone up, the percentage have shown and then accordingly, the ratio of if you compare the per liter EBITDA, et cetera, then that shows a sort of slight decline. But overall, here there is no degrowth per se in any of the sectors -- segments.

The next question is from the line of [ Ankit Mahajan ], an individual investor.

So can you please [indiscernible] with the volume mix across the main like the 2-wheeler and the car, et cetera? And also the mix remains same in [indiscernible]?

So as we mentioned, our B2B volumes were slightly better this quarter. Overall, mix is roughly 20% is personal mobility, around 34% diesel engine oil. Industrial segments have gone up to 18%, which usually is around 15% and others are a similar range of around 28%.

Okay. Okay. And my second question is on retail lubricant. So what were the reasons for weakness in this segment during the quarter?

Retail you are saying, retail segment?

Yes, yes. Retail lubricant.

What is -- I didn't get your question. Sorry, can you repeat it?

Yes. The reason for weakness in that segment?

As we mentioned, you see the rural -- in this quarter, the rural economy and also agriculture demand of lubricants came down because last year, agricultural demand really peaked. As you can see in the tractor sales also, they started taking negative new tractor. So agri was lower. And in the rural, we saw even motorcycle, there was obviously some dip. I think these 2 are the factors where probably retail ratio didn't come through. But still, as Manish mentioned, they have still maintained their volumes and others have grown far ahead of them, diesel engine oils, cars, gear oils, other products have grown. So basically, it is -- obviously, demand there was even less than what we expected, but still good.

The next question is from the line of [ Hemal ], an individual investor.

What would be the battery revenue for this quarter?

Give us a moment, we will get back to you. Of course, as we have highlighted in our press release, this quarter, the battery performance because of the supply chain imbalances or challenge coming from -- because we do imported batteries, right? So far the localization we have not done, and imports were quite disturbed this quarter. So the performance of battery was lower this quarter. Around INR 13 crore is the top line for the quarter from that.

Are we still giving -- are we still going to focus on this battery business going forward in the way that we had envisioned 1.5 years, 2 years -- yes, so still seeing it as a growth cross-sell area?

Yes. Yes. We believe that it is -- it can give us a good share in the marketplace. And it has a synergy with our distribution and brand which has been the primary objective of going into this. We are now taking very -- because of the supply chain disturbances we have faced over the last 8, 9 months in this segment, now we have speeded up our localization efforts, and we will be taking aggressive stand on localizing the manufacturing.

Okay. My next question, sir, was on this January, February that we are in just on a ballpark, are you seeing improvement in your B2C channels or is it still very similar to what you observed in this quarter?

We will not be able to comment on an ongoing quarter, please.

No, just like not specific data, just -- is it a demand issue has been still existing? Is that -- what I'm asking, like, is it an issue overall ongoing or is it recovering now? Just any highlights you can throw on it on a high level.

This is a season for the lubricant. So it is something and every season also should start. So we are hoping for a good agri season also to come back because last quarter, the agri was not doing well.

Okay. I'm going to go back to the same point, somebody raised earlier about this inventory data. I understood your answer, but I just want to think about, is there an optimal inventory level that you would want to manage to like number of days and what I understood this during COVID issue that came about. But let's assume we take it out 2, 3 quarters down the line and COVID is on a back burner. Where do we imagine this inventory days to settle at, like, is there a number in mind and strategically, like where do we -- because I'm seeing some of your competitors doing -- still facing the same issues, slightly gone higher, but having far, far better inventory days and still managing the business. So I'm just throwing it out there that it may have risen during last 3, 4 quarters, but it is more of a bigger issue, which is coming out from several years, and I understand the factory starting, but still the inventory management has been just rising, just growing in one direction. So is there an optimal number that we have thought through where we should reach in the next 2, 3 quarters?

See, our gross working capital has been in the range of -- when the times were stable in the range of around 90 days, 90 to 95 days. That has been our range. Currently, it is at around 117, 115 days. I'm talking gross working capital. And of course, last September quarter, it had gone even around 120 days. So now we are at around 115 already, there is a 5-day reduction in the last quarter. And we hope to stabilize in a normal time back to 90 days around that gross working capital base.

Okay. Can I ask my one last question? Is that possible?

Yes, please.

Okay. So in the sense of the dividend policy that we have been having in capital allocation, is that going to continue ongoing? Or is that also now because of the share buyback maybe question or should we assume that its dividend policy stays as it is? Because I think the payout ratio has been gradually increasing over the years. Is that going to continue?

At this stage, we would -- we can only say that there are multiple ways of returning cash to shareholders and all the ways are open to return cash to the shareholders and subject to, of course, investment opportunities in the existing and new line of emerging opportunities in the EV space, et cetera.

The next question is from the line of [ Debarati Banerjee ], an individual investor.

Yes. Congratulations to the management for a good set of results. Sir, I have 2 questions. First, on the A&P spend. So can you give some number on the A&P spend for this quarter?

As I mentioned, it has slightly increased. So it is around 3% of the top line, which is an increased top line.

Oh, sure. My second question is on your battery segment. So I mean, any range -- any margin range that you can share on your battery segment?

You see battery for us currently is a very small segment. We are nurturing this. We are growing this and a lot of resources are being put behind this. So the current margins will not be a fair indication of what we are trying to aim and gain out of this segment. So once we reach a size and scale, it will be an appropriate question at that point in time.

Sure. One last question, if I can slip in. So can you just give some high-level numbers in terms of your volume and value share in terms of the lubricants market?

Sorry, yes, in terms of our market share, you see we are playing in the automotive and industrial, we are quite well-placed in the bazaar market, where we have close to 8%, 9% share in the diesel engine oil and motorcycle. The others are -- share is around 5% to 6% of the bazaar. Industrial, we are slightly lower at about 4% of the industrial markets. So this would broadly give you the shares that we have. And OEMs, of course, we are with the OEMs that we are there right from commercial vehicles to cars, bikes. There -- depending on the OEM, of course, the share differs based on whether we are the second supplier or 3 out of 3 suppliers. So I think all in all, if you take our share, you could take it as higher in the bazaar market in some segments and overall at a 5%, 6% level.

The next question is from the line of [ Manoj Oberoi ], an individual investor.

Sir, I've got 2 questions for you. Could you please help me with the utilization of the Chennai plant?

The Chennai plant utilization currently is at around 60% level.

Okay. And sir, could you please help me with the CapEx guidance for '22 and '23?

I answered this in one of the earlier questions. The regular CapEx will be in the range of around INR 15 crores to INR 20 crores.

Sorry for that. I may have missed earlier, sir. Also, the second question is that about our recent acquisition of the [ Electrify ], I know a lot of thought process must have gone into, but just wanted to hear from you what has been the strategic thinking behind the move, sir?

So I again answered this in the previous question that we are looking at participating in the entire EV value chain. And a SaaS platform is integral to some of the ecosystem and in creating charging infrastructure, battery swapping. Electrify already had a software on -- in these segments with an IoT-enabled platform, which is helping in the charging and battery swapping infrastructure in India. As you must have seen in our press release also, around 40% of all EV car owners today in India use some form of Electrify platform service in one way or the other. And hence, we -- as I mentioned, we want to leverage our strength of brand distribution reach and OEM relationships. And the SaaS platform by Electrify can be a very useful tool to scale up and provide ecosystem for even servicing the OEMs also, which we are already connected in the lubricant space, and as and when for some of the new EV OEMs also. So all this thought process is there in making a strategic investment in Electrify.

Yes. To add, we have also invested in Indra Renewables for the car chargers. So there is a connectivity there also for the software to play a role.

The next question is from the line of Mohit Kumra from Kumra Investment Company.

I wanted to understand something on a longer arc, like sort of -- I know you can't give me an exact answer to this, but how much of your business is actually exposed to electrical vehicles because the way the market is seating you and your competitors is like your business are going to fail in 5 years or 7 years. But how much after industrial -- commercial diesel, what is actually exposed to electrical vehicle, your total portfolio?

Yes. So we want to just assure you and all the people on the call that given the growth of the Indian economy, India being the third largest lubricant market, and you can check the reports of experts like Klein and others, there is going to be a continued growth of 2% to 3% in the lubricant market for the next 15 to 20 years. And because the penetration of vehicles is low, so there will be, of course, EV coming in, in various sectors as we know. There is a lot of momentum there. We can see that. But obviously, on the ground, the numbers are also there to see. There are challenges. So we have...

Hello? Hello?

Sir, just let me check the lines of the management. One moment. We have the line for the management reconnected. Mohit, you may want to repeat your question.

Yes. Mohit, I remember the question. Mohit, I remember the question. Can I continue answering?

Yes, please. Please do.

Yes. So the lubricant demand is going to continue to be there in the positive territory for next 15 to 20 years. So that is not an issue because we are seeing penetration is required for all the segments, including industrial and the diesel engine oil, the car, bus. For us, the sectors which obviously we have business is the 2-wheeler segment, we are not much in the 3-wheeler segment, oil doesn't go there. And 95% of our sale is replacement lubricants. So the new vehicles is only 5% of our sales, the factory fill. So that will get impacted if the new vehicles come. And if there is a -- also we are into EV fluids. So we have launched a range of hybrid and fully electric EV fluids globally in India. So we'll have a role to play there. Coolants will have a role to play as electric EV technology comes. So I would say the segments which probably have -- we have to look at is the 2-wheeler segment. In buses also, we don't supply much lubricants, which are converting. And 3-wheelers, we have, of course, a tie-up with Piaggio, but not a lot of volume there. So I would say the vulnerable segments are going to be 2-wheeler and that will take time because the vehicle part there will continue to grow even if the EV penetration is there in terms of the [ ICE ], motorcycles, of course, there will be some dip in that as it goes along, but it will take another 10 to 15 years for that vehicle part to come to a level where it will impact the volumes. So I think we are, of course, looking at the EV value chain where we can use our brand distribution and OEM tie-ups. So I think side-by-side, we'll have to look at that and continue to grow our market share in these segments as the demand is still there. So there is obviously mitigation and EV will come in 2-wheelers and 3-wheelers. In cars, we don't have much of our market share. Our market share is 4%. So there, again, we are growing our market share, but cars, again, the high-end cars, probably you'll see some EV penetration coming in. So that's the way we look at it. And of course, we need to take actions also to look at future growth opportunities here.

So I would just -- just to add, overall, 40% of market -- 40%, 45% of market is diesel engine oil, which is medium to heavy commercial vehicle and tractor. And that segment will take -- is not going to be EV very soon, right? And then there is an industrial segment, which is roughly around 20%, 25% of the market and growing rapidly, considering the manufacturing push given by the government now in the last 2 years, 3 years, the manufacturing side of industrial lubricant side will be a significant beneficiary of the entire thing and lubrication requirement will significantly increase there. Then there are certain things, certain oils which keep going into -- even in electric vehicles. So the personal mobility segment is overall around 20% of the market within which motorcycle is a large part and the scooters within motorcycle is only 30% of the overall 2-wheelers, where we are seeing mostly the models being launched right now.

I'm sorry, when you say -- I'm very sorry to cut you, but when you say the market, the market means your market, right? Gulf Oil's market?

No, no. We are talking about the industry.

No, no, overall market.

Industry, yes.

But could you give me some color on your -- like what part of your sales are commercial, what is industrial, what is passenger? Is that -- can you just give me an overall figure, like?

So that we have given in the -- in our earlier calls also. We have almost similar market share to industry in diesel engine oil and close to a similar market share overall in personal mobility, within which we have slightly more in 2-wheeler and less in personal cars. For industrial, we are below the market -- overall market share, where we are -- our focus is. And last 2, 3 years, we have grown high double-digit there in terms of our growth in industrial segment and others remain similar to the market overall. So overall, we see that 15%, 20% of the market over a longer period of time may have some impact or plateauing in the lubricant requirements, not the entire market, which is the perception currently that in the lubricant industry will be finished in 5, 7 years. That's not going to be the case. Even as per experts also, the growth of -- or the peak of overall lubricant consumption somewhere maybe in the 2030 to 2040 period.

The next question is from the line of Hemal, an individual investor.

I forgot to ask, do you believe the -- like with crude oil rising, the base oil prices are -- they have stabilized for this quarter or there is a potential for further raw material hikes this quarter or in the next couple of months?

We have highlighted again in the last call also that base oil preempted crude increase. The crude oil is stable for early part of the year, but base oil had significantly risen because of the demand-supply situation. Now crude has started going up, but base oil is already at an elevated level, except few grades which are -- there are different market trends for different grades of base oil, there are 7, 8 grades of base oil. Each one follows their own demand-supply pattern. But overall we do not see a very significant increase in base oil because of this recent crude rally because they are already at a very, very high level as compared to their -- what they were in the last year middle or June, July, August last year was the peak. Before that in quarter 1, they were at their lowest point. So they are still at a much elevated level to those levels.

So do you believe there's an opportunity for it to fall and further is in the -- given there's different grades and supply-demand and different level of refineries being worked upon and opening up in the world this year, do you believe there's an opportunity for the base oil to actually fall in the second half of this year, calendar year?

See, it's a very difficult question to predict as of today because there are, as I mentioned, multiple grades of base oil following demand-supply situations in various parts of the world. Base oil is a global commodity and trade happens consignments go from Southeast Asia to U.S. and coming from U.S. also. So this is a very, very global commodity. Depends on lot of factors. But typically, if the crude is stable in a range, the base oil should show a downward trajectory somewhere down the line, if crude is stable in a range because the base oil have already risen to a very, very significant level.

Okay. And my absolute final question is, look, it just seems like there has always been a spectacular, very nice performance from Gulf Oil in terms of growth, right, in terms of volume and revenue. But somehow listening to the call today, it seems that where your growth is going towards infra or a lot of those areas in B2C, where you are seeing some stickiness or some issues, is it -- it could be that we may see this EBITDA margin pressures going forward? I mean, are we doing growth with a focus on EBITDA margin levels so that they come to the levels that we thought of 15% to 17% sooner or is it that we will pursue growth even though EBITDA margins, they still stay at this level. Because I'm sure all of these products and all of these sectors have different products, different margins. And so we are hearing from competitors, some want to do growth with EBITDA margin performance to be kept and some depending on the strategy of pursuing the path that you are. So how -- if you can just help us understand that much for the next couple of quarters [indiscernible].

Yes, you see some -- couple of years back or you could say 3, 4 years back, our band of margin was lower. Now we see the margin we talk of 14% to 16%, you have said 15% to 17%. So the endeavor is always to take the margin also up. Of course, you have challenges in the market, which have happened due to input costs and other such things as demand because of COVID. So our progressively is to increase our market share and keep the band also at a level and try to grow the band. So that's really been our endeavor. But since we operate in many segments, including B2B, B2C, OEM, industrial, we will obviously take a call to improve those in terms of our market share and keep the band at a healthy level. So there is no thinking from the management to lower the band level. We want to go towards the band level which we've defined. And probably, there are opportunities when the prices go up and the prices come down. We have seen in the industry, the margin is gained in that. And as we improve our mix in the bazaar market, in the channel market where we are a clear #2 today, we believe that we can definitely maintain the band and try to improve on the band as well as grow the business, both. Of course, the mix of B2B, we're not going to say no to because B2B is also longer. It's -- as you see the business, we have a lower market share there. So there is potential to grow in all the segments where we are focusing.

And I would just like to add for the benefit of -- it's an excellent question, actually. And if you see, we have been able to do series of price increases which we have taken, you have seen our realization going up, which has helped us recover the cost per liter basis which means the top line has gone up, but the margins have remained per liter basis similar or slightly at the same level. And that is showing the percentage as a lower one. If we just translate same on a like-to-like basis on last year December quarter, we are already in that band of 14% to 16%. If you just translate that ignoring the price increase impact, which is just increasing the top line right now. So we have already recouped our -- we are in that range of 14% to 16%, if you just compare like-to-like on a realization basis.

As there are no further questions, I now hand the conference over to the management for their closing comments.

Yes. Well, I'd like to thank everybody on the call. And of course, we have tried our best to answer the questions, Manish and me. I'd like to end by saying that our focus is on the segment focused initiatives is continuing as we have shared all about the segments. And with help coming in from the stabilizing key input cost, it looks like it is a good platform to improve our performance going forward. Also, with the COVID situation improving across the country and globally as people and governments are now deciding to take the same in its stride and move towards normalcy, we hope to see the demand conditions going up. And definitely, the GDP growing next year, and we believe that that will be a tailwind for us to reenergize our all-round growth. And definitely, Gulf team has been very passionate. Our business partners have been working hard for growth. So that will be a good tailwind for us. We are also driving up our internal focus to evaluate and participate in the evolving EV space, as we mentioned, and where Gulf can make a move to have potential future growth segments like we have grown the segments in the lubricant market. This is another added segment where we see we can add value. We are examining those. We have made a couple of moves globally and in India. The strengths of our brand distribution reach and OEM relationships will come into play as we look at this value chain, which is emerging. And if you take the Indian economy, we are obviously seeing a trend of economic activities, infrastructure investments, even mobility, automobile sector looking at positive growth across. And definitely, as you know, the lube business is generating a lot of cash for us, and that will continue as it is a cash generation business for us and investments will come. We'll have to examine those. The demand conditions are picking up in the coming months, in the next financial year, especially as you know, manufacturing, commercial vehicle production, construction equipment, even B2C, there is going to be a lot of money in the hands of consumers. And this augurs well for the entire industry, which I think will be back on the growth path and which should provide the tailwinds for Gulf to push for further distribution reach, further customer acquisition and further market share growth. So I'll sign off with that, and I wish all of you a good evening, and all the best. Thank you.

Thank you very much. Ladies and gentlemen, on behalf of Yes Securities, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.