Gulf Oil Lubricants India Limited ($GULFOILLUB)

Ladies and gentlemen, good day, and welcome to Gulf Oil Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Probal Sen. Thank you, and over to you, sir.

Thank you very much. Good afternoon, ladies and gentlemen. Welcome to the Gulf Oil Post Q4 FY '26 Investor Call to discuss the results and management's view and outlook going forward. The format will be the same. As always, management will deliver their opening remarks, after which we can have an interactive Q&A session. Without further ado, I'll hand over to the senior management of the company who are with us Mr. Ravi Chawla, the Managing Director and CEO; and Mr. Manish Gangwal, the Whole-Time Director and the CFO of the company. Over to you, sir.

Thank you. Good day, good afternoon, everybody. Welcome to the quarter 4 call and really happy all of you are joining us. Extremely delighted to share with you that quarter 4 has been a record quarter for us in terms of our volumes, revenues and EBITDA. We have hit the quarterly all-time highs. Of course, we know that March end is usually a very good quarter for us, but we've continued to really grow as we've always been growing 2 to 3x. But this quarter, we can highlight that. We've done a 14% growth, which is by far in volume, one of the highest quarters for many, many years, I think, now. So that's been a really big achievement for the team. The quarter overall has been a strong one. As I mentioned to you, we've done 45,000 KL in our lubes, lubricant volumes. And really, it's also been supported by a good customer demand and of course, good business agility by all the teams as you know, a challenging quarter, as always, also March, we saw challenges coming due to the Gulf War, and we've really also done well to make sure that we are well prepared and going well in that regard. We've seen a significant momentum, as I mentioned, on the 14% growth, again, outperforming the industry by 3x, I think that's really where we are getting the data on the industry. And similar growth in our revenue of 14%, again, reflecting our continued focus on our growth priorities across segments in lubricants. And also, we have seen good results in the growing mobility segment in which Gulf has been making investments. Happy to also share that the growth was really broad-based across all our key segments. I would say, rising above and beyond the industry-leading performance this time. Passenger Car Motor Oils and Commercial Vehicles delivered double-digit growth. Agriculture segment also had a very strong robust double-digit growth. One of our strengths has been the OEM franchisee workshops where we lead in terms of the industry, in terms of over 40 OEMs across automotive, industrial, construction we've been able to really take that business and record a strong double-digit growth, again, not only growing sustaining the momentum across all our partnerships and adding new ones. We continued to strengthen our associations. And of course, as mentioned, we are reinforcing our leadership position in this segment of OEM franchisee workshops. B2B industrial, again, continued its strong trajectory. And as I mentioned, all around broad-based growth across all segments. For the quarter 4, which has ended well for us, as I mentioned, on record highs, we've also closed the year with a double-digit growth FY '26 in lubricants, we have done a double-digit 10.5% growth, again, 2 to 3x the industry. And really amongst -- when we look at what's happening in the market and really the year which had a lot of geopolitical headwinds, our disciplined execution has helped us here and our teamwork. And we've also closed the year on a high note in terms of revenue crossing INR 4,000 crores for the first time in terms of our business. And we also have seen every category, the passenger car, motorcycle, commercial vehicle, industrial, all these segments have grown positive. So that's really, I would say, a good achievement across. We'd also like to share, of course, our mobility EV subsidiary Tirex, has been gaining momentum and has crossed the landmark of INR 100 crores in the year. Again, a lot of traction on key marquee customer additions, both across the fast charging and slow charging, DC, AC charging and also, of course, well aligned with our long-term vision of building future mobility system. So that is another strong performance for us in terms of the mobility business. So overall, a quarter which has been record. And I'll request Manish now to share some of the other details and some of the other things that have been done well and also some of the other financial figures. Manish, over to you.

Thank you, Ravi. Good afternoon, everyone. So as Ravi highlighted, we had a very good quarter on all fronts, be it volume, revenue, EBITDA and for the quarter, we delivered for the first time 45,000 KL volume, which is the highest ever for any quarter ever in the history of the company and growing at nearly 14% in terms of core lubricant volume. And the AdBlue, we also recorded a very good 40,000 PL volume, which again is the highest, and that also delivered an 8% growth on volume side. Overall revenue following the volume growth is nearly 14%, which is also one of the recent highs. And EBITDA also in spite of all the headwinds in terms of rupee depreciation and the Middle East crisis is starting March, we have been able to deliver EBITDA growth of 8.5% and INR 135 crore EBITDA for the quarter is again the highest ever EBITDA, led by volume delivery. So overall, a very good quarter on all fronts. And for the full year also, we have our total lubricant volumes are 1,68,000 KL which is double digit as we highlighted. And AdBlue, we delivered 1,51,000 KL volumes. So again, overall, an 8% growth for the full year there as well. With that, the consolidated revenues crossed INR 4,000 crores, and EBITDA for the year also is the highest ever at INR 510 crores on a stand-alone basis and nearly INR 513, INR 514 crores on a consol basis. So overall, all the parameters in spite of headwinds of rupee depreciation throughout the year and tariff-related trade challenges followed by the Middle East crisis starting March. The year and the quarter has been an excellent one. And based on all this and considering the overall profit delivery, the Board has also recommended yesterday, highest ever dividend of INR 51 for the full year, which means a final dividend of INR 30, which follows the INR 21 interim dividend declared earlier in February and paid. So overall, we have the year and the quarter has gone very well. We would like to now take a few questions from our investors, [indiscernible]. Thank you.

[Operator Instructions] The first question is from the line of [ Sujeet Bartel ] from [indiscernible] Private Limited.

My name is [indiscernible]. I have 2 questions. The first question to Mr. Ravi Chawla, what are the strategic levers are you prioritizing in '26, '27 financial years to expand Gulf Oil Lubricants and [indiscernible] portfolio to strengthen the OEM partnerships and capture market share in EV-ready, lubricants while managing risk from crude oil prices, more volatility and competitive pressure. That's my first question. [indiscernible].

Yes. So as we've been sharing our strategy has been to focus on these segments, which you mentioned. Obviously, we've been growing 2 to 3x for many years now. So I think fortifying our strategy here has obviously been part of the journey. And we've been building our brand. We've been building our partnerships with OEMs. We have mentioned more than 50-plus OEMs. So I think for us, the strategy has been to focus our teams into each segment separately. And automotive, again, we have good market share in motorcycle and diesel engine oil, if you take the bazaar market. So there, again, looking at 2 to 3x doing work with the mechanic, if that is a new element we are bringing in a larger way in terms of growing that, increasing our distribution. So I think overall for us, each of these segments represents a unique approach, which has made us grow faster than the competition. And I think that will continue. So really for us, our track record also shows that we've been doing that consistently. But as we look at '26, '27, we have also been talking about Unlock 2.0, which has been our strategy to accelerate premiumize and transform. So bringing in digital initiatives, looking at mobility, accelerating the growth across all the key segments of lubricants. And definitely, we want to also grow in terms of our margin and looking at premium products, which can go in along with solutions. And to add further is we have, as a lubricant company and one of the few companies who have made investments into the EV mobility infrastructure space with through chargers to start with. We have got a company called Tirex now, which is part of us. And we've also got -- they make AC and DC, fast and slow chargers, which crossed INR 100 crores. And this also synergizing with our relationships the brand we have. So mobility is another area. And EV fluids, we have already got into a number of OEMs, and we will be happy to share with you a few more names shortly as we see that portfolio growing. So I think all around the strategy is to focus segment-wise. Our brand continues to be very strong as the #2 brand. We'll build it further this year. and invest in the brand. And I think for us, that sums up our kind of strategy. And that's really where we focus, and our teams are really clear about what the objectives are and how we have to go about it. Thank you.

My second question to Mr. Manish is what type of capital allocation and risk management framework are being applied in FY '27 to balance dividend payout with funding for R&D in EV compatible lubricants and hedging against ForEx and crude price volatility, and any sustainable liquidity buffers for working capital expansion. Please share your guidance on this?

So overall, we have been a cash-generating company. And year after year, we have generated good cash. And based on that, we have also started investing into the new opportunities like EV, where the Board has taken decisions. And in fact, during the last year, we have increased our stake in Tirex from 51% to 65%. So we are progressively investing into the adjacencies and more particularly in EV, where we see a big opportunity, coming in the next decade. Also, the research and development work for Gulf Oil Lubricant side continues from Gulf globally and the global provides us with entire R&D support. So that hit is not particularly on the P&L of India company. But obviously, there is a lot of work happening on data center cooling. And in terms of new and newer, better lubricant long grain products, that continues at the global level. A large part of the team's -- global team also is based out of India. So we get that additional benefit of being local, locally available. Overall, with the cash generation, the Board has been [indiscernible] increase the dividend payouts. So from a 30%, 35%, 40% dividend payout 3, 4 years ago until the time we find more opportunities of investing cash into the new businesses. The Board has increased the payout. And in fact, in that -- with this INR 30 final dividend and INR 51 full year dividend, the payout for the last year, which is financial year '25, '26 goes up to even 72%. So while we keep looking at the M&A opportunities, expanding our current business, we have increased the payout in the interim because we carry good cash on the balance sheet.

the next question is from the line of Dhaval Popat from Choice International Limited.

Yes. So first, I wanted to understand if there is any change in the inauguration or the -- when would the expansion of the plants come into operation for Chennai as well as Silvassa? That is the first part. Second question, of course, I wanted to understand more on where could the data center -- is there a timeline on, particularly, where would the data center liquids that the company is developing? Do we see some further opportunities or how is that playing out?

So I think our expansion at both the plants are on track. So the work is progressing well. Obviously, Chennai expansion, as we earlier highlighted, will come on stream first. And then Silvassa, which is our second -- because there, there is a lot of civil work also, which needs to happen. The work has already started. And our -- we earlier guided that the Chennai additional capacity should come into stream by quarter 3 and Silvassa by quarter 4. As of today, we believe that we are in a position to meet these timelines. . On the second question of data center cooling, I would request Ravi to please take it.

Yes. So we have been -- we have informed you that we now have 2 products in our portfolio, which have been developed. Now we've also made these products now in India, while the formulations come from our global team. And one is a POA based product, which is obviously the synthetics and the other is the mineral-based products. Now we're happy to share with you that these products are now tested for their critical material compatibility parameters. And for the components that are used, and soon, we will be testing this in data centers to see. And of course, there are some steps where we need to talk to the people who really get into this technology. So both these are progressive steps, and we are hoping that we'll be able to make some breakthroughs here.

Just sort of a follow-up on this, if I may. So about -- some time ago, the number, if I remember, it was about 14 million to 16 million liters is what the company was expecting the market size for this. So does -- is there further growth expected? Or does the company see this opportunity in any different way?

No. So this is a fast-growing area. As you know, the buzz around this is very high. And as we have also tried to explain earlier that the volume is going to be quite small. But overall, it's a good place to be with. And the way we see the data center is coming up, this technology, which is moving from air cooled to liquid cooled. This is where we are talking to the people putting up these data centers. And it will definitely go up, but it's still a very small percentage of the total volume, and we obviously want to be there and are progressing towards it.

The next question is from the line of Arya Patel from Emkay Global.

Congratulations on a good set of numbers. So sir, as we know we import around 50% or more than 50% of our base oil from countries like Korea, Singapore and even Middle East. So are we seeing any disruption in availability or imports of crude oil? And secondly, are we seeing any substantial spike in prices of base oil because of the Middle East crisis? And also, have you seen any pass-through of the price hike or higher RM cost during the quarter. That is my first question.

Yes. So we all know that post Middle East crisis, the crude oil, which is our base material for our input like base oils, et cetera. and crude oil has rallied from nearly $65, $70 in February to nearly $90 plus in March. And then as we speak in the current quarter, it has been mostly trending above $100 even touching a peak of $120 at some point in time shortly for a short period. So there is definitely a sharp movement in crude. And our key raw materials, which is base oil additives, packaging, they're all linked to the crude-related market pricing. So base oils obviously have followed the crude, of course, with some time lag of -- earlier, we used to say the time lag was 2 months now in these type of extraordinary situations, the time lag has, in fact, come down sometimes to 1 week or 2 weeks. So there has been a fast escalation in the input cost. Both all 3 base oil additives and packaging materials. And that has necessitated frequent price increases, we would multiple price increases to pass on the cost to customers, consumers. And right now, the management, we are all focusing on margin management. That is the key priority. And I think all the actions are being taken to ensure supplies to our customers and consumers because our customers should not suffer. So that has been a key priority for us to keep on arranging the material. So far, we have not seen any major disruptions in the supplies. But if the crisis continues for a very, very long period, eventually, entire world will get impacted and we'll have to see how it goes. But as of now, we have been able, in fact, one of the companies in the sector who have been consistently delivering to all our customers and consumers.

Got it. Just a follow-up on this. So because of the disruption, do we see our margins to be anywhere impacted in, say, the first quarter or the second quarter of FY '27 or we maintain our 12% to 14% guidance for the quarter?

See, these are very volatile times. But our band of 12% to 14%, all the endeavor is to protect that band. Also, we have cost levers in our hand to recalibrate during these times. And obviously, the demand side, there is a robust demand, as Ravi highlighted earlier, that there is a very good demand. And if we can, we are in a position to keep supplying the material to our customers, customers are willing to pay higher price also. So everybody understand and realize in these situations that I think ensuring supply security is the most critical part, and pricing is the secondary thing. And based on that theme, I think we have taken successive price increases with our customers. But to keep calibrating cost increases versus the price increases is obviously a key priority for the company. We still hope to maintain our 12% to 14% band in terms of margin. Of course, the realizations are going up sharply. So as a percentage, we may see towards the lower band or higher band depending on the situation. But per liter, increases are definitely being trying to be passed on to the customers.

[Operator Instructions] The next question is from the line of Sudeep Anand from Systematix.

Congrats for a very good set of numbers. Sir, just one thing we have seen a very strong volume growth during the quarter and during the year. So which particular business segment, which is actually currently doing pretty well? And how do you see FY '27, any upward revision in the growth guidance which we had given it on 2 to 3x of the industry growth, which is around 8% to 9%. And secondly, some update, if you can give on Tirex, what was the performance during the year? And how do we see in FY '27, '28?

Yes. So on the first part of the question, you spoke about the which segments. So we have been actually, 14% growth is a very good growth. I would say, to some extent, March end, we did see some demand coming in because of the situation. But overall, I think double-digit growth is what we've done for the year. And we also see that the market will continue to grow subject to, obviously, there is a crisis happening geopolitical crisis, but it looks like the conditions are robust, and agriculture season will come. July is usually a season where monsoons come. But overall, the year remains a good year. And also there has been very good sale of vehicles last year. If you take the -- every segment of automotive whether it's 2-wheeler or it is 4-wheeler commercial vehicles, tractors have done very well. So I think that helps our franchisee workshop business. So we continue to look at the market growing at about 3%, 3% to 4%. And most of our segment strategies are focused on really doing that 2 to 3x. And in certain segments where we are having, say, lower market share, like passenger car motor oil we want to grow a bit faster. Industrial is an area, again, we have been growing consistently double digit. So I think the outlook doesn't change as of now. Obviously, we have to wait and watch the situation is the sooner we have a solution to the overall situation, which is -- the whole world is in today. The war that is there and that Strait of Hormuz, we will all then stabilize to look at it in a normal manner. But I think. We continue to look at it 2 to 3x. And as Manish mentioned, the band of margin also. And that's the way it is. In terms of Tirex. Again, very happy to share that while we have done the milestone INR 100 crores. Indian market per se, the number of buses that were expected to come on road have not happened. But still, we have been able to get at least, I think, 35% to 40% share of new DC chargers for buses which are a key segment. So that is a good thing for Tirex. We've also been able to get business with MG Motors and VinFast for AC chargers. And as we learn in this segment, I would say that we are trying to get customer reach, service, reliability, [ production ] and all those are our endeavor. But we've also been getting new customers who have been testing. A lot of the OEMs now are trying to look at the solutions right from construction to even truck, e-truck and other segments. And AC chargers, slow chargers, which we have been doing for cars. We also have a global investment in a company called Indra which is a leader in the U.K. market, one of the leading companies. We're also looking to see how those chargers can be brought to India in some form. And really for us, energy is every 4 to 5 buses -- EV buses require one charger. So as that grows and we look at other solutions in the car segment, we have been looking at our EV fluids business going up. So we really want to look at our more than 30% market share in the bus segment. And overall, also, we want to continue growing tariffs.

Okay. Just one last question, if I may, squeeze. So in terms of base oil, don't we procure most of the base oil from Korean [indiscernible] but most of the base I'll eventually comes from west to Middle East area. So supply is also a concern or it's just the price which has gone up and availability is not a concern?

See, as we replied in the previous question also, while our -- most of the term contracts are based out of South Korea and Singapore refiners. Their feedstock ultimately comes or is aligned to Middle East feedstock, which is the crude, which they process. So far, we have been able to get our material -- the required material either from these refiners or sourcing locally from traders, et cetera. But if the situation or the crisis continues significantly longer, then obviously, the entire supply chain for these refiners also may get slightly squeezed. And we'll have to evaluate how that situation unfolds. But as of now, we have been getting our material with some allocation happening from some refiners at 80%, 90%. But overall, we have been able to get our required material so far.

The next question is from the line of [ Nilesh Sharma ] from [ Anita Saion ] Private Limited.

Sir, could you help us understand whether this is the volume growth that we delivered in this quarter is driven by channel stocking or inventory buildup due to concern around the product availability or any sustainable demand growth that we observed in the industry overall?

Yes. So the year -- in the year, we have done 10.5% growth. So we have seen that our growth has been 2x to 3x. Definitely, March has been a good strong month. But if you look at the Jan and Feb also, we continue to grow double digit. So I think that has been showing that the demand was there. I think towards the end of March, we would say that some -- obviously, people are concerned about availability. And as I've mentioned, we have more than 40-plus OEMs, in fact, 50, if you look at all segments. And they definitely have -- want to make sure that the supply is secured. So I think our relationships with them, even our stocking with the distributors, as you mentioned, the channel all of them were buying and continue to buy double-digit growth. But I would say the March end also helped us because -- not helped us, but it was also to make sure that people had the slight anxiety and we are available in terms of stock. So I think both of them are geared well, but double-digit growth has continued for us right through the year. It has gone slightly high. The 14% is above that. But I think even the recent months saw that the demand is good. partly for what you said that people are very clear that they need to have stock. A lot of the industries depend on lubrication, a lot of the OEMs got lines running. A lot of our channel partners obviously are meeting demand. And we are in a very good position. I think Manish mentioned it. We've been able to get good supplies both of all other components, additives, chemicals, all the others. And Gulf has been quite nimble and agile in this as a company. So I think that's auguring well for us to meet the demand.

And sir, my next question is upon data center cooling solution. Definitely, we developed 2 product, which is going under proof of concept. And very soon as per your view, it will get any commercial order. So from my customer standpoint, what tangible benefit are being demonstrated in the products such as energy efficiency for saving higher density. What -- how our product will be different from industry leader product?

Yes. So these products, as I mentioned, we have 2, the synthetic product obviously gives a better performance these are going to be all liquid cooled. So these are high-end data centers with high computing heat and all. So these products that we have developed, obviously, it has been developed from a formulation point of view to give an excellent performance. So having said that, we believe that, obviously, our product is going to provide that more efficiency is going to provide the necessary features for the data center cooling to happen. And like most of our products, we are always at the top level in terms of our performance. And we have obviously developed these products keeping those parameters in mind. And once we -- now that the compatibility test has been done on material, the next step is to actually put it across and get it in, as you said, enter some of these things, which in India is happening, but it's not probably happening at the pace because these data centers have to configure themselves differently in terms of their own methodologies. And it's basically making those racks with liquid cooling investing in that. So once that is there, we will actually see the products in action and be able to comment more on how well we are performing vis-a-vis others.

Okay. And sir, from an investor point of view, is it fair to assume that we can expect any revenue from coming 2 quarters at least or coming this financial year? Sizable revenue from this particular segment only?

I told you the volume, if you take the full -- all the data centers converting into liquid cooling, it is still only a percentage of the volume of the market today. So it is going to be a low volume. And once we are clear about what we are entering with which data centers and that is there, then we are able to comment on which quarter we can bring the benefit of this product.

The next question is from the line of Keshav Garg from Counter Cyclical PMS.

Sir, I wanted to understand that our operating margin is almost half that of Castrol. So what is the reason for this? And at what premium is Castrol selling their products, like-to-like products versus us?

Margin-wise, obviously, we have been able to reduce the gap with the market leader over years. It takes a lot of time and while we don't want to comment on a particular company, but our trajectory has been to keep growing ahead of the market growth and bring that operating leverage also. And that is why at EBITDA level, the gap can be reduced by increasing the -- obviously, the pricing power, which comes with the effect of increase in brand strength, which takes a longer time and sustained investment into brand, which we have been doing over the years. And obviously, the second lever is to bring that operating leverage, and that is where our volume focus continues to grow 2 to 3x of the market. So both these things combined effect is a gradual reduction in the gap but still, it takes a lot of time and effort to do that. We continue to pursue that journey.

Just to add, see we are a growth company. If you take our growth over the last 10, 15 years, we've been growing ahead of the market and our market share from #6, 7, we are now #2 in the private sector, at least we believe with the data we have. And we are across all segments. So as you see, India today, the industrial segment is doing well. The B2C segment continued to grow well. The segments that are there, like infrastructure, the segments, OEM, which is a big strength for us. So our mix is slightly different in terms of what we cater to. And we've been trying to explain that regularly through our interactions, and you can also see that Gulf has today more than 50, 55 OEMs. So the mix also makes a difference. And of course, we have a lot of headroom to grow. So that's a good opportunity, whether you take Passenger Car Motor Oils or even industrial. But I'm very happy to share that we are in the top 2, top 3 position. And as a brand, very delighted to share with you that over the last 15 years, we've invested our brand, Gulf is a motorsports brand globally, but in India, we have taken cricket. We have Mr. Dhoni, MS Dhoni, Hardik Pandya and Smriti Mandhana and we've also been sponsoring CSK for more than 13 years. And of course, investing in other things, which are below the line and promotions and mechanic contacts. So our brand is now #2, we believe after the market leader. And this has taken the investment and some of the other brands, obviously, have done investments over many, many more decades. So as we -- as Manish mentioned, as the strength goes up, then the pricing power goes up, but we have not -- we would not like to comment on what others are doing, but this is our mix and this is our sort of strategy and also where we are today.

Sir, so going forward, sir, firstly, I wanted to understand, does the market leader enjoy any advantage over us on the procurement side of base oil?

We will not be able to know that.

Okay. Now sir, do we have synthetic ester-based Indian oil and lube.

Yes, yes, yes. So we are growing that portfolio. That is a key area of premiumization, and we have all the products there in every category.

Understood. Now sir, finally, how much your more CapEx are we planning to incur in our EV charger subsidiary and also whether that. I mean, do they make charger for all kinds of EVs because I understand different EVs would be having different kind of batteries. So is it a general charger for all kinds of EVs or specific to some?

So the company we have invested in is Tirex Transmission. And they made both DC and AC chargers, which are suitable for all types of vehicles. So the battery profile may be different, but the charging regime for all vehicles are similar. Which follows a particular regime and which is a globally accepted regime. Like in mobile, we have C-type charger, which is now globally accepted or benchmark the type of chargers. Similarly, the chargers in EV field are standardized. So all type of vehicles can be charged. Obviously, depending on the battery capacity, you needed fast charger or a slow charger. So we have both in our Tirex plant. And we are, in fact, as Ravi mentioned, we are supplying to all the bus OEMs, which are our key [indiscernible] focus. And we are also supplying to AC charger OEMs like MG Motors and VinFast. So we have the complete portfolio there. As regards to investment, obviously, it's a very growing business. We have increased our shareholding to 65% last year by way of investing another INR 38 crores. But the business, as it grows, we need working capital. Obviously, and they are putting up a new plant also and we have -- that plant will also be up and running in quarter 3 of this year. That is where the Tirex company has started investing in the new plant. Obviously, we are looking at a combination of equity and borrowings to fund that expansion plus the working capital.

Understood, sir. And sir, lastly, what is the price hike that we have taken in the recent past? Or are we planning to take in the near future due to the hike in crude prices and base oil prices?

We have already replied this point earlier that there have been multiple price increases, which have been taken and which are being planned also because the situation is evolving on a weekly basis. And the input cost is changing on a weekly basis to fortnightly basis.

Sir, any quantification you would want to share?

At this stage, we can say that we are trying to maintain our band of 12% to 14% margin. with some recalibration in the cost also. But also, I think everybody on this call also knows that base oil prices are now additive and input cost, other raw materials follow crude. So the crude has gone up from $65, $70 band to now nearly, as we speak, $95, but it has touched a high of even $120. And the input costs have been increasing in that line this time without the lag effect, I would say, with a very fast turnaround happening from crude pricing to base oil pricing. Having said that, it takes time in the market to take price increases. And so we have to -- there is some lag effect which happens in the realization but we also carry some inventory to make up for those type of situations. So we are trying to match the input cost increases with the realization increase.

Sir, I missed your answer at what premium Castrol is selling versus us for a like-to-like product?

Sorry, we didn't get your question.

So for a like-to-like product, at what premium is Castrol selling versus us, I mean, broadly in like maybe 5% or is it more or less any?

It is from category to category. So it will be difficult to answer that how much percentage of premium somebody has, but it varies from category to category where we have our strength. For example, diesel engine oil, and motorcycle oil and buses where we are yet to grow our market share like passenger cars, et cetera. It varies from category to category.

[Operator Instructions] The next question is from the line of Hardik Solanki from ICICI Securities.

Congratulations on a good set of numbers. Sir, 2 questions, basically, first, just want to know what are our base oil inventory level at this point of time? And secondly, I just want to understand, are we running any additional campaign or royalty to increase any sales, how is it? And what expenditure are we expecting? Or what budget we have made for that?

So usually, we have been carrying 45 days of inventory on base oil side in a normal situation. we have tried to slightly increase that by 10, 15 days because of the -- to create more supply security. But overall, we are still around, let's say, 45 to 60 days, depending on which point in time we are talking. So we continue to have a healthy inventory, which we believe should be helpful to -- for us to cater to our customers and our consumers in a timely manner. Which is today the biggest, I think, anxiety among our customers' OEMs that whether the supply security is ensured by the supplier partner. So that we are in a position to so far handle very nicely. We couldn't get your second question, if you can repeat.

Are you running any campaign loyalty program as such or branding, anything or a budget we are allocated at this point of time to increase our sales.

We have been incurring overall 3% to 4% of our revenues back into A&P. It depends on the calibration can happen from quarter-to-quarter depending on external conditions. Right now, we see the demand condition anyway is very robust. So there is no major campaign as such being planned because there are enough demand from the demand side. The challenge right now is to ensure supply security, which where our focus is. I would request Ravi to add more.

You see part of our business is like a B2C business, what we call the channel retail and part is OEM and industrial, et cetera. So we have annual loyalty programs, right, across in terms of the trade channel. We have incentives for mechanics. We have other programs which we do across. And as Manish mentioned, probably the last -- if you talk about quarter 4, obviously, these continued, and they had a lot of impact on helping us to deliver convert customers, deliver that. in March and as you know, what the situation is. April and May, of course, this year, FY '27, we have our own campaigns planned and other things planned, which will continue. But as of now, obviously, the first quarter that is happening now, we have to look at what the market situation is, which as mentioned is going through major multiple price increases and other things. The loyalty programs per se don't change. for retailers mechanics. That would continue, and that is ongoing. But definitely, some of the above the line initiatives and all will come in slowly once the market and the supply situation normalizes, which is anyway planned during the year. And as Manish mentioned, we have a figure of 3% plus what we do, and that will continue. So those are ongoing.

Ladies and gentlemen, that was the last question of the day. And I would now like to hand the conference over to the management for closing comments.

Thank you so much. As I mentioned, we've seen a good year, good volume growth, industry growing and Gulf growing, obviously, very well in terms of overall quarter 4 again, giving the highest growth. We've also seen that the sales of new vehicles, which helps us in our OEM business is also gears as well for the industry has been really fantastic last year. The growth figures, as you all know, 2-wheelers, cars, even EV penetration going up, commercial vehicles, tractors have been really good. Most of them see double-digit growth. And really, the GST also helped there, and that's really good. So we continue with our Unlock 2.0 strategy where we will grow volume and value. ahead of industry. We were looking at definitely doing well in that and focusing on our portfolio, our segment-wise approach, we really believe that all the segments we are in today, and we have seen that across B2C, B2B have been doing well. And as an Indian economy, we continue to focus in all the segments, and we focus ahead of market growth. And there are some segments where our market share is less than 5%. We believe we can grow more than 2 to 3x. Manish mentioned margin management, it's even more critical as we look at the current situation, but we are focused on our 12% to 14%. And obviously, if things go well, which today is obviously a challenge to go to 14% to 16%. Obviously, if this will mean that stable pricing will help us to get there and look at competitiveness. Distribution growth, we focus on 10% to 15% growth in both urban and rural areas. Again, our brand strength, as mentioned, we are a #2 brand, but we need to increase distribution. So there's a huge scope for us to leverage that and take it up in terms of our brand strength. We will focus on our category brands going forward in terms of really having customer-centric branding marketing initiatives, both ATL/BTL with the consumer and the influencer of the mechanic. We continue to be strong in the B2B business and the OEM business where we also focus on programs and also education training to help us in premiumizing our products. We are looking at some adjacencies in terms of our e-mobility space to make investments. As we said, when we are clear about that we will share with you. And we're also looking at how we can synergize our relationships, our partnerships and our distribution where we can leverage this. And as mentioned earlier, the Unlock 2.0 strategy, which is accelerate, premiumize and transform. We're looking at a lot of digital initiatives right across from connectivity to new areas where AI will come in, in some form. And this is a journey we are in, We remain watchful of the evolving macro environment, particularly the volatility now that we are seeing in the currency movements, which are obviously keeping the input cost pressures elevated, but we continue to manage it well. And we have seen -- Manish has been mentioning on the sharp volatility in a lot of things. And of course, this is also how we can manage and calibrate our category pricing actions across portfolio. And in terms of our mobility piece, we will continue to strengthen Tirex and its leadership position in the bus OEM segment, also look at new segments, and we will look at how we can bring in more products here and also play a larger role in the AC charger business and continue to make this a part of a large part of our business going forward in the next 4 to 5 years. Thank you so much, and that's the outlook. And again, thanks to everybody to join the call. Hope we've been able to answer your questions to the best of our ability. Thank you.

Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.