Gulf Oil Lubricants India Limited (GULFOILLUB) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Girl Calls Q1FI27 on this conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Probal, sir, from ICA Secretary. Thank you, and over to you, sir.

Thank you, operator. Welcome, everyone, to this host Q1FI 27 call to discuss culls. With us, we have senior members of the management, including Mr. Ravi Chavala, the Director and CEO, and Mr. Mami Chagwal, our Overtime Director and the CFO of the company. As usual, we first start off with a briefing on the results and output from the management, and then go into an interactive Q&A session. So, enough further ado, I'll hand over to the management. Over to you, sir.

Thank you. Good day, good afternoon, good evening, everyone. It is a pleasure to invite you to this quarter one performance investor call. Very happy to inform you that this quarter has really seen us performing in terms of all-time highs on all fronts. Last quarter, you may remember, we crossed the revenue of 1,000 crores. Very happy to share that this quarter, with all the execution, agility, and certainly managing this situation to the best in terms of focused attention, we have been able to cross our revenues and reach 1,300-plus crores. If you look at all the other parameters, including EBITDA and profits, significantly ahead of the last quarter, which was also a record for us. So, I think overall, starting FY27 on this strong momentum with record performance is certainly satisfying for us. We saw the West Asia crisis and quite a volatile macro environment, cost environment, but with the focus on really executing well with agility, we have seen a very strong volume-led profitable growth in this quarter. The volumes have grown 17% year on year. You may recall that last year we ended at 11% and quarter 4 of last financial year was at 14%. But clearly for us, this quarter we have seen that the way the entire business has been managed across all categories which have grown have really seen a very good result for us. Effective real market execution, supply chain, solidity that has helped us and proactive customer engagement. And as mentioned to you, across all segments, B2C, OEM, and B2B, we have delivered good double-digit growth, which has given us these results. For us, really, if you look at the main things that were obviously challenging were the supply security, both from the customer point of view and the availability of raw materials, which were disrupted a bit because of the hormones crisis. We've seen that we've been able to manage this as a top priority, and we've ensured uninterrupted availability throughout this period, which has helped us. Not only the customers who are obviously buying from us, the OEMs, the channel partners, the retailers, the proactive approach that the team has used, and of course backed by great supply efficiency, supply solidity in terms of sourcing all the materials, we have been able to make this sort of crisis situation into all of us. And really optimized on the opportunities. Not only have we been able to ensure supply security with our current OEMs, distributors, customers, we were able to also win new customers. And really optimized on all this. There was a lot of heightened apprehension from customers. And I think we have been able to reinforce our position as a reliable partner. And really supporting the customers, including new customers have got added on in many segments like infra. We have increased our share with customers. And also in terms of retail, in terms of our customers, OEM franchisee workshops, we have increased our share. The growth was broad-based. As I mentioned, we have seen growth across segments. In OEMs, we have continued to grow. And, you know, Shlendana position, double-digit growth in OEM franchisee workshop was led by agriculture segment where we have Mahindra and Swaraj, PCMO and motorcycle where we have Bajaj in OEM workshops. In our B2C, there has been a very good double-digit growth with PCMO, passenger car leading it, and also gains in agriculture, commercial vehicles and motorcycles. In B2B, where we do business with industries, infrastructure and mining, we have again been seeing growth across our customer base. Also driven by new customer acquisitions as the traction improved. And of course, this is an important segment for us. So I think overall, the key numbers, Lube's volume was at 48,000, again a record for us, previous high being 45,000 in the last quarter. So followed by that 48,000. And we have seen this high double-digit growth of 17%, which is over 3x the industry growth rate. Revenue, as I mentioned, up 33% at 1320. EBITDA was up 35% at 170 crores. Last quarter, we did gain a highest of EBITDA, which was 135. So, we have exceeded that and I think with quite a sizable increase. And the margin also, which Manish will talk about later, we have been able to show a lot of operational resilience. Huge cost increases month on month for the last three to four months. We have managed to obviously proactively communicate that, explain that, and across all our different customer bases, we've been able to manage that. Plus, I think our stock solidity, which was there, we've been able to keep the margin at 13%, which is within the guided range. I think we have seen that momentum has been there for us in terms of all segments, and definitely quarter has been a very, very fulfilling quarter for all of us in the team. And we've been able to take it to a significantly high record level, which I think is also in line with the situation which was supposed to be a sort of a semi-crisis, been converted to good opportunity for the organization. Over to Manish to take us through a few numbers on the finance and other aspects. Manish, over to you.

Thanks, Ravik. Good afternoon, everyone. So, as Ravi highlighted, the quarter volumes for lubricant core lubricants were 48,000KL and AdBlue was at 40,000KL. And with revenue growth of 32%, revenue growth 1300 crore at 1320 crore and EBITDA at 170 crore. The PAT was also highest ever at 127.5 crore resulting in an EPS of 25 rupees plus. So, all-round excellent, robust performance, and... I think this is one of the best performance in the recent years by the company, and we would like to also highlight that in the quarter, which was a very tough quarter from all perspectives, especially the supply chain perspective, given the kind of crisis going on in the Middle East, and the crude volatility which impacted the quarter very, very severely from input cost perspective and availability. The crude at 1.1% of $120 per barrel. We have been able to manage our inventories well, and also proactively. You know, engage with our customers, as Ravi highlighted, on pricing discussions and price increases, and I think in this period of crisis, even our OEM partners, customers, we are also looking for more from supply security perspective and have been very cooperative, and hence, we have been able to manage our margins in a similar band of around 13%, 12.9%. Which in a tough quarter is very, very hurtening. Although you can see that at gross margin level, there is some deep still because it takes time to pass on the cost increases to the end customers. And there is a time lag between the same. But eventually, you know, we have been able to manage some of our cost and deliver an excellent quarter. So we would term it as a, you know, volume length profitable growth for the quarter is what we have been able to achieve. We had a lot of emphasis on the supply security. With that briefing overall, we would like to take a few questions. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question with a star and one on the touch-root telephone. If you wish to remove your film from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tisha Chamriya from Trinita Asset Managers. Please go ahead.

Hello, Disha. Hello, Disha.

No, your voice is weak, ma'am. If you can slightly speak louder, please.

I hope I'm more clear now.

Yes, please go ahead.

Yes, sir. Thank you for the opportunity. My first question was, how is the mix between OEM and after-sales evolved during quarter one? And as OEM relationship deepens, how do you finance the volume growth with profitability, given that the difference depends on the margin profiles of these both channels?

So, as Mr. Ravi highlighted in his opening remarks, all our segments have grown, and even B2C, OEM, B2B, marine segment, every segment has delivered double-digit growth, and that is the reason that our overall mix in terms of our sales mix, customer mix, more or less remains the same, because B2C and all the segments have delivered an excellent double-digit growth. So, for the quarter also, we have been in the similar range of around 45% B2B and 55% B2C sales.

Got it, sir. The next question was, could you please update on the scale and profitability of the AdBlue business, and like, do you see everything in business such as EV solutions becoming meaningful contribution to earnings over a medium term?

AdBlue.

Yes, sir. AdBlue and EV. Yes, sir.

So AdBlue also has been a very strong pillar for us now. We are clearly in the top three suppliers of AdBlue in India, and the volumes are now stable at around 38,000 to 40,000 KL a quarter, which we have been consistently now in a position to achieve. This quarter also we have been able to achieve 40,000 KL of AdBlue. We all know that AdBlue is a product which is a low-realization product with a single-digit But it adds up to the overall volume and gives us that operating leverage and efficiency. At the same time, the entire supply chain process is the same and consumer is the same. So it perfectly sits in the synergy product category. And hence, our focus on AdBlue continues. But this product will always be able to deliver only amid single digit margin. So this is about AdBlue. Coming to EV, of course, we have been saying that it is a very nascent business for us and for the industry also. But we are seeing the traction happening in EVs in certain segments. And most particularly in e-buses, there are a lot of government initiatives now and new tenders have come for e-buses. And I think in the next one to two years, all those tenders will be materialized. Based on which... We will be able to definitely take the EV business as per our earlier guidance in the range of around 300 to 400 crores in 3 to 4 years.

Got it, sir. And my next question was that given this industry is highly complicated, have you observed any changes in the pricing discipline or promotional intensity during quarter one that has affected your market strategy?

No, sir. I think the market, obviously, the pricing levels will differ based on the brand strength in the B2C business. I think we are seeing a huge cost increase. So price increases are happening. And I would say OEMs, obviously, there's a different structure on pricing and B2Bs are also competitive. So we don't see any change as such. But yes, the price increase, which has happened, is quite significant in the industry, quite unprecedented. So there have been a series of price increases. And I think now, you know, we are maintaining our position. In fact, we are in a strong position in terms of our brand. So we are able to also take a little bit of lead on the price increases in certain segments.

Just a follow-up on that question, Anissa. As you said that premium products and premiumization would be a key strategy to focus right now. So could you just quantify like how much of share from the premium lubricant has evolved over the last few years and how much of the future earning growth do you expect to come from the premiumization rather than the volume expansion?

See, the volume expansion of the industry is predicted to be around 3 to 4 percent for the next decade or so. And the value increase in the industry is expected to be double of that. So, if you see the value is coming from the higher end products. Higher end products are synthetics and other advanced products which are coming, which are, you know, semi-synthetics, synthetics and higher specifications. Now, as a company, we have got ample room to grow in that. As a percentage, we are obviously not getting into detail because each segment has a certain level of premiumization. And our endeavor is to premiumize our range because it is also adding value to the industry and us. So, we generally have a, you know, in each of the segments, you have products and you have certain percentages. It's quite complicated to explain. But overall, we are trying to increase our synthetics, our premium and value-added ranges, also environment-friendly products like biodegradable, hydraulic oils, etc. So, as a percentage, this is still, I would say, below 10% overall for us, and we want to take this to a high level.

Got you, sir, and this one. And just one small question. Thank you, sir. Okay, I'll join back to the case. Yeah, please, if you don't mind.

Thank you. The next question is from the line of Nitin Tiwari from Philip Capital India Ltd. Please go ahead.

Hi, sir. Good evening. Thanks for the opportunity and congratulations on a very strong set of numbers. So my question actually was with respect to the growth that we have seen in this quarter. So if you can just put it in some perspective, how has the industry growth been in this quarter and what our growth is and also what led to this strong growth? I mean, Was there any element of, like, you know, an anticipatory sort of buying because a price increase was anticipated or something like that? And how do we see this number unfolding over this?

Yeah, so, Nitin, thank you very much. I think industry growth as a benchmark, we say three to four. As you know, the information is not fully known on the industry growth because you have so many players. But if you were to look at it today, you know, three to four percent, obviously the quarter was a supply security, as we mentioned, was a very important thing. So there was definitely people wanted to secure some supplies. And I would say that that is an important thing for the industry because a lot of the industries, OEMs are very highly dependent on having these supplies in the pipeline. Otherwise, they would lose their customers. So that is a very important element. And people have definitely looked at how the industry can supply. I think in that Gulf has done very well. We've been able to get whatever we gauge. We have not only been able to meet the needs of our customers, even our channel distributors require stocks. So we have a close monitoring system which shows that we have been able to supply to meet a lot of the expectations, and we have been able to do better than others. So I would say that some of the growth we have got is definitely due to this efficiency model which we had in place, and we continue to grow at least 2 to 3x, in fact 3x is clearly what we feel. Maybe there's a percentage to growth which has come due to better supplies or maybe more. But the question is also the way that we have been able to go about all our segments growing effectively. That is another key which has happened for us, and I think that augurs well for us. We are definitely, you know, we will continue to look at this 2 to 3x growth going forward. Of course, as we know that the industry also is going to grow. So that's a positive thing. And I think some of the growth, yes, this quarter has been due to more, you know, supply security. But definitely agility, which we have shown, and a lot of our segments doing very well.

Got it. Understood. So, I mean, what I was trying to understand is that is there, like, you know, I mean, is it going to somewhat norm in second, third quarter, or do you expect the pace to continue as such?

No, no. See, the July, August, September quarter is a monsoon quarter. Generally, the demand is slightly less, but demand like agri and all goes up. OEMs are continuing to buy. B2C gets slightly less because of the monsoon. But I think overall, we will continue with our focus. If the opportunity is there, we are ready for it. But we hope the quarter will be also a positive and a good growth quarter for us.

So that's good to know. And secondly, on the pricing, I suppose, as raw material prices increase, we also undertook price evisions to adjust according to the same. So was this price adjustment distributed across the quarter? Or I mean, was it more towards the end of the quarter? How was it based if you can throw some color on that?

And then we lost you, just can you repeat the question?

So, I was saying that like, you know, in the quarter, like, you know, there was, there would have been an increase in raw material cost. So, I mean, I'm sure like, you know, there was a price adjustment undertaken to pass on the same. So, I was just trying to understand that was this evenly paced across the quarter or was it more bulged towards the beginning or end of the quarter or something like that?

You see it varies. In the B2C market, we have seen close to three increases, which has happened starting March end, April beginning, which is practically every month or so. And in B2B, you have formulas and negotiations with all the customers. So it is in a staggered amount, but obviously it has happened because of the increase in cost, it has happened in stages, two to three stages across all customers. And, uh, markets.

Uh, so B2C was mostly in March and, uh, April beginning and B2B was formula.

No, no, regular periods. As I said, it was literally like a monthly sort of increase.

Okay. Got it. Got it. And lastly, if I may ask one more, uh, so what's the roadmap for Tyrex if we can elaborate in terms of, uh, revenue and, uh, profitability and how does it stand in this quarter? Um.

Yes, so this quarter was slightly subdued because a lot of the EV buses, they come up in the depots and all, in the government depots. So that has gone slow this quarter. But as we have mentioned earlier, or earlier in our television interviews, the first half we are expecting the revenue will be positive for us. First quarter has been slightly slow for us. And we are both in ACDC chargers. So, I think we're looking at obviously growth coming in, but I think most of the growth will come in in the second quarter now, and hopefully quarter three, quarter three also will be good growth for us.

Great, sir. I understood. Thanks for answering my question. I will get back in the queue.

Thank you. Ladies and gentlemen, you are requested to restrict your question to two per participant. The next question is from the line of Sabri Hazarika from MK Global Financial Services. Please go ahead.

Yeah, good afternoon, and congratulations on good set of numbers. So, two questions from my side. Firstly, your sales volume growth, so it has been uniform across different levels, right, whether it's primary, secondary, or tertiary sales.

No, so if you look at the sales across segments, it has been double digit, and definitely some are, as you said, 17% overall. Secondary, tertiary is more for the retail part, and of course selling in through the distributors. So I would say, yeah, there has been a good offtake across the various primary, secondary, and tertiary.

Right. So have we seen some sort of like natural increase in the amount of like... I mean, the demand for lubricants overall for the company also, for the sector also as a whole?

Sector, we are looking at the market. Obviously, there has been some, obviously, when there was supply security issues, there has been stocking up, but there has also been a sell-through. For us, at least, we can say the sell-through has been positive as per our primary sales and our sales to the markets. So, for the industry, we still have to gauge, but, yeah, overall, market has grown, we say, 3 to 4 percent. We'll have to, you know, we really don't have the figure now, but in our market surveys, we will come to know if the market has been slightly better.

Right. And the second question is on your margins. So, I think the EBITDA margin has remained sort of within the range. But the EBITDA per litre has gone up significantly because of the price hikes. So right now, is there, I mean, you maintain this guidance of like 12 to 14% range, or given that the EBITDA per litre has gone up almost like 30-40%, there is a relook at the guidance, margin guidance?

In the pricing, price rising scenario, the top line goes up. And while we are, our endeavor is to pass on the per litre cost impact to the customers and maintain our per litre margin. The percentage margins are slightly dilutive in this kind of, you know, inflationary environment where prices are really like going up very, very high, and percentage, perhaps for the medium term, is not an ideal way to look at it, because this is a, there is a mismatch between the top line and the, you know, per litre beta you can make, but on a long term On a more sustainable basis, yes, our 12-14% guided band is still intact, with the completely all efforts on premiumization and all, which will enable us to move to the next band as we have been highlighting for 14-16%. But for the time being, this, I think, per litre, managing the margin per litre and trying to improve slightly at that point is our primary It's a great task at the margin management from the margin management perspective. But we still hope that because the operating leverage will also come in, the coming quarters, 12 to 14 percent should also be manageable.

Right. And also, was there any inventory gain impact in the margins?

No. So we don't play on inventories. So we are like an FMCG. So if there is a cost increase, we pass on. If there is a cost decrease, we have to pass on. So we don't play on inventory. There are no inventory gains related accounting.

Right. And also, just to follow up, so now if we see, I mean, there's a sharp increase in base oil prices in the last three, four months. So our raw material right now, I mean, to what extent the transmission has happened already in our raw material cost, or are we seeing more increase in, say, in these months, like July, August?

As we speak, I think we have taken another price increase in retail effective 1st of July. But it is just, you know, the B2C pricing takes, you know, nearly one to two months to get fully implemented because there is a pipeline inventory in the channel. But since the input cost have not come down significantly, although the crude is reflecting that, you know, it is from touching up. Above $100, it has come down to below $85 now. But the base soil pricing so far is not reflecting such decrease anywhere close to that. And rather in some of the great upward movement continues like some of the high-end base soils because of the demand supply position. So it is very, very difficult to right now predict until and unless the supply side improvement happens. Because the crude pricing is one barometer for base oil to move. But equally important is in these times the supply side improvement in the supply of base soils. And that is still very, very, you know, difficult. We would say state of Hormuz is still like almost shut. So it's very difficult to say how the things will move, further price increases. May need to be taken, if required, depending on how base oil moves and how demand supply moves, how long it will take to reopen Hormuj now again. So, there are many factors right now. We have to pay it by the month, maybe.

Got it, sir. Thank you so much and all the best.

Thank you, thank you.

Thank you. The next question is from the line of Ankit from Ardezi Ventures Family Office. Please go ahead.

Hello, Ankit, please go ahead. Can you hear my audible?

Yes, yes, Ankit.

Yeah, I think we can hear it. Hi, Ankit, so your volume, yeah, your volume is not of 32%, I mean, it looks really high, but obviously there is calcium crevres and chamich cotton. I mean, for FY27, if you were to look at it, depending on. Kind of estimate what kind of volume growth would be, what kind of growth and revenue would be, what kind of growth and revenue would be, and what kind of margins you would kind of improve?

Our volume growth for core lubricants is 17% for the quarter. Revenue growth is 32%. And as Ravi just highlighted in the previous question, That while there may be some sort of free buying or one-offs in this volume, but we have been, anyway, our entire, you know, strategy is to keep growing two to three years the market, which means anywhere close to double digit is what we have been growing. Last year also, full year basis, we have grown 11%. So overall, our guidance remains the same, that we will continue to grow 2 to 3 years the market, with the EBITDA branch, which we will try to maintain the range of 12 to 14%. Of course, I have created that in the previous session also that in these times, percentage margin may not be a right parameter. Maybe the per liter margin will be a better optics. But having said that, our medium to long term strategy continues to be ahead of the market growth, keep gaining the market share, and keep growing EBITDA on the back of a good volume growth with improved premiumization and eventually moving to the 14 to 16 percent back.

Okay, and with all the issues that you were kind of talking about with the raw material pricing and also in terms of raw material availability uncertainty, I mean, should we be building in a short-term kind of issue for margins ahead or and do you see any kind of supply constraints even ahead or as of now in July the situation?

So far, we have been able to manage our supplies very effectively. We have long-term tie-ups with some of the refiners. And on the spot market also, we have been, you know, very actively pursuing sourcing. It all depends on how the situation remains or how long the situation of Middle East crisis remains. And that will determine whether the supply will further get constrained or get eased out. So it is at this moment very difficult to predict. But I think we are geared up, we carry inventory also for at least 30 to 45 days on the soil side. So this quarter at least we are not seeing any major disruption. But we have to really see how the crisis unfolds and when the state of Hormuz normalizes, the things will rapidly improve as well.

Thank you.

Thank you. The next question is from the line of Dhaval from Choice International Limited. Please go ahead.

Yeah, hi. Thank you for taking my question. So, last photo on the balance sheet, there was a debt that has been raised for the expansion of Tyrex plant on the concentrated level that I was able to see. So, now the 380 to 400 crore revenue guidance that is there, is that including the expansion of the plant or is it basically the expansion is baked in or do we think of it as a higher number? And the second question I have is on the demand situation right now. Already a month has gone by, so do you see still some ad hoc demand coming through the market, or is it broadly settled? I also have a third question, if that is okay.

Go ahead, go ahead.

Yeah, and the third question on the, so the floodlight situation in Silvasa that one of the other lubricant there experienced, so is there anything to do with the utilization levels that could be there for the current quarter, provided there was some sort of flood situation in Silvasa? Yeah, that's better for mine.

Yeah, so Tyrex, as we have explained, is that we have bought a new plant. We are going to shift to that in terms of increasing the capacity, and obviously because we cater to a lot of OEMs and all, it will be a very upgraded facility. So that is what the CapEx was, and the 300-400 revenues anyway, this is part of that, that when we are expanding, this will help to meet the need because we have 8-10% market share in the DC charger business. So, this enhanced capacity that we are creating is for the future. So, it will take care of our needs. Obviously, if it grows more, we have to look at it. But this will take care of our growth going forward in terms of the 300-400 growth. The other is you asked a question on the current July of September, the industry is generally a monsoon quarter, and as we see it, it is obviously going to have that normal trajectory. At the current juncture, while we wait for the quarter to get over, it's a month-on-month thing, and we are happy to say that we continue to look at our 2 to 3x growth. Industry, at the moment, yeah, July, we are seeing, obviously, normal July, normal August, it depends a lot on the agri season, so that seems to be going positively.

I think the third question I will take, which is on the Silvasa side. So our plant has been operating smoothly, and we have not been impacted on the production side, so our capacity is in full stream, no problem.

Thank you. Thank you.

Thank you.

The next question is from the line of Prashant, an individual investor. Please go ahead.

Hello. Thank you for the opportunity, sir, and congrats on good set of numbers. Sir, my question is regarding what is the status of our ongoing expansion in Silvatsa and Chennai plant?

Yes, so I think Sylvassa and Chennai, as we announced, 70% increase in capacity. And we had announced quarter-three, quarter-four when there will be a phased increase of production. And we are happy to share that Yachenna is on track. Silvasa, we are also expecting that some of the augmented production will start. And that also should be there by the year-end, financial year-end. So it's on line with what we had planned.

So, the Chennai plant would be by December and Silvasa will be by end of March?

Yeah, so there is a lot of commissioning of inter-immediary equipment, storage and all which happens. So, I think more or less that's where the plans are.

So, all the civil work and machinery order, everything is set and restoration is ongoing?

That's part of the CapEx expansion as you are aware.

Okay, thank you very much, sir.

Thank you.

Thank you. The next question is from the line of Arya Patel from MK Global. Please go ahead.

Hi, thank you, sir, for the opportunity, and congrats on a really good set of numbers. So, my question was regarding domestic supply of basoids. So, we know that, you know, MCs are coming up with enhanced capacity. So, how do we expect the domestic supply to go up, and by when are we looking at this?

We are in touch with all the, you know, NOCs in India who are producing base soils, and in fact, we keep buying from them as well. So we are in close touch with them, and whenever they are ready with the additional capacities, we would be, you know, happy to connect and get the additional sourcing from them, subject to, of course, the pricing and quality, which is our norm. So we are well connected with them.

You got it, sir. Thank you. That is my case. Thank you. The next question is from the line of Mukundagarwal, an individual investor. Please go ahead.

Sir, congratulations on great set of numbers.

Thank you.

Sir, all my questions have been answered. So, thank you so much. I just didn't know how to disconnect from the Q line.

Thank you.

Thank you. The next question is from the line of Ruto Bikwani from Vinam Rao Capital. Please go ahead.

Yeah, thank you for the opportunity. So, sir, my first question relates to the Gulf 2.0 plan. So, we were looking at value-added products increasing in the overall mix. So, now that we are roughly about two years out since the initial plan was announced, could you quantify as to how the business mix has changed in terms of value-added products and how it has translated into margin?

Yeah, so some of the products that we have brought in, obviously the synthetic range, we are talking about the range which is obviously going to be at a higher formulation levels. So I think for us, getting these products out in terms of needs of our automotive consumers, in terms of our B2B partners, so I think it's an all-round initiative which adds to the value, and as I mentioned earlier that some of the synthetics and other products we have are still below 10%. So we really want to see, that has already started to go up year on year, and we are expecting that this will obviously add to the future pipelines that have been created. So as you rightly said, this journey has now started of Unlock 2.0, and some of these products already are selling, like we have a range of… Synthetic motorcycle oil called Syntrac. We have launched five, six new variants in that. So, currently, they are single digit in terms of our volumes, but we expect it to go up by at least one, one or one and a half percentage every year.

Right. So, if you were to look at the blended portfolio, we are talking about a value added of about 10-20 percent, roughly ballpark in that range.

It is difficult to keep slicing, dicing that way, but generally these products form part of the range, and they keep taking it up, and obviously the value addition is both in terms of creation of value for the customer and in terms of the pricing. And of course, some of these products would have a better margin, but we have to invest in them equally to be able to get them. So it is a sort of a balanced equation mushroom look, but yeah, the idea to premiumize is to create more value.

Right. So, essentially, the annual target would be to target like each category and do at least about like 150 to 200, which kind of improvement, right? It should be.

Because obviously, our 2 to 3x market growth gives us a percentage market share. If we are looking at these products, they should give us at least higher than the delta.

Right, sir. And secondly, in terms of Tyrex, I think there's some revenue numbers that we've been looking at, some 300, 400 curve numbers, but from an operational standpoint in terms of market, could you like throw some light on what is the competitive landscape right now? What are the kind of essentially traction in terms of the charger infrastructure which is there? So anything around the industry of Cyrex, if you could throw some light?

Tirex is catering to the fast chargers, which are called DC chargers. It varies from 30 kilowatts to 240 to 360 also. And these are used for fast charging for cars, but mainly it is used to stay in the EV buses. The buses are requiring a lot of the charging. And now you see even construction equipment, you see SUVs requiring fast charging. So they are present in the fast charging area, especially EV buses. We have always said that we are one out of three EV buses on a Tyrex charger. They have about, you know, installed these over the last three, four, five years. Now, as we look at this market, it is now where the captive use is very high. It is also going into, for example, SUVs require fast charging. We also have the AC chargers which are into cars. So, as this market develops, we are definitely looking at being part of the DC charger market and looking at evolving. There are bus OEMs who are buying. There are charge point operators who are buying. There are institutions who are buying. In fact, there are now societies that are buying. So these are the segments which are evolving. And as we look at it, Tarex obviously has products which can meet the needs of these customers. And we will evolve. India is still, I would say, picking up a lot on the public. The network is becoming strong as we look at it, but obviously at a pace which we know is at a certain level. And we are looking at a lot of the charge point operators coming in. In fact, now highway charging, destination charging, even home charging is becoming. But definitely a lot of potential to have more chargers in the system and also where the chargers are going to be used more. So we would like to be also there where the chargers are being used effectively.

Right, sir. Thank you. And just one small question in terms of our OEM business, if you could broadly give a ballpark number as to what was the OEM business two years back and where are we right now in terms of the proportion?

So, OEM business for us is a key building block. As we keep telling people that 2007-08, we had two OEMs, now we have 50. So, it is a large part of our business, and if you say two years back, we have been growing double digit across all our segments, including OEM.

I was actually trying to get the percentage to revenue, if you could give a ballpark.

Yeah, so we normally would not like to give that details, because it's a large part of us is related to contracts. Okay. Thank you so much. Thank you. Thank you. Appreciate it.

Thank you. The next question is from the line of Kirtan from Baroda BNB Paribas Mutual Fund. Please go ahead.

Thank you, sir, for giving the opportunity. Two questions, one on the growth side and second probably on the pricing side. On the growth side, is it possible to sort of give a color beyond double digit in terms of what has been our growth for B2B and B2C segment? And within B2B, can we sort of give some indications on OEM as well as workshop segment, just trying to understand where we have got this 17% from. And primarily from a perspective that when we compare the 17% versus the 11% growth that has happened last year, does this give us a comfort that at least this year growth could be 1 or 2% higher than the last year while it's remaining within the range? And are there any historical precedents around where we can compare the similar parallel situation to see how the demand movement has been post disruption? I'll probably say the question on the pricing later.

So, Kirtan, see, as we mentioned to you very clearly that all our segments have been growing double digits. Within the OEM segment, I think I mentioned it briefly, is that we have seen a very good uptick with the agriculture part of the OEMs. And in the case of them, also the motorcycle where we supply OEMs. So, these two segments have been higher growth for us. In the B2C, which is our channel business, we have again seen agriculture being a strong and of course, passenger car for us, the base is lower, but we have grown well. So I think these two segments, passenger car and agri have been very good for us in B2C. In the OEM franchisee workshop, it has been the motorcycle and the agriculture. So these are the segments in this quarter if we have to look at, but obviously as we look at the industry in a holistic manner, we have explained that there has been a lot of supply security, and important supply chain agility, which has also helped us to look at this entire quarter, which has gone by. And we also have been selling marine, which is a key segment, you know, now we look at it for globally. But in India, also, we have seen marine, some exports have been done from here. So overall, this quarter has been a good quarter. And if we take the rest of the year, we'll have to see the situation. Because as normal growth happens, we are happy. If the opportunity presents that we are able to get more market share, We are in a good position to look at it. So we'll have to wait and see how the rest of the year goes. Definitely, as you can see, quarter four of last year was 14%. So, it's a good end to last year and a good beginning to this year. So, we'll have to wait and watch the rest of the year.

Sure, thank you. On the pricing side, the way you explained B2B pricing can reverse with the formula with probably 1 to 2 month lag. But is generally the B2C pricing stickier? Will the pricing hold longer than typically the... And in that sense, do we typically see margin expansion once this supply disruption starts easing? Are there any historical precedence to it?

Yeah, so I think we have in the past seen on few occasions that when these kind of unprecedented price increases happen, especially in B2C where you have to take a series of price increases one after another. And when the MRPs are increased significantly in line with those, you know, the retail packs, which is mostly in the B2C, are sold on MRPs in India. And when the prices start softening on the input cost side, You don't roll back. Usually, all the MRP increases which have happened. That has been the past trend. We don't know because there is a competition, there is a, you know, it's a very competitive industry. But in the past, we have seen that there have been typically some margin retention in B2C, although in B2B, it is formula driven and it is passed on. But B2C, there is an opportunity to retain some price depending on how the input cost behaves. In the coming quarters, or over a period of maybe next one year.

Just one small follow-up to this. At what level of price increase you start seeing some sort of demand destruction happening in retail segment from your historical experiences?

Very difficult to predict because segment to segment, you know, a motorcycle buyer may be more, you know, it may be pinching more to his or her pocket versus a car buyer. But it depends on the segment and the category and the geography also. So, very difficult to predict, but yes, at a certain point, when such kind of price increases happen, unprecedented price increases happen, people may tend towards, you know, down trading or, you know, going to some other. Shipper options available, although there are hardly, everybody has taken price increases in these scenarios, very difficult. But typically, you are right, there is a possibility that at certain point, then the demand elasticity will play its role.

Yes, sir. The participant line just got disconnected. Moving to the next question. And the next question is from the line of Amit, an individual investor. Please go ahead.

Hi, sir. Am I Aadidin?

Yes, please.

Yeah. So, first of all, congratulations on the good quarter. My two questions are, so, assuming on today's base oil cost and today's price list, Expected gross margin for the company. And second, in terms of the, so we've seen about 190 bits fall in operating expenses in this quarter, the share of revenue. So just want to understand what are the key items driving this? Is this, is there some deferment in advertising and promotion spend, which we've done? Sir, a directionality is, just looking at a directionality, because last quarter would have, since we carry 30 to 45 days of inventory, we would have some base oil which was bought in Q4 and consumed in Q1.

Mr. Amit, you have to see we follow weighted average. Every week or every next day when we receive a further parcel, our cost gets weighted averaged. So, it is not that we are consuming on FIFO basis the last month and the system does not behave like that as per the accounting standard also. So, we are in a very dynamic environment. We can only tell you that it is a, you know, very, very weakly evolving situation and price management is the topmost priority at this stage where we have to continuously monitor the input cost, the incoming material versus the stock and calibrate our pricing accordingly. Because it's not easy to approach 2000 plus customers we are having in B2B and in our overall infrastructure B2B, OEMs put together. It is not easy to approach them and negotiate every week or every month a price increase. It's a very, very difficult situation right now. And we are trying to calibrate on an overall basis that we maintain our gross margins in the range plus minus, so you know, 1-2% here and there. And pass on the thing to the customers in the event, it goes beyond that. Of course, the percentages also I keep highlighting this that these are slightly becoming sometimes irrelevant in these scenarios because then the top line goes off very fast. Right? Overall, deliver still the 12% to 14% margin by, you know, looking at our other costs very, very closely, which brings me to your second question, where operating... Cost, you have seen some improvement that is partly because of the operating leverage also because certain fixed costs you keep absorbing. We have spent still around 3% on our ANP. So we have not largely cut the ANP in this quarter. We have continued to maintain our share of OAS in the market. But there have been many other fixed costs which we have been able to optimize and deliver the margin.

Okay. And in terms of absolute rupees, Q1 FY27 is comparable to Q1 FY26 ANP cost?

Ballpark is also fine. We always talk about percentage, sir.

Thank you. The next question is from the line of Vignesh Ayer from Sequent Investments. Please go ahead.

Hello, sir. Thank you for the opportunity and congratulations on a great set of numbers. Sir, I was hearing you earlier when you said that we, as such, don't make, you know, inventory gains because the system is different for us. But also, I heard you saying that, you know, the percentage margin tends to go down, which I understand because the numerator increases. So, that But despite all this, you actually, if I have to compare you with the same quarter last year, you have more or less done the same percentage margin as well. Whereas, you have actually managed to do a better, a bit tougher, you know, later as well. So, just from the understanding point of view, Would it be fair to say, you know, when the situation normalizes from year on, the EBITDA percentage margin is only going to go up from year? I mean, I don't see in such a volatile environment if you have managed to keep it stable at 12.51% versus 12.54%, which was last year's same quarter. So, am I reading it right if you could share your thought on this?

Yes, it depends on the how much price rollbacks happen or further price needs to be taken up if the situation margins in the middle from here and the availability goes further scarce. So the calibration on percentage will accordingly change because we must reiterate that not the full impact of all price increases has been reflective in the quarter. We have taken price increases which have been Periodical. Every month there have been some pricing action in different segments. So the full price increase or deflection will actually come in Q2 or Q3, probably when the situation starts normalizing. And from there on, how the market and competition behave and what pricing actions are taken will determine whether the percentages now start improving or not. So, I hope you will understand the current situation which is very very dynamic.

Understood, understood. I mean, considering my question was more towards because our B2C is 55% and usually, as you said earlier, the B2C, there is some component where you have the power that you may not take roll back the hype. So, considering that is a material percentage of our total revenue, so I was thinking it is more or less possible that the percentage margin only goes up from here.

No, no. Just to give again a reflection to all the audiences here, the kind of price increase which has happened in the last three months, four months in B2C is in terms of almost touching to three digits. Now, in any consumer industry, those kinds of price increases are not fully sustainable. And given an opportunity, whenever it happens, Some rollbacks will happen in B2C as well. It is not that the prices once taken up are not going to be reversed in B2C also, provided the cost situation improves. And I think when that will happen, the quantum will be determined based on the market situation and competition. And yeah, Ravi, you want to add something?

Yes, so contextually, you see, any price increase that happens, if there is a rollback, if the cost goes up X and you increase the prices X, when you roll back, you will roll back when all the prices go up or down, similar, you roll up. So, similarly, when the prices come down, you will have to have some rollback, but it could be possible that you retain something because you don't. But as Manish correctly explained, this situation is quite unprecedented, and we will have to wait and see how the market situation emerges. As a general, if the prices go up, there is some retention of margin, but there is a rollback. That is also to be understood. You can't retain the whole price increase. That doesn't happen in the industry.

Exactly. I was talking in the sense of only a partial or a very small part of the industry.

You see, the situation is very fluid now with the base oil supplies and the cost. It's very fluid. It's very dynamic. Unless the state of hormones, because a lot of the refineries are taking feedstock from this part of the world, and they have to travel and go across that area to supply the refineries. And there's a lot of movement and a lot of things happening, which is refineries are starting or shutting. So there's a whole complex thing. It's related to crude, but it's also on the base oil and the other movements.

Right. Just one final question from my side. I wanted to understand, as of today, on month-on-month basis, are you seeing a sort of plateau formed for the base oil prices or are you still seeing that the price is increasing on month-on-month basis?

As I mentioned in one of the previous questions, there are seven, eight grades of base soil, from light neutrals to heavy neutrals to synthetic or very advanced group three base soils. In some categories, the prices are still moving up as we speak. In some categories, there have been some softening in the pricing in the last one month. So, it is depending on that. Which group of base oil we are talking about also. And demand supply in that particular group. Suddenly, you know, group 3 base oils have become very, very scarce. The prices continue to rise. So, you know, depending on grade to grade, the situation is different.

Right. Right. You got it. I got it. Thank you. That's all.

Thank you.

Thank you. The next question is from the line of Ankit, an individual investor. Please go ahead.

Yeah. Good evening, sir, and congratulations for a good set of numbers. Over by Modul.

Yeah. Yes, yes.

Sir, I have two questions. I just wanted to understand what is the exports contribution for this quarter, and the second question is on the battery revenue for this quarter, and how is the battery business going?

So battery, we have seen a good quarter in terms of scale. We are obviously expanding our outlets. So we, I think, last year did about 80, right? Close to 80 crores. 80 crores, almost this quarter. Yeah, and this quarter is seen a much better performance compared to the quarter performance. 20 crores total turnover in the quarter. Yeah.

Okay.

We have seen good growth in the quarter, but obviously we want to take it up, you know, normally we took a 10-15% growth. That's how we are planning.

Okay. And sir, if on the exports, you can mention some, you know, percentage contribution. I mean, I remember that it was around 7-8% in the past quarter. Has it increased or is it around the same range?

So overall, our exports in this quarter also has been in the range of around 9-10%.

Okay. Thank you so much.

Thank you. The next question is from the line of Deva Patil from Samiksha Capital. Please go ahead.

Thank you for taking the question. I heard you mention earlier we are able to take lead in pricing in a few segments. So, just around that, if you can, you know, explain, were you referring to the three price increases for each of the months, or are you generally talking about trend, let's say the past two years, and again, which are these segments, and what percentage of revenue do they form?

So, Deva, it is in the B2C, there are certain pricing which comes into the market, and then the prices are made effective. So, what we can say is that there are many competitors that take prices up. We also put our price lists out. And effective prices is where we feel that there are some segments where sometimes, you know, you see certain players taking a step forward. And we have seen that in some of the areas in the last maybe six months, one year, there are some leads which some players are taking, some leads we are also taking. So, it's a mix of that. So that is what I was just referring to. There is no specificity that we have taken this segment and we are leading it. But if I take the last one year, there are some segments where we have gone and made a move in some products. Not necessarily as a category, but in some products. It's also related to your brand positioning. We believe as a brand, we are in the top two, top three if you take overall industry. So based on our position and our segment, we do take certain moves where we would say reduce a particular promotion or a scheme, try to improve the pricing. So I think that's what I was referring to.

Right, right. Secondly, you mentioned we do not, you know, play on inventory. Yet, when I look at the numbers, our inventory has gone up by 108 crores this quarter at the end of the quarter. So, was that transient, has that liquidity inventory already been liquidated?

So, this is a moral, you know, abjil, which is now produced at a higher rate. It has nothing to do with the weighted average.

Okay, that's all for my time. Thank you.

Thank you, Deon. Thank you. The next question is from the line of Dhawal from Choice International Limited. Please go ahead.

Yeah, so just to understand, last week, Mahendra and, of course, MG, and there are about, I understand, 12 OEMs to which there is approval for direct as per the annual report. So is there further, can you provide some color on, are there more partners or there are more players in the market that you have started to cater, given there is a higher penetration of EVs into the market in this current situation?

So, we have been supplying to most of the bus OEMs, you know, whether it is, we have Electra, we have other players like Switch and Home, and we have also looked at that, and there are OEMs like Mahindra, where we have supplied DC chargers, and also part of their dealers also have been buying. We are, in the last quarter, we have also got some construction OEMs who have started buying us, and a few more charge point operators. And we continue to work with all the OEMs. And I think for the Tyrex business, we are quite strong in the bus OEMs, as we mentioned quite often. We also supply AC chargers to MG and Winfast. So these are two of the other brands. And we are looking at further expanding into, you know, getting into other OEMs, looking at expanding our, you know, we have also got Tyrex chargers in some of the petrol stations. And we're looking at a lot of those other areas, but for us, it is mainly to go where the growth is and where the usage and the liability are important.

And just to follow up on this, as far as these chargers are concerned, so is it that Tyrex itself has a charging station and more to do with, let's say, Tyrex, the disc console, is there a business opportunity there wherein Tyrex itself will have its own charger and you plan to set it up across any sort of this thing that is there or it's only that DC chargers and AC chargers would be supplied? They said there's not going to be any charging station of Tyrex itself. Is there an opportunity for Tyrex in that time?

I think what you are talking about is the CPO business, we have not yet, Chirex is so far not into a CPO business, we are manufacturing chargers, so CPM, charge point manufacturers, and the CPO as a business is a cash-guzzling business, as we understand in the beginning, there is a long gestation period. And a lot of cash burn before it becomes profitable because utilization levels in India are still very, very low, especially for the public charges. And unless the utilization level significantly improves, which again depends on the number of vehicle park, which will be built over the years, India is very early in this stage of journey of EV. And if in future there is a business case to, you know, invest some money in creating a charging infra, the company will look at it. But as of now, we want to first, you know, make chargers and sell it and, you know, build our chargers in a very, very robust platform. And we are doing a lot of technically advanced features in the chargers. So, with our also. Global company Indra, AC chargers are also very advanced chargers. So, we want to go from that route of building the solid, technically, one of the best products, and the CPU opportunity will evaluate at appropriate time, not in the near future. Thank you.

The next question is from the line of Kirtan from Baroda BNB Paribas Mutual Fund. Please go ahead.

One more follow-up question. How much portion of the 109 crore relates to the change in value for the finished goods inventory?

Which one you are saying?

We have 109 crore of sort of the inventory, change in inventory numbers reported into the P&L. How much of that is related to the finished good inventory, in particular due to the change in value of the finished good inventory?

You see, basically, this value is derived as the difference between the value of closing inventory of as of 30 June and as of between the 31st March. It's a combined value of the change in inventory because the value of the inventory has gone up tremendously. We all know that during this period. That's why this 109 crore figure is coming. Whether it is coming from FG or RM is not relevant because overall the impact of this inventory will be taken care of in the price increases which have already been taken in the last quarter and will accordingly be reflective in the coming quarter seven years.

Sure, sir. Thank you.

Thank you.

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

Thank you, everybody, for patient hearing. I hope we've been able to answer all your questions to the best of our ability. Looking at what has been the quarter, which is a record-breaking quarter, obviously, we've tried to explain how it has worked for us. I'm very happy with it. And of course, as we look at the future, we want to look at a, you know, sustained growth momentum, both in terms of volume and value, which has been our sort of mantra. So our focus will be to remain on the industry-leading performance across segments. You know, obviously, 2 to 3x market growth is what we look at, double-digit value growth. In terms of our execution and supply resilience, I think what we saw in quarter one, we obviously want to carry it forward and gauge the situation going forward. We have definitely seen pricing pressure, as we have also tried to explain, in a competitive environment. And while this quarter will be a seasonally impacted quarter, we will continue to focus on demand fulfillment, sales execution, healthy customer engagement, and of course manage our margins with our product mix, our operational efficiency. And really for us, that is the endeavor to continue doing that. Gulf is a strong brand, and the distribution There's also green. So as a brand-led distribution B2C business, we are really focusing on that in terms of increasing our age, both in terms of outlets, in terms of garages right across, and of course, building customer trust. Brand investments are on. As we also explained, we have continued that even in quarter one, and really that's where we want to bring the category brands alive. So overall, I think that's been the outlook. Of course, we hope that the situation with the state of Ormos improves. But currently, as we look at it, we do see that it is continuing to the extent that we are not seeing significant changes in what we saw in recent months. So overall, I think that's the outlook. And we'll continue focusing on e-mobility, looking at opportunities, adjacencies, and new ventures where we can invest. And definitely profitable growth is also the mantra to bring in products that will help us. So overall, we are hopeful that with this very good start to the year, Thank you.

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