Premiumization and achieving profitable growth remain top priorities, according to Gulf Oil’s CEO

Gulf Oil Lubricants India is a private company that has a balanced presence in both the B2B and B2C segments of the Indian lubricants market, sitting comfortably between Castrol India at the top and Shell. In order to preserve its market position, safeguard its margins, and grow profitably, Gulf Oil is following the lubricants industry’s focus on premiumization.

What is Gulf Oil’s current market position, and what growth trends are you observing?

A decade ago, Gulf Oil ranked sixth in the Indian market, but today, it has risen to the second position. While the Indian lubricant industry grows at a steady rate of 3-4% annually, Gulf Oil has consistently outperformed this benchmark, achieving growth 2-3 times the market rate and maintaining near double-digit annual growth.

Our goal remains to sustain this momentum, growing 2-3 times faster than the market while expanding our distribution network. With a well-established brand presence, we continue to invest in strengthening our brand identity.

Over the past 15 years, we have significantly increased our partnerships, growing from just two OEM tie-ups to more than 40. Key collaborators include industry leaders like Ashok Leyland, Schwing Stetter, Daimler, and Piaggio.

Founded in 1901 along the Gulf of Mexico, Gulf Oil was acquired by the Hinduja Group in the 1980s. While globally recognized for its fuel stations, in India, Gulf Oil has carved a niche in the lubricant business. Our operations span factory fills, the replacement or bazaar market, and franchised workshops. Unlike PSUs that focus on volume, our strategy prioritizes building a robust brand that enhances recall, strengthens customer intent, and ensures higher margins.

Are you also ranked second in the market when it comes to volume?

Yes, we are also the second-largest company in the private lubricant market. Gulf has created a balanced presence in both B2B and B2C markets, although Castrol leads in the former and Shell in the latter. In a number of sectors, such as factory fills, industrial lubricants, two-wheelers, and commercial vehicles, we are currently leaders.

Customer-centricity and innovation are the cornerstones of our growth strategy. For instance, we provided significant value in 2006 by introducing India’s first long-drain engine oil, which doubled the truck owners’ oil change interval from 18,000 to 36,000 kilometers.

Do you envision surpassing Castrol in the future?

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Premiumization and achieving profitable growth remain top priorities, according to Gulf Oil’s CEO

December 11, 2024

Our goal is to expand well and profitably, not to overtake them. Our goal is to keep growing at a rate that is two to three times faster than the market while increasing profitability. Maintaining profitability and premiumizing our product line are our top priorities. We have more than 200,000 touchpoints and generate between 140,000 and 150,000 KL a year. Although there is undoubtedly room for growth, our top goal is value-driven, sustainable expansion.

Your margins appear to be quite strong already.

Yes, our margins currently range from 12-14%, driven by a well-structured approach and market-leading products. This reflects the trust and momentum we’ve built around our brand. Our new strategic initiative, UNLOCK 2.0 – Accelerate, Premiumize, and Transform, lays out our path for sustainable growth. We aim to expand in underpenetrated areas such as passenger cars, industrial lubricants, infrastructure, tractors, and synthetics, which will fuel future growth and enhance our market positioning.

Additionally, we’re developing customer-centric solutions. For instance, in the steel industry, we’ve introduced a lubricant management program for JSW, where we charge based on steel output while overseeing the entire process.

We’re also embracing technological transformation by collaborating with partners like Salesforce and SAP. Our partnerships with Deloitte and KPMG help us leverage AI and ML to optimize data usage and generate actionable insights.

How do you anticipate the rise of EVs impacting the lubricant industry?

There has been a false belief that the market for lubricants will be severely disrupted by the advent of EVs. Independent research, however, indicates that for the next 20 to 30 years, internal combustion engines (ICE) will continue to dominate the market. The ICE vehicle park will continue to expand even if EV penetration reaches 18–20% in five years and three-wheeler usage is higher. These vehicles will continue to require lubricants.

Since we made an investment in batteries about ten years ago, we have taken the initiative in the EV market. With 12,500 touchpoints, our Gulf Pride batteries are currently the third-largest in the two-wheeler market.

We also provide a variety of EV coolants and fluids, and we’re investigating battery management and charging options by investing in businesses like ElectreeFi, Tirex, and Indra Renewables.

How is the growth in the industrial sector, and which segment offers better margins – industrial or automotive?

We are growing at twice the rate of the industry, with the industrial section seeing growth of about 15%. We’re concentrating on providing innovative solutions to increase efficiency and efficacy in light of the new opportunities brought about by the government’s push for manufacturing. The automobile sector has larger margins, especially in the replacement market. Nonetheless, there are substantial volume potential in the industrial sector. We’re concentrating on premiumizing our product offers in both categories in order to achieve equilibrium.

What is your annual investment, and are you considering pursuing inorganic growth opportunities?

Our yearly capital expenditure for expansion is approximately ₹25–30 crore, whereas 5–6% of our revenue comes from marketing and digitization investments. We are now operating at 90–94% capacity, and we are considering additional expansions at our Silvassa and Chennai operations.

We are continually looking for growth prospects in the mobility vertical, even if there aren’t any acquisition options in the Indian lubricant market at the moment. In keeping with our vision for the future of mobility, we have already made strategic investments in Tirex, Indra Renewables, and ElectreeFi.