Gulf Oil Lubricants India Limited (GULFOILLUB) Q4 FY22 Earnings Concall Transcript

Gulf Oil Lubricants India Limited (NSE: GULFOILLUB) Q4 FY22 Earnings Concall dated May. 23, 2022

Corporate Participants:

Nitin Tiwari — Moderator

Ravi Chawla — Managing Director and Chief Executive Officer

Manish Gangwal — Chief Financial Officer

Analysts:

Pradeep Vaswani — Karva Capital — Analyst

Unidentified Participant — — Analyst

Sabri Hazarika — Emkay Global Financial Services — Analyst

Ankit Mahajan — Private Investor — Analyst

Manoj Oberoi — Private Investor — Analyst

Saurabh Doshi — YES Securities Limited — Analyst

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Amber Shukla — Private Investor — Analyst

Aditya Shetty — FinServ Consultants — Analyst

Presentation:

Operator

Ladies and gentlemen, good afternoon and welcome to the Gulf Oil Lubricants India Limited Q4 FY 2022 Earnings Conference Call, hosted by YES Securities Limited. [Operator Instructions]

I now hand the conference over to Mr. Nitin Tiwari from Yes Securities India Limited. Please go ahead, sir.

Nitin Tiwari — Moderator

Thanks, Ryan. Good day, ladies and gentlemen. On behalf of YES Securities, I welcome everyone to Gulf Oil Lubricants India Limited fourth quarter and FY 2022 earnings call. We have the pleasure of having with us today, the CEO of Gulf Oil Lubricants, Mr. Ravi Chawla and the CFO, Mr. Mani Gangwal.

I will now hand over the call to Mr. Chawla for his opening remarks, which shall be followed by a question-and-answer session. Over to you, sir.

Ravi Chawla — Managing Director and Chief Executive Officer

Thanks, Nitin. Good evening, ladies and gentlemen, welcome to the quarter four call for Gulf Oil Lubricants India Limited. I’m delighted to share with all of you that quarter four has been an all-time high for us in terms of our quarterly volumes revenues, EBITDA and PBT. I think we are delighted with this all-round performance by the team to deliver the highest quarter and of course this performance is in the environment where we have seen significant external challenges in the form of rising input cost, supply chain disturbances, unabated inflationary cycle. And it speaks well of the strength of our robust business model and strategies, our distribution strengths, our brand equity, our customer strengths and the determination of our team.

The company continued its run as to growing the revenues and of course we had all segments of the business doing well in quarter four, demand conditions have picked up, our diesel engine oils for commercial vehicles and our passenger car motor oils saw very good volume growth and traction. We have increased our market share both in B2C and B2B segments, which has been very good. There are some challenges in the retail business, but we are seeing that even that the agri season coming, motorcycle picked up towards the end of the quarter and we have an excellent growth in the industrial B2B segments, the OEM franchisee workshops and from customers in the infrastructure segment.

The quarter four volume is the highest ever at 37,500 kl, a 7% year-on-year growth and also a growth quarter-on-quarter, revenues also all time record and definitely as I mentioned, the market share increases have happened. And if you take the annualized basis, we have ended on high note. Our full year volumes have grown double digit at 16.5%, full year revenues at 32% and of course EBITDA also has grown at 80%. Given all the challenges this growth that we have got and we have estimated that the industry growth maybe flattish to very low single digit or maybe even negative.

Our market shares have gone up from 0.5% to 1% across segments. Also some of the other highlights I like to mention of quarter four here is we pushed in terms of our brand investment for the South region where we have more opportunity in our personal mobility. We have launched a customized campaign for MS Dhoni a short, five new films for us in the local languages, which are towards the motorcycle and the CVO segments and also there is some creatives that have been put out for the social media, where Gulf has a very high engagement in fact one of the highest (03:54) lubricant brands for our car segment with the Chennai Super Kings.

So all these five commercials and ground level support is happening in the South and certainly that is a good thing that has happened, we are investing back. We launched a retail display contest for agriculture products which again should — when the season coming should help us. We have had two new OEM tie-ups, one with International Tractors Limited Sonalika for the practical OEM workshop and distributor channels, which is good. Also started factory fill supplies to Hyundai Motors for some grads. In the industrial B2B business, we have received first-fill business from the Green projects of ThyssenKrupp &Welspun Steel.

Another important thing that is happening now as we reboot is the distribution outlet expansion in retail. This has witnessed a positive uptick as we have seen that conditions of travel have picked up and the Company is pushing to reboot the retail expansion program as travel has normalized. A special focus on increasing retail outlets in personal mobility and also in the south, where I mentioned that we have good opportunities more than because we are very strong in the diesel engine oil there.

We’ve also increased our focus on gulf bike stop and car stop channels, which are important consumption points with the launch of new program for FY 2023 and also to increase our treasury, we have launched the Mechanic Idol program for our specialized mechanic partners to recognize the best talents in this space. So overall like lot of good things are happening. The demand conditions are going better as we have ended the year and definitely we are looking at how we can take this further going forward.

Before I take — before we take the questions, I will request Manish to cover some of the financial highlights, some of the things that the Board has decided and some of the other things that will help you understand how the quarter four and the the year has done. Over to you, Manish.

Manish Gangwal — Chief Financial Officer

Thanks, Ravi. Good evening, everyone. As Ravi mentioned, as it was record breaking quarter for us in terms of all key parameter, while you will also notice that in terms of EBITDA, it was INR89 crore EBITDA for the quarter which is highest ever and it is 14% growth over last year same quarter and over December quarter also nearly 15.7% growth. And with this, our EBITDA margins have also improved from December quarter, it was 12.8% to now 14% yearly. So overall from financial perspective, it has been a good, very good quarter for us and to recognize the profit and the Board has declared a dividend of INR5 which is 250% and this you will recall that company had announced a buyback in the month of February, which was at a premium of 26% to the market price at INR600 per share. And that also has been concluded in the month of April now and the buyback process is over on 25th of April, which is in the current quarter.

So with this background, we would request for the Q&A session, please. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from the line of Pradeep Vaswani with Karva Capital. Please go ahead, sir.

Pradeep Vaswani — Karva Capital — Analyst

Yeah, thanks. Can you hear me okay?

Ravi Chawla — Managing Director and Chief Executive Officer

Yeah.

Pradeep Vaswani — Karva Capital — Analyst

I just have two questions, one, I think on the, on the quarter, the numbers look good. But could you maybe explain on the receivables that are kind of end of year going up by 50% and inventories up by 30%. And if you look at cash flow, it seems to be down by 80% for the year. That’s my first question. And second, I guess the stock even though the numbers are really good, the stock seems to be at eight year low and there are concerns on the capital allocation that’s been taking place like the dividend is down to 10% which is down again 67% from last year even though the buyback happened.

Second, I mean the buyback also happened at a price which is 50% higher than where the stock is right now. And maybe you can put some color on the investment in a cash of INR15 crores, so I mean if you take INR15 crores on the buyback at a higher price cutting the dividend given that the balance sheet having almost like INR500 crores of net cash with no CapEx requirement. Maybe you can put some color around how you’re deciding capital allocation. And is there any buyback or any commitment from management given the stock effect at eight year low. And there’s a lot of cash on the balance sheet to make some capital allocation decision. Thank you.

Ravi Chawla — Managing Director and Chief Executive Officer

Yeah, Manish.

Manish Gangwal — Chief Financial Officer

Yeah, thanks. So basically first coming to your working capital, you see this year has been a very inflationary year as we all know and the full year top line of the company has grown by nearly 33%. And accordingly there is an impact to that extent one driven by the top line growth, which is — which is quite obvious and that has increased the receivables. Overall, if you see the number of days of receivable, it has gone up by only five, six days over last year. And inventories also have gone up one because of the inflation which is there and raw material prices going up.

Secondly, we have slightly stocked some of the key raw materials more in terms of overall stocking because of global supply chain disturbances which are really unpredictable in these times and we do not know suddenly which part of the world will delay the supply. So, lot of imported materials are used in our process and that is one of the reason why inventories have also gone up. Third reason of course is that the March for us was a very, very high month, all-time high March we had and those are all trending in the receivables at the end of the year because balance sheet is as on a particular date. So these three factors have put in the working capital at the numbers you have seen in the balance sheet. Overall inventories in terms of number of days are well in the same line, slightly only three, four days, five days more maybe in terms of number of days, plus receivables are also only five, six days higher.

So overall we are in control of the working capital. Now that the increased level of operations or I would say funding has been catered into through the cash flows in the working capital, the incremental impact on cash flows will be normalized as we speak. Second point coming to company has announced their dividend in spite of the buyback which was recently concluded wherein close to INR85 crore of cash was returned back to shareholders. In addition, company has also paid nearly INR20 crores buyback tax. So total cash outflow was INR105 crores and further the Board has now declared 250% dividend. We are — we have made some investments in the EV space where we have also announced from time to time, we have actually made two forays in the EV, one was last year and one in the March quarter itself the recent quarter, wherein we have acquired 26% stake in Electrify which is a software as a service company catering to EV sector.

So the Board and management is looking keenly at the EV space and we are exploring where Gulf can play synergistic role and where we can participate in this EV value chain, which will help us to participate in the evolving EV space. So for that, we are looking at opportunities and obviously your cash will be preserved. Our incremental capex in the current business is around INR15 crore, INR20 crore annually and there also we are now that the full-year volume is at INR1,34,000 KL. We are looking at how we can take our capacities with these incremental capex to cater to next two, three years of need. So these are broad reasons why you will see that the cash is being preserved on the balance sheet to look for the investment opportunities across current business, as well as in the evolving space. I hope we have been able to answer your question? Thank you.

Pradeep Vaswani — Karva Capital — Analyst

Yeah, thank you. I think the first question was answered. I think I still have a little bit of kind of general concern on the capital allocation with EV space, you’re not a SaaS company, so investment in a SaaS business model where competition is pretty high. And then as an investor base, you are investing in kind of lubricants business, which you’ve shared that there’s plenty of growth left in the next 10, 15 years.

So curious like the amount of investment you’re thinking in terms of like you have net cash of INR500 crores, maybe you get a 10% yield on your current stock price, why wouldn’t you kind of feel some other firepower to kind of invest in your own stock and buyback more, given the promoter holding until 72 to 73 is probably by another 2% of your stock and little bit 75% target and still have enough cash to kind of extend your business model. So could you maybe share some color on like how much investment are you thinking, is it in the SaaS space or something else like so that we understand what are we investing in for the future?

Manish Gangwal — Chief Financial Officer

Just to tell you in terms of legal requirements, a company which has done a buyback and cannot do another buyback for at least a period of 12 months. So I hope that — so that is something this is there clearly as a regulation. We — as we mentioned Electrify it’s not only about investing in a SaaS company, it is a strategic investment for us because we are looking at charging infrastructure and they are a software provider for integrating the chargers to the vehicle and payment gateways.

So as and when Gulf decides Google go full throttle in this that strategic relationship with Electrify will definitely help us to strengthen our position in this space. So it is not investment only for the sake of investment, it is a strategic investment for us from that perspective and we are obviously looking at even our two wheeler battery business is going to grow significantly over the next two, three years and that will also be requiring some working capital and other investment which we are gearing up to. Thank you.

Pradeep Vaswani — Karva Capital — Analyst

All right, thank you, sir.

Operator

Thank you. Our next question comes from the line of Sadanand Shetty with True Equity Advisors [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Quarter-on-quarter basis, considering it was volatile also want to know if there is any realization growth quarter-on-quarter if any?

Manish Gangwal — Chief Financial Officer

Good afternoon Mr. Sadanand, sorry we missed your initial part of the question because the line was not clear.

Unidentified Participant — — Analyst

Sure, I will repeat again. The impact of base oil on this quarter over the last quarter, considering oil was volatile.

Manish Gangwal — Chief Financial Officer

So if you see our metal cost has gone up by nearly INR3 and in line with that realization also has gone up by the similar amount per liter. And we have been able to maintain our material margin rather slightly improved during the quarter — during March quarter over December quarter. So sequentially the metal margin per liter has been kept intact in spite of the inflationary pressures around. Of course the recent crude really which has been ignited by this Russia, Ukraine crisis has led to further increase in the base oil pricing.

And as we speak the company has already announced a price increase in the retail segment in the mid of April and which will be fully realized during this current quarter. As you know, there is a time lag between the announcement and the stock in the pipeline. So the full price realization happens over the next two months or so. So that steps are already being taken, so that the margin retention or margin management strategy continues for us.

Unidentified Participant — — Analyst

Sure. I can see a bump up in your finance cost although on year-on-year basis it’s substantially down, any technical reason why this bump up of finance cost for the quarter?

Manish Gangwal — Chief Financial Officer

See on the finance cost for the quarter also include the Forex losses mark-to-market because during the quarter post Russia crisis, Russia-Ukraine crisis, the rupee became very volatile and there was a mark-to-market impact on the open Forex exposure to the tune of INR3 crore. This also includes the forward premium for the coverage which we are doing. But as you rightly said, for the full-year basis, we are much lower than the last year finance cost.

Unidentified Participant — — Analyst

So how is that trend for the coming quarters given the hedge position that you have?

Manish Gangwal — Chief Financial Officer

So we have a revolving hedging position, Mr. Sadanand, now of course the current rupee situation is very, very dynamic and very volatile. Our payment to the extent of 70% were hedged, when we started the current quarter. So we keep our self substantially hedged at any point in time and that should help us in this very depreciating rupee scenario also, but overall there will be some impact in the current quarter as well on the balance open exposures.

Unidentified Participant — — Analyst

Okay. That is very useful information. I have one more question, then I’ll join the queue. When do you think your investments will make material difference to the consolidated number? And is there any incremental investment that you’ll have to make?

Manish Gangwal — Chief Financial Officer

See EV space is a very, very nascent space as of now, we are making investment based on our strategic priorities in that segment. But the numbers to make a meaningful difference also requires a lot of EVs on the ground, which we all know are not there as of now as a population, whether it is an investment in our Indra chargers in UK — a UK company or in Electrify. These are all linked to future and for the next two, three years, how much of this will be impacting our consolidated revenues is a very, very wild guess because the numbers itself are very dynamic as we speak, but these are considering a very, very long-term future, it is not something, which is Mr. Sadanand very immediate basis, but these are good investments to have from longer-term perspective.

Unidentified Participant — — Analyst

Understood, understood any incremental investment that you’ll have to make over the next two years in these ventures?

Manish Gangwal — Chief Financial Officer

We may have to depending on how they perform and how they start getting market share in their respective areas. So we may have to line up to more investment to them or to some other companies as well. So, the Board is and management is quite actively looking at all those possibilities as we speak.

Unidentified Participant — — Analyst

Thank you and best wishes.

Manish Gangwal — Chief Financial Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Sabri Hazarika with Emkay Global Financial Services Limited. Please go ahead.

Sabri Hazarika — Emkay Global Financial Services — Analyst

Yeah, good afternoon, sir and congrats on good set of numbers under a challenging quarter. So I just wanted to know the average base oil price whatever your benchmark is in Q4 versus currently and what was the quantum of hike taken in April?

Manish Gangwal — Chief Financial Officer

See, good evening, Sabri. Basically, it is very difficult to say again a benchmarking of base oil. As you know, there are — as we have been highlighting that there are many grades of base oil, each have their own demand and supply challenges. So, sometimes the group one becomes short in the market and sometimes group two or sometimes group three, very difficult to say. Overall, we have seen the trajectory that base oil follows crude over a medium term or a medium term. And crude has gone up from nearly $90 to now $110. If this remains in this range, obviously 15%, 20% increase in the base oil is expected and that we are seeing also currently in the current quarter. We have already taken a price increase as we mentioned.

Sabri Hazarika — Emkay Global Financial Services — Analyst

So Q-o-Q 15%, 20% increase in the cost of goods sold unit cost of goods sold is the trend right now?

Manish Gangwal — Chief Financial Officer

Which is again because we carry inventory for a period of 60 to 90 days and the impact will be staggered over a period of two quarters unless again crude comes down. So in fact we’ll be staggered over a period of two quarters, it’s not going to be happening in one quarter alone.

Sabri Hazarika — Emkay Global Financial Services — Analyst

All right. And any rough cut numbers of the amount of price hike you’ve taken in April?

Manish Gangwal — Chief Financial Officer

The price hike taken in April is roughly to the tune of around 3%, 4% yeah and we are looking at various sub-segments also and if required there will be margin management required, then we will keep looking at that space.

Sabri Hazarika — Emkay Global Financial Services — Analyst

So this 3%, 4% is on the bazaar segment as a whole, right?

Manish Gangwal — Chief Financial Officer

This is currently on bazaar and our OEM segment anyway has a quarterly formula linked to this one.

Sabri Hazarika — Emkay Global Financial Services — Analyst

Yeah, yeah. That I’m aware, but 3%, 4% would be the retail selling price in the bazaar segment?

Manish Gangwal — Chief Financial Officer

Yes.

Ravi Chawla — Managing Director and Chief Executive Officer

Unless you have the industrial segment also where price hikes happen.

Sabri Hazarika — Emkay Global Financial Services — Analyst

Right. Sir, secondly, second question is relating to your overall, I mean long medium-term or long-term growth outlook. So I think the company has maintained two to three times industry growth guidance. So, can you elaborate, I mean, I mean I know it’s been like last few years has been like almost last five, six years has been like significant growth. But how do you think that you’d be able to maintain this momentum for the next four, five years again?

Manish Gangwal — Chief Financial Officer

So, Sabri, as you know, last 10 to 12 years, we’ve been growing more than two, three times actually are double-digit growth, whereas this industry normally grows 2% to 3%. And also last few years, it has had negative growth. So our estimate is that 2021, 2022 it could be flat, it could be minus 1%, 2%, it could be even minus 3%, 4% in the bazaar market consumption. 95% of our sale is replacement. So our estimate is that last year it was negative, so consumption was less because April also was close partly, there was lot of challenges in consumption and offtake. And next year that is 2022- 2023, obviously, we believe that lube industry estimated is that we’ll get back to positive growth given that the base also has fallen in two years.

So if the industry grows 2%, 3% then that is a good tailwind for us to look at growth. In addition, GDP is doing well, COVID, obviously, there is now travel has resumed as you can see from the traffic out and also we are seeing in all the segments, industrial B2B is doing very well in terms of consumption, infrastructure is again going very well in terms of the consumption and we have seen that also in the last many months for us. Of course, there is going to be a challenge on how this will continue, but we are very clear that if GDP is growing, lube industry is growing. It gives us the great opportunity and we don’t have that strong market shares except obviously diesel engine oils we have a large role. We have got opportunities in growing in the other segments and our business model has given us this growth through various ups and downs.

So we are well set in terms of looking at an outlook where we will grow double-digit again and again look at how we can maintain our margin band of 14 to 16. Of course, there are challenges as we look at the raw material price and we have been growing in all the segments that we have participated, there will be some segments going up and down, like for example, agriculture, we’re expecting the season to come in. We launched a display contest that should go up. Our passenger car in commercial vehicle diesel they have done very well. We have — even motorcycle is now picking up, rural is picking up, which was impacted by the third wave. And so really for us it is to go out there and re-energize the growth and reboot ourselves to really make the distribution go up and we are looking at an outlook where we will grow and continue to gain market share.

Sabri Hazarika — Emkay Global Financial Services — Analyst

Yeah, I mean, I mean, just a follow-on. I mean, I mean, yeah, I mean I could understand the sectoral part, but I mean I mean next five, six years if not just five, six years probably next three, four also if you call like thinking that you’d be able to maintain that two to three times growth, so it would be, I mean it is the combination of both your like low base as well as the strategies. So can you elaborate on that and who are the ones who would be losing market share that you would be gaining actually. So would it be the PSUs or would it be some other part?

Manish Gangwal — Chief Financial Officer

We are growing our distribution. So distribution is a strength where we have our bazaar business and we are growing our OEM businesses with everybody. So we are not targeting anything. Ours is a product which is at a certain value, certain position in the market with push and pull. So we would look like to gain wherever we would put in the effort and as you know our brand is amongst the top three brands. In fact, our brand considerations are top two as for internal stat.

So we want to use that to grow our distribution and focus at all the segments we are there. And we believe that customers who obviously use Gulf look at value, look at brand, look at quality and look at also value addition to their businesses and their usage. So ours is a very focused strategy and I think for us obviously other players also are growing. So that’s a good sign.

Sabri Hazarika — Emkay Global Financial Services — Analyst

Right. But the market share gain is at the cost of ONCs [Phonetic] or it would be some other player?

Ravi Chawla — Managing Director and Chief Executive Officer

See we are targeting our consumer segment, we don’t target the type of usage, customers are upgrading, customers are looking at product. So ours is more customer-focused strategy.

Sabri Hazarika — Emkay Global Financial Services — Analyst

Right, right. Okay sir, fair enough. Thank you so much and all the best. Yeah.

Ravi Chawla — Managing Director and Chief Executive Officer

Thanks.

Operator

Thank you. Our next question comes from the line of Ankit Mahajan, an Investor. Please go ahead.

Ankit Mahajan — Private Investor — Analyst

Yeah, hello. Thank you for the opportunity. Yeah, so my first question is on rural demand. So I just want to know how has been the rural demand seen during the quarter and how do we expect that demand trend in coming quarter? And my second question is on once again on CapEx that I want to confirm. What is your CapEx guide for FY 2023 and FY 2024?

Manish Gangwal — Chief Financial Officer

So, as we mentioned, we are looking at lot of opportunities in the emerging spaces. In addition to that, our routine CapEx requirement for the current business for the next two years is roughly in the range of INR15 crores, INR20 crores annually. I also mentioned that our volume is currently at 1,34,000 last year, full year. And obviously, we have to see what is the further requirement considering we have capacity for the next one, two years, two years at least. But going forward, we have to look at how to do our incremental CapEx for the expansion also. So this is what currently we are working on. And on rural, we will — Mr. Ravi will remark.

Ravi Chawla — Managing Director and Chief Executive Officer

Yeah. So I think Mr. Mahajan, you had spoken of rural, now you see rural for us, obviously, we have been present in rural for many, many years, but last four, five years, we have got into the rural distribution. We have a Gulf rural stockist, which is servicing the rural outlets and penetrating that and the rural demand definitely they consume the agricultural tractor lubricants, they consume motorcycle, they also do a bit of car and other ancillaries, which we have. So we have seen the rural demand, which had got slightly subdued I would say in COVID in the wave 3, right, and agriculture also which had a, had a very good sale two years ago when COVID was there in the peak and started, for 2021, agriculture did very well.

’21-’22, we did see some drop in the agri demand, but we are now seeing that and you saw that in the tractor sales also, right. Tractor sales were doing very well in ’21-’22 first few months, then they started coming down. So agricultural demand did get a bit subdued. But now I think we are back on track. The COVID wave has gone, people are out there also and rural demand is picking up. So we believe the outlook should be the rural demand and the season starts now will again get back to normal and probably not at the peak what it did in 2021, but rural demand is picking up and our rural stockist are expanding and we are now kind of reconnecting them, giving them a lot of below the line activations to go back in the market and get the distribution back. So rural demand is going to pick up with the agri season coming in the next few months.

Ankit Mahajan — Private Investor — Analyst

Okay, thank you. That’s it from my side, and all the best to you, sir.

Ravi Chawla — Managing Director and Chief Executive Officer

Thank you, Mr. Mahajan. Thank you so much.

Operator

Thank you. Our next question comes from the line of Manoj Oberoi, an Investor. Please go ahead.

Manoj Oberoi — Private Investor — Analyst

Sir, am I audible to you?

Ravi Chawla — Managing Director and Chief Executive Officer

Yes, Manoj, yes.

Manoj Oberoi — Private Investor — Analyst

Hi, sir. Congratulations for the good set of numbers, sir. Actually, my query is on the demand side as well as on the price hike. Quantum side has already been answered by you. I’ve got only one data keeping question left with me. I think you said that our market share has increased by 50 basis points to 100 basis points in the quarter across the categories.

Ravi Chawla — Managing Director and Chief Executive Officer

No, no, for the year, for the year.

Manoj Oberoi — Private Investor — Analyst

For the year, okay. So, sir, do we have the data handy? If it’s handy, can we have the market share numbers for the top…

Ravi Chawla — Managing Director and Chief Executive Officer

No, no, very difficult to estimate. You see the segments that we are in, we look at the demand which we are potentially looking at with our competition. The data at a macro level we know the segments. But this is very difficult because there is no data available. There is some AC Nielsen, et cetera, which comes. So we, our estimate is the base figure remains what it is what we have and the overall market share is what we are talking about in a growth. Segment-wise, yes, sometimes the data we calibrate based on whatever market intelligence we have. We have increased our market share by 0.5% to even little above 1% in certain segments.

Manoj Oberoi — Private Investor — Analyst

Got it, sir.

Ravi Chawla — Managing Director and Chief Executive Officer

And it’s an overall estimation. We do have — with sharing the data will not because it keeps changing. We do have some tracks which come in, but those tracks are not very accurate.

Manoj Oberoi — Private Investor — Analyst

Got it, sir. Got it, sir. That’s it from my side, sir, and best of luck for the next quarter, sir.

Ravi Chawla — Managing Director and Chief Executive Officer

Thank you. Thank you, Mr. Oberoi.

Manoj Oberoi — Private Investor — Analyst

Thank you, sir.

Operator

Thank you. Our next question comes from the line of Saurabh Doshi with YES Securities Limited. Please go ahead.

Saurabh Doshi — YES Securities Limited — Analyst

Hello, am I audible?

Nitin Tiwari — Moderator

Yes, Saurabh.

Saurabh Doshi — YES Securities Limited — Analyst

Yeah. Thank you for taking my question. I have just two questions. Firstly, on the capacity, which is a total of around 150 million liters. And I think we have done, we have done sales of around 135 million liters in FY ’22. So do we foresee any need for investment in capacity in coming periods?

Manish Gangwal — Chief Financial Officer

See our capacity is based on two shift basis. So if we run our plant on third shift basis, we can increase the capacity to some extent. And that is why I mentioned that we will have to look at and we are doing incremental CapEx of around INR15 crore, INR20 crore to make some of the filling lines, et cetera where we — blending capacity, we have sufficient capacity, we can do much higher than what it is currently being produced, but it is all about the auxiliary support systems in the plant in terms of filling, in terms of storage, et cetera. So that needs to be augmented and hence the incremental CapEx. Blending capacity on third shift basis can be much higher.

Saurabh Doshi — YES Securities Limited — Analyst

Okay. Okay. Secondly, on the current distribution network, I mean in terms of distributed retailers, et cetera, can you throw some light on that and also on the addition that we have done in the year within the distribution network?

Ravi Chawla — Managing Director and Chief Executive Officer

See, Saurabh, with the travel restrictions and the closure of markets, the distribution numbers obviously, last, last two years, you’ve seen number of outlets also closing down like we have bike stop, car stops. You’ll appreciate that the market is obviously, a lot of people have their shops in different cities, they live in different cities. So, that has been a challenge. Our distribution, we have been saying 70,000, 75,000 based on the numbers that we have totally across segments and our endeavor is to increase that by 10%, 15% and right now, I would say we’re rebooting, reenergizing it, so that we can get the distribution back and then we have a targeted distribution plan, rural, urban and also segment-wise.

So, we would like to see a 10%, 15% growth going forward. Obviously some of the distribution will be recouped now or got back into the fold because of the challenges last two years. So, we have a lot of programs. Right from our loyalty programs to our coverage programs to giving our retail outlets like rural a boost in terms of below the line activations. So, our endeavor and about 45%, 50% of business is like our consumer product business where distribution plays a key role. So, a lot of the work is going on in that direction.

I’m happy to share with you last few months we have put that in the pipeline to be able to get our distributors, our rural stockist to go out there and increase, policy, I mentioned, Bikestop, Carstop in my opening remarks. So a lot of these programs are now going to go into full throttle and we hope the market doesn’t close down for any reason, we hope not all of us and that is going to help us to gain our distribution across segments.

Saurabh Doshi — YES Securities Limited — Analyst

All right, understood. Just can I just one follow-up, can we get a number of — number on the percentage that we have increased in this financial year?

Ravi Chawla — Managing Director and Chief Executive Officer

So this, this financial year, we have told you the markets were closed. So obviously, we’re just getting back our distribution this last financial year.

Saurabh Doshi — YES Securities Limited — Analyst

Okay, all right. Thank you so much. And all the best.

Ravi Chawla — Managing Director and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Chirag Fialoke with RatnaTraya Capital Partners. Please go ahead.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Hi. Greeting, Ravi, Manish, thank you so much for the opportunity. Just wanted — just three questions. First, a bookkeeping one. Can you give us the B2B, B2C split and the split of volume across the segment for this quarter?

Manish Gangwal — Chief Financial Officer

See our B2C, B2B was similar to December quarter at 55-45 and overall — overall I would say the volume mix, our product mix also has been more or less similar with slight increase in the diesel engine oil and overall, slightly — slight reduction in the others and industrials. So, our personal mobility continues to be in the range of around 18%, 20%, diesel engine oil is around 35% to 37% band, industrial is at around 16%, 18% band and others at around 25% to 27% band. So, this is our band and usually, the mix has remained in this band only.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Got it. And for the quarter, the battery sales?

Manish Gangwal — Chief Financial Officer

The battery sales for the quarter was around INR18 crores. You see this year we had a challenge of supplies from import in terms of batteries. So, there was a sort of, I would say 15% reduction in the battery cells overall. But as we — we found that this is going to be challenging. We mentioned in last call, in December quarter call that we have expedited our efforts to localize the production of batteries and the work has progressed significantly. On that, we are quite hopeful that from the beginning of H2, sometimes in October, we should be able to market our locally produced batteries or at least for the some of the key SKUs.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Understood. That’s very helpful. Sir, my second question was just around margins broadly. Is there a guidance that you can provide that if say crude remains at $100 per barrel? After we are done with the sort of cycle of price increases, do you believe you can go back to sort of historical EBITDA margins or are margins from here on looking suppressed?

Manish Gangwal — Chief Financial Officer

As a percentage margin when we say that March quarter we achieved 14% margins and if you take the realizations of last year’s March quarter, we are already at the band of around 15% in terms of our margins. It just because the topline has gone up and we have been able to recover our per liter margin, the percentage looks lower. But overall, we have been able to not only recoup in the margin band, which we have been guiding of 14%, 16%, in a good quarter, maybe 17%, we are already in that range and we try to manage that range except if there is a sudden sharp increase in base oils, which takes time to pass on. Overall, I think we’re quite quite confident that we’ll be able to maintain this band of 14% to 16% on the higher revenue base.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Got it. So, irrespective of oil, finally, the band will be 14% to 16%, that’s what you’re — is that the correct understanding?

Manish Gangwal — Chief Financial Officer

Yeah. Because the industry and the company has the ability to pass it on periodically if there is a significant increase.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Understood. That’s clear, sir.

Manish Gangwal — Chief Financial Officer

So, that is the way and OEMs, which is a good part of our business also are formula driven. So, with the every increase, there is a change in quarter in formula every quarter or six-monthly. So, we are in a position to recoup it, or maybe sometimes with a delay of one quarter, but overall, we are ultimately in that band. That is the one good part of this industry I would say.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Got it. That’s great. Sir, last question just on the volume guidance, previous questioner has just asked this question, I just want to double-click on it. So, essentially, when you say 2 times to 3 times the market, I mean we understand broadly what that range is. But for more short-term, say next three years or two years, is there a more concrete number that you can share with us that you’re targeting something like –?

Ravi Chawla — Managing Director and Chief Executive Officer

So Chirag, Kline, which is the expert, they talked about 2% to 3% growth of lubricant industry in a normal year.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Right.

Ravi Chawla — Managing Director and Chief Executive Officer

So, if you take that, obviously we have been saying that our ambition is to at least double-digit growth in volumes. Given that we have — we play in many segments. We don’t have a, we have mentioned the segments to you. So, our endeavor is to get a double-digit growth. And if the market is growing 2%, 3%, that is a 3 times growth.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Understood. So, close to say 10% odd is what your aspiration is?

Ravi Chawla — Managing Director and Chief Executive Officer

That’s the internal target and of course, internal targets we try to do better in some segments where our market shares are relatively lower.

Chirag Fialoke — RatnaTraya Capital Partners — Analyst

Perfect, Ravi, sir. Thank you, very clear. Thank you. That was all from me.

Ravi Chawla — Managing Director and Chief Executive Officer

Thank you. Thank you.

Operator

Thank you. Our next question comes from the line of Amber Shukla, an investor. Please go ahead.

Amber Shukla — Private Investor — Analyst

Yeah, thanks for the opportunity. Sir, I have just couple of questions. First, what would be the utilization level at Chennai plant?

Manish Gangwal — Chief Financial Officer

We are currently at around 60% utilization in our Chennai plant.

Amber Shukla — Private Investor — Analyst

Okay. And sir, you have already highlighted about the impact of electrification trend as asked by one of the earlier participants, but just wanted to get more sense on this trend. How it is going to impact us? I know it’s hard, it is hard to put some numbers, but directionally, how are you seeing this across segments?

Manish Gangwal — Chief Financial Officer

You’re talking of electrification in terms of penetration?

Amber Shukla — Private Investor — Analyst

Yes, yes.

Manish Gangwal — Chief Financial Officer

You see the overall India market is very large in terms of vehicle and we are under-penetrated in terms of vehicle per capita. With the growth in the economy, the vehicle population and the — it’s going to, continue to witness a robust growth, that is what the automobile sector is talking about. Within that there will be some segments which will be — having seen some more adaptation of EV. For example, buses, et cetera, will definitely be going towards electrification, three-wheelers are going to be going towards electrification and to some extent some portion of the scooters are going to be converting partly to electric. But overall, the number is going to be very, very low as compared to the total market of lubricants, sorry, market of e-vehicle.

Our estimation is that currently last year, last two years actually two-wheeler sales have been slightly subdued. This was around 22 million to — India sales, roughly 20 million two-wheelers every year, new vehicles. Out of which last two years have been slightly lower, but as it peaks those numbers again, the overall impact of EV conversion will be even lower. And within that only 30% is scooter. So, we have to see that the two-wheeler segment is also not going to be impacted more than 10%, 15% 20% over the next five, six, 10 years, that is our estimate. And impact of conversion of buses, et cetera is not going to be much on lubricant side because — on our company because that conjunction, we were, it was not our target segment, the buses and the three-wheelers in particular. So overall, we continue to believe that the lubricant demand is going to be very robust and growing till at least ’25, 2035, 2040 and the overall market of lubricants will be much higher than what we see today.

Amber Shukla — Private Investor — Analyst

Okay, sir. Thank you.

Manish Gangwal — Chief Financial Officer

Thank you.

Operator

[Operator Instructions] Our next question comes from the line of Aditya Shetty with FinServ Consultants. Please go ahead.

Aditya Shetty — FinServ Consultants — Analyst

Yeah, hi. First of all congratulations for the quarter achievement. My question is regard to the sales promotion spend. What would be the approximate amount that you would have spent in terms of sales promotion this quarter?

Manish Gangwal — Chief Financial Officer

You’re talking of advertisement and promotion, right?

Aditya Shetty — FinServ Consultants — Analyst

Yeah, yeah, correct.

Manish Gangwal — Chief Financial Officer

So that usually is now in the range of around 4%. It used to be roughly 6% but because of the market closures, et cetera, we had kept to down to around 4% and as we speak, when the markets, as Ravi mentioned, the markets are now opening up and there are lot of activations, BTL activities are being started, this, this will be again going to 4% to 5% range and we will continue to be in that range.

Aditya Shetty — FinServ Consultants — Analyst

[Indecipherable].

Manish Gangwal — Chief Financial Officer

Absolutely, yes.

Aditya Shetty — FinServ Consultants — Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from the line of Pradeep Vaswani with Karva Capital. Please go ahead.

Pradeep Vaswani — Karva Capital — Analyst

Yeah. Just a follow-on on the, maybe the Bikestop, Carstop the news [Phonetic], could you maybe share like the current business model and what are your future ambition is? Are these like co-owned or leased shops that you’re running for cars, our oil change service or something else? Thank you.

Manish Gangwal — Chief Financial Officer

Sorry, can you repeat your question please. We couldn’t hear you properly.

Pradeep Vaswani — Karva Capital — Analyst

Yes, sir. I was just curious on the Carstop, Bikestop kind business model. Are these like stores that are changing oil? Are these kind of co-owned by you or are you branding it? How many shops are there and what your ambition is for the future?

Ravi Chawla — Managing Director and Chief Executive Officer

So, we have about 8,000 of these, obviously some of them have gone through last two years. They have — some of them have closed down. But these are, these are just branded by us and we do have arrangement with them where we provide them certain support services and they would sell our product from their outlets. Some — most of them would be selling our product exclusively and we basically are developing these points because they are able to provide oil change and other services to both the car segment and the bike segment.

And this is — our focus is, as mentioned in the beginning of the call, we are putting in I would call re-launching the programs to energize this segment to grow more and we continue to increasing these touch points, which we call Bikestops and Carstops. So that is our continued strategy for us. And there’s a lot of scope for this because as we look at independent workshops, that’s an important segment. And we continue to grow in this segment and focus on it.

Pradeep Vaswani — Karva Capital — Analyst

Okay. Is there an ambition to actually run and own these shops?

Ravi Chawla — Managing Director and Chief Executive Officer

We provide, we provide a lot of services and of course we are having some of the premium outlets where we would provide more support but owning them it’s all about real estate there. So more for us, it is a tie-up which enables us to do a long-term strategy with these outlets both branding and support and obviously promoting products and services together to the end customer.

Pradeep Vaswani — Karva Capital — Analyst

Okay, understood. Thank you.

Operator

Thank you. Ladies and gentlemen, due to time constraint, this was the last question. I would now like to hand over the conference to our management for closing comments.

Ravi Chawla — Managing Director and Chief Executive Officer

Thank you. Well, I would like to say that looking at the year ahead and the quarter ahead, we’ve got obviously the lube industry growth, which should be positive. The OEMs, infrastructure, B2B and the GDP and as you see mobility going up and vehicles out there in all segments, whether it is agri, car, tractors, scooters, even three-wheelers. So, we’re seeing that there’s going to be definitely a different scenario where the industry will grow positively. And this really helps us because we are going to focus on profitable volume growth, we are rebooting a lot of our initiatives where we are restarting and connect with all parts of our, whether it’s our distributor or it’s the sales person on the ground, the retail outlets, the mechanics which drive our primary, secondary and tertiary sales. So lot more is going to be focusing on that, which is already underway. B2B, we are obviously looking at growth because that segment we do have lower market share. So lot of initiatives are out there.

And as we see normalcy coming and definitely free movement of goods and people, we’ll be focusing a lot more on improved customer satisfaction creating more value, bringing in digitization, customer connect, enhanced supply chain capabilities. Definitely to increase the width and depth of our product availability as our brand is strong and this is really going to be our endeavor and we’ve mentioned that for Gulf, the segment-wise approach, the brand — we’ll continue to invest in the brand and leveraging all our assets and our people. So that’s really going to be how we can look at continuing our growth journey and market share increase.

So I’d like to end on that and thank everybody and we hope we’ve been able to answer your questions to the best of our ability and look forward to all of you joining our next call and thank you for your support. Thank you.

Operator

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