See margins at 12-13%; have no long-term debt: Gulf Oil Lub

Q: Since the company has been demerged, we do not have much by way of history or the track record of performance. What can we expect by way of revenue growth as well as margin performance for this year as well as next year?

A: We have seen positive numbers coming in the last few months but major part of our portfolio is commercial vehicles and motorcycles. So we are hoping that even commercial vehicles will pick up as we go forward.

In terms of growth, we aim at 2-3 times the volume growth of the market and the industry. So we are hoping that we can look at the economy coming in strongly at least 10 percent growth in revenues in the year and maintaining our EBITDA at 12-13 percent.

Q: What would be the industry growth rate so that we can calculate 2-3X?

A: The overall industry growth has tapered down to flat level in the last few years but we expect industry growth to be at least 2-2.5 percent.

Q: With your current market share between 5-7 percent, with this improving outlook now on the economic scenario as well as the auto sector in particular, how much could you scale up your market share to?

A: We have been adding market share for the last five-six years quite consistently. So we are hoping to continue the run rate. The economy should start picking up in commercial vehicles also in a couple of months. So market shares should look at least 0.5 bps in terms of market share.

Q: In the quarter gone by, you have margins of 12.6 percent. What will be the margins in the industrial segment and what would be in automotive?

A: Certainly in terms of industrial, the margins would be lower than automotive. So automotive would be at least 30-35 percent more margins than industrials and our volume break up is 75-25.

Q: You have undertaken Rs 1.7 billion expansion for commissioning of greenfield lubricant plant at Chennai, you are also looking to expand some of your facility at Silvassa, can you give us an update on how this expansion is progressing? When can we expect the greenfield plant to come onstream?

A: The Chennai project - we have acquired the land, the process of getting the permissions and that should start production by end of 2016, that would be a capacity of around 40,000-50,000 metric tonne annually. Silvassa where we currently manufacture is operating 90-95 percent capacity currently.

The expansion plans for that have already been put in place. That should take our capacity from the current 70,000-75,000 to about 90,000-95,000 and that will happen by the end of this calendar year.

Q: What would the total capacity stand at and by FY16, when do you get the Chennai plant to come onstream, what would the total capacity then stand at?

A: Capacity in terms of lubrication plants are not only blending but also the packaging and filling and as we have a large number of small packs, which we sell, the smaller packs which are 5 litres, the total related blending capacity will go to nearly 140,000 metric tonnes and we are currently half of that.

Therefore, we anticipate that this capacity is also being built up for the future. So part of it will be used in the next couple of years but as a future outlook considering Chennai, there is a large auto hub we would be looking at, adding new customers there in terms of OEMs.

Q: What does your debt currently stand at and also you had guided for a profit after tax (PAT) of about Rs 100 crore, going forward can you tell us if the guidance is intact?

A: There is no long-term debt, we have all working capital debts currently. We would be taking some debt for the capex expansion at a later stage but currently we are looking at EBITDA margins of 12-13 percent. So similarly, our profit would be in the region of Rs 100-110 crore based on the turnover.