Gulf Oil Lubricants India Ltd

NSE:GULFOILLUB

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, welcome to the Q2 FY '25 Results Conference Call of Gulf Oil Lubricants India Limited, hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded.

I would now like to hand the conference over to Mr. Harsh Maru from Emkay Global Financial Services. Thank you, and over to you, sir.

[Harsh Maru, analyst]

On behalf of Emkay Global Financial Services, we welcome you all to the 2Q FY '25 Earnings Conference Call of Gulf Oil Lubricants India Limited. From the management side, we have Mr. Ravi Chawla, Managing Director and CEO; and Mr. Manish Kumar Gangwal, CFO.

So I will now hand the conference over to the management for their opening remarks, followed by the Q&A session.

[Ravi Chawla, executive]

Thank you. Morning, afternoon, and good evening, everyone. Welcome to the quarter 2 call for Gulf Oil Lubricants India Limited. Let me start on a festive note. I think we all have seen Diwali festival and the New Year coming in. So I'd like to wish everybody a very, very happy festive season and the new year going into the future quarter 3. And thank you for joining our call.

Very happy to share that quarter 2 for us, which is normally a quarter which has heavy rains, rains and other things has been a strong quarter for us in terms of volume growth. So happy to share that 9% volume growth continues our trajectory of being 2 to 3x the market. And this has really happened as we have looked at many demand pockets for us. While we also see the market growing by 3% to 4%, we have seen that this quarter, there was some lingering effect of the elections and certain liquidity challenges. But given our strategies, we have posted strong volume numbers. And of course, we'll cover the figures in detail, but we've also seen a lot of our segments growing, and we have not -- volume growth of 8.8%. If you take out the factory fill, which is the new vehicles, mainly commercial vehicles where we are also involved, our growth is actually double digit in this quarter.

A lot of good growth has happened in terms of double-digit growth in the motorcycle category, in the agri channel retail segments. We also continued our growth in the B2B segment, which has been growing double digit and high double digit in quarter 2. In the channel, particularly, we have seen that the channel OEM business that did very well. Again, the agri segment is a highlight there. We have seen that a lot of our sales and marketing initiatives undertaken during the quarter that were really working for us.

And very happy to share with you that we had launched in this quarter towards the end, one of Gulf's biggest ever campaigns, the 360-degree campaign, we call it The Unstoppable, which had not only used a lot of media vehicles, it featured the 3 brand ambassadors we have. The iconic, Mahendra Singh Dhoni; and the Cricket superstars, Hardik Pandya and Smriti Mandhana, for the first time, in an advertisement, which not only showcased the brand values of Gulf, which is, Together we are Unstoppable. The Hindi line being [Foreign Language] But also spoke about our products, and of course, created that connected -- connection and the engagement with our target audiences. This was 360 degrees. And definitely, this investment is paying off. We also saw some positive confidence in the trade and we also are continuing this.

Other highlights of this quarter have been the exports, which have also grown for us and was also a good contributor. We continue to focus on our premium range of products. And this is, again, happy to share that this has contributed to the overall city by notching up double the growth rate, though it is a small contribution in terms of percentage, but this is growing at double the rate which we are growing, which as well for our strategy of profitable growth.

Our distribution also has grown, particularly in the rural segment with our bike stops and car stops and therefore, increasing our penetration level. I think all in all, a very good quarter. There has been a slight decline in AdBlue this quarter, which I think would be a seasonal impact due to overall consumption, slowness and a bit of demand as we have seen. But I think overall, we are growing in the year, well double digit in that also.

And I would say that a lot of our strategies, which we have put in place are commitment to really outperform the market amid a lot of challenging conditions. Really, it has given us the results, and it positions us well, again, to continue this growth. And again, I would like to say that the outlook for us and the growth momentum that is there, it is also responding well to our strategic and our tactical measures which we are taking. And some of these have been industry-leading. So I think that's been quarter 2, again, a strong quarter for us, and we hope to continue this.

Over to Manish to cover a few of the other highlights. Manish?

[Manish Gangwal, executive]

Thank you, Ravi. Good afternoon, everyone. So as Ravi highlighted, it has been another good quarter for us from an overall volume perspective. And at the same time, we have been able to deliver good increase in the gross margin by nearly 100 basis points. Also, our EBITDA has been in the guided range of 12% to 14%, coming at 12.6% for the quarter. After investments, as Ravi was highlighting, there is a higher A&P during the quarter because of the mega campaign, The Unstoppables. And more investments into human resources and building the company for the future.

But in spite of that, the EBITDA is continuing to be in our guided range. Overall, the profit growth, PAT growth is 15% for the quarter. And for H1, it is 22%, so quite a strong performance at the PAT level as well.

On cash flow side, we have been able to continue to generate good cash. And you can see from the cash flow published that INR 147 crores of cash generated during H1, which is more than even the last year H1 of INR 140 crores. So overall, good control on the working capital, and there is some increase in the inventories because of some shutdowns coming for big refineries globally. But overall, still, we have been able to do very good at the working capital and generated a good cash flow for edge fund.

So with that overview, we would like to go for Q&A. Over to operator.

[Operator]

[Operator Instructions] The first question is from the line of Probal Sen from ICICI Securities Limited.

[Probal Sen, analyst]

A couple of questions. First one, the basic one, if we can get the number of the volumes for the quarter.

[Manish Gangwal, executive]

Good afternoon to Mr. Prabal. So core lubricant volume has been 37,000 kls, and AdBlue volume has been 29,000 kl.

[Probal Sen, analyst]

Okay. Okay. So AdBlue, I think, Ravi sir did mention that it was at in this quarter. How should we therefore look at the H2 in terms of growth in both these numbers? I mean just a trend, how should we actually sort of look at the second half?

[Manish Gangwal, executive]

We have grown AdBlue over the last 2 years significantly, nearly 600%, 6x from FY '22 base. So there has been a very rapid growth in that segment for us and for the industry as well. And obviously, at these elevated higher levels, we are seeing that there is a stability coming to -- in terms of overall numbers. However, this is seasonally impacted quarter as Ravi highlighted already that during monsoon season, obviously, the movement of trucks and CVs, which is the large consumption segment is relatively lower. And we are also monitoring. But on a YTD basis, we are still double-digit growth. And we hope that at least -- we are seeing a clear trajectory that at least 10,000 kl per month is a minimum stability, which has seen in the segment. How it grows from here on will really depend on how BS VI grows. Also, I think some of the segments are being added to AdBlue -- for AdBlue consumption like construction equipment, et cetera, from 1st of April. And that should also well for the segment overall going forward.

[Probal Sen, analyst]

Okay. Okay. The second question was with respect to the A&P cost increase that was mentioned about The Unstoppables campaign. So would it be fair to say that -- and you also mentioned that there was some increase in the staff cost as well. So is it fair to say that only a certain portion of this is going to be there for the rest of the year and some part of margin improvement can come through once this campaign costs are done in...

[Manish Gangwal, executive]

So usually, we calibrate our A&P expenses from quarter-to-quarter basis. Quarter 1 was slightly higher because of IPL season. Quarter 2, we have done this mega campaign, which is the biggest single campaign we have ever done in the history of Gulf. So obviously, there is some impact of those. But overall, we try to calibrate our marketing and on the ground activities in line with. Yes, but this is still a slightly elevated quarter to the extent of 40, 50 basis points.

[Probal Sen, analyst]

Right, which is what I'm saying. So just wanted to get a sense that we have been obviously seeing steadily increasing trend in terms of not just gross margins, but even EBITDA margins has been for the past several quarters. So this quarter, obviously, as we mentioned, is a bit of an aberration because these costs were higher. So can we expect a return to that trajectory? Sorry.

[Ravi Chawla, executive]

See, our A&P investments are based on our objectives in terms of consumers, how we want to convert, what are the various brands we have. And then there is a share of voice where you have competition also getting that share. And today, it's a bit different because you have many media platforms. You have digital, you have -- so we do calibrate our A&P based on that. As of now, we did do this mega campaign in quarter 2 in which we had to put in a slightly more investment. So we'll have to wait and watch what that is. But yes, we are not going to have these mega campaigns. It's a huge campaign, which still is going on. So this is obviously an investment we make in our brand. So we'll have to wait and watch in terms of share of voice. But yes, we do see that this campaign is also having a good impact on our sales.

[Probal Sen, analyst]

Is it fair to therefore say that some overflow of these costs will be there in Q3 before maybe Q4 sort of in a normalized OpEx environment?

[Ravi Chawla, executive]

It's a continuous process. So I would say that yes, it is going to have -- there is some spillover in quarter 3.

[Probal Sen, analyst]

Understood. Last question, if I may, sir. With respect to revenue from the battery segment, is it possible to share the number for this quarter?

[Manish Gangwal, executive]

The battery turnover was INR 20 crores for the quarter.

[Probal Sen, analyst]

INR 20 crores. Okay. Okay. And sir, overall, I think it was mentioned that Tirex has grown its revenue quite substantially in percentage terms, is it possible to share the absolute number as well right now?

[Manish Gangwal, executive]

Yes. So Tirex, we have -- it is DC charger manufacturer, where we hold 51%. We invested in this EV company, and they are really doing very well in terms of getting into the segment and growing their revenues and in terms of customer acquisition. And in terms of top line, yes, we consolidate their top line. So for quarter 2, it was around INR 14 crore. And for the H1, it is around INR 24 crores, INR 25 crores, which is -- the last year full year turnover was around INR 24 crores, INR 25 crores for Tirex. So they've achieved the last year number in H1 itself. And we have been also guiding in the past that we want to at least double the turnover every year for the next few years coming. So obviously, we are on cost to that. And if you compare H1 to H1, they have grown their turnover by nearly 3x. So last year, H1 to this year H1, they have grown their turnover by nearly 3x. Although on a small base, these are numbers which are still relatively quite small compared to our overall volumes -- overall revenue. But yes, we are seeing very good traction there in that business.

[Operator]

[Operator Instructions] The next question is from the line of Sabri Hazarika from Emkay Global Financial Services Limited.

[Sabri Hazarika, analyst]

So I just wanted some idea on the overall base oil pricing trend. So in terms of your cost of raw material on a dollar per metric ton basis, rough cut, I mean some sort of like ballpark rate. What was it in Q1? And what was it in Q2? And right now, what kind of rate you are seeing?

[Manish Gangwal, executive]

So thanks, Sabri. I think as you all know, the base oil rates are linked to the crude movement, which is a volatile commodity. We saw an elevated crude oil in April, May during this year, and there is a lag effect in the base oil to the extent of 1 to 2 months. And sometimes different grades of the soil also plays a different role. As I was mentioning, some of the big refineries of base oil globally are going for shutdown during October, November. So there are a lot of, I would say, interventions, which are there in the base oil prices coming from different quarters. And -- so time to time, we have seen elevations in the base oil movement and crude -- linked to the crude movement. But on a ballpark, I can give you that if crude remains at the current level, which is $75 to $80 range. Of course, it sometimes goes to $85 also during the quarter. April, it went up to $90; July, it went up to $85. So it's a volatile thing, difficult to comment. But if it remains at the current levels, we are comfortable to maintain our gross margins.

[Sabri Hazarika, analyst]

So sir, is there a possibility of like increasing your margin guidance from 12% to 14%? Or -- I mean, more so in terms of, say, EBITDA per liter. For example, based on the numbers you have given, I think it is like close to INR 16 per liter of the EBITDA. So if we -- and this is like on an oil price base of, say, $84, $85, if I take a 3 months pricing lag. So now against that INR $84, $85, I mean, if there's a base oil correction, are you in a position to like improve your margins? Because when we see the numbers, both yours as well as your larger competitor, what we have noticed is that last 3, 4 years have been like good in terms of volumes, but I think the -- but I think there's some sort of like catch up in terms of margins which could be there. I mean, both for you as well as for your larger competitors. So is there a thought process that there could be some increase in the overall margin guidance and like benefit from this lower oil price cycle?

[Manish Gangwal, executive]

It is -- margin is a function of, as you know, it's a function of many things, including the pricing in the market, the competitive activities. And of course, the product mix, the segment mix. So we have been highlighting that as a part of our unlock 2.0, we have been focusing on premiumization. We obviously see that there is a stability in the input cost, but there is a competitive intensity, which is also going up. Considering all this, it's difficult to say that in the short term, there can be a benefit of the lower crude sustained.

But over a longer-term trajectory over the next 1 to 2 years, obviously, our endeavor is to increase our gross margins and increase our EBITDA margins to the higher trajectory. So on a medium- to long-term basis, we are very positive to do that. But on the short term, it's very difficult to comment whether the short-term crude movements or base oil movements can really help us generate those kind of elevated levels.

[Operator]

[Operator Instructions] The next question is from the line of Nitin Tiwari from PhillipCapital.

[Nitin Tiwari, analyst]

Sir, my question was regret to the expense that you highlighted. So just wanted to understand that, was this expense also present in the first quarter? Or is it specific to this quarter? That was one. And secondly, when it comes to measuring the returns, I mean, then what are the metrics that we perhaps deploy to understand that what kind of returns on the investment that we are doing in brand building and A&P is stimulating for us? And thirdly, sir, what would be a more normalized level of basically expenses that we should consider if we are looking at like this brand campaign related expense as an aberration in overall scheme of things? So that would be my first question.

[Ravi Chawla, executive]

Yes. So Nitin, we are -- see, our ratio of our A&P to overall revenue we have been sharing is around 3% -- 3% to 3.5% at times. And sometimes it goes higher in some quarter even. So these are all expenses which are planned on a campaign basis on an annual basis. And then we have to obviously look at, as I mentioned, share of voice and other campaigns which we do. So it is basically around that level only which we plan. So it is not that we are -- and of course, we have to see the share of voice and what our objectives are. So it is around this range at present. And this quarter, it was slightly more because we had a mega campaign. Of course, we would like to continue investing in the brand. So the more we can invest, the more it helps us in the market, but it has to be a balanced approach. So I think that is what we basically keep calibrating.

[Manish Gangwal, executive]

So just to add, Nitin, we have already guided that our usual advertisement is in the range of 3% to 4%, as Ravi highlighted. In a normalized way, we would be towards the lower end of this band. And in this quarter like this, we are on the higher side of this bank. So that's where the delta is anywhere between 50 basis points to 75 basis points in given quarters. So that's where we usually play.

[Nitin Tiwari, analyst]

Sure, sir. The reason I asked is because in quarter 1, we had other expenses of about INR 209 crores roughly, and which is like at about INR 208 crores in this quarter. This is actually lower. I suppose the A&P expense finds, I mean is a part of other expenses only, right? So...

[Manish Gangwal, executive]

Nitin, we will just interject, that is mainly because of the lower AdBlue volume. The freight expenses are lower in this quarter because there is an 8,000 kl nearly reduction lower AdBlue volume, right, from last year -- last quarter. And that's where the freight has been lower. So you see that there is a lower fright and there are other expenses, which include advertisement, which includes OEM royalties, these are slightly higher. So on the net basis, you see a similar figure, but it's -- because the interchange between these 2, 3 things.

[Nitin Tiwari, analyst]

Understood, sir. Right. So I was just trying to understand the EBITDA margin in this perspective because if I look at the gross margin, it is actually on the high side. So only difference, therefore, then lies in the employee expenses has gone up on a sequential basis. So I suppose that you indicated about that, that building team for future groups, I suppose that would be the explanation rate?

[Manish Gangwal, executive]

Yes, yes, absolutely, right.

[Nitin Tiwari, analyst]

And sir, second would be more on the bookkeeping side. If you can help us with a broad segmentation of the volumes in terms of various segments like motorcycle oils and distillery car -- What could be a percentage breakup?

[Manish Gangwal, executive]

So for the quarter, I think we are roughly 39% in terms of diesel engine oil, which is similar to quarter 1. In terms of personal mobility, we are higher by around 2%. And in terms of industrial and others, we are lower by 2%. So more or less in that range. But as you mentioned, motorcycle has been very good in this quarter. So that is sort of a 2% increase in the mix in terms of personal mobility.

[Nitin Tiwari, analyst]

So would it be right to consider that consumability at about, say, 22% and industrial at about 18%. Now those would be the right numbers?

[Manish Gangwal, executive]

Yes, that's correct.

[Nitin Tiwari, analyst]

So that is -- and this would be about, I think, gear oil, brake goods, et cetera, right, which would be remaining 20%?

[Manish Gangwal, executive]

Correct.

[Operator]

The next question is from the line of S. Ramesh from Nirmal Bang Equities.

[S. Ramesh, analyst]

Sir, if you look at your balance sheet, what is the reason for the increase in debt because there is a loan given during the period in the cash flow. So sir, can you explain why you had to increase the debt between March and September?

[Manish Gangwal, executive]

So I mentioned in my opening remarks, Mr. Ramesh, that we have had to store higher inventory because as was mentioning in one of the earlier questions, some of the refineries were going for -- where we have a term contract, they were going for a maintenance shutdown during October, November. So we had to prebuy some of the inventories. And that's where you see increase in the borrowings.

[S. Ramesh, analyst]

So how do you see this debt being fair, say, in the next few quarters?

[Manish Gangwal, executive]

Yes, yes, obviously.

[S. Ramesh, analyst]

Okay. So in terms of your overall volume growth of 9%, how does it compare with the overall growth in the Indian industry for your comparable segments?

[Ravi Chawla, executive]

Yes. So our -- we don't have data validated, but whatever we are gauging the industry is growing by 3% to 4%. And I think that is where some people say 4% to 5% because of Bazar growth or different segments. But for us, the 3% to 4% growth is what the industry is getting in terms of volume. And I think we are continuing to look at a 2 to 3x of that. So that's the way the industry is growing. Of course, we have various segments which are for us also, it depends on how your position is, what your geographies are. And we also have B2C and B2B. So overall industry growth is 3% to 4%.

[S. Ramesh, analyst]

So if you look at your diesel and personal mobility, which is the lubricants for vehicles, can you put a number in terms of what would be your best guess on market share? And where do you see that going, say, in the next 2, 3 years?

[Ravi Chawla, executive]

Yes. So if you look at the segments, we are strong in diesel engine oils. We have close to 8%, 9% market share there. Similarly, motorcycle, we are 8% to 9%. So I think this is where we are. And most of the other segments, we are 5% or below.

[S. Ramesh, analyst]

Okay. And will you be able to build on this market share and increase market share...

[Ravi Chawla, executive]

Yes, yes. Yes, so that is what we keep stressing. You see our brand is in the top 3, and we have got -- we obviously have to convert more consumers to buy us, so that's where the whole piece on the approach in terms of marketing, distribution comes up. So we see good opportunity where we have these, I would say, moderate market shares. And where we are strong, obviously, we want to grow 2x. And we continue doing that across B2C, B2B, as we have been doing in the segments that have identified, and that is where we create our sort of differentiation to be able to gain market share ahead of market.

[S. Ramesh, analyst]

So just two more thoughts. So based on this kind of strength you have in the market, what is the kind of increase in ROCE one can expect, say, over the next 2, 3 years, basically the investments you're making in brands and the growth in the market and your own market share increase, roughly, what is the kind of internal target you have to improve your ROCE?

[Manish Gangwal, executive]

See, ROCE is, again, a function of many things. We have been keeping cash also on the balance sheet to look for opportunities in terms of investments into EV business and looking for more play in that segment. So overall, if we pay out -- we have been currently paying out roughly 55%, 60% as dividend payouts. And that we have increased over the last 2, 3 years from 35%, 40% to now 55%, 60%. So obviously, ROCE is impacted partly because of keeping the cash for the investment for future. If we can -- if we see that there are opportunities that are not immediately forthcoming, and we increase the payout, then ROCE obviously can improve. So these are -- there are many factors. Obviously, from an EBITDA perspective and PAT perspective, we have been growing much ahead of the industry and overall more than double digit for the last 2, 3 years quite significantly. So that also is all a positive factor, we would say.

[S. Ramesh, analyst]

Understood. So now coming to Tirex, if you look at the notes to the accounts, #6 in consolidated accounts, there seems to be a loss in the second quarter of around INR 1.5 crores. So when do you see the Tirex breaking even? And if you take 2, 3 years from now, what is the size you expect in terms of revenue and, say, EBITDA margin? Can you throw some numbers on that?

[Manish Gangwal, executive]

So in the last call for the quarter June, I think we explained this that it's a very nascent business and a small company at this stage in terms of top line. But we have been investing significantly in terms of their capability building for R&D, for manpower, creating Indian service network for chargers. So all these investments are being put into the company for the future sustainability and growth. Obviously, we -- as I mentioned in the previous question that they have already delivered INR 25 crores top line in this H1, which is more equal to last year, full year. So we will be obviously aiming to double the top line at least every year for the next 3, 4 years. And that's where we believe, and we have announced in the past also that we want to at least take this company to INR 500 crores to INR 700 crores top line in the next 5 years. And then obviously, the EBITDA margin level, we believe that there should be EBITDA neutral to EBITDA positive, marginally in the current year itself.

[S. Ramesh, analyst]

Okay. And any additional investments you need to make in the next 1 or 2 years?

[Manish Gangwal, executive]

So we have invested INR 65 crores in the company as a primary investment when we acquired this company. So that cash was with them to grow the business for their working capital needs and plant expansion. So we -- at this stage, we do not see that there is a need to put more money for the growth of the business. And of course, some working capital loans can be availed from the bank. But if we want to -- and we have 51%, and we have all the ROFR clauses if we want to increase the investment or percentage of shareholding, then further investment will be needed, which at this stage, we have not been thinking about.

[Operator]

The next question is from the line of Yash Nandwani from IIFL Securities Limited.

Can you please confirm the realization per liter for AdBlue in the quarter and whether the margins still remain in low single digits?

[Manish Gangwal, executive]

Annual realization on the quarter has been slightly lower than what we have been earlier indicating by INR 3, INR 4. So as we see quarter 2, the realization was in the range of around INR 45 as against INR 50, which we have been earlier talking about because urea prices also came down. So obviously, that is reflected in the price income...

[Operator]

Sorry to interrupt you sir, but there is some disturbance in the management line, we have to reconnect the line.

[Yash Nandwani, analyst]

Is it okay now?

[Operator]

No, sir. There is some disturbance. We have to reconnect the lines.

Ladies and gentlemen, thank you for patiently holding. We have the management line back on call.

[Ravi Chawla, executive]

Yes, please go ahead, Mr. Nandwani.

[Yash Nandwani, analyst]

Yes, sir. So I just wanted to confirm the realization for data for AdBlue and the margins for the same.

[Manish Gangwal, executive]

Yes. So I think we have already responded to that, right. It has been around INR 45 realization for Q2, which was earlier around INR 50. And the margin remains roughly similar, mid-single digit.

[Yash Nandwani, analyst]

And could you throw some light on your data margins as a percentage of your sales price? And if you could give some details as compared to your competitors as well, sir?

[Ravi Chawla, executive]

I think that is a very -- it's a relatively -- in the lubricant industry, the margins vary based on the brand strength. So they get a base margin and then they get certain other margins, which they get for their various activations. So I think that is the brand positioning, which we generally would like to -- we have a quarterly annual scheme, which we give them incentives. So that is the construct in terms of overall, and it also is relative to our brand strength. So I think that is something which we obviously don't publish publicly. It is a document between us and the trade.

[Operator]

[Operator Instructions] The next question is from the line of Angadh Kedari from Samiksha Capital.

[Unknown Analyst]

I just have one small bookkeeping question, and a bit could you please give me the volume and -- new volume data for core lubricant and AdBlue

[Manish Gangwal, executive]

So the core lubricant about 37,000 kl and AdBlue was 29,000 kl for the quarter.

[Operator]

The next question is from the line of Probal Sen from ICICI Securities.

[Probal Sen, analyst]

I actually had a couple of longer-term questions. We flew it as a segment. Is it still too early to speak about it? Has it gained any sort of scale at this point of time? Or is it still very early days for it to sort of be spoken about this type of business?

[Ravi Chawla, executive]

You see, EV fluid, obviously, the fluids that are going in our transmission, break fluids, Greece, coolants. So as we have been explaining, we are present in some of the EVs, we have close to maintain EV, OEMs to component manufacturers. So it's going to be a very small volume, even if it comes for all the EVs that are going to be made, which are now going up. As you know, the penetration is going up from 3%, 4% to even 50% in 3-wheelers. So I think it's going to be a growing segment. We want to be part of it because we are there. And we already have a good partnership with few OEMs, but not a very large volume. It will still be a very small volume of the overall

[Probal Sen, analyst]

So sir, I mean in your view in terms of how you have seen the segment evolve. By when do you see this actually developing into a material component of our business?

[Ravi Chawla, executive]

If you track the EV penetration today, whatever numbers we have, as I told you, 3-wheelers is 50%. All the others are low single-digit penetration of new vehicles. So by the time these vehicles come up and 2-wheelers is probably going to be at 6%, 7%. It can go up to double maybe next [ 2 ]. So once it is a sizable side, we are anywhere there with the OEMs. So we have the products in our range for EV, few new products will come in like coolants, slightly better things. So as this evolves, we have a global range. So we'll be able to play in the share that whatever it is there in the market. And as you know, we are very strong with OEMs. We have a very, very large number of OEMs as you look at our customer base. So I think it's going to be still single-digit volume even if it goes to its maturity.

[Probal Sen, analyst]

Understood, sir. And the other question was you also just alluded to the OEM relationships. And you did speak about giving some details in the year-end analyst presentation. I just wanted to sense that what has happened to OEM relationships in H1? How many more have we added? Where are we right now? And also if you can speak a bit on how the B2B business has evolved? And where do you see that going forward for the next 6 to 12 months?

[Ravi Chawla, executive]

Yes. So I'll start with B2B, Mr. Sen. B2B, see, we are present in the B2B segment with industrial customers. We have a distributor network, plus we have infrastructure customers, IMF. Both these segments for us, we have less than 5% market share in some geographies may be higher, but overall. And this business has been growing double-digit volume for us. Obviously, we have certain strengths which we have in each of the segments. We have a product range. We are working on getting more OEM approvals. In our distributors also we have appointed and maybe a few locations are left. So this business is growing well with India manufacturing base going up. The way India -- Indian manufacturing industry is going up, you take sectors whether you take textile, you take food, you take cement, you take metals, all of this is going up in India. So we are part of this growth. And we'll continue increasing our market share if we are growing double digits because this industry is also growing maybe 4% to 5%. So you see that's where our endeavor is on.

And coming to the OEMs, we have very strong relations with OEMs, both automotive, industrial, construction. And of course, now with EV fluids, we are there with them and the EV even some of the new EV OEMs we are getting. So we continue to growing there. And of course, we get aftermarket is where 90% of our volume gets sold. So OEMs, again, give us products which we can sell in aftermarket like the franchisee workshop. So in terms of any new OEMs added in this quarter, we are working on a few prospects. We will -- but we are also growing with our current OEMs. So that's a positive where we get extra territories. We cover more in terms of their spread. They are exporting for few OEMs. So this -- I think it's been a very good quarter, as I mentioned to you that the channel OEM business has grown double digit for us, the current OEM. So no new announcements, but hopefully, we'll get a few. We have more or less got representation in most of the sectors in the OEMs.

[Probal Sen, analyst]

If I can sneak in one last question with respect to The Unstoppables campaign. Typically, a campaign, which, as you mentioned, which is more ambitious than on thing that we have done. Will this also be accompanied by probably an aggressive push to grow our retail distribution platform is there?

[Ravi Chawla, executive]

Yes, yes. So this campaign -- if you have seen the advertisement, it talks about our 3 brand ambassadors. They are -- obviously, there's a connect -- emotional connect to the campaign, it's a rescue film. And then it talks about we show a bike in the car and then obviously, we talk about the human aspect of being unstoppable and then related to our products. So these are campaigns which send messages to consumers. And obviously, we want more consumers to then get -- the current consumers are using us, they'll use more and new customers. So it has got a lot of trade activations. Let me share with you that on the ground, once the campaign hit the media and it still continues to go, we had display across thousands of our retailers done within 4 days of the campaign. So this is where the grade, and we have seen the confidence in the trade also going up because when you invest in the brand, they definitely want to stock and sell more. And of course, new outlets are joining us. So it is the objective of these campaigns are also to get back what you just mentioned.

[Operator]

The next question is from the line of Rajit Agarwal from Atara Investment Managers.

[Unknown Analyst]

Very small question. On the direct business, how do you see the margins in this business once this business has achieved a reasonable scale, say, 2 to 3 years down the line, will it be higher than our existing business or will it be in the similar range?

[Manish Gangwal, executive]

See, as we see the business progressing. And this is a business which is more a B2B business. Of course, it has a component of retail, and it has a component of some elements of B2C. But a good part of this is a B2B business. But -- we believe that once we reach a size and scale, it should deliver us at least a similar EBITDA margins as our lubricant business. So it will not be a margin dilutive business on a consol basis.

[Unknown Analyst]

Just a follow-up, small follow-up. When you say it's B2B. So towards the end users of this service or product?

[Manish Gangwal, executive]

So these are direct mix, DC fast chargers. And they are the charges with a capacity which is 30-kilowatt going up to 40-kilowatt and even higher. So these are basically charges which are used to charge buses, for example, e-buses. So e-bus manufacturers and e-bus operators, they are the target customers. Of course, then we have fuel stations of private and public PSUs. They are also being guided to electrify their fuel stations, so there are a potential customer. Retail, wherever there is a construction and there are new malls being constructed or even in the existing malls or shopping malls, housing societies. They also put fast chargers and create some slots. So overall, some of these are the segment -- target segment as of now. Of course, CPUs, which are the charge point operators, they are also a category who are electrifying highways and putting chargers across Pan India to create a charging infra. So all these are the potential customers for this kind of fast charger.

[Unknown Analyst]

Right, sir. So these charges are for passenger vehicles as well, as you said it's a high voltage. So -- is it for passenger vehicles and buses, et cetera, both? Or is it only for buses?

[Manish Gangwal, executive]

Yes, yes. Public charges are mostly fast chargers. But cars, et cetera, can be charged with the AC slow chargers also at home when they are there.

[Operator]

[Operator Instructions] The next question is from the line of Sarvanath, an individual investor.

[Unknown Attendee]

I just wanted to ask about the dividend payout being around 40% right now. And our future plans whether you're going to sustain it or if you're going to change it?

[Manish Gangwal, executive]

So I think we have increased our dividend payout to now nearly 55% plus in the last 2, 3 years. So it's not 40% anymore. 40% was a payout 3 years ago, where we were maintaining around 35%, 40%. But as we continue to generate good cash and our cash conversion to profits have been also very high at nearly 80%, 90%. And also considering that our CapEx requirement for lubricant business also is around INR 20 crores, INR 25 crores, INR 30 crores annually. So we continue to generate good cash, and we have increased the payout already to 55%, 60%.

[Unknown Attendee]

Okay. Got it. I apologize for the miss number, but are you going to sustain a number in the years going forward?

[Manish Gangwal, executive]

So while we do not have an announced policy for the percentage, but obviously, our trajectory has been to maintain and if -- as I mentioned in one of the earlier questions, if the use of cash is not quite visible in the near future, it can be increased also.

[Operator]

[Operator Instructions] The next question is from the line of Nisha an Individual Investor.

[Unknown Attendee]

So a few questions from my side. Firstly, on the AdBlue, since you mentioned that there is a decrease in the [indiscernible] because of the movement impact. So what are the spaces or the route to market for AdBlue? Is it only in the OEM segment? Or how does this

[Manish Gangwal, executive]

So your voice is breaking, Nisha.

[Unknown Attendee]

I am speaking about the AdBlue segment since you mentioned there is a drop in the volume in the current month because of the seasonal impact. So what is the rate to market for AdBlue? Is it only through the OEM segment or it is distributed along all the states and channels?

[Ravi Chawla, executive]

No, it is right across all our customers.

[Unknown Attendee]

Okay. And the majority of it we assume must be because of the diesel engine oil and the OEM segment, right?

[Manish Gangwal, executive]

Yes. yes. This is -- AdBlue is used for diesel engine.

[Unknown Attendee]

Okay. Okay. And moving around export fees. As you have mentioned in the press release that for being a good growth in this quarter. So what is the overall percentage of the exports on the total portfolio? Has it -- has that also gone up versus earlier quarters?

[Manish Gangwal, executive]

Yes, I think we are now at around 6%, 7% in terms of our export as a percentage. While earlier it used to be 3%, 4% and then we stabilized around 5%. Now it has gone to 6%, 7%.

[Unknown Attendee]

Okay. And on the last picture, specifically on the new technology that has been developed around the data center. So any view on that point that haven't started anything or any product development for that

[Ravi Chawla, executive]

Yes, yes. So we have started. We have -- we have products. We are developing them globally. .

[Operator]

[Operator Instructions] As there are no further questions from the participant, I now hand the conference over to the management for closing comments.

[Ravi Chawla, executive]

Thank you. I'd like to thank all of you for being on the call. We hopefully answered your questions. Going forward, obviously, we have continued the trajectory of 2 to 3x industry volume growth. So our focus remains to do that. And of course, to look at revenue growth and be ahead in the industry. We are quite confident that we will continue our market-leading growth to gain market share. And of course, we will continue our focus on margin management, profitable and sustainable growth, better product mix and marketing initiatives.

As we have shared with some of you earlier, to achieve the next level of growth and success, we have embarked on the theme, Unlock 2.0, which is accelerate premiumize and transform. For acceleration, we are not only growing ahead of the market, we are also focusing on growing more in areas where our market share is lower. And given what is happening in the Indian economy, the demographics, the growth of automotive industry, manufacturing industry, and of course, we believe that this will give us opportunities to grow faster and much better in terms of categories where we are strong and also where we have less market share and also enhance our profitability.

While we premiumize, we are looking at the value growth, which the industry is also seeing in terms of having a higher volume growth -- value growth and volume growth. So we will continue to look at that, bringing products which can give us a part of this growth and also where India is the third largest lubricant consuming country, we are clear that this -- in spite of EV, we are going to see 3%, 4% volume growth and double of that in terms of value growth. So over the next decade, premiumization in terms of products is important. We are focusing on that in both in terms of product development and placing the products.

The third theme of transformation, we are looking at not only digital infrastructure, brand investments, digital, social media, but also EV charging solutions and really the core transformation and transformation across the organization plus the EV ecosystem is what we are talking about. So we are quite confident of this. We are also -- as we have mentioned on the EV, we have started making some inroads to our charging business. The recent PM drive, which was announced in August and is now effective from October 1st, is again, talking about giving a lot of incentives to increase the charging infrastructure. This helps us and the Tirex business. And really, this is again a good development that has happened. And of course, as Manish mentioned, we are going to look at more investments going forward.

So overall, I think looking at continuing the growth, and certainly, in terms of -- we also have other companies with Tirex electrical, which makes software. Indra AC chargers, which we plan to bring in India. So given our business relationships, our brand and our touch points, we want to also capitalize on that. But the lubricants and of course, continuing our AdBlue growth is also a key focus area.

That's all from my side. Thank you so much for joining us on this call and look forward to you joining our next call. Thank you so much.

[Operator]

Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.