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Gulf Oil Lubricants India Ltd
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Ladies and gentlemen, good afternoon, and welcome to the Gulf Oil Lubricants India Limited Q4 FY '22 Earnings Conference Call hosted by Yes Securities Limited. [Operator Instructions] Please note that this call is being recorded. I now hand the conference over to Mr. Nitin Tiwari from Yes Securities India Limited. Please go ahead, sir.
Thanks, Ryan. Good day, ladies and good evening. On behalf of Yes Securities, I welcome everyone to Gulf Oil Lubricants India Limited Fourth Quarter and FY '22 Earnings Call. We have the pleasure of having with us today the CEO of Gulf Oil Lubricants; Mr. Ravi Chawla and the CFO, Mr. Manish 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.
Thanks, Nitin. Good evening, ladies and gentlemen. Welcome to the quarter 4 call for Gulf Oil Lubricants India Limited. I'm delighted to share with all of you that quarter 4 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 around 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 costs, supply chain disturbances, unabated inflationary cycle and it speaks well as 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 it's run as to growing the revenues. And of course, we had all segments of the business doing well in quarter 4. 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 4 volume is the highest ever at 37,500 KL, a 7% year-on-year growth and also 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 a high note, our full year volumes have grown double digit at 16.5%. Full year revenues at 32%. And of course, EBITDA has also grown at 8%. Given all the challenges, this growth that we have got, and -- we have estimated that the industry growth may be 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'd like to mention of quarter 4 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 has shot 5 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 amongst lubricant brands for our car segment with the Chennai Super Kings.
So all these 5 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 the retail display contest for the agriculture products which again should -- with the season coming should help us. We have had two new OEM tie-ups, one with International Tractors Limited Sonalika, for the tactical OEM workshop and distributor channels, which is good.
Also started factory fill supplies to Hyundai Motors for some grades. 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 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 Bikestop and Carstop channels, which are important consumption points with the launch of new programs for FY '23 and also to increase our [indiscernible], we have launched a Mechanic Idol program for our specialized mechanic partners to recognize the best talents in this space.
So overall, a 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 4 and the year has gone. Over to you, Manish.
Thanks, Ravi. Good evening, everyone. As Ravi mentioned, as it was a record-breaking quarter for us in terms of all key parameters. While you will also notice that in terms of EBITDA, it was INR 89 crore EBITDA for the quarter, which is highest ever and it is 14% growth over last year's 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 a financial perspective, it has been a very good quarter for us and to recognize the profits, the Board has declared a dividend of INR 5, which is 250%. And this -- you will recall that the company had announced a buyback in the month of February because at a premium of 26% to the market price at INR 600 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.
With this background, you would request for the Q&A session.
[Operator Instructions]
The first question is from the line of Pradeep Vaswani with [indiscernible] Capital.
I think I have two questions. One, I think 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 the inventory is 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 came together 8 years low. And there are concerns on the capital allocation that has been taking place, like the dividend is down to 10%, which is down against 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 and the cash roughly at INR 15 crores, take INR 15 crores on the buyback at a higher price, cutting the dividend, with the balance sheet having almost INR 500 crores of net cash with no CapEx requirement. Maybe you can put some color on maybe how you're deciding on capital allocation?
And if there's any buyback or any commitment from management to stock at a 8-year low and there's a lot of cash on the balance sheet to make capitalization decisions.
Yes. So basically, first coming to the working capital facility. This year has been a very inflationary year, as we all know. And 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 quite obvious.
And that has increased the receivables overall. If you see the number of days of receivables, it has gone up by only 5, 6 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 reasons 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 spending in the receivables at the end of the year because balance sheet is as on a particular day.
So these three factors have put in the working capital as 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 3, 4 days, 5 days more maybe in terms of number of days plus receivables are also only 5, 6 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 the dividend stock buyback, which was recently concluded wherein close to INR 85 crores of cash was returned back to shareholders.
In addition, company has also paid nearly INR 20 crores as buyback tax so total cash outflow of INR 105 crores. And further, the Board has now declared 250% dividends. We are -- we have made some investments in the EV space, which have been also announced from time to time.
We have actually made 2 forays in the EV. One was last year and one in the March quarter itself, in the recent quarter, wherein we have acquired 36% stake in ElectreeFi, which is a Software-as-a-Service company catering to EV sector.
So the Board and management is looking mainly at the EV space, and we are exploring where Gulf can play a synergistic role and where we can participate in the EV value chain, which will help us to participate in the evolving leases. So for that, we are looking at opportunities, and obviously, our cash will be preserved.
Our incremental CapEx in the current business is around INR 15 crores, INR 20 crores annually. And there also, we are -- now that the full year volume is at 134,000 KL, we are looking at how we can take our capacities with these incremental CapEx to cater to next 2, 3 years on. So these are broad reasons why you will see that the cash is being preserved on the balance sheet to look for the investment opportunity across current business as well as in the evolving space. I hope we have been able to answer your question.
Yes. I think there is the first question I think -- answered. I think I still have a little bit of kind of a general concern on the capital allocation with the EV space. You're not a SaaS company. So investments in a SaaS business model where competition is pretty high.
And then as the investor [ days ], we are investing in kind of a lubricant business, which you've shared that the plenty of growth left in the next 10, 15 years. So I'm curious like the amount of investment you are thinking in terms of like you have net cash of INR 500 crores. Maybe you get a 10% yield on your current stock price. Why wouldn't you do kind of used some of that firepower to investing in your own stock and buy back more within [indiscernible], probably by another 2% of their stock at 75% target and still have enough cash to kind of extend your business model. Could you maybe share some color on like how much investment are you thinking? Is it a more fast pace or something else? Like -- so we understand what are we investing in for the future.
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 which is there clearly as a regulation. As we mentioned, ElectreeFi is 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 charger to the vehicle and payment gateways.
So as and when Gulf decides to go full throttle in this, that strategic relationship with ElectreeFi will definitely help us to strengthen our position in this stage. 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 2-wheeler battery business is going to grow significantly over the next 2, 3 years, and that will also be requiring some working capital and other investments, which we are gearing up to.
Our next question comes from the line of Sadanand Shetty with True Equity Advisors.
Quarter-on-quarter basis, considering it was volatile. And also I want to know if there is any realization growth quarter-on-quarter, if you need.
Sorry we missed your initial part of the question because the line was not clear.
So I will repeat again, the impact of base oil on this quarter over the last quarter considering oil was volatile?
Okay. So -- so if you see our material costs has gone up by nearly INR 3, 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 material margin per liter has been kept intact in spite of the inflationary pressures around -- of course, there are the recent [indiscernible] which has been ignited by this Russia-Ukraine crisis have led to further increase in the base oil pricing.
And as we've seen, 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 stock in the pipeline. So the full price realization happens over the next 2 months or so. So that steps are already being taken so that the margin retention or margin management strategy continues for us.
Sure. I can see a bump up in your finance cost, although on a year-on-year basis, it's substantially down. Any technical reason why this bump up of finance costs for the quarter?
Finance cost for the quarter also includes the ForEx losses, mark-to-market because during the quarter, post Russia-Ukraine crisis, the rupee became very volatile and there was a mark-to-market impact on the open ForEx exposures to the tune of INR 3 crores.
This also includes the forward premiums 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.
So how is the trend for the coming quarters given the hedge position that you have?
We have a revolving hedging position, Mr. Sadanand. Now of course, the current rupee situation is very dynamic and very volatile, so our payment to the extent of 70% were hedged when we started the current quarter. So we keep ourselves substantially hedged at any point in time. And that would help us in this very depreciating rupee scenario also.
But overall it will have some impact in the current quarter as well on the balance open exposures.
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 a material difference to the consolidated number? And is there any incremental investment that you'll have to make?
See, the EV space is a very, very nascent space as of now. We are making investments 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 to a U.K. company or in ElectreeFi. These are all in to future. And for the next 2, 3 years, how much of this will be impacting our consolidated revenue 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 a longer-term perspective.
Understood. Understood. Any incremental investment that you have to make over the next 2 years in these ventures
We may have to, depending on they perform and how they start getting market share in their respective areas. So we may have to line up few more investments to them or to some other companies as well. So the Board is -- and the management is quite actively looking at all those possibilities as we speak.
[Operator Instructions] Our next question comes from the line of Sabri Hazarika with Emkay Global Financial Services Limited.
Congrats on good set of numbers, very 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?
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 for base oil, each has their own demand and supply challenges. So sometimes the group 1 becomes short in the market and sometimes group 2 or sometimes group 3, very difficult to say.
Overall, we have seen the trajectory that base oil follows through overall -- over the 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.
Q-o-Q, 15%, 20% increase in the cost of goods sold unit cost of goods sold is the trend right now?
No. This is again because we carry inventory for a period of 60 to 90 days. And the impact will be staggered over a period of 2 quarters unless again, crude comes down. So impact will be staggered over a period of 2 quarters, it's not going to be happening in 1 quarter alone.
All right. And any rough cut numbers of the amount of price hike you have taken in April?
The price hike taken in April is roughly to the tune of around 3%, 4%.
3%, 4%.
And we are looking at various subsegments also. And if required, there will be -- margin management required, then we'll keep looking at that space.
So this 3%, 4% is on the Bazaar segment as a whole, right?
This is currently on Bazaar and our OEM segment anyway has a quarterly formula linked to the...
Yes, that I'm aware. But 3%, 4% will be the retail selling price in the Bazaar segment.
Yes. Plus, you have the industrial segment also where price hikes happen.
So second question is relating to your overall, I mean, long -- medium-term or long-term growth outlook. So I think the company has maintained that 2 to 3x industry growth guidance.
So can you elaborate -- I mean I mean, I know it's been like last few years has been like almost like 5, 6 years has been like significant growth. But how do you think that you'll be able to maintain this momentum for the next 4, 5 years, again?
Yes. So Sabri, you know, our last 10 to 12 years, we have been growing more than 2, 3x, actually, our 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 '21, '22, 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, the market was negative. So consumption was less because April also was closed partly, there was a lot of challenges in consumption and uptake. And next year, that is '22, '23. Obviously, we believe the global industry estimate is that we'll get back to positive growth given that the base also has fallen in last 2 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's going to be a challenge on how this will continue. But we are very clear that if GDP is growing, new industry is growing. It gives us a 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 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 segment going up and down. Like, for example, in our agriculture, we're expecting the season to come in.
We launched the display contest that should go up. Our passenger car and commercial vehicle diesel and oils have done very well. 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 there is a 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.
Yes. I mean just a follow-on. I mean -- I mean, yes, I mean, I could understand the sectoral part. But I mean, next 5, 6 years, not the 5 to 6 years probably next 3, 4 years or so, if you are like thinking that you'd be able to maintain the 2x to 3x growth. So it would be -- I mean, it is a 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 partners?
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 positions 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 among the top 3 brands. In fact, our brand consideration is the top 2 as per [indiscernible] So we want to use that to grow our distribution and focus on all the segments we are there. And we believe that customers who obviously 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 doing. So that's a good sign.
Right. But the market share gain, is it the cost of [indiscernible] or it would be some other players?
We are targeting a consumer segment. We don't target the type of usage. The customers are upgrading, customers are looking at products. So ours is more customer-focused strategy.
Our next question comes from the line of Ankit Mahajan, an investor.
So my first question is on rural demand. So I just want to know how has been rural demand in [indiscernible]? And how do you expect that demand trend in coming quarters? And my second question is from once again on CapEx that I want to come from -- what is your CapEx addition for FY '23 and FY '24.
So as we mentioned, we are looking at a lot of opportunities in the emerging spaces. In addition to that, our routine CapEx requirement for the current business for the next 2 years is roughly in the range of INR 15 crores, INR 20 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 1, 2 years, 2 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, Mr. Ravi will answer.
Yes. So I think Mr. Mahajan, you had spoken of rural. But you see rural for us, obviously, we have been present in rural for many, many years. The last 4, 5 years, we have got into the rural distribution. We have a Gulf Rural Stockists which is servicing the rural outlets and penetrating that. And the rural demand, definitely, they consume the agriculture tractor lubricants, they consume motorcycles. We also do a bit of car and other ancillaries which we have.
So we have seen the rural demand, which has got slightly subdued, I would say in COVID in the wave 3, right? And agriculture also, which had a very good sale 2 years ago when COVID was there in the peak and started. So 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 also, right? Tractor sales are doing very well in '21, '22 first few months and 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 stockists 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 the rural demand is going to pick up with the agri season coming in the next few months.
Our next question comes from the line of Manoj Oberoi, an investor.
Sir, am I audible to you?
Yes, Manoj.
Congratulations for the good set of numbers, sir. 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 believe -- you said that our market share has increased by 50 to 100 basis points in the quarter across the categories.
For the year.
For the year, so sir, do we have the data handy, if it's handy, can we have the market share numbers for Gulf.
It is very difficult to estimate. You see the segment 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 [indiscernible], et cetera, which comes. So we -- our estimate is the base figure remains what it is for what we have. And the overall market share is what we are talking about in the 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 a little above 1% in certain segments. And it's the overall estimation.
We do have -- sharing that data is not because it's still changing. We do have some tracks which come in, but these tracks are not very accurate.
Our next question comes from the line of Saurabh Doshi with Yes Securities Limited.
I have two questions. Firstly, on the capacity, which is a total of around 150 million liters. And I think we have been sale of around 135 million liters in FY '22. So do you foresee any need for investment in capacity in coming season.
You see, our capacity is based on 2-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'll have to look at -- and we are doing incremental CapEx of around INR 15 crores, INR 20 crores 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 auxillary 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 first shift basis can be much high.
Okay. Okay. And secondly, on the current distribution network or in terms of distributed retailers, et cetera. Can you throw some light on that? And also on the additions that we have done this year or within the distribution network.
See, Saurabh, with the travel restrictions and the closure of markets, the distribution numbers obviously, last 2 years, we have seen a number of outlets of closing down that we have by Bikestop, Carstop, you will appreciate that the market is obviously -- a lot of people have the 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 are rebooting, re-energizing 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 2 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 our 45%, 50% of business is like a consumer product business where distributor 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 stockists to go out there and increase. Previously, I mentioned Bikestop, Carstops 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.
Understood. Just can I -- just one follow-up. Can you give a number on the percentage that you have increased in this financial year?
This financial year, we told you the markets were [ closed ]. So obviously, we are just getting back our distribution this last financial year.
Our next question comes from the line of Chirag Fialoke with RatnaTraya Capital Partners.
Just wanted the three questions, first bookkeeping one. Can you give a B2B, B2C split and the split of volume across the segment for this quarter?
See, our B2C, B2B was similar to December quarter at 55/45. And overall, I would say the volume mix has -- product mix also has been more or less similar with slight increase in the diesel engine oil and overall slight reduction in the others and industrial.
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 kind of...
Got it. And for the quarter, on the battery sales.
Battery sales for the quarter was around INR 18 crores. You see this year, we had a challenge of supplies from imports in terms of batteries. So there was a sort of, I would say, 15% reduction in the battery sales overall. But as 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 some of the key SKUs.
That's very helpful. Sir, my second question was just around margin broadly. Is there a guidance that you can provide? I just say, crude [indiscernible] $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 being...
As a percentage margin, when we say that in March quarter, we achieved a 14% margin. And if you take the realization of last year in March quarter, we are already at the band of around 15% in terms of our margins. It is just because the top line 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're already in that range.
And we try to manage that range, except if there is a sudden sharp increase in base oil which takes time to pass on. Overall, I think we are quite confident that we'll be able to maintain this band of 14% to 16% on a higher revenue base.
Got it. So irrespective of oil, finally, the band will be 14% to 16%. That's what we are -- is that the correct understanding?
Yes, because the industry and the company has the ability to pass it on periodically, if there is a significant increase. That is the way an OEMs, which is a good part of our business also are formula-driven. So with every increase, there is the same in quarter formula every quarter or 6 monthly. So we are in a position to recoup it. So maybe sometimes with a delay of 1 quarter, but overall, we are ultimately in that band. That is one good part of this industry, I would say.
Got it. That's great. Last question, just on the volume guidance. Previous questioner just asked this question, I just want to double click on it. So essentially, when you say 2 to 3x of market, I mean do you understand broadly what that range is. But for the more short term, say next 3 years or 2 years, is there a more concrete number that you can share with us that you are targeting...
So Chirag, client, which is the expert they talk about 2% to 3% growth of lubricant industry in a normal year. So if you take that, obviously, we have been saying that our mission is to at least get a double-digit growth in volumes given that we have -- we play in many segments. So 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 the [indiscernible] grow.
Understood. So close to say 10% or is what your aspiration is?
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.
Our next question comes from the line of Amber Shukla, an investor.
Sir, I have just a couple of questions. First, what would be the utilization level at Chennai plant.
We are currently at around 60% utilization in our Chennai plant.
Okay. Okay. And 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?
You are talking of electrification in terms of penetration?
Yes, yes.
It is 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 is going to continue to witness a robust growth. That is what the automobile sector is talking about.
Within that, there will be some segments, it 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 come 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 oil lubricant -- sorry, market of vehicles. Our estimation is that currently last year, last 2 years, actually 2 wheeler sales have been slightly subdued. This was around 22 million -- India sells roughly 20 million, 20 million 2-wheelers every year, new vehicles. Out of this, last 2 years have been slightly lower.
But as it speaks those numbers again, the overall impact of EV conversion will be even lower. And within that, only 30% in scooter. So we have to see that the 2-wheeler segment is also not going to be impacted more than 10%, 15%, 20% over the next 5, 6, 10 years. That is our estimate.
And impact of conversion of buses, et cetera, there's not going to be much on lubricant side because on our company because that consumption these are not our target segments, the buses and the 3-wheelers in particular.
So overall, we continue to believe that the lubricant demand is going to be very robust and growing till at least 2035, 2040 and the overall market of lubricant will be much higher than what we see today.
[Operator Instructions] Our next question comes from the line of Aditya Shetty with Finserv Consultants.
First of all, congratulations for the quarter. My question is with regard to the sales promotion spend. What is a rough amount that you would have spent in terms of sales promotion?
You're talking about advertisement and promotion, right?
Yes, yes.
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 cut it down to around 4%. And as we speak, when the market, as Ravi mentioned, the markets are now opening up and there are a lot of activations, BTL activities are being started. This will be, again, going to 4% to 5% range, and we'll continue to be in that range.
Percent of the revenues?
Yes.
Our next question comes from the line of Pradeep Vaswani with [indiscernible] Capital.
Yes, just a follow-on on the -- maybe the Bikestop, Carstop business. Could you maybe share like the current business model and what your future ambition is? Are these like co-owned or leased shops that you are [indiscernible] oil-change service or something else?
Sorry, can you repeat your question, please? We couldn't hear you properly.
Yes, sure. I was just curious on the Carstop, Bikestop kind of business model? Are these like stores that are changing oil? Are these kind of co-owned by you or branding it? How many shops are there and what your ambition is for the future?
So we have about 8,000 of these. Obviously, some of them have gone through the last 2 years, where some of them have slowed down. But these are just branded by us. And we do have an arrangement with them where we provide them certain support services, and they would sell our product from their outlets.
Some of -- or 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, relaunching the programs to energize this segment to grow -- and we continue to increase in these touch points, which we call Gulf 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 book shops, that's an important segment. and we continue to grow in this segment and focus on it.
Okay. Is there an ambition to actually run and own these shop or pretty much...
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.
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.
Thank you. Well, I would like to say that looking at the year ahead and the quarter ahead, we have got -- obviously, the lube industry growth, which should be the positive. The OEMs, infrastructure, B2B and the GDP and as you see mobility going up and vehicles out there in all segments, whether it's agri, car, tractors, scooters, even 3-wheelers. So we are 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're rebooting a lot of initiatives where we are restarting and connect with all parts of our -- whether it's our distributor or it's a sales person on the ground, the retail outlets, the mechanics, which drive our primary, secondary and tertiary sales. So a 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 a 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 and supply chain capabilities, definitely to increase the [indiscernible] of our product availability as our brand is strong. And this is really going to be our endeavor. And we mentioned that for Gulf, the segment-wise approach, the brand and 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.
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.
Thank you. On behalf of Yes Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.