Gulf Oil Lubricants India Ltd

Crafting Sustainable Momentum

Dear Stakeholders,

The IMF?s recent baseline forecast (World Economic Outlook April 2024) shows that the global economy will continue to grow at 3.2% during 2024 and 2025, at the same pace as in 2023. A very minimal acceleration from advanced economies will be offset by a modest slowdown in emerging markets and developing economies.

In such a global backdrop, India shines as a bright spot and continues to be among the world?s fastest growing major economies, with a robust GDP growth projection of 6-8% in the coming years. India is now the third largest automotive and lubricant-consuming market. Not only is India an enormous and growing market, but also stable governance, unprecedented growth in infrastructure investments, and changing consumer demographics and aspirations are creating further potential for volume and value growth in the lubricants sectors.

Interestingly, the proportion of the middle class has more than doubled in the last 20 years and is forecasted to continue to grow well into the future. We can expect these aspiring consumers to transform consumption patterns, with an increased demand for high-quality products, brands and services. However, when it comes to vehicle ownership, it is still very low in India. Only approximately 8% of families own a car, while 47% of households own a two-wheeler, which means there is significant scope for growth in the automotive lubricants industry.

India is also investing significantly in the future. It has long been a service market, but now it is becoming a manufacturing hub. To support this transition, central and state governments are investing in infrastructure as a priority, with 1.7 trillion dollars expected in the next four to five years. There are also exciting targets for expansion in rail networks, airports and in improving connectivity to the ports. There are impressive prospects for manufacturing, power and energy, along with high-growth sectors with service support such as mining, metals, textile and cement. This will positively impact the growth of the lubricants sector, especially within the industrial segment, driving significant advancements. Competition is intensifying, prompting brands to increasingly appoint brand ambassadors. Your Company is operating in the most promising geography, with the right products and solutions, and targeting the most high-potential sectors for continued stakeholder?s value maximisation.

In FY 2023-24, Gulf Oil has accomplished significant growth, setting high standards for the industry as a whole in a challenging market landscape. We have recorded the highest-ever annual revenue and profit for FY 2023-24. Drawing confidence from our overall performance and cash flow generation, the board has declared a total dividend for FY 2023-24 at Rs 36.00 per equity share.

The critical business levers for our year-on-year higher level of financial growth include gradually expanding margins, prudent cost management, improved product mix, robust cashflows, better-working capital management and relentless premiumisation of our products.

With India shining as the third-largest lubricants market globally, we are poised to unlock new opportunities while continuing to grow in our core lubricants segment. We have initiated ‘Unlock 2.0: Accelerate, Premiumize, Transform?, a strategic theme aimed towards next level of growth & success. This approach focuses on accelerating growth in our lubricants segment leveraging our strengths to enhance market share across portfolio; improving our value proposition through product innovation and premiumisation; increased investments in digital infrastructure, brand initiatives, and expanding EV charging solutions to drive transformation and sustainable growth. The strategic acquisitions made in E-mobility segment positions us to play a pivotal role in shaping the future of transportation.

At Gulf Oil, we are committed to enhancing sustainability through a comprehensive approach that minimises our environmental impact and promotes responsible business practices. Our resource-efficient initiatives emphasise water stewardship, focusing on restoring and preserving water resources. We also prioritise the social and emotional development of communities by providing free medical assistance to populations in remote villages near our manufacturing facilities, along with skills training in communication and financial literacy.

As a leader in India?s lubricant industry, we adhere to Extended Producer Responsibility (EPR) for the safe disposal of packaging. Our waste management practices target the reduction of E-waste, hazardous waste and other types of end at waste.

We view product stewardship as a strategic opportunity to integrate sustainability into our business strategy. We promote eco-friendly products, such as long-drain oils, biodegradable hydraulic oils, EV fluids, and AdBlue^?. Acknowledging the evolving automotive industry, Gulf is transforming is by investing in EV charging solutions through Indra Renewables, ElectreeFi, and Tirex Tansmission aiming to develop a comprehensive EV charging portfolio. Further, we are committed to sustainable sourcing and refining our procurement processes, while aiming to establish solar installations across all rooftops to achieve a renewable energy generation capacity of 1.14 MW.

At Gulf Oil, we continue to empower communities through various initiatives. I am happy to share that the Gulf Superfleet Suraksha Bandhan campaign has entered its 5th season in FY2023-24 and distributed over 10,000 portable water purifiers to truck drivers and installed community water purifiers at 12 Transportnagars across India.

The campaign also launched the Gulf Superfleet Suraksha Clinic, providing truckers with free doctor consultations, discounts on medicines and health check-ups. Additionally, our projects such as Road to School and Road to Livelihood are designed to upskill students, promote women?s empowerment and provide livelihoods in the communities we serve. Our Kushal Mechanic Programme also offers vocational training to mechanics, unveiling opportunities and accelerating their professional growth.

To capitalise on India?s unique opportunities, we are committed to meeting the ever-evolving needs of consumers by delivering greater value across diverse sectors. We are forging strategic partnerships, empowering our talent, and placing a strong emphasis on crafting a cleaner, greener future for all. We foster a caring, agile, and empowering work environment that celebrates gender diversity, driving innovation, promoting equality, and enhancing organizational performance by leveraging a diverse and inclusive talent pool. In this innovative, exciting and rewarding journey towards new horizons, Gulf Oil International will continue to support Gulf Oil India with relevant strategies and resources. With all our brand strength, relationships, and distribution channels, we are committed to playing a pivotal role in contributing to the growth of New India, while creating value for all stakeholders.

We extend our heartfelt thanks to all our stakeholders and associates for their unwavering support. A special acknowledgment goes to our employees for their dedication in building the Company and its businesses. I envision greater achievements for your Company in the years to come and look forward to a successful year ahead.

Regards,

Chairman