New Delhi: In an industry that’s gradually moving from internal combustion engines to electric powertrains, lubricant makers are compelled to redefine their growth strategies. The Hinduja Group-owned Gulf Oil has been making a series of investments in sustainable businesses to align with the future which is closely linked to electric vehicles (EVs). Futureproofing is a priority and investments in the EV ecosystem become strategic for the lubricant maker. For such investments, the company would make use of the INR 600-crore surplus cash at its disposal.Over the past two and half years it has been making such strategic investments; the latest being the acquisition of a controlling stake in Tirex Transmission, a DC charger maker, investing INR 103 crore.
Earlier in 2021 Gulf Oil also increased its share in Indra Renewable Technologies from 32% (between Gulf Oil and Gulf Oil India) to a controlling stake with additional investment. It was the first move under the lubricant maker’s futureproofing strategy.
The second investment, of around INR 35 crore, was to pick up 26% stake in a software as a service (SaaS) provider, Techperspect, which specialises in implementing IoT-based e-mobility solutions. More similar investments, including entry into the two-wheeler segment, are underway.
Making AC chargers in India also
The UK-based Indra Renewable Technologies is a maker of AC chargers. EV charging is a key focus area for Gulf Oil to enter the EV ecosystem, with a goal to be a significant player in it eventually. “We now have got both the companies. The global market also is expected to be worth USD 200 billion by 2030. In India also we are expecting that by 2030 there will be demand for at least 1 million chargers, out of which maybe 10% to 15% will be DC chargers,” Ravi Chawla, CEO & MD, Gulf Oil India, told ETAuto.
WIth the Tirex Transmission investment, Gulf Oil India is also looking at having its own brand of DC chargers. “Tirex is making charges for the Tirex brand. They’re also making charges with a white label which some other people may want to take, and now we can also make Gulf branded DC charges,” Chawla said.
Tapping the opportunity in the larger market of AC chargers with imported, highly specced Indra chargers will be a difficult task. Therefore, Gulf Oil India plans to start manufacturing them locally. “We have tested the chargers in India. They are basically car Smart Box chargers. So, we are looking at manufacturing as one growth area for us,” Manish Gangwal, CFO, Gulf Oil India, said.
According to Gangwal, Indra Renewable Technologies is one of the leading players in its space in the UK, with over 20,000 chargers installed. These chargers have advanced technology like Vehicle-to-Grid. Some of the advanced features will be removed from the chargers for India, to make it more affordable and relevant for the domestic market.
Future investments in the EV ecosystem
Gulf Oil is looking at more new investments to beef up its presence in the EV ecosystem. “We are definitely looking at other options in the EV value chain. Two-wheelers are also a focus for us in India,“ Chawla said.
Setting up a two-wheeler charging network, and/or a battery swapping service are among the options being explored. Chawla and his team are looking at tapping Gulf Oil’s market reach, through its existing relationships with OEMs, and its retail network to make inroads into the EV industry.
“That is one criteria. The other is in the value chain, where we see it makes sense for us to future-proof because these are not going to be very high revenue streams initially, but you need to seed it to be able to be a part of it (EV ecosystem) at some point of time,” Chawla said.
Gulf Oil has around 80,000 touchpoints in India, 10,000 of which are branded. Gulf Oil has a network of garage partners which have ‘Gulf Bikstop’ as a prefix to their names. Around 7 years ago, Gulf Oil ventured into the two-wheeler battery business, and it plans to tap the available synergies to build its service for electric two-wheelers too. The battery business, present only in the aftermarket, generates INR 75crore -80 crore annually for Gulf Oil.
In its core lubricants business, Gulf Oil is diversified into fluids required for EVs. According to Chwala, the company has bagged 7 customers, and 3-4 more are on the anvil. Gulf Oil has single digit percentage share in the emerging segment of EV fluids. “We are wanting to be a leader in that,” he said.
Tapping surplus cash for future growth
Gulf Oil India had over INR 600 crore of surplus cash at the end of FY23, according to Gangwal. With the annual capex for the traditional lubricant business at a moderate INR 20 crore-25 crore, the company wants to utilise a good part of its cash for future growth opportunities. Gulf Oil India says the plan is to divide the available sum between rewarding investors, and making new investments. “I would say if we have X, the dividend takes up maybe half of it, half of it we have to look at in terms of investments for the future,” Chawla said.
As for the domestic lubricant industry, Gulf Oil India expects it to grow at around 2%-3%. With technology advancements, the value share is expected to grow at a higher rate.
