The Indian economy is at the cusp of a new inflection point wherein growth andunleashing of its true potential will bring about nationwide prosperity and reducepoverty. According to a recently released IMF World Economic Outlook Update the Indianeconomy will continue to grow at a faster pace than China's in 2017 as well as 2018.
As lubricants remain integral to the nation's smooth growth momentum - both at theallimportant industrial and automobile segments your company is well placed to cater tothis enhanced demand and nurture this nascent industry to further heights.
In addition we have successfully catered to the growing needs of automotiveindustrial marine and process oil markets through adoption of latest technologies andefficient compliance systems.
Current & Future Strategy :
During 2015-16 the market witnessed uneven fluctuation in crude from $62 to $30 perbarrel. However there was marginal stability in 2016-17 at $41 to $54 per barrel ofcrude. We maintained optimal stock level of base oils procured at economical pricessubject to optimum usage of available storage space to effectively shield ourselves fromfluctuations.
With an endeavour to hold and continue our growth in the B2B and B2C segments welaunched new products in 2016-17 specifically catering to customers in these segments.Hence we successfully introduced new products such as semi synthetic cutting fluids formachining aluminum lubricant for cold forging applications specialty neat cutting oilsfor specific applicationsand high performance greases like calcium sulfonate and extremepressure grease.
To be the most sought after partner for lubricants and value added services forcustomers has been our foremost mission. Towards this objective we have always believedthat OEM and user endorsements don't merely increase the acceptance of products but alsoenhance customer confidence to use our products without any fear of productivity losses.Hence we have been continuously concentrating our efforts and have remained focused upongaining maximum OEM and user endorsements.
In 2017-18 the company plans to consolidate the semisynthetic cutting fluid portfolioand bring in products for new segments like high performance turbine oils energyefficient spindle oils for the textile industry and other variants for the metal workingindustry.
Across auto segment our focus is to increase reach and therefore work on appointingdistrict wise distributors with the ultimate aim of doubling within next two years. Tohave presence in PCMO segment we are planning to launch a fresh product range for moderncars by end of Q2 2017-18.
As the government pushes forth its ambitious 'Make in India' policy - there will beenhanced manufacturing and machinery based activities thereby spurring demand forlubrication products. It is herein that GPPL's well-known global brand IPOL could assistin fulfilling customer demand and growing the market-size. IPOL has one of the widestranges of products carefully designed to suit various applications and deliver highperformances. These are available in a variety of pack sizes as per market needs.
Last year your company achieved a new milestone by launching the leading Spanish oilcompany - Repsol's lubricant business in India. Repsol is a major player in the lubricantbusiness worldwide having six decades of experience and comprehensive range of productsfor vehicles and the industry. GPPL has the exclusive right to manufacture and marketRepsol's superior and comprehensive line of premium quality lubricants across India.
External Influence on Business:
The vast majority of Indian business segments felt demonetisation to be a majordisruptor that changed the traditional status quo overnight. However the effect ofdemonetisation for us was like any other B2B company around that era. But demonetizationdid indirectly affect liquidity in the auto market and directly impact small distributors.In long term it may taper down as network will compel to work on billings rather thancash.
In addition there was nothing unusual about the monsoon or other seasons on ourbusiness. The B2B segment is mainly based on pricing and any fluctuation in base oilprices has an impact on margins in the export and import arena. Furthermore any effect ondemand in the auto sector impacts us indirectly due to our large customer base in the autoancillary segment.
A Responsible Corporate:
Growth and margins are critical to the success of any business and GPPL is nodifferent. But as a responsible Indian business entity we have also focused on ensuringthat our success benefits the community at large. As part of this initiative GPPL hasprovided computers and laptops to schools thereby ensuring that future generations areempowered to uplift their local communities through the power of knowledge. It is our firmbelief that upliftment of local communities will spur development in the long term.
Within this evolving environment you company has performed reasonably well andmaintained its growth momentum. As a result the company's net profit for FY 2016-17 grewto Rs 2023 lakh from Rs 1359 lakh during FY 2015-16. The main reasons for growth inmargins were increase in manufacturing sales volumes decrease in COGS per Litre lowerfinancing costs and sale of fixed asset.
During FY 2015-16 GPPL declared Interim dividend of INR 0.40 per share (8% of valueper share i.e. Rs. 5) and Final dividend of INR 0.10 per share (2% of value per share i.e.Rs. 5). In comparison GPPL declared Final dividend of INR 0.75 per share (15% of valueper share i.e. Rs. 5) during FY 2016-17.
Going into the future we are excited at the unfolding opportunities within our rangeof businesses. We are optimistic of business sustainability and invite you to be a part ofour sensational journey.
|With my best wishes |
|Manan Goel |