Gulf Oil looking to enter two-wheeler battery segment

The annual size of the motorcycle batteries market in the country is estimated at Rs 5,000 cr

Gulf Oil Lubricants India Limited (GOL), a Hinduja group company engaged in production and sale of automotive and industrial lubricants, is exploring the prospect of entering into the two-wheeler battery segment. It is currently importing motorcycle batteries and test marketing them through its retail outlets in India.

“We are examining this segment more for synergy of our channel sales,” GOL managing director, Ravi Chawla, said adding the annual size of the motorcycle batteries market in the country was estimated at Rs 5,000 crore.

GOL, which was demerged from Gulf Oil Corporation this year, is also looking at introducing new lubricant products suitable to two-wheeler and car segments where it wants to increase its presence. As of now, motorcycle and car segments account for 15 per cent and 6 per cent of the company’s total business respectively.

This apart, the company is formulating “strategies” to penetrate into the rural market. As a part of these, it wants to increase the number of existing 50,000 retail outlets by 10-15 per cent every year besides increasing its communication with target customers in the rural areas through advertisements and other means. At present, 10 per cent of the company's turnover comes from the rural market.

Chawla said GOL had embarked on a Rs 165-crore expansion plan. This included capacity expansion of the company’s unit at Silvassa from the existing 75,000 tonnes to about 95,000 tonnes a year at a cost of Rs 40 crore and setting up of a Rs 125-crore greenfield unit near Chennai. While the expansion of the Silvassa unit would be completed by January 2015, it would take two more years for the completion of the 50,000-tonnes per annum capacity Chennai facility.

According to Chawla, GOL is setting up the Chennai unit as it has a strong presence in the southern market. In open market sales of commercial vehicles lubricants, it is a market leader in the south. Besides, Chennai has emerged as an automobile hub with nearly 26 major automobile makers setting shop near the city.

Chawla said GOL’s target was to emerge as one of the top three private sector lubricants companies in India. At present, it has a 4-5 per cent share in the Rs 28,000-crore, 2-million tonnes per annum lubricants market in India and occupies fifth or sixth position.

Of late, he said, the lubricants sales, which had been flat for the past two years, was showing signs of growth. The market was expected to register a 1-2 per cent growth in sales volume in the next six months.

For the quarter ended September 2014, GOL posted a turnover of Rs 284 crore and net profit of Rs 19.4 crore. It has reserves and surplus of Rs 157 crore.