Built to endure
At the outset let me wish all of you and your family members the best of health andwell-being. These are difficult times with a global health crisis disrupting our livesand posing newer challenges. These unprecedented circumstances made us introspect and arepaving the way for a new normal to emerge. I am pleased to share with you that despiteall-round slowdown in the economy as well as within the automotive and lubricantindustry we continued to demonstrate resilience in delivering industry-leadingperformance.
A year of multiple macroeconomic challenges
Global economies continued to slow down in FY 2019-20 amid weakening demand dampeningconsumer and investor confidence and rising uncertainty around US-China trade. Even beforebenefits from a temporary resolution between US and China could begin to fructify theoutbreak of COVID-19 pandemic brought economic activity across the world to a standstill.
Even in these testing times owing to our robust business model and the passion of ourteams we continued to focus on our strategic priorities and gained market share acrossall our core segments.
Indian economy though dealing with its own problems remained one of the fastestgrowing around the world. Global headwinds liquidity constraints and subdued consumptiondemand were leading to some moderation in the growth rate. However with a nationwidelockdown coming into effect (in last week of March) the country's GDP grew at amulti-year low rate of 4.2%.
The automotive sector felt the ripples from a slowing economy and witnessed one of itstoughest years with new vehicle sales covering all product segments declining sharply.Limited availability of vehicle loans growing congestion in bigger cities risingprominence of shared mobility services and weakening consumption were other pressurepoints. Implementation of BS VI norms entailed replacement of older inventory and alsocontributed to the slowing automobile sales. Implementation of the nationwide lockdownfurther aggravated the situation. Consequently the lubricants industry in India toowitnessed a decline of about 5-6% (as per our internal estimates) including automotiveand industrial segments during the year.
A resilient performance by Gulf Oil
Even in these testing times owing to our robust business model and the passion of ourteams we continued to focus on our strategic priorities and gained market share acrossall our core segments. In fact we were clocking double-digit volume growth in our keysegments upto February 2020 except factory fill which is around 8-10% of our totalvolumes. Factory fill is directly linked to new automobile production which droppedsignificantly during FY 2019-20.
We continued to strengthen our distribution reach relationships with our existing OEMsand also welcomed several new OEMs and B2C and B2B customers across automotive industrialand construction sectors. This along with new products with superior customer valuepropositions and innovative engagement initiatives with customers mechanics and otherbusiness partners were the key drivers of our performance.
But for the impact of lockdown in the economy during March our full year performancewould have reflected the buoyancy witnessed until February. Our core volumes stood at110500 KL slightly lower than the volumes sold in FY 2018-19 due to macro factors beyondour control. However we continued to perform better than the industry for yet anotheryear even amid several adversities.
For FY 2019-20 we posted the highest-ever PAT in our history of Rs 203 crores anincrease of 13.9% over FY 2018-19. EBITDA too touched an all-time high of Rs 287 croresinching up by 1.2% over FY 2018-19. The challenges notwithstanding we declared a totaldividend of Rs 14 per equity share during the year (dividend payout ratio of 35%) as a wayof expressing our gratitude to our shareholders for their unwavering support to ourCompany.
Fortifying brand Gulf
During the year under review we continued to strengthen our brand and gain strengthfrom our many India-centric and global branding associations as we have consistently donefor over a decade. Our innovative marketing communication and activations across focussegments added to the growth of our brand and businesses. I am truly delighted to sharewith you that with all the work done in this area brand Gulf has climbed up to becomethe second placed brand in the Industry in terms of brand recall metrics and importantlyfor the brand consideration scores (as per our extensive internal brand track done inJanuary-February 2020) in India. This certainly puts us in a position to attract and addeven more 'value' and premium brand' conscious customers consumers and continueincreasing our market shares in the future.
Gulf Oil International's global brand associations like Manchester United ApriliaRacing for the Moto-GP and the recently announced multi-year strategic partnership withMcLaren racing and luxury supercar McLaren Automotive augur well and will furtherstrengthen our brand recall in India.
At Gulf Oil we believe in driving inclusive growth and giving back to our communitiesbusiness partners and other stakeholders. Our focus areas include supporting waterconservation security and development initiatives at a group level skill developmentprogrammes for mechanics road safety community support programmes and providing medicalhealth services in Silvassa. During the pandemic we stepped up our existing initiativesand started several measures to actively support communities who were affected the most.These included our mechanics daily wage earners/communities around Silvassa and in TamilNadu. We worked closely with local and government bodies to be a part of programmes thatprovided immediate help and relief to those worst hit.
At Gulf Oil ethics transparency and sincere governance practices are absolutelynon-negotiable. This approach has enabled us to gain the trust of all our stakeholders andcreate sustained value for them through the ebbs and flows during different businesscycles.
Embarking on an exciting future
As the situation normalises around the country the world as we know is likely tochange for the better. We are ready for the new and the team is looking at tapping intothe current focus segments more and more and looking at newer opportunities where we cantake the lead and work on how we can reimagine the ways to grow. Our strategies will needto evolve to leverage our core strengths and exemplary execution capabilities which willremain the tools for our future success. We will continue to build on our collectivestrengths grow our reach and offer distinctive products that will offer more value to ourcustomers. Gulf Oil International will continue to stand together with Gulf Oil India tosupport the brand and its technology and facilitate value add in these important areas forall our stakeholders.
With this I want to extend my heartfelt gratitude to all of you including our teamswho continue to take the Company to greater heights under the able guidance of the MD& CEO Ravi Chawla. I am also thankful to our customers business partners bankers aswell as shareholders for being our solid pillars of support.
While India's long-term growth prospects remain intact good monsoon along withpositive effects of several fiscal and monetary measures could provide support in theforeseeable future.
We see a new way forward and are confident of continuous and consistent value creation.
Sanjay G Hinduja