Interview with Ravi Chawla, MD and CEO, Gulf Oil Lubricants India on Gulf Oil’s tie-up with McLaren, developing oils for India and potential going forward
In this interview, we get chatting with Ravi Chawla, MD and CEO, Gulf Oil Lubricants India about a variety of subjects. We start off with the new tie-up between Gulf Oil and McLaren that was announced last week. The partnership is a historic one, but more relevant to Indian customers is that the company is planning some sort of engagement with the F1 team in the coming years! We then veer to the Indian market and talk about Gulf’s market share, strengths and growth potential. Gulf has a large R&D centre in India where it does a lot of research on products specific to the Indian market. One tidbit that Ravi did share is that the company has no less than 180 vehicles testing its products in India every single day! Read about this and so much more in our insightful conversation with Ravi below:
Sirish Chandran: Tell us about your partnership with McLaren. As an Indian and for our enthusiastic audience, what do we see out of this partnership?
Ravi Chawla: When it comes to motorsport, there is always a following and people are interested in the races and Formula 1 is obviously the pinnacle along with MotoGP. With Gulf cars, there is a lot of history. There's a lot of wins that have happened. And so for the Indian fans, the association they have with the brand in India, it gives us a platform to take it forward. Particularly our users of our products, who are using our passenger cars or bikes and those interested in motor racing, it gives us a platform. And certainly, you know Formula 1, there has been a past in an attempt to get it here. We hope with this not only the platform is there, Gulf as a brand, which is known with motorsports and McLaren -- both of them have a lot of history -- that is again exciting people. And in some form next year we will try to do something along with McLaren in India. That is our plan.
SC: Right now McLaren is not there through an official importer or anything. So you will still do something with McLaren here in India?
RC: Something on bringing the experience on the fan side. There's no race going to happen in India. But if there's some way we can bring in something, we do have that on the cards. In some way we can partner with them to bring in some experience for Indian motorsports fans.
SC: I also wanted to ask, now you've been partnering with a lot of motorsport teams in the country. You were there with Volkswagen Motorsport also. Will that the association continue in the days to come?
RC: No, VW and all were part of the bi-annual or annual deals and earlier investments we made. As of now, we have global associations in MotoGP with Aprilia Racing. In India we don’t have any committed relationship in the motorsports area. With McLaren and MotoGP, we would use these platforms to reach out to people on television and through people like you. We do have tie ups with Manchester United in football, so we do have fan academies which take fans to matches. There will be opportunities like that once spectators are allowed. Obviously today, spectators are not allowed. But basically, there is no other association with motorsport for us in India at the moment.
SC: In terms of another McLaren partnership is also to highlight your association with premium cars. What is the plan for that in India?
RC: We have products in a global bank. So we have products which cater to the high end and as you said, the premium segment of bikes and cars. I think the offerings that we can make to them would mainly be the product and as I mentioned to you, the experience that we can bring to the fans. And the supercars and superbikes would obviously be able to share in that experience.
SC: Will you be also introducing your premium range of oils in the country?
RC: Yeah, you see synthetics and semi-synthetic are a growth area for us. So certainly there we are planning one or two offerings, which will come out soon, possibly in the next quarter.
SC: What is Gulf's market like in India right now?
RC: So Gulf is right now the second amongst the top two players in the private sector. We have grown as the fastest in the last 10-12 years and our brand is placed at number four if you take the PSU brands in our internal studies. Gulf is fairly well established now as a leading player probably second to the market leader Castrol in the open market called the Bazaar.
SC: How many OEM tie-ups does Gulf have in India?
RC: Currently we have close to 14 to 15 OEM tie-ups. In the passenger car segment, we do give some of the products to Mahindra. We supply to Tata Motors, for particular models. We are supplying car OEMs with products for BS6 -- like AdBlue. But are also present in commercial vehicle OEMs, two wheeler OEMs.
SC: Is the commercial business stronger for the Gulf in India?
RC: Yes. We are primarily strong in commercial and motorcycles. So actually this is a good opportunity for us to grow our business in the car segment where our market shares are lower.
SC: Coming to the McLaren partnership, will they be any like activation in India on the digital front?
RC: I think those platforms are going to be obviously experiential. So I think that is something we definitely plan for and I guess the excitement of the announcement has just happened so a lot of those ideas have to be dwelled out and put in place, but definitely on the cards.
SC: In terms of global markets for the Gulf, where does India rank?
RC: India is one of the leading markets. We are clearly in the top three. So I would say as all global markets are concerned we are best placed in India.
SC: How much of your production in India? What is the capacity like and how much do you?
RC: We have the capacity of 140,000KL in two plants. And currently, we are at about 70 per cent of capacity.
SC: In terms of the car and bike market, where you are even commercial vehicles for that matter the industry hasn't really been in the best of health. What are your projections and where do you see the industry going?
RC: If you see we are supplying lubricants for even the current vehicle parts. This is what we call the replacement market. So we are not talking only about only the new vehicles. New vehicles are basically factory fill. As we see new vehicle [sales] coming down, the factory fill business comes down. As I look at it, I feel like that is going to take some to revive. But Gulf, in the lubricant industry, we are more focussed on the replacement and if you take the overall industry also it did not grow last year. It was a -6 per cent and -7 per cent. And this year, because of the situation it might become -10 per cent because it will drop further. So I think the industry will take time to revive and we have always been growing two-three times the industry growth. I think we should be looking at how we increase our sales and market share and that we are pretty sure those plans will come. Now you will see demand will normalise in the next few months hopefully. June has been very promising. But there must have been some pent up demand due to which March-end, April were absolutely blank months. So I think once we get back to some normalcy you can see global demands also coming to the normal level but an overall drop in the year as you lost out on many months.
SC: How do you reach out to your customers?
RC: We have many ways, you know. We have a widespread distribution network so what you see 60-65 per cent of the business is through distributors and we have close to 78,000 outlets. This is one part, and then we supply to OEMs, we have B2B business which we supply to industrial distributors, directly to customers on infrastructure, directly to big industries. But 60-65 per cent consumer product business through distributor channels. We have distributors, they have sub distributors, we have branded workshops. We tied up with 14 to 15 OEMs, so for some we do factory fills, workshop and aftermarket. We have tied up with OEMs where we are doing business with them like Bajaj, Bharat Benz, Ashok Leyland, Mahindra tractors, Tata Motors and so for all these people we are supplying to their dealerships.
SC: What do you see as the biggest area of growth in the near future?
RC: We have a lower market share in the passenger car segment, so that is an opportunity that we are looking at to grow even more. And all round in terms of our distribution and reach so that it will impact all our products. And if you look at the B2B business for us, OEM tie-ups have been happening. We recently had a deal with Piaggio in the three-wheeler segment. So we are open to all these areas that we focus on.
SC: And your customers. What is it that they are looking at when they purchase your oil?
RC: If you talk about the car and bike segment there are, within these segments, many people who have the preference for a brand and then there are people who pick-up a brand that someone recommends or one that is available. So I think the people who look for a brand whose product can give them something in terms of performance or protection, engine maintenance, I think that segment is roughly a third of the market. It is only when a brand can appeal to that segment, and customers can differentiate.I think that is an important thing to keep doing and that is where partnerships with McLaren can be used to provide a platform to explain our differentiation.
SC: How do you make your oils better than the competition?
RC: The specifications defined by various associations like the API, or the European standard, or the Japanese standards. In addition to this, what we try to do is we try to do is work out products that give us enhanced performance by testing our products against competition and developing certain enhanced features with the additive companies and the OEMs. Just to give you an example, we have a motorcycle oil called Gulf Pride 4T Plus. Now that has a better acceleration, because it facilitates the additive technology to provide that. These are things that give you a smoother acceleration, and these are things we can build into our products. In our truck and tractor oils, we give longer drain intervals. That is a clear benefit where you use a better quality base oil, a better additive package, and then we test these benefits on the models of vehicles available in India and then you give that reason to believe to customers.
SC: And all your research, the R&D is that done in India or is that done abroad?
RC: Our parent company Gulf Oil International provides the R&D support, but a large part of the resources of Gulf Oil International are based in India. We have a team here and also a R&D centre in Chennai. This R&D centre is also currently developing a lot of value propositions for the Indian market. For a quick example, at any point we have 180 vehicles being tested in India on any given day. So that is what helps us make our products for India and few other emerging markets, catered to from the R&D facility.
SC: Can you give me some examples of the unique things that have been done in your Indian R&D centre?
RC: The long drain oils for the diesel engines which goes across to trucks, tractors and even some cars is an example. The long drain oil was developed for India, right from 2006. For trucks it was 36,000km and now the same oil is available for 80,000km and 1,20,000km. The motorcycle oil I mentioned earlier, that gives smoother acceleration, was also developed for India.
SC: And in the future, will you be doing R&D on like high-end oils for sports cars?
RC: Yes, we are working on it on a global level and obviously, we will adapt some of them to the Indian conditions. As I mentioned to you, we are going to launch a synthetic passenger car oil shortly. And that is being worked on in India.
SC: And what is the specific requirement for India that you will tune or adapt these odds to?
RC: So when you're looking at BS6 and other standards coming in for emissions, the oils have to be suitably adjusted to meet along with the engine technology and the vehicle emission technology. The oil has to be made in line to that and those oils are already being tested for the various segments and are coming in. Addition to that we try to customise some of the benefits that are relevant to India like -- a lot of bike lovers want better performance from the oil, synthetic oils give you better life, and there would be better things like protection and cleaning the engine more. Some of these things can only be differentiated when you test the products in Indian conditions vis-a-vis other competitive products and you are able to deliver that particular benefit.
SC: Do you see a lot of growth potential within the Indian market. Do you also export out of here?
RC: We are exporting motorcycle oils from India with Bajaj to 20 countries, right from Latin America to Asia. We are also doing that with Ashok Leyland as well, and definitely that is helping us send our products developed here to export markets. Export is not much, it is about 4-5 per cent of our turnover.