How is the ongoing Russia-Ukraine war impacting your business?
The Russia and Ukraine conflict has affected many sectors. One of the major commodities is ammonium nitrate. India is a major importer of ammonium nitrate and Gulf Oil Corporation (GOCL) also import ammonium nitrate for the explosive business. The company’s exposure to prices in its key raw material, ammonium nitrate, remains low given the price variation clause included in the contracts, since the ban/ embargo on ammonium nitrate, our imports from Russia has stopped. However, we also work and import ammonium nitrate from countries like Georgia, Bulgaria and Uzbekistan which has been very helpful in meeting our demands for the raw material.
In the recent past, prices of raw materials have increased considerably. How are you optimising the use of raw materials to ensure highest product quality with lowest ecological footprint?
According to global reports, ammonium nitrate prices in India have regularly climbed in Q1 2022 because of continuous supply chain challenges, weather-related disruptions, and higher shipping container costs, which are likely to lead to shortages and higher fuel fertilizer prices. Russia has also imposed temporary export restrictions and fertilizer bans in recent months. Rising cost and unexpected fluctuation in raw material cost are destabilizing supply chains making it difficult for OEMs and manufacturers to remain in black. We have optimised our operations to improve efficiency without compromising on product quality delivering high level of financial prudence.
What is your demand outlook for fiscal FY23-24 and where do you see growth coming from?
GOCL holds its major stake in the business of detonators and explosives. For over 5 decades we are a significant player in energetics with a substantial client base across mining and infrastructure sector. Our expertise in energetics also provides a headway to cater to the large defence sector with specific and precision oriented requests. We are the pioneers of producing modern fully programmable and intelligent high strength detonators that are used in the mining and the infrastructure industry. The pandemic had a direct impact on our business as most of the industries came to a halt, last two years have been the slowest growth since our inception. However, we are seeing an upsurge in the infrastructure and economic growth which has put an increased demand. The year 2022 will see a major change in industry at large. With the onset of the pandemic the infra business was vastly effected. However, business is resuming back, and the pent up demand for infrastructure development is set to boost the demand for energetic and industrial explosive. Adding on, the power and cement industry is aiding growth for the metal and mining sector, and with the rise in the automotive products this year looks very optimistic for a B2B sector like ours.
The demand for minerals from various sectors gives us the confidence that the company would see a 2x growth by doubling its sales. These key factors determine demand for our products, demand in infrastructure space, mining and growth in exports. This brings in competitive demand for our products. GOCL looks forward to gain more market shares in the coming months and simultaneously consolidate our position in this business as a premium service provider among the PSU and private players within the country alike.
To keep abreast of competitors a company has to continuously innovate and improve on its products. How important is product development? What are the R&D efforts you are taking in this regard?
GOCL has a legacy of 60 years and innovation has been core to our success and relevance in the market. We continue in the path of innovation to be market leaders and sustain our position in the industry. We have a dedicated R&D team that is solution oriented. With constant innovation to deliver efficiency and the best products available in the domain. We are abreast with the changing demand in the market and committed to providing best solutions to our clientele through product development, introducing new offerings, with safety being the core of every product that we deliver. We are pioneers, where we are dedicated towards build a precision oriented products with a new electronic detonators. The current product portfolios with us are all born out of innovation that the market demanded.
What are your growth plans for your organisation for the next three years? Are there any plans for a new manufacturing facility or acquisition or product launches in the offing?The government continues to make efforts to move up in the global electronics supply chain and is expected to come up with new policies. With the government aiming to grow overall electronics production in the country by 30 per cent to over Rs. 6.9 lakh crore next year we see a lot of potential in this sector. While GOCL will continue to be the market leader in the explosives and detonators business, electronic manufacturing services (EMS) would be an extension of what GOCL has been pursuing currently. We are looking at JV’S and other business and in the near future, we are envisioning GOCL to be prominent player in the EMS space. We see exponential growth in this space and already foresee future of demand in the market. We started as a small player but have built a healthy order book that gives us this confidence.
