Demerged Gulf Bullish on Future


Newly formed Gulf Oil Lubricants India Ltd. is scheduled to be listed on the Bombay Stock Exchange Thursday, completing its demerger from Gulf Oil Corp. Ltd. Officials say the move will allow management to concentrate on the priorities of the lubes business.

Lubricants – along with mining and infrastructure services, explosives and real estate – was one of four business segments of GOCL, a subsidiary of Hyderabad, India-based Hinduja Group. Officials have said they decided to carve out the lubes business after its rapid growth left it accounting for more than 80 percent of GOCLs total revenue.

The lubricant business has reached the size and scale to take up its future growth journey in a more focused manner independently, GOLIL Managing Director Ravi Chawla told Lube Report Asia. Further, the real estate division of GOCL has reached a stage where monetization of its significant land parcels is starting, and this will be a focus for the remaining entity post demerger. Hence, this was right time for demerger to create value for all stakeholders based on different businesses focusing on specific segments.

Indias lubricant market has sagged to annual growth rates of 2 percent to 3 percent, but Chawla said GOLIL is confident of its ability to grow two or three times the market rate, as it has for the past six or seven years.

Hence, we are likely to increase our market share further, Chawla said. Demand conditions may improve further based on revival of infrastructure, mining and the real estate sector. Commercial vehicle sales have bottomed out, and a reversal from negative growth to marginally positive growth is expected, which shall help increase in demand for diesel engine oils. The personal mobility sector may also move up if the overall economic scenario improves, leaving more disposable income in the hands of consumers.

Our focus has been to consolidate our strength in the diesel engine oil segment and increase market share in the motorcycle and car segments, as well. We are constantly looking for new OEM tie-ups. Tractor [lubricants] have done well in the last few years, and we have been able to get a major breakthrough in this by launching co-branded oil for tractors with the largest tractor OEM.

Chawla suggested the demerger will not result in much change in the operations of the lubricant business. He said all of GOCLs business segments were managed separately prior to demerger.

Chief Financial Officer Manish Gangwal confirmed that GOLIL will need to take out medium-term loans to help pay for an expansion at the companys blending plant in Silvassa and construction of a new plant in Chennai, but he said that this financing will not be affected by the merger.

GOLIL remains a part of London-based Gulf Oil International, which is a unit of GOCL.

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