Gulf Oil Corp. shareholders on Thursday gave a ringing endorsement to managements proposal to carve out the companys lubricant business. In a court-ordered vote, shareholders cleared the three-fourths majority required for the plan to move forward.
Hyderabad, India-based Gulf, which plans to complete the demerger by April 1, declined to comment.
Management received the support it needed despite recommendations from proxy advisors that urged shareholders to vote against the plan. At least two firms concluded earlier in the month that Gulf had provided too little information about its operations or details of the plan to make its lubricant business into a separate company, Gulf Oil Lubricants India Ltd. Gulf Oil Corp. would retain its other operations, which include mining services, supply of explosives and property development.
The logic behind demerging the lubricants business, which constituted over 90 percent of the revenue and more than 100 percent of the profits, isnt clear, InGovern Research Services Managing Director Shriram Subramanian told Lube Report Asia. If anything, the three other businesses should have been divested.
Gulf Oil Corp. proposed the demerger in August. Management argues that the lubricants business has grown 17-fold since 2002 and deserves a dedicated management team in order to continue expanding. The lubricants division had revenues of 970.87 crore rupees in the 2012-13 financial year.
Last weeks vote was ordered in January by the Andhra Pradesh High Court. According to a Friday letter from Gulf Oil Corp. to the National Stock Exchange of India, the vote was attended by 278 shareholders in person or by proxy. Those individuals accounted for 75.66 percent of all shares. Votes in favor accounted for more than 99.9 percent of shares represented at the meeting. Promoters of the plan control 49.96 percent of shares.