MUMBAI, INDIA – Gulf Oil Corp. on April 20 announced an agreement to buy a controlling share of its parent companys subsidiary in China, part of a plan to ramp up investment in order to grow Gulfs lubricant business in China and in neighboring countries. Gulf Oil Corp., which is based in Mumbai, India, has already decided to invest $5 million to provide a new blending plant for the Chinese company, Gulf Oil Yantai (Co.) Ltd.
In the aftermath of this strategic investment Gulf Oil Corp. has big plans for China. In course of time we will set up two additional plants – one each in North and South China – to cover the entire country, explains V. Ramesh, executive director and head Asia region. Currently catering to some provincial markets, Gulf Oil Yantai will soon market all over China, attempting to corner at least 5 percent of the market in the next three to four years.
China is the worlds second-largest lubricant market, with demand of 4.3 million tons per annum that makes it approximately 3.3 times the size of Indias market, Gulf officials said. The company projects the market will grow at the rate of 5 percent per year to 5.5 million tons in 2010 and to 6.3 million tons in 2013.
Gulf Oil Yantai, was set up in 1996 with manufacturing and marketing operations in picturesque Yantai City, Shandong Province. The fresh capital infusion of $5 million from India will be used to build a new manufacturing facility with a capacity of 30,000 metric tons per annum in the Yantai Technical Zone, offering tax benefits and export facilities.
Since Yantai is a centrally located port with proximity to Taiwan, South Korea and Japan the new plant will help us export to these countries, as well as to Vietnam, Ramesh said. With a large base oil storage capacity at the new factory, base oil trade is prominently on the agenda.
Gulf Oil Corp. and Gulf Oil Yantai are both subsidiaries of Gulf Oil International, a unit of the Indian conglomerate Hinduja Group and owner of the famous Gulf brand outside Portugal, Spain and the United States. Gulf Oil International operates lube marketing subsidiaries in numerous countries around the world – some being joint ventures with local partners. The largest is Gulf Oil Corp. in India, a publicly traded stock corporation of which Gulf Oil International owns a 28-percent stake.
Gulf Oil International will retain a 49-percent stake in Gulf Yantai.
Gulf Oil Corp. Managing Director Subhas Pramanik said the Gulf Yantai acquisition is in line with Gulf Oils policy of aggressively expanding into the growing markets of Asia-Pacific, using Indian technical and managerial expertise and the world-famous Gulf brand. This is the companys third overseas foray in the last 2 years, after the formation of Gulf Oil Bangladesh and PT Gulf Oil Indonesia.
Strategically located manufacturing plants across the Asia-Pacific to cater to the growing lubricant market in the region is the plan, Pramanik said.
The Indonesian venture, which was originally a trading concern has recently acquired permission to manufacture and will be setting up a grease plant shortly. In addition, Gulf Oil Corp. increased its equity to 75 per cent after buying out the local partner last year.
Gulf Oil Bangladesh, which uses a toll blending facility is picking up steadily, informs Ramesh, and sold 4,300 kiloliters last year. With a 4 percent share of the Indian market, Gulf Oil Corp. is faring extremely well.
Ramesh has chalked out ambitious long-term goals: We will expand China, build up India as a hub for the Asia-Pacific region, and enter new markets about to open up in Laos, Cambodia, Vietnam and Myanmar.