Tide Water Oil (India), a 26.22 per cent subsidiary of Andrew Yule Co, is forming a new 50:50 joint venture with JX Nippon Oil & Energy. The venture is for production and marketing of the latter’s branded automotive and construction equipment lubricant Eneos.

RN Ghoshal, MD, Tide Water Oil, said here on Friday that the joint venture, which was yet to be incorporated, would take over the company’s around ₹200 crore-a-year licensed business of producing and marketing the lubricant in India and in some of its South Asian neighbours.

Tide Water, a listed entity, would hive off its Eneos business (without any manufacturing facility) for an undisclosed consideration. According to sources, the valuation, which was vetted by two independent valuers, including PricewaterhouseCoopers, is about ₹100 crore.

The new joint venture would get the lubricant manufactured through a third party. At present, about 17,000 kilo litres of Eneos lubricant is produced from Tide Water Oil’s plants on the outskirts of Chennai and Mumbai.

Ghosal said the business’ de-merger proposal would be placed before the shareholders for their approval.

Standard Greases and Specialities Pvt Ltd, an Indian player in the lubricant market, holds 23 per cent in Tide Water Oil. United India Insurance and LIC hold 9.3 per cent and 4.22 per cent, respectively.

“The memorandum of understanding has been signed for the proposed deal. We reckon that in the next four months the joint venture could be operational,” he added.

JX Nippon Oil, largest petroleum conglomerate in Japan, through this joint venture, would make an entry into the sub-continent where Japanese automotive and equipment players are already present. The stock of Tide Water Oil closed at ₹7,591.70, up 0.64 per cent, on the BSE.

(This article was published on February 28, 2014)
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