Kolkata, July 7
TIDE Water Oil Co (India) Ltd, a member of the Andrew Yule group, has planned a major rejig of its product mix to penetrate deeper into the "bazaar" segment of the market for lubes.
Speaking to Business Line today after the company's AGM, Mr Arindom Mukherjee, Chairman, said that Tide Water's performance in the first quarter, unaudited results of which are still awaited, was quite satisfactory despite the overall lubricant industry remaining depressed owing to the ongoing upgradation of engine design and introduction of long-drain lubes.
Mr Mukherjee also said that notwithstanding adverse factors like rise in oil prices in international markets and the resultant increase in input costs and increased market competition, the company has managed to maintain its profit after tax (PAT) at Rs 10.04 crore for 2004-05.
"This was due to continued focus on the bazaar segment and launch of products in new segments."
The company, whose turnover for 2004-05 has increased to Rs 256 crore (up from Rs 218 crore last year), has declared a dividend of Rs 10 per share (100 per cent), including the interim of Rs 7.50 per share already paid on the ordinary shares.
Stating that the company's products, primarily marketed under the `Veedol' brand name, were now widely accepted and recognised in the industry, Mr Mukherjee said that in a bid to enhance brand equity, the new ad campaign for Veedol brands in both the petrol and diesel segments has been highly successful.
"Encouraged by this, and the first quarter improvements in sales, we have planned to sell 5,000 kilolitres of Veedol lubricants this fiscal."
He added that the products manufactured under technical collaboration with Nippon Oil Corporation and marketed under the `Eneos' brand name have got encouraging response from the market.
Commenting on the current industry structure, and why industry has stagnated, warranting a product remix at periodic intervals, Mr Mukherjee said that emission norms for motor vehicles in the country have been made more and more stringent, with the result that quality of fuels being used perforce had to improve.
On Tide Water, he said that the company's wide range of products, supported by a countrywide network of dedicated distributors and dealers and consignment depots, have helped in difficult times.
"Improvements in engine design owing to advent of MNC original equipment manufacturers and new generation vehicles have resulted in longer-drain intervals and consequently lower consumption of lubricants."
Stating that the lubes sector was now passing through a consolidation phase, he said that a shakeout was inevitable, as evidenced by curtailing of operations by many companies over the years.
On the interest shown by ONGC in the divestment of Andrew Yule stake in Tide Water, he said that it augured well for the company. He expected the process to be completed within the next six months.