Gulf Oil Lubricants in expansion mode

Gulf Oil Lubricants, a Hinduja Group company, aims to be a rising player in the lubricants business. The company has undertaken capacity expansion, that includes capex in a new plant and expansion of current allocation.

With 75 per cent of its portfolio serving the automotive sector, Gulf Oil Lubricants' believes it has not yet tapped India’s 1,200 thousand metric tonnes (tmt) industrial oils market. With many industries coming up near Chennai, the company considers South India the key to growth, in the industrial as well as the automotive sectors.

In order to tap into the industrial lubricant market, Gulf Oil Lubricants' 50 tmt blending plant near Chennai is expected to commence end FY16. While land has been acquired for the plant in Chennai, sources indicated that the company has invested around ₹35 crore on land from internal accruals.

Capacity expansion is also on at its existing Silvassa blending plant, from 75 tmt to 95 tmt, at a cost of ₹40 crore. Expansion at Silvassa is likely to be completed by March. At present, analysts added, the Silvassa facility is running close to full capacity, and additional capacities are expected to be unlocked with de-bottlenecking.

India’s lubricant demand, which is expected to grow at 2.5 per cent compounded annual growth rate over the next five years, is set to be propelled by the growth in the domestic auto sector, which caters to 47 per cent of lubricant demand. With annual consumption of less than 2.3 mt, India is the third largest lubricant market after the US and China, contributing over 5.5 per cent of global automotive lubricant demand, and over 4 per cent of industrial lubricant demand.

In the domestic lube market, around 80 per cent market share is held by oil marketing companies and Castrol. Gulf Oil Lubricants has decided to train its focus solely on the domestic lubricant market. The company is intent on capturing incremental market share through innovative original equipment manufacturer tie ups, brand development, strengthening of distribution network, and targeting untapped verticals in the industrial and auto segments.

While capacity expansion is expected to aid growth, the company has been keen to be among the top three lubricant players in the business.

In an earlier interaction with BusinessLine , Sanjay Hinduja, Chairman, Gulf Oil International, had said from its then sixth position, the company wanted to be among the top three players. This, Hinduja had said, would take two-three years.

“The gap (between us and competitors) is not that wide. There is a bunch of us in that range, so we have to leap frog. Castrol has been operating in this country for 100 years. So, they have built a solid brand for themselves. Tide Water is here for many years as well, and they have always had an association with Japanese OEMs (original equipment manufacturers), which gives them an advantage,'' he had said, adding that expansions and marketing efforts would propel the company to the third slot in a very short time.

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