Gulf Oil Lubricants India lists on bourses

Amrita Nair Ghaswalla Mumbai | Updated on March 12, 2018 Published on July 31, 2014

Sanjay Hinduja, Chairman, Gulf Oil International, makes a point in an interview with Business Line in Mumbai. Photo: Paul Noronha

Right time to unlock value, let company go on a separate fast-track journey: Chairman Sanjay Hinduja

Gulf Oil Lubricants India, the demerged lubricants business of Gulf Oil Corporation, which had a debut listing on the BSE and the NSE today, has managed to tick mark all the requisite boxes prior to its listing, according to Sanjay Hinduja, Chairman, Gulf Oil International.

"The lubricants business has reached the Rs 1,000-crore mark, has achieved double digit growth, is reporting healthy margins. All the indications were there that this was the right time to unlock value, and let the company go on a separate fast-track journey,'' Hinduja said, on the need to delist the company, and differentiate it from other businesses within Gulf Oil Corporation.

Way forward

Speaking to Business Line, Sanjay Hinduja said, "The management had shown us that they were capable of delivering this growth rate. Am confident that in the future also, double digit organic growth is possible.''

With four main business operations - industrial explosives, lubricants, mining and infrastructure services within Gulf Oil Corporation, "it was like a many headed animal. We were not getting the right valuation,'' added Hinduja.

Though the main reason to delist was to unlock shareholder value, the Chairman said, "When you have different businesses within the same company, which are really not synergistic with each other, it confuses the market. Analysts wonder if they have to track the lubes business, or the real estate business.

Aim to be among top 3

The aim was also to be a contender in the top three slot. "With the lubes business being demerged, investors and analysts will now have to benchmark Gulf along with the top three players here: Castrol, Tide Water and the newest Gulf. We will be benchmarked with the best in this space," added the Chairman.

The Hinduja Group company is also on track with its expansion project that entails setting up of a lubricants manufacturing plant near Chennai. "For the second plant, construction will start this year in Chennai, where we are investing Rs 120 crore. The existing capex is around Rs 40 crore, at the Silvassa plant,'' added Hinduja.

Listing will bring more focus on biz

In Mumbai to commence the day’s trading at the Bombay Stock Exchange by striking the gong at the listing ceremony, Hinduja was accompanied by Ravi Chawla, Managing Director, Gulf Oil Lubricants India Ltd.

Speaking to Business Line, Chawla said with the lubricant business achieving certain scale and size, ``it was the right time to have it as a pure play offering. In future, if one is looking at both organic or inorganic growth, it will then provide a full entity to take it forward. This (listing) will also bring more focus on the business, as well as resources.''

Stating that Gulf Oil Lubricants was the fastest growing brand in volume terms, Chawla said, "With 15 per cent compounded annual growth rate increase in revenues, 40 per cent increase in profits, and now with the pure play of lubricants, there would be a clean comparative. By ensuring shareholder value, this company can now be compared to any other lubricant company.''

Maintaining that the company has been doing quite well, Chawla added, "With our strategies, we have become the fastest growing in this industy. Volume growth has been hardly 1 or 2 per cent, and was actually flat in the last two years, when we gained double digit growth. We have gained market share in various segments that we are operating in.''

He added that with the Indian economy opening up, "we can get back to the growth story in terms of revenues and market share, and maintain our profitability which has been around 12 per cent for the last few years.''

Post demerger, shareholders of Gulf Oil Corporation Limited (GOCL) have been allotted one share in Gulf Oil Lubricants India for every two shares held in GOCL. Simultaneously, capital reduction and reorganisation in GOCL has been done by allotting one new GOCL share for every two old GOCL shares.

The new lubricant company would manage the standalone lubricant business in India under the 'Gulf Oil' brand, and would build on its market share in the automotive and industrial lubricants space.

Published on July 31, 2014
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