GP Petroleums, part of $3 billion UAE-based conglomerate Gulf Petrochem, is looking at inorganic growth opportunities in the short term as the company plans to increase its automotive lubricant volumes to 30% from the current 10% in the next five years. The company plans to acquire manufacturing units of 50,000 kl – 100,000 kl per annum in the coming months, mostly to meet the emerging requirement of the Indian lubricant segment. The company would also look at technology partnerships to improve the quality of its flagship brand – IPOL. “We are studying the effect of Goods and Services Tax on the lubricant sector, where it is expected to have a positive impact on personal mobility due to fall in prices and simplification of taxes. Based on the final clarity, we will reassess our supply chain network of depots and CFAs around the country. This is expected to deliver operational efficiency and cost optimisation going forward,” Hari Prakash M, chief executive officer of GP Petroleums told Financial Express.
“We can look at acquiring assets in the South so that there is logistic advantage to cater to the South and Eastern markets,” Prakash said. According to industry estimates the cost of setting up a 100,000 kl per annum plant is around `150-200 crore.
Traditional markets of North, West and South India are growing and the company wants to sustain its double digit growth by increasing the focus on IPOL lubricants. The company is evaluating options to tie-up with original equipment manufacturers (OEMs) for IPOL in India and has secured few approvals, mostly in the commercial vehicle and Industrial segments. Along with focus on Indian operation, GP Petroleums has also signed agreements to sell IPOL branded lubricants in Middle East and African countries such as Nigeria, Kenya and Tanzania. The parent group Gulf Petrochem had acquired retail outlets of Essar Oil in Africa, where it plans to establish IPOL Lubricants and gradually look to increase volumes.
The company has established presence in the manufacturing industries for Industrial lubricants and is also growing in automotive lubricant segment. To gain market share in the premium auto lubricant segment, they have tied up with the Spanish oil major REPSOL to manufacture and market REPSOL lubricants in India.
“We have rapid growth plans for REPSOL in India. The company is looking at OEM partnership and have had initial discussions with Honda Motorcycles. Besides, we are in discussion with few of the leading automotive manufacturers in India,” Prakash said. “Repsol works closely with Honda in many countries in Asia and we would like to leverage the global strategic partnership in India as well to offer high end auto lubricants,” Hari Prakash said. The company aims to meet 5% automotive market share through Repsol Lubricants in next 10 years in a market dominated by established MNCs and PSU lubricant companies.
GP Petroleum at present has two manufacturing units, one each in Vasai in Mumbai and Daman. The combined capacity of the two units is 80,000 KL, while the current production is around 60,000 KL. The current plant capacity will be fully utilized to produce Repsol brand lubricants.
They are also plans to upgrade the existing plant and R&D facility to meet the growing demands. The consolidated total income for financial year ended March 31 rose 14% to Rs 479 crore and the consolidated PAT grew by 49%.