"This is absolutely imperative for Gulf Oil if it has to survive in a deregulated scenario, and a decision to this effect will be taken by March end next year," top sources told The Financial Express. The company has already appointed a merchant banker to scout for viable plants where the promoters want to sell out.

Most of these units are in the western region, while a few are located in the north. Sources said that once the merchant banker gives its list of recommendations, Gulf Oil would send its own task force across to these sites to be able to make a first-hand assessment.

In case the acquisition route is not found feasible, the company will thenexplore the options of setting up a greenfield plant. "For the moment, the south looks promising. Chennai and Pondicherry, in particular, are attractive," sources added. The final choice would, of course, depend on incentives like tax concessions, which could swing the deal in favour of Pondicherry.

The need for a third plant has also become crucial what with Gulf Oil keen on entering the export market for lubes. A beginning has already been made in Nepal, and the company has now shifted focus to Bangladesh and Sri Lanka. Here, the idea is to export lubes directly from its plants to these countries in the first phase while setting up a 20,000-tonne lube-blending facility in the second phase with a local partner.

As part of its efforts to boost its presence in the lubes segment, Gulf Oil is working on forging an alliance with the Chennai-based TVS group which, in turn, has begun the process of setting up huge retail outlets for auto spares across the country.

"TVS is a strong brand name and the group'sclose association with Ashok Leyland, another Hinduja company, will ensure that the Gulf Oil brand image gets a fillip in the years to come," sources said.

As for plans to get active in marketing of other petro-products after 2002 when the oil sector opens up completely, sources said that a lot would depend on the timely commissioning of the company's 2.4 lakh-tonne base oil refinery in Orissa. The project is presently planned as a joint venture of the Hindujas and Sumitomo Corporation of Japan. Thus far, there is no indication when the refinery will be commissioned, though sources reiterate that it is too premature to say that the project has been shelved.