Mumbai, Feb 2: The Hinduja group company Gulf Oil India Ltd has decided to make a foray into the niche segment of lubricants through the acquisitions route. The foray is mainly to increase the pace of growth.The company has identified three product segments - white oils, waxes and jellies - which will be launched this year.
Gulf Oil India managing director Kalyan Das Gupta said that the company has already made a beginning in white oil (liquid paraffin) which is primarily used in the pharmaceuticals sector. The company has set a target sale of 7 metric tonnes to 8 metric tonnes this year. The company, however, wants to wait for some time before venturing into waxes and jellies.
Mr Das Gupta added that Gulf Oil is looking at acquisitions to get a foot-hold in the Indian lubricant market.
The company is learnt to be negotiating with four Indian lubricant companies for acquisition. However, Mr Das Gupta refused to divulge the names saying the deals have not been finalised.
Sources informed that Gulf Oil had signed a memorandum of understanding with Chemoleum for Rs 10.5 crore but the deal fell through and the latter was finally acquired by Caltex for Rs 16.1 crore.
Gulf Oil India has also decided to exit the direct marketing business where the margins are small. The company is consolidating its position in the rust prevention, car care and high end lubricant business, though the company has not seen any major success in these segments in the last couple of years.
Mr Das Gupta added that the lubricant market has been on the downslide since last year, mainly because of the slow growth in the automotive industry and the low economic activity.
The lubricant industry has witnessed a decline of 3 per cent in 1999-2000, and it has increased to 6 per cent to 7 per cent in the first nine months this year. Mr Das Gupta added that the increase in crude prices has further aggravated the situation.
Gulf Oil is planning to increase the volume of business by 7 per cent to 10 per cent every year as this growth is required to stay in the market. The company is delivering a little over 5 per cent profit in the lubricant market, he said.
Gulf Oil has decided to enter marketing and retailing of oil in India. But it wants to wait till dismantling of the Administrative Price Mechanism (APM) takes place.
The company is also looking at Bangladesh, and has chalked out a plan to invest around Rs 8 crore to 10 crore in the downstream activities.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
