The Hindujas are reviewing their interests in the group’s Gulf Oil India and have begun scouting for a buyer for their 82 per cent stake in the Rs 257-crore lubricants company. The group has mandated DSP Merrill Lynch to help it find a buyer.

DSP Merrill Lynch executives denied that they had received a mandate to scout for a buyer for the Hinduja stake.

Even as feelers are being sent to prospective buyers, some sources claim that the group does not seem to be averse to considering all options—exiting the company entirely, selling only a part of its equity or just hawking the brand. “It appears the Hindujas are keeping all options open,” they added.

The rights to the Gulf brand rests with Gulf Oil International (which is closely held by the Hindujas) in most parts of the world, except in North America, Portugal, Spain and the UK. Gulf Oil International has operations in over 40 countries, and service stations in Brazil, Holland and Saudi Arabia.

The overseas parent owns 49 per cent in Gulf Oil India, while another 33 per cent is owned through other Hinduja Group companies like Askok Leyland, and others.

KN Venkatasubramanian, the chairman of Gulf Oil India said, “We deny that we have any plans to divest equity in Gulf Oil India.” A Hinduja group spokesperson denied that the promoters were selling their equity in Gulf Oil India or hawking the brand. “Gulf continues to be an important brand in the Hinduja group and a major player in the expansion plans of Gulf Oil International.

In fact, Gulf Oil India is planning to strengthen its activities through alignment with other private sector players to enter the liberalised petroleum market, post deregulation,” she said.

“We are looking to align with Ashok Leyland to establish service stations for servicing trucks and cars which will further expand our base in India,” she added.

Gulf Oil India is already exporting products to Bangladesh and is looking to export to Sri Lanka, Mauritius and other neighbouring regions.

If the Hindujas are reviewing their interests in the lubes business, this may partly be prompted by the fierce competition in the lubes business—competition which some say will only get fiercer after the administered pricing mechanism is dismantled. The presentation, in fact, points out that the public sector oil companies will become more aggressive.

What may also be prompting the review is that the company's sales and profits dipped dramatically last year. Sales dropped from Rs 276 crore in 1999-2000 to Rs 257 crore in 2000-2001.

Consequently, post-tax profits plummetted from Rs 12.7 crore in 1999-2000 to Rs 1.6 crore in 2000-2001.

Some oil industry analysts speculate that buyers will not be interested in the 'Gulf' brand as it will be difficult to value it. That's because Gulf Oil India sells a major part of its lubricants to another group company, Ashok Leyland, apart from a host of other companies such as Mahindra and Mahindra. If any sale goes through, it is not clear whether Ashok Leyland will continue to buy lubricants from the new management.

Gulf Oil India currently enjoys a market share of 5 per cent and produces lubricating oils and greases for automotive and industrial usage.

According to industry estimates, Indian Oil Corporation leads the sector with a 40 per cent market share, Castrol with 20 per cent, Hindustan Petroleum with 9 per cent, Bharat Petroleum with 8 per cent, while other companies like Elf, Mobil, Tide water and IBP have a market share of anywhere between 1 per cent and 5 per cent.