Gulf Oil scouting for tech partner

The Gulf Oil Corporation, a part of the Hinduja Group, is chalking out initiatives for its four verticals to boost bottomline. Besides, it is trying to rope in a technology partner for its newly-created explosives subsidiary and is finalising plans to set up a second lubricant plant.

“We will look for a new partner, mostly from outside India who can bring technology in to enable the company come out of the conventional mould of business, being carried on since the 1960s,” said Gulf Oil managing director Subhas Pramanik here today.

The wholly-owned subsidiary was created with the six explosive manufacturing plants of the previous explosives division in last October. This was done to take the Rs 282-crore explosives business to the next level by introducing new and more advanced products. The company has contacted merchant bankers for the same, according to him.

In the last six months, the explosives subsidiary reported just Rs 28 lakh in net profit while the company’s explosives business for the full year grew by a mere 3 per cent due to the slowdown in the country’s mining sector.

The lubricants division, which contributed over 60 per cent to the total revenues of Rs 1,100 crore in FY11, has been growing on the back of the increase in automotive sales in the country. The division achieved breakthrough last year when the company’s R&D wing developed a mineral oil-based long drain lubricant that lasts for up to 80,000 km compared with 32,000 km offered by the conventional ones. The lube is being used presently in Ashok Leyland’s new trucks and would later be taken to a wider market depending on the performance.

The lubricants business, which accounts for 4.2 per cent of the market share, has been growing at 20 per cent following the marketing drive the company took by sponsoring IPL teams from the second season onwards. “We have been regaining lost ground in the lubricants business for the last two-three years,” he said.

Gulf Oil launched its second co-branded lubricant initiative with Mahindra & Mahindra in the third quarter of last fiscal. It is now weighing options regarding the size and nature of products to finalise its second lubricant plant to be set up at an investment of around Rs 150 crore in the south, according to Pramanik.

The company meanwhile, would do ground-breaking in the next two months for its 40-acre IT SEZ near Bangalore. Hinduja Estates, a group company, would bring in an investment of Rs 1,350 crore and build the 5.04 million square feet property, including hotels and service apartments, while Gulf Oil will put its property valued over Rs 500 crore as equity.

Gulf Oil would get 30 per cent of the revenues from the project while the rest would go to Hinduja Estates, according to Santhanam Subramanian chief financial officer, Gulf Oil. The company expects a minimum of Rs 80 crore revenues through the lease model from the third year.

It is also looking at developing an 80-acre plot in Hyderabad with a total built-up space of over 10 million squ-are feet. For this, it is yet to finalise the developer and the time lines.

Revenues from mining and infrastructure divisions too declined to Rs 129 crore in FY11 from Rs 196 crore in the previous year as mining consulting operations were down due to a near stoppage of fresh mining activity in Orissa and other regions. Though the company expects a spurt in mining activity from next year, it has entered infrastructure and irrigation operations such as canal excavation in Andhra to offset such shortcomings.

The company reported a net profit of Rs 54 crore for the year 2010-11 while revenues grew under six per cent to Rs 1,132 crore from Rs 1,071 crore in the previous year.