Gulf Oil to raise $75mn via FCCBs

Hyderabad-based Gulf Oil Corporation Limited, a Hinduja Group company, is planning to raise $75 million (around Rs 300 crore) through foreign currency convertible bonds (FCCBs) to fund expansion plans.

The company would set up new facilities including a lubricant manufacturing plant, likely to be located in Tamil Nadu.

Speaking to the media on the sidelines of the company's annual general meeting (AGM), Subhas Pramanik, managing director, Gulf Oil, said the proposed expansion would further scale up the operations of all the four divisions, which would pave the way for hiving them off at a later date.

The AGM has approved the recommendations to split the stock to Rs 2 from the present face value of Rs 10 of the share.

Besides focusing on its core business, the company has also drawn up plans for property development at its land. A 5-million sft IT, ITeS and residential project would come up on a 40-acre plot at Yalahanka in Bangalore at an investment of Rs 1,000 crore and a 100-acre knowledge park for R&D initiatives in various fields at about Rs 800 crore in Hyderabad, according to Pramanik.

While the first project, for which the designs have already been prepared by Singapore architects, is proposed to be complete in the next 2-3 years, the company is awaiting approvals from the state government for the second project.

"For these two projects, we want to use the real estate funds," he said. The company proposes to create R&D facilities for chemistry, organic chemistry, nano-technology besides defence.

According to Pramanik, the four divisions - lubricants, explosives, mining services, and speciality chemicals and pharmaceuticals - have been witnessing a new momentum of growth.

Under the lubricants division, which contributes the biggest chunk - about 45 per cent share to the company's revenues at Rs 360 crore of the total Rs 668.65 crore last year, the company plans to have a separate lubricant plant in the southern region of the country for logistical reasons.

"We may locate the plant in Tamil Nadu because base oils for the plant are available there. Besides, the company is thinking of setting up a base oil manufacturing plant," he said. However, he did not disclose the investment required for the projects proposed across the four verticals.

Mining is a major activity the company is looking forward to grow in a big way. Pramanik said the company had an order book worth Rs 400 crore and expected an equal amount in the coming days.

Currently, the company has mining development contracts from Singareni Collieries in Manuguru, Andhra, Coal India Limited in Singrouli, Madhya Pradesh, NMDC Limited in the Donimalai block, Karnataka, and from a few private iron ore companies in Orissa. The company proposes to invest in acquiring much bigger trucks and other mining equipment, he said.

The explosives business, which contributes 24 per cent of the total revenues to the company, is back on the track from the stagnation being experienced in the last couple of years mostly due to Coal India Limited's new norms favouring big players in the field.