The board of directors of Hyderabad, India-based Gulf Oil Corporation Limited (GOCL), a Hinduja Group company, last Thursday approved the demerger of its lubricants division and transfer to a wholly-owned newly created subsidiary Hinduja Infrastructure Limited (HIL). GOCL has business interests in lubricants, industrial explosives, mining, infrastructure and property development.

In May of this year, GOCL had decided in-principle to demerge the lubricants division, its biggest revenue contributor (close to 80%), into a separate listed entity. For additional details, please see our story Gulf Oil Ltd Net Profit Falls; Board Approves Lubricants Business De-merger Plans in the June 3, 2013 issue of the OEM.

In a filing to the Bombay Stock Exchange on Thursday, GOCL said the appointed date for the proposed demerger would be April 1, 2014.

The board of directors of GOCL has also approved the dilution of 90% stake by infusion of fresh equity by Gulf Oil International Limited, Cayman, in GHGL London Limited, UK. GHGL, a special purpose vehicle and a step-down subsidiary, formed by GOCL for the 100% acquisition of Houghton International Inc. GOCL had in November 2012 signed an agreement to acquire metal-working lubricants and chemical firm Houghton for $1,045 million. Houghton was bought by New York-based private equity firm AEA Investors in 2007.

 

“The rationale of this de-merger was that we were not getting right kind of the valuation for the lubricant business as we have lot of mixed businesses,” Gulf Oil managing director S. Pramanik said. “Investors had also suggested the same in the past. We would be listing the subsidiary on the stock exchanges.”

“With the proposed equity infusion, the said GHGL along with its all the step-down subsidiaries, including Houghton International Inc, will cease to be the subsidiaries of GOCL,” the company informed the exchanges.

Gulf Oil Corporation Ltd reported a 4.4% decline in its net profit to Rs 9.56 crore for the first (fiscal) quarter ended June 2013, as compared to Rs 10 crore in the corresponding quarter last year. The company registered gross sales of Rs 263.34 crore during the first quarter against Rs 260.10 crore in the corresponding period last year. Lubricants division recorded a turnover of Rs 207 crore, up 4 per cent over Rs 199 crore, aided by gains in market share in spite of tough automotive industry demand.