Gulf Oil Lubricants to up Silvaasa unit capacity

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Gulf Oil Lubricants India (GOL), part of $18bn Hinduja Group that markets automotive and industrial lubricants, two-wheeler batteries, automotive filters and lubricating equipment, is enhancing capacity at its manufacturing facility at Silvaasa even as it is working on setting up a Greenfield plant near Chennai, said a top official.

The plant at Silvassa currently has a capacity of about 75,000 mt and it would be enhanced to about 90,000 to 95,000 mt by December this year, involving an investment of about Rs 40 crore, according to its managing director Ravi Chawla.

The new plant near Chennai, which would have a capacity of 40,000 to 50,000 mt in the phase I, was expected to be ready in 2016. The estimated investment in the project is Rs 125 crore, he said. The company is hopeful of entering into OEM tie-ups with multiple players across segments to strengthen its operations, he said.

“We expect to grow three times the industry growth rate,” Chawla said, adding that the B2B segment for it now accounted for 26 per cent of its revenues while the automotive channel brought in 74 per cent. The effort is to increase the share of the B2B segment, he said.

It had a distribution network of over 50,000 retailers and the company was planning to increase this is to about 75,000 with an eye to ensure the product availability closer to farms. Among others, it focused on the tractor segment for entering the rural markets, he said.

Over the past six years, the lubricant business has attained a CAGR growth of about 15 per cent in revenues and delivered Ebitda margins of over 12 per cent. The volume growth rates have been more than double the industry growth rates during this period. The company expected the similar trend to continue, said Chawla.

GOL has recently forged a partnership with Mahindra & Mahindra. Under the agreement, GOL would manufacture and supply lubricants under the brand name ‘Mahindra M-Star Super’ for its dealer workshop network. It would supply a Mahindra-Gulf co-branded lubricant line under the brand name of ‘Gulf XHD M Tractor’ for its ‘bazaar’ segment.

“We have plans to further expand our current seven per cent market share in the open market namely the bazaar channel and in the B2B related OEM, industrial and infrastructure segments,” he said adding that it was in talks with OEMs across segments.

“We have long drain lubricants, where there is no need to change the engine oil for distances ranging from 10,000 km to 36,000 km depending on the product. These are a result of our research and we look to strengthen in this,” he said.

Chawla said the current low crude price will not make a big difference on pricing of its products as there is a time lag of about 90 days and wherever possible, it is passed on the benefit of lower costs to B2B customers. It used additives, whose cost has been rising, and this evened the cost benefit due to lower crude prices, he said.

GOL was listed on the BSE and NSE in July this year after the demerger of lubricants business of Gulf Oil Corporation.



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