The demerger of Gulf Oil Corporation Ltd’s (GOCL) lubricants division to Gulf Oil Lubricants India Ltd (GOLIL), the company’s wholly-owned subsidiary, will be effective from April 1, 2014, according to a company press release. Post demerger, the Hinduja group-owned Gulf Oil Corporation will continue to hold three divisions - explosives, mining products & services and realty/infrastructure.
“At the time of the merger of Gulf Oil India Ltd with IDL Industries Ltd in 2002, the turnover of the lubricants business was Rs 51.58 crore. Since the merger, the business has been growing at a CAGR (compounded annual growth rate) of 30 per cent; for 2012-13, the turnover was Rs 970.87 crore. Therefore, it was decided by the board that the business be demerged to allow the lubes business to grow further in a focused environment rather than as a division of the diversified company,” said the company in the release.
It added the value of equity holdings of all GOCL shareholders would be unchanged, as they would have equal shareholding in both GOCL and GOLIL. According to the scheme, for every two existing shares (face value Rs 2) in GOCL, they would receive a share of each of the two companies of the same face value (Rs 2 each).
As the company’s lubricants business in India is dependent on a technical collaboration and brand licensing arrangement with Gulf International, the association will continue with GOLIL.
The agreement, currently valid for seven years, is renewable. The combined royalty is paid on arm’s length basis, effectively about one per cent of the turnover. For the company’s other businesses, no royalty is paid.
“At the time of the merger of Gulf Oil India Ltd with IDL Industries Ltd in 2002, the turnover of the lubricants business was Rs 51.58 crore. Since the merger, the business has been growing at a CAGR (compounded annual growth rate) of 30 per cent; for 2012-13, the turnover was Rs 970.87 crore. Therefore, it was decided by the board that the business be demerged to allow the lubes business to grow further in a focused environment rather than as a division of the diversified company,” said the company in the release.
It added the value of equity holdings of all GOCL shareholders would be unchanged, as they would have equal shareholding in both GOCL and GOLIL. According to the scheme, for every two existing shares (face value Rs 2) in GOCL, they would receive a share of each of the two companies of the same face value (Rs 2 each).
As the company’s lubricants business in India is dependent on a technical collaboration and brand licensing arrangement with Gulf International, the association will continue with GOLIL.
The agreement, currently valid for seven years, is renewable. The combined royalty is paid on arm’s length basis, effectively about one per cent of the turnover. For the company’s other businesses, no royalty is paid.