According to the agreement signed in Dhaka, a lube blending operation will be started in Bangladesh, which will function under a newly formed company Gulf Oil Bangladesh with its head office in Dhaka.
Gulf Oil Corporation will hold 51per cent stake in the joint venture, while Oil Bangladesh will hold 49 per cent stake.
With this joint venture, GOC will become the first Indian lubricant company to invest in the international market. GOC is the second largest private sector company in the Indian Lubricants market.
Subsequent to the opening of lubricants market in Bangladesh in 1997, Gulf Oil appointed Oil Bangladesh as their sole distributor in 1999.
Since then, their sales have peaked at 200 kl per month, which represents a market share of 3.5 per cent, a release said.
In order to take advantage of duty differentials between raw materials and finished products, GOC has decided to start a
The total size of the lubricants market in Bangladesh is estimated at 70000 MT per annum, with an annual growth rate of 6-8 per cent.
In the first year of operations Gulf Oil Bangladesh is targeting a market share of 7.1per cent, which will translate into a turnover of US$ 5.4 million.
According to V Ramesh Rao, the executive director of GOC, the JV will blend and exclusively market GULF branded lubricants in the country.
The company will import about 25 per cent of the material from India and Italy, mainly representing premium quality base oils, other raw materials and also finished products, which cannot be blended in Bangladesh.
During the nine months ended December 2002, GOC recorded a turnover of Rs 273.35 crore (Rs 2.73 billion) and a net profit of Rs 9.73 crore (Rs 97 million).
The company is also planning to set up a Rs 20 crore (Rs 200 million) speciality chemical intermediates manufacturing unit in Hyderabad to cater to pharmaceutical and cosmetics industries. The unit will be set up by the end of current fiscal.