In an interview to CNBC-TV18, Subhas Pramanik, MD, Gulf Oil Corporation spoke about stake sell in three of their overseas arms.
In an interview to CNBC-TV18, Subhas Pramanik, MD of Gulf Oil Corporation spoke about his company’s stake sale in three of their overseas arms.
Below is an edited transcript of the interview on CNBC-TV18.
Q: Gulf Oil Corporation is looking to divest stake in three of its overseas subsidiaries. When will this materialise and will you be booking profits on this divestment in the upcoming quarterly earnings?
A: You must see this whole thing in context of the decision we have taken for demerging the lubricants business. We are planning to have a lubricants division, which is totally standalone and totally focused on the Indian business. We have three subsidiaries; one in China, other in Indonesia and third is in Bangladesh, which were taking a lot of attention of the management.
At the same time, we were not getting the kind of returns we had planned when we invested in these companies seven-10 years ago. Therefore, we decided that it would be a good idea to disinvest these stakes.
The lubricant arm is growing at a very good rate. We have been able to maintain a CAGR of approximately 18 percent and last year we had a growth of 12 percent over 2011-12. Therefore, this was the basic reason why we took a decision in this direction. We would be getting about Rs 54.9 crore from this disinvestment, which when we made this investment, it was just about Rs 29 crore.
Q: Are you saying that in three-four months you will have two separate listed companies because 90 percent of your revenues are coming from lubricants and if you are going to demerge that then what is going to remain in the parent company?
A: We took a decision that once the lubricants division crosses 1,000 crore, we would look at the question of demerging it into a separate entity which we have done now because it crossed last year 1,051 crore so we said that is a good time to do it. So, we have gone on that basis. What will be remaining with the company will be the other three divisions; one is the explosives division, which is in Hyderabad, second is mining and infrastructure services division and third is properties. So, these will be there.
At the moment the mining scenario is very subdued and therefore we are having a little drag there from our mining consults division as we call it and therefore there is little bit of time which is required for it to come around, of course it depends totally on the government policies on mining which we are expecting that there will be some relook and some action shortly.