GP Petroleums: Some facts

Now I would like to present to you some facts that I have been reading
about the company for the past one year. All of it is in no specific order but
in bits and pieces which I have tried to present in a flow. Once you read the
points below the picture of what I am trying to portray will be partially clear
in your eyes

This is what the new management had to say about the historical
business of the company and the future business they are planning on venturing
into…. “We have so far been
traders of bitumen, base oil and fuel oil. Now, we want to graduate to
marketers and manufacturers, and India will play an important role in the
strategy. We are looking at more acquisitions,” S Thangapandian, executive
director, Gulf Petrochem”

"We aspire to make Gulf Petrochem Group a global conglomerate
operating in oil space and have an integrated portfolio. This acquisition fits into our strategy and also helps us extend our capabilities
manufacture, supply and globally distribute a wider variety of products,"
Sudhir Goyel, Managing Director, Gulf Petrochem Group”

On their investment
in India this is what the management had to say….”with a strong government at the helm and with its focus on domestic
manufacturing, Gulf Petroleum would like to invest another Rs500 crore in India
which will entail entering deeper into the lubricants space with products in
automotive and marine industries as well as setting up two more fuel storage
terminals to have a total storage capacity of up to 600,000 cubic metres” S
Thangapandian, executive director, Gulf Petrochem”

In June 2015 the
company announced the launch of REPSOL branded lubricants in India…… “GP petroleum will be securing the
formulation of Repsol, blending on behalf of Repsol and marketing the Repsol
brand in India. Repsol apart from helping GP in giving technology, formulation,
it will also join hands with them in spending money for marketing this
lubricant in the country. The spends will be shared 50:50 to start with. While
Repsol is strong in two wheelers, it intends to offer products for all the
segment of the automotive industry and challenging brands like Castrol,
IndianOil amongst others.”

“S Thangapandian, ED
at Gulf Petrochem says there is a a good synergy between both the companies
Repsol needed a partner, with a good strong presence in the country, the
partner who has the financial strength and distribution strength.”

Here is how they
intend to sell REPSOL in India… “Repsol
currently has around 30 distributors, with warehouses across the country, which
are marketing IPOL lubricant for both industrial and automotive segment. The
company has more than 2000 dealer counters across the country, which will start
selling Repsol lubricant. India will also be the feeder point for the SAARC
region for GP-Repsol.”

The Indian lubricant
market is intensely competitive but is one of the few sectors which is on a
growth path, both on the quality and quantity front. A separate dedicated team and network will service the Repsol brand
in India,” said Sudhir Goyel, managing director, Gulf Petrochem Group. Repsol’s products come with added benefits
of intense R&D and close association
with Honda in Moto GP, which will cater to the newly emerging premium and
top end segment across markets in the country.

will launch the full range of products in Indian market. This year, the company
plans to introduce a range of products including, synthetic, synthetic blend and premium mineral base oil products
to cater to two wheelers, passenger cars and heavy duty vehicles for the Indian
market. Further an exclusive two wheeler
premium mineral oil product for the fastest growing segment, ie

initiatives GP Petroleums has roped
in Suresh Raina as the brand ambassador for marketing brand REPSOL in India

On sector potential
this is what the management had to say…. “While the global lubricant market is flat, the 2 million metric tonne
Indian lubricant market is growing at 2.5-3%, and within that the automotive
lubricant market, which makes up for 52% of the overall lubricant market is
growing at 6%. The partners have set
themselves a target of achieving 5% automotive lubricant market by the end of
the decade and if GP-Repsol achieves that India will be the second largest
lubricant market for Spanish lubricant maker with a production of 50,000 metric
tonne in India”

Now I feel the sectoral outlook for automotive lubricants seem to be
very positive and here is why. This is what another global behemoth, Petronas
had to say… PETRONAS Lubricants
International (PLI) today officially launched its state-of-the-art lubricant
blending plant in Maharashtra Industrial Development Corporation (MIDC) Patalganga.
The USD50 million-plant investment is an essential driver that will help propel
PLI’s position as a formidable lubricants player in India. The new plant -
constructed on 25 acres of industrial land at Patalganga MIDC - with an
estimated production output of 110 million litres of lubricants, is expected to
commence operations by end 2017.”

"PLI has very aggressive ambitions to be amongst the world’s top
lubricants player by 2019. India is without exception a very important market
for us here in the Asia region and we are confident of the potential ahead of
us. Therefore, we have embarked on a solid growth plan to accelerate our
business here in India, starting with investments into the new plant that is
equipped with world class lubricants blending facilities and equipment, highly
automated production line, and increased storage tanks. We have also embarked
on a new route-to-market approach that will see us transform the way we do
business with our distributors and retailers in the high-street business,"
said Giuseppe Pedretti, PLI Regional Head of Asia.”

Launching REPSOL branded lubricants in India…. As the management mentioned in June 2015 when it first announced
partnership with REPSOL to sell lubricants in India, Last year, GP Petroleums
and Repsol SA entered into a strategic partnership under which GP Petroleums
has the exclusive right to manufacture and market Repsol’s line of lubricants
in India. Thangapandian Srinivasalu, executive director at Gulf Petrochem
Group, said the company is targeting at
least 5% market share in India’s lubricant market.

Deal contours and future plans…. GP Petroleum, which in 2014 acquired SAH Petroleum in India is a modest
player in the domestic industrial lubricant space with its IPOL brand through
this partnership with Repsol wants to build its position in the thriving
automotive lubricants market. Apart from manufacturing Repsol lubricants at its
existing plants in Vasai and Daman, GP Petroleum is also planning to set up a
separate 1,00,000 tonnes plant on the outskirts of Pipavav with an investment
of Rs 125 crore

S Thangapandian, ED at Gulf Petrochem says
there is a good synergy between both the companies Repsol needed a partner,
with a good strong presence in the country, the partner who has the financial
strength and distribution strength.

“We already have a partnership with Repsol
as traders, we are big traders out of UAE, we are a big trader for base oil,
this relationship got extended to his partnership here,” he said.

“We know that this relationship is a starting
point, as things move forward, there are lot of things that we can do together.
It is an initial phase, so first you start understanding each other, the
culture, plus-minuses. I don’t rule out anything. We have been both open about
that, as we move forward, we will decide,” added Thangapandian. India will also
be the feeder point for the SAARC region for GP-Repsol.

Through the above statements I have tried
to put forward my understanding of what has been happening with this company GP
Petroleums, listed on the NSE & BSE over the past 18-24 months. What
interested me most about this company was when I got to know of their
partnership with REPSOL to sell automotive lubricants under the REPSOL brand in
India. Let’s see how the events unfolded
over the past one year….

Gulf Petrochem acquires SAH Petro in 2014 from
erstwhile financial investor Navis Capital who exited after a loss on their
investment of 5 years.

Over the course of the year company bought over
the stake from promoters “Sah Group” taking their shareholding to over 70

In June 2015 GP Petroleums (name changed from
Sah Petro) announces a collaboration with REPSOL to sell lubricants in India,
launch slated within a year

In April 2016 GP Petroleums launches REPSOL
branded lubricants in India with Suresh Raina as brand ambassador

Now in the above four points I have tried to summarize whatever has
happened with this company over the last 18-24 months. Below I mention few
aspects which I find interesting about GP Petroleums

Gulf Petrochem, promoters of GP Petroleum is
owned by Indian origin NRI’s based in the UAE and is a USD 2 billion group.
They have created this empire in the last 18 odd years which speaks a lot about
their capabilities

Existing business is most suitable as it helps
them in access to base oil at cheap rates and also a deep understanding of the
automotive lubricants market (partnership with REPSOL) which is very
famous in the two wheeler circuit because of its long standing association with
HONDA in Moto GP

The Indian automotive lubricants market is a
highly lucrative one with the leader Castrol clocking operating margins in the
region of 25-30%

Gulf Petrochem & REPSOL SA are USD 2 billion
& EUR 16.5 billion companies who have partnered to launch REPSOL branded
lubricants in India, so there is comprehensive financial muscle behind a
company which has a market
capitalization of just USD 45 million

I was unable to complete the whole post and hence i am posting a link to my blog where you can read the complete post. Please go through it completely.

This is my first post and though i have tried to follow the guidelines before posting, moderators can point aout any mistake made while making this topic

Disclaimer: I have holdings in the company GP
Petroleum and I am not advocating any investment in the same. I am not an
investment advisor. This is an educational post and I have just tried to
assimilate facts and present my view on the above. I have no targets or future
price in mind. This should not be construed as an investment advice. It’s just
an educational post where I invite others to point out holes in my analysis so
that we can become better investors


Is this Company related to Gulf Petrochem based in Hamriya Free Zone, Sharjah, UAE ??

@Savishesh yes this is a subsidiary of Gulf Petrochem

About their parent Co. - Be careful and cautious.

I highlighted that as a risk. Trying to gain some info over that. Can you tell us any wrongdoing of theirs in specific which you know of

Their main business is physical trading in oil & oil products. Its a low margin business.Management lacks professionalism, vision and passion for their business. Some of my friends worked there and I was involved in Rating of their Company for 3 years in a row.


Vikram kotak has some stake in the company…
Will need to check if he still holds it…

@karu_lamborghi_ I was going through the fy15 annual report, and there was no mention of write off in Inventories and Receivables if they had done then it would have impacted the P&L.

On breakout point, Lifetime high is 99.