Hindustan Petroleum Corporation (HPCL) is planning to create a separate entity for its lubricants business in the fiscal year 2024, with the aim of capitalizing on the robust growth in this segment driven by strong domestic demand, despite inflationary pressures, according to a senior company official.
Rajneesh Narang, Director (Finance) at HPCL, disclosed during a post-earnings call with analysts, “We intend to carve out this company into a separate unit. We have various options which we can follow – either we can list this company, come up with an IPO, or we can get in a strategic partner.” He also mentioned that a decision regarding this move would be made within this financial year.
HPCL’s lubricants unit, which has been in operation for nearly five decades, is a significant player in the domestic market, offering a wide range of over 350 lubricants, specialty products, and greases. The state-owned company had already announced its intention to separate the lubricants business earlier this year.
Narang pointed out that the formation of a new entity within a public sector undertaking (PSU) requires regulatory approvals from the government of India, and they are presently awaiting the final approvals from the relevant regulatory authorities.
Despite the rise of electric vehicles, the Indian lubricants market is anticipated to maintain its growth, with a projected compounded annual growth rate (CAGR) of 3 percent, as per Kline’s Global Lubricants 2022 market analysis report.
In a recent development, HPCL entered into a partnership with US energy giant Chevron to introduce Caltex products in the Indian market. This long-term agreement enables HPCL to license, market, manufacture, and distribute Caltex-branded lubricants in India.
As per the company’s website, HP Lubricants commands the highest market share in the industrial oils segment.
HPCL reported a consolidated net profit of Rs 5,826.96 crore in the second quarter of FY24, as announced on November 6. This marked a significant turnaround from the previous year when HPCL faced losses due to record-high crude oil prices. However, the profit in the second quarter declined compared to the previous quarter, mainly due to the momentum gained by crude oil prices since July, driven by supply cuts and geopolitical tensions.
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