Gandhar Oil Refinery is a leading manufacturer of white oils. They manufacture over 440 products across the personal care, healthcare and performance oils (PHPO), lubricants, process and insulating oils (PIO) divisions under the 'Divyol' brand. These products are used as ingredients by leading Indian and global companies for the manufacture of end products for the consumer, healthcare, automotive, industrial, power, tyre and rubber sectors
Company is India’s largest manufacturer in this segment by revenue in FY 2023, and is one of the top five players globally in terms of market share in the calendar year 2022. Their products are sold in over 100 countries to over 3,500 customers.
ABOUT THE INDUSTRY
White oil, the fastest-growing segment of the Indian specialty oil market, is estimated to be worth usd 0.473 billion in 2023 and reach USD 0.759 billion by 2028, at a CAGR of 9.9%.
One of the categories in this area that is growing particularly quickly is personal care and cosmetics. The market is driven by improving standard of living and rising demand for cosmetics.
The other growing category is pharmaceuticals. Government initiatives such as the PLI scheme, expertise in low-cost generic patented drugs, quality service at a low cost compared with the US, Europe, etc., and strong domestic demand are the key drivers of the Indian pharmaceutical market.
Strengths And Risks
+ Leading Market Share: Company was India’s largest manufacturer of white oils by revenue in FY 2023, and one of the top five players globally in terms of market share in the calendar year 2022. Their revenue from operations grew at a CAGR of 40.59% to Rs. 4079.4 Cr in the FY 2023.
+ Diverse Customer Base: They cater to an extensive customer base of more than 3,500 Indian and global companies. Their customers in the PHPO division include P&G, Unilever, Marico, Emami, Bajaj Consumer Care, Encube, Patanjali, Dabur, Amrutanjan Healthcare, Supreme Petrochem and other leading Indian pharmaceutical manufacturers. They manufacture lubricant oils for Gulf Oil, Adani Ports etc. PIO division include Toshiba Transmission and Distribution Systems (India) and other leading manufacturers of transformers and power distribution and transmission companies.
+ Scalable Business Model: Gandhar Oil Refinery has over three decades of experience in the specialty oils industry. They have increased the scale of operations over the years, while increasing efficiency and reducing costs. The business has high entry barriers due to complexities in technology, regulatory norms and hazard management.
+ Consistent Financial Performance: The company has demonstrated consistent financial performance among peers in terms of revenue, profitability and efficient capital employment. revenue from operations grew at a CAGR of 40.59% between FY 2023 and FY 2021. PAT has also increased significantly to record a CAGR of 15.02% in the same period. The ROE and ROCE are among highest in peer group.
+ Strategically Located Manufacturing Facilities: Company operates three manufacturing facilities, with two plants located in Western India and one in Sharjah, UAE near the ports which saves time and cost towards transportation.
- Supply Chain Risk: They source a majority of raw material, base oil, from suppliers in South Korea and the GCC Region, Delays, interruptions or reduction in the supply of raw materials due to geo-political reasons is akey risk.
- Exchange Rate Risk: Exchange rate fluctuations in various currencies in which they do business, mainly USD and other currencies, could negatively impact business and finances.
- Capital Intensive Business: They have significant working capital requirements for manufacturing operations. If they experience insufficient cash flows to fund working capital requirements or are not able to provide collateral, there may be an adverse effect on business.
- Legal Proceedings: There are pending litigations against the company, certain subsidiaries, group companies and certain Promoters and Directors. Any adverse decision in such proceedings may adversely affect the business.
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