Tide Water Oil Co. (India) Ltd., a member of the multi divisional Andrew Yule group and a lubricant manufacturer in India, last Friday announced that it has signed a Memorandum of Understanding with JX Nippon Oil & Energy Corporation, Japan, to set up a 50:50 joint venture in India. The JV entity will be responsible for selling, marketing, distributing and manufacturing the “ENEOS” brand of lubricants in India, Nepal, Bangladesh and Bhutan and catering to the Factory and Service Fill requirements of, mainly, the Japanese original equipment manufacturers.

In 1993, Tide Water Oil had entered into a technical collaboration with Mitsubishi Oil Company to market its lubricants in India. This collaboration continued with Nippon Oil Corporation when the latter merged with and absorbed Mitsubishi Oil in 1999. In 2010 Nippon Oil Corporation was restructured and re-organized and became JX Nippon Oil & Energy Corporation, the largest petroleum conglomerate in Japan. Tide Water Oil, having built a substantial lubricant business in India for its Veedol Brand, continued to market the ENEOS brand in India through a technical collaboration Agreement with JX Nippon Oil & Energy Corporation. This also enabled it to gain a larger footprint in the OEM oil segment by virtue of becoming Genuine Oil suppliers to the leading 2-wheeler companies in India like Hero MotoCorp, Honda Motorcycles and Scooters India and India Yamaha Motor as well as other Japanese OEMs like Kobelco and Kubota.

Chairman Kallol Datta said the new JV entity, subject to shareholders' approval, would have a initial capital base of about Rs 100 crore (US$16 million), adding that a part of that would be used as working capital needed for the new entity.. Tide Water Oil would get a substantial value for divesting the business into the new JV identity. According to sources, the value for divesting the business into JV entity would be above Rs 80 crore.

Datta said that Tide Water, which also had its own lube brand 'Veedol', was selling around 70,000 kilo litres per annum. Out of that, 25 per cent was 'Eneos'. Tide Water acquired the Veedol brand from BP Castrol in late 2011.

Tide Water Oil has five lube manufacturing plants in India, specifically Faridabad, Howrah, Silvassa, Turbhe, and Oragadam with a combined capacity of 88,000 KL of oil and 4,400 MT of grease, but as of now it would use the Chennai and Maharashtra facility to manufacture and sell 'Eneos'.

Tide Water would now seek approval of the shareholders for the business transfer.

This JV is being formed with the intent that the two companies will collaborate further to develop and expand the market for lubricating oils utilizing the technology and know-how of JX Nippon Oil.