Lubricant maker Tide Water Oil Co (India) Ltd is eyeing supply pacts with top notch Japanese automobile brands such as Toyota, Honda, Nissan, Mitsubishi and Suzuki as well as Korean brands like Hyundai with the formation of its equal stake joint venture with Japanese conglomerate JX Nippon Oil & Energy Corp.
Tide Water, maker of Veedol brand, had in February signed a memorandum of understanding with JX Nippon for the JV, which has been formally set up on Monday.
Besides Veedol, whose global rights are now with Tide Water, the Kolkata-based lube maker has been making and selling Nippon's Eneos brand in India under a technical agreement against payment of royalty for years, a business which has now been transferred on a slump basis to the new venture against payment of Rs 108 crore.
"Japanese OEM makers were not quite eager to get into lube sourcing pacts for Eneos brand in India as they were not sure about the quality or technical standards. But now with Nippon taking up a stake in the India business, they would be more comfortable dealing with us," Kallol Datta, chairman, Tide Water, said.
Eneos currently serves two-wheeler and earthmoving vehicle makers like Hero Corp, Yamaha, Honda Motors, Nissan and Isuzu, Kobelco and Kubota, accounting for an annual sales of Rs 250 crore out of Tide Water's total turnover of Rs 1,200 crore.
"With this JV we would be looking at entering supply pacts with four-wheeler customers from Japan and Korea," RN Ghosal, managing director, said.
Veedol meanwhile has recently entered the German market through its subsidiary in the Netherlands, Veedol International BV, set up a year back.
"We have started supplying the German market though a manufacturing base in Rotterdam," Ghosal told dna.
There are plans to enter Poland and Turkey as well.
This is JX Nippon's first business venture in India and the Japanese conglomerate is likely to enter other sectors depending on its maiden venture performance.
"We will not exclude anything but will consider (entering new businesses) once the JV succeed," Hajime Uchida, chief representative of JX Nippon in India, said.
JX Nippon is Japan's largest oil company having interests in refining, manufacturing and selling petroleum products, importing and selling of gas and coal, supply of electricity and also developing, manufacturing and marketing of fuel cell, solar power generation and storage batteries.
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