Sundrex Oil Company Ltd. IPO: Building a Manufacturing-Led Lubricants Business with an Eye on Sustainable Growth

Shashank Sonthalia, Whole Time Director and CEO, Sundrex Oil Company Limited

Incorporated in 2010, Sundrex Oil Company Limited was founded by Mahesh Sonthalia, who currently serves as Chairman and Managing Director. Over the years, the company has evolved from a focused lubricants manufacturing venture into a manufacturing-led, B2B-centric enterprise serving industrial clients, infrastructure companies, automotive players, and public sector undertakings (PSUs) across India. Sundrex Oil also exports to Bangladesh, Nepal, Bhutan, and the UAE.

Choosing the Right Moment to Go Public

In an exclusive conversation with Shashank Sonthalia, the CEO and Whole-Time Director of Sundrex Oil Company Limited, he elaborates on why the company chose this moment to enter the capital markets.

“Over the past decade and a half, we have built a strong manufacturing backbone and a diversified B2B customer base. Particularly in the post-COVID period, our growth has accelerated at a healthy pace. Today, we operate with nearly 50% spare manufacturing capacity and serve over 500 institutional customers,” Shashank Sonthalia said.

He added, “The IPO is aimed at strengthening the company's balance sheet and funding the next phase of growth without resorting to excessive leverage. We are entering the public markets from a position of operational strength rather than anticipation. This allows us to scale responsibly while maintaining financial discipline.”

Deploying IPO Proceeds for Scale and Stability

The proceeds from the IPO will be primarily used for working capital requirements, capital expenditure, repayment of certain borrowings, and general corporate purposes. In a volume-driven, tender-oriented business like lubricants manufacturing, access to adequate working capital plays a critical role.

“Improved working capital will enable us to participate in larger tenders, execute orders more efficiently, and scale faster,” Shashank Sonthalia explains. “Planned capital expenditure will focus on backward integration and new product lines, allowing us to serve a wider set of industries with better margin visibility. Strengthening the balance sheet by reducing higher-cost debt will also lower finance costs and support profitability.”

Strong Operational Efficiency Drives Growth

Sundrex Oil's recent growth reflects its operational focus. Efficiency gains, better plant utilisation, and increased contract manufacturing and toll blending volumes, which are relatively less working capital intensive, have contributed significantly.

“We have consciously avoided aggressive leverage and focused on using our existing capacity more efficiently,” Shashank Sonthalia says. “Disciplined cost management and fixed-cost absorption have been key drivers of profit growth over the past few years.”

Balancing PSU Stability with Revenue Diversification

While PSU and tender-based contracts provide stability, the company remains cautious about over-dependence on any single segment. Currently, the PSU business contributes around 10% of total revenue.

“Our model is already diversified across institutional customers, B2G, and contract manufacturing,” ShashankSonthalia notes. “Going forward, new capex will help us enter segments with better margins and further diversification, ensuring balanced and sustainable growth.”

Sustainability and EPR: Aligning Growth with Regulation

Sustainability and regulatory compliance are increasingly central to Sundrex Oil's strategy. With India's Extended Producer Responsibility (EPR) framework gaining momentum, the company has taken proactive steps to align its operations.

In 2023, Sundrex Oil incorporated its green subsidiary, EcoLixir Green Tech, to support EPR compliance and strengthen backward integration. “For us, sustainability is aligned with profitability. EPR is not a cost burden but an opportunity for long-term value creation,” Shashank Sonthaliaexplains.

Medium-Term Growth Priorities Post Listing

After the proposed listing on NSE Emerge, Sundrex Oil plans to deepen penetration in the industrial and institutional segments, improve utilisation of its existing manufacturing capacity, and selectively expand exports.

The company aims to focus on markets operationally similar to India, including Africa, Southeast Asia, the Middle East, and neighbouring countries, while avoiding asset-heavy expansion and maintaining operational control.

What the IPO Means for SME Investors

For investors evaluating the IPO, Shashank Sonthaliaemphasises the company's manufacturing-led DNA and promoter commitment.

“The promoter family and management team are fully invested in the business. We have a proven track record of consistent growth, disciplined capital allocation, and improving profitability,” he said.

“We are entering the public markets at the right time, with a scalable model focused on cash flows, operational excellence, and sustainable growth. For long-term investors, Sundrex Oil offers a strong value proposition.”

As Sundrex Oil prepares for its public market debut, the IPO marks a significant milestone in the company's evolution—from a family-founded manufacturing venture to a publicly listed enterprise with a clear focus on sustainable growth and value creation.

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