Lube-rref (Bangladesh) Limited has already gained the confidence of consumers as the most reliable manufacturer and marketer of lubricants in the country
The lubricant industry isn’t discussed much, yet holds tremendous potential for employment and foreign revenue. The lubricating material manufactured by Lube Blending Plant (LBP), Lub-rref (Bangladesh) Limited is being marketed under the brand BNO. Building a new industrial complex by the River Karnaphuli, the huge project which will include a jetty, a tank terminal, a modern base oil refinery, a hydrogen plant and a specialized bitumen plant. Lub-rref (Bangladesh) Limited, the country's first private lubricant blending company, wants to raise Tk150 crore from the capital market to continue its success.
Mohammad Yousuf, the founder of the company, completed his Masters in Economics in 1974 (1982 batch) from Chittagong University. Nationalization of the industries of the war-torn country at that time did not provide many opportunities for private enterprises; employment opportunities were limited; infrastructure was not as developed as it is today. With the dream of becoming an entrepreneur always at the back of his mind, he then got acquainted with Rafiqul Alam Chowdhury, GM of New Era Steel Mills and ended up offering to supply grease to his organization. He bought products from Paragon Oil, a local and foreign lubricants company in Sadarghat, for Tk 8,000 per drum of grease and supplied it to New Era and BSRM for Tk 8,200.
After deducting the cost, he was left with a profit of Tk150. From then on, his business started to grow. Later they jointly established a chemical industry in 1986. Since then, he has been involved in the lubricants business and has accumulated the necessary knowledge and experience about grease and lubricants. In 1980, they submitted a loan proposal. Later, a loan proposal of Grease House Limited was approved and Islami Bank Bangladesh Limited provided capital for the project.
“I still attend workshops on lubricants, petrochemicals in different countries of the world whenever I have the time and opportunity, which has helped me to reach my current position,” says Mohammad Yusuf
Lube-rref (Bangladesh) Limited has already gained the confidence of consumers as the most reliable manufacturer and marketer of lubricants in the country. At present, the blending plant with an annual capacity of 12,550 tons is meeting five per cent of the total demand of the country. They are hoping to increase it to 20 per cent in 2019. On the other hand, 91.75 per cent of the capacity of the refining unit with a capacity of 10,000 metric tons is being used which was 75.6 per cent in 2015. And in the financial year that ended on June 30, 2018, the sales of Lube-rref were Tk 118 crore and 67 lakhs, with profits of Tk 15 crores. In the previous financial year, their profit was Tk 9 crore 33 lakh as against Tk 90 crore 17 lakh.
Now they are making a total of 35 types of lubricants and have a state-of-the-art accredited laboratory to maintain the highest quality of these products. In this laboratory, all the expensive equipment has been bought from the best companies in the developed world. It has received technical recognition from many organizations. As well as ensuring the best quality of their products, they are also providing testing services to other organizations as the most modern testing lab in the country.
The demand for lubricants is also increasing with the increasing economic dynamism. This demand will increase several times in the future. This is because as part of the country's infrastructural development, expanded railways, power plants, road transport, ships, aviation, manufacturing factories are and will be using a lot of lubricants in every field. Against this growing demand, Lub-rref is already going to start working on a number of expansion and support projects to take the brand name to a stronger position for which they are strongly hopeful.
Recently they did a roadshow to get listed on the capital market. “I came into the business to serve the country, to transition from import-dependent petrochemical and lubricant trading to petrochemical and lubricant industry. We want to get investors as companions in this transformation,” he said. Currently, about five per cent of the local lubricant market is occupied by the BNO brand. If this increased capacity and marketing efforts are successful, it is possible to increase this rate to 25%. This will increase the company’s revenue by at least several times. He also added saying: “We have a base oil refinery too, a tank terminal, berth operating jetty, bitumen plant, hydrogen plant and power plant as part of our extensive expansion activities.” And with a 60,000-tonne-a-year base oil refinery, a new dimension will be added to the country's lubricant industry. It will create industry protection and technology transfer, save valuable foreign exchange as well as create many technologists locally.
According to them, with the approval of the regulator, out of the Tk150 crores IPO, Tk96 crores will be invested in the company's expansion projects. It will cost Tk48 crores to repay high-interest loans. The remaining Tk6 crores will be spent on the IPO process and other expenses. However, the company will not need any land purchase or construction project for expansion and will start the process of importing equipment after receiving the IPO money. In this case, the quotation of the proposed equipment has been already taken and commercial production will start thereby setting it up within a year. The money earmarked for loan repayment will be used as soon as the IPO funds are received.
Lube-rref (Bangladesh) Limited is an industrial project established with adequate equity investment. They claim it to be a 100% safe and reliable institution for investors as they have four decades of practical experience in the petrochemical and lubricants industry. “The company has already earned the trust of buyers by preparing world-class lubricants at the local plant.” BNO is currently a better-known lubricants brand. And sales of automotive, industrial and marine lubricants in the country at competitive prices are constantly increasing. Besides, once the expansion process is over, Lub-rref will surely try to export beyond the country's borders.