Lubricant industry poised for take off

by Lalin FERNANDOPULLE

The lubricant industry, a vital cog in the country’s economy is recovering from a lull that hampered the growth prospects of the sector according to industry experts.

The high vehicle import taxes, natural disasters and proliferation of substandard lubricants had severely stifled growth in the industry.

The opening of the North and the East, reduction in vehicle import taxes and the revival of the economy have helped the lubricant industry, which is a vital component in the transportation and construction sectors.

Lanka IOC PLC Managing Director, K.R. Suresh Kumar said the lubricant industry is poised for take off in the growth trajectory and added that the positive mood augurs well for players in the industry.

The lubricant industry has recorded a steady growth since the end of terrorism which has paved the way for industrial growth.

Economic growth is spurred by a vibrant lubricant industry which boosts the vehicle market and increases fuel consumption. The lubricant industry comprises around 16 players who are vying for a share in the intensely competitive market.

Lubricants help in the smooth functioning of vehicles by reducing the friction in moving vehicles and ensures smooth function. The lubricant industry was liberalised in 1990.

Kumar said that import liberalisation of automobiles by relaxing restrictions, rationalising the duty structure and encouraging the automobile industry has given a fillip to lubricant sales. Lubricant sales volumes have recorded a healthy growth during the past two years and the current indications are that the momentum will be sustained. The government is encouraging domestic manufacture to boost the industry. Experts said that sustaining growth is what is important than increasing the number of players.

“The challenge faced by the industry is to upgrade the standards and quality of products to meet the needs of current and next generation vehicles”, a leading player in the industry said.

He said that manufacturers should upgrade technology to improve quality products and packaging. Enforcing industry regulations is vital to improve the standard of the lubricant industry.

“Absorption of new technologies by industrial segments would raise customer expectations in product quality and longer life, energy efficiency and eco friendly specifications”, Kumar said.

LIOC hopes that the 2012 Budget will consist of incentives for domestic manufacturing which will help enhance value addition to the industry. Incentives for exports of finished lubricants will help Sri Lanka to be a manufacturing hub in the region.

Chevron Lubricant Lanka PLC Managing Director Kishu Gomes said that imposition of proper industry regulations is vital to prevent low quality products entering the market.

“An independent laboratory to check the quality of products, prevention of adulteration and speeding up approval for TIEP scheme (Temporary Import for Export Processing) are vital to develop the lubricant industry”, Gomes said.

Around 55 million litres of lubricant are used in Sri Lanka per annum. Only two players in the lubricant industry blend products in the country.

“The 2012 Budget should focus on creating an investor-friendly environment which is transparent and predictable to boost investment. Private sector investments should be encouraged”, Gomes said.