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Industrial Report On Lubricant Business
Industrial Report On Lubricant Business
ON
LUBRICANT BUSINESS IN BANGLADESH: “A STUDY ON
LUB-RREF (BANGALADESH) LTD.”
CHITTAGONG,BANGLADESH
Submitted To Submitted By
1
Letter of Transmittal
November 24, 2019
Dr.Jahangir Alam
Professor
Department of Finance
Faculty of Business Administration
University of Chittagong
Subject: Submission of Industrial Tour Report.
Respected Sir,
It is my great pleasure to submit the report on “LUBRICANT BUSINESS IN BANGLADESH:
A STUDY ON LUB-RREF LTD.”
It has been a great experience for me to prepare the report. I tried my level best to put meticulous efforts for
the preparation of this report. Any shortcomings or flaw may arise as I am novice in this aspect.
I have tried to make each and every element relevant to my topic and discussed under the context of whatever
I have learned from the course. It would be pleasure for me, if this report is accepted by you.
Thanking your in anticipation
Sincerely Yours
2
Certificate of Approval
This is to certify that MD.SAYED KARIM, ID:14303001 has prepared his Industrial tour report titled on
“LUBRICANT BUSINESS IN BANGLADESH: A STUDY ON LUB-RREF LTD.”under my supervision
and guidance.
I do hereby approve the style and contents of this tour report. This is for the partial fulfillment of his four
years BBA program, major in Finance from University of Chittagong.
3
ACKNOWLEDGEMENT
At the beginning, I am very much grateful to the Almighty Allah for giving me the strength to complete the
report properly. Without divining blessings of my Almighty, it would never be possible for me to complete
Industrial tour and tour report successfully.
A special thanks and gratitude goes to my supervisor Professor Dr. Jahangir Alam. Without his valuable
supervision and directions it would not have been possible to complete this report.
Then I would like to express my heartfelt gratitude to tour management committee and to my respected
teachers for arranging such an important industrial tour.
Then, I express my profound gratitude to MR. MOHAMMED YOUSUF(Managing Director),DR. JAKIR
HOSSAIN ,General Manager (Technical),MR. MOFIJUR RAHAMAN,(CFO) as well as all senior managers
and deputy managers of LUB-RREF (BANGLADESH) LTD. for their constant support, guidance and
supervision on our visit during the tour time.Without their cooperation this this report might have remain
incomplete. This tour really makes student capable of knowing official tasks before entering the corporate
world.
4
EXECUTIVE SUMMARY
This report tends to provide information about LUB-RREF (BANGLADESH) LTD. It is one of the leading
business industries of Bangladesh. One of the major organizational goals is to reduce poverty and hunger
through large scale of employment generation. The report focuses on the Operations and management of
LUB-RREF (BANGLADESH) LTD. at Chittagong. LUB-RREF (BANGLADESH) LTD. gives CSR effort
on revolving around the four premises environment, energy preservation, community and people to improve
the quality of livelihood. Moreover, LUB-RREF (BANGLADESH) LTD. strengths and competencies
developed over the years.
The whole report divided into five chapter: Chapter-1: Introduction, objectives, scope of study methodology
and limitation of the study.Chapter-2: Overview of lubricant business in Bangladesh is given which meets our
first specific objective. Chapter-3: Company overview, Vision, Mission, Department and products and
services and CSR of LUB-RREF (BANGLADESH) LTD.Chapter 4: Practical experience of visiting the
company.Chapter -5: Terminates with the Findings, Recommendation, and Conclusion. And References.
I have taken all the reasonable care to ensure the accuracy and quality to make the report standard. And I
believe that it has included all the necessary information to be relevant.
5
TABLE OF CONTENTS
Letter of Transmittal
Approval Certificate
Acknowledgement
Executive Summary
6
2.7 Major players of market 17
3.3 Values 21
7
4.7.1 Marketing policy 35
5.1 Findings 41
5.2 Recommendations 42
5.3Conclusion 42
References
8
Chapter-1
INTRODUCTION
1.1. Introduction
Lubricant is a substance which is used to control (more often to reduce) friction and wear of the surfaces in a
contact of the bodies in relative motion . Depending on its nature, lubricants are also used to eliminate heat
and wear debris, supply additives into the contact, transmit power, protect, seal. A lubricant can be in liquid
(oil, water, etc.), solid (graphite, grapheme, molybdenumdisulfide), gaseous (air) or even semisolid (grease)
forms. The liquid lubricants can be classified based on the base oil to synthetic/semi-synthetic, mineral or
environmentally acceptable (biodegradable) oils. Most of the lubricants contain additives (5-30%) to improve
their performance. The application determines which oil, commonly referred to as the base oil, should be used.
In extreme conditions, synthetic oils are typically used. Where the environment is of concern, environmentally
acceptable lubricants must be used. Lubricants market of Bangladesh is a competitive one. The Bangladesh
Lubricants Market is segmented by Product Type (Engine Oil, Transmission and Hydraulic Fluid,
Metalworking Fluid, General Industrial Oil, Gear Oil, Grease, and Other Product Types) and End-user
Industry (Power Generation, Automotive and Other Transportation, Heavy Equipment, Food and Beverage,
Metallurgy and Metalworking, Chemical Manufacturing, and Other End-user Industries).The lubricant shelves
of overall market have already placed more than 100 brands altogether and the number of brands is increasing
day by day .And the situation is being worsened while so many by name products are taking the different
shelves of different clusters. This market has become more overstated in terms of brand names and local
products. Around 100 million liters, whereas base oil demand around 140 million liters. . However, the base
oil demand of Bangladesh is growing for increasing automotive sector and the agriculture-based economy.
Lubricants consumption in the industrial sector has increased significantly in the last 5 years.
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1.2. Objective of the Study
Broad Objective:
The main objective of the report is getting an overall idea about the current scenario of lubricant business,
market size and Production Procedures in Bangladesh.
Specific objectives:
There are some specific objectives of this report and these are,
1.5. Methodology
Type of Study: In this report I tried to find out the operation procedures of lub-rref (Bangladesh) ltd. It gives
a description about the company. So I used Descriptive Research because it describes the overall
operation,sales,marketing, financial characteristics of lub-rref (Bangladesh) ltd. For this study I collected data
from both Primary and secondary sources.
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Sources of Data:
For primary data I interviewed some employees of lub-rref (Bangladesh) ltd. Observational trials and
participant/non participant observations. So my primary information is based on the experience. My
experiences on visiting at lub-rref (Bangladesh) ltd. also helped me to prepare the report. For secondary
sources of information.website of LUB-RREF (BANGLADESH) LTD. and also took some assistance from
textbooks and internet journals.
1.6. Limitations of the Study
Every report has some limitations. There are several limitations in preparing this report. The main limitations
are followings I found it very difficult to ask question to and getting answer from some of the members of lub-
rref (Bangladesh) ltd.and outside stake holders. In some cases they were reluctant to talk freely regarding the
systems which are followed by operation procedures of lub-rref (Bangladesh) ltd.I found difficult to get some
data as they were confidential and the authority intended to keep them hidden from me which is very logical
from their point of view. Very few secondary data can be collected from Internet as there are few journals
about lub-rref (Bangladesh) ltd.
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Chapter-2
The entire lubricant industry is possible to observe as few distinct markets as well as segments with various
lubricant oils. In the context of Bangladesh, this industry can be described as a market which contains few
segments like car engine oil, motorcycle oil, truck and heavy duty engine oil, CNG oil and industrial oil, etc.
Another observation can also identify more segments like railway oil, marine oil, and aviation oil; though
these are insignificant compared with other lubricant oil segments. The market of CNG oil is an exponential
one, though the users are mostly using the heavy-duty engine oils for the vehicles. But a few quality lubricant
oils are also available for CNG vehicle. The industrial oil market is a sensitive one, where the use of
recommended oil is required, which is closely supervised by the engineer. The growth of power sectors and
other industries has perked this industrial oil segment up. Customers are quite knowledgeable about the
lubricant brand and quality now. In fact, for consumers, the main source of information arises from peer
suggestions. Retailer suggestions also play a part in affecting the purchase. Retail shop owners recommend
their preferred brand to the customers most of the time. Due to this, customers often purchase brands as
referred by the retailers. The customers of this market don’t want to risk anything happening to their vehicles
for not using high-quality lubricant. The sole distributors always run promotions for the regulars, though it
plays an insignificant part in the purchase decision. Availability of brand doesn’t affect people’s purchase
decision. Rather, it’s dictated by the brand’s popularity. Using these market insights, very newly brands are
taking their entrance in this growing lubricant industry. But the renowned brands like Mobil, BP, Total, Shell,
and Castrol are enjoying their existing market share with strong brand preferences. Moreover, the customers
of this market have a better acceptance of those lubricant brands though many quality products are also
available in this market.
Engine Oil
Gear Oil
Grease
Other Product Types
End-user Automotive and Other Transportation
Industry
Heavy Equipment Power Generation
Food and Beverage
Metallurgy and Metalworking
Other End-user Industries
13
2.4 List of renowned lubricants company in BD:
1. APSCO Bangladesh
14
11. Rahimafrooz Distribution Ltd (Castrol)
15
Lubricants in marine transportation are used to dissipate heat, for reducing friction, and combat wear
and tear between the surfaces of two moving components. Additionally, lubricants help fight corrosion
and rust in the engine, whether its an aviation engine or a wheel burning on a car.
The automotive industry in Bangladesh is considered as the third largest in South Asia. Bangladesh is
anticipating a rise in the demand for motorized vehicles. Until July 2018, 282,354 vehicles were
registered against the 420,398 vehicles registered in 2017.
Although the sales of new vehicles have been decreasing in the country for the past three years, the
sales of used cars have increased significantly in the country, thereby driving the demand for automotive
lubricants.
The automotive industry in Bangladesh is dominated by imports of new vehicles, mostly by Japan,
China, and India on a large scale and a few from Europe and the United States.
Bangladesh is anticipating a growth in the aviation market, with the 170 million population increasing
the use of the aerial route for traveling, owing to the growing middle-class income. Due to this, air
travel is increasing in the country, which in turn is leading to the market growth for aviation lubricants.
The demand for engine oils will keep rising with the increasing automotive vehicles, which in turn will
increase the market for lubricants in Bangladesh.
The market for engine oils, known as lubricants, is growing rapidly, driven by an increasing number of motor
vehicles in Bangladesh.
Of the Tk 1,000 crore lubricant retail market in 2009, the automobile industry consumed 77 percent, while the
manufacturing sector consumed the rest, market data shows.
A study by Mobil Jamuna Ltd, a leader in engine oil blending and sales in Bangladesh, has projected lubricant
consumption at 62,600 tonnes for 2010. Such consumption was over 60,000 tonnes in 2009 and 58,300 tonnes
in 2007.
The study shows the engine oil market, which grows at 3 to 3.5 percent a year, has more potential to grow as
thousands of new motor vehicles are plying the roads every year. World demand for lubricants is forecasted to
advance 2.3 percent a year to 41.7 million tonnes in 2010.
However, a disruption in manufacturing and industrial activity because of the energy crunch has reduced the
potential for further growth of the product.
“Engine oil consumption could easily grow by 5 to 6 percent annually, if there was a constant supply of gas
and electricity,” Sanaul Haque, chief executive officer of Mobil Jamuna, told The Daily Star yesterday.
Mobil Jamuna, a joint venture of state-owned Jamuna Oil Company and Mobil Asia Pacific, set up its own
blending plant in 2003 to blend and market quality lubricants for the growing Bangladeshi market. The
company imports all ingredients, including base oil and additives to make lubricants.
Mobil Jamuna is also the first Bangladeshi company that is exporting lubricants. It exports to countries like
Nepal and Bhutan. The company has exported lube oil worth more than $ 450,000 to Nepal in 2009. The
export target for this year has been set at a million dollars.
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Engine oil, also known as motor oil, is a liquid product used to lubricate various types of internal combustion
engines, such as automobile and industrial engines. It is also used in marine, agricultural, train and aeroplane
engines. The key function of the oil is to lubricate and clean the moving parts of machines or engines. It also
prevents corrosion and rust and keeps the engines cool by carrying away the heat from the sliding parts.
The lubricant business in Bangladesh in the private sector is less than a decade-old. Until 2000, only the state-
owned oil companies were allowed to import, blend and distribute lubricants here. At that time, majority lube
oils (65 percent) contained no additives.
The government liberalised the market and banned non-additised lubricants in 2001, to ensure minimum
standards. Since then, more than 50 brands of lubricants, including renowned multinationals, have entered the
market. But half a dozen brands account for nearly 50 percent of the total business.
Mobil Jamuna's brand, Mobil, is by far the market leader with a 26 percent stake worth Tk 350 crore, followed
by BP with 11 percent, Total 6 percent, Shell 2 percent and Castrol 2 percent. The rest 53 percent is
dominated by low quality, low cost brands.
According to Azam J Chowdhury, chairman of Mobil Jamuna Limited, low-quality engine oil has become a
concern, as it destroys an engine. “The industry needs government intervention to ensure the quality of engine
oils."
A litre of low-quality lubricant costs only Tk 120 to Tk 130, whereas the price of a litre of oil by Bangladesh
Petroleum Corporation is over Tk 150 and a minimum of Tk 240 by Mobil.
“A section of unscrupulous businessmen import used lubricants from Dubai by mis-declarations and recycle
those for sale at a lower price,” Mobil Jamuna's CEO said.
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2.7 MAJOR PLAYERS:
Trade Services International (Total)
Ranks Petroleum Limited (Royal Dutch Shell PLC)
Rahimafrooz (Bangladesh) Ltd (BP PLC)
Navana Petroleum Limited (Caltex/Chevron)
MJL Bangladesh Limited (Exxon Mobil)
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Chapter-3
20
Mrs. Rubiya Nahar (Chairman)
Mr. Mohammed Yousuf (Managing
Director)
Mr. Md. Salauddin Yousuf (Director)
Ms. Dr. Israt Jahan (Director)
Mr. Mohammad Ameer Faisal(Independent
Director)
Mr. Wahid Uddin Chowdhury (Independent
Key Management Director)
Mr. Dr. Khandakar Zakir Hossain (GM-
Technical)
Mr. Suhail Ahmed Head of Corporate
Finance Management
Mr. Md. Mofijur Rahaman, CGIA (Chief
Financial Officer)
Md. Moshihor Rahman ACS (Company
Secretary & Compliance Officer)
Dr. Mohammed Saifuddin (Manager, Lab
and R&D)
Mr. Sajid Aftab (Head of Business
development Lab Division)
Mr. Naim Siddiqui (AGM, Operation)
Mr. Mozammel Hossain (DGM, Marketing
and Sales)
Mr. Bishjit Chowdhury (Civil Engineer)
3.3. VALUES:
WE ARE RACER in our heart! RACER R – We are Resourceful and Responsible A – We are Advanced and
Aggressive C – We are Customer-Centric and Caring E – We are Efficient and Environment-friendly R – We
are Respectful.
21
Updated motto of lub-rref ltd :
“we get our hands dirty to keeps others’clean”. we make the the world more greener and better for living.
Robust financial growth and strong market share. Focus to become the most trusted ‘Customer centric’
company. Transformation through innovation, restructuring and continuous development; focusing with green
business. Build a strong ‘Brand Image’ transcending local market (beyond border) Sustainable CSR programs
and commitment to People and community development’. Operational Excellence utilizing modern
technology. The objectives have been set in accordance with the values of the organization.
22
Lub-rref has established a reputation for unmatched technical support and liaison with customers thus
ensuring correct choice and applications of lubricants. Coupled with trouble-shooting and service planning,
Lub-rref’s initial objectives to become an indispensable part of the industrial mix has been achieved. A very
satisfactory market share has been secured in a relatively short period of operation, Lub-rref’s products are
second to none in the industry and fully supported by technical representatives and engineers.
Automotive
Industrial Product
1 Hydraulic Oil
2 Transformer Oil
4 Refrigeration Series
6 Turbine oil
8 Generator oil
3 Marine TPEO
Specialty Product
BNO grease
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3.7 SERVICES OF l LUB-RREF (BANGLADESH) LTD
Lub-rref (Bangladesh) Ltd. is an ISO 9001:2015 Certified Limited Company for manufacturing Lubricants
and allied products. As a part of corporate social responsibilities (CSR) Lub-rref (Bangladesh) Ltd. involved
in the following activities.
The Lub-rref (Bangladesh) Ltd. also provided Practical Training to 160 number of cadets of Bangladesh
Marine Academy especially on selection, application, and quality testing of Lubricants and greases in the
marine segment. Besides, Lub-rref (Bangladesh) Ltd. provides important seminars on selection of lubricants,
used oil management for public awareness.
To achieve these objectives, the Management of Lub-rref (Bangladesh) Ltd. has practiced the guideline of
ISO 9001, ISO 14001 and OHSAS 18001 within the company including all level of business dealing. As such
Lub-rref (Bangladesh) Ltd. has established the Environmental policy, Health and Safety policy and Supplier
Sustainability Policy. Under the individual policy, respective department and manpower are engaged to
monitor and fulfill the objective fixed by higher management.
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Chapter-4
FXPERIENCE OF VISITING OF
LUB-RREF(BANGLADESH) LIMITED COMPAY
Lub-reff ltd. imports base oil and additives to blend lub oil of various formulation to cater to the needs of
automotives and industries they produce about 35 items considering multifarious uses.We have a modern &
fully equipped laboratory, which includes atomic absorption equipment, supports and complements. Contract
work is also undertaken for outside companies.The Company is committed to health, safety and care of the
environment. The blending of lubricants generates no waste.
Production part of lub-rref:
Analytical Division
Onsite Transformer Oil Filtration
Onsite NAS Filtration
Used Transformer Oil Reclamation
For cross-check of our test accuracy we regularly participate in global ASTM Cross-check Program.
It also offers advice on sampling and if necessary can provide you onsite sampling Service.
Segment of service:
25
1. Power Generation
2. Cement
3. Steel Manufacturing
4. Bunker
5. Transport
6. Textile
7. RMG
8. Other Manufacturing Unit.
BNO Lab Testing Facilities for Lubricating Oil/Transformer Oil/ Fuel Oil (HFO) and Grease
Note-1:- Lubricating Oils: LO; Transformer Oil: TO; Fuel Oils (HFO): FO; Grease: G
Pre-requirement
• Simply connect the filtration plant at site with your 120 KW Electricity.
• Connect the flexible hose with your Transformer inlet & outlet.
28
• De-activate & discharge the accumulated electricity in the transformer before connecting with your plant.
29
Lub-rref (Bangladesh) Limited has been using sophisticated machinery and modern technology in order to
produce high quality of Lubricant oil. It helps us to be competitive over our competitors because of our latest
machineries and technology. Lub-rref (Bangladesh) Limited uses the most modern technology in its Blending
plant and Re-refinery Plant.
OBJECTIVES :
Provide best quality product and services to the customers within their affordability
Saving environment with the help of refined oil.
Save every drop of oil
Energy conservancy for future
Formation of ROSE foundation
Harvesting renewable energy
Re-refining means one step ahead in quality
31
4.6 Finance division:
MARKET SHARE:
2019 10
2017 7
2010 4
2006 2
Capital structure:
Mixed financing strategy is used in lub-rref ltd company
32
Statement of Financial Position
30-Jun-2018
Amounts in
Particulars Taka
30-Jun-17
30-Jun-2018 1-Jul -16
** Restated
ASSETS
Non-current Assets 3,356,504,608 2,565,717,753 2,306,320,415
Property, Plant and Equipment ** 3,356,504,608 2,565,717,753 2,306,320,415
Current Assets 1,294,612,445 1,276,972,043 790,019,664
Inventories 490,787,134 394,096,791 196,593,883
Receivables 346,224,382 350,533,704 301,640,755
Advances, Deposits & Prepayments 278,687,677 281,759,388 138,523,739
Related Party Current Accounts 48,180,000 176,845,436 141,426,472
Cash and Cash Equivalents 130,733,253 73,736,724 11,834,816
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Long-term Loan-non current portion 742,895,373 746,868,483 782,120,023
Lease Liabilities-non current portion 1,459,486 2,185,930 -
Deferred Tax Liability** 252,116,690 185,552,747 113,559,203
Current Liabilities 670,307,894 658,410,648 858,623,318
Long-term Loan-current Portion 78,000,000 78,000,000 78,000,000
Lease Liabilities- current portion 1,147,716 1,147,716 -
Short-term Bank Loan 521,423,550 542,149,034 753,292,674
Provision for Contribution to WPPF 13,590,919 - -
Trade Payables 12,516,851 10,370,086 7,534,990
Liabilities for Income Tax 30,113,234 17,324,466 9,595,053
Liability for Expenses 13,515,624 9,419,347 10,200,601
34
4.7 Sales and marketing division
Knowledge Sharing by given training and organized seminar for creating awareness
Commercial advertisement
Website information
Using Social Media
Participating in foreign and local Fair
Expert sales Team support
Sponsorship in Sports by given Jersey, Banner, Feston, Bill Board, Social welfare, Commercial AD
through print and digital media, etc.
35
4.7.3 Sales strategies:
1. Dealer base:
the company uses dealer base strategy to go general public and about 70% of sale of the company is
completed in this way.it is called automatic system.it has 60 dealer all over the country.
2. Industry base:
36
the company uses indusry base strategy for selling to different industry. It sells about 30% of sale to different
industry and it is called door to service or B2B .
37
4.7.5 SUPLLY CHAIN OF LUB-RREF LTD
Product benefits
Service benefits
National benefits
Price benefits
38
4.9 KEY USERS OF THE COMPANY’S PRODUCT :
39
4.9 1.INTERNATIAL BUSINESS
Lub-rref already has started export their product in neighbour countries such as
NEPAL
INDIA
MIYANMAR etc.
40
Chapter -5
Availability of Products.
Customized Products.
World Class laboratories for R&D and Engine oil testing & analysis.
Fresh Oil, In-Service oil and used Oil analysis for safety of Engine
41
5.2 Recommendations:
Lub-rref (Bangladesh )limited can handle challenges:
I. Adopting modern technology
II. Provide training and motivation to client and employees
III. Ensures product quality as per inspirational standard
IV. Conduct social awareness program
V. Discuss and negotiate with regularity body
VI. Making bridge with global partners
Conclusion:
The lubricant business is on steady state in comparison with other business in Bangladesh .according to
market insider,the annual demand is expected to reach at two lakh tons in the 2019-20 fiscal yearThe annual
consumption has got almost 3% growth which is on par with India but behind China.The demand from the
automotive,construction sector ,industrial machinery and equipment application also accounts for a major
share of total lubricant markets driven by end users sectors.additionally ,industrial sector accounts for 30%of
lubricant consumption.the demand is highest thanks to automotive sector in agro economy like Bangladesh.in-
terms of volume the transportation sector accounts for more than half of total market of lubricant.
So,the government should take care of this sector which may be the great source of employment. The sector
will play a great rule in emerging economy like Bangladesh.
References:
[1] Essential Concepts of Bearing Technology, Fifth Edition (Rolling Bearing Analysis, Fifth Edtion) 5th
edition by Harris, Tedric A., Kotzalas, Michael N. (2006).
[2] Principles of Tribology, Shizhu Wen, 2017
[3] Some Problems of Lubrication, W. B. Hardy, Nature volume 106, pages 569–572 (30 December 1920),
https://doi.org/10.1038/106569a0.
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