Lub-rreff aims to create Bangladesh ‘self-reliant in lubricant production’
Lub-rref, a local lubricant producer, is set to invest Tk 400 crore to determine the country's first state-of-the-art base oil refinery with an aim to meet the growing demand for lubricants from both home and abroad.
"The sector has huge prospect of growth in Bangladesh as the neighborhood lubricant market is mostly import based," said Mohammed Yousuf, managing director of Lub-rref.
Base oils certainly are a raw material used to produce various lubricants, such as for example grease, motor oil and metal processing fluids.
Of the full total investment, Tk 120 crore would result from equities and return earnings as the rest will be financed through foreign loans.
Alongside the construction of a fresh base oil refinery at the Julda Industrial Theme Park in Chattogram, the company will expand its present factory and fit it with the means to create a higher grade of lubricant products.
To finance the expansion, around Tk 98 crore will be funded through Lub-rref's initial public offering (IPO) proceeds.
The Chattogram-based company recently secured approval from the Bangladesh Securities and Exchange Commission to off-load its shares and raise funds of Tk 150 crore. Of the IPO proceeds, Tk 46 crore will be used to pay back loans.
Bangladesh consumes around 1.2 lakh tonnes of lubricants annually, of which 1.04 tonnes is met through imports while about 0.16 tonnes is produced locally, according to the company's data.
Meanwhile, Lub-rref aims to export its products after meeting domestic needs so that you can capture a larger share of the rising global demand, which has been driven by the growth of automotive production worldwide.
"Lub-rref really wants to break the domination of foreign brands and make Bangladesh self-reliant in lubricant production," Yousuf said throughout a press conference at the prevailing factory's premises.
The brand new project, being established directly on the brink of the Karnaphuli river, could have an gross annual production capacity of about 70,000 tonnes.
Having secured all 25 certificates necessary to break ground, the project will be developed across 16 acres of land and is likely to be complete within the next two years.
As a part of its plans, Lub-rref will little by little set up a tank terminal, berth operating jetty, bitumen plant, hydrogen plant and power plant in the area as well.
Luf-rref, whose products are branded as BNO Lubricants, recently introduced Nynas technology based transformer oil and nano technology based lubricants to minimise carbon emissions and ensure engine longevity.
"At present, our market share is 8 per cent, which we try to increase by 20 % with the brand new plant," said Mofijur Rahman, chief financial officer of Lub-rref.
The lubricants company makes 60 % of products with responsibly recycled lubricants as the remaining 40 per cent is manufactured out of imported base oils.
"By recycling old oils, we are adding to the environment," he added.
About 60 per cent of BNO lubricant products are being used by the automotive sector while 35 % is employed by various industries, including power transformers, power plant factories and commercial generators.
The remaining 5 % is employed by the marine sector because of their engines, according to company data.
Lub-rref's paid up capital was Tk 100 crore and its own income rose 11.6 % to Tk 153 crore in 2018-19.
