The biggest names in the world and some home-grown brands have found Nepal the perfect field when it comes to automotive lubricants.
BY BIJAY LAXMI DUWAL
With the increasing number of vehicles plying on the roads, the market for automotive lubricants is on a fast acceleration in Nepal. Engine oils form the largest part of the lubricant market which also includes other products like grease, transmission fluid, gear oils and coolants. The biggest consumption of lubricants now exists in the two-wheeler and light commercial vehicle (LCV) segments of the Nepali automotive market which used to primarily rely on large commercial and passenger four-wheeler segments until a decade ago, according to domestic producers and distributors of foreign lubricant brands.
The five-year data provided by the Trade and Export Promotion Center (TEPC) indicates the increasing trend of importing automotive lubricants. In FY2017/18, Nepal imported 18.24 million kg of lubricants worth Rs 4.02 billion, up 20.11 percent from FY2016/17 when 15.20 kg of lubricants amounting to Rs 3.35 billion was imported. India is the largest exporter of lubricants to Nepal. In FY2017/18, Nepal imported 15.38 million kg of lubricants worth Rs 3.16 billion from its southern neighbour.
Similarly, UAE was the second largest exporter of lubricants to Nepal with 2.18 million kg worth Rs 653.28 million followed by South Korea (212,162 kg worth Rs 46.60 million), Indonesia (77,719 kg worth Rs 12.80 million) and Japan (65,343 kg worth Rs 25.39 million).
A Competitive Market
With the number of vehicles growing across the country, lubricant brands, both international and domestic, have found Nepal a competitive market. Castrol, Shell, Mobil, Total, Gulf, GS Caltex, Enoc, Motul, Veedol and Petronas are among the prominent global brands in Nepal. Similarly, Indian brands including MAK, Servo and HP have a strong presence here. Meanwhile, PLO, Control, MB Lube and Superb are home-grown brands.
Castrol, a global lubricant brand owned by British petroleum giant BP, has had several decades of prominent standing in Nepal through its authorised distributor, Nepal Overseas Trading Concern (NOTC). “Castrol has a strong hold in the motorbike, car and light commercial vehicle (LCV) segments in the domestic market. We have been importing Castrol lubricants from Dubai and distributing the products through 30 distribution channels across the country,” says Amar Jyoti Ranjit, marketing manager at NOTC. According to him, Castrol produces premium products that ensure optimal engine performance, increased fuel efficiency and longevity of vehicles. “Using quality lubricants can also help in saving the money that the country has been spending on importing vehicles,” mentions Ranjit.
Mobil, an international lubricant brand owned by the US-based multinational petrochemical manufacturer Exxon, is also another major foreign brand in Nepal. Like in many underdeveloped and developing nations, Mobil is synonymous with motor oil in Nepal too. Reliance Trade International is the authorised distributor of Mobil in Nepal.
Launch of castrol vectron in nepali market on june,2018
According to the company’s Head of Sales and Marketing Rakesh Tiwari, Mobil commands an eight percent share of the automotive lubricant segment in Nepal. “250 kilolitres of Mobil lubricants are being consumed on a monthly basis in the Kathmandu Valley. We are also the only supplier of Mobil aviation lubricants in the country,” he shares. Reliance Trade International started the distribution of Mobil lubricants with the sales of synthetic engine oil Delvac in 2008.
Sipradi Trading, Golchha Organization, Syakar Trading Company, Vishal Group and Batas Organization are among the prominent business houses engaged in distributing foreign lubricant brands namely, MAK, Servo, Idemitsu, Veedol and Petronas, respectively. “We started the distribution of MAK lubricants in Nepal when the Euro-III emission standard was implemented in the country,” informs Roshan Shrestha, deputy general manager of Sipradi Trading. Shrestha, who heads the lube division of Sipradi says that MAK holds a 16 percent share of the Nepali automotive lubricant market. “We extended our product range for four different vehicle segments- commercial, two-wheelers, tractors and construction/heavy equipment in five years. As a result, our market size also increased by four times,” he mentions.
Domestic Brandsin the Making
Nepali brands are also making their mark in this highly competitive market. Five companies, namely, Purbanchal Lube Oil (PLO), Nepal Lube Oil Limited (NLOL), Fujima Oil Company, MB Petrolube Industries and Superb Lube have been producing various types of automotive and industrial lubricants in the country.
“Lubricants produced in Nepal cover 35 percent of the demand in the domestic market,” says Krishna Prasad DulaI, director of Purbanchal Lube Oil (PLO). Established in 2001, the company has been producing several types of engine oils, gear oils, coolants, greases along with automotive and industrial lubricants under PLO, Star and Mega brands. According to Dulal, the three brands of PLO collectively hold a 10 percent share of the market. “We have received appreciation from customers for high quality products. This helps us to compete with foreign brands,” he says. Dulal, who is also the executive committee member of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), informs that Nepal has become self-reliant in grease. “90 percent of the grease consumed in the country is produced domestically,” he says.
Established as the Lube Blending Company in 1983, Nepal Lube Oil Ltd (NLOL) is the first lubricant manufacturer in Nepal which was privatized in 1994. Chaudhary Group owns majority stake in NLOL, which is among the few manufacturing companies listed in the Nepal Stock Exchange. From its inception, the company has remained as a licensee of the US-based Gulf Oil International and is engaged in producing and distributing the Gulf brand lubricant in Nepal with its 27 dealership networks. According to the NLOL’s Marketing and Brand Manager Pradyumna Neupane, 40 percent of Gulf lubricant is imported from India and Dubai and the other 60 percent is produced by the company itself at its plant in Bara.
MAK lubricants being showcased at NADA auto show 2016.
“We strictly adhere to the manufacturing guidelines set by Gulf Lube International. To ensure quality in our products, we have a highly equipped lab with 21 advanced testing equipments which is a benchmark for lubricant production in Nepal,” he says, adding, “We hold approximately 10 percent of the market share in the country. Last year, we sold 2,600 kilolitres of Gulf lubricants.” For the two-wheeler segment, Gulf 4T and Gulf Pride 4T are locally blended and imported engine oils, respectively. Meanwhile, the high performance synthetic engine oil Gulf Ultrasynth X is imported for cars, according to Neupane. Similarly, NLOL also produces SuperFleet and Multi G for diesel engine vehicles.
New Trends in the Market
One latest trend is to use vehicle specific lubricants. For instance, Sipradi’s latest engine oil launch Mak CI4 Plus, has been developed especially for TATA vehicles. Sipradi is the authorised distributor of TATA Motors for Nepal. The company has also introduced Mak Platinum for those seeking affordable yet quality lubricants for their vehicles. Likewise, Syakar Trading Company, the authorised distributor of Honda two-wheelers and four-wheelers for Nepal, introduced the Honda Genuine Engine Oil for motorbikes and scooters in March 2018. Mobil is also a lubricant brand of choice for some automobile and heavy equipment brands. “Mobil is the preferred brand of Kia in the car and Komatsu in the heavy equipment segments,” says Tiwari claiming that using Mobil engine oil can save fuel consumption from three to five percent. Similarly, the use of synthetic engine oil, is also popular. As Nepalis have lately been buying more vehicles with high performance engines, the demand for such types of lubricants is also increasing in the country. Synthetic engine oils are lubricants produced from artificially made chemical compounds. More expensive than general engine oils, these types of lubricants are used for optimal viscosity performance of engines at a range of climatic conditions and fuel efficiency that play a major role in the smooth operation of vehicles.
Problems in Lubricant Business
Producers point to the policies of government as factors of hindrance to the growth of home-grown brands. “If the government reduces at least five percent of the existing 15 percent customs duty levied on import of raw materials for lubricant production, the share of Nepali brands can easily go up to 50 percent,” says Dulal of PLO. Similarly, the lack of awareness about the quality of lubricants is another obstacle in this business. According to Tiwari of Reliance Trading International, many people use recycled engine oils that are available at price starting from Rs 100 per litre in the local market. “These types of lubricants are potentially harmful to the engines,” he says. Shrestha of Spiradi Trading agrees with Tiwari. “People generally buy high volume of lubricants in lower price points rather than purchasing quality lubricants,” he shares. He suggests the government to formulate and implement parameters for grading the lubricants available in the market. Ranjit of Nepal Overseas Trading Concern says that due to the lack of awareness in terms of quality and usage of the products, customers buy any lubricant referred by mechanics or retailers, thus affecting the market of genuine brands.
There are also efforts by importers and producers of lubricants in terms of educating their customers about the quality of products. NLOL, for instance, has been organising awareness programmes every year putting at all its dealerships in a bid to promote its product portfolio and educate customers, retailers and auto mechanics about the benefits of using quality lubricants.
Stall of Mobil lubricants at NADA auto show 2017.