In a conversation with Mohammad Yusuf, the father of the country’s first lubricating grease manufacturer and exporter, we get many insights about the Bangladeshi lubricant market. Something which isn’t discussed about much, yet hold tremendous potential for employment and foreign revenue. The lubricating material manufactured by Lube Blending Plant (LBP), Lube-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 Tk 150 crore from the capital market to continue its success. He recently spoke to Turbine at his office about the company’s history, current activities, business prospects and plans.

To become a successful entrepreneur, surely there were many challenges. What was your story of becoming an entrepreneur?

I completed my Masters in Economics in 1974 (1982 batch) from Chittagong University. At this time, Muhammad Yunus Sir and other teachers used to inspire us not to look for jobs but to become entrepreneurs and advised to get involved in any work. Because the nationalization of the industries of the war-torn country at that time did not provide opportunities for private enterprises; employment opportunities were limited, infrastructure was not so developed. Government job opportunities were meager. Then my friend and the late Mayor Anisul Haque and I thought we would go to the Middle East. But the thought of becoming an entrepreneur was constantly on my mind. In the meantime, I got acquainted with Rafiqul Alam Chowdhury, GM of New Era Steel Mills. He offered to supply grease to his organization. I 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, the profit was Tk 150. From then on, my dream also started to grow. We jointly established a chemical industry in 1986 with the dream of becoming an entrepreneur. Since then I have been involved in the lubricants business and have accumulated the necessary knowledge and experience about grease and lubricants. In 1980, I submitted a loan proposal inspired by the then MD of Shilpa Bank Kamal Uddin and GM Syed Ashraful Haque. Later, a loan proposal of Grease House Limited was approved in favor of Mohiuddin Alamgir and Tawfiq-e-Ilahi Chowdhury, MD of the bank respectively. Islami Bank Bangladesh Limited provided capital for the project.

We then set up the largest lube blending plant at Fux-GHL Lubricants (Bangladesh) with the help of then Power Secretary Tawfiq-e-Ilahi Chowdhury and former Minister Major General (Retd.) Nuruddin Khan, jointly owned by Germany’s largest oil company Fux Petrolub AG. 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.

Tell us more about Lube-rref’s current operations.

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 percent of the total demand of the country. I hope to increase it to 20 percent in 2019. On the other hand, 91.75 percent of the capacity of the refining unit with a capacity of 10,000 metric tons is being used. Which was 75.6 percent in 2015. And in the financial year ended 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 we are making a total of 35 types of lubricants. We have state-of-the-art accredited laboratory to maintain the highest quality of these products. In this laboratory all the expensive equipments have been bought from the best companies of the developed world. It has received technical recognition from many organizations. As well as ensuring the best quality of our products, we are also providing testing services to other organizations as the most modern testing lab in the country.

Give us an insight about the lubricant market. Is there are growing trend?

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 we are already going to start work on a number of expansion and supportive projects to take our brand to a stronger position. Inshallah we are strongly hopeful that we will succeed.

Recently did a road show to get listed on the capital market. The reason for coming to the capital market. I came into 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. Currently, about five percent 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 percent. This will increase our income several times. For this I am being listed in the capital market. We also have a base oil refinery, 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.

How do you plan to use the money generated from the IPO?

With the approval of the regulator, out of the Tk 150 crore IPO, Tk 96 crore will be invested in the company’s expansion projects. It will cost Tk 48 crore to repay high interest loans. The remaining Tk 6 crore will be spent on IPO process and other expenses. However, they will not need any land purchase or construction project for expansion. I will start the process of importing equipment after receiving the IPO money. In this case the quotation of the proposed equipment has been taken. Commercial production will start there by setting it up within a year. The money earmarked for loan repayment will be used as soon as the IPO funds are received.

Give a few words for the investors about what they can expect?

Lube-rref (Bangladesh) Limited is an industrial project established with adequate equity investment. It is a 100% safe and reliable institution for investors. We have four decades of practical experience in the petrochemical and lubricants industry. We have 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, Lube-rref will try to export beyond the country’s borders.