HPCL taking its lubes business to India’s neighborhood

Hindustan Petroleum Corporation Ltd, the State run company is expanding its lubricants business in India’s neighborhood riding on the Prime Minister’s strategy to improve relations by forging extensive economic relations. HPCL launched its lubricants in Myanmar in October and is now working on marketing the lubricants in Nepal and Bhutan as well as looking at resuming sales in Bangladesh soon.

India’s third largest fuel retailer and the largest lubricant maker in India is now looking at markets beyond the country’s boundaries in order to sell finished products since they bring more value. Lubes account for almost a quarter of the company’s profit and HPCL operates the country’s largest lubricants refinery which is known for the high quality of its base oils. The company supplies base oil for various brands in the Indian market and is now aiming to run the lubes refinery at the brim in order to expand the market for products which are more profitable than selling base oil.

HPCL is unfazed by competition from global brands which currently dominate the neighboring markets. The company has already been competing in India against some of the global brands ever since the lubes market was deregulated. About 148 parties entered the Indian market at a certain point of time and there are only 48 existing today. With an experience of competition, the company has carved a niche for itself due to the high quality of its products.

The marketing director of HPCL, S Jeyakrishnan said that the company is going on its own in the new market without tying up with the local partners. They will be appointing dealers through advertisements taken out in consultation with the embassies. The company will have to work out a significant operating strategy in order to cater to wider markets. With a huge plant capacity, the company will be able to increase production and deliver the high quality lubes into the new markets.

HPCL reported a net profit of Rs.1, 735 crore in the second quarter which marked a 147% increase over the same period last year. Its profit increased on account of higher refinery margins and inventory gains. The company generated $7.61 on processing each barrel of crude oil into fuel in the quarter against $3.23 during the same period last fiscal. The gross sales of the company have increased to Rs.54, 153 crore from Rs.47, 750 crore during the same period last year.