KARACHI: Pakistan is one of
the top three markets in Chevron’s worldwide lubricants portfolio based
on its high profit margins, a company official said on Wednesday.
Addressing
a press conference, Chevron Pakistan Lubricants Chairman Muhammad Najam
Shamsuddin said the company will make an equity investment of over Rs2
billion from 2016 to 2018 to upgrade its infrastructure in the country.
Book building: Hi-Tech Lubricants raises Rs1.35 billion
Chevron
Pakistan Lubricants is an indirect subsidiary of Chevron Corporation,
which is the world’s fourth largest integrated energy company.
The
equity investment will be used in upgrading and expanding its
lubricants blending plant in the West Wharf area of Karachi as well as
other facilities across Pakistan.
“Some people thought Chevron
would exit the lubricants industry once it divested its fuel business.
Chevron isn’t going anywhere. We are scaling up our investments
instead,” Shamsuddin said.
US-based Chevron exited its fuel retail and storage business in Pakistan recently by selling it to Total Parco Pakistan.
Chevron
Pakistan Lubricants trades under the Caltex brand in Pakistan and
markets its lubricants products in the country under the Havoline and
Delo brands.
IPO: Hi-Tech Lubricants to offer 7.25m shares to public
It
is one of the major players in Pakistan’s lubricants industry and
controls a share of roughly 24%, according to Shamsuddin. Other major
players include Shell, ZIC, Total and PSO.
The company will use
the new investment to increase its production by over 36% — i.e. from
current 55 million litres per annum to 75 million litres per annum. “We
see high growth prospects in Pakistan,” he added.
Lubricants are
made by mixing additives with base oil. While some companies import base
oil, others buy it from local refineries. Additives, on the other hand,
are always imported. Some companies import lubricants in the finished
form while others operate their own plants to manufacture lubricants
locally, including Chevron Pakistan Lubricants.
The company
established a chain of 65 oil change facilities across Pakistan during
the last 18 months as it no longer operates petrol pumps of its own. “We
plan to have up to 150 such facilities by the end of 2017,” he said.
Although
he refused to divulge the company’s financials citing its status of a
privately held entity, Shamsuddin said last year’s gross profit was Rs3
billion.
This Pakistani bootstrapped his company all the way to IPO
Another
major player in the lubricants market – Hi-Tech Lubricants that
produces ZIC – is in the process of the initial public offering (IPO).
Its gross profit for the last fiscal year amounted to Rs1.3 billion,
which is less than half of the gross profit posted by Chevron Pakistan
Lubricants.
“We don’t plan to go for an IPO right now,” he noted.
Published in The Express Tribune, January 28th, 2016.