This analysis is an attempt understand the structure and dynamics of the lubricant industry in Sri Lanka. The author is of the view that the industry could have some growth potential, however, the presence of 13 players would have a negative impacts on the profitability of the industry. In the long run we may see some consolidation in the industry.

1. Lubricant Industry in Sri Lanka
Mahesh Amarasiri

2. Overview
 Market is estimated to be LKR 20 bn with a sales volume
of 54,000 K/Liters per annum
 There are 13 industry players in the market providing
import, export, sell, supply and distribution of lubricants
 Two players are authorized to blend lubricant oil in Sri
Lanka
 The Public Utilities Commission of Sri Lanka (PUCSL) is
acting as the shadow regulator for the lubricant sector
 The sector was liberated in early 1990s ending a
government monopoly; however creating a private
monopoly which has been liberalized subsequently

3. Market Players
Activity 1 : Blending
Activity 2 : Imports

4. Annual sales volume shows a declining
trend
 Annual sales volumes
have contracted in 2012
and 2013 due to
 Drop in new vehicle
registration
 Drop in demand from
industrial sector driven by
low utilization of power
plants
 However, the increase
in prices helped to
partially mitigate the
drop in volume
-
50
100
150
200
250
300
350
400
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2009 2010 2011 2012 2013
PriceperLiter(LKR)(Green)
Quantity(KL)(Red)
Sales Volume and Price Per Liter
Quantity (KL) Price per Litre

5. Market Segments : Heavily dominated by
Automobiles and Thermal power
 The market is dominated
by the automotive sector
driven by vehicle
population
 Industrial sector is mainly
driven by thermal power
and commercial
transportation
 There is an emerging
export market in
Bangladesh and Maldives
(operated by Chevron)
Automotive
70%
Industrial
21%
Marine
5%
Greases
4%

6. Highly concentrated market : Nearly 88%
of the market is shared by 5 players
 Chevron Lubricant is the
market leader with 55%
market share (declining
trend)
 The last 8 players share
12% of the market
 Mclarens as a group claims
~10.5% of the market being
the third largest
 Mobil~7.6%
 Sinopec~2.8 %
Chevron
Lubricants
55%
LIOC
12%
Ceylon
Petrolium
10%
Exxon
Mobil
8%
Laugfs
3% Others
12%

7. Future Outlook of the Industry : Demand is
expected to recover following the increase in
vehicle population
 The industry is heavily dependent on vehicle
population given 70% of the sales focusing on
automobile
 The vehicle market is expected to recover due to
 Low import duties
 Low interest rates
 Reduction in fuel prices
 Stable exchange rate
 This will help to recover the sluggish demand
prevailed in 2012-2013 period

8. Future outlook : Recovery of the
industrial sector and thermal power
 The thermal power sector is expected to pickup with
the recent completion of thermal power plants
 The industrial sector and the commercial
transportation too is expected to continue to growth
momentum
 Therefore it is expected that the growth in power,
energy, agriculture, ports and infrastructure will
increase the demand for lubricants in the long to
medium term

9. Thank You
Mahesh Amarasiri
https://www.linkedin.com/in/maheshamarasiri