Chevron Lubricants Lanka sees market slow down in Q2

Kishu Gomes, CEO of Chevron Lubricants Lanka PLC, said the lubricant industry in Sri Lanka has not grown since the start of the second quarter this year, and has failed to keep the momentum of the first quarter. The slow down, in Gomes’ view, can be attributed to several factors including:

• Unexpected volatilities in the global and local economy, also experienced in Bangladesh, although the market volume of the Maldives experienced double digit growth.
• The increase in duty on vehicle importation aimed at minimizing the currency drain out of the country adversely affected vehicle growth in the past two years.
• Consumer preference for higher technology products which offer extended oil drain

“Modern tech savvy consumers keep moving up the value ladder which is encouraging for lubricant companies which believe in technology,” Gomes said. The European economic crisis has also had an effect on the lubricant industry, because it affected tourism, foreign direct investments, expatriate worker remittances and exports, all of which impacted the exchange rate and resulted in local inflation.
“With the current issues we face, market consumption has reduced not only in the lubricant industry but across many industries due to lower purchasing power. This is true for many markets across the world. So we cannot complain about it as an isolated issue impacting only Sri Lanka,” Gomes explained.
The economy was also greatly affected by the rupee’s unexpected depreciation of more than 15% within four to five months. However, Gomes reiterated, “If it’s a one time correction that was needed to create a more healthy medium- to long-term economic environment, then this would not be an issue.”
There is however, good news. “The brand shift from Lanka brand to Caltex brand has been good for us. We, as the market leader have been investing heavily and put in a huge effort to educate customers in opting for superior technology,” said Gomes. “The gradual strengthening of the rupee experienced over the past weeks is a welcome sign and I hope it will gain more strength”. He continued, “Chevron will expand its export market to bring in more foreign revenue into the country. I believe, from the country’s perspective, that there is no better time to do this than now. The company is observing the movement of the regional market with a lot of infrastructure development taking place in many parts. This would change the market size in those areas and we have plans to strengthen our distribution network and invest in targeted areas. The North and the East markets continue to grow despite a challenging environment. The two markets will reach around 15%t market potential which is higher than many industries.” (September 2, 2012)