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How to Start a Profitable Lubricant Manufacturing Business

Do you want to start a profitable lubricant manufacturing business? Find here a sample engine oil production business plan with other allied products.

Basically, engine oil and grease are the most important items in the automobile industry. Actually, these items come under the petrochemical segment.

According to the use, there are two different types of lube you can find in the market. These are the lubricant for automobile use and another for industrial use. However, the automotive lubricant market is more competitive than industrial lubricant.

Basically, you can start a lubricant manufacturing business on a medium or large-scale basis. The business demands moderate capital investment in procuring the machinery and raw materials. Hence, a well-crafted business plan is required for starting and running the business smoothly.

Is Lubricant Manufacturing Business Profitable?

In the lubricant sector, automotive holds a 60% market share, and industrial holds 40%. Broadly, the lubricants market is segmented into five regions. These are Asia-Pacific, Europe, North America, the Middle East & Africa, and South America.

Asia-Pacific is the largest market for lubricants, followed by Europe. Middle East & Africa is projected to be the fastest-growing market in the recent future.

The growing consumer awareness regarding the use and advantages of engine oils and other lubricants is growing. Also, the rising trend of partnerships between original equipment manufacturers (OEMs) and lubricant manufacturing companies is expected to augment demand for automotive lubricants in India over the next five years.

In the automotive segment, cars, two-wheeler, and three-wheelers segment account for 30% of the market. However, diesel-operated engines, trucks, and other heavy vehicles have the bulk share of the rest 70%.

Actually, the increasing number of passenger and commercial vehicles in the region is fueling the growth of the lubricants market. Additionally, the low cost, easy availability, and increased application in all sectors are driving the lubricants market. Hence, starting a lubricant manufacturing business is a highly lucrative business for entrepreneurs who want to start a business in the petrochemical industry.

Here are the Steps to Start Lubricant Manufacturing Business

Starting this type of manufacturing business demands a personalized business plan according to your investment capacity. If you are confident enough then you can craft a plan of your own. Otherwise, either you can ask an expert or you can take the help of some business plan writing software solutions. In writing a business plan, you must pay attention to the minutest of details that will help your brand in the long run.

In the plan, determine your annual production target, the cost of the project, and the company formation pattern. Additionally, you will need to determine the financial resources, utilities, raw materials, and human resources. Have a clear marketing strategy and funds for implementing that.

Currently, the global lubricants market is dominated by various market players. The list includes Royal Dutch Shell Plc. (Netherlands), Exxon Mobil Corporation (U.S.), PetroChina Company Limited (China), Sinopec Limited (China), Total S.A. (France), Lukoil (Russia), BP Plc. (U.K.), Chevron Corporation (U.S.), Fuchs Petrolub AG (Germany), Idemitsu Kosan Co., Ltd. (Japan), and others.

So, you can get enough statistics to make the decision about the specific products you want to produce. Generally, from the same unit, you can produce lubricants of different grades and greases. And you can spread the product lines in the same distribution channels.

1. Create a Business Plan

Here, mention the exact location of your unit. Additionally, mention the exact covered area you have. Generally, it is better to secure a location in the industrial zone. Mention what type of licensing or permissions you need for initiating the business. Generally, licensing aspects depend on the local bylaws. In most cases, this type of unit doesn’t demand any type of pollution NOC.

Mention the sources of utilities like electricity and water. Mention the means of transport you are going to avail. Ensure, you have all other necessary basic infrastructure in the unit to become functional.

2. Cost of the Lubricant Manufacturing Unit

Here are the major costs of launching a lubricant business:

  • Land (Generally, you can establish a small-scale unit with 5000 Sq Mt of land)
  • Preparing the building and shade (If you are not initiating in a rented space)
  • Plant and machinery
  • Other fixed assets
  • Pre-operative expenses
  • Working capital

3. List of Machinery for Lubricant Manufacturing Unit

  • Tin filling machine
  • Blender tank
  • Centrifugal
  • Cooking kettle
  • Cooling kettle
  • Molding machine
  • MRP machine
  • Generator
  • Storage tank
  • Foiling machine
  • Grease filling machine
  • Air compressor

4. Raw Materials for Lubricant Manufacturing Unit

Mainly, you will need to procure the base oils or additives from the suppliers. Additionally, you will need to source lithium and HCO. Finally, you will need to have packaging consumables to pack the finished goods.

Generally, lubricants come in different packaging for end users. The 1-liter pack, 5-liter pack, and 20-liter pack are the most popular. According to the market demand, you may think about bulk packaging.

5. Learn the Lubricant Manufacturing Process

a) Lubricants

Procure the base oil or additive from the supplier. Put the materials in the storage tank. Heat and blend the material for proper mixing. Get the material in the finished oil storage tank. Check the quality. Finally, fill the lubricants in the right packing. Now the material is ready to go to the market.

b) Grease

First of all, procure the base oil, lithium, HCO, and additive from the suppliers. Put the material in the storage tank. Heat and blend the material for proper mixing. Then, get the material in the finished oil storage tank. Next, you will need to check the quality. Finally, fill the grease in different packing with the help of a filling machine.

From the same suppliers, you can procure polymers for preparing plastic containers. Generally, you can use a blow injection machine for producing different plastic containers.

6. Register your Lubricant Manufacturing Business

There is a wide range of business structures one can choose to register as a lubricant manufacturing company. However, if you are planning to start on a small scale, LLP or a Private Limited Company are the two best options in India.

Suggested Read: How to Register a Company

7. Human Resources with Roles and Responsibilities

In starting this type of business, you must employ skilled and experienced manpower for a smooth and effective operation. Broadly, you have two basic departments for staffing. One is manufacturing and another is marketing. In the production unit, you will need to hire a production manager and quality control, expert. Additionally, you will need to require some semi-skilled labor for machine operation.

In addition to that, you will need to hire marketing staff according to your marketing strategy. You must hire experienced marketing personnel to meet the distributors and retailers. Additionally, you must have some production promotion and advertising strategy to establish the brand name.

Basically, after initiating the project, you must concentrate on the marketing and expanding your lubricant manufacturing business.

About Next What Business Research Team

The Editorial Staffs at NextWhatBusiness is a team of Business Consultants with years of experience in small and medium-scale manufacturing and service-based businesses.