Another lube company joins the market - Aims to list on the stock exchange
A new company called Master Lube has entered the lubricants market, but its operations are confined to the distribution of imported brands on behalf of a Trinidadian firm, for now.
In another year or two, however, the new entrant plans to branch out into production of premium lubricants - a project for which the budget is estimated at US$1 million, and the site for the plant is being scouted.
First, the company aims to go public via a stock market listing and has hired Mayberry Investments to broker the offer.
Master Lube, a company formed just one year ago, covers the econo-lubes market in the western half of Jamaica and some sections of Kingston. Its product range covers automotive lubricants, gear oils, power steering fluid, greases and coolants.
Master Lube was launched by one of the owners of Batteries and Accessories, a four-decade-old family company in the business of trading auto parts and tyres, but is not structured as part of that group.
The new Master Lube operation was seeded at US$100,000 by shareholders.
Managing Director Andrew Williams says his company entered the lubes market with a pricing strategy in order to claim market share. At a time when a quart of the average engine oil retails for $550-$950, Williams says his Supreme and Prolube brands retail at $300 to $450.
"We pride ourselves in delivering products that are competitively priced," he told Gleaner Business.
Master Lube has Underground, Adbro, and Valutech brands of lubricants as competitors. Williams says Master Lube's advantage lies in the wide choices on offer from among the 48 products in its portfolio, whereas his rivals carry around two to three products each.
Master Lube does not operate as a retailer, instead the products are transported from its warehouses at Hagley Park Road in Kingston to distribution points and on to gas stations and auto parts dealers nationwide.
"We presently do one container per week and it's out of our hands in two to three days because the orders are there waiting," said Williams, in reference to the amount of products imported.
The lubricants market in Jamaica was once served only by importers. But around two years ago, LSC Jamaica commissioned a plant in Clarendon, while Paramount Trading and its American partner Allegheny are about to commission another in Kingston.
Master Lube currently imports its line of value-priced products from Trinidad & Tobago. The mineral-based product is manufactured and blended by Trinpac Limited.
Williams says Master Lube is on track to double its business by year end and triple it by 2018, which, if he hits that target, would give the company a 30 per cent share of the lube market.
"We see ourselves growing to about eight containers per month by year end, and by the next year, we want to go up to 12," he told Gleaner Business. "Hopefully, in the medium term, we want to be growing by one container per month after that two-year period."
At present, Master Lube relies on a low price, just-in-time inventory, wholesale delivery model. This means that as soon as the weekly consignment comes in, it is out the door to consumers via three major distributors - one on the north coast, another in May Pen to cover southern parishes of Clarendon, Manchester and St Elizabeth, and another in Savanna-la-Mar to cover the western tip of the island.
"There are other people who do deliveries for us," said Williams. "We do drop shipments. We increase our network by taking the product to one strategically located mega dealer and they in turn deliver the product to smaller distributors."
To grow his business, Williams is actively eyeing the junior stock market to raise capital. However, he said regulatory rules prevent him from saying too much about his fundraising targets and expected initial public offering.
"We are looking at taking our business islandwide. To that extent, we are looking at getting the necessary trucks, delivery vehicles, sales representatives and administrative personnel to do that," he said.
Companies Office records name the current directors of Master Lube as Williams, his wife Jenieve Sabdul Williams, and William Rennals. But Williams also names dentist AndrÈ Foote and businessman Rory March as part of the governance team.
Williams and Sabdul Williams own the company, with their holdings split 70:30.
Master Lube plans to do its own packaging of coolants and distilled water, on a timetable to be dictated by the realisation of growth targets. Williams says he plans to follow that with packaging of a range of premium lubricants by 2018.