Lubol India Limited (B)

Abstract

With complete liberalization of imports, blending, and pricing in the lubricants sector announced by the Government of India in the early 1990s, Lubol Petroleum Inc, (USA) (LPL) was one of numerous multinational companies who flocked to India. LPL entered into a 50-50 partnership with NOC, a leading public sector petroleum company, to form Lubol India Limited (LIL) early 1995. LPL had the highest worldwide shares in lubricants and carried a well-respected image for high quality. It saw the Indian market as a sizeable opportunity, and the collaboration as providing immediate access to blending facilities and an established national distribution network. NOC was an established player in the lubricants market with its indigenous brands having an 8% market share. The CEO, the Assistant CEO and the General Manager (Logistics) had just decided to locate third party (Carrying and Forwarding Agents - CFAs) managed depots in all the major states of India. They were now contemplating the structure of the distribution network further downstream as part of the business plan for the year 2002-03. The plan had an objective of making LIL a 9% player by the year 2002-03 from its current share of about 1%, in the extremely competitive lubricants market in India. They were examining the case of the bazaar trade in Gujarat. Decisions had to be made regarding the nature of wholesalers to be appointed (i.e. large/small), and the number and location of CFAs to ensure effective servicing of the wholesalers.