Volatility in raw material prices and aggressive price competition in the UAE market are forcing local lubricant manufacturers such as Rulexx Lubricants & Grease Industries to look to export markets for growth.
Currently, Rulexx exports 80% of its products from the UAE to markets such as Pakistan and Afghanistan. The manufacturer is seeking further expansion across the Middle East, in Saudi Arabia, Iraq, Jordan, Lebanon, Egypt and Kuwait.
Rulexx’s product portfolio includes automotive oils, gear oils, transmission fluids, hydraulic oils, marine oils, turbine oils, industrial lubricants, motor oils, auto coolants, brake fluids, and greases.
The company’s production facility is situated in the Al Jurf industrial area in Ajman and houses its office, labour accommodation, R&D department and warehouse.
The plant’s storage capacity for base oil is 3 million litres, distributed in 6 storage tanks, each with a maximum capacity of 500,000 litres. Its filling capacity per shift is up to 45,000 litres, equivalent to the total capacity of two fuel tankers.
“We operate five filling machines for small packaging formats, ranging from 500ml to 10l, as well as large quantities, which include 20l, 25l and 200-l drums. We have machines dedicated to filling plastic and metal cans. The facility is equipped to fill up to six different packaging formats at the same time,” says Mohammed Abdallah, export sales manager, Rulexx Lubricants & Grease Industries.
Abdallah points out that intense price competition in the UAE market along with unreasonable payment terms are making it increasingly difficult for manufacturers to offer attractive prices while maintaining high quality standards.
“There are more than 100 factories in the UAE blending lubricants only for the local market. A large number of them do not confirm to American Petroleum Institute (API) or other standards associated with high-quality lubricants, which gives them the advantage of offering low prices that we cannot match,” he says.
Payment terms is another deterrent to doing business in the UAE, according to Abdallah. Six-month credit terms with the possibility of further delay are common in the UAE market, which does not make if feasible for a company that wants to maintain its cash flow. Rulexx maintains its sizeable market share and cash flow in the UAE by dealing only with reputed large enterprises which usually settle payments in 3–4 months.
“Almost all raw material suppliers demand cash payments. Carton and plastic suppliers may give us credit facilities from time to time, but that’s roughly 20% of our costs. No supplier will give us credit for the two major raw materials, base oil and additives. When 80% of our costs are settled in cash payments, we cannot afford to give credit to the market,” says Abdallah.