The lubricant company will also sell one of its two vessels for Tk68 crore
The country's largest lubricant company MJL Bangladesh, formerly known as Mobil Jamuna Lubricant, will buy an oceangoing oil tanker vessel for Tk185 crore, or $22 million, to expand its business and reduce costs.
Currently, the company has two oil tankers. It uses the vessels to transport its own raw materials and also rents them out to other institutions such the Bangladesh Petroleum Corporation.
MJL will now sell one of the two vessels for Tk68 crore or $8.02 million because of its age, increasing maintenance cost and anticipated dry dock cost.
Md Rokibul Kabir, the company secretary of MJL, told The Business Standard that they will buy a new vessel to replace the old one within a short period of time.
"The new vessel, with the capacity of 1.15 lakh tonnes, will help increase the company's net profit," he said.
MJL Bangladesh, is an authorised manufacturer and dealer of American multinational oil and gas corporation Exxon Mobil, and a joint venture between state-owned Jamuna Oil Company and EC Securities Limited, a subsidiary of the East Coast Group.
The journey of blending lubricants in Bangladesh started in 1998 when the Exxon Mobil Corporation decided to set up Mobil Jamuna Lubricants Limited in partnership with the Jamuna Oil Company.
MJL, with a 26% market share, is a major player in the country's lubricants business.
Its revenue earnings from lubricants went down by 9% to Tk526.37 crore in the first three quarters of the 2019-20 financial year.
According to the MJL financial report, quick rental power plants and automobiles are the major customers of the company.
Rokibul Kabir said the situation worsened due to the novel coronavirus pandemic and, "Now we are trying to get our business back to the pre-pandemic situation."
"Moreover, some local importers are bringing in low-quality lubricants. The import of substandard and cheap products is on the rise, hurting popular brands," he added.
Power producers are the biggest private sector clients of lubricants. The quick rental plants constitute 30% of the total lubricant demand in the country.
The automobile sector constitutes nearly 60% of the total demand for lubricant.
MJL Bangladesh's consolidated revenue slightly increased to Tk1,620.61 crore in the first three quarters of the last financial year despite a decline in the lubricants business.
The company said most of the revenue comes from its subsidiaries – Omera Petroleum Ltd and Omera Cylinders Ltd. Both are engaged in the LNG business.
However, the consolidated net profit of MJL increased by 3% to Tk161.31 crore and its earnings per share was Tk4.92.
The paid-up capital of MJL, which was listed on the Dhaka Stock Exchange in 2011, is Tk316.75 crore.
Sponsors and directors hold 71.53%, institutional investors 19.52%, foreign investors 0.23%, and general investors 8.72% shares of the company.
The company's closing price per share was Tk91.80 on Sunday at the Dhaka Stock Exchange. Its share price has increased by 39% in the last two months.