Indian firm MX Africa Limited has signed a deal to acquire the balance of a 49 percent stake in Quantum Lubricants Limited, a Kenyan-based manufacturer in which it first invested in 2019.
MX Africa, a wholly owned Kenyan-based subsidiary of Indian conglomerate Maximus International Limited (MIL), first purchased a 51 percent stake in Quantum Lubricants three years ago, easing its entry into the local lubricant market whose growth has been driven by demand from operators of heavy machinery in the infrastructure sector.
“This acquisition of 49 percent in QLL is a part of our ongoing global expansion plan. We now have total control over QLL’s operations which will facilitate our expansion programme,” said Mr Deepak Raval, Maximum International Limited’s managing director.
“This acquisition of 49 percent stake in QLL is part of our ongoing worldwide development plan. We now have complete control over QLL's activities, which will aid our expansion plans.”
MIL mainly deals in importing and exporting lubricants, base oils and other chemical goods used, among others, in the metal, power and automobile industry.
The Kenyan unit mainly manufactures automotive lubricants, metal working fluids and oils for refrigeration, engines, transformers and hydraulic units.
Demand in the local market for both automotive and heavy machinery lubricants has grown in recent years. Latest data from the Kenya National Bureau of Statistics (KNBS) shows that consumption of lubricants locally increased to 61,602 metric tonnes in 2021 from 57,249 tonnes in 2020.
The KNBS data also shows that 12,600 metric tonnes of the product were imported while 28,800 tonnes of lubricants were exported last year, indicating that local manufacturers are also accessing a lucrative regional market.
Importation of lubricants has however undercut the utilisation of local manufacturing capacity on account of h taxation of raw materials (base oils), according to the Petroleum Institute of East Africa (PIEA).
More than 40 percent of lubricants have been imported into the country as finished products despite existing lubricant manufacturing companies running at half capacity.