EXPORTS TO OVER 40 COUNTRIES FROM IRAN

Iran 2017 | ENERGY | VIP INTERVIEW

TBY talks to Asad Azizi, Member of the Board & Managing Director of Behran Oil Co., on increasing capacity, exporting to more than 40 countries, and reaching out to new partners.

Behran Oil enjoys a large market share in both engine oils and lubricants for industrial applications, partly because of the strengths of your brands. How do you assess your current market share in the different divisions, and how are you planning to develop it?

We are the market leader in the lubricants industry, with a 50% market share for passenger cars, motor oil, and especially heavy-duty oils. In the industrial sector we occupy 33% of the total market. We are in a situation where we can define the price and manage the market. We have a strong portfolio that covers nearly all the needs of the market. Car manufacturers approve all our oils, which provides a good reference for people looking to see who the strongest players are. Lately we have reached some limitations in the market, and for that reason we have placed our focus on some of the top-tier products. This is because of the high margin in the area and the better brand position that Behran Oil want to have. In addition, in the near future this will be the trend of the market so we want to keep up. We pursue a high position and want to compete in terms of quality rather than price. We also want to capture the premium parts of the market regarding the brand position that we have. On top of this, we aim to launch brand campaigns for our top-tier products and reorganize our distribution channels based on that strategy. We want to shape the market, giving more services to the end users and maintaining close contacts with them. In the industrial oils division, we have offices in eight provinces in Iran and offer technical and consulting services through our sales engineers. We want to increase their knowledge of lubricants and additive monitoring, and thus become even more powerful in the market.

After establishing the first refinery nearly 50 years ago with a capacity of 30,000 tons per year, your current base oils output is around 250,000 tons per year. Do you plan to further increase your capacity in the next years?

Actually we want to focus on finished products rather than base oils. Base oils are an intermediary product for us, and we prefer to focus on the marketed products.. Therefore we want to steer away from increasing production capacity for these oils and move to production of base oils in the 1+ Group. We want to be pioneers in the technology realm, which is why we want to find a qualified partner that has a license and advanced technology. Also, we would be interested in a partner that can finance our projects and grant us market access. If we find that partner, we are ready to start a new company producing base oils for Group 2 and 3.

What is the outline of your growth strategy?

We see some internal and external drivers for growth. Internally, we have brilliant human capital. Behran's credit also allows us to invest, which is another strength. Externally, industrial growth in Iran allows us to enhance the market. The share of the industrial sector here may not be so great in comparison with other sectors, but we expect to see a boom in the economy when sanction being lifted, and this will positively affect the industry sector. Industrial growth will provide a good base for our lubricants. The car producers in Iran are also sparking growth and innovation. The sector is moving from the low to the high end, which is another good trend for us. There is also an increase in public work; the infrastructure and mega projects that the Iranian government is carrying out are another good driving force for our business. The government also intends to invest in the automotive and industrial sectors and address the problem of unemployment. These investments have a good effect on our lubricant businesses, as we produce hydraulic and turbine oils for industrial use as well.

Behran Oil already exports to over 40 countries. Are you looking to enter new markets?

Our grand strategy is to have a direct presence in our target markets. In the past, we would just export commodity to overseas markets. Now, we are aiming brand oriented products to be exported. We want to have a direct presence in the target markets. Setting up blending and packaging facilities in our target markets and building a distribution system through a local partner is part of our strategy. The local partners with which we would like to sign long-term partnerships are those who already operate in those markets. Our target markets are all East of Africa, West Asian countries, our neighboring countries, and the CIS countries to the north. We want to have a marketing and sales campaign in thesemarkets as well to introduce the Behran Oil brand. We may also establish a joint brand for any particular market, but primarily we would like to use the existing Behran branded products in the markets.

What is your strategy for reaching out to new partners?

For potential internal partners, we focus on cooperation with technology and know-how. If any partner or investor has the ability, they are welcome to work with us, and we are ready to receive them. The mass market already belongs to Behran Oil; however, we are looking for a specialized company to help us expand into niche markets. This could be under the Behran Oil brand but also through a joint brand if any company comes and sees the opportunity. Iran enjoys great social and political stability, as well as a prime geographic position. Thus, establishing relations with a company such as Behran Oil means having sustainable business for years to come. We invite foreigners to come to Iran and start a lucrative business here.

What is your outlook for the year ahead?

For half a century, Behran Oil has worked in the lubricant business. We believe our human capital is our main capital for staying in the market. Our people and processes are important for running the business. Our main competitor has made more investments in machinery than we have, but we have made better use of our resources. Our human capital, know-how, and software form the soft part of our business. This part may be hidden, but it is our secret to success. It helps us stay in the market as a leader and further expand our position. For the lubricant business we need good relationships with additive suppliers and OEMs all over the world. With the lifting of sanctions, we were now able to strengthen our partnerships with additive producers and sign agreements with them. Also, regarding the OEMs, we renewed the approvals, which is important for the industrial sector. They wanted to know if Behran Oil had the certificate of approval or not. After the sanctions were lifted, it was much easier to renew these approvals. Also, with regard to transportation we have not faced any problems after sanctions. We do, however, still face issues with transferring money, which we hope will be solved in the near future. The trend shows that the economy is growing and that Iran will be booming over the next five years. Our business in Behran Oil is related to this growth. If the economy takes off in the near future, our business will radically change. As the rate advances are being made—with new marketing tools, agents, and networks—we will do our best to stay apace with the new intelligence of target markets.

 

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