Shrewsbury-based Morris Lubricants sets up Indian subsidiary as exports boom
Oil blending company Morris Lubricants is seeing an export boom after a 40 per cent rise in overseas sales.
Exports to 85 countries worldwide now account for more than £15 million of the Shrewsbury-based company’s £50 million turnover and this figure is expected to rise further following the launch in April of a subsidiary in India.
The increase has been driven partly by the collapse in the value of the pound, although that has also led to tighter margins because the company imports raw materials.
The company's Indian subsidiary Paterson Lubricants India aims to establish a presence in the huge automotive and motorcycle markets in India through distribution partner George Oakes, which has 35 branch offices in the country.
Lubricants are made in India to the company’s existing formulations. Morris may establish its own manufacturing facility to further develop the Indian market, as the country’s economy is growing quickly.
Morris has also started exporting to Russia, Italy, Vietnam, Mongolia and Azerbaijan in the last year and its international business is growing across traditional territories in Europe, the Middle East, Asia, Australasia and North America.
Managing director Andrew Goddard, a fifth generation descendant of company founder James Kent Morris, said the strong overseas performance had come despite a "challenging" year.
“The new Indian business was set up to gain entry to what we hope will be a very lucrative market,” he said.
“From the outset, it was apparent that we wouldn’t be able to achieve our goal by exporting directly from our bases in the UK.
“We needed to find an alternative, which is why we established a wholly-owned business trading in India through an established distributor network. We decided to produce a dedicated automobile and motorcycle product range to meet the specific performance requirements of the Indian marketplace.
“It is an enormous growing market. To put it into perspective, there are 18 million new motorcycle registrations every year.
“The Indian Government is encouraging inward investment, they are spending a huge amount on the country’s infrastructure and are really focused on developing India as an economic powerhouse, and our involvement will soon become an integral and important part of our company’s future.”
He said Morris is facing a challenge to manage the growing demand for the company’s products, with export volume alone up 30 per cent this year.
The increased exports have brought extra demand for space to store orders before despatch, and Morris company has bought more premises next to its Shrewsbury manufacturing plant, while more warehousing may yet be added.
Further investment will see £250,000 spent on a new small pack filling line at the Shrewsbury plant.
Mr Goddard added: “Undoubtedly some of the benefits we are seeing in volume growth are down to the impact of Brexit and the weakening of the sterling pound.
"Who knows how long that is likely to continue, but we have laid solid foundations and are confident of being able to retain the current level of business going forward, even if exchange rates become less favourable.”
He is hoping that the UK leaving the European Union does not result in a change to export tariffs, which could make the company’s products uncompetitive in Europe.
But he also sees opportunities to develop new trade deals with other countries outside of Europe.
“The worst case scenario would be to be cut-adrift on our own and subsequently see exchange rates plummet further,” Mr Goddard added.
“Most of the products that we manufacture in Shrewsbury use materials imported from the EU and our costs have risen significantly in the last 12 months because of Brexit, which has obviously had a detrimental effect on profits and margins.
“The uncertainty is not good for business but all we can do is manage the situation as its exists. Every UK blender is in the same position, but most of our major competitors no longer manufacture in the UK, so they have an advantage.
“It has probably been one of the most difficult years I can remember in managing our business, because there were so many variables with which to contend and most of them are far outside our control."
Morris, which employs 210 people, sells more than 800 product lines.