Minor Slip

August 30, 2006 (LBO) – Dominant lubricant supplier Caltex Lanka Ltd is expecting a marginal drop in volumes this year as intensified fighting in the northeast dries up sales. Caltex says sales to the conflict zones accounts for around 10-12 percent of total volumes, and was growing steadily until hostilities erupted in July.

Prior to July’s intensified battle between the military and the Tamil Tigers, Caltex noted a spike in sales of about 15-20 percent from the northeast dealers.

“We are expecting total volumes to drop just under 3-percent this year because fighting has erupted in the north and east, which were earlier doing well,” the firm’s Finance Director Anura Perera said.

Equity research firm Lanka Orix Securities says Caltex sales will also come under pressure from new entrants coming into the lubricant market.

Sri Lanka threw open its lubricant market in July, calling for bids from interested investors to blend lubricants locally or import and sell packed products.

So far around 10 firms have sent in applications when bids closed on August 28.

During the first six months of 2006, Caltex achieved a satisfactory 43 percent sales growth,