LPC SA operates simultaneously at industrialproduction of basic lubricants, at production and selling of prepackagedlubricant products as well as at selling paraffin and other products of oil.LPC’s major aim is to give her clients high quality products in order tosatisfy their needs and at the same time show respect to community andenvironment.HistoricalbackgroundThe company was founded in 1981. In 1982, the refinery production plant forbasic lubricants was launched.
It was created using the most modern standardsof construction and the technical know-how of the top experts under theguidance of the Italian company TECHNIPETROL.IN 1986, LPC launched its blending plant. This gavethe opportunity to the company to produce final lubricants. Moreover, in thesame year the company expanded its operations of selling paraffin.In 1988, the company, for the first time inGreek market, developed and started selling self-made lubricants under thebrand name “CYCLON”. LPC organized a pan-Hellenic sales network.Three years later, in 1991, the company startedto export its products.In 1993, a new production plant was launchedthat gave the capability to produce a different type of lubricants (BrightStock).
LPC S.A. became the only company in Greece that could produce thisspecific fraction of basic mineral oil.
In 1994, the company reconstructed itsproduction lines something that helped to grow its capacity of production from25,000 to 40,000 tons per year.Five years later, in 1999, LPC started tooperate in the fuel market and created a network of service stations named”CYCLON”.In 2001, the company changed its brand name in”CYCLON Hellas S.A.” and started to trade its shares in the Athens StockExchange.From 2002 until 2013, the company proceeded tovarious buyouts and establishments of companies in Bulgaria, Romania, Libya andSerbia.
Finally, in 2015 “CYCLON Hellas S.A.” was splitin two separate fields (fuels and lubricants).
Fuels field was absorbed by”AVINOIL S.A.” whilst lubricants contributed to the newly established LPC S.A.LPC S.A.
in 2016In the last three years the exports of thecompany as far as the field of lubricants is concerned face an upward trend.This is something that is expected to continue in the upcoming years certifyingcompany’s exporting orientation. Furthermore, fiscal year 2016 is characterizedby a consecutive reduction of the company’s expenses (approximately 0.1%)compared to the year before which was also decreased by 5% compared to 2014.
The annual turnover amounted to €66,728 and EBITDA equaled €4,922.The company during 2016 increased its sales in lubricants by 19.5%.· Salesin lubricants total 65,582 MT· Salesin natural gas total 297MWThe gross profit ratio reached 16%.
However, due to the economic recession anextremely unstable setting exists and make the company believe that sales willbe affected unfavorably in the forthcoming period and until the country springback to a more stable economy. Considering those facts, the company preservesits main strategy to rise and expand sales network paying mostly attention tosales abroad. In addition, they implement techniques in order to secure sales,credits and liquidity and endorse its clientele and minimize as much aspossible credit risk. Organization · Growthe exports operations in lubricants field.· Intensifycollecting waste oils in internal market.· Developnew collaborations based on new sources of raw materials (waste oils) andexpansion in Mediterranean and Balkan states.· Reducethe days of credit to clients in order to reduce the credit risk.
· Elaborateactivities for “AVIN” lubricants which are managed by LPC.· Discovernew synergies with the Group’s companies aiming at a further reduction ofcosts.· Upgraderendering of services for lubricant customers.· Upgrowtha new delegation of “Valvoline”.Business activitiesLPC owns a contemporary refinery for theproduction of mineral oil products in Aspropyrgos, Attica where theymanufacture a wide range of lubricants which can cover the market’s needs.Meantime, those facilities are the only that produce the heavy mineral oilcalled “Bright stock” in Greece.
The refinery’s facilities can be divided intothe following segments:· Productionof basic lubricantsThe technologically advanced production processof the refinery has as a result the production of base mineral oils with a veryhigh quality that can cover the modern and the most challenging standards intheir class. (???????? ???? ??? ??? ??????? ??? ?????????? ??? ?????????? ?????????? ??????????????????) · Finishingof lubricant products- Storage/LogisticsThe company produces and packages almost 50,000metric tons ready to use lubricants. In its production facilities about 200different types of lubricants are being produced so as to cover the needs ofevery type of machinery and vehicle for lubrication. This segment manages blendingand packaging.After packaging final products are beingtransported and remain at warehouses until being placed in the market.· Biologicalcleaning and treatment unitCompany’s ultimate goal is to minimize the useof natural resources and to recycle as much as possible processed liquidwastes.
LPC invests to the implementation of new technologies for the processof liquid wastes and in this context and philosophy the biological cleaningunit operates very successful at their premises, at Aspropygos’ refinery. · Productdevelopment and quality assurance unitIn alliance with the proficient departments ofthe company, new products are being developed which cover the highest standardsin a continuously evolved lubricant market whilst during the phases ofproduction, packaging and storing are being under review in order to secure thequality of products. The Safety, Health and Quality department in conjunctionwith the Chemical unit which is highly apparatus and certified are responsiblefor the quality maintenance of all the produced and traded products of thecompany. Products andCustomersPLC offers to its clientele both final productsand services.Considering as main goal the quality excellence,the company provides lubricant products to commercial customers, industries,shipping and for special uses. Studying carefully the requirements from theapplication of lubricants and also the peculiar needs of final users of thoseproducts they put emphasis on the advocacy of solutions based on technologicalnovelty, maintain stable caliber, cost less for the end-consumer while do notburden the environment.
LPC supplies the market with the followingtypes of commodities:· Basiclubricants, vehicle lubricants, industrial lubricants, marine lubricants,grease· Specialproducts· ParaffinObserving customers’ necessities but also andthe international trends and developments LPC tries to find alternatives so asto provide them with better services as a return for their affinity tocompany’s products. In that way, the company has developed a set of services throughweb services that give customer the opportunity to handle and monitor thecondition of the lubricant in use and the lubricated machinery/engine. CompetitionGreek lubricant marketThe demand on automotive lubricants is affectedboth by the evolution and compound of the fleet of in-service vehicles as wellas by technological advances in both engine and lubrication.The market of vehicle and industrial lubricantsfollows a downward trend during the last 8 years. The same applies for themarket of marine lubricants. The total domestic automotive lubricants’market has a downward trend in recent years while the consumption was estimatedabout 34 million litres in 2014 and for 2015 it was observed a further declineof about 4%. Based on sectorial studies this trend in consumption is expectedto be followed until 2018 but at a lower rate of decline.
Timelessshrinkage of domestic lubricant consumption is due to a number of factors. Newtechnology engines do not require frequent changes in lubricants compared toolder ones. Theadvancement of lubricants’ synthesis also contribute to the reduction oflubricants’ consumption. Moreover, due to the economic recession the use ofvehicles has been decreased whilst the intervals of the lubricant change hasbeen extended.The domestic consumption in industriallubricants in 2014 was about 15.
5 million litres with a further reduction ofabout 10% in 2015 while for 2016 it was projected that this percentage wouldremain stable. The main reason for this dent was the cut down of the industrialproduction due to the recession.The total market for marine lubricants has beenlessened by 6.3% in 2014 compared to 2013 reaching 27,000 tons where it wasstabilized for the years 2015 and 2016. Transfer pricinganalysisOverview On 1st of January 2014 a new taxbill was approved by the Greek Parliament for the Code of Income Taxation (l.4172/2013) which brought numerous changes to the tax rules affectingindividuals and companies.
Furthermore, the Greek Ministry of Finance hasissued a ministerial decision that provides guidance on the contents of thetransfer pricing documentation file, the parties subject to the transfer pricingrules and exemptions thereby, language requirements, transfer pricingdocumentation methods and the content of the summary information table(SIT).the ministerial decision POL 1097 provides guidance and clarifications onGreek transfer pricing rules and documentation requirements under the new taxregime.Deadline for the submission of the SummaryInformation Table (SIT)According to the ministerial decision until2016 the deadline for the submission of the SIT was the end of the fourth monthfollowing the taxpayer’s fiscal year end. After the amendment to the Code of Tax Procedures (l. 4174/2013) by law 4410/2016the deadline for the submission of the SIT and the Greek transfer pricing filedeferred to the deadline for submission of the annual income tax return. The summary of the information has to be filledand submitted electronically on the web page of the General Secretariat ofInformation Systems (GSIS) – www.
gsis.gr – of the Greek Ministry of Financewhilst it should not be considered in any way complete and sufficient transferpricing documentation that gives evidence for the compliance of the taxpayer’sintragroup transactions with the arm’s length principle. Companies and transactions subject todocumentation requirementsWhen determining the companies which are liablefor the documentation of the transfer pricing file and the submission of thesummary information table the scope of article 2 of the Income Tax Code