§1What this business is
Used oil arrives in 200-litre drums. It is heated to drive off water, acid-treated so dirt settles as sludge, mixed with fuller's earth and heated under vacuum, filtered in a filter press and blended with antioxidant. The sludge is mixed with lime and moulded into fuel bricks for the unit's own furnace. Lube oil makers, grease makers and the transformer industry buy re-refined oil. BIS has IS 9048 for re-refined engine oil.
Capacity: 1,50,000 litres of used oil a year (500 litres a day); at 60% yield that gives 90,000 litres of refined oil at full capacity.
§2Is it right for you?
Who it is for
Someone with chemistry or oil-trade experience who can get hazardous-waste authorisation and used-oil supply contracts.
Who it is not for
Someone without technical staff or the patience for environmental approvals.
Advantages
- Turns a hazardous waste into a saleable product
- Re-refined base oil sells to blenders and grease makers
- Raw material is cheap (₹10 a litre in the report)
- Sludge is reused as fuel
Drawbacks
- Hazardous-waste rules and pollution consents are strict
- Acid and sludge handling is risky
- Steady used-oil supply depends on tenders and workshops
- The sample report's profit sheet is wrong, so the numbers need redoing
Skills you need
- Oil testing and quality control
- Safe acid and sludge handling
- Environmental compliance
- Buying used oil through tenders and workshops
Why difficulty 5/5: Hazardous-waste licensing, chemical safety and a sample report whose profit sheet does not add up.
§3Market
Who buys
- Lubricating oil companies (for blending)
- Grease manufacturers
- Transformer industry
- Users of axle, spindle and hydraulic oils
How it sells
- Direct sale to blending plants
- Supply to grease makers
- Industrial oil traders
Good to know
- The report calls sale to lube-oil blenders the best outlet for refined oil.
- Re-refined oil is cheaper than fresh lubricant because it is made from used oil.
§4Raw material & machinery
| Item | Qty | Cost |
|---|---|---|
| Decantation tank, 200 litres | 1 | ₹60,000 |
| Dehydration vessel, 800 litres | 1 | ₹30,000 |
| Lead-lined acid treatment plant, 800 litres | 1 | ₹2,70,000 |
| Vacuum heating plant, 500 litres | 1 | ₹3,00,000 |
| 24-plate oil filter press | 1 | ₹90,000 |
| Blending plant, 500 litres | 1 | ₹60,000 |
| Testing equipment | 1 lot | ₹90,000 |
| Coal / sludge-fired furnace | 1 | ₹60,000 |
| Electrical and water installation | 1 lot | ₹2,00,000 |
From: PMEGP sample project report — Re-Refining of Used Lubricant (prepared by Udyami/Samadhan)
- Used and contaminated lubricating oil1,50,000 litres a year at ₹10 a litre; sold by ONGC and IOC through tenders and by vehicle workshops
- 98% oleum (sulphuric acid)14,000 litres a year at ₹30 a litre
- Fuller's earth9,000 kg a year at ₹50 a kg
- Lime900 kg a year at ₹15 a kg
- Antioxidants900 litres a year at ₹200 a litre
- Drum seals460 a year at ₹20 each
- Coal30,000 kg a year mixed with sludge bricks as fuel
From: PMEGP sample project report — Re-Refining of Used Lubricant (prepared by Udyami/Samadhan)
Suppliers in Building Business Bazaar
Sri Balaaji Industries, Unit-II · Coimbatore →Steve Industries · Coimbatore →Nagalakshmi Agencies · Coimbatore →ARPE Lubricants · Coimbatore →Sathya Sai Lubricants · Coimbatore →Sasi Industries · Dindigul →Saizrol Industries · Erode →Jayam Refineries · Erode →Sai Ram Industries · Erode →Aruchem · Kancheepuram →Vinayaga Lubricants · Karur →Thirumala Industries · Karur →
In our raw material database
§5Licences & registration
- Udyam
- GST
- Authorisation from the State Pollution Control Board under the Hazardous and Other Wastes Rules (registered re-refiner)
- Consent to establish and operate (red category type activity)
- Fire NOC
- IS 9048 conformity for re-refined engine oil where buyers ask for it
§6Schemes & subsidies
The report was written for PMEGP; CGTMSE covers collateral-free loans.
§7Money
How the investment is worked out: Samadhan report: building & civil work (3,000 sq ft) ₹4.00 L + plant & machinery ₹11.60 L + furniture ₹0.83 L + pre-operative ₹0.50 L + working capital ₹8.07 L = ₹25.00 L.
Working capital: Working capital ₹8.07 L (bank finance ₹7.27 L) — 60 days of used oil and 30 days of finished oil in stock.
Year not printed on the sample report — check current machinery prices.
§8Export potential
Confirm the HS code in the DGFT ITC(HS) lookup before you export
- Used-oil and re-refined-oil trade is controlled under the Hazardous and Other Wastes Rules; check import-export rules before any cross-border trade.
- Confirm the 8-digit ITC(HS) line with DGFT or your customs broker before shipping.
§9Risks — where people fail
- Pollution and hazardous-waste violations
- Fire and chemical accidents
- Used-oil supply gaps
- Buyer rejection for poor quality
§1030 / 60 / 90-day plan
A general plan that applies to any business. A plan for this business will be added after research.
- Days 1–30: Visit a working re-refining of used lubricant oil unit, ask 10 buyers about price and quantity, and get quotations from 3 suppliers.
- Days 31–60: Udyam and the licences you need (Udyam, GST), a project report (DPR), and the scheme or loan file.
- Days 61–90: Space and machines, trial production, and first deliveries to 10 customers.
§11Who to connect with
Associations, clusters and training institutes — the directory is being built. Connect
§12Watch
There is no episode on this business yet. Shows are coming soon on the Podcast page.
Want to start Re-Refining of Used Lubricant Oil?
DPR, loan file or registration — ask us on WhatsApp.
¶Sources
Data review: 6 October 2026. Spotted a mistake? Report it. For information only — not legal or financial advice.