Smooth operations


The growth in automobiles and aviation industry will help the lubricants industry.



While major sectors are getting their act together, it’s the allied industries which can get the biggest bang for their buck. With the structural shift of volume growth to value growth, this industry is riding high on the growth bandwagon.
India’s lubricants demand, which is expected to grow at 2.5% CAGR over the next five years, is set to be propelled by the growth in the domestic auto sector, which caters to 47% of lubricants demand. With annual consumption of less than 2.3 million tonnes (mt), India is the third largest lubricants market contributing over 5.5% of global automotive demand, and over 4% of industrial demand. However, a comparison with other developing countries like China and Indonesia reveals significant potential for India for growth in lubricants consumption. In the domestic lubes market, around 80% market share is held by oil marketing companies and Castrol.
As per reports, industrial lubricants emerged as the leading segment in the global market and accounted for 39% of total market volume in 2013. Within industrial lubricants, general industrial oils were the most consumed lubricants. General industrial oils were followed by process oils. However, industrial engine oils are expected to be the fastest growing at an estimated CAGR of 2.81% from 2014 to 2020. Industrial lubricants were followed by commercial automotive lubricants and consumer automotive lubricants which together accounted for over 60% of total market volume in 2013. Consumer automotive lubricants are expected to be the fastest growing product segment at CAGR of 2.61% from 2014 to 2020.
Yatendra Kumar, business head, Motultech India, opines, “While the global automotive market continues to expand, it results in the growth of auto components. These sectors are major consumers of metal working fluids. Though automotive components’ exports is back on track, it’s not all smooth sailing. This is giving us the opportunity to work for high performance metal working products and other industrial lubricants, which not only improve the machine up time but also improve overall equipment efficiency.”
Munish Garg, MD, See Lube Technologies, seconds this thought, saying, “Major consumption comes from the automotive segment, that too through commercial vehicles and agriculture. The demand for lubricants is directly proportional to the growth of the economy. With the number of vehicular sales increasing year-on-year, there is a positive impact on the sales of lubricants.”
While the time is right for the industry to break the shackles of slow growth, there are certain impediments hampering growth. A big challenge is the awareness about available lubricants and using the right lubricants for the right application.
According to Kumar, “The most challenging is to make people understand that ‘it’s not per litre cost of oil’ which is important, when you are looking to increase the life and efficiency of costly equipment. The cost of oil may be less than 1% of the manufacturing cost but the cost of equipment is much higher. Hence customers can save a lot if they make use of the right quality product at their shop floor. We have many examples where we have shown heavy reduction in manufacturing cost of a component by increasing the machine uptime, decreasing cycle time, increasing tool life and decreasing the frequency of lubrication.”
He adds, “We found that people misuse energy in metalworking operations. Lubricants not only help in the improvement of machinery by way of reduction in downtime, through less stoppage and reduction in frequency of lubrication, but can also offer great savings in energy consumption by selection of the right product. For example, if we use the hydraulic oil of viscosity index (VI) 96 and 150, the viscosity of both the oils is 68cst at 400 Centigrade. It will increase to 1,060cst for an oil with VI of 96 and 648cst for an oil with 150 at zero degree centigrade. Now you can understand how much of extra energy you need to pump the oil with such a huge viscosity.”
Garg is of the view that although India is one of the largest lubricants consumers, base oil and lubricants additives are still imported. Most of the R&D happens abroad and it takes time to get implemented in India.
According to Grand View Research, volatility in mineral oil prices owing to frequent fluctuations in crude oil prices is expected to remain a key restraining factor for the market. In order to minimise such effects, the industry has shifted its focus towards developing bio-based lubricants and synthetic lubricants. Bio-based motor oils have the potential to reduce the amount of toxic metals found in engine sludge and can increase fuel economy by 3-5% over conventional oils. These oils also break down at a much higher temperature as compared to oils, which makes them ideal for high temperature use.
Talking about the innovative best practices implemented, Garg informs, “We have been successful in converting a number of applications from neat oil to water soluble fluids with promising technology. Operations like threading and tapping have always been through the application of neat cutting oil, but with our highly innovative product, we are able to convert quite a good number of customers to our oil. We believe in perfection with continual improvement.”
Looking at a promising growth haven, Motultech India wants to serve other industries like steel, food and beverages to expand its horizon. On the other hand, See Lube is prepping up to serve industries like process machinery manufacturing and precision measuring instrument manufacturers.

As the global lubricants market volume is expected to grow from an estimated 38,635KT in 2014 to 42,780KT by 2019, with a CAGR of 2.4% between 2014 and 2019, India is set to set foot into the path of economic growth as well. Eying to capture a major market share in the lubricants market, many big corporates are preparing for big bang expansion plans. Gulf Oil Lubricants, a Hinduja Group company, aims to be a rising player in the lubricants business. The company has undertaken capacity expansion, that includes capex in a new plant and the expansion of current allocation. Balmer Lawrie, a mini-ratna PSU under the ministry of oil and natural gas, is betting big on its lubricants business that brings in a fifth of its revenues.
GP Petroleums has announced its strategic partnership with Repsol of Spain. The tie-up will enable it to exclusively manufacture and market Repsol’s superior and comprehensive line of premium quality lubricants, including premium motor oils such as MOTO 4, Repsol Elite and Repsol Diesel in India. The product launch is planned for September this year.
Kumar feels that, “We look to offer innovative solutions to customers, which will help them eliminate the challenges they face in day to day life in the shortest possible time. Placing emphasis on ‘customer first strategy’, See Lube believes in developing new products as per customers’ needs as well as deliver the right product to the right customer at the right price.”
There has been a marked shift on the product definition of lubricants from being a commodity to an FMCG product. In lieu of that, what would set the lubricants companies apart from others is how well they market their products and how strong their distribution network is.
For smaller players, the key would be to tie up with leading players to gain a major market share and in turn become a crucial enabler of this growth extravaganza. Going forward, moving away from automotive and focussing on newer avenues of growth, adopting sustainable practices, and exploring newer markets will be the keys to garner growth.



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july 2020
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