The firm existing demand for new equipment from all segments of infrastructure and construction, would put the market of engine lubricants in top gear. As per Mr. Sanjay Jain, State Institutional Sales Manager, Indian Oil Corporation Limited (IOCL), "The demand of engine lubricants in India is essentially led by two demand areas from the construction equipment sector. The first one is from new equipment that are being brought by contractors whereas the second one is a major existing market for engine oils in the country. The market constitutes big fleet owners as well as single equipment owners especially from the rental fraternity." The aftermarket has attained critical importance led by its sustained demand, ensuring high equipment uptime by the contractors and equipment providers." IOCL is the market leader for engine lubricants and other formulations in construction equipment sector. Engine lubricants essentially help in reducing friction in engine parts, keep the machinery protected from wear and tear, thus cutting failure and downtime of machinery at job sites.
High Demand Base
Demand in large volumes, for high quality lubricants, both from the new and existing equipment fleet at job sites has brought in newer players in the market. As per lubricants producer's data, equipment demand market is mainly served by public sector undertakings (PSU) and a few leading private players. The present size of lubricant market in India is around 1.8 million tons and is 6th largest in the world. Future demand is projected over 2.2 million tons by 2014-15 as per industry estimates. The four PSUs in totality command a large market with a combined market share of close to 46%. Besides this, there are about fifteen major lubricant producing entities in the private sector. In addition, there are local producers as well. The private players amongst them have close to 54% market share. In the overall lubricant industry, 55-60 percent constitutes the retail market, which also covers the aftermarket, while 40 -45 percent constitutes institutional market segment. One of the primary reasons for PSU's having a large market share is because only about 1million tones of the market is open to international suppliers as some segments like defence, railways etc are completely serviced by the state owned PSUs.
Being large in volume and profitability, the aftermarket naturally holds importance for lubricants producers. As per Mr. Suresh Kalra, AVP & Head, C&I, Valvoline Cummins Limited, "the retail lubricant market essentially works on brand recall in India. However, the industrial segment, essentially consisting of construction equipment sector, mining equipments, power generation equipments, etc, places their requirement of lubricants as per the recommendations of the OEMs, API & SAE norms, engine norms, logistical support from lubricant supplier, overall value deliverables, relationship building and importantly on pricing."
Lubricant producers serving the equipment market are buoyant on the existing and expanding market. The ongoing growth in the infrastructure market, estimated at 12 percent is behind the positive demand sentiment. Positive sentiment is also driven by consistent growth from mining sector at 7-8 percent, one of the highest in the world, led by firm domestic consumption. As per industry estimates, demand for lubricants from construction sector is growing at 4-5 percent annually.
Mr. Kalra informs, "the market being wide is quite competitive as well. Positive business relationship with OEMs and appropriate customers training can make a positive impact on the sale of lubricants."He adds, "there is also a wide requirement of value selling to construction and mining equipment customers through the products for ensuring brand recall."
Mr. Akhilesh Mishra, Segment Manager- Construction, Mining and Cement, Valvoline Cummins Limited explains, "value selling to customers in addition to the products assumes wide significance in India. This is because, India as compared to other global markets has varied geographical conditions. The machinery has to provide extended uptime while continuously running in different environments. This can mean humid, hot, dry as well as severe cold conditions. There have to be valued, specialized engine oils and other lubricants for allowing the machines to work in all such conditions. Being a sensitive market, value propositions like used oil testing is thus offered by VCL, which acts not only as a preventive maintenance tool but is also used for drain period extension and thus enhancing overall cost efficiency. Valvoline's POST facility is one of the most acclaimed used oil testing facility in the country."
For performance of the engine in varied service conditions, Valvoline offers its most premium product Premium Blue 15W-40 engine oil. As per the company, the oil can provide advanced lubricant performance in modern low emission diesel engines. The engine oil endorsed by Cummins and other OEMs such as Volvo etc, is recommended for use in medium and heavy duty diesel engines for off highway, construction, mining, marine and loco applications amongst others. The oil have optimum engine oil drain intervals.
The properties of the oil includes, unique dispersive polymer technology with premium group 2 and group 3 base oil for advanced soot control. It also have advanced cold flow and pumpability properties. The CI-4 range of Premium Blue oils are especially recommended in EGR engines which are now increasingly used in all modern equipments as mandated requirement to reduce environmental emissions. EGR engines recirculate the exhaust gases back into the engine to reduce emissions into the environment. However, the effect of this is that great stress is then placed on the engine to cope up with increased formation of acid and sludge - it is thus vital that the engine oil for EGR engines be of completely new technology and Premium Blue CI4 oils are formulated to meet these requirements.
Valued products are also offered by market leader Indian Oil Corporation Limited (IOCL). Mr. R. Nambiar, Senior Manager Technical Services, IOCL mentiones, "IOCL is supplying high performance engine lubricants based on group 1&2 based oils produced from its Haldia refinery in West Bengal. The lubricants are produced through quality additives procured from Lubrizol, Indian Additives Limited and Afton." He adds, "IOCL lubricants are able to provide high uptime to construction and mining equipment by ensuring performance in very dusty atmosphere prevailing in the construction sites along with high operating temperatures in most parts of the country especially in summer. The lubricants address issues of high oxidation, stability and lower volatility."
IOCL engine lubricants comprises 'Servo Pride TC 15W-40', 'Servo Pride XL 15W-40', 'Servo Pride Supreme Plus 15W-40', 'Servo pride Max 15W-40'. Mr. Nambiar informs, "The engine oils meets the international classification of API CF-4,CH-3,C-14,C14 Plus and API CJ4 (American Petroleum Diesel Engine Oils)". He tells, "engine oils made available to in construction and mining sector in near future would have to further address the issue of value and application as equipment are shifting to higher class and size."
Mr. Kalra says, "Valued products can ideally be created through extensive focus on research and development jointly with OEMs. Our Premium Blue 15W-40 CI4 Engine oil is one such effort of joint development, being tested right from the prototype stage of EGR engines to final product out in the market. Only after extensive trials has this engine oil been launched in the market to meet stringent working conditions as also to meet environmental emission norms of Euro IV."
Informs Mr. Akhilesh Mishra "Valvoline's commitment to offer the very advanced lubricants is now strengthened further by the launch of fully synthetic engine oil Pro Fleet 10W40. It is recommended by OEM's like Mercedes and Scania and offers advanced engine protection and drain intervals upto 3 times more than normal mineral based engine oils."
For India operations, Valvoline has a JV with Cummins India Ltd. The latter recommends only Valvoline's oils for its engines. Entering into collaboration with OEMs through recommendations and branding tie ups is increasingly becoming the norm with lubricant producers for product approval and promotion. Mr. Mishra mentions, "an advanced product has to be backed up through adequate customer support. We emphasize in reaching the end users of our oils at job sites by testing the samples of the oils for ensuring extended equipment performance. In accordance with this, wear metal analysis is undertaken on the oil though carrying out samples under our preventive oil testing programme. Besides this, end customers are extensively trained on the usage of the product."
Being market leader, adequate services back up is maintained by IOCL. As per Mr. Nambiar, "our marketing division has a full fledged technical services department at our head office in Mumbai and field engineers are posted under 16 state offices across the country to provide required customer support. Our four customer service laboratories (one in each region) are available for testing customer's lube oil samples for issues related to trouble shooting and condition monitoring." He says, "IOCL's state of the art R&D centre at Faridabad is associated with the development of tailor made lubricants for various segments and has been instrumental in developing novel in house formulations for import substitutions in line with International Specification Standards."
The PSU is having 40,000 touch points and stockists for distributing its engine lubricants and other lubricants formulations. Besides this, it has the largest number of lube blending plants and CFA's.
Indian Oil Corporation also has its presence in additives through its 50:50 joint venture equity with Lubrizol US. IOCL also has a separate joint venture with Caltex through its fully owned subsidiary Chennai Petroleum Corporation Limited. The joint venture company is Indian Additives Limited. Additives are the essential constituent of lubricants. Lubricants are formulated with base oil and additives. Additives are added to base oils based on requirement for each type of engine oils, gear oils, hydraulic oils etc.
Buoyant Market & Advanced Product Placement
According to Mr. Kalra, "It is significant that value selling have to be combined with adequate product availability to customers, working at remote job sites in desired quantities as well. Product availability have to be ensured through proper logistical support." Valvoline has 46 distribution points across various geographical locations. This is further augmented by the equally strong distribution network of Cummins which is the JV partner of Valvoline in India. Says Mr. Kalra "the distribution network of Valvoline with close to a 100 distribution points is unmatched by any other company in the country and this is our greatest strength, especially in the infrastructure segments of Construction and Mining."
Mr. Akhilesh Mishra adds, "the growth that Valvoline has experienced in the infrastructure segment in the last two years has been phenomenal and Valvoline is now clearly an acknowledged private company in the infrastructure segment. Infact all leading end customers are working with Valvoline in some way or the other – be they in mining or construction. A complete portfolio of top of the line engine oils and industrial lubricants, an unmatched distri- bution network, value propositions like training and used oil testing and an overall commitment to customer profitability has helped Valvoline achieve this growth."
As Mr. Suresh Kalra notes, "It is a testimony to our end to end complete offerings that many top customers have agreed to be part of Valvoline's CABA (Customer as Brand Advocates) initiative. In recent months, such top names as Simplex Infrastructures Ltd, Ashoka Buildcon, DSC Limited, Sainik Mining, EMTA etc have appeared in Valvoline ads endorsing our products and services. It is a unique, unmatched validation for any lubricant supplier and places on us greater responsibilities to continue meet and exceed customer expectations."
Timely and desired product availability is an area of focus for newer entrants in the market. As per Mr. K. Ganeshan, Territory Accounts Manager, GS Caltex India Private Limited, "our foremost marketing strategy is to ensure product availability, so as to maintain brand loyalty with the customers. To ensure product availability, we are availing services of carrying and forwarding agents and currently, we have seven carrying and forwarding agents in various parts of the country. We are planning to add few more in near future." GS Caltex made its recent entry in engine lubricants market in India during last one and half year. Mr. Ganeshan says, "GS CALTEX is the third largest producer of "Group 2 plus base oils" and is a major exporter to India." The company is positive on demand of its engine lubricants both from construction and mining sectors in India.
Mr. Ganeshan tells," we have two variants of engine oils for the construction equipments in India for short and long drain. The short drain is Kixx Dynamic Gold for 300-350 hours and long drain is Kixx D1 Platinum for 500 hours for high equipment uptime. The engine oils are approved by global engine manufacturers and can perform in varied climatic conditions. Our engine lubricants are free from all impurities being group two base oils."
As a part of R&D and customer support, GS Caltex upgrades the properties of its engine lubricants, based on the recommendations provided by OEM. It also undertakes oil service monitoring in its laboratories. It carries onsite training programmed for its customers imparting information on the properties of its lubricants and on handling of the lubricants. GS Caltex has its global tie ups with Major OEM's.
The company will start its lubricants blending at Mumbai very shortly. As per Mr. Ganeshan, "our future business plan would be to expand and retain our position in India by tapping new and existing construction equipment manufacturers." GS Caltex is a 50:50: joint venture entity between GS Holdings of South Korea and Chevron Global.
High on Services & Support
Providing engine oils for extended equipment uptime in differential weather conditions is also key for Shell. "Protecting and maximizing the availability of construction equipment to ensure timely project completion while minimizing costs and complying with legislative standards are the key to running a successful construction business. Shell Lubricants works with OEMs to draw on the technical knowledge and expertise to deliver a range of heavy duty lubricant products, business services and maintenance solutions that can help to add real value to the operations. Shell's range of lubricants includes hydraulic oils, industrial gear oils, greases, air compressor oil, heavy duty diesel engine and gear oils, passenger car motor oils, motorcycle oils and others," said Mr. Donald Anderson, Country Head, Shell India Markets.
He reveals, "Shell Rimula, Heavy Duty Diesel Engine Oils from the Shell Lubricants portfolio, is designed to protect the equipment even in extreme conditions. Through the use of adaptive technology, Shell Rimula reacts to the operational conditions of the equipment to help provide optimal equipment protection. Rimula portfolio is designed to allow customers to select the lubricant that provides the right level of protection to meet their needs."
Mr. Anderson adds, "Shell Lubricants invests heavily in lubricant R&D which has allowed us to be 'first to market' with a number of lubricants innovations and value-added services. We work closely with the customers to provide solutions in long-term partnerships and pride ourselves on finding practical solutions to the challenges they face. We are in partnership with Komatsu, Schwing Stetter, and Eicher."
On customer support he mentions, "Shell focuses on building deep relationships with its partners, customers and OEMs and focuses on becoming their technical partner of choice. Shell delivers customer benefits through better technology which results from our 4D process: Define, Design, Develop, and Demonstrate. This systematic approach to product development combines a deep understanding of the customer challenge with applied fundamental science and an innovative approach to component selection. Shell invests heavily in the development of the next generation of lubricants that will deliver improved energy efficiency for our customers without compromising protection.
To meet the needs of B2C and B2B customers in India, Shell has launched the Product PLUS portfolio that offers a wide range of services. Some of the services included in the portfolio are Shell Lube Match, Lube Analyst, and Lube Clinic.
Lube Match is a web based tool which is designed to help customers match their vehicles and engines to the correct lubricants whether in the commercial vehicle, industrial or off-road sectors. Shell Lube Clinic and Lube Analyst facilitate low turnaround time and offers reduced direct cost of testing as compared to comprehensive oil condition monitoring programme. Additionally, they reduce the tendency to rely on human senses to take decisions and helps avoid wrong top ups."
Well backed distribution is also claimed to be offered by Exxon Mobil. Exxon Mobil distributes its engine lubricants in India through its pan India distribution network. As per the company, the distributors are able to ensure timely delivery of lubricants to the OEMs and to contractors having their equipment at remote job sites. R&D is taken by the company jointly with OEMs. Necessary improvements in the characteristic of the engine oils are carried as per the recommendations of the OEMs as per the Exxon Mobil sources. Exxon imports couple of its engine oil products while some are blended locally for distribution.
Most of the lubricants producers produce high performance oils that can help in providing optimum equipment uptime, through continuous running in different environmental conditions. However, to derive optimum benefits from the engine oils it would be essential to appropriately maintain the engines. This will in turn ensure extended equipment uptime through its entire lifecycle.