Hydraulic Oils - Technological Advancements Determine Demand
The basic principle of economics applies to all commodities and consumables i.e. "Supply is always indexed to demand." Construction equipment and the consumables that go into the same is no exception to the rule. However, it should be surprising to know that there can be exception to the rule when it comes to demand of hydraulic oil from construction equipment. Reputed lubricant oil producers supplying hydraulic oils in India unanimously and in 'certain instances' endorse fallacies, that need of hydraulic oils is governed by demand should be discarded to a good extent.
It should be interesting to examine the basis of the argument. Rapid mechanization of construction activities in the country is making it increasingly necessary to deploy equipment at sites that are truly workhorse in their entity. In sync, there are obvious requirement of equipment that have lesser oil drain out intervals during the entire job cycle. Further basis to the argument is added by the fact mechanization is bringing in requirements of equipment that are technologically refined.
Interpreting the argument, Mr. Akhilesh Mishra, Head – Industrial & Infra Segments, Valvoline Cummins Limited says, "With India's construction and mining sector catching up fast with its global counterparts in terms of technological advancements demand of hydraulic oils is not just volume driven but more value based." He adds on explaining, "What is encouraging is that new contractors and mining operators are bringing in the best class of equipments. This is good news for high technology lubricant suppliers like Valvoline, but simultaneously it also places a demand on us to continuously innovate to continue to provide value to the consumer." Mr. Mishra informs, "Main buyers of hydraulic oils in India are users of sophisticated and expensive equipment and large fleet owners." 250 million liter is the estimated total market size of hydraulic oils in India out of which 80-100 million liters is estimated to be from the construction and mining sector alone.
Value being the major determinant, Valvoline produces hydraulic oils that have chemical composition comprising 'mineral oils+ anti rust+ antioxidant' (MO+ AR+ AO) additives. Mr. Mishra says, "We are among the few oil companies in India who supply as standard offering, hydraulic oils that have combination of MO+ AR+ AO+ Viscosity Index Improvers (VII)". The characteristic of VII additive is that with change in external and internal operating temperature of the equipment, the viscosity of the hydraulic oils does not change thus allowing the hydraulic systems of the equipment to function effectively at all working temperatures.
Base stocks used in hydraulic oils are mineral oil or synthetic oils and these are mixed with additives comprising mono ethylene glycols, esters, organophosphate ester, polyalphaolefin, and silicone or propylene glycol. Mixtures are created with chemicals and synthetic products according to what the hydraulic oils will be used for. Depending upon the application or need, additives are chosen to improvise hydraulic function, such as rust prevention, anti-wear, extreme pressure additives, VI improvers and water demulsifiability characteristics.
Valvoline hydraulic oils systems meet the latest ISO and DIN certifications. The US origin company also produces 'super clean hydraulic oils' based on NAS variants and is in the select few companies which can give NAS 6 levels super clean hydraulic oils. Valvoline claims to have a good percentage of market share in hydraulic oils among other private producers having combined market share of 55%. The public sector producers have 45% share for the specialized oil in the country.
With value playing the major role in demand, pricing is not the determining factor in hydraulic oils sales, maintain hydraulic oils producers. However, retention of market presence requires to be adequately backed by customer support for sustained equipment uptime. Customer support has to be through assistance to determine wear and tear of the fed parts consuming hydraulic oils. According to Mr. Mishra, "we have recently started offering to our customers a unique portable oil sample testing device for our customers. The item is given to customers as part of the value package. It is much helpful for equipment working at remote job sites as it can help in testing oil samples without sending it to the laboratory for preventive maintenance."
Valvoline has three laboratories across India for oils sample testing – the central lab in Mumbai while two regional labs in Asansol and Coimbatore. The company has many OEM approvals which help it in being a preferred supplier in the market.
Distribution of the hydraulic oils by Valvoline is carried by its 46 carrying and forwarding agent (CNF) across the country, with 1 CNF in each state. The CNF caters directly to the institutional sales. There are 700 distributors and 32,000 retailers. Valvoline's existing blending facility for the hydraulic oils is in Panvel, Maharashtra with capacity of 100 million liter. To have larger market presence, it is setting up a new facility at Ambernath near Kalyan also in Maharashtra with a capacity of 150 million liter per year. Stated to be one of the largest blending facilities in India by Valvoline, production is expected to start from September 2012 in the new facility.
Valued Multiple OfferingsValue proposition in hydraulic oils is provided by PSU producing major Indian Oil Corporation. IOCL makes its hydraulic oils available under "Servo" brand. Servo hydraulic oils are available under Servo System HLP Series (VG 32,46,68,100 & 150) premium AW hydraulic oils. The oil meets denison HF-0 and DIN 51524 part-2 specs. Other variants of hydraulic oils includes, 'Servo Hydrex Series' (VG 32, 46, 68 & 100) high viscosity index anti wear hydraulic oil. It meets E & F specs and DIN 51524 Part-3 Specification. As per IOCL, Hydrex series meets requirements of L&T Komatsu excavators.
According to Mr. R. Nambiar, Chief Manager, Technical Services, Indian Oil, "Servo Hydrex Plus Series formulated with group-3 base oils is ideal for long drain in high capacity excavators at 4,500 hours as compared to the conventional oils with 1500 hours drain period. Our other value added product offerings consist of Servo System HLP series (VG 22, 32, 46, 68, 100 & 150) AW hydraulic oils for sophisticated hydraulic systems. It meets denison HF-0, US Steel 127, DIN 51524 Part -2 and IS 11656 Specs. While our Servo System (Conventional AW Hydraulic oils) Series (VG 22,32, 46, 68, 100, 150, 220, 320 & 460) meets Denison HF-2, DIN 51524 Part-1, IS 10522 specs." He says, "grades used for heavy earthmoving equipment are mainly HLP type, Hydrex and Hydrex plus. HLP and Hydrex type are based on group-2 base oils. Hydrex Plus is based on group-3 base oils developed with long drain potential especially for excavators."
IOCL enjoys its heightened market position based state-of-the-art, ISO quality systems certified blending plants for hydraulic oils across the country. The major plants are located at Paharpur ,Budge- Budge, Trombay near Mumbai, Chennai, Asauti near Delhi, Silvassa and Vashi (grease plant only). IOC also has 12 small can blending plants to meet the demand. IOC's large production infrastructure backed by CFA and stockists helps to serve bulk and non bulk customers equally and adequately.
He points out, "our marketing division has a full fledged technical services department at our head office in Mumbai and field engineers are posted in 16 state offices across the country to provide required support to customers. Our four customer service laboratories (one in each region) are available for testing customer's lube oil samples for issues related to troubleshooting and condition monitoring." He says, "IOCL's state-of-the-art R&D centre at Faridabad is associated with the development of tailor made hydraulic oils for various segments. It has been instrumental in developing novel in house formulations for import substitutions in line with international specification standards."
The PSU is having more than 30,000 touch points and stockists for distributing its hydraulic oils formulations. 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 Chevron through its fully owned subsidiary Chennai Petroleum Corporation Limited. The joint venture company is Indian Additives Limited.
Additives are the essential constituent for hydraulic oils. Hydraulic oils are formulated with base oil and additives. Additives are added to base oils based on requirement for each type of hydraulic oils engine oils and gear oils.
Numerous valued hydraulic oil formulations are claimed to be offered by Total oil India Private Limited. According to Mr S. Velappan, Senior Manager-Technical, Total Oil India Private Limited, "Total's hydraulic oils span a range of products for construction, mining, irrigation, port handling equipments and dump trucks and fleets — subject to adverse atmosphere viz...high temperatures, heavy loads, and dirt. They are formulated to attain reduced operating costs. Along with their maker's Fluid control program (ANAC INDUS and ANAC) Total helps to increase equipment life. All our heavy-duty lubricant product is extensively field tested and approved by major original equipment manufacturers worldwide. In India, Total – Hydrelf TH is approved by Telcon. This has allowed Total to develop range of hydraulic oils and other associated lubricants ideal, both technically and commercially, for use in construction and off-highway equipment, such as excavators, backhoe loaders cranes and heavy trucks. All these products have been truly tested in these construction equipment to ascertain its suitability and right application. Our hydraulic oils follow ISO (32, 46 and 68), DIN 51524 Part 2 and Part 3 specification."
He informs, "Total produces HLP, HVLP, super clean, fire resistant and ash free products. These are composed of different base components. The range of Total products highlights the top selling product like Azolla ZS (HLP and Super Clean), Azolla AF (Ash free HLP), Acantis HM (HM Grade), Equivis ZS (HVLP) and Hydransafe (Fire resistance). The drain out intervals varies according to OEM's. However, in general it is expected to work beyond 2000 hours even in critical applications."
Mr. Velappan adds, "Total products are approved by many OEM's. To name a few, Sany, Liugong Liebherr, Arburg, ferromatic Milacron, Engel, Nestal, Schuler, Battenfeld, Boy, Windsor, Sachmi, Sauer Danfoss, Bihler, KHS, Eaton, Denison Hydraulics, Krones, Muller."
Total provides adequate customer support through its core research & development centre based at France (Solaize), Mr. Velappan says, "this aids to develop new and customised products based on the demand of the OEM's. While at the manufacturing base at Mahape, Mumbai key considerations are given for testing of every consignment received at the site, conforms to HSEQ norms, risk analysis and controls mechanisms are reviewed at each point in the process of handling these materials. Quality control is maintained with our state-of-the-art lab. The lab tests raw materials (base oils and additives), finished product (from the blenders), line samples (before and after filling), and used oils from the customers." He informs, "our much awaited Technology Centre Asia Pacific at Mahape destined for Asia Pacific Zone is expected to commence shortly. This would be of great advantage for Total's customers in India. The centre will aid in development of new products along with carrying out improvements in existing key lubricants in the days to come."
Total's production facility is based at Mahape, Mumbai where it has more than 100,000 MTPA with tank farm storage facilities. "The tank farm area (TFA) is provided with various levels of protection methods; against overflow, contamination, moisture ingress, fire protection and environmental pollution elimination to maintain product quality. The TFA has currently > 15 base oil/additive tanks and finished product tank. Set of blenders (agitation type) of various capacities, designed on the basis of LEM concept, a patented design from the elf stream. Blending is carried out at an elevated temperature range.tells Mr. Velappan. The company claims to have minimum lead times in making lubricants available to our customer site with the back up of > 500 depots across the country.