GS Caltex: Overcoming All Odds

Jayanta Ray, General Manager – Industrial and OEM
After a decade of success and growth in the Indian market, GS Caltex is entering a phase of consolidation. According to Jayanta Ray, General Manager – Industrial and OEM, GS Caltex India, the company is strategically balanced to take on upcoming megatrends in the lubricants industry, having effectively managed several unprecedented, difficult situations caused by the pandemic lockdown that saw reduced usage and demand for lubricants.

What are the factors affecting the global oil and lubricant industry and what will be the solutions and products, going forward?
The worldwide lubricants market size is anticipated to reach USD 182.6 billion by 2025 from USD 157.6 billion in 2020, at a CAGR of 3.0% according to a report. Rapid industrialization and the growth of the automotive market are key factors influencing demand of lubricants, which have showed a positive trend till Covid hit us last year. Variables such as emission regulations, higher quality, and OEM requirements are anticipated to have a major impact on demand.

As the Industry shifts to a more sustainable way of operating, we can anticipate massive and rapid changes ahead. New energy systems, modern powertrains, alternative fuels, and new materials will demand new solutions from the Lubricant players. This indicates the emergence of High-Performance Lubricants and the synthetic category gaining a stronger foothold.

Also, with the rise in EVs, the lubricant market growth is expected to slow down in the (more) developed countries, where adoption rates are faster and higher. A market research predicts a CAGR growth of -0.5% to 1.5% depending on US, Europe, and Asia for Lubricants Industry in next 10 years.

GS Caltex
Given the price volatility observed in crude oil prices, how effectively have you been able to support your customers and partners?
On the supply side, refinery shutdowns have led to short supply of base oils, bright stock, and other hydrocarbon products in the Asian market. A tremendous rise in spot market rates for base oils was followed by bright stock, which remained in short supply during the first two quarters of 2021.

The shipping industry outage in recent months further pushed costs up by almost 3 times in sea-freight, along with higher lead time. India is short in both crude and base oils and depends mostly on import, which has aggravated the situation further.

On the demand side, crude oil moved above 70$/barrel and is likely to rise further in the next few months as per the forecasts of numerous CEOs of Fortune 500 companies. Asia, along with India, is witnessing strong recovery, pushing demand for base oils and other petrochemical products, including additives. Fuel prices that were at an all-time high during the last 8 years impacted transportation costs. Steel, plastic and other packaging materials also witnessed significant price increase in recent times.

The last 6 months were extremely uncertain for the Lubricant Industry, which witnessed an unprecedented rise in input costs of more than 40 to 50% - mainly due to sudden implications in both supply and demand.

However, GS Caltex (a JV between Chevron USA and GS Energy South Korea and an integrated Fortune 500 oil company with the 4th largest refinery in Yeosu Korea), secured high quality KIXX LUBO Base Oils for our Indian customers in abundance. Consequently, GS Caltex customers are fully secured of its supply, and we stand by to support our customers during these tough times.

During the past few months, not only have our customers and distributors benefited from our dependable services, but they have also supported our growth in the Indian market.

What kind of developments are you seeing in your lubricants portfolio, given the growing environmental concerns?
GS Caltex is committed to fulfilling its social obligations and becoming a respected company through enhanced sustainability. It is committed to eco-friendly practices (that are more rigorous than environmental regulations), throughout our value chain - from material procurement to production, from sales to recycling.

Due to the focus (and investments) on naturally sustainable lubricant solutions, the market is moving towards fully synthetic products (Group III and PAO-based base oils). GS Caltex is prepared to address the challenges in the market and become the preferred solution partner in Synthetic Lubricants.

At Excon 2019, we won the ‘Yellow DOT Award’ for our long life Hydraulic Fluid for the Construction Industry; this augurs well for our environment friendly initiatives.

How do you see GS Caltex positioning itself in the market, post the pandemic?
Amid the lockdown, most Industrial units faced a decrease in production, which impacted the use and demand for lubricant products. Also, automotive lubricants declined severely due to reduced usage and the increase in ‘work from home’ activities. It is estimated that the Lubricants Industry contracted significantly in the last FY by 16 to 20% in different categories.

This necessitated a focussed initiative to remain in close touch with our customers and back them during these challenging times. Safety remained our topmost priority for all stakeholders along with managing cost initiatives since the Lubricants Industry has been facing shortages and fluctuations, spiralling into an input cost increase.

Our team is equipped to address the needs of OEMs by ensuring and prioritizing a smooth supply chain and other marketing initiatives. Digital connect and introduction of value-added products and services helped us retain our mindshare with our channel partners, the end-users, and key decision makers. In fact, GS Caltex team did exceptionally well to grow significantly compared to the pre-Covid period. This has given us the impetus to invest more in such activities.
NBM&CW July 2021
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