Valvoline Cummins Ltd on Double Digit Growth Path

We have seen a very rapid growth and emerged as one of the fastest growing foreign brands in the country. We are seeing a high double-digit growth and will continue to maintain that for the next few years. In fact, our growth has been phenomenal, driven mainly by our strong distribution both in after market and in the off highway segment. . . We are focusing on increasing our retail footprint in excess of 50,000 retailers across the country and plan to increase our thrust on OEM and Specialty lubes business. . . VCL is setting up a state-of-art manufacturing facility to produce in excess of 120Mn Liters and the plant will go on stream from mid 2012 onwards, said Mr. Sandeep Kalia – CEO, Valvoline Cummins Ltd., in an interview with S.A.Faridi.

Please tell us in brief about Valvoline-Cummins and its joint venture partners.
Valvoline Cummins Limited is a Joint Venture which started operations in 1998 in India. The JV is between Valvoline Inc. USA and Cummins India Ltd. Valvoline Cummins is one of the India's fastest growing lubricant marketers and producers of quality branded automotive/industrial products. Over the last few years while the lubricant industry has only grown at 3-4 percent per year, we have been clocking high double digit growth rates.

What are Valvoline-Cummins vital business areas, product range and their technical attributes as different from those in the market, particularly their advanced additive technology and premium base oil attributes ensuring high performance and enhanced engine life?
Our products include all types of automotive lubricants, transmission fluids, gear oils, industrial lubricants, specialty products, greases and cooling system products.

Our vital business is the Diesel lubricants both for on and off highway applications. Valvoline products are technically differentiable because we only use group II and group III base oils for our entire range. The additives that we use in some of our flagships products like Premium Blue range of Engine Oils make them unique and possible the best diesel engine oil in the country! We are one of the largest lubricant players in power generation segment. Due to our global presence, customers are never far from a complete line of unbeatable Valvoline products. We have the expertise and experie- nce in developing and marketing of high performance oils in more than 140 countries. We are already testing the next generation CI4+ oils in India, as the latest engines are becoming more environment-friendly and our lubes delivers the results as per the latest norms be it Euro IV or BS IV.

Your company is an important player in the manufacture and supply of advanced lubricants. To benefit our readers—would you please spell out lubricants broad range available for various industrial applications?
Diesel Engine Oils, PCMO, MCO, Compressor Oils, Cutting Oils, Gear Oils, Greases, Transmission Oils, Hydraulic Oils, Rust Preventive Oils, Thermic Fluids, Heat Treatment, and other specialty products.

What is your assessment of the market size of lubricants in the country, and its pace of growth in the next 3-4 years? What segment of industry would lead its growth in the years to come?
We have seen some strong economic recovery across the globe in the past few months and are very optimistic about the continued momentum. As far as India is concerned, we were one of the least impacted countries and continue to grow at a steady rate. Now coming back to our business, if we look at the current market size for Lubricants in India, it is over 1.8 million metric tonne and for any foreign brand like us, accessibility is close to just 50% of the entire market as there are vast areas like defence and railways that are predominantly serviced by PSU oil companies. The industry is projected to grow 3.9% year on year basis till 2013. There will be lot of technology shift, as customers will upgrade themselves to long drain lubes. There is enough scope for us to grow.

We have seen a very rapid growth and emerged as one of the fastest growing foreign brands in the country. We are seeing a high double-digit growth and will continue to maintain that for the next few years. We see ourselves as a clear number two foreign brand in the country soon. In fact, our growth has been phenomenal, driven mainly by our strong distribution both in after market and in the off highway segment.

Your products have been serving the lubricant needs of construction equipment sector. What is the size of market in terms of lubricants for CE and your share of the market in CE space and your plans to garner more market share in the next 2-3 years with ongoing expansion in manufacture and supply of CE in the country?
CE market is diverse and includes the construction, mining, cement and other such industries where CE equipments are deployed. The total market size in these segments is close to 120 million liters although the market accessible to private players like us is relatively smaller, especially in mining. The market size is projected to grow at more than 7-8% in these segments in the next few years as both these segments are the highest contribu- tors in India's overall GDP growth. In the accessible markets, we are amongst the largest foreign players in mining and have grown very rapidly in construction in the last two years. Indeed, construction and mining (including cement mining) has been our growth areas in the last few years. We plan to expand our footprint in these segments further with introduction of new products like fully synthetic engine oils, innovative value additions and top end technical train-ing and support to the end users.

Co-branding with CE OEM has been a success story at your end to push sales of your products and services. What are the finer points of this tie up arrangement between your company and MNC? How has it been a win-win situation for both the parties?
Co-branding and private labels are two well accepted ways where lubricant companies like us and CE OEMs partner to effectively serve the end users. Co-branded products can be marketed both from the lubricant manufacturer's distribution network and the OEM's dealerships while private labels are generally marketed only from the OEM's dealerships. The success model of these tie ups is that the brand name of both companies are simultaneously pooled thereby creating a win-win situation for both. Also, the end users benefits in that they do not have to scout for products in the market and have a one stop solution for all their lubricant needs.

We have had a very successful tie ups with such global players as Terex, Mahindra, Swaraj Mazda, Ajax Fiori amongst others.

As the market for CE is expanding—would you like to make your co-branding scheme more broad based to cover more CE manufacturers or you would like to focus on a few?
We would certainly like to expand our association with other CE manufacturers, especially with those where we can jointly leverage our brands for the benefit of our customers.

What are various technical value added services available at your end in guiding users to select good quality of lubricants and their right application to ensure long service life?

We have a customer care cell where we have technical experts addressing the calls of consumers and educating them of good quality lubricants and their right application,

We also have a setup for used oil testing called "Progressive Oil Sample Testing" POST which is a state of the art "predictive & preventive maintenance programme designed to decrease downtime, extend component life, optimize oil drain intervals and monitor fluid quality. This facility can be operated from web wherein we give unique id and password to each user who can then monitor all their historical test datas and plot trend graphs etc.

What is the status of VCL new blending plant? How will this facility enable the company to play more effective role in the lubricants market in the country, apart from expanding your in-house production capabilities to deliver fast, localized technical services in the country?
VCL is setting up a state-of-art manufacturing facility to fulfill our targeted growth in India. The construction is in full swing and is estimated to produce from mid 2012 onwards. The capacity will be in excess of 120Mn Liters. This facility is also targeted to be a fully green facility.

A word about your marketing, distribution and sales network in the wholesale and retail market to serve the evolving needs of the Indian market.
Ricky Ponting has been our Brand ambassador for the past three years. We are having a base of 42 stock points delivering products and services to 600+ distributors and close to 4000+ institutional customers. We are focusing to increase our retail footprint in excess of 50,000 retailers across the country. We do not deal with wholesalers for our business and touch the direct consumer through retailer. We also plan to increase thrust on OEM and Specialty lubes business, which has given us superior growths in the recent years.