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SYNOPSIS ON

Survey on various Lubricant companies India

in

Submitted byRajdeep Rawat BBA(O&G), 5th sem R050208057
Introduction The Indian automotive lubricant market is the sixth largest market in the world with revenues of approximately $1.30 billion in 2002. It is also one of the fastest growing retail markets in India. Until 1993, it was a highly regulated market with a clear dominance of the public sector. Companies like Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL), and Indian Oil Corporation (IOC) held more than 75 percent of the market share. In recent years, with the advent of the increasing number of multinationals in the Indian market there is a growing presence of private companies. Companies like Castrol, Elf ,Total-Fina, Gulf, and Shell Oil have made their presence felt in the market. Market Size Total production of automotive lubricants in India is approximately 8 to 10 percent of global lube production. Unlike other countries where lubricant demand has witnessed stagnation, the Indian market has been growing at approximately 7 percent per annum for the past 2 years. The

After the deregulation of the petrol pumps companies are keenly watching the developments in the lubes market. Automotive lubricants are further divided into diesel lubes and petrol lubes. as they do not have the distribution infrastructure to sell their products in a deregulated market. their market share is higher. Recent deregulations in the lubricant market have promised many new opportunities for the private lube manufacturers. linkages are gaining importance. These developments naturally encouraged the entry of foreign players on Indian shores who were already facing a slowdown in demand in their local markets. Basic custom duty on base oil stock was also reduced from a peak of 85 percent to a level of 25 percent. Elf. Gear oils. With the dismantling of Administered Price Mechanism (APM) the burden of subsidies is now being passed on to the government. transmission fluids. hydraulic brake fluids. the industry is going to witness sea changes. Retail networks. the key raw material. Companies like Reliance are already selling their products through petrol pumps. was de-canalized with IOC losing its status as the sole canalizing agent. . Frost & Sullivan expects private sector companies to have a market share of around 25 percent. which made it more difficult for the Indian lube manufacturers to survive. Engine oil constitutes around 83 percent of total sales volumes. Import of base oil. Almost 70 percent of the lubricants in India are sold through petrol pumps. The original equipment market contributes almost 70 percent and 30 percent of the market is comprised by the retail sales segment. In the next couple of years. As diesel lubes are used by commercial vehicles. Pricing of base oil was deregulated in a phased manner and currently it is market determined.public sector contributes to over 60 percent of the revenues for this market. Most of the MNC’s have tied up with oil majors for marketing their lubricants like Castrol with Escorts and Tata BP with Telco. The coming in of foreign participants created an excess supply situation in the Indian automotive lubes market. MNC’s will be able to sell their products through petrol pumps. logistics management. Private participants will also gain a presence in the Indian oil and gas sector and hence there will be competition between participants that will ensure the growth of the sector. Castrol. the government decided to open the Indian market to foreign competition. Distribution Structure There are two key markets for lubricants in India. All quantitative restrictions were also removed. The channel for replacement market or the retail segment is petrol pumps or retail stores. Lubes manufactured by Reliance Petroleum. MNC’s have 5 percent market share and the remaining share is held by the unorganized sector. The monopoly of the public sector holdings will no longer exist. and engine coolants contribute to the balance. Gulf Oil etc. which are now sold at petrol pumps. Competitive Analysis The first seeds of competition were sown in the early 1990’s when following the liberalization of the Indian economy. Given high levels of competition original equipment. which have to cover greater distances. The stand-alone refineries will have to be merged with the marketing companies. and risk management are going to be the crucial factors. Diesel lubes comprise 70 percent of the market and petrol based lubricants cover the rest. In medium to long term.

Outlook In the future. In this. The concept of "User Outlet" is another new concept developed by Castrol. Most of the MNC’s have tied up with oil majors to market their brands like Castrol with Escorts. the consumer selects his own brand of lube after giving his vehicle for service in the same outlet. Hyundai Motors. To compete with dominant public sector distribution. However. This sector has witnessed considerable amount of mergers and acquisitions. Market Trend In the recent past. However. in the future volume growth . Key Success Factors Frost and Sullivan believe that the key factors for success in this highly fragmented and competitive industry include: Distribution Channels With increasing number of players in the market. Hindustan Motors. Other private participants have had to set up an independent infrastructure comprising of distributors. In the lube market. companies are entering into collaborations with vehicle manufactures. as well as preference. Indian Oil Corporation Limited is leading the market with 30 percent market share. The Indian lubes market is a combative market place and lubricant companies find themselves fighting a tough battle for survival. growth in the automotive lubricants industry will largely depend on the overall performance of the economy. the scenario has improved with higher sales of commercial vehicles and two-wheelers. TAFE. British Petroleum’s not so recent acquisition of Castrol is one example. Toyota. Public limited companies selling primarily through petrol pumps manage to achieve a deeper penetration. brand awareness. In the OE sector also lubricant manufacturing. The lubricants market in India is very highly fragmented and complex." These are outlets meant only for lubricant sales. it is vital for the companies to reach a wider segment of customers. Maruti Udyog. Tata BP with Telco. with increasing number of competitors it is not possible for every one to carve a nich in the market. brand name and finances have the power to launch themselves on their own in the market. the Indian lubricant market has witnessed a phase of consolidation. Castrol developed the concept of "Bazaars. MNC’s and private companies sell through retail stores. concepts like "Bazaars" and "Super Stores" have also been developed. Multinationals with better technology.The distribution channel adopted by public sector units is through the petrol pumps. and Skoda have entered into collaboration with IOC and Castrol for some of their models. In the past one and a half years. This will help the private companies to establish a wider access. Convenient stores and highway stops for vehicles are being built from where the vehicle owners can get their vehicles repaired and get their supply of lubricants. stockiest and retailers through out India. Other private companies hold the remaining market share. Castrol is next with 25 percent of the share and HPCL and BPCL are next with about 20 percent and 15 percent shares respectively.

In the shorter term. This will increase the replacement cycle for lubes. which has the potential to change the face of the lubricant industry. one will witness intense competition in a slow growing market marked by a consolidation activity. Given the rising competition. long drain lubes.will be affected because of use of better quality. success of a product would largely depend how well it is branded and distributed. .

as well as LPG Lubricants Gas . turnkey projects. international operations. has interests in industrial packaging. Japan. and registered office in Mumbai. part of global BP Group Lubricants 6 Total Group. cargo & logistics. gear & transmission oils. industrial fuels & petrochemicals. state-owned petroleum company headquartered in Mumbai. leather chemicals. in India its product range covers lubricants (under the Elf brandname) for cars and utility vehicles. greases & lubricants. lubricants. and industrial purposes. aviation fuel etc Petroleum Gas Lubricants 2 Hindustan Petroleum Corporation Ltd (HPCL) State-owned company which is the second-largest integrated oil refining & marketing enterprise in India. motorbikes. LPG. India Global oil and gas company based in France. tea. Dr Rajendra Prasad Sarani. Kolkata. has a technical tieup with Nippon Oil Corp. etc. lubricants. container freight stations & IT services Packaging Lubricants Chemicals Agricultural Companies 5 Castrol India Ltd Second largest lubricant company in India. products include engine oils. West Bengal. figures in the Fortune 500 list of companies. bulk fuel & specialities. activities include refining. commercial vehicles. India Manufacturers of automotive & industrial lubricants under the brands Veedol & Eneos. Top of Form Bottom of Form 1 Bharat Petroleum Corporation Limited (BPCL) Large. corporate office is in Mumbai.Various Lubricant Companies in India…. activities: LPG. travel & tours. retail. manufacturing & marketing automotive (two brands Castrol and BP) and industrial lubricants. aviation etc Petroleum Gas Lubricants 3 Tide Water Oil Co (India) Ltd 8. has 5 manufacturing units in India. West Bengal 700001. part of Andrew Yule Lubricants 4 Balmer Lawrie & Co Ltd Netaji Subash Road. based in Kolkata. greases. Kolkata 700001. farm equipment. India Public sector diversified company based in Kolkata. retailing (petrol pumps etc).

gear oils. nitrile rubber. transmission oils. gas engine oils. products incude engine oils. based in New Delhi Lubricants . products include industrial & automotive oils. auto lubricants etc Petrochemicals Lubricants 10 Valvoline Cummins Ltd (VCL) Manufacturers of automotive & industrial lubricants. petroleum sulfonates. cutting oils. speciality & process oils made by Sah Petroleums Ltd. pour point depressants. anti rust & anti-corrosion products. the company is Mumbai-based and has a production capacity of 40. joint venture between Valvoline & Cummins. other products: industrial greases. corporate office is in Mumbai. transformer oils. product range includes liquid paraffin. latices etc Lubricants Aluminium Miscellaneous Supplies 8 IPOL Brand of industrial & automotive lubricants.000 KL. transformer oils etc Lubricants 9 Savita Group Mumbai-based group comprising Savita Chemicals & Savita Polymers.7 Apar Industries Ltd Manufacturers of transformer oil & specialty oils. white oil. rubber process oils. overhead power transmission & distribution aluminium conductors & specialty polymer. optic fibre filling compounds. greases.

manufactures and markets automotive lubricants and industrial lubricants including diesel engine oils. multi-location flagship Mumbai. brake fluid. plants (sugar. corrosion-prevention products. industrial electronics. produces and supplies sodium benzoate. telecom. lubricants. food preservative Chemicals Lubricants 14 Gulf Oil Corporation Ltd (Lubricant Division) A Hinduja Group company in Mumbai. corporate head office m Lubricants B ot 12 Gagan Gases Ltd to Indore-based organization with diverse m LPG in the private sector in Madhya Pradesh of Pithampur and an authorised distributor for F Lubricants Gas o r 13 Ganesh Benzoplast Ltd m Multi-division. turnkey contracts. lubricants. buses. is a leading distributor of having its own LPG bottling plant at ESSO and Mobil branded lubricants company of the Ganesh Group located in lube division. electrical. divisions include chemical division. has interests in power. headquartered in Faridabad with offices across India Lubricants 17 Daya Lubricants Pvt Ltd . infrastructure division etc. steel.New T o p of 11 Fuchs Lubricants (India) Pvt Ltd F An ISO 9001 wholly owned Indian subsidiary o manufacturers of automotive oils. presses). manufactures & supplies centralised lubrication systems for machines & machine tools (CNC lathes. tractor oils etc. a of Fuchs Petrolub AG Germany. in Mumbai and factory at Navi Mumbai business interests. engineering & environment. tea. is one of the reputed OEM suppliers to various leading brands Lubricants 15 The Andrew Yule Group Diversified central public sector company based in Kolkata. industrial r metalworking fluids etc. etc). gear oils. paper) & vehicles (trucks. financial services & printing Machinery Electrical Equipment Energy Telecom Services Telecom Equipment Engineering Lubricants 16 Cenlub Industries Ltd Firm that designs.

400022. nitrogen & calibration gases apart from Shell lubricants and greases. etc. lubrication accessories etc for different machines and industrial applications. oxygen. water soluble cutting oils. products include honing & hydraulic oils. filling lines etc. Mumbai. based in Mumbai Lubricants 22 Lynx Marine Sion West. metal working oils. also distributors of SRF Ltd for their entire range of CFC & non-CFC refrigerant gases Industrial Gases Lubricants 23 Monisha Petrochem Pvt Ltd Manufacturer of a complete range of automotive lubricants. transformer oils.Producer of automotive & industrial lubricants uner the brand name Shaktee and re-refiners of used lubricants. based in Pune Lubricants 20 Frigmaires Grease – An ISO 9001 manufacturer of lubricant milling machines for the grease manufacturing industry. Bharat Shell Ltd. synthetic cutting oils. India ISO certified company in Mumbai that supplies industrial gases. acetylene. based in Mumbai Lubricants 18 Dropco Multilub Systems Private Ltd Manufacturer and supplier of centralized lubrication systems offering a wide range of grease lubrication systems. based in Mumbai Lubricants 24 OKS . based in Mumbai Top of Form Bottom of Form 21 Global Technical Services A team of professionals providing total lubrication management (TLM). industrial lubricants. located in Faridabad. mist lubrication systems. high performances oils. etc. also fabricates processing equipment like mixing cooking vessels. reactors. Mobil India Ltd. fuel conservation consultancy and technical and techno-commercial services to major consumers of petroleum lubricants and fuels in India. dewatering & corrosion inhibitor fluids. de-aerators. industrial & high temperature greases under the brandname Monex. plant coolants & lubricants. also manufactures automotive & industrial lubricants for Gulf Oil India Ltd. Haryana Lubricants 19 Emulsichem Lubricants Pvt Ltd An ISO 9001 manufacturer of neat type cutting oils.

quenching oils. headquartered in Chennai Lubricants 27 Sri Narasimha Petro Products Automotive & industrial lubricants company based in Alandur.Brand of speciality and open gear lubricants. rubber process. valves. etc. compressor. based in Mumbai Lubricants Compressors New . rust preventives etc. greases. & Delhi Lubricants 25 Pentagon Lubricants An ISO 9001 manufacturer of the entire range of industrial lubricants. telecom cable compounds. compressors. engine oils. manufactured and marketed by OKS Speciality Lubricants (India) Pvt Ltd. brand: Metrite Lubricants 28 Witmans Group Group of 2 companies manufacturing automotive & industrial lubricants. Chennai. automotive lubricants. cutting. neat cutting oils. & maintenance and corrosion protection products. Kolkata. turbine. spindle. transmission. spindle. paints & primers. heat transfer. heat exchangers. cylinder. metal working. jewellery injection waxes. rubber processing oils etc. quenching. products include engine. gear. with offices in Bangalore. based in Chennai Lubricants 26 Raj Group Manufacturer of petroleum products and lubricants. greases. greases. products: transformer oils. oils (textile. etc). specialty lubricants. marine engine oils and speciality lubricant products under the trade name Pentagon.

TABLE SHOWING SALE OF AUTOMOBILES IN INDIA . TABLE SHOWING PER CAPITA CONSUMPTION OF LUBES In the world market the consumption growth of lubes has almost stagnated due to saturation in industrial activity and stagnation in the sale of automobiles. Further the industry also suffers from considerable overcapacity. Thus. Automotive segment and Industrial segment. The lubricants market in India is estimated at around 1. following the entry of number of private players after the deregulation in 1993.05 million Kl (Kilo litre) per annum (Rs 5500 crores) as against an installed capacity of 1. However. given its large industrial base and booming vehicle market. given the recovery in the industrial activities and increase in sale of automobiles. We expect the market for both industrial and automotive lube segment to post a growth of more than 45% in the current year. the consumption of lubes in India is very low compared to the rest of the world because of high population and low penetration of automobiles.Research An overview of Lubricants Market in India The current market for lubricants in India is characterised by stiff competition. The lubes market in India can be broadly classified into two main segments viz. India remains the target market for most of the MNCs in the lubes industry because of its potential for future growth.60 million Kl per annum.

strong distribution channels.73 42. given the severe competition and overcapacity prevailing within the sector as mentioned earlier. The prices of base oil have been rising in consonance with rising crude oil prices. GLOBAL PRICE TRENDS IN BASE OIL PRICES Month Price per tonne (In US $) March’99 September’99 January’2000 180 240 325 However we believe that given Castrol’s brand leadership. Base Oil constitutes more than 50% of the total material costs for Castrol.18 Heavy and Medium commercial Vehicles Light Commercial Vehicles Passenger Cars 108814 78746 57706 574287 55631 403719 3. it would be in a position to partially pass on this increase in cost. technology and R & D backup of the parent and management initiatives in increasing its market share.1999 1998 % Change 38. which may have considerable impact on the profitability of Castrol in the current financial year. Castrol would remain the best investment option within the industry. Developments & Impact • Rising Base Oil Prices Typically. However given Castrol’s excellent brand value. In fact Castrol increased.25 We believe. prices . the scenario for lubricant market in India does not seem attractive in the medium to short term.

we believe that the company’s business model might undergo a change with the global takeover of business by BP-Amoco. The company has already signed contracts to manage these processes at Delphi Automotive. Industrial Business Segment The industrial segment achieved a sales growth of more than 20% in 99. We believe this help will help the company in maintaining direct contacts with large customers. Cummins India and Timken India and many other such contracts under the Programme are under negotiation. Further. though the management has not indicated any intention of doing so. the distribution reach has increased from 6000 retailers to 35000 retailers at present. Over the years. while on the other hand Castrol would increase its market presence through its increasing availability at their workshops. we believe that with the recent rollback of production cuts by OPEC would bring base oil prices at realistic levels. whereby Castrol would assume responsibility for managing the processes and facilities covering all chemicals including lubricants. The company also entered into strategic alliances with number of OEM’s. Further. Castrol India had already evinced interest in taking over smaller companies within the industry. Castrol recently entered into strategic alliances with Telco. Besides. Further with government aggressively considering increasing the FDI Limit in refining to 100% as well as strategic sale of PSU Oil companies. under its new Castrol+plus programme Castrol introduced Chemical Management Services (CMS) and Lube Management Programme (LMP). • Castrol: Identifying Strategies for Future Growth Consumer Business Segment: This segment accounts for more than three fourth of Castrol India’s total sales. Castrol hopes to push its product availability in Telco’s workshop from the present 40% to 75%. On one hand these. Further Castrol India Limited can also be . Castrol has concentrated only on the lubes industry. LML and Apollo Tyres in a bid to provide customised products. whereas BP-Amoco business interests varies from up-stream Oil Exploration to downstream production and refining. Given the high level of competition in this segment. Further.mainly due to realignment in the distribution network. chances exist that Castrol India might venture into other downstream activities. the new distribution system will also help Castrol increase focus on two wheeler segment for future growth.of its products twice in the last 6 months. which was hitherto controlled by PSU’s. which helped in providing customised solutions to particular business segments and thus further increasing penetration into several potentially lucrative market segments. linkages with OEM’s (Original Equipment Manufacturer) is becoming increasingly important to add value to brand positioning. with Castrol adopting new distribution policy of selling through distributors. • Fate of things to come Though it would be very early to comment. OEM’s would endorse Castrol’s range of lubricants.

considered for global sourcing point by BP-Amoco for catering to the International markets. In light of the above. . we believe the fate of things to happen at Castrol India seems quite interesting in time to come.

80 16.6 1099.22 23.10 16.36 17.14 60.75 Financial Ratios OPM (excl O.75 26.I.80 OPM (incl.59%.87 60.6 1195. Total Inc.6 8.09 20.84 299.23 _ _ _ _ _ Growth GPM % NPM % Tax/PBT _ 21.83 0.55 crores operating Profit increased more than proportionately by 16.07 16.36 14.5 61.83% to Rs.87 10.% Particular Chang s 1999 1998 e 1999 Q4 Gross Sales Other Inc.08 219.7 40.77 10.76 2.80 20.57 Depreciati on 3.65 0. Financials Castrol declared a strong result in for the year ended 31/12/99. O.31 375.56 74.I) % 19.53 3.16 227.90 19.4 1218.67 4.4 314.86 869.80 20.78% to 1195.59 123.2 1 7 18.80 Int/Sales % 0.) % 19.40 _ 21.80 16.52 2.15 18.35 5 1 10.11 16.20 .7 255.50 18.46 4 1 10.86 256.66 -1.23 268.91 204.6 1 4 17.56 51.08 PBT Tax PAT Equity 71.72 21. Total Exp.83 63.44 63.75 123.70 _ 16.5 61.78 230.60 19.37 51.24 949. 268.70 _ 0.4 1 5 17.90 19.38 178.5 1079.34 9.64 16.54 16.22 0.97 8.78 3.26 75.2 319. Op.21 19.50 266. While the Net Sales for the Year ended 31/12/99 increased by 10. however higher depreciation and corporate taxes resulted in Net Profit growth of 14.2 14.79 34.Profit Interest Gross Profit Q4 FY % Chang 1998 e FY 372.62 2.78 crores.20 _ 20.17 0.81 18.43 19.78 -23.

It also scored better on most of the important parameters on Marketing Dimensions as shown below. Castrol India has already evinced interest for local acquisitions. In fact it ranked 17th in the list of Most Admired FMCG Marketing Company in the annual survey conducted by ORG-MARG. in spite of stiff competition and its product being priced at least 10% above the industry average which goes a long way in suggesting its brand value.97 HLL 2500 51. Castrol would continue to outperform the industry growth rate. various possibilities arise for future growth of the company.42 . Castrol’s sales increased by more than 9%. Castrol India can also be considered as a sourcing point for various projects and products Internationally.9 638 29.) Price/Earnings Ratio (x) Castrol Cadbury Britannia Nestle 312 18.94 374 33. We believe that though the lube industry would grow at an average rate of 4-5%. We believe that valuations of Castrol India would depend upon these developments in time to come. Further. Marketing Dimensions Better than average success rate at new product launches Brand Provides Long Term Stability Company has superior distribution network Rank’99 9 Rank’98 13 10 13 13 12 Though the market for lubricants in India grew at a rate of 4% in 99.85 904 55. • We believe that given Castrol India’s Cash rich position and the backing of strong parentage of Global Oil Giant BP-Amoco.• Castrol continues to enjoy excellent brand image in the Indian Lube industry. Comparative Valuations Comparative Valuations with Other FMCG companies Particulars Market Price (Rs. As explained earlier.

and wholesale distributors Public sector unit (PSU) companies. Due to the growing competition.Market Capitalisation/Sales (x) Sales Growth (YOY) 3.97 Currently.3 19. follow different distribution strategies as compared to private participants that solely dependent on imports.34 -0. Companies are adopting a more customer-oriented approach where they are likely to focus on creating brand awareness through print and visual media. The market is fragmented with over 22 big and small manufacturers and with the spate of mergers and acquisitions (M&A). The other marketing channels are authorized service stations.08 and 14. only a handful of big companies enjoy a major market share. The original equipment segment and retail trade are the two major marketing channels in the Indian automotive lubricants market. Abstract The Indian automotive lubricants market is largely price sensitive and volume growth is stagnating due to longer lasting lubricants. For example promotional campaigns and trade shows offering gifts to their customers are methods of driving sales of automotive lubricants. rural and agricultural dealers. that manufacture their own base oil.78 4. super markets.32 1. Petrol pumps form a major distribution channel in retail trade.22 10. tie-ups with original equipment manufacturers (OEM) are becoming important as they reinforce the value proposition of a particular brand.49 2. . While PSUs sell through their own wide spread network of petrol stations private manufacturers prefer retail outlets.85 times its KRC Research estimated earnings for 2000 and 2001 respectively.04 5.41 6. however sales of lubricants through retail outlets (also called ‘the bazaar trade’) has transformed the Indian automotive lubricants market into a fast moving consumer goods (FMCG) sector.73 21. garages. It is available at just 17. Castrol is available at a P/E of just more than 19 times its 99 earnings.

which accounted for over 70. Demand for coolants is increasing due to continuous growth in heavy commercial vehicles.Engine oil. tie ups with original equipment manufacturers. plays the most crucial role in deciding the market share of manufacturers. increasing awareness among the customers.0 percent market share in 2004 in the Indian automotive lubricants market. The brake oil and coolant is the next largest segment in the Indian automotive lubricants market. and implementation of new pollution norms are just some of the key drivers of the engine oil segment. The market for gear oils is also growing rapidly and has a high potential due to the increasing number of vehicles on the road. and ultra-Matic. which reduce the oil changing intervals. and changing customer mindset regarding specialty lubricants are expected to push demand further. the overall outlook for the automotive lubricants market is expected to be positive due to the growing Indian economy along with the increased purchasing power of consumers. consumption of lubes by commercial passenger vehicles. In brake oil segment. . API GL-5. API MT-1. introduction of new brake systems. and OEM tie-ups. increasing growth in light commercial vehicles. Increase in demand for four stroke motorcycles. In the long term. new cooling system technologies. New generation vehicles with advanced gear system technologies and automatic transmission systems require special type of lubricants resulting in greater demand for multi axel gear oil and API synthetic gear oil.