Business dynamics in lubricant

market in India
SUBMITTED TO :-

SUBMITTED BY :-

PROF. KAUSHAL KISHORE

MAULIK PATEL

(32)

PARTH PANCHAL (46)

VIVEK MEHTA
YASH MAURYA

(73)
(74)

Motivation
Indian lubricant market is the fourth largest in the world.

Demand of auto lubricant in Indian market is increasing

continuously.

PSUs (IOCL, BPCL and HPCL) are continuously losing their market
share in the Indian lube market.

During the 90s the market share of the PSU Lubricant sector
were 90% and currently it is 60%. Now days PSU is spending
significant amounts on Brand Positioning to influence consumer
behaviour which was missing during 90s.

Reason?

SWS 2006

Lubricants
A lubricant is a substance introduced to reduce friction between
surfaces in mutual contact, which ultimately reduces the heat
generated when the surfaces move.

It may also have the function of transmitting forces, transporting

foreign particles, or heating or cooling the surfaces.

SWS 2006

Properties Of Lubricants
A good lubricant generally possesses the following characteristics:

High boiling point and low freezing point (in order to stay liquid
within a wide range of temperature)

High viscosity index

Thermal stability

Hydraulic stability

Demulsibility

Corrosion prevention

High resistance to oxidation.

Source: http://

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SWS 2006

Types Of Lubricants
Gaseous lubricants

Liquid lubricants

Semi-solid lubricants

Solid lubricants

Source: http://

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SWS 2006

Lubricant market
Global Scenario

Indian scenario

SWS 2006

Global Scenerio
Global demand for lubricants in the world
is estimated at around 41 million KL.

Automotive lubricants account for around

54%, industrial lubricants for around 41%.

Globally Lubricants has been growing at

2-2.5% per annum in past five years.

In developed countries, automotive

lubricants have been growing at a slower
rate of 1.0% per annum.

The global industry consists of more than

1700 players of which less than 2%
control around 70% of worldwide sales.

SWS 2006

Figure :- Region wise Demand of lubricant [Source:

http://www.crisil.com/Ratings/Commentary/CommentaryDocs/lubart.pdf]

Asias share in lubes market has

increased from 22% in 1993 to 25% in
1998.

Countr
y

Per
Capita
Consumption (Kg)

America

31

Europe

14

China

India

Table :-

Lube per capita consumption in world

[Source:
http://www.crisil.com/Ratings/Commentary/CommentaryDocs/lubart.pdf]

India scenario
India is the fifth largest lubricant market globally in volume terms

India is a net base oil deficit market and many additives used in
lubricants are mostly imported.

The declining consumption volume was as a result of improving

lubricant and engine quality.

The lubricants usage can be divided in two key segments

Automotive and Industrial which constitute about 65% and 35%
respectively.

SWS 2006

Indian Automotive Lubricants by Products Categories in %, 2013

8%
Gear oils

Presently the Indian lubricant market is growing at the rate of 5%

per annum.

Majorly dominated by national oil companies namely IOC, BPCL and

HPCL that account for almost half of market share. other private
multinationals companies includes Shell, Exxon Mobil, Total and
numerous smaller and loyal players.

Lubricants are sold broadly through three channels- Original

Equipment Manufacturers (OEMs), petrol pumps and bazaar/retail
trade. Bazaar trade is the most profitable amongst the distribution
channels and consists of spare part shops, dedicated lubricant
dealers, mechanic workshops and service centers.

Engine oils

10%

Greases

12%

Transmission Fluids
70%

Source:

http://www.moneycontrol.com/news_html_files/news_
attachment/2014/Lubricant-Sector_DolatCap_300114.pdf

India scenario (contd)

Production and Consumption of lubricants in India ('000 MT)

SWS 2006

India is a net base oil deficit market and many additives used in lubricants are sourced
from outside India. India is the fifth largest lubricant market globally in volume terms
behind the US, China, Russia and Japan. The declining consumption volume was as a
result of improving lubricant and engine quality.

Indian Lubricants Market Segmentation by End Use in %, FY13

3000

Automotive Industrial

2500
2000
1500

Production ('000 MT)

916800

Consumption ('000 MT)

77

1000
500
0

Source:

pngstat2012-13.pdf; pngstat2013-14.pdf

993200

112

Volume (TKL)
Value (billion rupees)
http://www.moneycontrol.com/news_html_files/news_attachment/2014/
Lubricant-Sector_DolatCap_300114.pdf

Source:

Demand for automotive lubricants is driven by growth in vehicle population.

Consumption of industrial lubricants is highly correlated with Index of Industrial Production (IIP).

Indian lubricant market study

SWS 2006

Different
types of
Market
structure

Perfect

Source: http://

Monopoly

( addddddddddddddddddddd..)

OligoPoly

10

Monopoilistic

Why oligopoly ?
Very few firms

Barriers to entry

Interdependence of firms

Non-price competition

Important role of advertising

SWS 2006

11

Price rigidity
Source: http://www.yourarticlelibrary.com/oligopoly-market/the-oligopoly-market-example-types-and

features-micro-economics/9140/

Bharat Petroleum Corporation

Following price variables are considered by BPCL for
Limited(BPCL)
MAK:Bharat Petroleum Corporation Limited lubricants
Old Brand Name

Product
Price
Place
Promotio
n

New Brand name

Following promotion
Lube Distribution
variables are
Channel
considered by BPCL
Strategies
for
MAK lubricant:: Premium pricing
Brand
Retail Channel
ambassador : M.S Dhoni
Least
Brandprice
line :: MAK
Rs. 09makes
to Rs. it14possible
/ Ltr more than regular
Advertising
lubricant
Bazaar Channel
: TV, News paper, Magazines, Internet
Sales Promotion: Various schemes are available in
the
Discounts:
Industrial
marketChannel
MAK
where
offers
customer
the opportunity
has to SMSinstantly
bill no to
reading
the
central
thedata
points,
base
you
toearn
stand
fora at
chance
participating
to win
lucrative
BPCL
Infrastructure
retail
offers.
Outlet. Extra discount are also given to
MAK
theMALAMAAL
OEM partner.
DAILY - "JEET KI KHUSHI
Other Initiatives
SCRATCH
& WIN
Payment
GADI
ITC-eChoupal,
MEIN mode
DHAMAK
and
MAK
HASI
period:
Garages,
MEIN
OnDHAMAK!
cash/debit
Vehicle Care Centre,
MAK
card/credit
MAK
MALAMAAL
Quick
card/petro
Lube
DAILY
Oil- card
"KISMAT
change
i.e. smart
KI BALTI
card,
KHOLO"
which
can be used by the card holder to make purchase of

GLIDE GOLD FC

MAK 2T

GLIDE 2T

MAK 2T

GLIDE 4T

MAK 4T

AUTOMOL SILVER

MAK CLASSIC

AUTOMOL SF

MAK CLASSIC

AUTOMOL GOLD

MAK ELITE

AUTOMOL SG

MAK ELITE

AUTOMOL DIAMOND

MAK SUPREME

AUTOMOL SC 20W-40

MAK MULTIGRADE 20W - 40

ACTUMA SUPER SERIES

MAK MIL-B SERIES

ACTUMA ULTRA SERIES

MAK CD OIL SERIES

ACTUMA ULTRA SUPER SERIES

MAK MIL - C OIL SERIES

ACTUMA MULTIGRADE OILS

MAK MULTIGRADE OILS

AUTOMATIC TRANSMISSION FLUID A

MAK ATF - A

MAK D5

MAK SHPD (D5)

MAK SILVER

MAK MIL B

BHARAT MAK T OIL

MAK GOLD

BHARAT ULTRA SUPREME 15W - 40

MAK ULTRA SUPREME 15W-40

BHARAT SUPER HEAVY DUTY BRAKE FLUID

MAK HEAVY DUTY BRAKE FLUID

SPIROL EP OILS

MAK SPIROL EP OILS

SPIROL HD OILS

MAK SPIROL HD OILS

SPIROL XEP OIL

MAK SPIROL XEP OIL

SPIROL S OIL

MAK SPIROL S OILS

SPIROL DIAMOND

MAK SPIROL XHD

SUPERKOOL

MAK SUPERKOOL

REDIKOOL

MAK REDIKOOL

SUPERKOOL AF

MAK SUPERKOOL AF

BHARAT TURBO SHPD OIL

MAK SHPD (D5)

UNIVEX A

MAK UNIVEX A

UNIVEX CD

MAK UNIVEX CD

UNIVEX RB

MAK UNIVEX RB

BHARAT WB GREASE SPECIAL

MAK WB GREASE SPECIAL

Hindustan Petroleum Corporation

Limited Following price variables are considered by BPCL
Product
Price
Place
Promotio
n

for MAK: Strategies

Following
promotion
variables
are considered
Lube
: Premium
Distribution
pricing
Channel
Least
by
HPCLprice
for Hp
lubricant:-ministrydecides price
: Petroleum
Retail
Brand
line
: future
of energy
and every
of each
Channel
and
every full
product
for each
Advertising
: TV, News paper, Magazines,
PSU.
Discounts:
Internet
Industrial and
HPCL
Government
offers the opportunity
Channel
Sales
Promotion:
Various
schemes
instantly
reading
the points,
you are
earn for at
participating
available
the HPCL
market
where
has
Marketin
extends
to retail
count
Outlet.
risecustomer
likeExtra
Nepal,
discount
to Shrilanka,
SMSalso
bill given
noBangladesh,
to the
central
data
base to
are
to the
OEM
Saudi
partner.
Arabia,
Malaysia
Payment
stand
a chance
toand
win period:
lucrative
mode
Onoffers.
cash/debit
Co-Branded
card/credit card/HP
Lubes as
card
a Marketing
i.e. smartstrategies
card, which
can
HP be
Bajaj
used
Genuine
by theOils
card holder to make
purchase of lubricant at designated retail
outlet of HPCL.

Castrol India Limited

Product
Price
Place
Promotio
n

Comparison of Public and Private

lubes companies
Parameters

Public limited company

Private company

Prices

Low

High

Market Share

Almost 60%

Around 30%

Marketing Strategy

Co-branding,
Promotional schemes by Dealers and
distributors.

Though Sponsorship, advertisement,

Different Schemes for mechanics and
drivers etc

Distribution Structure

Mainly through Petrol pumps

Quality

Relatively low quality

Have their own independent

infrastructure comprising of
distributors, stockiest and retailers
throughout India. introduce concept
like bazaar
High quality product

Source: http://www.frost.com/prod/servlet/market-insight-print.pag?

Challenges of lubricant industry

Declining automotive demand growth

Increase industry competition

Low consumer awareness

Increase dependence of imports

Source: http://www.crisil.com/Ratings/Commentary/CommentaryDocs/lubart.pdf

Outlook

Macro Economic and Industry Factors

Automobile
Personal

Disposable Income in India

Population
Inflation
Crude

Sales in India

in India

in India

Oil Prices in India

Forecasting using multiple regression using SPSS.

To predict the future trend of lubricant market in India

References (add further)

http://www.moneycontrol.com/news_html_files/news_attachme
nt/2014/Lubricant-Sector_DolatCap_300114.pdf

http://www.crisil.com/Ratings/Commentary/CommentaryDocs/lubart.p
df

http://www.indiaenvironmentportal.org.in/files/file/pngstat%202012-1
3.pdf

http://www.indiaenvironmentportal.org.in/files/file/pngstat%202013-1
4.pdf

http://www.yourarticlelibrary.com/oligopoly-market/the-oligopoly-m
arket-example-types-and-features-micro-economics/9140
/

http://
www.frost.com/prod/servlet/market-insight-print.pag?docid=6608589

http://
www.crisil.com/Ratings/Commentary/CommentaryDocs/lubart.pdf