E&I Group Project

Business dynamics in lubricant market in IndiaSUBMITTED TO :-

PROF. KAUSHAL KISHORESUBMITTED BY :-

MAULIK PATEL (32)

PARTH PANCHAL (46)

VIVEK MEHTA (73)

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

Reason?

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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.

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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.

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Source: http:// ( addddddddddddddddddddd………..)

Types Of Lubricants

Gaseous lubricants

Liquid lubricants

Semi-solid lubricants

Solid lubricants

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Lubricant market

Global Scenario Indian scenario

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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.

Asia’s share in lubes market has increased from 22% in 1993 to 25% in 1998.

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Country Per Capita Consumption (Kg)

America 31

Europe 14

China 2

India 1

Figure :- Region wise Demand of lubricant [Source: http://www.crisil.com/Ratings/Commentary/CommentaryDocs/lubart.pdf]

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.

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.

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70%

12%

10%

8%

Indian Automotive Lubricants by Products Categories in %,

2013

Engine oilsGear oilsGreasesTransmission Fluids

Source: http://www.moneycontrol.com/news_html_files/news_attachment/2014/Lubricant-Sector_DolatCap_300114.pdf

http://www.moneycontrol.com/news_html_files/news_attachment/2014/


India scenario (contd…) 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.

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Volume (TKL) Value (billion rupees)

993200 112

916800 77

Indian Lubricants Market Segmentation by End Use

in %, FY13

Automotive Industrial

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

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

Source: http://www.moneycontrol.com/news_html_files/news_attachment/2014/Lubricant-Sector_DolatCap_300114.pdf

Source: pngstat2012-13.pdf; pngstat2013-14.pdf

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

0500

10001500200025003000

Production and Consumption of lubricants in India ('000

MT)Production ('000 MT)Consumption ('000 MT)


Different types of Market

structure

Perfect Monopoly OligoPoly Monopoilistic

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10Indian lubricant market study


Why oligopoly ?

Very few firms

Barriers to entry

Interdependence of firms

Non-price competition

Important role of advertising

Price rigidity

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

Product

Bharat Petroleum Corporation Limited(BPCL)Bharat Petroleum Corporation Limited lubricants

Old Brand Name New Brand name

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

Price

Following price variables are considered by BPCL for MAK:-

• Strategies : Premium pricing

• Least price : Rs. 09 to Rs. 14 / Ltr more than regular lubricant

• Discounts: MAK offers the opportunity instantly reading the points, you earn for at participating BPCL retail Outlet. Extra discount are also given to the OEM partner.

• Payment mode and period: On cash/debit card/credit card/petro card i.e. smart card, which can be used by the card holder to make purchase of lubricant at designated retail outlet of BPCL

Place

Lube Distribution Channel

• Retail Channel

• Bazaar Channel

• Industrial Channel

• Infrastructure

• Other Initiatives ITC-eChoupal, MAK Garages, Vehicle Care Centre, MAK Quick Lube Oil change

Promotion

Following promotion variables are considered by BPCL for MAK lubricant:-• Brand ambassador : M.S Dhoni• Brand line : “MAK makes it possible‟• Advertising : TV, News paper, Magazines, Internet• Sales Promotion: Various schemes are available in

the market where customer has to SMS bill no to the central data base to stand a chance to win lucrative offers.

MAK MALAMAAL DAILY - "JEET KI KHUSHI“SCRATCH & WINGADI MEIN DHAMAK HASI MEIN DHAMAK!MAK MALAMAAL DAILY - "KISMAT KI BALTI KHOLO"

Hindustan Petroleum Corporation LimitedProduct

Price

Following price variables are considered by BPCL for MAK:-• Strategies : Premium pricing• Least price : Petroleum ministrydecides price

of each and every product for each and every PSU.

• Discounts: HPCL offers the opportunity instantly reading the points, you earn for at participating HPCL retail Outlet. Extra discount are also given to the OEM partner.

• Payment mode and period: On cash/debit card/credit card/HP card i.e. smart card, which can be used by the card holder to make purchase of lubricant at designated retail outlet of HPCL.

Place

Lube Distribution Channel

• Retail Channel

• Industrial and Government Channel

• Market extends to count rise like Nepal, Shrilanka, Bangladesh, Saudi Arabia, Malaysia

• Co-Branded Lubes as a Marketing strategies HP Bajaj Genuine Oils

Promotion

Following promotion variables are considered by HPCL for Hp lubricant:-Brand line : „ future full of energy ‟Advertising : TV, News paper, Magazines, InternetSales Promotion: Various schemes are available in the market where customer has to SMS bill no to the central data base to stand a chance to win lucrative offers.

Castrol India Limited

Product

Price

PlacePromotio

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 Have their own independent infrastructure comprising of distributors, stockiest and retailers throughout India. introduce concept like bazaar

Quality Relatively low quality High quality product

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

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 Sales in India

Personal Disposable Income in India

Population in India

Inflation in India

Crude 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_attachment/2014/Lubricant-Sector_DolatCap_300114.pdf

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

http://www.indiaenvironmentportal.org.in/files/file/pngstat%202012-13.pdf


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

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


















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