Shell Lubricants is one of the global market share leaders in finished lubricants with 13 per cent of the market in volume terms. Since 1997, Shell India has been manufacturing its lubricants at its state-of-the-art lubricant oil blending plant at Taloja, near Mumbai.
Akhil Jha, Vice President Technical – Lubricants, Shell India Markets Pvt. Ltd told Sandeep Menezes that the demand of lubricants in India is not growing due to country’s growing GDP – but proliferation of large numbers of OEM’s and growing number of construction equipment owners.
Excerpts from the interview:
What is the current and estimated future size of the lubricants market in India? How much of this comprises of construction equipments, trucking segment?
Indian lubricants market is one of the fastest growing markets in the world growing at a CAGR of 17.8 per cent during FY 2008-2012 and expanding from $1,044.87 million to $2,014.85 million in the same period. The overall lubricants industry in India is expected to grow at a CAGR of 11.5 per cent to $7,713.7 million by FY’2017. Source: Ken Research
Basis the estimates published in Kline’s report titled “Opportunities in Lubricants 2010: India Market Analysis”: We estimate India’s current overall lubricants market to be approx 2 million metric tons. Out of this on-highway segment is estimated to account for approx 0.53 million metric tons and off-highway segment approx 0.28 million metric tons. Off-highway segment consists of both construction and mining.
What are problems faced by construction equipments and trucks using sub-standard quality lubricants?
Usage of substandard lubricants leads to manifold problems which can be categorized as below:
o Reduced equipment life – As substandard lubricants are not capable of meeting the desired requirements of modern construction equipments it leads to frequent breakdowns and reduced overall equipment life. This has very high financial impact on the customers due to not only expensive parts/equipment replacement but also very expensive down time cost.
o Reduced Efficiency – Faster wear of machine parts by substandard lubricants leads to reduced efficiency of the equipment.
o Increased Lubricant Cost – Substandard lubricants deteriorate faster leading to frequent oil changes and increased top up rates.
o Adverse Environmental impact – Due to enhanced wear, substandard lubricants (primarily engine oils) find its way into the combustion chamber and consequently getting into the atmosphere as by-products of incomplete combustion. Frequent, wide spread oil drains also lead to increased disposal challenges.
Tell us about the customer requirements for construction equipments and trucking lubricants?
The construction equipment sector needs engine oil, hydraulic oil, transmission oil and grease. These are the four categories of lubricants that are used in construction equipment. Traditionally, people have been using products made according to the industry standards and specification but may not be getting the desired performance. At Shell, we are investing heavily on R&D and trying to develop products which can give maximum benefits. We study the requirements of the construction industry. We have around 300 experts in the field globally who are working closely with customers & OEMs to understand their requirements. They bring all the information about the requirements back to the technology team. Then we look at what can be done to raise the benchmark. We want to develop a product that does not just meet the standard but also addresses the requirements of the industry.
Trucking customers demand for lubricant with enhanced Oil Drain Interval (ODI) and fuel efficiency as there is frequent price revision for fuel items. Trucking customer is also looking for a lubricant which is available everywhere at every part of the country as the truck movement route is not uniform or a fixed one. Customer is also demanding for higher ODI in transmission and gear oils. As part of the technology updates from CE OEMs and the Oil suppliers, customer is also demanding for value added service like lube oil condition monitoring, end-to-end lube oil management system etc.
How do you view the recent trend of co-branding lubricants with construction equipment OEMs?
End user can easily select the lubricants without any cross verification. As the CE OEM and the oil supplier do the product evaluation together to finalize a co-branded product, the end user is generally assured of the oil quality. Co-branded products are made available through networks of OEM service centres and oil supplier’s distributors hence it benefits the end users in terms of where to buy the oil from. As the oil is co-branded, the OEMs are keen to utilize value added services from the lubricant suppliers such as oil testing, staff training etc. In Shell we take the partnerships with the OEMs to the highest level which goes beyond co-branding. We call this “co-engineering” where Shell & the OEM design & develop the engine hardware and the lubricant together in order to get the maximum benefits for the end users.
What is Shell Lubricants future business strategy in India’s construction equipment and trucking segment?
Construction equipment market is tightly coupled with infrastructure expansion. India at the current levels of infrastructure gives a huge opportunity in the medium and long term.
We foresee, growing demand of engine oils and other variety of lubricants from Indian construction equipment sector, catalyzed by growing mechanisation of construction activities. However, at par with developed markets, we see the demand of lubricants in India growing not due to country’s growing GDP, but proliferation of large numbers of OEM’s and growing number of construction equipment owners, both representing the institutional and rental segments.
By bundling products and services delivered through world class technical team, we are able to retain and grow our customer base in construction sectors. We call this Value Selling approach.
Going forward, does Shell Lubricants intend to launch any new products for the construction equipment, trucking segment? Also, could you please elaborate on your R&D focus specifically for the construction equipment and trucking segment?
We are continuously launching new products for the construction industry and we recently had an opportunity to showcase those products at EXCON 2013.
Shell has a long history of Technology and Innovation. To date, we have three R&D hubs in the world in US, Europe and India. The Bangalore R&D hub in India is among the top three R&D facilities of Shell in the world. In fact, we have recently announced an expansion of the Bangalore facility. We have about 108 engineers today who will be establishing a new campus to develop a next generation of technology.