e&i group project
DESCRIPTION
lubricant market in indiaTRANSCRIPT
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?
SW
S 2
00
6
2
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.
SW
S 2
00
6
3
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.
SW
S 2
00
6
4
Source: http:// ( addddddddddddddddddddd………..)
Types Of Lubricants
Gaseous lubricants
Liquid lubricants
Semi-solid lubricants
Solid lubricants
SW
S 2
00
6
5
Source: http:// ( addddddddddddddddddddd………..)
Lubricant market
Global Scenario Indian scenario
SW
S 2
00
6
6
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.
SW
S 2
00
6
7
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.
SW
S 2
00
6
8
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
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.
SW
S 2
00
6
9
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
SW
S 2
00
6
10Indian lubricant market study
Source: http:// ( addddddddddddddddddddd………..)
Why oligopoly ?
Very few firms
Barriers to entry
Interdependence of firms
Non-price competition
Important role of advertising
Price rigidity
SW
S 2
00
6
11
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.indiaenvironmentportal.org.in/files/file/pngstat%202013-14.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
http://www.crisil.com/Ratings/Commentary/CommentaryDocs/lubart.pdf