Last Wednesday, October 6, 2010, Milind Phadke, Industry Manager, Energy, for the Parsippany, N.J.-based consulting and research firm, Kline & Company, in a webinar presentation, shared insights from Opportunities in Lubricants 2010: India Market Analysis.
This report provides a comprehensive analysis of the Indian lubricants market, focusing on key trends, developments, challenges, and business opportunities and provides detailed segment-wise and product-wise demand estimates for consumer, commercial, and industrial lubricant segments. The base year for the study is 2009 with projections for 2014.
In his webinar presentation Phadke noted, "Besides China, India is the only major economy that did not contract, due to the global recession in 2008-09. While growth rate slowed down towards end of 2008, the Indian economy achieved pre-recession growth by early 2010".
Of the findings discussed by Phadke, he noted that overall lubricant consumption in India in 2009 was estimated at 1,864 KT. Industrial lubricants is the largest segment accounting for 950 KT. Nearly 50% of the industrial volume is accounted by process oils. HDMO is the second largest product category accounting for nearly 24% of the total market.
Phadke then discussed the commercial automotive lubricant market, the consumer automotive lubricant market, and the industrial lubricant market in India in detail, noting that the commercial automotive lubricant market accounted for 732 KT in 2009. On-highway segment accounted for about 480 KT or two-thirds of the overall market and the balance is accounted by various off-highway end-use segments. IOCL (IndianOil) is the largest supplier in the commercial automotive lubricants market with a 26% market share, followed by Castrol at 16%, HPCL (Hindustan Petroleum) at 15%, BPCL (Bharat Petroleum) at 13%. Others include Gulf and Veedol each at 4%, Valvoline at 3%, Total and Shell follow at 2% each. The commercial automotive lubricants market is trending towards higher quality products due to stringent emission limits, changes in fuel, need for longer life oils.
The overall market for consumer lubricants is estimated at 182 KT in 2009. General repair garages is the leading end-use segment (34%) followed by dealerships (27%) and franchised and independent workshops (F&IW) (14%). Retail outlets (mainly fuel stations) owned by the three government oil companies mainly sell two-stroke engine oils. Their packaged sales are mainly to other installers and this volume is accounted in the respective installer segment. Castrol is the leading supplier, by a whisker, in the consumer automotive segment (24%), followed by IOCL at 23%, BPCL at 14%, Shell at 10%, Japan's Idemitsu at 8%, Total at 6%, HPCL at 5%, Veedol and ExxonMobil each at 3%, Gulf at 2% and Motul at 1%.
Overall consumption of industrial lubricants accounted for 950 KT in 2009. Power generation is the largest end-use industry accounting for 24% of the total consumption, followed by chemicals at 20%, metals at 12%, auto, auto component, general engineering at 11%, mining at 8%, aviation, marine and railways 7% and other 16%. IOCL is the leading supplier in the industrial market with sales of 160 KT or 18% of total, followed by Apar at 16%, Columbia Petro at 11%, and other at 13%. Growth in consumption of industrial lubricants will be driven by growth in infrastructure investments, growth in manufacturing and manufacturing exports. Given the poor infrastructure, the government is investing heavily in projects covering roadways, rail and ports. Due to economic growth, growth in commercial and residential construction is also quite strong. Most manufacturing sectors including automotive manufacturing, auto components, machinery, agricultural equipment are all expecting strong double-digit growth. All of these factors drive growth in practically all segments of the market.
Phadke stated "The overall lubricant market in India is projected to grow at 3.7% per year to reach 2,230 KT by 2014. Besides volumetric growth, quality levels are also improving due to modernization of the car and commercial vehicle population, need for longer life oils, and increasingly stringent emission limits."