Boom in lubricants segment attracts foreign players

 Petrol and diesel prices have been deregulated but it is the lubricants segment that those in the oil marketing sector find attractive and are preparing to fight over.

 
In the past year, the segment has seen entry of Malaysia’s Petronas and Spain’s Repsol. Last week, Petronas Lubricants International (PLI) launched a $50-million lubricant blending plant at Patalganga, Maharashtra. This, it said, would help make it a formidable entity in the segment here.
 
“India is without exception a very important market for us in the Asia region and we are confident of the potential. Therefore, we have embarked on a solid growth plan to accelerate our business here in India,” said Giuseppe Pedretti, PLI’s Asia head.
 
Constructed on 25 acres of industrial land, with an estimated production output of 110 million litres a year, this factory is to commence operations by end-2017. It reportedly has world-class blending facilities and equipment, a highly automated production line and increased storage tanks.
 
India’s growing economy and emerging middle class continue to contribute to a robust automotive market growth. As a result, India is now the world’s third largest lubricants market, behind only America and China, with a market size of 2.5 billion litres. Lubricants’ demand is projected to grow at a 2.3 per cent compounded annual rate. Of that, the automotive lubricants market is 52 per cent, and growing at six per cent annually.
 
Those in the industry say the US is the largest market but this has stopped growing. In Europe, China and Japan, the growth is slowing.
 
India and Africa are the only growing markets for lubricants, with India having a bigger growth potential. This industry has a high correlation to gross domestic product growth — it is important for the automobile, agriculture, construction, steel and cement sectors, among others.
 
Repsol, largest petroleum company in Spain, entered India by announcing a partnership with UAE-based Gulf Petrochem. Last year, Gulf had year acquired Sah Petroleum (now GP Petroleum) in India. The company is a modest player in the domestic industrial lubricant space with its IPOL brand. With its Repsol partnership, it wants to make inroads into automotive lubricants. GP Petroleum would be manufacturing Repsol lubricants at its existing units in Vasai and Daman. It would also be setting up another unit of 100,000 tonnes on the outskirts of Pipavav (Gujarat), with an investment of Rs 125 crore, to be commissioned in the next nine to 12 months.
 
"We have set ourselves a target of achieving five per cent of the automotive lubricant market by 2020. Right now, we are at three per cent in the industrial segment. We are trying to spread the word by meeting mechanics, customers and conducting workshops," said S Thangapandian, executive director at Gulf Petrochem.
 
An official from Indian Oil Corporation (IOC) said with the segment seeing interest from global entities, competition will increase. However, with the large number of fuel retail outlets that oil marketing companies already have in the country, it will be tough for the new entrants to beat the existing ones.
 
The lubricants industry in India is dominated by IOC (Servo brand), Bharat Petroleum Corporation (MAK) and Hindustan Petroleum Corporation (Turbo). These have half the market share. The rest is with private multinationals, including Shell, Gulf Oil, Castrol, Exxon Mobil, Total, IPOL and smaller companies.
 
Source : http://www.business-standard.com/

Posted on : 25 Nov,2024 | News Source : ABNews

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