The Indian coolants & lubricants industry charts a positive growth track with technology upgrades and green measures
by Mitalee Kurdekar
According to a report titled ‘India Automobile Coolant Market Forecast & Opportunities, 2019’, the Indian coolants market is expected to grow at a CAGR of around 6% during 2014-19. This forecast augurs well for the industry. Currently, the Indian coolants market is largely driven by the growth in the automotive sector. With rapid urbanisation and gradual increase, the purchasing power of Indians has led to a spurt in the demand for light passenger vehicles as well as heavy-duty vehicles.
Retail distribution channels are the key for this market in India. Franchised service centres of Original Equipment Manufacturers (OEMs) are seen to be mushrooming, but only in large urban centres in India. Given the large geographies and road transportation being a major medium to reach nooks and corners of the country, there is rapid growth of small scale workshops seen at regular intervals on national & state highways and inside towns.
Retail channels are acting as the strongest driver for sales of automotive coolants and with the increasing do-it-yourself culture in the country, the retail channel is expected to grow further over the coming years. OEM franchised service centres provide the second biggest sales channel for automobile coolants in the country. These medium to small workshops are emerging as a major platform for coolants and lubricants, particularly where vehicles are serviced for replacement of these coolants/lubricants.
Growing industrialisation is also proving helpful in surging demand for lubricants in industrial applications. It is important to choose a combination of high-quality lubricants – slideway oils, water soluble cutting fluids and neat cutting oils – in order to ensure that a machine tool runs smoothly. A Kline & Company report of 2016 titled ‘Opportunities in Lubricants: India Market Analysis’ suggests that as the growth in Asian countries is slowing down, India is the only bright prospect on the horizon. Strong economic growth of the Indian economy is propelling rapid growth in lubricant consumption. Tightening of emission limits by government agencies in urban centres raises the need for improved fuel quality. This bodes well as far as an improvement in lubricant quality and an increased use of synthetic lubricants is concerned.
Advancing Technology
In terms of higher revenues though, this industry expects a robust growth in the future from an enhanced interest in higher quality metalworking fluids such as synthetics, semi-synthetics/synthetic blends and water-soluble products. The value proposition for use of such quality products for its user has changed over the years, mainly on account of an increased life span for the equipment – be it an automobile or a machine – and the affordability for quality lubricants owing to improved purchasing power. In the past few years, the industry has seen demanding customers who ask for products emerging from high technology and ones that offer superior performance in their workplaces. Specific targets at modern day machine shops, including improving productivity in their processes and reducing cost of their operations, has only enhanced the importance of metalworking fluids, placing it high on their wish list.
Better performing products bring down the Total Costs of Ownership (TCO), improve the safety profile and take into account Health, Safety & Environment (HSE) issues for the operators. Achieving these therefore becomes a key challenge for this industry and is at the forefront in the context of any innovation and development project. A provider who can successfully address these challenges would hold the advantage in a competitive market.
Emphasising the importance of TCO, Yatendra Kumar, business head, MotulTech India, laments that many customers do not appreciate this aspect in the first place when they hard bargain on the price of the product. He says, “If by using high quality lubricants, the customers can increase the productivity of their machines by 10%, it means they save one machine out of 10. Additionally they are not only saving the machine cost, they are also saving on space, manpower, electricity, tools and other consumables required for the additional machine. In today’s environment while the cost of everything mentioned above is going up day by day, we can save money for our customer by offering them high productivity at a most competitive price in the market. And this is our contribution in making our customers the most competitive in their own operations.”
As a company that helped pioneer synthetic lubricant technology, ExxonMobil devotes significant resources to product research and development. “We use an advanced, scientifically engineered ‘balanced formulation approach’ that leverages the company’s leading technology and application expertise. This comprehensive process enables us to develop lubricants that deliver exceptional performance across all critical areas for each application – such as oxidative stability, component wear protection, corrosion control, filterability, shear stability and extreme temperature performance,” states Imtiaz Ahmed, Asia Pacific Mobil SHC brand manager, ExxonMobil Lubricants.
New challenges continue to be addressed with new products and services. With every new technological development, there will be continuous challenges in the industry. For instance, Tapas Chakraborty, DGM, technical services, Raj Petro Specialities, points out that they have introduced many sophisticated products keeping in mind customers’ specific requirements in both water-miscible & neat cutting oils. “With the advancement of additive technology, we’ve launched special products for machining difficult metals like Titanium, Inconel, Monel & Aerospace Aluminum. We also have boosted our portfolio with some special products for Minimum Quantity Lubrication (MQL) and a biodegradable range keeping environmental aspects in mind,” he adds.
In order to maintain their relationship with OEMs, Ahmed believes in closely monitoring the trend of technology development on the equipment side, so that they are geared up to deliver the right product, which will cater to this requirement in the industry. This proactive approach helps to get the products right and thus stay competitive. ExxonMobil’s flagship Mobil SHC synthetic lubricants are approved for use in more than 10,000 applications and have preferential endorsements from more than 2,500 equipment builders.
Quest for Efficiency
Another trend seen in the industry is the use of green initiatives, from incorporating biodegradable materials in the manufacture of coolants to recycling programmes that the customers can adopt to reduce waste. Munish Garg, managing director, See Lube Technologies, suggests, “The expected growth of industrial lubricants is technology based. To compete in this market, adoption of new technology is inevitable. With the increase in demand, there is an inevitable problem of disposal of used lubricant and it is becoming a big challenge. To overcome this, we are working towards biodegradable lubricants. We have developed cutting oils using vegetable oils that are biodegradable employing nanotechnology.”
Echoing this sentiment, Ahmed states, “The metalworking industry continues to go green as more shops adopt vegetable-based coolants and implement recycling programs. To reduce overhead costs, more shops are investigating in new ways to reuse their coolant rather than dispose it, including new coolant recycling programs that can reduce coolant waste and increase sump life.”
Garg is emphatic in suggesting that the world is becoming smaller, while technology is getting over-worked. The challenge, therefore, for the manufacturers in the industry is to continuously innovate in order to stay ahead in the game. He is equally clear that customer expectation is towards continuous cost improvement and hence, unless one is looking for cost minimisation at both own as well as customer sites, one would not stand a chance against the competition.
One interesting facet that we notice in the Indian coolant and lubricants market is the variety of distribution channels that get deployed. Apart from the OEM segment, retail trade has become a significant distribution channel for the industry. In the OEM segment, manufacturers have to tie up with OEMs to impress upon the value proposition of their brand. Retail trade, on the other hand, has many channels. The ‘I will do it myself’ attitude has helped Indian consumers to self-serve their basic needs of coolants and lubricants. Hence, petrol pumps form a major distribution channel. Apart from this, such sales take place through authorised service stations, garages, wholesale distributors, rural and agricultural agents as well as super markets. The product range is therefore assuming the label of fast moving consumer goods (FMCG).
Flowing with the Times
Industry players have employed various growth strategies to keep up in this vastly transformed market place. MotulTech has introduced many products in last 12-18 months for the Indian market. These products are based on the latest technology and highly focused on the concept: How to make the customer competitive in their operations. Kumar explains that their ‘Tube Gel’ brand is one such example.
He adds, “Tube Gel is rated high on performance, incurs minimum consumption, is environment friendly and, above all, we are able to eliminate one process in most of the places, whenever we have tried this product.” Another example, he says, is their top-of-the-line high performance water miscible Safco Stabilis 822 Ultra, which can vie against any competitor on productivity and tool life. He proudly sums up by saying that all this has happened due to their continuous efforts to improve their own performance.
See Lube Technologies’ growth strategy is also centered on product innovation. Garg announces, “We are also introducing a complete range of products, thus we have become full-line suppliers for any industry. Apart from our mainstream products, we are also moving to value-added products and services, like regeneration of used lubricants at customer premises only. We are also introducing equipment for the same, which will be available off-the-shelf from July 2016.”
Last year, See Lube launched the Total Lubrication management system, wherein they take responsibility for the lubrication needs of clients through a single window system. “We manage, test & optimise the lubricants at the client’s premises. There are a couple of customers who benefitted from our efforts in terms of reduction in consumption. This year, we are increasing our sphere to Coolant Management services too,” professes Garg. They will be taking responsibility for coolant management for procurement, usage & disposal; thus giving much relief to customers. This activity will not only help customers to optimise the usage of coolants (cutting oils), but also reduce the cost of operation.
“Although the Indian two-wheeler & passenger vehicle markets are already huge, strong growth is expected in export in the coming years. Similarly, primary metal industries, like Steel, Aluminum & Copper, are also showing rapid growth in India, and should impact coolants & lubricants’ demand positively,” asserts Chakraborty.
Judging by the above, the industry is poised to witness exciting days ahead, if it continues to remain customer and efficiency focused.