GS Caltex India is a 100 per cent subsidiary of GS Caltex, which is a 50:50 joint venture between GS Energy of South Korea and Chevron Corp of USA. Being part of such global energy leaders gives the company an edge over other lubricant companies by having access to the latest base oil and additive technologies. K Madhu Mohan, General Manager-Marketing, GS Caltex India, elaborates on the market scenario and outlook of the lubricants market in India.
The market is going through a tough situation now with slowdown affecting many equipment segments. How do you look at this scenario for lubricant market?
The ongoing economic slowdown has certainly affected equipment and construction sector too. In the past few months, construction equipment makers have cut production and stalled some of their expansion plans. Government also has delayed awarding new projects to curb the capital expenditure to meet the FY19 deficit target. As per the latest estimates, execution of road projects is likely to miss the target by 35 per cent. Not surprisingly, the reduced flow of money has impacted construction equipment companies. These companies estimate production cuts of 15-60 per cent. This unprecedented slowdown has impacted the lubricants market as well. However, the impact is more prominent for companies who have a larger share of FF and SF business in their portfolio. In our case, having an even spread of different business verticals has helped us in mitigating this challenge by focusing more on the channel business. The lube industry does have some challenging times ahead with many affecting factors other than the slow down. However, it would be too early to say that the industry will see any major de-growth because of these factors.
How do customer requirements for lubricants vary with different equipment? How are you meeting these requirements?
Gone are the days when a single type of engine oil or hydraulic oil would suffice the customer or equipment requirements. The continuous technological innovation and the dynamic operating conditions have made the customers demand different types of lubricants for different machines and equipments.
Research and development (R&D) is the core strength of GS Caltex in developing product competitiveness. Our R&D has developed many award-winning lubricants to forge partnerships with major OEMs and key accounts globally. GS Caltex product portfolio for the construction industry focuses on all types of costs including product cost, maintenance costs and administration costs, thereby reducing the total cost of ownership for a business house. The high-performance lubricants from GS Caltex offer ultimate reliability at all temperatures, lower oil consumption, and significantly lower fuel consumption along with extended service intervals. Just one per cent lower fuel consumption means, depending on operating conditions, fuel savings of several hundred rupees per vehicle and year. Our impressive range of high-quality finished lubricants is now supplied to large businesses in India including major OEMs viz, Hyundai Motors, Volvo Construction Equipment, Volvo Trucks and Buses, Hyundai Construction Equipment, Posco, Kohler, SDLG, Ajax, Doosan, Ammann, Puzzolana etc.
How is the technology developing for lubricants to meet the latest technology and application conditions?
Lubricant industry has been always at the forefront in adapting to the fast-changing automobile technologies and there are many factors which are currently influencing the industry globally as well as in India today. One of the main change drivers in India currently is the forthcoming implementation of BS VI norms from April 2020. Bharat Stage VI is the most advanced emission standard for automobiles and is equivalent to Euro-VI norms currently in place across the countries in Europe. Similar norms have been already notified for the construction equipment industry by the government. These statutory requirements call for many changes in the way construction machinery is manufactured today.
GS Caltex is fully aware of the legislative and the technological changes in the industry; our R&D team is closely working with global companies as to what efficiencies they are bringing in their vehicles and processes, and how we can add value to complement their work. In the coming years, development of more advanced technology will have greater implications and we are fully geared up to meet those challenges. As a global technology leader, we see these changes as an opportunity to showcase our strengths and play a meaningful role as a lubricant company. We are fully equipped and prepared to meet the requirements arising out of the shift to the latest emission norms. In the engine oil, we have developed the latest CJ4 and CK4 specification oils and already supplying CJ4 to a leading global OEM in India. We had launched the latest CK4 grade oil in the bauma 2018 held at Delhi. Parallelly, we have also launched many synthetic products in the gear and transmission oil segment, which are more efficient and will complement the efforts in bringing down the emissions.
What are the product offerings and solutions from GS Caltex for construction equipment industry?
R Our construction portfolio includes engine oils, gear oils, greases and hydraulic oils. The high-performance lubricants from GS Caltex offer the customers the ultimate reliability in all types of operating conditions. We have already launched products meeting the latest API standards of CK4 and FA4 to meet the latest emission and fuel economy norms. We have also developed many products which meet several industry specifications of ACEA, JASO, Cummins, VDS, CAT and MB standards. Apart from engine oils, we have been supplying high-performance gear oils (API GL4/GL5, TO4 and UTTO), greases (Li-complex, Moly, EP, etc) and hydraulic oils (meeting DIN 51524 Part III and super clean range) to many OEMs and customers.
In summary, we have a complete portfolio of brands for construction sector as below:
Engine oils - Kixx range of oils
Gear oils - Kixx Geartec range of oils
Hydraulic oils - Kixx Hydro range of oils
Grease - Kixx grease range
What is your outlook on the synthetic oil-based lubricants?
Focused on environmentally sustainable lubricants, market is moving towards fully synthetic products (Group III and PAO-based base oils). Increasing popularity of synthetic lubricants due to excellent thermal stability, wear and tear protection, good load carrying capacity, and low friction will propel growth in construction and mining segment. For example, we have developed polyalphaolefin (PAO)-based Kixx PAO DX Euro 15W40 synthetic engine oil meeting the latest API and European standards.
GS Caltex synthetic product lineup boasts superior oxidation stability and delivers a smooth and comfortable ride, thus providing a complete engine and component protection. Though the awareness level is growing among customers, there is a long way to go to see a substantial volume in synthetic oils, due to higher cost compared to mineral oils. Despite the higher price range, synthetic will play a crucial role in future as OEMs are recommending more and more synthetic-based lubricants. With reference to the technology changes happening in the industry, the performance parameters required are quite advanced and stringent. Engine OEMs are shifting towards CK4 and CJ4 oils, which suit the latest technologies such as SCR and EGR. Oil will play an important role in the safe keeping of engines and other parts.
How do you look at the future of the lubricants market? What are the growth opportunities in future from infrastructure equipment?
India is the world's third largest lubricant market, behind the USA and China, and ahead of Japan, Russia and Brazil, with total consumption of approximately 2.31 mt in 2018; industrial oils account for approximately 45 per cent of the total lubricants demand. Preliminary data indicates that the country's lubricants consumption rose by an estimated 1.8 per cent year-on-year in 2018. With the pace of growth led by the transport and manufacturing sectors, India's lubricant demand is projected to rise by 2.1 per cent per year on average over the 2020-25 period, to approximately 2.55 mt in 2025, assuming average annual GDP growth of around 7-7.5 per cent. India's lubricants consumption per capita remains low at 1.62 kg in 2018, compared to 2.7 kg for Indonesia, 5.2 kg for China and 8.1 kg for Malaysia, suggesting considerable long-term upside potential. Above data clearly reflects the scope and opportunity that the Indian lubricant market offers to global multinationals and well as domestic players.
GS Caltex in India is relatively a young player and we see a huge opportunity for us in the lubricant space, particularly in the equipment industry, considering our strong relationship with some of the major global construction OEMs. There is enormous potential for infrastructure development in the country, which offers a great opportunity for the equipment market.
In the industrial lubricants front, with many global manufacturers setting up facilities in India, there is a huge growth opportunity for industrial lubricants in the country. In the long run, industrial lubricants consumption growth may outpace the growth in the automotive lubricants.