Robust market for industrial lubricant segment ahead

Anand,
Executive Director Lubes,
BPCL.

Anand, Executive Director Lubes, BPCL says that the development of construction sector would act as a key catalyst for the growth of the Industrial growth in India.

Industry lubricant segment is expected to register a moderate growth between2019 and 2024. Comment

We rather expect a robust growth as Indian industrial lubricant market stood at     approx. Rs. 87 billion in 2017 and is projected to grow to Rs. 330 billion by 2023, on the back of strong growth in construction & mining sectors across the country. The Indian lubricant market is expected to register a CAGR of 4.64%, during the forecast period, 2019-2024. The major factors driving the growth of the market are the increasing vehicular production along with the increasing construction and infrastructure activities in the country. Increasing demand for advanced lubricants, in addition to government initiatives towards infrastructure development and growing focus of manufacturers on expanding their production capacities, is expected to fuel the country's industrial lubricant market.

By putting infrastructure at the top of the government's vision in the recent Union Budget, Government of India has sent a strong signal that infrastructure development is going to be top priority. The absence of quality infrastructure has often been blamed for hampering the faster economic growth.

The massive push includes connecting all the habitations through all-weather roads under PM Gram Sadak Yojana, building a network of industrial corridors and dedicated freight corridors which will have manufacturing centres along the sideways. It will also include Bharatmala project that will connect the country through a network of world-class highways, while Sagarmala project will develop a grid of seaports and connecting infrastructure in coastal areas. Sagarmala will boost port-linked industrialisation and the country's export.

The government will develop national waterways for affordable transportation of goods by making Indian rivers navigable.

Could you touch upon the growth rate of the company in the last financial year andthe first quarter for industrial lubricant segment?

In past few years we have grown moderately owing to internal infrastructure development project in our Refinery. We also witnessed an influx of many new competitors in the Lubricants sector. However with the renewed support from our refineries, we have revised our strategies, resulting to a growth of 10% plus in the first quarter. This growth is attributed to aggressive field activities by our Officers and robust production and supplies from our blending units.

Heavy machinery segment had a good run in 2018 which resulted in good growth for industrial growth. Do you expect this trend to continue?

In my opinion, the growth in the machinery segment was driven by the commencing of new road and infrastructure projects As per reports the growth of construction equipment sector was doing well till the liquidity crisis gripped NBFCs following the defaults by major construction companies. The construction  sector which was sailing comfortably before the crisis has pegged the growth around to 10%.

India has become one of the key potential markets for construction equipment. Development of construction sector would act as a key catalyst for the growth of the Industrial growth in India. Rapid urbanization, growing population, increasing government spending in infrastructure projects, the increasing number of public-private partnerships, government initiatives such as smart city development projects, the inflow of foreign direct investment are the major drivers boosting the demand in this segment. In terms of equipment types, construction equipment market is mainly dominated by earthmoving equipment segments such as loaders, excavators and cranes. This will increase the demand of hydraulic oils, high quality engine oils, gear oils and speciality greases. With the rapid increase in infrastructure investment and industrial production we expect a good growth of industrial lubricants in this segment.

What are the three major challenges? or how tough is the competition in this segment?

The major challenges we expect in this segment Aggressive competition amongst all lubricant players as this sector is likely to lead in growth terms of lubricants. OEM tie ups will be crucial for pushing volumes Ability to cater these customers as the construction activites will be happening away from the cities. Timely supplies will be the key.

Softening of base oil rates and plentiful availability of base oil in the global market which can push the margins down.

What are your expectations for the next three years in terms of growth for the company?

We have laid strong foundation this year for a robust growth and have taken many initiatives in this direction. We are targeting to grow atleast 10% YoY for the next three years leveraging on our high quality base oil, wide range of products available in our basket, digital marketing and data analytics. We are also investing on our young sales force to deliver extraordinary results. They have been enabled with high quality training
programs that are necessary to deal in the competitive market.

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