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| Edited By: Sumit Moitra |Source: DNA |Updated: Mar 22, 2018, 02:03 AM IST
We have around 350 field experts working with our customers and OEMs (Original Equipment Manufacturers) all across the world. And we have research and development centres at strategically located places all around the world – in US, Germany, China and one in India at Bangalore which not only works for our lubricants business but across all our businesses including upstream like refining. This will be one of our top R&D centres in the world. In addition to that we are also opening up an IT centre at Bangalore which will employ around 1,000 people this year. Coming to lubricants, we have partnerships with leaders in their respective sectors like DaimlerChrysler for trucks, Ferrari for racing cars and Ducati for two-wheelers and with Atlas Copco for compressors and Komatsu for mining. In India, we have similar partnerships with Maruti Suzuki, Hyundai or General Motors for passenger cars or Tatas and Volvo Eicher for commercial vehicles. You name a segment and we have a partnership. These partnerships are not only about supplies but also about technology. In the B2B space in India, we have similar partnerships with Watsila, Suzlon, Tata Hitachi.
The market for lubricants is strong in India with rising opportunities. Ranking third after the United States and China, India is one of the most important markets. As per Kline reports, the overall lubricants market in India is approximately 2,200 kilotonnes. The industry in India is expected to grow at a CAGR of 2.2%. With respect to the company's performance, we have 10 to 15% market share in what we call an 'accessible market' in India. The accessible market doesn't include markets like the government sector where purchases are made through tenders, which is very cost-driven. Globally, we're the largest with about 12 to 13 % market share, and in India too we plan to continue growing in double digits over the next three to five years.
An important aspect for us is applications. We innovate not by working alone but with our partners so that we understand their needs before developing the product. Then you apply that in the field. That's where we learn where things can go wrong, go back to rework and then again demonstrate the product's values to customers. We call it Demonstrative Value Records, whatever value we deliver, we demonstrate and record. We have three categories: three-star, four-star and five-star. Three-star is when we deliver a value to customer and customers acknowledges but doesn't allow us to disclose their identity or issues a letter. In those cases, we would use such acknowledgements for internal training purposes. Under the four-star category, customer issues us a letter but requests us not to name them. In those cases, we would use such DVRs externally and would say that one of the leading power companies in, say, Malaysia, has saved so much using our products. Under the five-star DVR, customers not only acknowledge the benefits they derive but also give up a signed letter allowing us to disclose their names. We have a collection of such 2,500 different five-star DVRs globally across sectors and applications.
We expect demand from the mining sector to grow. The sector so far was under a lot of government legislation. Even purchases by mining major Coal India happen through the tendering route. But with the sector opening up, and mining contractors slated to play a bigger role, we see lot many opportunities. In automotive lubricants, a large portion of lubricants is sold through the 'bazaar' (retail) segment where we don't have a large presence as the segment is cost-driven and many brands are present. But we plan to really grow the market there.
To grow in the retail segment, we have launched a lubricant, Rimula T5, in partnership with the Tatas, who have approved it as giving a fuel economy of 3%. We have clearly demonstrated the fuel economy value. A 3% improvement in fuel economy for a truck translates into Rs 40,000 a year. Consider the benefits that accrue to a fleet owner of 100 trucks. Since India is a price conscious market, these value propositions are very compelling. From the parameter of costs of lubricants to the total cost of vehicles, which could be anywhere between 2-3%, we are making consumers understand the cost of ownership of the vehicles. In the mining sector, for example, the equipment owners ask how the downtime can be reduced. For this, we demonstrate how to extend the life of the oil as well as the life of the machine. These apart, we also calculate the monetary benefits they can have through better fuel economy. If you add the three, there could be significant savings to be made. So, after working on this strategy in India for years, we are happy to see that customers here are now realising the importance of cost of ownership compared with just the cost of buying our products.
This is based on gas-to-liquid technology pioneered by Shell. We have more than 3,000 patents on this technology alone. With the commercialisation of our huge GTL facility in Qatar, we are now able to meet one-third of the requirement of group 3 base oil. Conventional lubricants come from crude oil which contains a lot of impurities including sulphur. Using the GTL technology, which in Shell we call PurePlus technology, we are producing lubricants from an ultra-clean base oil under brands like Helix Ultra. The confidence in this technology encouraged us to launch the Shell lifetime engine warranty programme. Under this, for customers of Helix Ultra, we are guaranteeing to pick up any costs of failures of the engine once the warranty is over. We are basically giving a lifetime warranty on engine.
