An interview with CEO of Total India (Lubricant Division) on plans to increase its share in the domestic two-wheeler lube market, trends in the lubricants industry and the impact of vehicle electrification on the sector.
02 Apr 2018 | 21439 Views | By Nilesh Wadhwa
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What is the strategy behind launching Hi-Perf lubricants? Was there a section of the two-wheeler segment not being addressed?
We were addressing the market with our Elf range of products but with new motorcycles coming in, the Elf range had its limitations. We had to increase the range to address the consumer demand in the market.
Total India is targeting a 10 percent market share in the motorcycle lubricant segment. What is your current share in the Indian lubricant market?
Yes, we are targeting a 10 percent share in the motorcycle lube segment with the launch of Hi-Perf. India’s lubricant market is estimated to be around 2.5 million tonnes per annum; we are doing about 70,000 tonnes right now. It is a very big and fragmented market that makes us optimistic about our target.
How many new products are you planning to introduce? Is there a roadmap for introducing new products?
It is very simple. For instance, India is gearing up for BS VI and the need and demand for that will be there. We have the capacity, capability and the research facility with the development capability to make sure that the needs of the new engines are met. So as and when there is a need in the market for a new product, we will be in a position to launch it because we have the expertise.
How many vehicle segments does Total Oil’s lubricant division cater to in India?
We service the passenger car, bus and truck segments but the off-road vehicle and motorcycle segments are also important for us. We have the products that meet the requirements of the industry and are also involved in developing products along with OEMs.
India is set to upgrade to BS VI in 2020, barely three years after introducing BS IV norms. The government is also pushing all-electric mobility by 2030. How do you view this situation as an energy company?
Our technical R&D centre is located in the heart of the development of new products (Europe), meeting the new challenges. As a company, we are very much involved in the development of products which are required for the transport, mobility and personal mobility industries, along with the OEMs trying to develop new solutions.
We spend around $1 billion (Rs 6,317 crore) in research and development. And as and when there is a need for new products, we are always at the forefront.
How much do the India operations contribute to Total's global revenues?
We are a huge oil company and our presence in India is still very minuscule, so the contribution currently is very small as we are, currently, only dealing with speciality products (LPG, lubricants) in the domestic market. When you deal with mainstream activities, then the numbers become bigger. India is still a very small portion of Total’s market but it is one of the most ambitious markets in which we would like to grow.
Total is also present in the Indian LPG market which has not seen a major pickup in demand. Now with the government pushing electric mobility, how do you foresee the LPG market’s future potential, given your investments in this sector?
From a consumption point of view, the per-capita consumption of LPG is very low; we are at least one-third of the average of the US or China market. So the potential is huge; not even 50 percent of the households are covered with LPG. The government is giving it a big push which is why it continues to subsidise it. Our core focus is not just vehicles, but LPG for households, industrial and transport. With our Auto LPG in South India, we cater to a lot of autorickshaws in around five states and cities including Bangalore, Chennai, Hyderabad where again it is a clean fuel.
Do you think LPG could be a mainstream fuel or will it lose its sheen?
Every fuel has its place and position in the global market. There will be times where you are using diesel- powered transport. Personal vehicles could move towards petrol and because of the government changing the fuel price mechanism, many personal vehicle owners have moved towards petrol.
Similarly, you could see few people moving towards LPG, which is more convenient and he/she is more sensitive to pollution. There could be some places where the pipeline/supply is available, so they would move towards CNG, as there is some constraint of the pipeline today because you need to put in big investments.
Do you think that in 2030 there could be a mix of fuel consumption for the automobile industry?
It will always be a mix because the needs will be different for different people. For instance, a transporter who is going to Assam will have a different need than the one going to Delhi. It is quite possible that towards along the Delhi road you could have CNG stations, but if you are going to Assam you won’t have that facility, so some will be in diesel, some in other.
Prakash Jonnalagadda with Karoly Repas, senior VP – Sales, Marketing and Technical, Total Oil India Lubricant Division, and Gayatri Ojha – VP (Marketing and Corporate Communications, CSR), Total Oil India, at the launch of the Total ‘Hi-Perf’ range.
Do you mean to say a single fuel will never dominate the industry?
Over a period of time, you will see changes. If you compare India with other countries, you will find the mix in the basket is completely different; globally, diesel is less, petrol is more, and in India, you have more diesel, and less petrol.
What are the new trends that you have seen in terms of marketing activities? And could you tell us about the growth of high-performance lubricants in the country?
As regards the lubricants market, we have seen a growing interest towards higher-end products and better viscometrics, which means consumers are looking for more from the oil then what they were asking for before.
Earlier it was basic oils, today it is high technology. This is where Total has an advantage of providing high-tech oils with very good viscometrics and excellent detergent properties that help enhance power. This is where we come in by providing high-end products to the consumer. People have been shifting from monogrades to multigrades, and now towards thinner oils. Of late, you see more of thinner oils (0W 40s, 0W 50s) coming into the market. Fuel consumption efficiency improvements are also forcing lubricant companies to produce oils which are far more efficient than what they were. Everybody is on the curve to improve fuel efficiency; earlier, people used to ask only for lubricants, now they ask for lubricants that enhance engine performance as well as fuel efficiency.
The growth is quite fast in the car segment as vehicles are becoming more and more technology oriented. Cars are becoming more and more complicated as are trucks. You see much bigger horsepower and as you see infrastructure improve you will see long-haul trucks taking in much more horsepower and load. More power will mean more wear-and-tear for the engines, which will need higher-grade oils. Thus, with the growth of the country, you will see demand for higher-end products.
Hypothetically, by 2030, if there is a penetration of 10-20 percent electric vehicles in the Indian market, how do you
perceive this as a challenge for Total Oil?
You will still have the transport segment which is huge and will be growing. You will have the motorcycle segment too.
But many experts including SMEV, say that the adoption of EVs will be first seen in the two-wheeler segment in the Indian market.
If it happens, it’s fine. Everybody is trying to find out what will happen in the electric vehicle segment. There is still a lot of work to do, new batteries have to come that are longer lasting with more mileage, technology is moving in that direction and we will see as it moves will have to change.
Total is an energy company and lubricants and oil are just one portion of our business. Electricity is another part of it, we have one vertical which looks after solar energy and another which is into battery technology. We have all these things, so whenever the market moves, we move along with it. Total as a company is geared towards it.