Daewoo Eyes 20% Lubricant Exports From India

South Korean steel-making brand Daewoo is planning to make India a lubricant export hub by expanding on the manufacturing capacity in the country. The company is eyeing for 20% exports by financial year 2028, a senior official told Autocar Professional.

In a strategic partnership with India's petrochemical major Mangali Industries Ltd (MIL), the company will manufacture lubricants in its manufacturing facility in Maharashtra.

POSCO Daewoo Corporation is the parent company of Daewoo and is headquartered in Seoul, South Korea.

With a revenue of $30 billion in 2022, the company has a diverse portfolio that includes steel, liquefied natural gas (LNG), automotive components, agricultural products, and consumer goods.

“MIL has been into the petroleum product business for more than 50 years. They know each and every product and formulation. And plus they have been into the trading business of lubricant for 40 years. So technically they are very strong,” Vineet Singh, Director- Strategy and Growth, Daewoo India said. 

“We wanted to be in a big market such as India and luckily had a meeting with them. So that's how the marriage happened,” Singh added. The company has invested Rs 30 crore in the lubricant business including setting up the Maharashtra plant. It is planning to invest Rs 200 crore in the next three years. 

Targeting 80% of India’s retail market that comprises mechanics, the company is also likely to export to Middle East and East African countries while exploring opportunities in Latin America after two years.

It has plans to target OEMs, too. “Initially, our focus will be on customers like commercial establishments, garages, mechanics, and similar channels. We'll also look to partner with OEMs such as companies like Maruti, and others. So the overall strategy is to begin with retail, B2B, and B2C segments, and eventually expand into the OEM space.” Singh said.

The plant has a capacity of 40,000 metric tonnes, which the company will expand to 60,000 MT in the next six months. Talking more on the expansion plan Daewoo India's Singh said, "Because it's the same facility, we just need to increase the expansion. Just that, say if we have four lines, so we are using three lines. One line we will use next year.”

India's automotive lubricant industry is an over 102 million tonne volume according to Mordor Intelligence. It is growing at a compound annual growth rate of nearly 2%. The Indian automotive lubricant market is segmented by product type (engine oils, transmission oils, hydraulic fluids, and greases) and vehicle type (passenger vehicles, commercial vehicles, and motorcycles).  

Main industry players in the sector include Bharat Petroleum Corporation Limited, BP plc (Castrol), Gulf Oil International, Hindustan Petroleum Corporation Limited, and Indian Oil Corporation Limited.

To make its own space, Daewoo-MIL partnership is aiming for 2% market share in the Indian domestic market, increasing it to 3% by 2027-28.

Talking about the competition in the industry, Singh said, “Yes, there is competition, but we have a technology and plan in place, and we have one of the most veteran and experienced team members, we are in touch with all the distributors, and have done 80% of the work for the OEM.”

The company also has further expansion plans to establish a 10,000 kilo tonnes facility in Kandla, Gujarat, where it will produce white oil which is used in pharma products.

“We are coming up with another manufacturing plant in Kandla, Gujarat, which is a port and we plan to have that operational after six months," Singh said.

In 2024, Daewoo entered the Indian aftersales market with batteries and lubes. 

Talking about the business, Singh said, “I would say that not a lot of companies are doing good in the battery business. There are more noises, but having said that, Daewoo is not doing so bad.”