Prospects of Indian industrial lubricant markets look promising

Facts first, in June 2021, IOCL signed an MoU for 'Investment Promotion' between the government of Gujarat and Indian Oil for setting up a Petrochemical and Lube Integration (LuPech) Project and Acrylics/Oxo Alcohol Project, along with other infrastructure projects at its Gujarat Refinery at Vadodara.

l In April 2021, SK Innovation has agreed to sell a 40 per cent stake in SK Lubricants to domestic firm IMM Private Equity for 1.09 trillion South Korean won ($983million).

l In February 2021, the FUCHS Group announced that it has acquired 70 per cent of the lubricant business of the specialty distributor STD & S Co Ltd based in Vietnam.

l In February 2021, the OTK Kart Group and ENI SpA have entered a partnership for the development of lubricants on vortex engines, the engine division of the OTK Group.

l Royal Dutch Shell has come up with a lubricant laboratory to propel market. The new lab will help the company to expand and strengthen its R&D activities in the world as well as India. The lab can be play an imperative role in uplifting the automotive lubricants market share in the years to come due to the technologies to co-engineer products that will help OEMs in improving efficiency and reliability of their equipment along with business development support and maintenance activities of Indian customers. In addition to serving OEMs, this laboratory will also enable us in developing performance data of Shell-branded products relevant to Indian customers.

l Indian Oil Board has greenlighted the setting up of India's first mega-scale maleic anhydride plant, to manufacture value-added chemical products, at its Panipat Refinery and Petroleum Complex (PRPC). The project with a capex of Rs 3,681 crore will be commissioned in 54 months from Stage 1 investment approval. The project is proposed to have a capacity of 120 KTA (kilo tonnes per annum) of maleic anhydride (MAH) that is used to make speciality products like polyester resins and surface coatings, plasticisers, agrochemicals, and lubricant additives. The plant will also manufacture 20 KTA of 1,4-butanediol (BDO) that finds applications in polyurethanes, polybutylene terephthalates (PBT) - an engineering grade plastic and biodegradable fibres. The upcoming MAH Plant will reduce import dependence and save foreign exchange of about $150 million per year, thus strengthening the mission of Aatmanirbhar Bharat. Moreover, petrochemicals integration is the cornerstone of our future growth strategy, given the high potential of petrochemicals in India. This project will consolidate Indian Oil's basket of niche products and increase the Lube and Petrochemical Integrity Index of Panipat Refinery to more than 15 per cent after the refinery expansion plan is implemented.

And these developments can be justified by the fact that the Indian industrial lubricant market, which stood at $1.54 billion in FY19, is projected to grow to $1.91 billion by FY27, on the back of strong growth in construction & mining sectors across the country. Having said all these, one must keep in mind that with the automotive sector rapidly gearing up for electric mobility in the passenger vehicle segment, Indian lube manufacturers have started exploring options with two-wheeler electric vehicle (EV) manufacturers for development of EV fluids. At the same time, these companies continue supplying EV fluids to top OEMs in India.

While the projected growth of the EV sector may certainly pose some challenges before the lubricants manufacturers unless they tweak their product portfolio and re-strategise, the overall prospects of the lube business look quite promising.