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This comprehensive overview explores the intricacies of lubricants, focusing on their composition, including base oils and additives. We delve into the lube refinery operations, influencing factors on base oil pricing, and the domestic pricing of lubricants, factoring in logistics, raw materials, and marketing strategies. A special emphasis is placed on India's oil market dynamics and various consumer segments. The analysis also covers competitive advantages of integrated oil companies, major consumer markets, and the critical role of efficient supply networks.
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Lubes Composition • Base Oils 88% 60% 500 N 30% 150 N 10% 150 BS • Additives 12%
Lube Refinery Operation 75 SM 75 SS/ SPINDLE VACUUM TOWER 150 N R C O 150 SS DEWAXING UNIT 500 SS 500 N NMP EXTRACTION HYDROFINER 1300 SS 1300 N BRIGHT STOCK 150 BS PROPANE EASPHAL-TING RPO (AROMATIC EXTRACTS) WAX BITUMEN
RPO • HVI SP / 150 N – FCCU • 500 N – RPO / CBFS – Pricing • 150 BS – RPO Heavy • Diana
Base Oil Prices Factors affecting base oil prices on which India has insignificant control : • Demand – supply gap (world) • International crude oil prices IMPORT PARITY PRICING BASIS ICIS LOR SINGAPORE
Base Oil Prices (RTPs) • ICIS avergae mid quotes for last two weeks • Freight • 2.5% Insurance, losses, handling, etc. • 10% custom duty
Domestic Pricing • Raw Materials – Formulations Costs (R&D), Base Oils, Additives
Domestic Pricing • Package Cost – Bulk, Barrel, Smalls – MRP
Domestic Pricing • Logistics – Bulk – tanker size / storage at customer’s premises, Transportation Contracts, Blending Plant acting as Warehouse, Cenvat Issues, Inventories, Storage, Losses, etc.
Domestic Pricing • Blending – plants
Domestic Pricing • Marketing – Manpower, TS / R&D for Customisation, Secondary Sales – CFA / Distributor Channels, Customer Education / Campaigns / Promotion / Ads, Genuine Oil Costs, etc.
Domestic Pricing • Duties / Taxes – Cenvat, Special Pricing, Non – cenvatable Customers – lower list prices, CST Sales, Concessional Sales, deemed Export Sales, SEZ, etc. Landed Cost
Strengths • Integrated Oil Marketing Company • Largest Refinery in the most economic zone • Bright Stock • Plan for Group II • Power Brands – Enklos, Hytherms, Rustops • Rubber Processing Oils – Low PAH Oils • Vast supply network with huge inventories • Halo affect due to huge total sales
Strengths • Integrated Oil Marketing Company • Largest Refinery in the most economic zone • Bright Stock • Plan for Group II • Power Brands – Enklos, Hytherms, Rustops • Rubber Processing Oils – Low PAH Oils • Vast supply network with huge inventories • Halo affect due to huge total sales
Consumer Market • Major Sectors (Railways, STUs, Coal, Tata, Army, Jindal, Sterlite, Tyre, Major Steel Plants, etc.) • 235 TMTPA • Major Auto (including Tractor) & Construction Equipment Manufacturing Industries • 55 TMTPA • Cement, Sugar, Textile, Steel Re-rolling Mills, Power Plants, Food Processing, Ports, etc. • 75 TMTPA • SME Segment • 150 TMTPA
Passenger Cars Maruti Suzuki, Hyundai, Tata Motors, General Motors, Ford, Honda, Toyota, Fiat, Mahindra Renault, Skoda, Volkswagen, Nissan, Hindustan Motors, Daimler Chrysler, etc.
Motorcycles Bajaj Auto, Hero Honda, TVS, Yamaha Motors, Honda, Suzuki Motor, etc.
Scooters Bajaj Auto, Honda, Kinetic, Hero Honda, Suzuki Motor, etc.
Three Wheelers Bajaj Auto, Mahindra & Mahindra, Piaggio, TVS, Force Motors, Atul Auto, etc.
Jeeps Tata Motors, Mahindra & Mahindra, Toyota, Ford, General Motors, International Cars & Motors, etc.
Tractors Mahindra & Mahindra including Punjab Tractors, Tractors and Farm Equipment Ltd. (TAFE) including Eicher, International Tractors, John Deere, New Holland, Escorts, HMT Tractors, Indo Farm, Force Motors, Preet Tractors, VST Tillers, etc.
Commercial Vehicles Tata Motors, Ashok Leyland, Volvo, Swaraj Mazda, Mahindra & Mahindra, Force Motors, Eicher, etc.
OEMs to Support Infrastructure Caterpillar, J C Bamford Excavators (JCB), BEML Ltd. (formerly Bharat Earth Movers Ltd.), L&T Komatsu, TELCO Construction Equipment Company (TELCON), Action Construction Equipment (ACE), Escorts Construction Equipment Ltd. (ECEL), etc.
Spare Parts except Tyre Gabriel, Endurance, Munjal Showa, Bharat Forge, ZF India, Sona Koyo, Rane Power, etc.
Tyre MRF, Apollo, Ceat, Birla Tyres, Goodyear, JK Industries, Bridgestone, etc.
Consumer Sales • Customization, alternate product • Special prices • Exports • Special grades - NM • Silvassa / CST • Bonded storages • Understanding • Cross subsidization – basket, I&C / Lubes
Consumer Sales • Bulk / packed • Tankage • Genuine oils • Non moving inventory • Commercials