Lubricants Benefiting from Low Crude

The high proportion of crude derivates used in lubricants dictates the bottom line for this industry. As much as 66 per cent of raw material costs for lubricant manufacturers are derived from crude. The Indian lubricant industry is a $4.8-5.1 billion market (ICICI Securities estimates), with volumes of around 2,350 million litres. The largest single user of lubricants is automotives, which consume close to half of total sales. Pre-liberalisation, PSUs dominated the automotive lubricant market with over 90 per cent market share. Today, with open market competition, their share is down to a third. Automotive slowdown seen in recent years not only hurt original equipment manufacturers but also lubricant manufacturers, who saw volume growth at 2-3 per cent during the slowdown.