Shell Lubricants said it has seen substantial pick up in demand for lubricants in the last three months bolstering the impression that the economy is rebounding, according to a top company official.
Shell Lubricants Managing Director Nitin Prasad told The Hindu : “There has been a big surge in demand (for lubricants) in the last three months. We see a lot of brownfield expansion happening, not so much greenfield.
“Manufacturers are either upgrading their lubricants by buying higher-quality, more efficient products or are expanding their operations.”
The lubricants industry serves as a bellwether of economic activity as lubricants are used in all kinds of machinery, power equipment, mining and automobiles.
The mining sector was especially showing a lot of enthusiasm for lubricants after licensing issues were sorted out, Mr. Prasad said. The Index of Eight Core Industries registered its fastest growth in 15 months in February while the Purchasing Managers’ Index (PMI) came in at an eight-month high in March, both suggesting a significant rebound in manufacturing activity in the country.
“The lubricants industry is very heavily correlated to GDP and the IIP (Index of Industrial Production),” Mr. Prasad said.
While the industry worldwide grows at around two percentage points slower than GDP, in India it grows at around 3-4 percentage points slower than GDP.
Mr. Prasad also praised the government’s decision to shift straightaway to BS-VI norms from BS-IV, a move that has come under criticism from the auto industy.
“We are a big fan of the shift from BS-IV to BS-VI. It will be very difficult and will require large investments but it must be done. This is just another example of India’s ability to leapfrog technologies,” he said.
Since the pricing structure of fuel was now import-equivalent, there will be no shortage of BS-VI compliant fuel since it can be easily imported, Mr. Prasad said.
The big issue to do with the lubricants sector in India, Mr. Prasad pointed out, was the lack of awareness regarding the efficiency gains that can accrue through the use of high-quality lubricants.
