CURRENT LUBE SALES SCENARIO AND

RECOMMENDATIONS

JOINT STUDY BY-

MUMBAI RETAIL RO
&
MUMBAI LUBE RO

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EXECUTIVE SUMMARY
There is a downward trend in lube sales through retail network. It has become challenging day by day
to sell lubes in retail outlets. There is a fierce competition in the retail outlets for selling lubes when
vehicle sales are also showing negative growth of 33%. Our study will primarily focus on following
points: -

1. Current Market Scenario (Competitor vis-à-vis HPCL Brand position)

2. Different Marketing channels (Distributor/ Wholesale/ Retail Outlets) and product
portfolios available in these channels.
3. Pricing differentiation of brands in these channels including available schemes/ offers
(LIS/VLI etc).
4. Brand wise sales in Mumbai RO in last financial years 2018-19 & 2017-18.
5. Existing lube sales practices
6. Recommendations for boosting Lube sales.

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METHODOLOGY
Source of data-

1. Review of online secondary sales data

2. Interaction with high selling dealers (Sonal Super, Saikripa Auto & Oil Centre) and taking their
suggestions/feedback

3. Interaction with Lube distributors (Ideal Marketing- Kalamboli Truck Terminal)

4. Visit of cross-functional team to a Shell outlet on outskirts of Pune

5. Interaction with Mumbai Lubes Team

6. Analyzing trends and brand-wise details of Lube sales across marketing channels.

THE MARKETING CHANNELS for automotive lubricants in Mumbai consist of the following:

1. Retail Outlets

2. Bazaar sales

3. Authorized Service Stations (OEMs)

Brand-wise Sales of Mumbai Retail Outlets: (Fig. in KL)

Sum of Current Sum of Historical
Lube Brands
Sales (2018-19) Sales (2017-18)
HP Laal Ghoda 20W 40 402.0 453.3
HP AUTO SHAKTI 55.5 6.0
HP GASENOL 20W 50 52.2 19.3
HP MILCY TURBO 15 W 40 52.2 62.1
RACER 2 LOW SMOKE 48.4 27.2
HP RACER 4 20W 40 44.1 29.9
HP NEOSYNTH 5W 30 32.2 27.9
HP COOL 23.4 23.6
HP CRUISE 21.8 20.4
HP RACER 4 20W 50 17.2 0.4
MILCY TURBO TECH 13.1 11.4

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HP X-3 10W KLT 12.0 6.9
HP THANDA RAJA 12.0 7.5
HP AUTOMATIC TRANSMISSION FLUD 11.4 10.5
ENKLO 68 - FOR 7 ALSO 8.1 4.0
HP GEAR DRIVE EP 90 8.0 4.4
HP GEAR OIL XP 80W-90 3.6 0.6
HP SUPER DUTY BRAKE FLUID 3.1 1.0
HYLUBE HDX MULTIGRADE 20W-40 2.8 0.2
HP AP 3 GREASE 2.7 1.8
BAJAJ DTSI10000 SAE 20W50 2.3 -1.1
HP RACER 4 SKUTEX 10W 30 2.3 1.0
HP MILCY FLEET 2.1 0.0
HP MILCY TURBOSTAR 15W 40 1.7 1.2
HP RACER 4 SPLENDID 1.6 0.2
ENKLO 46 1.4 0.0
HP RACER 4 SYNTH 10W 30 1.1 0.4
HP MULTIPURPOSE GREASE 3 1.0 2.5
HP WHEEL BEARING GREASE 0.9 0.6
HP GEAR OIL EP 140 0.9 0.4
HP MILCY 40 0.8 0.7
HP CRUISE CLASSIC 0.8 3.4
HP GEAR OIL EP 90 0.8 0.5
HP MILCY PICKUP 0.7 0.0
HP MILCY SUPER 20W40 0.7 6.1
HP RACER 4 15W50 0.6 0.0
HP SUPER DUTY BRAKE FLUID – DO 0.5 0.3
HP NEO SYNTH 5W40 0.5 0.2
HP GEAR DRIVE EP 140 0.5 1.1
LONG LIFE AP 3 GREASE 0.4 0.5
HP CHASSIS GREASE 0.4 0.2
HP NEOSYNTH PLUS 0W20 0.3 0.1
HP RACER 4 SKU TEX 10W40 0.2 0.2
HP GEAR OIL XP 85 W-140 0.2 0.0

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Brand-wise Margins:

Net Market Margin

Base After
Sr. No Brand Name Landed operated MRP in Rs /
Rate Tax
Price price Ltr.
1 HP RACER 2 210 247.8 198 200 300 102
2 HP RACER 4 20W 50 210 247.8 203 250 340 137
3 HP RACER 4 20W 40 207 244.3 200 250 340 140
4 HP RACER 4 SPLENDID 10W 30 203 239.5 200 220 295 95
5 HP RACER 4 SPLENDID 20W 40 196 231.3 193 220 290 97
6 Racer 4 Synth 10w 30 288 339.8 270 300 445 175
7 HP GASENOL 20W50 181 213.6 175 200 295 120
8 HP AUTO SHAKTI 20W 50 (1) 152 179.4 152 150 230 78
9 HP MILCY TURBOTECH 15W 40 234 276.1 219 250 350 131
10 HP MILCY TURBOSTAR 15W 40 214 252.5 200 240 320 120
11 HP MILCY TURBO 15W 40 202 238.4 195 220 300 105
12 HP MILCY SUPER 20W 40 193 227.7 187 210 285 98
13 HYLUBE HDX MG 20W 40 163 192.3 160 200 240 80
14 HP LAAL GHODA 20W 40 147 173.5 145 150 210 65
15 HP NEO SYNTH 5W 30 275 324.5 258 280 440 182
16 HP CRUISE 15W 40 199 234.8 192 220 275 83
17 HP CRUISE CLASSIC 195 230.1 189 220 270 81
18 HP GEAR OIL EP 90 193 227.7 190 260 275 85
19 HP GEAR OIL EP 140 201 237.2 198 260 285 87
20 HP AUTO TRANSMISSION FLUID A 189 223 186 260 270 84
21 HP LONG LIFE AP3 GREASE 277 326.9 272 320 400 128
22 HP AP3 GREASE 250 295 246 300 355 109
23 HP CHASSIS GREASE 189 223 186 220 270 84
24 HP WHEEL BEARING GREASE 189 223 186 220 270 84
25 HP NEO SYNTH 1 5W 40 596 703.3 558 700 970 412
26 HP NEO SYNTH 0W 20 302 356.4 283 350 515 232

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Price Difference between Lube Distributor Vs. Retail:
Sr. Brand Name Net Landed Price- Net Landed Price- Difference in Rs
No Retail Lube RO /Lit
1 HP RACER 2 189 191 1
2 HP RACER 4 20W 50 205 184 -21
3 HP RACER 4 20W 40 201 184 -17
4 HP RACER 4 SPLENDID 10W 30 191 171 -20
5 HP RACER 4 SPLENDID 20W 40 183 171 -12
6 Racer 4 Synth 10w 30 291 266 -26
9 HP GASENOL 20W50 170 165 -5
10 HP AUTO SHAKTI 20W 50 (1) 143 144 1
11 HP MILCY TURBOTECH 15W 40 206 192 -14
12 HP MILCY TURBOSTAR 15W 40 183 174 -9
13 HP MILCY TURBO 15W 40 195 179 -16
14 HP MILCY SUPER 20W 40 184 169 -15
15 HYLUBE HDX MG 20W 40 153 141 -12
16 HP LAAL GHODA 20W 40 143 126 -17
23 HP NEO SYNTH 5W 30 255 231 -24
31 HP GEAR DRIVE EP 90 174 162 -12
32 HP GEAR DRIVE EP 140 179 166 -13
33 HP GEAR OIL XP 80W 90 187 173 -14
34 HP GEAR DRIVE XP 85W 140 193 180 -13
35 HP AUTO TRANSMISSION FLUID A 181 169 -12
37 HP LONG LIFE AP3 GREASE 268 243 -25
38 HP AP3 GREASE 236 211 -25
40 HP CHASSIS GREASE 184 184 0
41 HP WHEEL BEARING GREASE 184 184 0
44 HP NEO SYNTH 0W 20 353 353 0

Existing Sales practices in Mumbai:

 Quarterly product push sales and PDC Scheme

 Credit driven sales
 Lack of awareness about margins of available grades
 Re-selling through various distributors below MRP in market instead of
selling through forecourt.

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GENUINE OIL TIE-UP OF HPC & COMPETITORS WITH MAJOR OEMs :
 HPC – SWARAJ MAZDA, EICHER, PUNJAB TRACTORS, BAJAJ AUTO, ESCORTS YAMAHA,
TELCO, TATA MOTORS.
 IOC – TATA MOTORS, ASHOK LEYLAND, MARUTI, TAFE, ELGI, HYUNDAI, BHEL RC, TELCON
CONSTRUCTIONS, M&M
 BPC – HERO HONDA, TVS, TATA MOTORS CVBU, KIRLOSKAR OIL ENGINES, ATLAS COPCO,
L&T KOMATSU
 CASTROL – TATA MOTORS CVBU, CATERPILLAR, L&T KOMATSU, L&T POCLAIN,
VOLKSWAGEN, JCB, MARUTI,TELCON CONSTRUCTIONS, KOMATSU
 GULF – ASHOK LEYLAND, MAN
 SHELL – MARUTI, THERMAX, WARTSILA, JCB, L&T KOMATSU, DEMAG PLASTIC MOULDING
MACHINES
 IDEMITSU – M&M, TECUMSEH REFRIGERATION COMPRESSOR, HERO HONDA, HONDA
MOTORS, TOYOTA, HONDA, TELCON
 VALVOLINE – ASHOK LEYLAND
 NANDAN PETROCHEM – GREAVES, BEML
 EXXON MOBIL – VOLVO TRUCKS & EARTH MOVING EQUIPEMENT
 TOTAL – VOLVO BUSES, M&M, ROYAL ENFIELD
 CHEVRON – TENNECO SHOCK ABSORBER

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STRENGTHS:
 In Mumbai District, HPCL has good reputation in the market. There are total 87 Retail outlets
spreading all over Mumbai and suburban districts.

 Well-connected supply point from Wadala cold Godown to all 87 No. outlets.

 Lube manufacturing and supply units.

 High quality lubricants.

WEAKNESSES:
 Non availability of certain brands- Sometimes it takes time to make certain products available.

 Less no of tie-ups with all major Commercial & Passenger vehicle manufacturers (OEMs).

 Insufficient Marketing of brands:

It is observed that IOC, BPC, Castrol & other brands are aggressively promoting their products
through different media.

 Non-availability of Brand exclusivity across market channels leading to conflicts on selling same
product across markets.

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COMPETITOR STRATEGIES

1. IOC offers freebies like Umbrellas, Door covers to Auto rickshaws to capture 3-wheeler
customers during monsoon.

2. BPC has followed categorization of its product portfolios across different market segment to
avoid channel conflicts between Retail outlets and Distributors.

3. Mobil, Castrol, Gulf Oil, Motul has forged tie-ups with non-authorized service stations for car
and bike segments.

4. IOC caters to Retail outlets through Distributors only, however the end prices available through
retailers or end customers are same, ensuring uniform pricing.

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RECOMMENDATIONS
1. Lubes as a profitable business to dealers

Dealers are not leveraging the profit margin available in different lube grades. Hence training
programmes need to be conducted for both dealers and FSMs to raise awareness on various
lube grades.

2. Incentive schemes for FSMs for selling Lubes through COCO/COMCO and dealers

Dealerwise incentive schemes to be developed for FSMs to boost forecourt sales.

Presently COMCOs are having flat discount scheme of Rs. 30 per Litre of lubes. It is proposed to
give an discounts of Rs. 50 & Rs. 100 per Ltr. for Non-premium and Premium grades in COMCOs
respectively. FSMs to be given an incentive of Rs 10 and Rs 25/- to promote the said grades.

3. Campaigns

It was observed that competitors are doing campaign to promote lubes clubbing it with fuel
sale. A cross functional team visited a Shell outlet at outskirts of Pune wherein a cross
promotional scheme is running. As per the scheme, 4 Ltr MS or HSD are given free on purchase
of 4 Ltr. of Lube oil. Similar kind of scheme or campaigns (e.g. Nitrogen air/PUC free for some
defined amount of Lube purchase) is proposed to be developed for our outlets also.

4. Brand exclusivity for Distributor Vs Dealers

It is observed that similar type of brands is sold to different channels (Distributors/ Retail
outlets) which leads to channel conflict. Hence it is recommended to segregate different brands
for different channels.

E.g. If Lalghoda is being sold through distributor channel then it should not be allowed to be
sold through Retail network. Similarly, if Racer-4 is being sold through Retail network, then it
should not be allowed to be sold through Distributor network. By this way, channel conflicts
can be avoided.

5. Local promotions for customers:

During our interaction with one of our dealers, M/s Sonal Super, it is observed that dealer has
made lot of efforts on brand awareness among Taxi drivers through various associations. The
said dealer is selling all lubes through forecourt only through various interlinked discounts on
various products and services. This model can be developed in other outlets also.

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 6. Distribution of sales over the year:

Dealers always wait for the end of the year to avail PDC facilities, free products and special
discounts. This create burden on the supply locations for making the products available. In
order to increase sales at the last moments, special discounts are given to the dealers. These
special discounts are actually passed on to the distributors leading to extra expenditure for the
company. View above it is recommended to extend PDC throughout the year so that the sales
volumes are distributed over all the months of the year. This will help the dealers to regularly
pick up the product in every month.

7. Installation of Oil Changing Machine and Lube displays in all outlets

Lubes changing machines to be made mandatory for all outlets. Special dealer’s subsidy to be
given towards this. Last year few lubes displays are given to outlets. All outlets to be provided
with lubes display for increasing visibility

8. OEM tie-ups

More no of tie-ups with OEMs will help the dealers to cater to the demands of authorized
service stations.

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