Face-to-Face: Sreejit Banerjee

With the vision "To be a leading diversified corporate entity having market leadership in the chosen business segments, consistently delivering value to all stakeholders, with environmental and social responsibility", Balmer Lawrie has been successfully responding to the demands of an ever changing environment and leveraging every change as an opportunity. In a discussion with Machinery Lubrication India, Mr. Sreejit Banerjee- Chief Operating Officer, Balmer Lawrie tells about their journey of emerging leader of the industry.

Sreejit Banerjee is a Petroleum Engineer from IITISM, Dhanbad & a successful Business Leader with cross functional experience in various MNCs for over 25 Years & expertise in Business Development in Indian subcontinent. Currently, he is serving Balmer Lawrie & Co. Ltd. as Chief Operating Officer with P&L responsibility for Grease & Lubricant Business. He is specialised in Management, B2B/ B2C Sales, Acquiring OEM business & Skilled in New Market Entry & Implementing Scale up Strategies & Sustainable Growth. He has Excellent Track record for launching New Brands & making them successful business venture with companies like Shell, Valvoline, Caltex to name a few.

1. How has been the growth in lubricants sales in the last 1-2 years in India? And what do you see the future as?

In terms of volume, the growth is around 2-3% CAGR, however in terms of value many companies particularly the private players have been able to post double digit growth by shifting focus to consumer segment particularly in MCO & PCMO segment, as well as selling more of higher grades including synthetics & largely semi synthetics, lower viscosity grades & being able to grow substantially in Retail/Channel business where margins are higher. The segments that largely affected growth of lubricant business in India are primarily Personal Mobility (MCO/ PCMO), Transport & Fleets & Infrastructure. In our estimates, same trend will continue in next 5 years where we will also see some shift towards higher grades resulting in higher growth rate in value terms.

2. What would be the major challenges that the industry may encounter in the next few years?

The lubricant developer has to achieve the constant scrutiny to improve fuel economy & emission output while also having to raise the performance bar. Transition to lower viscosity oils to improve fuel economy in case of Engine oils / Transmission oils as well as Energy Efficient oils for Industrial application will remain a challenge. Millions of Dollars have to be spent on Engine Tests to make the changes in additive technology / design friction modifiers which ultimately will be passed on to the Oil developer.

The other challenge is what Amin Nasser, CEO, Saudi Aramco describe as “crisis of perception” where multiple stakeholders believe that the in few years entire world will run on anything but oil. But this is factually incorrect. Oil demand is expected to grow with emission standards tightening with more fuel efficient vehicles & this challenge will also impact Lubricants to meet the desired objective.

3. Balmer Lawrie is one of the leading companies in this field.

a) How have you performed and how do you see the next few years as?

“Balmerol “ brand owned by Balmer Lawrie is more than 150 years old & we are highly respected by our customers for quality products & services. We are one of the largest Grease sellers in India under Balmerol Brand & in top 10 Grease sellers in Asia. We have been primarily in B2B segment for many years servicing core sector industries like Railways, Defence, Steel Plants and Automobiles (Trucks). We have been growing more than average Industry Standard in last few years both in value & profitability term. The next few years will be quite exciting for us with aggressive double digit growth plan to become one of the significant players in lubricant business in India. Economic Times has recently awarded us Best Brand -2019 in an event in Mumbai based on a study by Nielsen Research which has identified few leading brands in India.

b) What would be your main thrust engines for growth?

We have realized that Balmerol Brand has tremendous potential to grow & to unlock the potential we have made foray into Retail Market with our entire range of Automotive & Industrial Lubricants. Building up a robust distribution network in selected markets will be our thrust area for the next few years backed by strong BTL activities to increase our Brand visibility. We will continue with bringing innovative & high performance products for our customers like Synthplex Grease which is semi synthetic grease with life of over 2.0 lac KM & entire range of Synthetic Ester based Biodegradable products.

c) What are the major challenges your company may require overcoming in the next few years?

One of the main challenges will be to grow aggressively Pan India basis through building up a robust distribution network & increase brand visibility in a fiercely competitive market. We are going through a transformation process of making it big in Retail Space from being primarily a B2B player where we were well respected for our products & services in Core Sector. Managing these two verticals & continue to grow more than average Industry standard will be a challenge that we need to overcome in next few years.

4. Only a handful of companies have a full-fledged R&D division to support its growth. What are your views on this?

We have the advantage of having our own Application Research Laboratory (fully fledged R&D centre with NABL accreditation) in Kolkata where we have developed high performance specific products like Semi synthetic Grease with life over 2.0 lakh km, Fire Resistance Greases, Synthetic Mould Oils , Biodegradable Products with Synthetic Ester based etc. We are the only lubricant company where we produce synthetic Esters in our in- house Ester plant. We spend around 1.5% of our turnover & 20% of our Profit in our R&D activity.

The biggest advantage of having a set up in India is exposure to our own people, engineers who are working in this R&D centre who can better understand & ability to resolve customer requirement in local condition & atmosphere which may not be matched when someone from USA or UK is visiting the customers once in a while& working at their R&D centre located abroad.

5. The Indian Government is pushing for the growth of the electric vehicles in the country. What impact would that have on the market?

I don’t see that this is going to impact us significantly in short term & in another 15-20 years.

However in longer time frame, some business will get definitely affected but the market size & applications where lubricant usage is necessary is big enough & will remain so in next 30-35 years. This is one of the reasons why global companies like Shell, BP & others are still investing heavily in adding capacities & in new Lube blending plants in many countries like China which only indicates growth in overall market size in coming years.

6. Is it true that most multinational lubricant companies focus on speciality lubricants and MWF with (low volume with higher profit margins), PSU’s and other mid-sized Indian companies are only looking at basic grades of lubricants (high volume with lower profit margins)? If yes, how do you see the game changing in future?

Every company wants better returns & it is a fact that returns from selling MWF is generally more than selling conventional lubricants where base oils being a commodity today with published Indexes/Pricing anyone has his say on the price of the finished product. However MWF has its own challenges & requires more of After Selling/Maintenance related challenges which are not everyone’s cup of Tea. What is slowly happening is companies are trying to get focused on their strength areas where they have competitive advantages over others by which they are trying to shift to better realization. In a country like India with vast geographical area/market, a PSU oil company with Fuel Stations will definitely take their advantage of having a wide distribution network to play on volume while others including MNCs will definitely try to sell with better realization & margin as they will not have the volume advantage to match a player who is into both fuels & lubricants.

7. Government is pushing the “Make in India” concept, but India continues to import lubricants. Would you suggest a higher import duty to encourage local manufacturing?

To excel in any area, we need to be at par with global companies with the ability to manufacture best of products at par with global standard at competitive pricing. I don’t think getting protection in any way helps you to be a global leader & be at par with the best in Industries. However it is important for Government to ensure that local manufacturing isn’t at any disadvantages with global companies. So local manufacturing need to be encouraged & conditions created to encourage local manufacturing but certainly not by giving protection & restricting others to make local manufacturing an easier option for industries to adopt .Govt’s make in India concept should be taken in the right manner & we should be able to produce the best of products in India by creating a business& overall environment to be able to make the Best Products here in India. When Indian people can work in Global companies in other countries & make the best of products in USA, they will be able to do so here as well & it is necessary to create that environment.

8. What you have to say about ‘Green’ manufacturing initiatives?

We need to create an overall environment & infrastructure to adopt Green manufacturing initiatives. It cannot be only restricted within the boundaries of the manufacturing facilities.

The entire supply chain has to be in line with this initiative as well as when it comes to disposals of wastes. It is actually a culture & overall environment to encourage this cultural change that is required. It can’t be by bits & pieces that this change can take place & requires quite an Intent & encouragement & support from Government to make this change. Long way to go.

9. What’s your personal vision for Balmer Lawrie?

I would like to see Balmer Lawrie, Greases & Lubricant business to grow & acquire 5% market share in next 3 years. We will also make our Retail Channel business to cross 20,000 KL level in next 3 years where we are currently focusing. At the same time we will retain our leadership position in Greases & in some Segments where we still supply products on proprietary basis. We will make continuous investments in our R&D centre, in developing new products & in our people.