Castrol Ups Tags, Ioc May Follow

Castrol, the second-largest lubricant brand in the country, has increased prices of lube oils effective August 1. On an average, Castrol has pushed up prices of its oils by Rs 2 per litre.

Taking a cue from Castrol, Indian Oil Corporation (IOC), the market leader with 39 per cent share, is actively considering a price hike. Industry sources claim that several lube oil producers will also go in for price hike.

"Considering the soaring input costs, the price hike has been in the offing for over six months. Even though base oil constitutes 90 per cent of lubricants, it adds only 20 per cent to the cost of lube oils. The remaining 80 per cent is on account of additives, container and packaging costs, and freight. Prices of these variables have gone up substantially," sources said.

 

Following a slew of international majors entering the local lube market, manufacturers have sustained to keep the price lower and hold on to their market share. Besides major schemes, discounts and freebies are being offered to push brands in the market, sources add.

However, market observers point out that the market may not be able to sustain the price hike with the consumers having wide range of lube oils to chose from. They claim the lube market may witness price war. With industrial slowdown and tight market conditions, the oil companies have become aggressive in the one million tonne lubricant sector with value of Rs 6,000 crore.

IOC, which dominated the market pre-1992 (lube market decontrolled) with 54 per cent share, has jumped on the bandwagon of bazaar trade to get back its lost customers. Its share has slumped to 39 per cent post decontrol with its share eaten up by private companies. As many as 30 players are competing in India, the sixth largest market in the world.