Lubes

ATMOSPHERIC TOWER REDUCED CRUDE OIL TO LUBE REFINERY FUEL REFINERY PROCESS CRUDE OIL LAN SKO HAN LVGO HVGO LPG

VACUUM TOWER NMP EXTRACTION PROPANE D EASPHAL- TING BITUMEN 150 SS 500 SS 1300 SS 75 SS/ SPINDLE RPO (AROMATIC EXTRACTS) DEWAXING UNIT BRIGHT STOCK WAX HYDROFINER 150 BS 1300 N 500 N 150 N 75 SM RCORCO LUBE REFINING

BASE OIL TERMINOLOGY LUBES ARE HIGH VALUE PRODUCTS WITH BROAD VARIETY OF USES – Automotive: Engine oils, Automatic Transmission Fluids (ATF) – Industrial: Turbine oils, Hydraulic oils, Industrial Gear oils, Compressor oils, Refrigeration oils, Machine oils, Electrical oils, Drilling Fluids etc – Medicinal: Food Grade oils, White oils,.. REFINERIES PRODUCE BASE OILS OR BASE STOCKS – Finished Products are Blends of Base stock with(out) Additives BASE STOCKS ARE CALLED BY VARIOUS NAMES: – Neutrals (100N, 150N, 600N,...) Bright Stocks – Grades (SAE 5, 10, 30,..; ISO 22, 32,...) MOST COMMON LUBE NAME IS NEUTRAL – Number is the 40 or 100oC BRIGHT STOCK IS HEAVY LUBE PRODUCED FROM RESIDUE – Name Refers to Appearance and Typical Viscosity is 2, oF GRADE NAMES MAY REFER TO VISCOSITY OR TO TRADEMARKS

BASESTOCK PROPERTIES AND DEFINITIONS BASE STOCK COMPOSITION DETERMINES PERFORMANCE OF FINISHED PRODUCTS –Viscosity Index or VI Higher VI improves Volatility, Fuel Economy, and Operating Range –Saturate Content Higher Saturates improves Oxidation Stability and Soot Handling –Wax Content Lower Wax Improves Operating Range Lower Wax improves Low Temperature Performance – Pour Point – Cloud Point AMERICAN PETROLEUM INSTITUTE (API) BASESTOCK CATEGORIES API Group Sats Sulfur VI TYPICAL MFG PROCESS I 0.03% Solvent Processing II>90% <0.03% HYDROPROCESSING III >90% <0.03% 120+ WAX ISOME, H/C, GTL IV N.A. N.A POLYALPHAOLEFINS (PAO) V ALL OTHER BASE STOCKS

KEY LUBE OIL PROPERTIES VISCOSITY (MEASURE OF FLUIDITY) –Range from ~ 4 to oC for Neutrals up to 32 cSt for Bright Stock –Brookfield Measures Low Temperature Fluidity on Finished -40oC VISCOSITY INDEX (INVERSE MEASURE OF CHANGE OF VISCOSITY WITH TEMPERATURE) –Ranges from ~85 to ~105 for most Base stocks, Higher for Speciality Grades –(ex: Exxsyn ~140, PAO ~150, XHVI~140+, Ultra S ~ 125) POUR POINT (TEMPERATURE AT WHICH FLUID BECOMES NEARLY SOLID) –Typically from -9 to -24oC –Cloud Point is Temperature at Which Wax Crystals Appear VOLATILITY (MEASURE OF OIL LOSS DUE TO EVAPORATION) –Noack Volatility Measures Actual Evaporation (Typically wt%) –GCD Volatility Measures Front End of Boiling Curve (e.g COLOR (APPEARANCE) AND STABILITY (MEASURE OF COLOR CHANGE IN LIGHT) CONRADSON Carbon (MEASURE OF CARBON RESIDUE LEFT ON IGNITION) SATURATES, AROMATICS and ASPHALTENE CONTENTS

CLASSIFICATION OF LUBRICANTS  GENERAL CATEGORIES  SPECIFIC APPLICATIONS  PHYSICAL SPECIFICATIONS  STANDARD SPECIFICATIONS  PERFORMANCE REQUIREMENTS  USERs SPECIFICATIONS  TYPE OF BASE OIL

INDIAN LUBE REFINING CAPACITY » TMTPA HPCL, Mumbai IOC,Haldia CPCL, Chennai- 240 BPC, Mumbai TOTAL - 950

LUBE MANUFACTURING Lube Refinery Blending Plants Function Base Oils Viscosity Index Pour Point Flash Point Lubricants Improved No change Oxidation Stability Additives Key Properties CUSTOMERSCUSTOMERS Special Properties

BLENDING CAPACITIES BLENDING PLANTCAPACITY (TMTPA) MAZAGAON180 SILVASSA60 B’ BUDGE / RAMANAGAR 30 CHENNAI30 SEWREE10 TOTAL310

GENERAL CATEGORIES AUTOMOTIVE LUBRICANTS INDUSTRIAL LUBRICANTS GREASESSPECIALTIES ENGINE OILS TRANSMISSION OILS TURBINE OILS HYDRAULIC OILS COMPRESSOR OILS REFRIGERATION OILS SPINDLE OILS CYLINDER OILS GEAR OILS TEXTILE OILS etc WHEEL BEARING CHASSIS INDUSTRIAL CUTTING FLUIDS METAL ROLLING OILS RUBBER PROCESS OILS RUST PREVENTIVES HEAT TRANFER FLUIDS METAL DRAWING COMPOUNDS QUENCHING OILS etc

FUNCTIONS OF ENGINE OILS oPERMIT EASIER STARTING o LUBRICATE AND PREVENT WEAR o REDUCE FRICTION o PROTECT AGAINST RUST AND CORROSION o KEEP ENGINE INTERIORS CLEAN o COOL ENGINE PARTS o SEAL COMBUSTION PRODUCTS o BE NON-FOAMING o AID FUEL ECONOMY

GREASES COMPOSITION BASE OIL + THICKENER + ADDITIVES MINERAL SOAP ANTI-OXIDANT SYNTHETIC NON-SOAP ANTI-CORROSION VEGETABLE EP/ANTI-WEAR TACKINESS AGENT SOLID FILLER

WHY USE A GREASE? A GREASE OFFERS UNIQUE CHARACTERISTICS WHICH MAKES IT PARTICULARLY USEFUL IN MACHINE ELEMENTS  STAY WHERE IT IS PUT  ALLOWS UNATTENDED SERVICE FOR LONG PERIODS (SEALED FOR LIFE)  REQUIRES LESS FREQUENT APPLICATION FOR AREAS OF POOR ACCESSIBILITY  SEALS OUT CONTAMINANTS  OPERATE OVER A WIDE TEMPERATURE RANGE  SOLID ADDITIVES CAN BE USED WITHOUT CONCERN OF SETTLING OUT  LOW LEAKAGE MEANS THEY ARE EFFECTIVE IN WARM EQUIPMENT

NLGI CLASSIFICATION OF GREASES NATIONAL LUBRICRATING GREASE INSTITUTE NLGI NO. ASTM 25OC* * After working 60 strokes.

MAJOR INDUSTRIAL GRADES ENKLOS TURBINOLS PARTHANS SEETUL SPINTEK KOOLKUTS RUSTOPS HYTHERMS ELASTOS METAQUENCH

MARKET SHARE (PSUs) ( ) MARKET LEADER IN GROWTH : 35.1% AGAINST INDUSTRY GROWTH OF 12.7% HPC Figures exclude base oil sales to BPC / IOC CO. CURR (TMT) HIST (TMT) % VAR % MARKT SHARE (CURR) % MARKT SHARE (HIST) HPC BPC (1.5) IOC IND

SECTORIAL CONTRIBUTION LUBES MARKET 1250 TMTPA INDUSTRIAL 450 TMT AUTOMOTIVE 800 TMT RET OUTLET 170 TMT BAZAAR 580 TMT DIRECT 500 TMT 2S 2/3W 150 TMT GEAR OIL 100 TMT CAR 30 TMT D E OILS 350 TMT 4S 2W 45 TMT OTHERS 75 TMT Growing

CORE SECTORS Sector Percentage Auto OEM - 7 Cement- 3 Power - 4 STU- 8 Rubber -9 Colliery -4 Defence - 4 Railways-10 Metals- 10 Others -41

LUBE MARKET : MARKETING CHANNELS  RETAIL OUTLETS AUTOMOTIVE OILS AND GREASES  RESELLERS/JOBBERS AUTOMOTIVE OILS AND GREASES  C&F AGENTS FOR SMALL AND MEDIUM INDUSTRIES  LUBE DISTRIBUTORS FOR BAZAAR TRADE  DIRECT SALES TO CONSUMERS

DEVELOPMENT OF NEW CHANNEL BAZAAR : LUBE DISTRIBUTORS BAZAAR : 40% VOLUMES : CASTROL AND OTHER PLAYERS PSUs TOO STARTED DEVP. BAZAAR REMAINED UNCATERED NEED FOR EXCLUSIVE LUBE DISTRIBUTOR CHANNEL SHIFT IN BUYING HABITS OF CUSTOMERS : NEW GENERATION VEHICLES : MECHANICS ACTING AS INFLUENCERS CHANNEL PICKED UP 25,000 KL WITHIN THREE YEARS

LUBE DISTRIBUTOR EXCLUSIVELY CATERING TO LUBE SHOPS, GARAGES, AUTHO. SERVICE CENTRES INFRASTRUCTURE : DELIVERY VEHICLE, STAFF, SHOWROOM / OFFICE AND GODOWN COMPUTER FMCG TYPE OF MARKETING : POPs, INVENTORIES, ORDER TAKING, SUPPLIES AND CREDIT / COLLECTIONS

DIRECT SALES - LUBES OEMs, CORE SECTOR ( STEEL. COAL, POWER, CEMENT, SUGAR ETC.,), RAILWAYS, DEFENCE ETC., MOSTLY TENDER BASED EXCEPT LOCALISED SMALL REQUIREMENTS SALES SUPPORTED BY TECHNICAL SERVICES – CES, PES, CONDITION MONITORING, TRAILS, ENERGY AUDITS ETC., PRICE HEDGING – SUPPORT TO CUSTOMER THROUGH FIXED PRICE : INVENORY MANAGEMENT : COST SAVINGS

LUBE NETWORK RETAIL AND DIRECT RETAIL OUTLETS : 5,000 PLUS : DIRECTLY CATERING TO END USER / CUSTOMERS AND MECHANICS LUBE DISTRIBUTORS : 150 PLUS : HAVING A BASE OF BAZAAR SHOPS PER D’TOR WHO IN TURN SERVICE THE END USERS / MECHANICS LUBE CFAs, COLD, COD AND LUBE AND OTHER DEPOTS

RETAIL LUBES MARKETING Packaging Lube Incentive Schemes Advertising and Product Promotion Campaigns Launching of new Brands Genuine oil tie-ups Network Development Micro Marketing Mechanic Contact Program

ENVIRONMENT Long-term growth estimated at 3-4% p.a. More than 25 players of repute in the Market Over 500 small local blenders