With vehicular technology growing rapidly in India, the market for better and advanced lubricants is growing faster than ever. Even fleet operators are now realising that investment in better technology ensures better returns in the long-run. Shell is one of the major players in India's lubricants space and is renowned for being one of the leaders in technology in this domain. In India, market dynamics although improving are strikingly different from the West. Keeping this in mind and the effect of 'Demonetisation' on the business, we caught up with Mansi Madan Tripathy, Country Head, Shell Lubricants India Cluster. She took us through the company's business and product plans along with an insight into the effect of certain Government policies on the industry.
A seasoned business leader with 20 + years of experience across industries, business models and markets, Mansi Tripathy is currently the Country Head- Shell Lubricants India Cluster and responsible for managing leading all business activities across India, Bangladesh, Sri Lanka and Nepal, which combined, form the 3rd largest lubricants market in the world. Her previous roles include Chief Marketing Officer at Shell Lubricants, Global Director for Global Gillette, Asia Pacific Head for Consumer & Market Knowledge at Procter and Gamble and various roles across Asia pacific in Sales, Strategy, Operations, Marketing and Insights. Mansi has an experience spanning over 20 years across industries and markets. Mansi is a B.Tech degree holder in Electronics and Communication from National Institute of Technology Kurukshetra and an MBA in Marketing from S.P. Jain Institute of Management & Research.
Arpit Mahendra: Ever since you took over the new role, how has the business growth been and has there been any key operational change in the structure of the company?
Mansi Tripathy: I've taken the role since four months now and I was a part of the operating team before that, fully aligned to the overall directions of our plans. I think that with the strong growth we have seen over the last couple of years, it is imperative that there's more to hold on and ensure that we build on that rather than fully disrupting it. One exercise we did as a leadership together is to really see what's happening in the larger global-economic area, what is happening at large to our consumers and our channel partners and are there any important imperatives that we need to integrate in the way we have moved forward. We found there are four spaces which came out which would be a build on to our existing strategy rather than changing it.
The first and the foremost is that we want to really integrate more of our social purpose or social responsibility as a leading lubricant brand in India, rather than bring it on the sidelines and being on the commercial side only. The second pillar is about how do we make everything much more digitally enabled rather than traditional methods of working and that could range from business models to ways of working to analytics to the classical marketing etc. The third space, which we are really trying to focus on is instead of being almost everywhere, we have consolidated the focus areas but giving a rallying cry that where we are present, we would like to be number one in that area. So, more consolidation while being deep and focused in our attempt is what we've done.
Last but not the least is improving the organisational structure and capability and how do we put a fresh impetus in terms of the people being a core of our plans and hence improving their resilience and improving their career path. So, those are the four buckets, which we have further enhanced as we are moving forward.
Could you elaborate the scope of these points a bit further?
For the first one on social and business purpose, we have introspected that why are we here and how are we impacting lives. There were two big answers that came up. One was that we can play a substantial role in the way we are providing cleaner energy because if we are a lubricant partner we can be playing in the energy efficiency story and reducing the carbon dioxide footprint and helping India breathe better.
So, some of our products like Rimula 5, which if being used on one truck, translates to Rs 40,000 saved on fuel as it is three percent more fuel efficient. In the process, it also reduces the carbon dioxide, which is almost equivalent to planting 81 trees. We also want to ensure that we are playing our part in refurbished oils or how the sustainability of our overall value chain is there and it just keeps growing into multiple areas of how we'll be playing that role. Likewise, we also want to play a role in the social responsibility as well because we are working with close to 50,000 mechanics, 600 dealers, 25,000 retail points and a number of customers in a B2B segment point-of-view. And each of them have needs of safety, being better skilled, providing better healthcare and hence we want to be playing that role a lot stronger.
On the digital front, we want to expand ourselves into seeing which new channels can be tapped into. While there is e-commerce, there are a lot of other spaces like service aggregators who are coming in. For example, there are a number of entrepreneurs who are stating that they will provide lubricant service door to door. So, we are looking at how to partner with those players into new ways of operation in the lubricants space . We want to do classical segmentation analytics and take our depth in that space to a better space. We want to do a lot more in the digital area and focus on sectors as mentioned earlier ensuring that the capabilities are at a very high level.
You just talked about the services Shell was doing in terms of getting check ups for the driver, training etc. What happens when you find out about a driver who has been driving for the last 20 years is colour blind?. Does he end up losing his job because a colour blind person cannot drive as there is no cure?
Our first objective is to raise awareness and then we direct them to the right places where such drivers can go in for treatments and advice. In a number of cases, we are also offering a personal health insurance on top of what we sponsor as a part of our programme so that we take it to the next level of social responsibility. Then we are having continuous engagement programmes to check and follow up if the drivers/mechanics have done anything about it or not.
The health insurance programme has been a big hit amongst the mechanics/drivers community because it is a small investment but they are typically the sole bread winners in their families. If anything, God forbid, happens to them, there is no mechanism by which finances can be taken care of.
What is Shell's take on the most recent move, the demonetisation from your perspective? Is it good/bad/ugly for you and overall from an automotive industry perspective?
If I look at it from a series of the last couple of months, right from Make in India to Digital India to GST and some changes in the BS6 norms in the automotive industry to demonetisation, each of them show the intent on how they can impact the economy and hence all the players in the value chain.
Zeroing down on demonetisation, our business is divided into direct and indirect business. The direct part of the business is pretty much cashless from a large purchase angle and that hasn't impacted the business. Obviously at the last mile, for example, in mining, quarries etc. there are a number of daily wagers and hence there is an impact. So, it's not a zero impact but not a sizeable one. Then there is the backend part of our business, which makes products reach from our manufacturing unit to all the distribution points and so on. Here we did see a short-term disruption because of all the issues which the transportation industry is facing. The big impact in the short term is in our indirect segment where we are witnessing three situations. One is an actual consumption drop where the consumer is stating that “I have other bigger things which I need to take care in my life and hence I can obviously postpone or not do a lube oil change because I have to fight for ensuring that I have the next meal etc.” So, yes there is a clear consumption drop in the last few days.
The second aspect is more around the whole concept of credits, because part of it was already on credit. But, the people are postponing their decision and all of this is getting question marked over here. The third piece is that there are other people who have various business models than just lubricants and there is a general distraction. Some of our distributors, for example, have their involvement in shipping or cargo or jewellery etc. as they have invested into multiple things. And hence this has caused a distraction at their end.
However, on a larger picture, like in any big economy sheet, we do feel that this will help in reducing our overall trade deficit as a country by roughly three to four percent. It will pump in a fresh amount of new circulation in terms of how the society is going to go more cashless once operations start this way. It is key to enabling GST as well. So, there are a lot of other benefits which we see and it's a great move where we need to ensure that the next few days that there is enough cash that gets pumped in and we really need to encourage that the consumption doesn't drop. People generally get happy seeing Rs 100 notes as it has much value and people are exhibiting that behaviour right now. So, I think our case in point would be to ensure that consumers don't infinitely delay their vehicle's lubricant change which in the long run would cost them more. We just want to ensure that this education is in place and people are coming back.
If there is any credit help needed along to ensure there is liquidity, we want to lean forward and enable that cause along the way. Agreed there is a lot of criticism being done on the implementation part of it but if one does the maths on how much of the implementation is getting done, logistically things are still working out perfectly in terms of the money moving back to banks etc. Given the larger picture, it is a fairly decent execution.
You spoke about one of your products wherein a consumer can save up to 3 percent or Rs 40,000 which is equivalent to saving 81 trees. Any such products that you are looking at from a development perspective within India?
This is just one example and we do have our patented gas-to-liquid technology which is our base oil and that goes into multiple products. Crude oil has some impurity but if you could dehumidify, say tea leaves from boiling water, that would bring out a pure product. That is the purity level of the oil which we are talking about here. And the gas-to-liquid oil goes into a large part of our portfolio and a lot of data and evidence proves cleaner engines with lower volatility and oxidation points etc, which help in ensuring that there is less friction. As a result, there are multiple benefits in the B2B segment since it translates into lower maintenance, a lesser need of change, longer oil drain intervals, etc.
That is just one part of the story and the other part is what we do about the re-used oil and ensuring that it sees its end and does not get resoiled in multiple hands which is very poisonous. This is where our secondary and primary packaging, which is more biologically friendly, comes into play.
So, what are the primary means that you are using to reach out to consumers to make them aware about these benefits in Shell products. Is it digital or traditional?
What we have done is that we have taken each of our consumer target groups. So, for our segment in our commercial vehicle segment or B2B consumer etc., we have mapped out the consumer journey on how they would like the purchase to happen. And within that consumer journey what are the trigger, touch and decision points in terms of how they are making their decisions. Then we come to a list of what are the most important influencers along the way. Our communication strategy is more towards which touch point is the highest influencer when a consumer is closest to the purchase decision tree. This is done so that we don't do a mass splash through TV, radio etc. because we have learnt over a period of time that it probably is good in creating awareness but is not strong enough to changing a purchase decision. What we have seen is that if we make it more contextually closer to the purchase and make it say through the key influencers such as a mechanic or a friend, the results are favourable.
So the point is that we have to know our customer journey and cater our communication based on how they will be doing the purchase.
Are there any new business areas or domains that you are planning to enter in the next short or medium term planning?
We have a part of the portfolio where we are present and have a high share and there the focus is how do we ensure we are giving the best experience, relationship building as well as ensuring we are giving out the full portfolio.
Then there is part of the segment where our shares are low and the eal trick is to go to the next set of customers and prove that we are definitely better and get the trial so that we get and ongoing relationship with them.
And then there is a part of the business where we are not present at all and there are genuine reasons for that. For example, we are not a part of the national oil companies etc. which are Government aided or run in India. It is a very low price range in which that part of the market is playing. In those cases, we have to pilot or test and see if we have all the systems like the product portfolio, capabilities etc and align all of those to ensure that it is a sustainable long term presence for us.
The new areas are the fleet business where we would want to explore more. There are emerging opportunities with some aggregators, the entire fleet which has come in the commercial vehicle market such as Ola, Uber etc. This is a very exciting change happening as far as mobilty solutions for a common man are concerned and we want to see how we can play there. Hence, we want to partner and learn along the way and see how we can provide the best solution for various consumers in the value chain.
In terms of business, please tell us how the growth for India operations has been over the last year and what are you aiming at?
Shell in India has been on a strong growth path. We have been growing in the top as well as bottom line over the last four years and our total market share currently is five percent, but the range within that is very high. There are segments like wind, where our market share is about 48 percent, down to some rural channels where our share might be low. So, this is an aggregated number and hence we want to play in the markets where we feel we have the right strength and consolidate that part a lot more.
The second aspect is the strength in our technology and products, which through internal, external and benchmarking studies have given us the confidence that we have the best products and we want to continously invest in both, technology, patents etc.
The third area is our footprint in India and that's with the legacy of a number of years and we have further strengthened our footprint. The intent would be to take ourselves to places where we are not present. From top tiers to the next and so on. From an area of weakness, we are now at an area of neutrality and we want to take it to the area of strength.
The fourth aspect is our partnerships with OEMs, B2B etc, like big automotive companies which we are working with. Both, globally and within India, we are playing with most of the players in terms of our relationship and partnership.
Can you disclose the numbers in terms of the shares in the Indian business from a global operation point-of-view?
We do talk about Shell being the No 1 lubricant supplier for the 10th year in a row and we have again got the No 1 position and likewise in India we have mentioned our market shares. We don't share India specific numbers because we are not listed in the national oil companies list.
Can you talk about the planned growth for the Indian operations? A rough figure?
The vision as mentioned is that in the mind of our key customer, we would want to be the Number 1 lubricant supplier. We would want them to see Shell as the company with the best products, service, relationship and price and hence the total value that we create for them, they are able to see and appreciate and value Shell as a brand. That is really the core of how we want to operate.
Shell products are looked as premium products from a price perspective. How much of a challenge do you foresee to penetrate Tier II or Tier III cities ?
The perception is that we have the best products and hence we can command a premium which is absolutely true. The reality linked to that is that we do have a portfolio which caters to mid and entry tiers that are cost effective. We do have our pricing strategy basis the sectors and where we are coming from, our pricing strategy could be premium, competitive and in many cases, lower.
To summarise, in the last couple of years, we are trying to make lubricants an exciting category and the reason we are able to do it is by looking at each member of our value chain and understanding what are their needs and how do we partner with them along the journey and creating the specific proposition and specific programmes which are sustainable in the long-term.