By Aditya Gowda| Aug 12, 2021

Steelbird Enters Engine Oil Segment

With a strong presence in the automotive filters and rubber components space, Steelbird International has announced an entry into the two-wheeler engine oil and lubes space. It marks a logical extension for the company that is having a presence in the OEM as well as the aftermarket. Having a presence in the two-wheeler tyres market too, Steelbird International has also introduced two-wheeler multi-purpose grease and fork oil. Expressed Manav Kapoor, Executive Director, Steelbird International, that the new product line of oils will complement the company’s existing product lines, which include oil filters. “We have been into the auto component business for over 35 years, manufacturing oil filters and rubber components. Our brand is very well understood by the consumer and the mechanics,” he mentioned. Informing that the company is one of the biggest players in the aftermarket for two-wheeler oil filters, Kapoor said that it is a name to reckon with in the distribution networks, dealer networks and with the mechanics.

Keen to take advantage of its distribution channel and familiarity to promote its new product line Steelbird International has a strong presence in North India. n market. Banking on the synergy between its existing product lines and the new ones, it is also working on launching some new products over the next few months. Buoyed by the strong performance of the existing product lines, it is also conducting the necessary due diligence for the introduction of the new products. The nature of the new products it is not yet ready to reveal. All that Kapoor said is that the new products will complement the existing ones. Entering the volume intensive two-wheeler space below 350 cc, Steelbird International is cautious about the current market scenario. It faced challenges and some disruption due to the Covid-19 pandemic, and is keen that it is prepared for such challenges if they were to come.

Stating that they did a thorough work out of the financials during the decision-making process to enter the oil and lubes market, Kapoor averred, “Many companies are struggling to break even.” The strong financial position of the company let it take the leap into new products. It was a calculated risk, quipped Kapoor. Allocating enough funds for the new product line to take off, the company is banking on innovation and R&D. Achieving double-digit growth last year, according to Kapoor, the company is entrusting the task of oil manufacture, which is highly specialised, to reputed companies in the country. Stating that in-house design and specifications are in place, Kapoor explained that the new products have been developed as per the requirements of the consumers. Initial response to the oil and lubes has been quite positive, he said. “The sales numbers in the first month of the introduction have well exceeded the target set by us. They were achieved in the first week itself,” Kapoor elaborated.

Of the opinion that the key challenge the oil and lubes market is currently facing is the considerable fluctuation in oil prices, Kapoor said that they have been changing every quarter. Highlighting the oil and lubes operation as not manpower intensive, he said, “The key difference between auto components and lubes is the need to keep a close watch on the prices and adjust them every quarter. They are clearly linked to the input prices and their near constant fluctuation is quite unlike auto components whose prices could be held for up to a year.” The prices of filters and rubber components do not change that often, Kapoor emphasised. Informing that the consumer – a two-wheeler owner – in India is largely influenced by the workshop or the mechanic that he goes to, Kapoor said that they are promoting their oil and lubes product line by reaching out to the mechanics around the country. “We are educating them. We are conducting local campaigns and loyalty programmes. We are offering cash-backs, coupons to save cash and financial incentives to the mechanics and dealers,” he stated.

Focusing on the sub-350 cc two-wheeler segments, Steelbird International is keen to take advantage of their voluminous nature. Compared to the sub-350 cc segments, the ones above are niche oriented, according to Kapoor. They are also well-serviced by other brands, he remarked. “It does not sense for us to focus on segments above 350 cc as of now. The commuter two-wheeler segments will consume our time and attention,” he added. On the subject of challenges regarding OEMs, Kapoor averred, “We need to look at the thin margin involved. Also, whenever the price of materials changes, there is the challenge to ensure its absorption as well as how much to pass it on.” Facing a highly volatile 2020, the company is keeping a close eye on the changes that are affecting the auto industry. In the case of electrification of automobiles, it is not worried as much. Its calculation says that the penetration of EVs is not likely to rise beyond 30 percent by 2030.

Pushing its new oil and lubes product line, therefore, the company is confident of a strong mid-term and long-term journey. Kapoor said, “I am not worried about the effect the rising count of EVs will have on my new oil and lubes venture. And, this is in spite of the volatile petroleum product prices.” Witnessing an aftermarket growth at a CAGR of seven percent per annum, Steelbird International, according to Kapoor, will get a substantial market size to enjoy apart from the other players even though a 30 percent shift to EVs takes place. “The current situation is such that 99.99 percent of the vehicles are powered by IC engines,” quipped Kapoor. “They are significant consumers of oils and lubes,” he added. With EVs also said to require oils and lubes, albeit different in nature and grades than what are consumed by the IC engine-powered vehicles, the company is confident of the existing oil and lubes market enjoying a longer tenure than would be anticipated. It is, therefore, looking at a considerable revenue earning potential.

Well-aware that OEMs and suppliers need to keep a tab on the future in terms of technology, regulations and customer requirements, Steelbird International, said Kapoor, is anticipating a fairly stable journey in the aftermarket at least until 2025. “Any shift in market dynamics is likely to impact post 2025 at the aftermarket level,”he averred. With the Covid-19-led disruption leading to some unprecedented challenges like the fall in shared mobility and a rise in personal mobility, the company is confident that growth is closer than expected. Stating that the automobile market in India will rebound quickly in line with the improving economy, Kapoor said, “The pandemic did one thing that is worthy of mention. It is the change it led to, from the unorganised sector to the organised sector.”

Experiencing a business adverse first quarter in FY2020-21 due to the lockdown, the company is confident of a strong growth. “We were able to capture the demand curve in the market due to our manpower variability,” he added. Causing an amount of disruption, the Covid-19 pandemic saw Steelbird International revisit its business strategies and processes. Measures were taken to ensure the impact was as less as possible. Surpassing 30 percent growth in FY2021-22 on the basis of the low base of FY2020-21, the company is confident of a good uptake in its new product line. With its core strength in its domination of the North Indian market, the company is looking at increasing its presence in the South Indian market as well. Looking at risk aversion measures, the company is also looking at further accelerating its export venture. It currently exports filters and rubber parts to Germany, a few Latin American nations and neighbouring countries. The new product line, comprising oils and lubes, could offer Steelbird International a better opportunity to increase its exports revenue. (MT)

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