<div>BW|Businessworld’s <strong>Simar Singh </strong>caught up with Shell Lubricants India’s Managing Director <strong>Nitin Prasad</strong>, to talk about the challenges and future of the company and how Shell is investing a couple of millions in Bangalore R&D facility </div><div> </div><div> </div><div><em>Excerpts from the interview</em></div><div> </div><div> </div><div><strong>What has been the focus of Shell Lubricants in India?</strong></div><div>In India, in terms of the domestic market, what we have been focusing on is how can we bring energy efficiency for our customers, how can we bring fuel efficiency solutions that are not available in India today and focusing on total costs of ownership so that we can help our customers in India become much more competitive. It's all about what value you bring to the country and how you orient yourself.</div><div> </div><div><strong>In your experience, what are the challenges that you have faced at Shell Lubricants from the Indian policy environment?</strong></div><div>On the domestic side, when it comes to the movement of goods within the country the GST that has been drafted is a problem for us, it magnifies the costs by two to three times. In terms of having the right infrastructure to be able to service the entire company, the overheads are very high. That makes us less competitive. </div><div> </div><div>What it also does to the industry is that it breaks the benefits that come from consolidation and scale. Most industries like to have one big manufacturing facility and one big warehouse and be able to supply everywhere because thats how we get the maximum efficiency in our production levels. However, because of the way the economy works and not having a GST we actually have to break apart your business and operate in many small different locations as that works out to be more efficient.</div><div> </div><div>We ourselves have one manufacturing facility and 17 odd warehouses, and at different locations we import products all across the entire country. We have also had multiple manufacturing facilities, third-party facilities in Chennai and elsewhere.</div><div> </div><div>Another challenge is that the mindset so far has been to make the cheapest thing you can and everyone wants to try and save one rupee here and there. As a culture, we talk about value for money but I believe that we often mistake that for the cheapest possible thing. </div><div> </div><div>There are plenty of examples in the industry where people have made extremely cheap products, but consumers have come in and said that these don't meet their basic requirements or basic standards of quality. I see that, as a society, we are demanding more now in terms of quality and capability. Of course, we still want it to be competitive but we want quality now.</div><div> </div><div>On the export side, there are a lot of infrastructural challenges and we need a proper policy framework. On our side, we have invested quite heavily in both the labour and technology side. So we are exporting and we are comfortable exporting. But it doesn't take much for us to rank ourselves with other plants in countries across the world and I will say that we are not that competitive. </div><div> </div><div>Being a multinational, we at Shell have 35-40 odd plants across the world, so we really have the luxury of choosing where we want to manufacture our product. We have to compete with all those other 40 plants to get our business.</div><div> </div><div><strong>Where would you rank your Indian operations amongst all the different plants that are there?</strong></div><div>The honest answer is that that we are better that more than half of them and we are worse than the other half. Somewhere in the middle, but getting better.</div><div> </div><div>We have been increasing our exports over the years and are drifting towards being the top 25 per cent. In a few years time we hope to be a top quartile manufacturing location and we feel like we can get there on our own steam. The real challenge is going from top quartile to top 10%, for that we would need a lot more support from the environment.</div><div> </div><div><strong>Is Shell looking at expansion?</strong></div><div>We always have plans to expand capacity and have been expanding over the years. If you take a look at the Shell Group as a whole, we are by far, one of the most diversified oil and gas companies. We have been investing over a billion dollars in the marketplace and are continuing to invest.</div><div> </div><div>In India, we are expanding our R&D facility in Bangalore, we've put in a couple hundred million dollars to get the latest and greatest R&D technology. We already had about a 1,000 people there and are now growing that number to 1,500. We are expanding our finance outsourcing arms and are looking at expansion of our downstream businesses. We are looking at everything and are very bullish on India. We believe that it is economy that is coming into its own. We think its going to take time but it is a top priority market for us and we are going to continue investing in it.</div><div> </div>
_20240527192124_original_image_21.webp)
