Adventure in Oil
Yet another activity almost came into Balmer Lawrie's fold in 1878. Tea had taken Mr. Lawrie into Assam. At that time another exciting prospect being actively pursued in Assam was oil exploration.
In a letter dated January 13, 1878, Balmer Lawrie applied to the state government for concession in perpetuity or 99 years of all rights to petroleum and other finds in Jaipur sub-division of Lakhimpur district of Assam. However, for reasons which could not be ascertained, the request was not granted. By 1881, Assam Railways & Trading had secured extensive concessions and in 1889 it met with success in Digboi, only 15 miles from the location Balmer Lawrie had applied for.
Balmer Lawrie maintained its interest in oil upto the early 1900s through its association with Assam Oil Syndicate until it was taken over by Assam Oil, a company formed by Assam Railways & Trading for oil prospecting.
There was yet another attempt in 1910 when Mr. F E Hecquet of Balmer Lawrie visited Re-lai Sang in north Assam to inspect a property offered to the Firm. This also did not materialize, perhaps fortunately, as the area never produced any oil.
Greases and Specialities
Balmer Lawrie was importing and distributing lubricating oils almost since the inception of its trading operations. Initially, these were straight oils and later a range of blended oils were added, including motor oils from Alexander Duckhams in 1933. The people in the Metal Department who led Balmer Lawrie into grease manufacture in 1937 were, in all likelihood, unaware of the intricacies of grease making, where the process and technology were shrouded in strict secrecy and confined to only a handful of individuals.
There were three products taken up simultaneously when the Metal Department started production at Peelkhana in Howrah. One was grease, the other two were 'Balarene', a disinfectant fluid and 'Killem', an insecticide. The 'togetherness' of the products indicate the inspiration came from some chemist. The target market was tea gardens where all the three were in demand. 'Broom' brand Balarene and 'Hammer' brand Killem were instant successes, extending to markets beyond the tea gardens. Based on elementary cold blending, these products employed simple equipment and the growing demand was quickly responded to, including that for export. Oppenheimer & Co. were appointed representatives in Rangoon during the 1940s.
Grease production in Peelkhana had started in 1937 with the capacity of one barrel per day of cup grease in a lean-to shed attached to the Metal Department godown.
In 1944 a similar facility for production of the three products was set up in Bombay and production of Balarene and Killem started. A lean-to shed was set up for grease production. Additionally, Burmah Shell had a contact with Balmer Lawrie to repack grease imported in bulk in small packs at Bombay.
Twists and Turns
The twists and turns in the story of grease production in Balmer Lawrie started in 1946. It's success is steeped in initiative and tenacity.
Two salient events took place in 1946. One was unavoidable, where as in the case of the other, the Company had options. The first was repeated rejection of batch after batch Grease No. 1 produced against a government order. It can be conveniently said in retrospect that, considering the level of expertise or rather the lack of it, the rejections were unavoidable. However, for the people in positions of responsibility at that time, it was a harsh blow. They had to choose between the option of continuing or throwing up their hands. That is the second event of importance. Fortunately, the management opted for the former.
Alex Lawrie on request from Calcutta had been looking for grease makers but without success. Besides being scarce, they were paid exorbitant emoluments. In the early 1950s the Company approached grease producing companies in the UK, including Shell, with requests for training its technical personnel but the art of grease making was so shrouded in secrecy that no one agreed to share this knowledge. It was left to Balmer Lawrie 'grow its own timber'.
The most important far reaching was the appointment, in 1954, of Mr. Paul Gonsalves, a chemistry graduate from Bombay University with working experience in oils and fats. He was also new grease making when he joined but by the time he retired, almost 26 years later, he was acknowledged as the 'Father' of grease industry in India.
On the business side, the most significant breakthrough came in 1953. Balmer Lawrie was approached by Burmah Shell and Caltex with a proposal whereby Balmer Lawrie would transfer its entire business of lubricating oils to the oil companies and, in return, they would have their greases processed at Calcutta and Bombay. Since 1939, Balmer Lawrie had been procuring blended oils under its own brand 'Balmerol' from Hudson Oil Co. of the USA and had built up a good market for these oils. This agency was discontinued and a 'gentlemen's agreement' was made, effective from July 1, 1953 which, among other stipulations, provided that Balmer Lawrie would process greases for Burmah Shell and Caltex for the Indian market. There was no provision for transfer of knowledge or expertise. Balmer Lawrie, entirely through its own efforts, would have to match the samples provided by the oil companies. It was understood that as and when Balmer Lawrie could meet the specifications of a particular grade, the oil companies would discontinue import of that item in favour of procurement from Balmer Lawrie.
At about the same time, there were two other major companies, apart from Standard Vacuum, entering grease manufacture in India. Their strategies were more or less convention but very different from those of Balmer Lawrie. Bird Helgiers had proposed a technical collaboration with the internationally famous Silvertown and Andrew Yule was to tie up with Tide Water. The basic difference in the two approaches was that whereas the Balmer Lawrie arrangement gave it access to the largest market segment (Burmah Shell and Caltex then held almost 80% of the grease market share in India), Bird and Andrew Yule had assured access to expertise which was the key to success and not easily available. Thus, Balmer Lawrie had opted for high risk and high gain, whereas the other two followed a conservative approach of modest reward. A rather bold and unusual strategy for Balmer Lawrie!
Balmer Lawrie, the largest producer of greases…
Balmer Lawrie's strategy fortunately succeeded and, by 1960, its customers included Castrol and Gulf Oil besides Shell and Caltex. In fact by 1960, Balmer Lawrie had emerged as the largest producer of greases in the country. It also had the distinction of having the widest range of product capabilities. Whereas, the captive plants of Esso (successors of Stanvac) and Tide Water were restricted to their own products, Balmer Lawrie produced for Shell, Caltex, and Castrol besides having its own additional formulations. Grease processing became an important revenue earner for the Company.
However, the scenario in respect of oil companies started changing rapidly with the emergence of Indian Oil as the premier oil company in India. Nationalization of Burmah Shell, Esso and Caltex in the 1970s added a new dimension to the ongoing changes. Indian Oil decided to set up its own grease plant in association with Mobil and a plant came up in Bombay under Indian Oil Blending ltd. Caltex was absorbed in Hindustan Petroleum. With that its own brands were discontinued. Only Bharat Petroleum retained its earlier policy of having its new product range processed by Balmer Lawrie. There was a sharp drop in the offtake, particularly in Calcutta, as Bharat Petroleum was not very strong in the eastern sector.
Here was Balmer Lawrie, having the largest manufacturing capacity in India but without its own products or marketing capability and dependent entirely on the oil companies for work.
The Calcutta unit decided to make a small beginning with direct sales in the early 1970s. The products immediately available were conventional greases and gaps had to be found in the market where oil companies had not penetrated. Efforts were made to develop a dealer and stockist network in the eastern region. This was in addition to ongoing sales through Martin Burn and business secured from the Ministry of Defence, DGS&D etc. A branch office was also later established in Secundrabad.
In the 1970s Balmer Lawrie started to look around outside India in search of new products and technologies. A solution to Balmer Lawrie's predicament then started emerging. It was found that 'specialities' and 'high performance' products were developed, produced and marketed employing techniques very different from those for conventional products. The former had to be custom developed in association with the user through an ongoing and close interaction. The producer had to be backed by a well-equipped laboratory with an ability to tailor specific products to meet individual needs.
Applications Research Laboratory
By 1978, a small technical team in Balmer Lawrie had completed its study to comprehend the new opportunity. Mr. Paul Gonsalves, a key member of the team, helped to give shape to a scheme for setting up a product development facility. Dr. B P Banerjee made the objectives and directions explicit by naming the proposed facility 'Applications Research Laboratory'.
'Niche' Grows and Madras
By the mid-1980s, Calcutta had begun to establish itself in 'specialities' and 'high performance' products. Although, production capacity was not yet fully utilized, Calcutta was in direct communication with the market and emphasis was on continually searching for new opportunities. Bombay, on the other hand, remained confined to processing for oil companies, which constituted about 95% of its production in 1988. A factor which helped Bombay immensely was the decision taken by the Ministry in 1982 to peg Indian Oil's production and not allow any growth in capacity until Balmer Lawrie capacities were fully utilized. To meet the growing demands Indian Oil had its incremental requirements processed by Balmer Lawrie. While Calcutta continued to press on with 'specialities', Bombay also decided to take quick measures to promote a technology intensive 'niche' market.
With the commencement of production of lube oil base stock in Madras Refinery in 1968, a new logistic emerged. With grease plants at Bombay and Calcutta, base stocks were now moving from Madras to these destinations for conversion into grease, and then transported back to south India. Balmer Lawrie had suggested to the government in early 1980s that a grease plant was justified in Madras. In 1982 a letter of intent was issued in favour of Balmer Lawrie for setting up a grease unit in Madras but the government desired that actual implementation be kept in abeyance until existing installed capacities in Calcutta and Bombay were utilized. In December 1985, the department of petroleum and natural gas communicated its decision, advising Balmer Lawrie to set up the plant for production of conventional greases and 'specialities'. The plant commenced production in March 1987.
(Source: Footprints on the Sands of Time)