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Effect On The Sales of Indianoil Bitumen Due To Import in West Bengal
Effect On The Sales of Indianoil Bitumen Due To Import in West Bengal
PROJECT REPORT
ON
PROJECT TITLE:
Submitted by
PRIYANKA MULLICK
PGPM 08 (2009-2011)
Reg No – 010108047
1
INDEX:
1. Acknowledgement 4
2. Declaration 5
3. Executive summary 6
5. BITUMEN 20-28
6. PRODUCTION OF BITUMEN 29
7. INTRODUCTION: 30
Need for the research
Research problem
Research objective
8. INSIGHT TO THE RESEARCH 31-32
9. RESEARCH PROCEDURE 33
2
12. Import of bitumen 40-41
20. Recommendations 55
21. conclusion 56
3
ACKNOWLEDGEMENT:
Any task that is under taken reaches successful completion not only by an
individual’s effort but also by the guidance and support of many others. Here are
to acknowledge a few of those who have helped me to carry out this project work
successfully.
I would also like to thank entire marketing department for the invaluable help
and support extended during the project work.
Last but not the least; I am thankful to my faculty guides Mr.Avik Mukherjee and
Mr.Udayan Basu for being the source of inspiration and motivation to strive for
excellence.
PRIYANKA MULLICK
PGPM 08
KOLKATA
4
DECLARATION:
PRIYANKA MULLICK
5
EXECUTIVE SUMMARY
Title of the project “Study of the Effect on the sales of Indian Oil
Bitumen due to import in west Bengal” Itself suggests the gist of the
project.
Indian Oil Corporation Limited is the flagship national oil company in the
downstream sector. Its objective is to maintain the highest market share
in all its product portfolios.
The basic approach in this project is identifying what are the reasons for
decrease in the sale of IOCL bitumen market in West Bengal due to
import of bitumen by importers or customers themselves.
6
COMPANY PROFILE:
The Indian Oil Group of companies owns and operates 10 of India's 20 refineries
with a combined refining capacity of 60.2 million metric tonnes per annum
(MMTPA, .i.e. 1.2 million barrels per day). These include two refineries of
subsidiary Chennai Petroleum Corporation Ltd.
7
Network Beyond Compare
IndianOil operates the largest and the widest network of petrol & diesel stations
in the country, numbering 18,643 including 2947 Kisan Seva Kendras (KSK) outlets
in the rural markets. Indane cooking gas is present in 2,764 markets through a
network of 5,095 Indane Distributors.
Customer First
At IndianOil, customers always get the first priority. New initiatives are launched
round-the-year for the convenience of the various customer segments.
Exclusive XTRACARE petrol & diesel stations unveiled in select urban and semi-
urban markets offer a range of value-added services to enhance customer delight
and loyalty. Large format Swagat brand outlets cater to highway motorists, with
multiple facilities such as food courts, first aid, rest rooms and dormitories, spare
parts shops, etc. Specially formatted Kisan Seva Kendra outlets meet the diverse
needs of the rural populace, offering a variety of products and services such as
seeds, fertilizers, pesticides, farm equipment, medicines, spare parts for trucks
8
and tractors, solar lanterns, tractor engine oils and pump set oils, besides
auto fuels and kerosene. SERVOXpress has been launched as a one-stop shop for
auto care services.
Some of the new in-house technologies and catalysts developed by IndianOil are
the Olivorus – S bio remediation technology (extended to marine applications
too), DHDS catalyst, a special Indicat catalyst for BS-IV compliant Diesel, IndVi
catalyst for improved distillate yield and FCC throughput, and adsorbent based
deep desulphurization process for gasoline and diesel streams. IndianOil has won
the prestigious Technology Day Award 2010 from the Govt. of India, for successful
development and commercialization of multifunctional additives for premium
grade diesel and lubricity additives for ultra low sulphur diesel.
Widening Horizons
9
To achieve the next level of growth, IndianOil is currently
forging ahead on a well laid-out road map through
vertical integration— upstream into oil exploration &
production (E&P) and downstream into petrochemicals –
and diversification into natural gas marketing, bio-fuels,
wind, solar and nuclear power projects, besides
globalisation of its downstream operations.
Petrochemicals
In petrochemicals, IndianOil is investing Rs. 20,000 crore (US$ 4 billion) by the
year 2011-12. Through the world’s largest single-train Linear Alkyl Benzene (LAB)
plant , with an annual capacity of 1,20,000 tonnes, set up at its Gujarat Refinery,
the Corporation has already captured a significant market share of LAB in India,
besides exporting the product to 15 countries.
The overseas E&P portfolio of IndianOil includes nine blocks - 86 and 102/4 blocks
in Sirte Basin and Areas 95/96 in Ghadames basin of Libya, Farsi Exploration Block
10
in Iran, onshore farm-in arrangements in one block in Gabon, one on land
block in Nigeria, one deepwater offshore block in Timor-Leste and two onshore
blocks in Yemen.
In all, IndianOil has 12 domestic exploration blocks, including 2 blocks where gas
discoveries have been made and 9 overseas exploration blocks. Exploration
activities are at various stages of progress. In addition, as part of consortium,
IndianOil has been awarded Project -1 in the Carabobo heavy oil region of
Venezuela. IndianOil has also incorporated Ind-OIL Overseas Ltd. – a special
purpose vehicle for acquisition of overseas E&P assets – in Port Louis, Mauritius,
in consortium with Oil India Ltd. (OIL).
Gas
Gas marketing is a thrust area for IndianOil with special focus on City Gas
Distribution (CGD) business. For this, IndianOil has tied up with several players
such as Adani Energy, Reliance Gas Corporation, OIL and ONGC, etc., to set up
joint ventures in various cities of India. The Corporation has also entered into
franchise agreements with CGD players such as Indraprastha Gas Ltd., Mahanagar
Gas Ltd., Adani Energy Limited, GEECL, SITI Energy and GSPC Gas Ltd. to market
CNG through its retail outlets.
IndianOil’s joint venture – Green Gas – has been authorised to take up city gas
distribution at Agra. A long term gas supply agreement has been signed with
NTPC.
Bio-fuels
To straddle the complete bio-fuel value chain, IndianOil has formed a joint
venture with the Chhattisgarh Renewable Development Authority (CREDA) with
an equity holding of 74% and 26% respectively. IndianOil CREDA Biofuels Ltd. has
been formed for carrying out farming, cultivating, manufacturing, production and
sale of biomass, bio-fuels and allied products and services.
IndianOil has the largest captive plantation for bio-fuel production in India – 1012
11
hectares – which is underway in Chattisgarh and Madhya Pradesh,
generating rural employment of over 1.4 lakh man-days. IndianOil has also
entered into a partnership with Ruchi Soya Industries Ltd., a leading manufacturer
of high quality edible oils, to establish a model value chain for the production of
bio-diesel in the state of Uttar Pradesh.
IndianOil has also launched Solar Lanterns in Orissa, Karnataka and NorthEastern
states and an all-India phased roll out is underway. Solar products like Solar
Lanterns and torches are being sold through our Kisan Seva Kendras and Retail
Outlets.
IndianOil has signed a MoU with the Nuclear Power Corporation of India Ltd.
(NPCIL), for investing in the nuclear energy sector in the country.
Globalisation Initiatives
IndianOil has set up subsidiaries in Sri Lanka, Mauritius and the United Arab
Emirates (UAE), and is simultaneously scouting for new business opportunities in
the energy markets of Asia and Africa.
12
major supplier of lubricants and greases to the three arms of the Defence
services of Sri Lanka. I t holds 12.4% share of the market. It has also introduced
nitrogen filling facilities for automotive tyres, the first of its kind in Sri Lanka.
India Inspired
As a leading public sector enterprise of India, IndianOil has successfully combined
its corporate social responsibility agenda with its business offerings, meeting the
energy needs of millions of people everyday across the length and breadth of the
country, traversing a diversity of cultures, difficult terrains and harsh climatic
conditions. The Corporation takes pride in its continuous investments in
innovative technologies and solutions for sustainable energy flow and economic
growth and in developing techno-economically viable and environment-friendly
products & services for the benefit of its consumers.
13
VISION AND MISSION OF INDIANOIL:
VISION
MISSION
16
To develop operational synergies with subsidiaries and joint ventures
and continuously engage across the hydrocarbon value chain for the
benefit of society at large.
FINANCIAL OBJECTIVES:
17
4 P’s of IOCL
PRODUCTS
Petrol
Diesel
LPG
Auto LPG
Aviation turbine fuel
Lubricants
Naphtha
Bitumen
Paraffin
Kerosene
PRICE
PLACE
PROMOTION
18
PRODUCTS OF IOCL:
IndianOil is not only the largest commercial enterprise in the country it is the
flagship corporate of the Indian Nation. Besides having a dominant market share,
IndianOil is widely recognized as India’s dominant energy brand and customers
perceive IndianOil as a reliable symbol for high quality products and services.
IndianOil is a heritage and iconic brand at one level and a contemporary, global
brand at another level. While quality, reliability and service remains the core
benefits to its customers, its stringent checks are built into operating systems, at
every level ensuring the trust of over a billion Indians over the last four decades.
19
BITUMEN
Bitumen is a thermoplastic material and its stiffness is dependent on
temperature. The temperature versus stiffness relationship of bitumen is
dependent on source of crude and method of refining. Bureau of Indian Standards
(BIS) first time introduced paving grade Bitumen specification IS: 73-1950 based
on penetration. Based on classification the bitumen was classified into five
grades: S35, S435, S65, S90 & S-200.
BIS first revised the IS: 73-1950 specification in the year 1962 based on
penetration. In IS: 73-1961 specification only eight parameters were considered
for specifications.
BIS revised IS: 73-1961 specification in year 1992 for waxy and non waxy crude
based on penetration. In this revision, IS introduced four additional qualification
tests like penetration ratio, paraffin wax content, viscosity at 60 & 135 degree C
and retained penetration after thin film oven test. In case of non waxy crude one
additional grade S55 (50/60 penetration) was introduced. However, in case of
waxy crude only four grades A35, A55, A65, & A90 were specified.
20
INTRODUCTION OF VISCOCITY GRADE BITUMEN:
India has embarked upon massive and unprecedented road construction and
improvement programmes involving huge investments. It has also to maintain a
vast road network of over 33 lakh Km.The durability of the road surfaces depends
largely on the type and quality of the bitumen used and quality control exercised
in the production, transportation, mixing, laying and compaction.
21
THE NEED TO SHIFT FROM PENETRATION TO VISCOSITY GRADE, TO PAVING
BITUMEN
Grade Application
VG-10 BITUMEN Widely used in spraying such as surface
dressing and paving in very cold climate
in lieu of old 80/100 Penetration grade.
Also used to manufacture Bitumen
Emulsion and Modified Bitumen
Products.
VG-20 Bitumen Used for paving in cold climate & high
altitude regions.
VG-30 BITUMEN VG-30 is primarily used to construct
extra heavy duty Bitumen pavements
that need to endure substantial traffic
loads. It can be used in lieu of 60/70
penetration grade.
22
VG-40 BITUMEN Is used in highly stressed areas
such as
intersections, near tool booths and
truck parking lots in lieu of old 30/40
Penetration Grade. Due to its higher
Viscosity stiffer Bitumen Mixes can be
produced to improve resistance to
shoving and other problems associated
with higher temperature and heavy
traffic loads.
TABLE:
(Viscosity Ratio at 4 4 4 4
60 0C, max)
Ductility at 25 0C, 75 50 40 25
cm, min, after thin
film over test
23
DIFFERENCE BETWEEN PENETRATION AND VISCOSITY GRADE:
Viscosity is measured at 60 C and 135 C, which takes care of both low and high
temperature susceptibility of the binder, which is not possible with the
penetration value @ 25 C. Hence, pavement engineers, contractors I consults can
have better understanding about the binder’s performance in the field. Any two
same viscosities Grade Bitumen would give similar rutting performance in hot
summer unlike penetration Grade. Greater ease of handling to customers, as
Viscosity Value at two different temperatures (@60 C and 135 C) is available,
which would enable users to measure accurate mining and compaction
temperatures. Minimum specified Kinematic Viscosity value @ 135 C helps to
minimize the potential of tender mixes during construction. Viscosity Grade
Bitumen are suitable for a wide range of temperature: 2 C for raveling fatigue
cracking, 60 C for rutting and 135 C for construction (mixing and compaction) IS
73-2006 has only & tests to evaluate a sample compared to 14 tests in
Penetration Grade Bitumen. This reduces time and cost of testing without
sacrificing its quality.
24
BENEFITS OF VG BITUMEN
IndianOil produces bitumen from its refineries at Panipat, Mathura, Koyali, Haldia
and Chennai and markets it in bulk as well as packed in steel drums. IndianOil also
markets modified Bitumen CRMB and Emulsion. CRMB is produced at Panipat,
Mathura, Koyali, Haldia and CPCL refineries. IndianOil markets Bitumen Emulsion
by the brand name Indemul and it is produced from emulsion plants located in
Haldia and Panipat refineries. CRMB and Emulsion are available both in bulk as
well as in packed drums.
25
General uses of Bitumen:
Industries
26
TYPES OF BITUMEN MANUFACTURED BY IOCL
Pavements that need to endure substantial traffic loads. It can be used in lieu of
60/70 Penetration grade.
Bitumen:
IndianOil markets Bitumen from its Refineries located at Koyali(Gujarat),
Mathura(UP), Panipat(Haryana), Barauni(Bihar), Haldia(WB) and CPCL(Tamil
Nadu). Bitumen is available from these locations both in bulk as well as in packed
drums. In addition to the refinery locations, packed bitumen is also marketed
from upcountry locations Jamshedpur (Jharkhand), Bokaro (Jharkhand), Guwahati
(Assam), Haldwani (UP), Balasore (Orissa), Coimbatore and Madurai (Tamil
Nadu).
CRMB:
CRMB is available from the refinery locations at Koyali, Mathura, Panipat, Barauni,
Haldia and Chennai. The product is available both in bulk as well as packed
drums.
Emulsion:
PMB:
IndianOil is setting up a Polymer Modified Bitumen plant at Koyali Refinery. The
plant is expected to be ready by the end of 2010.
PRODUCTION OF BITUMEN:
28
Bitumen is produced by refining crude oil by fractional distillation. The
crude oil is pumped from storage tanks, where it is kept at about 60°C, through a
heat exchanger system where its temperature is increased to typically 200°C by
exchanging heat gained from the cooling of newly produced products in the
refining process. The crude is then further heated in a furnace to typically 300° C
where it is partly vapourised before entering an Atmospheric Distillation Column.
Here the physical separation of the components occurs. The lighter components
rise to the top and the heaviest components fall to the bottom of the column. The
material from the bottom then enters a Vacuum Distillation Column via another
heat exchanger. Here is where the bitumen is produced. Vacuum distillation helps
to maintain the inherently high binding characteristics of crude, due to the lower
operating temperatures.
INTRODUCTION:
Need for the research:
29
Earlier Indian oil had 100% market share in bitumen in West Bengal. Since
2007 the market share started gradually decreasing due to import of bitumen
which started from October 2007. The road contractors and processors who were
dependant only on IOCL bitumen few years back have now started buying
imported bitumen. As a result the sales quantity has decreased over the past few
years. Though the decrease is negligible but still it has become a major concern
for IOC to regain its market share.
Research Problem:
The research problem was to analyze the reasons for gradual decrease of market
share and decreasing sales quantity of bitumen. For this analysis to be carried out,
we have to work on the various factors which are affecting the buying behavior of
bitumen of road contractors and processors.
Research objectives:
30
Scope of the study:
The research work will be totally concentrated inside the Kolkata region. The
Research work will cover the respondents from the customers of IOCL’s VG
bitumen i.e. both road contractors and processors of VG bitumen, and Kolkata
based importers of bitumen.
Research Methodology:
This research work is done to first find out the factors which affect the buying
decision of Bitumen of customers & secondly on the basis of survey analysis,
formulate recommendations to improve sales of bitumen of IOCL.
Type of research:
The research work conducted is exploratory & descriptive in nature. This research
work is used to investigate the factors which are affecting the buying decision of
bitumen & marking perception of customers about imported bitumen available in
market. It is an exploratory and descriptive research, as it has both the secondary
data and surveys.
a) Primary Data
The data was to be gathered through a survey based research approach with the
help of questionnaire.
b) Secondary Data
The source of secondary data was the articles on bitumen mentioned on the
internet. The sources of all the sites are mentioned in bibliography in this report.
Sampling Techniques
31
Comparing this years and previous year’s purchased quantity of bitumen of
IOCL customers, I made a list of customers whose purchase quantity of bitumen
have decreased than that of the previous year. From that list I randomly selected
some Kolkata based customers of IOCL both road contractors and processors.
Sample Size
There were 2 types of questionnaires which were formulated to carry out this
research work. The sample sizes for each type of questionnaire are as follows:-
2. Importers: 2
There were few limitations in this research work. Due to limited time span it was
not possible to visit all customers of west Bengal. Whereas,to get more concrete
results it was necessary to increase the sample size.
Research procedure:
32
The project title was “effect of sales of bitumen of IOCL due to import of
bitumen”. Since no prior data was available about the imported bitumen market
as well as the effect of sales of IOCL due to import,so it was necessary to
understand the bitumen market of west Bengal and total potential of bitumen by
visiting both customers and importers .The research process is divided into two
phases:
Phase 1:
Phase 1 was the starting point of research work & its duration was about 2 weeks.
Before going out for primary research work, I studied the bitumen market with
the help of internet & collected some useful insight about the industry. In the
primary research work, I first of all decided on the different category of persons
who are linked with the usage of bitumen ie the customers of bitumen. They are
divided in 2 categories; road contractors who directly use the purchased bitumen
for construction purposes and Processors of bitumen, who process the purchased
bitumen into various products such as paints, Cationic Bitumen emulsion
Modified Bitumen, water proofing agents also used for construction purpose.
I collected the address and contact details of west Bengal based bitumen
customers of IOCL and compared their previous year purchased quantity with the
current year. The ones whose purchase quantities have decreased were
shortlisted. I visited Kolkata and Haldia port to collect the contact details of
importers.
Phase 2:
33
Questionnaire for bitumen customers:
1. Who are the suppliers of bitumen to your company?
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
4. Are the end uses of bitumen same for the last 2 years?
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
8. What is the payment mode/facility provided by the suppliers other than IOCL?
------------------------------------------------------------------------------------------------------------
2008:-----------------------
2009:-----------------------
2010:-----------------------
34
10. What is the price to quality rating you want to give to IOCL bitumen?
------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
35
Questionnaires for importers of bitumen:
--------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
5. What is the selling price of bitumen to customers excluding VAT, excise duty
and transportation cost?
---------------------------------------------------------------------------------------------------------
6. What are the payment modes and facilities (if any) you provide to customers?
----------------------------------------------------------------------------------------------------------
VISITS:
36
Below is the list of customers whom I visited for the research purpose with
the questionnaire. The reason for short listing them is due to their decreased
purchased quantity of bitumen than the previous year.
37
Kolkata -700020
16 VANEETA PETROCHEM N.H 2 Delhi 63.53 0
Road,Jaganathpur,Dankuni
17 SIMPLEX 27,Shakesphere Sarani,Park 162.84 19.75
INFRASTRUCTURE Circus Kol-12
18 DINESH CHANDRA 158,Lenin Sarani,Kol-30 28.43 0
AGRAWAL
19 CALCUTTA FELT 39,Hazra Road, Kolkata-34 216.12 16.57
INDUSTRIES
20 ASIANOL LUBRICANTS LTD 7B Pretoria Street Kolkata-71 49.28 29.01
38
List of importers visited are:
39
IMPORT OF BITUMEN:
Import of bitumen started at Haldia port from October 2007.
2008-09
Sl.
No
. VESSEL'S NAME C/Work ORIGIN
02-06-08
1 JANESIA ASPHALT-V SINGAPORE VINERGY INTERNATIONAL
15:25 5,204
13-09-08
2 JIANG ZHOU SINGAPORE VINERGY INTERNATIONAL
04:45 3,926
22-10-08
3 ALFATEM TURKEY HIMADRI CHEMICALS
03:45 6,026
09-02-09
4 JANESIA ASPHALT-V SINGAPORE VINERGY INTERNATIONAL
20:06 5,182
21-03-09 VINERGY INTERNATIONAL-
5 JIANG ZHOU SINGAPORE
05:30 3,994 3990/PEC LTD.-4.09
24,332
2009-10
Sl.
No
. VESSEL'S NAME C/Work ORIGIN
06-04-09
1 JIANG ZHOU SINGAPORE VINERGY INT. PVT. LTD.
04:35 4,002
13-05-09
2 JIANG ZHOU SINGAPORE PEC LTD.
04:00 3,961
15-06-09
3 JIANG ZHOU SINGAPORE PEC LTD.
02:00 3,904
24-10-09
5 DA WEL SHAN NANJING PEC LTD.
06:00 5,176
08-01-10
6 DA WEL SHAN CHINA VINERGY INT. PVT. LTD.
23:00 4,957
28-01-10
7 XING HAI WAN KEMAMAN PEC LTD.
14:30 4,110
26-02-10
8 TASCO-I MALAYSIA PEC LTD.
16:55 3,882
2
TOTAL
9,992
40
Comparing the above data we see that the import quantity has gradually
increased in the past three years. It has been graphically represented as follows:
30000
25000
20000
15000
10000
5000
0
2007-08 2008-09 2009-10
Among the importers Vinergy International Pvt ltd. imports the maximum
quantity of bitumen in West Bengal. Most of the customers I visited were buying
imported bitumen from Vinergy.
41
PRICING OF BITUMEN OF IOCL:
IOCL changes the price of bitumen after 15 days. Which indicates it comes with a
new price list in the market after every 15 days of a month. So the price of
bitumen change twice a month and 24 times during a financial year.
The main reason behind the change in price after every 15 days is that, the basic
price of bitumen is based on import parity price of packed bitumen source EX
IRAN. The free on board price of IRAN drum is taken from the International Argus
Asphalt Report. The report is published fortnightly and therefore every fortnight
packed bitumen price is worked out based on import parity mechanism. The price
of bulk bitumen is worked out from the price of packed bitumen by subtracting
the cost of bitumen drum.
BITUMEN GRADES
VG-10 VG-30 VG-40
PORT REF(Mumbai/Mangalore/Kochi) 26090 26890 28230
KOYALI 26090 26890 28230
MATHURA 27290 28090 29430
PANIPAT 27590 28390 29730
PORT REF (Haldia/Vizag/Chennai) 26190 26990 28330
BARAUNI 27220 28020
BITUMEN (PACKED)
PORT REF(Mumbai/Mangalore/Kochi) 29090 29890 31230
KOYALI 29090 29890 31230
MATHURA 30290 31090 32430
PANIPAT 30590 31390 32730
PORT REF (Haldia/Vizag/Chennai) 29190 29990 31330
42
PRICING OF IOCL BITUMEN DATED (15/5/2010):
43
In West Bengal refining of crude oil is done at Haldia refinery. The basic price is
the price of bitumen at Haldia refinery at the time of production. Bitumen
produced there is then transported in bulk to Uluberia for packaging. The
transportation cost of Rs.450 and packing charge of Rs.200 is added here with the
basic price of bitumen per MT.
Duties on bitumen:
Excise duty: 14% on basic price
EDU Cess : 3% on excise duty
Local tax(VAT): 4%
44
PRICE OF IMPORTED BITUMEN:
I visited vinergy international and himadri chemicals who are the major importers
in west Bengal. They import bitumen mainly from china,Singapore,turkey and
middle east countries.
Though there are special duties on imported bitumen still they provide bitumen
to the customers at a lower price than that of IOCL. This is because the
international price of crude oil keeps on fluctuating. When the price is low they
order bitumen in large quantities. Vinergy international has storage tanks for
bitumen. So they can provide customers the required quantity of bitumen at a
faster rate and at a lower price than that of IOCL.
The special duties on imported bitumen are:
Customs basic duty: 5%
Additional duty: 8%
Special additional duty: 4%
Excise cess: 3%
Customs cess: 3%
45
FACTORS INFLUENCING THE BUYING BEHAVIOR OF BITUMEN CUSTOMERS:
From the interview of the customers it was found that there are 4 factors which
play the most important role in influencing the buying behavior of customers:
Price
Availability
Quality
Service
Most of the customers were satisfied with the quality of bitumen of IOCL. But still
they opted imported bitumen because of poor service of IOCL. IOCL cannot
provide the customers with required quantity of bitumen on time, due to its huge
customer base. So customers buy imported bitumen when there is shortage or
immediate requirement.
Price also plays an important factor. Since the importers provide bitumen on
credit and also on discounts as mentioned earlier, so some IOCL customers have
started buying large quantities of bitumen from them.
A no. of formalities have to be fulfilled while ordering bitumen from IOCL, like
photo ID proof, address proof, demand draft etc, which is a long procedure.
Also due to its huge customer base IOCL cannot give attention to its individual
customer demands.
Some customers have no new projects in hand so the quantity purchased have
decreased than the previous year.
46
Customer responses:
Below is the rank-wise rating of the above 4 factors by the customers as deduced
from their responses
Dagcon(India) 2 1 4 3 Increase
pvt.ltd availability,discounts
should be given
47
From the above rating it is seen that availability plays the most important
factor for the buying decision of bitumen. Service also plays an important factor.
It has been represented in the following diagram:
0
availability service price quality
Some customers complained that the time between the placement of order and
delivery is too long. Sometimes it is almost as long as 2 weeks, so they go for
imported bitumen whenever there is shortage or immediate requirement.
Some customers are also importing bitumen as according to them the quality is
almost the same, but the cost of importing bitumen is lower than that of IOCL.
Few such customers are:
Dagcon India pvt ltd.
Jalnidhi bitumen
As far as quality is concerned most of the customers accepted the fact that quality
of Indian Oil bitumen is much better than that of imported bitumen. So the main
concern of IOCL is to increase the availability of bitumen and improve the service.
48
Sale of IOCL bitumen in the Eastern region:
2009-10
STATES BULK PACKED TOTAL
2008-09
STATES BULK PACKED TOTAL
= (144037-143984)/143984*100=0.03%
So we see that the growth rate in west Bengal is somewhat flat though the
number of bitumen customers has increased than that of previous years.
49
MARKET SHARE OF IOCL IN EASTERN REGION IN 2009-10:
iocl
import
iocl
import
50
From the above pie-charts we see that within 3 years, the imported
bitumen have already captured 6% of market share in eastern region, and every
year the quantity of imported bitumen is increasing.
So it has become a major concern for IOCL to regain its market share in bitumen
industry.
51
RESEARCH FINDINGS:
Service and availability play the most important factor for making buying
decision of bitumen as quality wise there isn’t much difference between
IOCL and imported bitumen.
60% of the customers of IOCL interviewed were buying imported bitumen
due to poor service of IOCL, as IOCL cannot provide the quantity of bitumen
as and when required by the customers. Also their individual demands
were not given attention by IOCL.
Some customers were importing bitumen for self use as well as buying
bitumen from IOCL.
10% of the customers were buying imported bitumen due to price
flexibility, as the importers give discounts to the customers as well as
provide the goods on credit in some cases.
Others did not have new projects in hand at present so their purchase
quantity of bitumen from IOCL has decreased.
Some customers said it takes a long time to fulfill the formalities of IOCL
before placing an order, so whenever there is immediate requirement they
go for imported bitumen which involves a much shorter process.
52
ANALYSIS:
PRICE:
Comparing the prices of IOCL bitumen and imported bitumen we see that in spite
of the import duty the price of imported bitumen is less than that of IOCL
bitumen.
For eg.- the price per MT of VG 10 bitumen of Vinergy international is Rs 32, 474
And that of Himadri chemicals is Rs. 32,556 (26/5/2010).
AVAILABILITY:
Bitumen is obtained from the fractional distillation of crude oil which is limited.
Also IOCL has other products to concentrate upon which are obtained as
byproducts of crude oil. So whenever bitumen is unavailable or there is shortage
at IOCL, they go for imported bitumen, though very small quantity.
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SERVICE:
Some customers complained that IOCL has poor service, as the goods ordered
were not delivered on time. Besides, the time between placement of order and
delivery is longer as compared to that of importers. Also it is a long process as
they have to fulfill certain formalities as mentioned earlier. So whenever there is
emergency or shortage they buy imported bitumen. The importers have storage
tanks for bitumen, so whenever an order is placed they deliver them immediately.
Also they don’t have huge customer base like that of IOCL, so can give attention
to their customers’ individual demands and thus have maintained a good
customer relation.
QUALITY:
From the interviews of the customers it can be said that quality wise there isn’t a
much difference. Except one, majority customers said that IOCL bitumen quality is
better than that of imported.
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RECOMMENDATIONS:
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CONCLUSION:
Although Indian Oil is losing market share to imported bitumen, still this is
negligible and isn’t much of a threat as of now, as customers still rely upon Indian
Oil because of its brand name. Though few customers have started importing
bitumen or buying them from importers still they are in small quantities and they
go for imported bitumen only when IOCL cannot provide them the required
quantities on time.
So it can be concluded from the analysis that if availability and service of IOCL is
improved, IOCL will continue to maintain dominance over the market and will
soon be able to regain the lost market share.
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WEBLIOGRAPHY:
1. www.nynas.com
2. www.benzeneinternational.com
3. www.indianyellowpages.com/india/importers/bitumen.htm
4. www.tradeindia.com
5. www.exportersindia.com/foreign-exporters/bitumen.htm
6. www.hnd.usace.army.mil/techinfo
7. www.tradekey.com/kb-bitumen/
8. www.mongabay.com
9. www.infodriveindia.com/
10. www.kolkataporttrust.gov.in
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