priyanka iocl

1

A

PROJECT REPORT

ON

PROJECT TITLE:

“EFFECT ON THE SALES OF INDIANOIL BITUMEN DUE TO IMPORT

IN WEST BENGAL”

Submitted by

PRIYANKA MULLICK

PGPM 08 (2009-2011)

Reg No – 010108047

PROJECT GUIDE: Mrs. GOURI BISWAS

Senior Manager (CS), WBSO

INDEX:

S.NO TOPIC PAGE NO.

1. Acknowledgement 4

2. Declaration 5

3. Executive summary 6

4. COMPANY PROFILE: Vision & mission Objectives Financial objectives Products of IOCL

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5. BITUMEN 20-28

6. PRODUCTION OF BITUMEN 29

7. INTRODUCTION: Need for the research Research problem Research objective

30

8. INSIGHT TO THE RESEARCH 31-32

9. RESEARCH PROCEDURE 33

10. Questionnaires 34-36

11. visits 37-39

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12. Import of bitumen 40-41

13. Pricing of IOCL bitumen 42-44

14. Price of imported bitumen 45

15. Factors influencing the buying behavior of customers

46

16. Customer responses 47-48

17. Market share of IOCL in West Bengal

49-51

18. Research findings 52

19. Analysis 53-54

20. Recommendations 55

21. conclusion 56

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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 express my deep gratitude to my project guide Mrs. GOURI BISWAS, Sr.

MANAGER (CS),WBSO, INDIANOIL CORPORATION LIMITED for giving me this

opportunity to undertake this project under her in this prestigious organization

and for her constant guidance, encouragement and support to the completion of

this project.

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

GLOBSYN BUSINESS SCHOOL

KOLKATA

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DECLARATION:

This is to declare that the Report entitled “MARKET SURVEY OF IMPORTED BITUMEN IN WEST BENGAL & IS EFFECT ON IOC” has been made for the

fulfillment of the Course: Summer Internship Program (SIP) by me at Indian Oil Corporation Ltd. under the guidance of Mrs. Gouri Biswas, Senior Manager(CS).

I confirm that this Report truly represents my work undertaken as a part of my Summer Internship Program (SIP). This work is not a replication of work done

previously by any other person. I also confirm that the contents of the report and the views contained therein have been discussed and deliberated with my Faculty

Guide.

PRIYANKA MULLICK

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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.

So this project was assigned to me to contribute towards the goal of this

organization as well as this was a good exercise from my learning point

of view.

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.

To know the perception of the customer about the imported bitumen.

By using such information we can analyze market conditions and can

make our policies to acquire highest market share.

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COMPANY PROFILE:

INDIANOIL CORPORATION LIMITED:

India’s Flagship National Oil CompanyIncorporated as Indian Oil Company Ltd. on 30th June 1959, it was renamed as Indian Oil Corporation Ltd. on 1st September 1964 following the merger of Indian Refineries Ltd. (established 1958) with it. Indian Oil and its subsidiaries account for approximately 48% petroleum products market share, 34% national refining capacity and 71% downstream sector pipelines capacity in India.

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.

The Corporation's cross-country network of crude oil and product pipelines, spanning over 10,550 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and environment-friendly manner.

IndianOil is currently investing Rs. 47000 crore in augmentation of refining and pipeline capacities, expansion of marketing infrastructure and product quality up gradation.

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Network Beyond Compare

As the flagship national oil company in the downstream sector, IndianOil touches millions of lives every day through a countrywide network of over 35,600 sales points. They are backed for supplies by 167 bulk storage terminals and depots, 98 aviation fuel stations and 88 Indane (LPGas) bottling plants. Validating the trust of 56.8 million households, Indane earned the coveted status of 'Superbrand' in 2009. About 7,593 bulk consumer pumps are also in operation for the convenience of large consumers, ensuring products and inventory at their doorstep.

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.

IndianOil's ISO-9002 certified Aviation Service commands almost 63% market share in aviation fuel business, meeting the fuel needs of domestic and international flag carriers, private airlines and the Indian Defence Services. The Corporation also enjoys 65% share of the bulk consumer business, including that of railways, state transport undertakings and industrial, agricultural and marine sectors.

Customer FirstAt 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

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seeds, fertilizers, pesticides, farm equipment, medicines, spare parts for trucks 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.

To safeguard the interest of the valuable customers, interventions like retail automation, vehicle tracking and marker systems have been introduced to ensure quality and quantity of petroleum products.

Technology Solutions ProviderIndianOil's world-class R&D Centre is perhaps Asia's finest. Besides pioneering work in lubricants formulation, refinery processes, pipeline transportation and alternative fuels, the Centre is also the nodal agency of the Indian hydrocarbon sector for ushering in Hydrogen fuel economy in the country. India’s first commercial Hydrogen-CNG station is already in operation at an IndianOil retail outlet in New Delhi. The Centre holds 215 active patents, including 109 international patents.

IndianOil is in the league of global technology providers with the deployment of its in-house developed INDMAX technology (for maximizing LPG as yield) for the 4 MMTPA Fluidized Catalytic Cracking (FCC) unit at the Corporation's upcoming 15 MMTPA grassroots refinery at Paradip in Orissa, as well as for the FCC unit coming up at Bongaigaon.

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

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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.

PetrochemicalsIn 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.

A world-scale Paraxylene/Purified Terephthalic Acid plant (annual capacities: PX - 3,63,000 tonnes, PTA – 5,53,000 tonnes) for polyester intermediates, and India’s largest Naphtha Cracker with a capacity of 800,000 tonnes of ethylene per annum, are in operation at Panipat. The Naphtha Cracker comprises four downstream polymer units: Polypropylene (600 KTA), HDPE (300 KTA), LLDPE (350 KTA swing unit with HDPE) and MEG (325 KTA). It also produces Propylene, Benzene, LPG, Pyrolysis fuel oil, etc.

To strengthen its presence in the speciality petrochemicals sector, IndianOil is setting up a state-of-the-art Styrene Butadiene Rubber (SBR) unit at Panipat with an annual capacity of 120,000 tonnes. The high quality SBR is used to manufacture automotive tyres, conveyors, fan belts etc.

Exploration & ProductionIn E&P, IndianOil has non-operator participating interest in eight oil & gas blocks awarded under various NELP (New Exploration Licensing Policy) rounds and two Coal Bed Methane blocks in India, in consortium with other companies. In addition, IndianOil has two onshore type ‘S’ NELP blocks, with 100% participating interest (PI) and sole operatorship.

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

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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).

GasGas 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.

A technology innovation is being harnessed to reach LNG (Liquefied Natural Gas) directly to the doorstep of bulk consumers, in cryogenic containers for industrial as well as captive power applications.

Bio-fuelsTo 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

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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.

A MoU for collaborating on commercial production of biodiesel from algae has also been signed with PA LLC.

Other Diversification InitiativesIndianOiI has forayed into wind energy business with the commissioning of a 21 MW wind power project in the Kutch district of Gujarat and the cumulative power generation from the 14 wind turbine generators has crossed 6 crore units(KWHR) since commissioning in January 2009.

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 InitiativesIndianOil 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.

Lanka IOC Plc (LIOC)LIOC is ranked no. 1 among the island nation’s leading listed companies. It operates about 150 petrol & diesel stations in Sri Lanka, and has a very efficient lube marketing network. Its major facilities include an oil terminal at Trincomalee, Sri Lanka's largest petroleum storage facility and an 18,000 tonnes per annum capacity lubricants blending plant and state-of-the-art fuels and lubricants testing laboratory at Trincomalee. Presently, it holds a market share of about 43.5%. In a highly competitive bunker market, catering to all types of bunker fuels and lubricants at all ports of Sri Lanka, viz., Colombo, Trincomalee and Galle. It is the

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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.

IndianOil (Mauritius) Ltd. (IOML)IndianOil (Mauritius) Ltd. is the third largest petroleum company in Mauritius and holds an overall market share of 24% and commands a 42% market share in aviation fuelling business, apart from its bunkering business. It operates a modern petroleum bulk storage terminal at the Mer Rouge port, besides 17 filling stations. In addition to the ongoing expansion of retail network, IOML has to its credit the first ISO 9001-2008 product-testing laboratory in Mauritius.

IndianOil Middle-East FZE (IOME)The Corporation's UAE subsidiary, IOC Middle East FZE, which oversees business expansion in the Middle East, is mainly into blending and marketing of SERVO lubricants and marketing of petroleum products in the Middle East, Africa and CIS countries. It exports finished lubes to Oman, Yemen , Bahrain, UAE and Nepal .

India InspiredAs 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.

IndianOil. The Energy of India

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VISION AND MISSION OF INDIANOIL:

VISION

A major diversified, trans-national, integrated energy company, with national leadership and strong environment conscience, playing a national role in oil security and public distribution.

MISSION

To achieve international standards of excellence in all aspects of energy and diversified business with focus on customer delight through value of products and services, and cost reduction

To maximize creation of wealth, values and satisfaction for the stakeholders.

To attain leadership in developing, adopting and assimilating state-of-the-art technology for competitive advantage.

To provide technology and service through sustained Research and Development.

To foster a culture of participation and innovation for employee growth and contribution.

To cultivate high standard of business ethics and Total Quality Management for a strong corporate identity and brand equity.

To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience.

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OBJECTIVES:

To serve the national interests in oil and related sectors in accordance and consistent with Government policies.

To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil refining, transportation and marketing activities and to provide appropriate assistance to consumers to conserve and use petroleum products efficiently.

To enhance the country's self-sufficiency in crude oil refining and build expertise in laying of crude oil and petroleum product pipelines.

To further enhance marketing infrastructure and reseller network for providing assured service to customers throughout the country.

To create a strong research development base in refinery processes, product formulations, pipeline transportation and alternative fuels with a view to minimizing/eliminating imports and to have next generation products.

To optimize utilization of refining capacity and maximize distillate yield and gross refining margin.

To maximize utilization of the existing facilities for improving efficiency and increasing productivity.

To minimize fuel consumption and hydrocarbon loss in refineries and stock loss in marketing operations to effect energy conservation.

To earn a reasonable rate of return on investment. To avail of all viable opportunities, both national and global, arising out of

the Government of India’s policy of liberalization and reforms. To inculcate strong ‘core values’ among the employees and continuously

update skill sets for full exploitation of the new business opportunities. To develop operational synergies with subsidiaries and joint ventures and

continuously engage across the hydrocarbon value chain for the benefit of society at large.

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FINANCIAL OBJECTIVES:

To ensure adequate return on the capital employed and maintain a reasonable annual dividend on equity capital.

To ensure maximum economy in expenditure. To manage and operate all facilities in an efficient manner so as to generate

adequate internal resources to meet revenue cost and requirements for project investment, without budgetary support.

To develop long-term corporate plans to provide for adequate growth of the Corporation’s business.

To reduce the cost of production of petroleum products by means of systematic cost control measures and thereby sustain market leadership through cost competitiveness.

To complete all planned projects within the scheduled time and approved cost.

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4 P’s of IOCL

PRODUCTS

Petrol Diesel LPG Auto LPG Aviation turbine fuel Lubricants Naphtha Bitumen Paraffin

Kerosene

PRICE

Price for all the products of all company is decided by petroleumMinistry.

Very less difference in price of all PSU’s

PLACE

Located all over India. Maximum number of refineries. Only company having retail outlet outside India ( Sri Lanka)

PROMOTION

Subhiksha: Two ZOOP noodles packet free on purchase of Rs. 250/-

Dominos: Rs. 50/- off on each midsize dominos pizza. PVR cinema: Rs 10/- off on eatables purchased

in PVR cinema. Rajdhani Thali: 10% off on each Rajdhani Thali. Yoko Sizzlers: 10% off in Yoko Sizzlers AC Restaurants.

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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.

Benchmarking Quality, Quantity and Service to world-class standards is a philosophy that IndianOil adheres to so as to ensure that customers get a truly global experience in India. Its continued emphasis is on providing fuel management solutions to customers who can then benefit from our expertise in efficient sourcing and least cost supplies keeping in mind their usage patterns and inventory management.

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.

The Retail Brand template of XtraCare(Urban), Swagat(Highway) and Kisan Seva Kendras(Rural) are widely recognized as pioneering brands in the petroleum retail segment. IndianOil’s leadership extends to its energy brands - Indane LPG, SERVO Lubricants, Autogas LPG, XtraPremium Branded Petrol, XtraMile Branded Diesel, XtraPower Fleet Card, IndianOil Aviation and XtraRewards cash customer loyalty programme.

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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.

To improve the quality of the bitumen, IS revised IS-73-1992 specification based on viscosity grading (Viscosity at 60 Degree C) in July 2006.As per the specification there are four grades VG-10,VG-20,VG-30 & VG-40.Few specification tests like specific gravity, water content ,ductility ,loss of heating and Farass breaking point were removed from IS:73-1992 specifications as these test do not have any relationship either with the quality or performance of the bitumen.

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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.

Traditionally, we have been using Penetration Grade Bitumen in Bituminous mixes. The bituminous surfacing was showing rutting at higher temperatures, cracking at lower temperatures and raveling due to fatigue. The life of Bituminous surfacing on National Highways varied from 3-4 years requiring frequent repairs and renewals. To achieve durable pavements, use of modified bitumen was introduced in late nineties. The cost Modified Bitumen is about 30-40 % higher than the cost of bitumen as well as the construction of pavement with modified bitumen requires higher levels of care & quality control during the entire process right from production of modified Bitumen to laying and compaction. The latest introduction is”Viscosity Grade Paving Bitumen” which is designed to take care of the lowest temperature (responsible for cracking) and maximum temperature (responsible for rutting).The BIS has issued IS 73 specification for this type of Bitumen in July 2006.In view of the importance of Bitumen in road construction and maintenance, it is necessary that appropriate grade of Bitumen most suited for our environment are used and adequate quality control is exercised in each stage.

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THE NEED TO SHIFT FROM PENETRATION TO VISCOSITY GRADE, TO PAVING BITUMEN

Penetration grade was developed in an era of significantly lower pavement loading. In the past, truck weights were less than 30 tons with tyre measure of 75 PSI. Today truck weights exceed 35 tons with tyre pressure of 125 PSI. The 10% increase in truck weights yield 40% increase in stresses applied to the pavement and is further aggravated by heavy traffic and change in weather conditions. Therefore, to cope up with the change in conditions, a need to shift from penetration to viscosity grade paving bitumen has been felt. Both user agencies and statutory bodies have shown keen interest in use of VG Bitumen.

VISCOSITY GRADING OF BITUMEN

Viscosity grade Bitumen is categorized according to viscosity (degree of fluidity) grading. The higher the grade, the stiffer the Bitumen. In viscosity grade viscosity tests are conducted at 60 C and 135 C, which represent the temperature of road surface during summer (hot climate, similar to northern parts of India) and mixing temperature respectively. The penetration at 25 C, which is annual average pavement temperature, has been also retained in specification.

Grade ApplicationVG-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.

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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 GRADE (VG) BITUMEN SPECIFICATION AS PER IS 73:2006

CHARACTERISTICS VG-10 VG-20 VG-30 VG-40Absolute Viscosity, 60 0C ,poises, min

800 1600 2400 3200

Kinematic Viscosity, 135 0C, CST, min

250 300 350 400

Flash Point, 0C. min 220 220 220 220Solubility in Trichloroethylene,% , min

99.0 99.0 99.0 99.0

Penetration at 25 0C 80-100 60-80 50-70 40-60Softening point, 0C, min

40 45 47 50

TEST ON RESUDUE FROM THIN FILM OVER TEST/RTFOT

(Viscosity Ratio at 60 0C, max)

4 4 4 4

Ductility at 25 0C, cm, min, after thin film over test

75 50 40 25

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DIFFERENCE BETWEEN PENETRATION AND VISCOSITY GRADE:

Penetration Grade classification based on the penetration value (degree of hardness) (Test conditions:25 c, 100 gm, 5 secs) while VG system is based on absolute Viscosity(degree of flow resistance) of the bitumen samples measured in Poise (Test Conditions: @60 C, 300mm Hg vacuum) . It includes Kinematics Viscosity measured in cst@135 C.

VG system is based on fundamental engineering parameter (not empirical)

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.

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BENEFITS OF VG BITUMEN

Bitumen is a common binder used in road construction. It is principally obtained as a residual product in petroleum refineries after higher fractions like gas, petrol, kerosene and diesel, etc., are removed. Indian Standard Institution defines Bitumen as a black or dark brown non-crystalline soil or viscous material having adhesive properties derived from petroleum crude either by natural or by refinery processes.

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.

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VG BITUMEN BENEFITS

LONGER DURABILITY

LESS NUMBER OF THE TEST SAVES TIME AND COST

GREATER EASE IN MIX DESIGN

TAKES CARE OF LOW AS WELL AS

HIGH TEMPERATURES

General uses of Bitumen:

For civil engineering works

Constructions of roads, runways and platforms. Water proofing to prevent water seepage. Mastic floorings for factories and godowns. Canal lining to prevent erosion. Dump-proof courses for masonry. Tank foundation. Joint filling material for mason

Industries

Electrical cables and junction boxes. In battery manufacture as sealing compound. Paint industries for manufacturing black paints and anti corrosive paints. Ceramics. Printing inks. Water proof papers. Electrical capacitors. Bituminous felts.

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TYPES OF BITUMEN MANUFACTURED BY IOCL

VG-10: It is manufactured by IOCL. its absolute viscosity at 60C is 800, its kinematic viscosity at 135C is 250, its flash point is 220C, it is soluble in tricholorothene is 99% its penetration at 25C is 80-100 and its softening point is 40C. VG-10 is widely used in spraying applications such as surface dressing and paving in very cold climate in lieu of old 80/100 Penetration grade. It is also used to manufacture Bitumen Emulsion and Modified Bitumen products.

VG-30: another type of bitumen manufactured by IOCL. its absolute viscosity at 60C is 2400, its kinematic viscosity at 135C is 350, its flash point is 220C, it is soluble in tricholorothene is 99% its penetration at 25C is 50-70 and its softening point is 47C. 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.

CRUMB RUBBER MODIFIED BITUMEN(CRMB): It is basically a combination of bitumen with penetration grade of 80/100 and Crumb rubber modifier. IOCL manufactures CRMB in three grades they are CRMB-50, CRMB-55, and CRMB-60. It reduces rutting.

Life of pavements reduces noise pollution, it has better anti-tripping property, it shows more stiffness. It is available in bulk and packed from IOCL.

EMULSION: An emulsion prepared by homogenizing two pure immiscible components will rapidly result in phase separation. To prepare stable emulsion, an emulsifier must be added that facilitate emulsification of two immiscible phases and promotes stability. Bitumen emulsion is a liquid product in which bitumen is suspended in a finely divided condition in an aqueous medium and

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stabilizes by suitable material. Emulsion is applied on the road it breaks down resulting in release of water and the mix start to set. It is mainly used for hill road construction, where heating of bitumen is difficult. Rapid setting emulsions are used for surface dressing work.

Marketing of Bituminous Products:

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:

Emulsion is available from Haldia and Panipat refineries. IndianOil is shortly setting up new Emulsion plants at Chennai, Koyali and Mathura refineries.

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:

29

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:

30

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:

To understand the grading and various uses of bitumen. To understand the bitumen market of IOCL in west Bengal by visiting its

customers and to have a rough idea about the annual demand of bitumen in west Bengal.

To visit Kolkata and Haldia port to collect the information about quantity of bitumen imported in last few years.

To identify major importers of bitumen and collect information about price, quality, availability and customers of imported bitumen.

To analyze the data and provide recommendation to IOCL in order to regain its market share.

An Insight into the Research

31

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.

Sources and tools of data collection:

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

32

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:-

1. Customers: a)road contractors: 15 b)processors: 5

2. Importers: 2

Limitation of the Research

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:

33

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:

I visited the customers with a questionnaire to conduct an exploratory survey to find out the reason for which their purchase quantities have decreased. This helped me to point out the factors which are most important in influencing the buying behavior of the customers and thus help me in analysis to provide recommendations to the company.

A separate questionnaire was made for the importers.

The sample questionnaires are as follows:

34

Questionnaire for bitumen customers:

1. Who are the suppliers of bitumen to your company?

----------------------------------------------------------------------------------------------------------

2. What are the grades of bitumen your company deals with?

----------------------------------------------------------------------------------------------------------

3. What are end uses of bitumen of your company?

----------------------------------------------------------------------------------------------------------

4. Are the end uses of bitumen same for the last 2 years?

----------------------------------------------------------------------------------------------------------

5. Do you import bitumen or buy imported bitumen?

----------------------------------------------------------------------------------------------------------

6. Buying price of imported bitumen (if any)?

----------------------------------------------------------------------------------------------------------

7. Buying price of IOCL bitumen?

-----------------------------------------------------------------------------------------------------------

8. What is the payment mode/facility provided by the suppliers other than IOCL?

------------------------------------------------------------------------------------------------------------

9. Annual demand of bitumen of your company

2008:-----------------------

2009:-----------------------

2010:-----------------------

35

10. What is the price to quality rating you want to give to IOCL bitumen?

Excellent good neutral satisfactory bad

2008 ----------- ------- ----------- -------------- ------

2009 ----------- ------- ----------- -------------- ------

2010 ----------- ------- ----------- -------------- ------

11. What factors you consider before buying bitumen?

------------------------------------------------------------------------------------------------------

12. Any recommendations you want to give to IOCL for improvement?

-------------------------------------------------------------------------------------------------------

36

Questionnaires for importers of bitumen:

1. Since when your company has started importing bitumen?

--------------------------------------------------------------------------------------------------------

2. From where your company imports bitumen?

3. Quantity of bitumen imported in recent years?

---------------------------------------------------------------------------------------------------------

4. What type of customers are your bulk buyers?

--------------------------------------------------------------------------------------------------------

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:

37

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.

SL.NO NAME ADDRESS SALE QUANTITY 2008-09(MTS)

2009-10(MTS)

1 JALNIDHI BITUMEN SPLTS.P LTD

130, Cotton Street,Kolkata-7 4539.5 4465.2

2 DILIP KUMAR CHATTERJEE 158,Lenin Sarani,kol-30 298.52 86.17

3 MASCOT INDUSTRIES 56,N.S Bose Road Kol-1 352.22 221.484 SHIVAM PETRO

PRODUCTS PVT.LTD34A Metcafe St,Room No-7C,Jain Centre Kol-30.

188.56 184.26

5 UNIVERSAL BITUMENOUS INDUSTRIES

12 BBD Bag(E),Kolkata-1 944.4 1499.97

6 UNITED TAR PRODUCTS(P) LTD

40/1 Strand road Kolkata-1 731.7 25.99

7 VAISNO CONSTRUCTION P 74,Ramswarup Khetri Road Kol-53

376.47 291.21

8 PROTEK SOLUTION PRIVATE LTD.

Millenium City-B.E ,Tower -2 IT Park,DN-62 Sec 5 Salt Lake-91

187.95 56.38

9 DAGCON(INDIA) PVT.LTD 167,Anandapur,Rajdanga Main Road Kol-107

61.49 0

10 DRA INFOCOM PVT LTD. 44,Shantipaly Kol-107 121 1011 ALLIED BITUMEN

COMPLEX(INDIA)98,B.K Pal Avenue Kol-5 351.2 14.58

12 ADHUNIK INFRA STRUCTURE (P) LTD.

Kamalalaya Centre 156, Lenin Sarani Kol-13

460.25 0

13 HINDUSTAN TAR PRODUCTS

Nimtala Ghat Street Kolkata -06

432.64 0

14 HARIHAR INDUSTRIES Jalan Complex,Bipramapara,HowrahPost-Begri

214.23 0

15 BENGAL CONSTRUCTION CO.

6th Floor Sarat Bose Road Lala Lajpat Rai Sarani

479.06 0

38

Kolkata -70002016 VANEETA PETROCHEM N.H 2 Delhi

Road,Jaganathpur,Dankuni63.53 0

17 SIMPLEX INFRASTRUCTURE

27,Shakesphere Sarani,Park Circus Kol-12

162.84 19.75

18 DINESH CHANDRA AGRAWAL

158,Lenin Sarani,Kol-30 28.43 0

19 CALCUTTA FELT INDUSTRIES

39,Hazra Road, Kolkata-34 216.12 16.57

20 ASIANOL LUBRICANTS LTD 7B Pretoria Street Kolkata-71 49.28 29.01

39

List of importers visited are:

SL.NO NAME ADDRESS GRADES MAX.IMPORTEDAND PRICE

1 VINERGY INTERNATIONAL

NAME OF RESPONDENTS-PUNIT GARG

33/1 N.S ROAD, MARSHALL HOUSE,9TH FLOOR ROOM NO 932

MAX IMPORTS VG 10 GRADEPRICE-Rs 32, 474DATED-26/05/2010(INC TAX AND VAT)500MT/MONTH330 BULK & 170 PACKED

2 HIMADRI CHEMICALS PVT LTDNAME OF THE RESPONDENT-A.K SINHA

23A N.S ROAD 8TH FLOOR KOLKATA-1

MAX IMPORTS VG-10 GRADEPRICE-32,556DATED-26/05/2010300-500—MT/MONTH

40

IMPORT OF BITUMEN:

Import of bitumen started at Haldia port from October 2007.

In the year 2007-08 the total import was 14,200 MT of bitumen.

Below is the import data of bitumen from Haldia port:

2008-09Sl. No. VESSEL'S NAME C/Work ORIGIN

1 JANESIA ASPHALT-V 02-06-08 15:25

5,204

SINGAPORE VINERGY INTERNATIONAL

2 JIANG ZHOU 13-09-08 04:45

3,926


3 ALFATEM 22-10-08 03:45

6,026

TURKEY HIMADRI CHEMICALS

4 JANESIA ASPHALT-V 09-02-09 20:06

5,182


5 JIANG ZHOU 21-03-09 05:30

3,994

SINGAPOREVINERGY INTERNATIONAL-3990/PEC LTD.-4.09

24,332

2009-10 Sl. No. VESSEL'S NAME C/Work ORIGIN

1 JIANG ZHOU 06-04-09 04:35

4,002

SINGAPORE VINERGY INT. PVT. LTD.

2 JIANG ZHOU 13-05-09 04:00

3,961

SINGAPORE PEC LTD.

3 JIANG ZHOU 15-06-09 02:00

3,904

SINGAPORE PEC LTD.

5 DA WEL SHAN 24-10-09 06:00

5,176

NANJING PEC LTD.

6 DA WEL SHAN 08-01-10 23:00

4,957

CHINA VINERGY INT. PVT. LTD.

7 XING HAI WAN 28-01-10 14:30

4,110

KEMAMAN PEC LTD.

8 TASCO-I 26-02-10 16:55

3,882

MALAYSIA PEC LTD.

TOTAL 2

9,992

41

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:

2007-08 2008-09 2009-100

5000

10000

15000

20000

25000

30000

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.

42

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.

Ex-Refinery prices exclusive of taxes (Rs./Metric tonne)Applicable from: April 16, 2010

BITUMEN GRADES VG-10 VG-30 VG-40 PORT REF(Mumbai/Mangalore/Kochi) 26090 26890 28230KOYALI 26090 26890 28230MATHURA 27290 28090 29430PANIPAT 27590 28390 29730PORT REF (Haldia/Vizag/Chennai) 26190 26990 28330 BARAUNI 27220 28020 BITUMEN (PACKED)PORT REF(Mumbai/Mangalore/Kochi) 29090 29890 31230KOYALI 29090 29890 31230 MATHURA 30290 31090 32430PANIPAT 30590 31390 32730PORT REF (Haldia/Vizag/Chennai) 29190 29990 31330 PRICING OF IOCL BITUMEN DATED (15/5/2010) :

43

PRODUCT SOURCE BASICHandlin

g BulkPackin

g TranE.D.%

E.D. QTM EDU TOTAL

PRICE Charge Bitumen Charge Value CESS

(RS) Trans (RS) 3% (RS)

BITUMEN 80/100/VG-10 PACKED HALDIA 29490.00 100.00 0.00 0.00

29590.00 14% 4142.60 124.28

33856.88

-DO- FOR BHUTAN & NEPAL 29490.00 100.00 0.00 0.00

29590.00 14% 4142.60 124.28

33856.88

BITUMEN 80/100/VG-10 PACKED

GUWAHATI 31240.00 200.00 0.00 0.00

31440.00 14% 4401.60 132.05

35973.65

BITUMEN 80/100/VG-10 PACKED ULUBERIA 29490.00 0.00 450.00 200.00

30140.00 14% 4219.60 126.59

34486.19

DO- FOR BHUTAN & NEPAL ULUBERIA 29490.00 0.00 450.00 200.00

30140.00 14% 4219.60 126.59

34486.19

BITUMEN 80/100/VG-10 BULK HALDIA 26490.00 0.00 0.00 0.00

26490.00 14% 3708.60 111.26

30309.86

-DO- FOR BHUTAN & NEPAL HALDIA 26490.00 0.00 0.00 0.00

26490.00 14% 3708.60 111.26

30309.86


30390.00 14% 4254.60 127.64

34772.24


30390.00 14% 4254.60 127.64

34772.24


GUWAHATI 32040.00 200.00 0.00 0.00

32240.00 14% 4513.60 135.41

36889.01


30940.00 14% 4331.60 129.95

35401.55

DO- FOR BHUTAN & NEPAL ULUBERIA 30290.00 0.00 450.00 200.00

30940.00 14% 4331.60 129.95

35401.55


27290.00 14% 3820.60 114.62

31225.22


27290.00 14% 3820.60 114.62

31225.22


31780.00 14% 4449.20 133.48

36362.68


31780.00 14% 4449.20 133.48

36362.68


GUWAHATI 33430.00 200.00 0.00 0.00

33630.00 14% 4708.20 141.25

38479.45


32330.00 14% 4526.20 135.79

36991.99

-DO- FOR BHUTAN & NEPAL ULUBERIA 31680.00 0.00 450.00 200.00

32330.00 14% 4526.20 135.79

36991.99


28680.00 14% 4015.20 120.46

32815.66


28680.00 14% 4015.20 120.46

32815.66

BITUMEN 80/100/VG-10 BULK BARAUNI 27520.00 0.00 0.00 0.00

27520.00 14% 3852.80 115.58

31488.38

BITUMEN 60/70/VG-30 BULK BARAUNI 28320.00 0.00 0.00 0.00

28320.00 14% 3964.80 118.94

32403.74

44

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%

45

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%

Payment mode/facility provided by the importers:

The importers provide bitumen to customers on credit.

According to Mr. Sunil Singhal of DRA Infracon Pvt Ltd.,one of the customers of IOCL,the importers give discount of Rs. 1800 per MT of bitumen than the price of IOCL.

46

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.

Customer responses:

47

Below is the rank-wise rating of the above 4 factors by the customers as deduced from their responses

Customers price availability quality service Suggestion to IOCL

Jalnidhi bitumen splts.p ltd

3 1 4 2 Service should be improved

Dilip kumar chatterjee

4 1 3 2 Increase availability

Mascot industries 3 2 4 1 Service should be improved

United tar products(p) ltd


Dagcon(India) pvt.ltd

2 1 4 3 Increase availability,discounts should be given

DRA infracon pvt ltd.

1 2 4 3 Discounts,allow credits;improvement of service,customers relation should be given importance

Calcutta felt industries


Allied bitumen complex(India)


Simplex infrastructure

1 2 4 3 Discounts should be given,improve service

Vaneetapetrochem

3 2 4 1 Service should be improved

48

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:

availability service price quality0

1

2

3

4

5

6

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.

49

Sale of IOCL bitumen in the Eastern region:

2009-10

STATES BULK PACKED TOTAL

WBSO 82285 61752 144037

ORISSA 28834 10591 39425

BIHAR+JHARKHAND 91992 130324 222316

NESO 19515 60105 79620

TOTAL 222626 262772 485398

2008-09

STATES BULK PACKED TOTAL

WBSO 76374 67605 143984

ORISSA 13778 15126 28904

BIHAR+JHARKHAND 83414 143169 226583

NESO 17966 74536 92502

TOTAL 191537 300436 491973

Growth percentage of bitumen sales in West Bengal

= (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.

50

MARKET SHARE OF IOCL IN EASTERN REGION IN 2009-10:

ioclimport

94%

6%

MARKET SHARE OF IOCL IN EASTERN REGION IN 2008-09:

ioclimport

95%

5%

51

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.

52

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.

53

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).

The price per MT of VG 10 bitumen of IOCL at Haldia is Rs 33,856 and at Uluberia is Rs. 34486.19 (15/5/2010).

Besides the importers also provide discounts to customers on the purchase of a certain quantity of bitumen. Credits are also provided to attract more customers. On the other hand, payments have to be made in demand drafts while placing an order in IOCL.

AVAILABILITY:

The most important factor affecting the buying behavior of customers is availability. Although price of the imported bitumen is less, but still Indian Oil has loyal customers who would always prefer IOCL bitumen over others. Some customers have accepted the fact that presently they are buying imported bitumen because of unavailability.

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.

54

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.

55

RECOMMENDATIONS:

From the above analysis the followings can be recommended in order to regain the market share of bitumen:

Customer relation should be improved. Though IOCL has huge customer base still individual demands should be given importance to some extent.

Service should be improved. IOCL should try to provide the customers the quantity ordered on time.

Discounts can be given occasionally or on the purchase of a certain quantity of bitumen. This will attract more new customers.

Credits can be provided to some extent based on volume purchased and the loyalty of the customers.

IOCL must reduce its refinery cost and capital expenditure on bitumen to make it cost effective by passing it on the other refinery product. Hence it will be able to supply the product at a lesser price compared to its competitor.

56

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.

57

WEBLIOGRAPHY:

1. www.nynas.com2. www.benzeneinternational.com3. www.indianyellowpages.com/india/importers/bitumen.htm4. www.tradeindia.com5. www.exportersindia.com/foreign-exporters/bitumen.htm6. www.hnd.usace.army.mil/techinfo7. www.tradekey.com/kb-bitumen/8. www.mongabay.com9. www.infodriveindia.com/10. www.kolkataporttrust.gov.in

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priyanka iocl

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