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ABOUT THE ORGANISATION HPCL-Mittal Energy Limited (HMEL) is a joint venture between Hindustan Petroleum Corporation Limited (HPCL) and Mittal Energy Investment.

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Presentation on theme: "ABOUT THE ORGANISATION HPCL-Mittal Energy Limited (HMEL) is a joint venture between Hindustan Petroleum Corporation Limited (HPCL) and Mittal Energy Investment."— Presentation transcript:

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2 ABOUT THE ORGANISATION HPCL-Mittal Energy Limited (HMEL) is a joint venture between Hindustan Petroleum Corporation Limited (HPCL) and Mittal Energy Investment Pte Ltd, Singapore - a Lakshmi N Mittal Group Company. Both the JV partners hold a stake of 49% each in the company, the rest 2% is held by financial institutions. The land mark public-private partnership company has built the 9 MMTPA Guru Gobind Singh Refinery.

3 ABOUT THE PROJECT The present configuration translates into one of the highest Nelson Indexes for the refinery amongst all the refineries in the country. This refinery is the single largest investment in Punjab and is the first Oil and Gas industry being set up in Punjab. The Refinery is expected to create a large number of jobs directly and indirectly seeding industrialization and development of Punjab. The refinery is a world class, state of the art refinery incorporating the latest technologies enabling it to excel the current specifications available in the country.

4 VISION To build and operate best in class petroleum refinery using state of the art technologies to ensure protection of the environment, health and safety of the community. The company will be a model of excellence in fulfilling its social responsibilities, meeting stakeholder aspirations, caring for its employees and complying with government laws and regulations. HMEL shall plan,design,construct,commission and operate an energy efficient and environment friendly Greenfield refinery at Bathinda, Punjab along with associated infrastructure facilities. The company shall endeavor to achieve excellence in all aspects of project management while successfully implementing the project within the scheduled time, budgeted cost and desired quality standards. MISSIONHMEL C ORE V ALUES These values are of highest priority for the organization and deeply held driving forces. Safety First Achieve Targets and Meet Deadlines High Ethical Standards Respect for People Continuous Improvement Teamwork

5 PRODUCT RANGE L IQUID P RODUCTS Motor Spirit High Speed Diesel Superior Kerosene Oil Aviation Turbine Fuel LPG (Liquefied Petroleum Gas) Naphtha Hexane Mineral Turpentine Oil HMEL is committed to giving its customers superior user experience through quality products and outstanding service. HMEL thus conducts all aspects of its business with a commitment to integrity, high ethical standards and good Corporate Governance practices. HMEL will produce the following Petroleum & Petrochemical products:-

6 S OLID P RODUCTS Pet Coke Sulphur It is a Yellow crystalline solid obtained as a byproduct of removing sulfur-containing contaminants from natural gas and petroleum. Polypropylene HMEL produces Polypropylene utilizing the NOVOLEN technology which enables the production of Polypropylene grades ranging for 0.3 MFI to 120 MFI (Melt Flow Index). Petroleum coke is the solid residue remaining after the distillation of petroleum materials. Any coal using industry can be a potential consumer of Petcoke.

7 SIZE OF ORGANISATION Number of Employees : 5,000+ Expected Turnover: $ 5 Billion (5,000,000, $) Or Rs. 25, – 30, Crore (Since the Company has begun its operation from the current year 2012.) M ARKET S HARE AND P OSITION Initial Investment: $ 6 Billion

8 SWOT ANALYSIS

9 STRENGTH - Product Off take - Promoter Support - Reduced Risk Profile - Support from Government - State of the Art Technology - Strategic Location WEAKNESS - Low Bargaining Power of Suppliers - Low Bargaining Power of Customer - New Entrant Agreement with HPCL to market all liquid Products. Support by the JV partners. Full Commissioning for Operations and Expansion Plan. Provision of Substantial fiscal and non fiscal incentives by the Govt. of Punjab to the Project. EURO IV Standard production capability Located in proximity to supply deficient target market. One of the only Two refineries in Northern India. Petrochemical players have little bargaining power against the suppliers. These players are therefore vulnerable to raw material prices. Incase increase in input costs the company cannot pass on the rise to the customers as it is highly influenced by supply and the international price Still needs to set ground

10 Indian petro product demand is growing at a rate of 4-5%. (at par with the Lowest Per Capita Consumption in the world) The global demand supply imbalance is an opportunity for Indian refineries to become a global refining base. The government has set aside nearly ` 400 billion for infrastructure projects such as roadways, airports and convention centers and also towards rural housing as well as for the petrochemicals industry sustained growth in the auto sector is likely to keep the demand for petrochemical products high. Rampant growth in the aviation sector leads to proportionate growth in demand for jet kerosene, which is a high margin product for Indian Refiners. OPPORTUNITY - Low Per Capita Consumption - Prospects of being The Global Refining Hub - Increased Economic Activity THREAT - Volatility of Crude Oil Prices - Custom Duties - Competition - Devaluation of the Rupee The crude oil price has seen a constant rising trend, but the trend has a sense of uncertainty to it thus making it a difficult task to predict the future about changes in the price. The government is likely to reduce duties going forward and this is likely to reduce the cushion enjoyed by the domestic players as against the landed cost of imported products. With commitments to reduce and eliminate tariff and non-tariff barriers, India, with huge market potential, might witness entry of global majors such as ExxonMobil, Dow Chemicals and Shell into the business.

11 F UNCTIONAL A NALYSIS : MARKETING The State of the art refinery at Bathinda incorporates the best in class technology for the production of its various products (Solid or Liquid Products). The Product Planning Process is based of prevailing Demand in the economy for each of its products. Since the Liquid Products manufactured at the refinery are to be marketed by the JV partner M/s. Hindustan Petroleum Corporation Ltd. Which already has a nationwide chain of outlets and suppliers, much planning was not required as to the process to be implemented. The Solid Products manufactured are to be marketed by HMEL, Since it is potentially a new entrant. A few considerations taken during Planning were :- A prevailing demand and supply gap. Wide Area of applications of each product Huge demand in overseas markets Availability of more technical work force Low Labor Cost and Availability of a more technical workforce

12 PARITY PRICING : Parity means equal or equivalent. (With respect to a reference point) Import Parity Pricing :A price charged for a domestically produced good that is set equal to the domestic price of an equivalent imported good. Export Parity Pricing : The value of a product sold at a specific location in a foreign country, but valued from a specific location in the exporting country. Trade Parity Pricing : The Pricing of a good/commodity by a combination of Import and Export Parity Pricing in the ratio of :- Import Parity Price (80%) + Export Parity Price (20%) PRICE OF COMPETITORS:Pricing with consideration of the existing petrochemical companies in India DISTANCE FROM PORT:Consideration of transport cost is another factor considered during planning and pricing. Further away a location is from the coast more the cost of transportation which intern leads to an increase in price of commodity

13 DISTRIBUTION CHANNEL PLANNING AND MANAGEMENT HMEL has Incorporated a Nation Wide Distribution Chain of Agents located in each and every state, more than one even on the basis of business opportunities in that area. All the Appointed Agents of HMEL are classifies under the practice as :- DIRECT SALES via TRADERS DEL CREDERE AGENTS  A del credere (Italian for belief or trust) agent, in English law, is one who, selling goods for his principal on credit.  His position is thus that of a surety who is liable to his principal should the vendee make default  Commission may vary. CONSIGNMENT STOCKIST AGENT  He is an agent employed to sell goods on behalf of and at the risk of his principal  He not only negotiates the transaction but also makes arrangement for transfer of ownership.  He gets commission on sales at a fixed rate.

14 LOGISTICS ( ROAD ) Main Entry at Gate Parking/Security Check Time Office Product Entry Gate / Weight-ment before Loading Loading Sealing / Weight-ment After Loading Invoicing

15 Indent Checking Before Placement Checking After Placement Loading Post Loading Activities Release of Rake LOGISTICS ( RAILWAY )

16 PROMOTIONAL POLICIES With the growing competition in the market place as well as the customers becoming better informed and more selective in nature, there arises a need to Promote ones Image in the market. HMEL for the purpose of Promotion follows a few basic strategies to impart a better professional relationship between the company and its customers. A few promotional policies adopted by HMEL are :-  Memorandum of Understanding (Commitment Discount) Discount to a customer due to mutual understanding of a continuous working relation.  Volume Based Discount An incentive offered to a buyer that results in a decreased cost per unit of goods or materials when purchased in greater numbers.  Grade Discount With each grade following a different market trend there arises a need to levy the prices based on demand.  Locational discount

17 LESSONS LEARNT

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