Shell India

Shell India

Background

The Royal Dutch Shell Group (‘Shell’) employs over

119,000 people worldwide and is a leading energy

company in the world. Shell has five core businesses:

Exploration and Production, Oil Products, Downstream

Gas and Power, Chemicals and Renewables, with

operations in more than 140 countries across the

world. Shell registered revenues of US$ 268 billion in

2004, making it the fourth largest corporation in the

world and with profits totalling US$ 18.18 billion, it is

also the world’s second most profitable business.

The Shell Group’s presence in India dates back about

75 years, when it began operations in the country as

the pioneering oil distribution company, through

Burmah Shell in 1928, an alliance between the Burmah

Oil Company and Asiatic Petroleum (India).

Shell returned to India in 1993 with the incorporation

of Bharat Shell, a 51:49 joint venture between Shell

and Bharat Petroleum Corporation Limited. In 1996,

Shell India Private Limited, a 100 per cent Shell-owned

company, was incorporated to oversee the

development of businesses in petroleum, natural gas,

petrochemicals and renewable energy.

Shell’s present interests in India cover natural gas

(LNG), LPG (liquefied petroleum gas), lubricants, solar

energy and retail fuels. Shell is seeking to set up PMB

plants in Bengal and Maharashtra to support the

bitumen needs of a growing infrastructure sector in

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India. Shell’s US$ 650 million Hazira Port and LNG

Terminal, in Surat district, Gujarat, is regarded as a

key FDI project, and is building critical gas infrastructure

for India. Shell is the only international company to

be granted Government of India approval for the

retail fuels business in India. Shell has 9 registered

companies in India.

Key Shell Companies in India

Bharat Shell Limited is a lubricants joint venture

between Shell Overseas Investments B.V. - an affiliate

of the Royal Dutch Shell Group - and BPCL. Bharat

Shell has grown strongly and had a turnover in excess

of US$ 54.34 million in the local lubricant market.

The company has invested US$ 16.3 million in

developing a state-of-the-art lube-oil blending plant

at Taloja, outside Mumbai in western India. This is

considered to be among the finest lube-oil blending

plants in Asia.

Bharat Shell manufactures and markets a range of

Shell-branded lubricants in India. Shell lubricants are

available with over 20,000 Shell distributors and

dealers, authorised service stations, workshops, select

lubricant retail outlets, spare part shops and select

BPCL retail outlets.

Bharat Shell also services the demanding requirements

of large industrial customers that include, amongst

others, Tata Iron and Steel, TELCO, Maruti Udyog,

Steel Authority of India Limited, ONGC, the Jindal

Group, Mahindra & Mahindra, Ford, Coal India Limited,

Larsen & Toubro, Tamil Nadu Petro and Thermax.

Pennzoil Quaker State – after global acquisition this

company is part of the Shell Lubricants business in

India, manufacturing and marketing a range of branded

lubricants focused on the automotive as against

industrial sector, with significant OE supply relationships.

Shell Hazira Gas - The Shell Group has set up the

US$ 650 million Hazira LNG importation and

regassification terminal ahead of market. The company

is developing a commercial model for the Hazira

LNG terminal tailored to local needs, with an

innovative balance of short and long-term supply

contracts.

Shell Solar is actively engaging in partnerships with

rural banks such as the Vysya Bank, Syndicate Bank,

Canara Bank, the Nethravathi Grameen Bank and

others, in order to facilitate finance options that match

the cash inflows of the customer. These options,

coupled with the quality of Shell’s solar panels and

post-sales service, have made Shell Solar a trusted

name in the rural and peri-urban solar market. Shell

Solar has installed 20,000 lighting units in rural

Karnataka, Kerala & Andhra Pradesh, contributing a

fourth of Shell’s global rural solar installations.

Shell Global Solutions has been providing technical

SUCCESS STORIES PAGE 81

advice and services for Reliance Industries’ refinery at

Jamnagar in Gujarat, since 1999. The company is

expanding its footprint in India and has recently been

given an extension of the Reliance licence.

India is a priority market for Shell

Shell invested in India as it saw great potential in the

Indian market. The company perceived several

advantages that India offered –

• Large market with strong growth prospects

• Long standing relationship with MNC oil companies

• Open society that accepts new products, ideas and

practices

The company was quick to leverage the investment

opportunities that opened up post-liberalisation and

in expectation of further de-regulation of the oil and

gas sector. The Group’s committed investments, in

different businesses in India, total about US$ 1 billion,

making Shell one of the top foreign direct investors

in India. India is a priority market for Shell and it is

seeking to build its portfolio in this market.

Factors for Success

Clear and consistent strategy

Shell has clearly identified India as a priority sector

and perceives long term potential in the market. Whilst

the pace of deregulation of the market has not been

consistent, it has not weakened its focus or

commitment over the years. It has in fact demonstrated

its commitment by becoming one of the biggest foreign

direct investors in India.

Adapted to Indian business environment

Oil and gas being a regulated sector, the company

had to understand and accordingly comply with

numerous regulatory and procedural requirements.

The company has, however, been quick to learn and

adapt to the requirements, ensuring compliance.


The company has also recognised the diverse nature

of the Indian market, particularly, that the country

cannot be considered one homogeneous market.

It has had to tailor its approach to the market

suitably, taking local conditions and requirements

into consideration.

Invested ahead of market development

Shell’s investments in India have been driven by the

potential the company perceived in the market, and

not necessarily by the current size. Since it has

identified India as a growth market, it has been investing

ahead of market development and is poised to reap

the benefits as the market grows.

Sound relationships with government

and industry bodies

Shell has developed sound long-standing relationships

with government and industry bodies. It has leveraged

these relationships to put forth its views and hasten

reforms in the sector.

Best practices from Shell worldwide

Shell has leveraged its international practices to

develop its local businesses. An example is in the

area of lubricant blending - its lube oil blending plant

at Taloja is rated one of the best in Asia.

Shell India has taken the following initiatives to ensure

quality in manufacturing, production and distribution:

• Base oils and additives, the two basic raw materials

used in manufacturing lubricants, are procured either

from Shell Refineries or global sources approved

by Shell Research Centre. This gives it total control

over raw material quality from source to the

finished product.

• Products are formulated and tested as per Shell’s

Lubricants Quality System.

• Production processes are fully automated, which

ensures accurate measurement and dosing of

ingredients. First-in-first-out inventory movement

of packs is ensured through a computerised system.

Focus on marketing and distribution network

While taking care to market its products to large

industrial customers such as Tata Steel, Tata Motors,

SKF, Steel Authority of India Limited and ONGC, Shell

India has also ensured that its products are available

at spare part shops, lubricant shops, authorised/

independent workshops and various retail outlets. In

the rural market segment, Shell Solar has successfully

delivered lighting solutions through 30 regional offices.

Shell’s retail stations are being modelled along

international lines, with all of the retail innovations

that have been the hallmark of Shell’s retail fuels

business globally. Shell has already shared its best

practices in this arena, via the demonstration sites it

set up in India in response to the Government of

India’s request in 1998-2000.


Best practice is not restricted to product quality and

marketing, but also extended to health, safety,

environment practices and social investments. Shell

won the “Golden Peacock Award” for Eco Innovation

in 2005, a recognition of its innovative best practices

in environment and safety management. Shell

companies in India have invested considerable

resources in truck safety and promoting safe driving

practices. This continues to be a top priority across

its businesses, including LPG.

Future Plans

Shell’s focus in the short-to-medium term is expected

to be on consolidating and growing its existing

businesses in India. Shell India has been granted

permission to market transportation fuels in the

country. Shell has been allowed to set up a network

of 2000 petrol stations, which it is setting-up in a

phased manner.

For the moment, Shell is focused on developing its

retail business via the organic route. Shell India has

indicated that it would source petrol and diesel locally

from MRPL for its upcoming stations and would use

the importation option only if there were strong

commercial reasons for doing so.

Shell India is also developing its bitumen business, and

a company has been incorporated for the purpose.


Shell India: At a glance

• Shell: World’s leading Energy Company.

Fourth largest and second most profitable

corporation in the world. US$ 268 billion

revenues. US$ 18.18 billion profits. 119,000

employees worldwide

• Shell in India: About 75 years in India. US$

1 billion investments. Key Shell companies

– Bharat Shell, Hazira LNG, Shell Solar, Shell

India Marketing (for retail operations)

• For Shell, India is: large, potentially profitable

market with strong growth prospects

• Factors for success: Clear and consistent

strategy. Investment ahead of market. Best

practices from Shell worldwide. Marketing

and distribution. Adaptation to Indian

business environment

• Future plans, India: To grow existing business.

To develop retail business. To increase

investments

Shell is setting up manufacturing units for speciality

bitumen (poly-modified bitumen) in view of India’s

ongoing infrastructure development activities.

The Shell Group identifies India as a large, potentially

profitable market, and aspires to have a larger share

in the coming years. Shell’s strategic investment and

the policies adopted in business development have

made Shell a preferred partner in India’s growth, well

demonstrated by the successes achieved by Shell India

in India’s energy sector.


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Shell India