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A
Presentation
on
“Investment Opportunity in France
and Oil and Gas Industry STEEPLED
Analysis in France And
Motul and IOCL Business
Opportunity in India and France”
Presented by
Utkarsh Amaravat (03)
Investment Opportunity in France and Oil and Gas Industry STEEPLED Analysis (Overview)
Sr. No. Based On France India
1 Demographic Profile National language
knowledge,
higher literacy,
Single religion,
Wide speedy transportation.
Population ,
Increase in GDP.
2 Sector Hybrid and electric car
sector,
Creative architecture
construction sector,
Pharmaceutical sector,
Telecommunication sector.
Automobile sector,
Chemical sector,
Construction sector,
Pharmaceutical production
sector,
Oil and gas sector,
IT sector.
3 STEEPLED Analysis
(Oil and Gas Industry)
Technological factor,
Demographic factors
(As per Point 1).
Social factor,
Economical factor,
Environmental factor,
Political factor,
Ethical factor,
Demographic factors
(As per Point 1). 2
Introduction Motul
• Motul is leading oil Company in France. Motul has large number of
product worldwide where formulates produces and sells lubricants for all
types of vehicle engines in more than 80 countries.
• Motul makes and sells best quality lubricants according to standards that
incorporate technologies proven and validated in the most extreme
conditions, imposed by the manufacturers of motors and the most
demanding industries.
• Motul have their presence in more than 80 countries including India. In
today situation Motul makes more than 70% of its turnover outside its
original market and more than 50% outside the borders of the European
Union. Motul has structured itself in 8 strategic zones worldwide; these
decentralization approach entities ensuring the development and support of
more than 80 markets.
3
Introduction IOCL
• IOCL is leading company in India in oil and gas sector with market
share of 53 % in comparison of its competitor BPCL 23 % and
HPCL 20 % market share – based on 2012 records.
• IOCL major customers are Corporate, countries like Bangladesh, Sri
Lanka, Nepal, etc. and individuals looking to fulfill energy needs in
term of oil and gas.
• IOCL has more numbers of Petrol Stations than whole of Canada or
UK. This shows power of IOCL in oil and gas sector in Indian
market.
4
0
0.5
1
1.5
2
2.5
3
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
bb
l/d
ay p
er 1
000
peo
ple
Year
25
26
27
28
29
30
31
32
33
34
35
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
bb
l/d
ay
pe
r 1
00
0 p
eo
ple
Year
Oil consumption per capita in India Oil consumption per capita in France
India crude oil productions and consumption
5
France Import/Export Scenario
France Crude Oil Import by source6
India Import/Export Scenario
0
50000
100000
150000
200000
250000
300000
350000
400000
2006 2007 2008 2009 2010
Crude Oil
Petroleum products
Natural Gas
Import
0
20000
40000
60000
80000
100000
120000
140000
160000
2006 2007 2008 2009 2010
Crude Oil
Petroleum products
Natural Gas
Export
7
SWOT Analysis of Motul
Strength
Presence in more than 80 countries.
Constant improvement of exist over
time.
Most advanced E Technology.
Value creation approach.
Weakness
Poor marketing and positioning
strategy.
More focus on motor cycle oil
segment only.
Opportunity
Relationship with their Clients and
their loyalty.
Increasing oil requirement in
developing country.
Threat
Decreasing France oil consumption.
Increase in global competition.
Difficulty in managing worldwide
operation.
8
SWOT Analysis of IOCL
Strength
40 % of India’s overall refining
capacity.
58 % refinery located in high demand
and high growth areas (Northern and
Western India).
Strong Distribution Network
Presence in Foreign market (Sri
Lanka, Bangladesh, Oman, etc.).
Weakness
Research and Development; and
petrochemical product development
technology.
Volatility in the crude market and
subsidy burden.
Opportunity
Increasing oil demand in India.
Easier buying process.
Own pipelines.
Great scope in E&P.
Threat
Entered new foreign players.
Crude oil supply and its prices.
Privatization of oil and gas section in
India.9
Tows Matrix of Motul
India
Opportunity Threat
Motul
Strength
Indian local companies have
Strong Distribution Network that
creates opportunity for Motul to
use that network using business
relationship with them.
Indian Company presences in
foreign market but only in Sri
Lanka, Bangladesh and Oman but
Motul have global presence,
which creates more opportunity
for Motul.
Indian local company IOCL have 40 %
of India’s overall refining capacity in which 58
% refinery located in high demand and high
growth areas (Northern and Western India) that
creates threat for Motul in terms of capturing
market in India while France oil consumption is
decreasing.
Indian local companies Strong Distribution
Network is a threat for Motul to creates own
new distribution network.
Indian local company’s presences in foreign
market like Sri Lanka, Bangladesh, and Oman
increase global competition for Motul.
Weakness
Indian local companies have weak
R&D, which creates great
opportunity for Motul to provide
best product at suitable price and
capture market.
Indian local companies get subsidies, which
encourage them to run without more worried
about profit and compete in market in terms of
fewer prices with good quality that creates
threat for Motul.
10
Tows Matrix of IOCL
France
Opportunity Threat
IOCL
Strength
IOCL can buy new Innovation
technology from France.
France Value creation product IOCL is
able to sale using it well define
distribution network to provide their
consumer more range.
France Company like Motul global
presence creates threats in terms of
current scenario to purchase global
brands.
New technology and value creation
product creates problem in terms of
customer diversification towards
France Globle Company.
Weakness
Poor marketing and positioning strategy
of France Company (Motul) in India
help IOCL to invest less in Integrated
Marketing Communication tools, and
get benefit of leadership in oil and gas
segment.
France companies like Motul more
focus on motor cycle oil segment only,
which help IOCL to maintain leadership
power in 4-wheeler segment easily.
France Companies like Motul More
focus on motor cycle oil segment may
result in loss of motor cycle oil
segment by IOCL.
11
Motul Opportunity for investments in India
• Motul have its presence already in India it operate through various place
like
Baroda, Visakhapatnam, Pune, Coimbatore, Indore, Kolkata, Banglore, Jai
-pur, Chandigarh, Delhi, NCR Delhi, Ahmedabad, Mumbai, and chennai.
• Motul is selling its products Lubricants, gear oil, engine oil, Hydraulic
Lubricant Oil, Mould Lubricating Oil, Emkarate Compressor Oil, Motul
Hi-Performance Engine Oils, Lubricant Motul, Marine Gear Oil
• In India good opportunity due to,
Population
Industrialization
12
IOCL Opportunity for investments in France
• France Oil consumption is reduce because France is moving
towards Hybrid and electric car, and nuclear and renewable
energy sources of power which reduce scope for oil
industries in France.
• A result IOCL don’t have more business opportunity in
France.
13
Legal Factors affect India and France Oil and Gas Industries
France
• FDI Policy - Policies on Direct Investment flaws are there since
1984-1985. Both Inward and Outward Flows are at a higher rate
compare to India.
• Taxes and maximum price mechanism - The tax difference
between gasoline and diesel in France is EUR 17.2 euro cents per
liter. The current standard rate is at 19.6%.
14
Cont…
• India
• FDI policy- The present policy on FDI in the Petroleum &
Natural Gas sector permits FDI up to 100% under the automatic
route in all activities other than refining.
• Government Policy and Regulations
The Petroleum Act to control issues relating to
import, transport, storage, production, refining and blending of
petroleum was already in place since 1934.
• NELP (New Exploration Licensing Policy)
• Policy for Change in Price of Petroleum Products
• Petroleum and Natural Gas Regulatory Board
15
Cont…
• Legal Aspects of Oil and Gas Industry - Oil and Gas sector is
divided into 3 parts – Upstream, Midstream and Downstream
1. Upstream Sector - The upstream sector is also known as the
Exploration and Production of Oil and Gas.
2. Midstream Sector - The midstream industry
processes, stores, markets and transports commodities such as
crude oil, natural gas, natural gas liquids (LNGs, mainly
ethane, propane and butane) and sulphur. Generally midstream
is clubbed with downstream industry.
3. Downstream Sector - The downstream sector includes oil
refineries, petrochemical plants, petroleum product
distribution, retail outlets and natural gas distribution
companies.
16
Global Strategic Problem to Motul with reference toIndia
• Strong Distribution Network of local companies like
IOCL, BPCL, HPCL, etc. which creates lots of difficulty for Motul
to survive in Indian market.
• Indian customer loyalty towards local companies like
IOCL, BPCL, HPCL, etc.
• IOCL have 40 % of India’s overall refining capacity in which 58 %
refinery located in high demand and high growth areas (Northern
and Western India) and same way other local companies also have
that creates problem for Motul in terms of produce locally and
capture market in India.
• Major problem or challenge in front of Motul to manage or price oil
products when raw crude oil prices are fluctuating in international
market.17
Global Strategic Problem to IOCL with reference to France
• The major challenge from the business point of view is thefluctuation of crude oil prices in the global market along withthe control of the retail prices by the government in thedomestic market.
• During times of crude oil price fluctuation, like we had in2008 and 2009, maintaining the cash flow and sustainingprojects have been a major challenge. Every year we facesimilar challenges
• With reference to France this problem does not affect IOCLbecause in France Oil consumption is reduce due to France ismoving towards Hybrid and electric car, and nuclear andrenewable energy sources power plant which reduce scope foroil industries in France
18
Motul Winning Strategy and Future plan
Motul Strategy
• Decentralization approach
• Value creation approach
• High quality Standards
Future Plan• ALSL has a three-year technical licensing agreement with Motul to
manufacture and market Motul products in India, Bangladesh, SriLanka, Nepal and Bhutan.
• It has partnership with global auto majors and is closely associatedwith Motor sport.
• The agreement is a timely one when the premium range of cars likeLancer, Pajero are seeing perked up sales of 300 to 400 cars amonth.
19
IOCL winning Strategy and future plan
IOCL
• Overall Cost Leadership
• Extra Care
• KisanSeva Kendra
• Swagat
• Strategic Alliances
Future Plan
• IOCL planning refinery on west coast in Gujarat or
Maharashtra as part of its plans to raise the refining capacity.
• IOCL will carry out project of Acetic Acid Project at Baroda in
partnership of JV and M/s BP Chemicals (UK)
20
Motul Marketing Strategies in India
Objectives
“To Create and Manage Motul as Brand in Indian Market.”
Need for doing
• Motul have its presence already in India since 2003 but still
more than 10 years presence in India and variety of products
then also Indian customer/people don’t aware about Motul
due to its poor marketing communication strategy. So it
required to spread awareness and create Motul as brand is
important aspect to get success in Indian market.
21
Motul Strategic Marketing Mix
Product
•The Motul focus on global positioning strategy,
and only focus on the motorcycle oil. In motor cycle
oil also
•Motul have excellent Research and Development
department so using this Motul will be developed
engine oil for all motorcycle segment and also for
all car segment.
Place
•Motul have its presence already in
India
•India is the place for various business
units as well as due to higher
population it is great place for
automobile industries
•The uses for oil in two or four
vehicles are increase that is the good
opportunities for MOTUL in India
Price
• By comparing engine oil prices one can say that
Motul engine oil prices are quite high compare
to IOCL engine oil prices because Motul charge
engine oil price based on international market
price and Motul believe in premium product of
supreme quality which creates difficulty for
Motul in Indian market.
Promotion
•Advertisement
•Direct Marketing
•Personel selling,
•Internal selling
•Sales promotion
•Public Relation
22
Finance requirement
• Cost of Project
• Sources of FinanceMotul, which is big global private limited company, can invest all neededfinance from their reserves, from other countries profit margin, or throughissuing equity share in India. Equity share is best suitable option, whichreduced risk in high competitive oil market segment.
• ProfitabilityMotul main objective is to create and manage Motul as brand which don’trelate with sales. Thus, Motul estimate to increase brand equity in millionsbut sales at less amount in initial starting 3 years stage. So Motul willestimate to increase 2 to 5 % in profit margin during next 3 years.
Expenses Cost (Rs.)
Advertisement 100000000
Personal Selling 60480000
Internet Marketing 1000000
Direct Marketing 2500000
Public Relation 500000
Other Cost 100000
Total Cost 164680000
23
Resources Required by Oil and Gas Industries
Men
• In France any oil and gas industry can get better educated
expert human resource but In India market is huge and
cheapest human resource is available.
• Motul can hire Indian people in Middle and lower
management and in Top management mixture of France and
Indian people such that Top management make strategy by
considering Indian culture and behavior.
24
Cont…
Materials
1. Oil - Most of India's crude oil reserves are located in the western
coast (Mumbai High) and in the northeastern parts of the
country, although considerable undeveloped reserves are also
located in the offshore Bay of Bengal and in the state of Rajasthan.
• The combination of rising oil consumption and fairly unwavering
production levels leaves India highly dependent on imports to meet
the consumption needs.
• In compare to India, France doesn’t have any oil resources so
France is mainly depend on import only (Refer Fig. 1.6), so
compare to France in India Motul have good chances to get raw oil
easily through government or supplier.
25
Cont…
Technology required
• For Oil and Gas Industry required lots of technologies like efficient
and effective Furnace, Filters, cleaner, Corrosive Pipe
Line, Motors, Crain, and various supply chain management
instrument or machines.
• But these technologies have following feature to get competitive
benefits -
1. Software “Eats” Oil and Gas: The Digital Oilfield and Beyond
2. Accessing the Previously Inaccessible
3. Working in Remote Environments
4. Minimizing the Harm of Hydrocarbons26
Cont…
Financial Resource
• Finance is most important aspect to start anycompany or project. To start oil and gas companyhuge investment is required in billions where capitalis block for number of years. If any establishedcompany like Motul or IOCL is looking forexpansion then they can get fund through,
1. Equity Share
2. Preference Share
3. Debenture
4. Loan and subsidies
27
Cont…
Market
• Motul have good business opportunity in India because in
India consumption oil is increase.
• India is the place for various business units as well as due to
higher population it is great place for automobile industries.
• It is say that in India consumption oil is increase at
increasing rate but production of oil is not increase at
increasing rate. This gap is opportunity for outsider to enter
in to Indian market. Thus Motul has big opportunity in
Indian market where demand is increase at increasing rate.
28
Findings
• Motul has big opportunity in Indian market where demand is
increase at increasing rate but IOCL don’t have that much
business opportunity in France because in France Oil
consumption is reduce because France is moving towards
Hybrid and electric car, and nuclear and renewable energy
sources power plant which reduce scope for oil industries in
France.
• Also find out that India’s social factor, economical
factor, environmental factor, political factor, legal
factors, ethical factor and demographic factors such as market
in term of population and increase in GDP are more support oil
and gas Industries like Motul and IOCL compare to France
29
Suggestions
• Motul must work on its marketing and positioning strategy to
get better response from new developing big market like India
because France oil consumption is decreased and standing
against global competition; also not only focus on one segment
motor cycle oil but also give focus on all segments where oil is
used and use geographical decentralization approach to
manage worldwide operation effectively.
• IOCL must improve its petrochemical product technology
using Research and Development department because new
foreign players entered and Privatization is allowed in Indian
market; and effectively manage Volatility in the crude market
and subsidy burden.
30
Conclusion
• Motul which is leading oil Company in France which has large
number of product worldwide around 80 countries where formulates
produces and sells lubricants for all types of vehicle engines having
great chance in invest in India because of various reasons.
• Motul Indian market is more feasible and has big opportunity in
Indian market where demand is increase at increasing rate.
• IOCL which is leading company in India which has maximum
market share in comparison of its competitor BPCL and HPCL
• France is moving towards Hybrid and electric car, and nuclear and
renewable energy sources power plant which reduce scope for oil
industries in France
31
32