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Introduction of Hydrogen Fuel by
Indian Oil Corporation Limited in
                 Andhra Pradesh




                     Submitted    to:    Prof:
                     Rajdeep Chakrabarti
                     Submitted By:

                     Riteeka Gupta

                     Richa Baid

                     Rohit Singh

                     Shallabh Bhatia

                     Shilpi Sarkal

                     Shristi Bubna
Contents
1.      About The Hydrogen Fuel Industry ............................................................................... 4
     1.1 Evolution ..................................................................................................................... 4
     1.2 Hydrogen Industry in India .......................................................................................... 4
     1.3 National Hydrogen Energy Roadmap Technology Development: ................................ 5
     3 Tier set -up ..................................................................................................................... 5
     1.4 Hydrogen Energy Companies ...................................................................................... 5
        1.4.1. Hydrogen Energy Research Institutes................................................................... 5
     1.5 Hydrocarbon Vision India 2025: .................................................................................. 6
2.      Pestel Analysis for the Hydrogen Fuel Industry ............................................................. 7
     2.1 Political ....................................................................................................................... 7
     2.2 Economic .................................................................................................................... 8
     2.3 Socio/Cultural ............................................................................................................. 9
     2.4 Technological .............................................................................................................. 9
     2.5 Environmental ........................................................................................................... 11
     2.6 Legal ......................................................................................................................... 11
3.      Porter‟s Five Force Model ........................................................................................... 12
     3.1 Threat of new Entrants............................................................................................... 12
     3.2 Bargaining of Power of Buyers .................................................................................. 12
     3.3 Bargaining Power of Suppliers .................................................................................. 12
     3.4 Threat of Substitutes .................................................................................................. 13
     3.5 Competitive Rivalry .................................................................................................. 13
     3.6 CONCLUSION ......................................................................................................... 13
4.      Company Analysis – Indian Oil Corporation Limited. ................................................. 14
     4.1 Evolution of the company ......................................................................................... 14
     4.2 Market Share and Network ........................................................................................ 16
     4.3 Products offered by Indian Oil at present are - ........................................................... 18
     4.4 Competitors of Indian Oil .......................................................................................... 18
5.      SWOT Analysis .......................................................................................................... 19
6.      The Marketing Mix – 4 P‟s of Marketing ..................................................................... 21
     6.1. Product .................................................................................................................... 21
        6.1.1. Needs for the product ......................................................................................... 21

                                                                                                                                Page | 2
6.1.2. Features of the product:...................................................................................... 22
        6.1.3. How can customers use such green fuel ............................................................. 22
        6.1.4.       What is it to be called? ................................................................................... 23
        6.1.5.       How the product will be branded? .................................................................. 23
     6.2.      Place ..................................................................................................................... 24
     6.3 Promotion.................................................................................................................. 25
        6.3.1 Above the line promotion: .................................................................................. 25
        6.3.2 Below the line promotion: ................................................................................... 25
     6.4 Price .......................................................................................................................... 26
7.      Need of Hydrogen Fuel ............................................................................................... 28
     7.1 Data Collection .......................................................................................................... 28
        7.1.1.Primary Sources:................................................................................................. 28
        7.1.2 Secondary Sources: ............................................................................................. 28
     7.2. Focus Group Discussion ........................................................................................... 28
        7.2.1.Observations of Focus Group Discussion: ........................................................... 28
        7.2.3 What‟s next?? ..................................................................................................... 29
        7.2.4. TOTAL ENERGY CONSUMPTION (www.Eia.Doe.Gov/Oiaf/Ieo) ................. 29
     7.3 Hydrogen Energy ...................................................................................................... 29
     7.4 Hydrogen Production Technologies ........................................................................... 30
     7.5 Why Indian Oil Corporation Limited? ....................................................................... 30
        7.5.1. Hydrogen fuel: ................................................................................................... 30
        7.5.2. Product feasibility .............................................................................................. 30
        7.5.3Strong Research & Development Capabilities: ..................................................... 31
8.      Segmentation, Targeting and Positioning ..................................................................... 32
     8.1 Segmentation ............................................................................................................. 33
     8.2 Targeting ................................................................................................................... 35
     8.3 Positioning ................................................................................................................ 37
        Positioning Map .......................................................................................................... 37
9.      Future Prospects .......................................................................................................... 38
10.         References ................................................................................................................ 39




                                                                                                                                 Page | 3
1. About The Hydrogen Fuel Industry
1.1 Evolution




                                                                                               


1.2 Hydrogen Industry in India
Indian industry is producing hydrogen commercially for use in: Oil refineries, fertilizer
plants, and chemical industry. Chlor-alkali industry produces hydrogen as a byproduct Over 3
MMT per annum of hydrogen is currently produced in petroleum refineries and fertilizer
plants Hydrogen Storage in pressurized cylinders is the most common method of commercial
supply


For the development of hydrogen fuel, the National Hydrogen Energy Board has been
constituted in October, 2003 with Hon‟bleMinister, of Non-Conventional Energy Sources as
Chairman. The board involves high level representation from Government, Industry,
Research and Academia, Public Figures and other stakeholders

Two major initiatives with goals and targets upto2020

    A. Green Initiative for Future Transport (GIFT)
    B. Green Initiative for Power Generation (GIP)

The National Hydrogen Energy Road Map (NHERM) for the country prepared in January
2006 and keeping in view the broad directions provided in the NHERM, the Ministry has
supported four Mission Mode Projects in the areas of hydrogen production through biological
route, hydrogen storage in hydrides and carbon materials and development and demonstration
of hydrogen fuelled internal combustion engines for vehicles. Two Technologies Mission
Mode Project proposals relating to development of PEMFC and SOFC in collaboration with
the industry are under development and evaluation.




                                                                                    Page | 4
1.3 National               Hydrogen           Energy          Roadmap            Technology
Development:
3 Tier set -up




1.4 Hydrogen Energy Companies

Eden Energy Ltd.

Eden Energy Ltd., through its wholly-owned subsidiary Hythane Company LLC, has been
selected by Indian Oil Corporation to install and supply the first public hydrogen fueling
station in India. The $1 million retail outlet will be sited in the heart of Delhi at one of India‟s
busiest natural gas fuelling stations.

1.4.1. Hydrogen Energy Research Institutes
Department of Energy Systems & Engineering

Indian Institute of Technology Bombay A fuel cell and hydrogen research center
is being planned in the department. The department will have a new building (approx
80,000ft2 of built up area) as a zero energy building using passive solar, building integrated
PV, day lighting. There are plans for specialized laboratories like efficiency laboratory, solar
PV laboratory, fuel cells and hydrogen laboratory, energy innovation laboratory, alternative
fuels laboratory apart from the existing solar and energy systems laboratories.


Shri AMM Murugappa Chettiar Research Centre (MCRC)

Shri AMM Murugappa Chettiar Research Centre, popularly known as MCRC, is a non profit
research organization. MCRC‟s ideologies are centered on science and technology
applications for rural development thereby improving the quality of life of the rural people,
particularly the under privileged and the marginalized. Hydrogen energy technology has been


                                                                                           Page | 5
a part of MCRC research for two decades. With financial assistance from the Ministry of Non
Conventional Energy Sources (MNES), MCRC has developed a biological process for
generation of hydrogen from sugar and distillery wastes using the effluents at M/s. E.I.D.
Parry Ltd., at Nellikuppam, Tamil Nadu. MCRC has been working on scaling this technology
using a 125 m3 bioreactor which has produced 18,000 liters of total gas per hour with about
60% hydrogen mixed largely with CO2 and CO.

1.5 Hydrocarbon Vision India 2025:
The government has released a report in order to remove barriers of demand & supply in
energy. The study conducted suggests the following measures :

   A. Revisions of foreign ownership regulations for refinery operations allowing 100%
      foreign ownership.
   B. Elimination of government subsidies for petroleum for next 3-5 years
   C. Target to meet 90% of petroleum & diesel needs through domestic sources
   D. encouragement to allow gas prices to float to international level

The planned future:




                                       Intermediate Stage:
                                                                        Ultimate Objective:
        Present Scene:                   Electric & Hybrid
                                                                       Environment Friendly
   Petrol /Diesel /CNG based            Vehicles; Bio-Fuel /
                                                                          and Carbon Free
     Automobiles & Power               Synthetic Fuel based
                                                                      Hydrogen Based Vehicles
           Generation                    Vehicles & Power
                                                                        & Power Generation
                                            Generation




                                                                                   Page | 6
2. Pestel Analysis for the Hydrogen Fuel
           Industry




2.1 Political
For the development of hydrogen fuel, the National Hydrogen Energy Board has been
constituted in October, 2003 with Hon‟bleMinister, of Non-Conventional Energy Sources as
Chairman. The board involves high level representation from Government, Industry,
Research and Academia, Public Figures and other stakeholders.

The following activities are controlled by the board:

   i.    Guides the preparation and implementation of National Hydrogen Energy Roadmap.
  ii.    Creates policy framework cutting across different sectors.
 iii.    Guides research & development programme in Hydrogen and Fuel cells
 iv.     Business development initiatives for hydrogen fuel
  v.     Nationwide education and training programme.
 vi.     Manages issues relating to Production, Storage, Delivery / Transport, Applications,
         Safety and Awareness, capacity building addressed

In the year 2006, India was the first country selected to participate on the US government
steering committee for the Future Gen project, which was seeking to develop a coal-based
power plant that removes and sequesters CO2 while producing electricity and hydrogen. As
per the plan, The Indian government would contribute $10 million to the initiative and Indian
companies would be invited to participate in the private sector segment of the programme. In
the same year, the Indian government had unveiled a National Hydrogen Energy Roadmap
with the goal of having one million hydrogen-fuelled vehicles on the road by 2020 and



                                                                                     Page | 7
generating 1,000 MW from hydrogen through public-private initiatives. To achieve these
outputs, the national plan included two major new programmes:

  i.   The green initiative for future transport (GIFT)

The green initiative for power generation (GIP) that would develop and demonstrate a
hydrogen-powered engine and fuel cell-based cars ranging from small cars and taxis to buses
and vans (Tech Monitor).

Currently, to boost the development of hydrogen fuel, The Indian Ministry for Non-
Conventional Energy Sources (MNES) is funding a number of public institutes involved in
research on hydrogen fuel cell vehicles, hydrogen production and storage among other
hydrogen-driven applications .Examples include BHU for fuel cell vehicles; IIT (Chennai) in
collaboration with SPIC Science Foundation to assess the a range of polymers that can be
used as electrolytes in fuel cells and the Indian Institute of Chemical Technology (IICT) and
BHEL (Hyderabad) for the development of catalysts and two fuel reformers for producing
hydrogen from methanol (MNES)

Increasing importance of renewable energy resources: in 2007, share of power generated by
renewable energy resources in India was only 8%, and Indian government had setup a target
to increase this percentage to up to 12% by year 2012, benefits like tax holidays, lower
customs duties, sales tax, and exemptions from excise tax are offered to promote use of
alternative fuels. It is expected that fuel cells will have an increased share in this renewable
energy pie.

2.2 Economic

In terms of mileage efficiency, cost of fuel and emissions, hydrogen is superior to CNG. “It
depends on how you use hydrogen fuel. If used in a fuel cell car, the mileage efficiency
obtained is twice that of a conventional internal combustion (petrol) engine,” says Chetan
Maini, deputy chairman and chief technical officer, Reva Electric Car Company (RECC.)

Demand and Supply of Energy

With the growth of the economy comes an increase in demand for energy. India imports 80%
of its crude oil consumption.. Hydrogen fuel is about 3 times better in Calorific Value than
Petrol or Diesel/LPG/CNG, hence projected kilometre average for a given by car would be
near about three times, while currently being high priced (tentatively) INR 100/kg and would
prevent our further increase in Oil Pool Deficit. Power supply in India face several problems
like poor quality and reliability of grid supply, high tariffs, and high T&D losses. The Indian
power sector has not been able to meet demand-supply gap, and this gap is expected to
increase in foreseeable future. A big chunk of this demand is expected to be fulfilled by
alternative energy sources like small hydro projects, biomass gas, biomass power, urban and
industrial waste power, wind energy, fuel cells, etc. Such Plants are of importance

                                                                                       Page | 8
particularly in the rural areas and outskirts of cities where there is scope for Industrial
development.

Costs

It is difficult and costly to convert to liquid because hydrogen is a gas, it cannot be
compressed into a liquid form without intensive cost and energy input. Hydrogen is the
lightest element on earth hence it dissipates rapidly. Commercial production and use of
hydrogen fuel cells is also costly as some of the component pieces are made from highly
expensive materials. As for example there are fuel cells which can be operated on or near
room temperature - requires precious metal platinum as catalyst for the reaction to take place.
One very important challenge is to find a cheaper and alternative catalyst for the process.
Significant research is being done in this area and solutions are on their way.

Requirement of Fiscal Policy

There is a need for the government to design a fiscal policy to cushion the R&D cost, to
enable commercialization -- and rapid commercialization. Only large scale can impact this
program."

Employment and Reduction of Power Costs

Sick Public Sector Units/ Sick Private companies, can employ persons and boost industrial
productivity. The local persons can be inducted and trained which will assist to solve
unemployment problem to a substantial level. The Project Cost is approximated at INR 1.5
CRORES PER MEGAWATT, while one unit can be sold to Hydrogen Electricity Consumers
at an appx price INR 1.50, with appropriate security deposit in advance assuming that by-
product is sold.

2.3 Socio/Cultural
With the widespread use of hydrogen fuel, people will become aware of use of non-
renewable sources of energy. There will be a shift in the mindset and lifestyle of consumers.
People will be more conscious in terms of using environment friendly products.

2.4 Technological
Production of hydrogen fuel involves a lot of R & D. The technology in India involved is:

Production

The Banaras Hindu University (BHU); Murugappa Chettiar Research Centre (MCRC),
Chennai; and IIT, Kharagpur are among the leading research groups working on biological,
biomass, and other renewable energy routes to produce hydrogen. With R&D support from
the MNES (Ministry of Non-Conventional Energy Sources), the MCRC has demonstrated
hydrogen production in batch-scale from distillery waste. The pilot plant is able to produce
up to 18 000 liters of hydrogen per hour.


                                                                                       Page | 9
Storage

The BHU, IIT Chennai, and the National Physical Laboratory are working on the hydrogen
storage methods. The BHU has developed various types of metal hydrides with storage
capacities of up to 2.4 weight%. It has also demonstrated the use of 1.6% weight storage in
metal hydride on a pilot scale.

Hydrogen-Fuelled Vehicles

Hydrogen-operated motorcycles and three-wheelers have been developed and demonstrated.
The BHU has modified a commercially available motorcycle (100 cc, four strokes) and a
three-wheeler (175 cc, four strokes) to operate on hydrogen as a fuel. Biggest problem in cars
running with hydrogen fuel cell is that it needs refilling from outer source. Because of this,
these cars are not considered good for long distance travelling. To overcome this problem, he
worked on „onward fuel generation‟ technique. It means hydrogen will be generated in the
car itself. His team has added some new techniques in it. They prepared cell with aluminum
electrode with saline water (salt and water solution). With electrosis process, cell will
produce hydrogen fuel frenziedly in car. He used special type of air filters and thin film
membrane to separate fuel from hydrogen. By this way, purity of hydrogen will increase. In
addition, pollution level in environment will fall considerably. On a test drive, it was found
that pollution level from cars running with hydrogen fuel cell is very less in comparison to
cars running with gas/petrol.

Status of Major Technologies of Hydrogen Fuel

Technology                      International Status            National Status
Biological route for Hydrogen   In Pre-Commercial stage         Demonstration Plant set up
Production
Metal Hydrides for Hydrogen     Metal Hydrides for Hydrogen     Hydrides with 2.42wt% storage
storage                         storage Hydrides with 1.5 -     capacity for ambient conditions
                                2.0wt% storage capacity for     developed
                                ambient conditions developed
Carbon Nano-structures for      In R&D Stage                    In R&D Stage,Further R&D
Hydrogen Storage                                                efforts underway
IC Engine for Hydrogen          Not commercially available      Dedicated engine to be
                                                                developed


Problems with hydrogen Fuel Technology:


  i.   Separation Issues: Hydrogen is an energy carrier rather than an energy source. While
       hydrogen always exists in conjunction with other elements, such as in water, it must
       be separated from these elements and is therefore considered an energy carrier, as
       opposed to an energy source.



                                                                                      Page | 10
ii.   Costly to convert to liquid - . Because hydrogen is a gas, it cannot be compressed into
        a liquid form without intensive cost and energy input. Hydrogen is the lightest
        element on earth. As a gas, it dissipates rapidly. To compress this gas is very difficult.
 iii.   Fossil Fuels May be needed to produce Hydrogen - Most methods to produce
        hydrogen must use energy to separate the hydrogen from the oxygen. This may
        require fossil fuels such as coal or oil. So, in a sense, we are spinning our wheels in
        trying to get away from fossil fuels. Along with that, coal, which is a major feedstock
        for hydrogen, is a major contributor to pollution.
 iv.    Infrastructure :Existing infrastructure has not been built to accommodate hydrogen
        fuel

2.5 Environmental
There has been a concentrated effort around the globe to curb rising levels of pollution so as
to control global warming and its possible adverse effect on humanity in large. As fuel cell
emits no harmful gases they are expected to be used in this war against climate change,
resulting in there improved acceptance and use.Automobiles are the leading cause to the
world‟s air pollution problem. Cars also release toxic emissions that damage our
environment. Pollution is hurting our environment by adding to the greenhouse effect,
damaging air quality and decreasing the ozone level. By this technology, it has been proved
that we can reduce pollution level more then CNG.

In Mumbai & New Delhi Auto-exhaust pollution contributes to over 70 % and similar figures
in other metros. Hydrogen Car is the only solution as there is no pollution to air of any kind
as water is the by-product of combustion. The other advantages are about 10% higher
rpm/power is achieved during the same time, less noise and vibration (due to lowest density
of MHG) and naturally free from Carbon, Sulphur and more notorious Benzene (a
carcinogen) in Indian Fuels & its compounds. Hydrogen is not only clean and renewable, it
is also indigenous. One big advantage of using the fuel is that it is found in abundance in
solar energy and water. Not only is it eco-friendly, it will also bring down the oil deficit

2.6 Legal
Patents are granted from the Ministry of New and Renewable Energy, for the production of
new and renewable energy.

The Indian patent entitled „Hydrogen Gas Burner „has been awarded to Mr. S. M.
Degaonkar, Consulting Engineer with decades of Industrial experience, for the production of
Hydrogen Fuel.

Professor Y K Vijay and his team from the Physics department, Rajasthan University are also
to take patent as his research for hydrogen fuel production is going under this ministry since
1984. When this project will be cleared, it will not only be a blessing for industrial sector, but
also will help to clean environment. Automobile companies are free to experiment on
hydrogen fuel cell technology under guidance of Professor Vijay.


                                                                                        Page | 11
3. Porter’s Five Force Model




3.1 Threat of new Entrants
Setting up Hydrogen Plant, Development of Engine for Hydrogen Fuel and Fuel Cell
Technology involves huge costs supported with proper infrastructure Development costs and
Research and Development. Also It is difficult and costly to convert to liquid because
hydrogen is a gas, it cannot be compressed into a liquid form without intensive cost and
energy input.All these factors put together increase the entry barrier making it capital
intensive and proper infrastructure pre requisite for this industry.

RESULT: HIGH

3.2 Bargaining of Power of Buyers
Buyers do have other alternative sources of fuel options include both Renewable and Non
Renewable source energy. With wide range of energy choices available for the consumers,
the end decision maker is the solely the buyer commanding huge bargaining power.

RESULT: HIGH

3.3 Bargaining Power of Suppliers
Suppliers to this industry will mainly consist of Machine Suppliers because the hydrogen is
processed by the manufacturer. Bargaining power of suppliers also depend on supplier

                                                                                  Page | 12
relations, maintaining good supplier relations give the companies the power of negotiating
power. However the no. of companies into manufacture of hydrogen fuel is very less. Hence
suppliers of Machines do not command Bargaining power.

RESULT: LOW

3.4 Threat of Substitutes
Hydrogen Fuel has threat of substitutes from both the renewable and non renewable sources
like oil, petroleum, CNG, firewood, coal, biogas, natural gas, solar energy, wind energy etc,
and with people becoming aware of use non-renewable sources of energy there will be shift
in the minds of the consumers towards more environmental friendly products.

RESULT: HIGH

3.5 Competitive Rivalry
Currently there are no players in this industry supplying hydrogen fuel, but the industry has a
bright potential with big players investing in this sector. Therefore once this industry gains
momentum, great competition can be expected. But the industry being characterized by high
capital and Research & Development costs will see huge players betting money in this
segment.

RESULT: LOW TO MODERATE

3.6 CONCLUSION
From the analysis of porters 5 forces it can be concluded that the Industry is moderately
attractive to enter due to high R&D however there is a growth potential in the industry and a
bright future towards use of environment friendly fuel




                                                                                     Page | 13
4. Company Analysis –                                              Indian             Oil
      Corporation Limited.

The Indian Oil Corporation Ltd. operates as the largest company in India in terms of turnover
and is the only Indian company to rank in the Fortune "Global 500" listing. Its business
interests straddling the entire hydrocarbon value chain – from refining, pipeline transportation
and marketing of petroleum products to exploration & production of crude oil & gas,
marketing of natural gas, and petrochemicals. The oil concern is administratively controlled
by India's Ministry of Petroleum and Natural Gas, a government entity that owns just over 90
percent of the firm. Since 1959, this refining, marketing, and international trading company
served the Indian state with the important task of reducing India's dependence on foreign oil
and thus conserving valuable foreign exchange.

4.1 Evolution of the company

       Indian oil was formed by government after independence to end the monopoly of
       foreign private companies like Burmah and Shell. To implement this policy Indian
       government passed the Industrial Policy Resolution, which states that its oil industry
       should be state-owned and operated. In 1958, the government formed its own refinery
       company, Indian Refineries Ltd. with Soviet and Romanian assistance .In 1959, the
       Indian Oil Company was founded as a statutory body. At first, its objective was to
       supply oil products to Indian state enterprise. Then it was made responsible for the
       sale of the products of state refineries.
       By the early 1990s, Indian Oil refined, produced, and transported petroleum products
       throughout India. Indian Oil produced crude oil, base oil, formula products,
       lubricants, greases, and other petroleum products. It was organized into three
       divisions. The refineries and pipelines division had six refineries, located at Gwahati,
       Barauni, Gujarat, Haldia, Mathura, and Digboi. Together, the six represented 45
       percent of the country's refining capacity. The division also laid and managed oil
       pipelines. The marketing division was responsible for storage and distribution and
       controlled about 60 percent of the total oil industry sales. Indian Oil also established
       its own research center at Faridabad near New Delhi for testing lubricants and other
                                                                                      Page | 14
petroleum products. It developed lubricants under the brand names Servo and
Servoprime. The center also designed fuel-efficient equipment.
The oil industry in India changed dramatically throughout the 1990s and into the new
millennium. Reform in the downstream hydrocarbon sector--the sector in which
Indian Oil was the market leader--began as early in 1991 and continued throughout
the decade.
In 1997, the government announced that the Administered Pricing Mechanism (APM)
would be dismantled by 2002. To prepare for the increased competition that
deregulation would bring, Indian Oil added a seventh refinery to its holdings in 1998
when the Panipat facility was commissioned. The company also looked to strengthen
its industry position by forming joint ventures.
In 2006, Indian Oil and Korea Institute of Science and Technology (KIST)
signed a MoU to conduct joint research on hydrogen storage,
transportation, safety codes and fuel cell power generation. In early
2007, the government signed a MoU with Indian Oil to optimize
Hydrogen-CNG blend ratios for best performance in automotive vehicles
(Economic Times, March, 2007). India is expected to launch its first
hydrogen filling station in 2008. A petrol pump owned by the Indian Oil
Company will become the first to offer hydrogen refuelling capabilities,
delivering hydrogen and hydrogen mixed with CNG (Fuel Cell Today,
November, 2006).
In early 2002, Indian Oil acquired IBP, a state-owned petroleum marketing company.
The firm also purchased a 26 percent stake in financially troubled Haldia
Petrochemicals Ltd. In that year, Indian Oil's monopoly over crude imports ended as
deregulation of the petroleum industry went into effect. As a result, the company
faced increased competition from large international firms as well as new domestic
entrants to the market. During the first 45 days of deregulation, Indian Oil lost Rs7.25
billion, a signal that the India's largest oil refiner would indeed face challenges as a
result of the changes. Nevertheless, Indian Oil management believed that the
deregulation would bring lucrative opportunities to the company.




                                                                              Page | 15
4.2 Market Share and Network

    Indian Oil and its subsidiary (CPCL) account for over 46% petroleum products
    market share, 34.8% national refining capacity and 71% downstream sector pipelines
    capacity in India. With a steady aim of maintaining its position as a market leader and
    providing best quality products and services, Indian Oil is currently investing Rs.
    47,000 crore in a host of projects for augmentation of refining and pipelines
    capacities, expansion of marketing infrastructure and product quality up gradation.


                                 REFINING - % SHARE
                                                               PRIVATE
                    IOCL 34%                                   REFINERS
                                         PRIVATE               ONGC
                                        REFINERIES
                                           41%                 HPCL
                           BPCL 13%
                                                               BPCL
                                  HPCL7%      ONGC 5%




    The Indian Oil Group of companies owns and operates 10 of India's 20 refineries with
    a combined refining capacity of 65.7 million metric tones per annum (MMTPA, .i.e.
    1.30 million barrels per day approx).


    Indian Oil‟s cross-country network of crude oil and product pipelines, spanning
    10,899 km and the largest in the country, meets the vital energy needs of the
    consumers in an efficient, economical and environment-friendly manner.



                            PRODUCTS PIPELINE - % SHARE

                                         PIL 8%
                                                                           PIL
                                            HPCL 21%
                                 IOCL                                      HPCL
                                 54%
                                          BPCL 17%                         BPCL
                                                                           IOCL




                                                                                  Page | 16
Indian oil has the largest and widest network of petrol & diesel stations in the country,
numbering over 18643 regular ROs & 2947 kissan Sewa Kendra. The company has also
started auto LPG dispensing stations (ALDS).



                                            Termin
                                              al/
                                            Depots
                                             140




                                          About 35000
                                           Customer
                                          Touch Points




   Indian oil has till date invested close to Rs 1000 crore in setting up world class
   facilities at its R&D center and it plans to invest about Rs. 500 crore during the period
   2007 -2012, to maintain its leader ship in petroleum industry.


   Indian Oil has the largest and most sophisticated integrated petroleum products supply
   chain in India. Indian Oil's marketing operations network of storage, distribution and
   supply hubs is backed by efficient sourcing, on-time logistics and round-the-clock
   after sales service and consultancy.
   As a leading oil supplier, IOCL has the challenge of maintaining its leadership
   position and meeting its vision. To meet this challenge effectively appropriate
   marketing strategies need to be developed by focusing on consumer‟s needs.




                                                                                  Page | 17
4.3 Products offered by Indian Oil at present are -

                                                      SERVO
Indane     Natural                    Petrol/Gas                   ATF/Jet     Diesel/Gas
                         Auto gas                   lubricants
  Gas       Gas                          oline                      Fuel           oil
                                                    & greases
                                                                           Marine
                                                     Bulk/Industrial
    Petrochemicals       Bitumen      Kerosene                             Fuels &
                                                          Fuels
                                                                          Lubricants


4.4 Competitors of Indian Oil
                     BHARAT PETROLEUM
                     • Impressive track record as an innovator: from fuelling the pioneer
                       of Indian Industry – JRD Tata’s solo flight in 1932 to providing
                       India with the first modern refinery in 1955, to manufacturing the
                       country’s first bottled gas ‘Burshane’ in the mid 50s.
                     • Wass awarded the 'SAP Star Implementation Award' being the
                       first Public Sector Oil Company to implement Enterprise wide
                       Resource Planning (ERP) solutions - SAP.
                     • 1st to start the concept of convenience stores and loyalty cards as
                       promotional strategy.


                     RELIANCE
                     • largest private sector enterprise, with businesses in the energy
                       and materials value chain.
                     • Group's annual revenues are in excess of US$ 27 billion.
                     • The flagship company, Reliance Industries Limited, is a Fortune
                       Global 500 company and is the largest private sector company in
                       India. materials and energy value chain.



                     SHELL
                     • leading and most diversified global investor in India's energy
                       sector with nearly US$1 billion already invested.
                     • 5 core business exploration and production of
                       oil, chemicals, renewable energy and power.


                     HINDUSTAN PETROLEUM
                     • State-owned oil company of the Government of India
                     • Fortune 500 company of India listed at number 311.
                     • Operates 2 major refineries producing wide variety of petroleum
                       fuels.

                                                                             Page | 18
5. SWOT Analysis




Strengths                                                                Weaknesses
    i. The first and foremost strength of IOCL is that it is a i. Though being PSU is
       Government owned company.                                            an advantage to this
   ii. It has a huge group refining capacity of 60.2 million metric         company but it is also
       tons per annum and a share of 33.8% share in the national            a seen as a weakness
       refining capacity.                                                   because most the PSU
 iii. It has huge amount of cash holding which is evident from its          in recent time is
       high earning per share ratio which is comparatively higher than      lacking the proper
       its competitors i.e. BPCL and HPCL.                                  monitoring and thus
  iv. Being initiated in the year 1950 it has got a vast array of refining subjected to huge
       and distribution network.                                            losses.
   v. By virtue of entering extensive joint venture and out its own ii. The company has its
       initiatives the company has a diversified product elements in        major weakness in the
       other related activities like petroleum storage, pipelines, lube     R&D department.
       additives, explorations, petrochemicals, gas, training, and iii. It has got a low price
       consultancy etc.                                                     earning ratio.
  vi. The company has already entered overseas markets such as Sri iv. The           technological
       Lanka, Oman, and is presently considering entering in Turkey         drawback             is
       through a joint venture. It has also weighing the possibility of     considered to       be
       entering Indonesia.                                                  another weakness of
 vii. It is the market leader in the branded fuel sector with a 60%         the company.
       market share which gives them the goodwill of initiating a new
       product.
viii. Its assets turnover ratio is 3 times larger and revenue is 2 times
       larger than that of BPCL.
  ix. It has a higher operating profit margin which implies that its
       turnover is greater than its sales.
   x. It has also acquired management control of the marketing
       company IBP, thereby strengthening its position in these
       activities. It also has a dominant share in all segments in terms
       marketing infrastructure.


                                                                                     Page | 19
Opportunities                                                    Threats
    i. The company has an opportunity to build its own pipelines, so      i.  Prices          are
       that it will be a independent player.                                  governed          by
   ii. Global trend is to move from fossil fuels to carbon free fuels,        MoPNG
       including renewable.                                              ii.  As the technology
 iii. Increase crude oil price.                                               in private and
  iv. Growing gap between demand and supply of commercial                     foreign companies
       energy with increasing dependence on imported oil.                     is much more
   v. Urgency for containing environmental pollution caused by                advanced so the
       burning of fossil fuels and biomass energy.                            prices at which
  vi. Inadequate development of eco-friendly energy resources                 they are sold are
       including hydro and renewable energy                                   very cheap than
 vii. Oil intensification of Indian economy due to declining self-            this company.
       sufficiency in oil and increasing oil demand.                    iii.  This      type    of
viii. Centralized production of electricity based on increasing share         energy is diffused
       of hydro, nuclear and renewable.                                       and dispersed.
  ix. India has set up as the largest programmers of renewable iv.            They       are  not
       energy in the world.                                                   storable.
   x. Hydrogen best fulfills the requirements of lightness, highest       v.  Not      fuel    for
       energy density, clean, versatility and inexhaustible.                  transportation
  xi. Increased emphasis on the environmental policies of                     available.
       Government.                                                       vi.  Higher cost of
                                                                              hydrogen.
                                                                        vii.  Development high
                                                                              pressure cylinders.
                                                                       viii.  Regulations     and
                                                                              codes.


On analyzing the Strengths weaknesses opportunities and threats of Indian Oil foraying into
the hydrogen fuel industry it is clearly visible that the strengths outnumber the weaknesses
and opportunities outnumber the threats. Hence Indian Oil should consider foraying into this
industry.




                                                                                    Page | 20
6. The Marketing Mix – 4 P’s of
      Marketing




6.1. Product
6.1.1. Needs for the product
    Global fuel demands will be scorching high along with factors like high fuel cost,
     increasing energy security thus leading to wealth that will be uncontainable, change in
     ownership, economic empowerment, massive job creation, construction and
     development of new cities and ultimately a new energy order. The Indian economy
     itself is growing at 7- 8% p.a. which is thereby increasing the demand for Commercial
     energy which will grow at 4.5% per annum till 2020. There is a need for sustainable
     energy pathway for India which will ensure energy security.

    Given the backdrop of a continuously widening gap between demand and supply there
     is immense necessity to diversify the given energy sources and continuously explore
     alternative ways to satisfy the country‟s energy need in order to sustain our economic
     growth. Oil imports expected to rise from present 70 percent to 100 percent in next
     fifteen years. There has been Oil intensification of Indian economy due to declining
     self-sufficiency in oil and increasing oil demand.

    Growing dependence on non-commercial energy sources like fire-wood, cow-dung
     and agricultural wastes in rural areas which pollute the environment. Inadequate
     development of eco-friendly energy sources including hydro and renewable energy.
     There is an urgency of having renewable sources of energy that are safe, cleaner, and
     even inexhaustible. Increasing environmental concerns is also posing a serious


                                                                                  Page | 21
challenge for concerned energy companies. Urgency for containing environmental
      pollution caused by burning of fossil fuels and biomass energy

    By 2025, petroleum production is expected to go down significantly. The present oil
     production is 25 billion barrels of oil per year and by 2025, the oil production
     annually most likely will be somewhere between 18 and 19 billion barrels which is
     even less than the annual production of the oil during the oil crisis and shortage
     during the 1970s.

6.1.2. Features of the product:

    Green fuel is basically a solid, liquid or gaseous fuel which can be obtained from
     comparatively recently lifeless or living biological material. It is different from fossil
     fuels which are derived from long dead biological material.

    Known the fact that hydrogen is the most abundant element on the earth, it comprises
     more than 75 % of the environment and thus if it becomes a primary fuel our
     dependence on other foreign sources of fuel would be drastically eliminated.

    The other feature of hydrogen is that it can store approx 2.8 times the energy per unit
     mass as gasoline.

    Hydrogen fuel has the capacity to store more energy than batteries and in a fuel cell it
     burns with double the efficiency of gasoline in an engine which means it helps in
     saving money.

    There is only one by-product that is produced from burning hydrogen is water unlike
     the carbon based products that is produced by burning regular gasoline.

    Undoubtedly hydrogen is amongst the cleanest fuel available. The hydrogen-fueled
     ICE's and other gas turbine engines based on it have very negligible emissions of
     different air pollutants. Again the hydrogen-powered-fuel-cell vehicles have no
     emissions.

    Green fuel is non-toxic, fully biodegradable and is safer to store than fossil diesel. It
     has a flash point more than twice that of fossil diesel.

    The low carbon footprint it has when compared with coal gives its clean combustion
     features

6.1.3. How can customers use such green fuel



                                                                                     Page | 22
 Green Fuels like Hydrogen fuel can be used by the customers as it can blend up to
     100% in any diesel vehicle and its performance will not be affected as long as correct
     procedures are followed.
    Hydrogen can be derived from a variety of feedstock which includes coal, natural gas,
     oil, water, and biomass.

    Companies like DaimlerChrysler, Mazda, and BMW have successfully developed and
     tested ICE's fueled with hydrogen and has concluded that hydrogen fuel can be used
     effectively and successfully as a vehicle fuel.

    Also these Fuel cell vehicles will be within budget by the time it will reach the
     marketplace.

    Critics to the technology claim that the price of today‟s hand-built prototypes and
     other stationary power generation systems are very high and thus they leap to the
     conclusion that fuel cell vehicles will not be very much cost-competitive. In the
     process, they ignore that prototypes and first-generation systems are almost always
     very expensive like gasoline powered cars, personal computers, digital cameras, and
     many other innovative products compared with mass produced units.

    Again this works well in any diesel engine with very little or almost no modification
     to the fitted fuel system. Findings even suggest that using it can actually prolong the
     engine‟s life by as much as 50 percent over other traditional fossil fuel as it leaves
     very less or no carbon deposits and thereby reducing friction and abrasion.



   6.1.4. What is it to be called?


IOCL can foray in this market and the name of the hydrogen fuel could be “Naveen”. This
name signifies the new innovation which will foster the growth objective of the company and
will bring a new way of seeing the fuel products as more eco friendly alternatives could be
explored.

   6.1.5. How the product will be branded?


Creating a positive emotional association in the market for hydrogen fuel will be the key. If
the product is good, it needs comparatively less effort to sell. Awareness will create want and
desire by the mere mention of how their act is serving the nature and a greater cause of
protecting it. For instance, the mere mention of McDonalds conjures up images of numerous
unique burgers and other offerings with the anticipation for our favorite. Such positive
emotional associations will be built over time through branding practice and a time-tested

                                                                                     Page | 23
relationship between IOCL and their customer based on intrigue, trust, understanding and
support.

To create a brand promise that creates such emotional connections, it should be:

    A relevant proposition for the target customers in order to engage our target market
    The brand must be able to create some sort of positive emotional attachment beyond
     just being “good”
    It should be adaptable to the prevailing business climate
    It must be continually reinforced
    It must maintain consistency across advertising and marketing mediums
    Also it should be known and echoed by business partners




                 Different aspects of Hydrogen Fuel as a substitute product.

   6.2. Place

IOCL has its products which get distributed directly to bulk customers and to the other retail
customers via a network of different retail outlets and dealers or distributors. IOCL‟s overall

                                                                                      Page | 24
distribution network is encompassing over 35,000 different sales points incorporating IOCL‟s
   own franchise as well as other independent outlets, distributors, consumer pumps etc. the
   substantial majority of which are governed by dealership agreements. Hydrogen being an
    energy carrier and not an energy source like wind; it not only needs infrastructure for its
    production but also for its distribution. Different products are transported to the various
    distribution points by pipeline, rail tankers and road tanker trucks, ship tanker etc. Thus
  consumers will be able to buy hydrogen at the established “energy stations” of IOCL. The
  company can choose to build a massive centralized national hydrogen distribution system,
  but there‟s no need for coming on a national basis. It can get started for much less. Getting
  hydrogen in consumers‟ hands will require new production and delivery systems, but they
     need not be built all at once, and they may begin as widespread small scale facilities.




                                             Located near to
                                               the market            Convenient to
                      Existing sites                                 customers

                                                                                Easy to
                                                                                locate /
                                                                                find out
                                   Why is place important in                    about
         Near to                          marketing?
         other
         facilities
                                                                              Good
                                                                              transport
                       Staff availability                                     links
                                                   Geographical
                                                   needs




                            Fig. Importance of selecting appropriate place.




6.3 Promotion
6.3.1 Above the line promotion:
TV, radio, newspapers, internet

6.3.2 Below the line promotion:


Sponsorship, sales promotion, merchandising, public relations, trade shows.

   a) Advertisements: Advertising will be a 'paid for' communication. It will be used in
      order to transmit information, develop attitudes and to generate awareness, and also it
      helps in gaining and analyzing responses from the target market. There are many
      advertising 'media' such as newspapers (local, national, free, trade), magazines and
      journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising
                                                                                           Page | 25
(such as posters, bus sides).IOCL can opt for advertising in prominent dailies for
      selection of dealers who will be dealing with the proposed hydrogen fuel for their
      proposed retail outlet dealerships at various locations in various states.
   b) Sponsorship: Sponsorship is where IOCL will be paying so that it can be associated
      with a particular event, cause or image. All the marathons for saving the environment
      or any green initiative could get the sponsorship by IOCL..The underlying attributes
      of the event which has been sponsored should then be associated with the sponsoring
      organization i.e. IOCL.

   c) Personal Selling: IOCL is selling Hydrogen fuel which is a very new concept and
      such complex products usually use salespeople to sell their products in a business to
      business aspect. As IOCL can work with Mahindra & Mahindra, personal Selling will
      be an effective way to manage personal customer relationships. The respective sales
      person will act on behalf of the organization. They tend to be well trained in the
      approaches and techniques of personal selling.

   d) Relationship Marketing: This type of marketing refers to a philosophy that IOCL
      wishes to succeed. It should be able to sustain a strong, continuous, long-term
      relationship with all its respective customers, its suppliers and distributors. For this,
      IOCL should work with umbrella branding. In order to make sure this happens,
      customers and intermediaries have to feel good about doing business with the
      company.

   e) Sales Promotion: Sales promotion tends to be thought of as being all promotions
      apart from advertising, personal selling, and public relations. Schemes like free
      accessories and introductory offers could work. Each single different sales promotion
      should be cautiously checked and then costed and compared with the next best
      available alternative present.

6.4 Price
Hydrogen has long been championed as the ultimate environmentally-friendly fuel,
potentially offering zero-emissions motoring and freedom from oil addiction.

Hydrogen is readily available, in natural gas or in water and burning hydrogen in an internal
combustion engine or combining it with oxygen in a fuel cell to produce electricity, produces
only heat and water vapor.

The lure of CO2-free driving has persuaded governments and the auto industry to invest
billions of dollars in the last decade researching hydrogen fuel cells, developing
demonstration cars and, more recently, installing hydrogen refueling
stations. And, therefore, as far as pricing is concerned, it is going to be
on a higher side. The major reasons being:



                                                                                     Page | 26
 Although Hydrogen is readily available, in natural gas or in water, but storing
     hydrogen is a challenge as compressed hydrogen tanks need to The Telsa Roadster is a fully
     be specially built in which can carry compressed hydrogen in a     electric car with zero
                                                                     emission and a top speed of
     small available space in the vehicle.                                   125 km/hr
    Also, distribution of hydrogen is a problem. But, this can be
     overcome by Home Energy Station, which drivers can use to produce energy (or make
     hydrogen) at home via electrolysis by tapping into the domestic natural-gas supply.
     But, this would also incur cost.
    Huge amounts are being spent on the Research and Development of the hydrogen
     fuel.
    IOCL spends around 20 million INR annually to educate its customers and others on
     protecting the environment as its CSR activity.

                                 Also, a lot of money is being spent on the promotion of the
                                 fuel.

                                 All these factors and many more have led the way for
                                 hydrogen fuel to be priced high.

                                 But here, the probable price can be lowered if IOCL by any
                                 chance convinces government to subsidize the fuel and
                                 make it cost effective and affordable to the common man.

            Fuel Cell             IOCL being such an old player in crude oil production and
now being the first mover in the hydrogen fuel category in the market and with other
available domestic fuel prices touching the skies, if in such a scenario IOCL comes up with a
fuel which is a green fuel with no or almost Zero Emission; then pricing should not be
problem for them as the cost incurred till now in all the R&D etc will easily cross the break
even.




                                                                                    Page | 27
7. Need of Hydrogen Fuel

7.1 Data Collection
7.1.1.Primary Sources:

Primary Data till date has been collected on the basis of the focus group discussion and face
to face interviews.

    Focus Group Discussion: FGD was conducted to infer the attitude and viewpoints of
       target population towards introduction need of Hydrogen fuel in today’s Scenario.

    Face To Face Interviews They were conducted with the faculty members of IBS so
     as to have a deep insight in the opportunity.

7.1.2 Secondary Sources:
Secondary Data Sources being used in research include-

   Manuals, Research Papers, Brochures
   Website‟s
   Journals and Publications

7.2. Focus Group Discussion
   A focus group is a qualitative data collection method in which one or two researchers and
   several participants meet as a group to discuss a given research topic.

7.2.1.Observations of Focus Group Discussion:
       Most of the participants wish for a cleaner environment.
       People conscious about energy preservation.
       Prefer less travel through vehicles
       Believe in technology usage. .
       People find renewable sourse as a savior for coming generation.
       They want to adopt the renewable sources for maximum products
       The time frame for development of such alternate resources is a major issue
       Talking about prices customers were willing to pay extra to avail this service however
       they said that if the base price increase then the demand will decrease.
       Few people also suggested introduce such services in government aided vehicles –
       buses.
                                                                                     Page | 28
In addition it will help to reduce the the pollution.
       For such products, initial step to be taken by government.
       Finally people were positive to adapt this service as they believe this will be a value
       added Product as it will provide them a healthy environment.

7.2.3 What’s next??
With depleting oil resources and degradation of atmosphere we are planning to go green. As
an alternative to fuels the company decided to work on hydrogen fuel cell technology,
production of hydrogen on mass scale through various processes, technological upgradations
in the development and analysis of key physical component, the catalyst.

7.2.4. TOTAL ENERGY CONSUMPTION (www.Eia.Doe.Gov/Oiaf/Ieo)
The average annual rate of energy consumption and the gross domestic product have
been growing at a significantly greater rate in India

COUNTRY           1999          2005           2010            2020     % DAMAGE
    USA           96.7           107           114.1           120.7         13
  JAPAN           21.7           22.8          23.5             26           0.9
  CHINA            32            43.2          55.3            84.1          4.7
   INDIA          12.2           15.5          18.4            26.1          3.7



In India, the 2 and 3 wheelers are mainly responsible for the air‟s poor quality. Conversion of
some vehicles to run on hydrogen fuel will improve the quality dramatically. With the
advancement of industry towards a hydrogen economy production of such alternative sounds
positive.

7.3 Hydrogen Energy
Hydrogen holds the potential to provide a clean and reliable source of energy that can be used
in a wide range of applications, including the transport sector and power sector mainly.
The road map is to identify the path that would lead to gradual introduction of hydrogen
energy in India. The road map also aims to accelerate commercialization efforts and facilitate
creation of hydrogen energy infrastructure in the country.

With the progress in technology, a lot of focus is being put on development and
demonstration of hydrogen energy and fuel cell technologies.

                                                                                       Page | 29
7.4 Hydrogen Production Technologies


Hydrogen does not exist by itself in nature. It has to be produced from hydrocarbon
compounds. It can also be produced from available resources including natural gas and
nuclear, Biomass and other renewable including solar , wind , hydro-electric or geothermal
energy.

The development of fuel from renewable sources – clean , sustainable and cost-competitive
hydrogen production processes. The production can be done from three different process :

   i.     Thermal Processes
  ii.     Electrolytic Process
 iii.     Photolytic Process

7.5 Why Indian Oil Corporation Limited?
In March 2010, IOC entered into a limited liability partnership agreement with Ruchi Soya
Industries, a leading manufacturer of edible oils. The agreement sought to establish a model
bio-diesel value chain for production of bio-diesel in Uttar Pradesh and covered nursery
management, contract farming and oil seed processing. Further in March 2010, IOC signed a
MoU with Honeywell International for collaboration on research and development for a range
of bio fuels technologies and projects in India

7.5.1. Hydrogen fuel:

The product can be manufactured under GIP (Green Initiative for Power Generation)
programme of the company with a tie up with IIT-Madras and SPIC-SF as they are the two
major institutes which are working on hydrogen and fuel cell technology. It will involve the
development and demonstration of fuel cell power packs (50-100 kW).

7.5.2. Product feasibility

Hydrogen-fuel-cell-powered cars are the best alternatives to polluting, gasoline-powered cars
for several reasons:

             o The cars are completely emission-free


                                                                                   Page | 30
o The fuel cells have no moving parts
           o Hydrogen is renewable and abundant
           o The cars are compatible with cold weather
           o The fuel cells are compact and lightweight--not overly bulky or heavy
           o The cars are about 3 times as efficient as gasoline-powered cars
           o The cars will have incredible mile ranges
           o The tanks will be refueled quickly
           o Hydrogen is safe, has been tested rigorously for use in vehicles, and is being
               used in many vehicles already.

7.5.3Strong Research & Development Capabilities:

IOC‟s R&D Centre has made successful developments in lubricants formulation, refinery
processes, pipeline transportation, and alternative fuels. Indian Oil Technologies, a wholly-
owned subsidiary, commercializes the innovations and technologies developed by IOC‟s
R&D Centre. The centre is also the nodal agency of the Indian hydrocarbon sector for
developing hydrogen fuel usage in the country. The centre is setting up a commercial
hydrogen-compressed natural gas (CNG) station at an IOC retail outlet in New Delhi. It holds
214 active patents, including 113 international patents.




                                                                                    Page | 31
8. Segmentation,   Targeting    and
   Positioning




                               Page | 32
8.1 Segmentation
The fuel market has been segmented on the basis of various factors which are shown as
follows:

                          On The Basis Of Resources Used


 Renewable Resource                                     Non-renewable Resource


                            On The Basis Of Geography

                 West          North         South        Central         Foriegn
 East India
                 India         India         India         India         Countries

                      On The Basis Of Industry To Be Served


 Automobile Industry        Telecom Industry         Power Sector        Others


                On The Basis Of Nature Of Existing Relationships

   Existing Companies With
                                    Existing Companies        Desirable Companies
        Stong Relation


                 On The Basis Of Purchasing Criteria Of Customer


              Quality              Service                       Price


                         On The Basis Of Specific Application

     Automobile Fuel               Power
                                                      Others - Like Batteries Etc
                                  Generator

                        On The Basis Of Attitude Towards Risk



              Risk Seeker              Neutral             Risk Averse




                                                                              Page | 33
THE BASIS OF                            CATEGORIES
      SEGMENTATION
Resources Used                   Renewable Resource
                                 Non-renewable resource
Geography                        East India
                                 West India
                                 North India
                                 South India
                                 Central India
                                 Foreign Countries
Industry to be Served            Automobile Industry
                                 Telecom Industry
                                 Power Sector
                                 Others
Nature of Existing Relations     Existing Companies with Strong Relations
With Customer                    Existing Companies
                                 Desirable Companies
Purchasing       Criteria   of   Quality
Customers                        Service
                                 Price
Specific Application             Automobile Fuel
                                 Power Generator
                                 Other Utilities – Batteries, etc.
Attitude Towards Risk            Risk Seeker
                                 Risk Averse
                                 Risk Neutral




                                                                            Page | 34
8.2 Targeting
The highlighted part in the segmented market shows the target market of the company.

                           On The Basis Of Resources Used


 Renewable Resource                                       Non-renewable Resource


                             On The Basis Of Geography

                  West          North          South        Central          Foriegn
 East India
                  India         India          India         India          Countries

                       On The Basis Of Industry To Be Served


 Automobile Industry         Telecom Industry          Power Sector         Others


                 On The Basis Of Nature Of Existing Relationships

    Existing Companies With
                                      Existing Companies        Desirable Companies
         Stong Relation


                  On The Basis Of Purchasing Criteria Of Customer


               Quality               Service                        Price


                          On The Basis Of Specific Application

     Automobile Fuel                 Power
                                                        Others - Like Batteries Etc
                                    Generator

                         On The Basis Of Attitude Towards Risk



               Risk Seeker               Neutral             Risk Averse






                                                                                 Page | 35
The target market of IOCL is classified on the following basis:

Industry: the hydrogen cell of IOCL will initially cater to the automobile industry as the
company is already into the production of hydrogen fuel and targeting other sectors would
require the advancement of technology.

Geography: Initially the company is targeting the capital region of the country seeking the
help of the government. However, the product will be made available at other metropolitan
cities in the near future with the success of the project. The company is also making the
presence of its product felt in the entire country by tying up with Mahindra & Mahindra and
TATA Motors by implementing its hydrogen fuel cell kit in its certain specified models.

Resources used: the product will act as a substitute to the exhaustible sources of energy.

Power structure: Serve companies that are engineering dominated.

Nature of existing relationships: apart from just focusing on existing strong
3relationships the company would concentrate more on desirable companies.

Purchasing criteria: Serve companies that are seeking quality and service?

Specific application: focusing on a specific application initially rather than all applications.

Size or order: Depending on the size of fuel cell required for specific application.





















                                                                                        Page | 36
8.3 Positioning

     As IOCL in itself has a great brand name and standing for itself in the market, it‟s
      new product i.e. the hydrogen fuel cell will be able to bring revolution.

     Act of designing the company‟s offering and image to occupy a distinctive place in
      the minds of the target markets. The goal of positioning is to locate the brand in the
      minds of the consumer.

     IOCL has the biggest advantage of its name which it can use for capturing a huge
      chunk of the hydrogen fuel cell market.



Positioning Map



               zero                                       Hydrogen
                                                          fuel
                                              CNG
                                              LPG
               low
                                            Petroleum
(Pollution caused)                           Diesel
                                            kerosene
           medium             Coal
                              wood

               high

                                     Low           Medium               High

                                  (Energy Efficiency)

                            




                                                                                   Page | 37
9. Future Prospects
 The hydrogen fuel cell of IOCL has the potential of developing into a full fledged
   alternative to automotive fuel in the future. Studies say that-
        As the research and development activities go on the cost of hydrogen is
           expected to be brought down to Rs. 70 / kg at the fuelling station or actual
           point of use.
        Studies say that by 2020 there will be large scale use of hydrogen based
           Engines and fuel cells for power generation.
        Also, there are expected to be one million hybrid vehicles on road by 2020.


 All these findings point out that there is a huge scope of hydrogen fuel being used on
   a large scale as an ultimate inexhaustible source of energy for power generation in the
   country, environment friendly automobiles and other energy requirements.


 This would further dominate in future as an energy resource decreasing the
   dependency of the country on International player for the same.


 Thus it can be said that development in hydrogen fuel can lead to great profit earnings
   for the company and so we can say that the hydrogen fuel cell of IOCL will prove to
   be a very successful product for the company.




                                                                                Page | 38
10. References
 i.     Annual Report Analysis of Indian Oil Corp. Ltd, September 2004, (online), available
        at www.IndiaInfoline.com
  ii.   http://www.usfcc.com/resources/Connection_March2006.pdf
 iii.   http://mnes.nic.in/html_folder/ch7_pg1.htm;
 iv.    http://www.techmonitor.net/techmon/06jan_feb/nce/nce_news.htm
  v.    http://www.hydrogenassociation.org/newsletter/ad102_india.asp
 vi.    http://iahe.org/News.asp?id=28
vii.    http://www.ovonic.com/PDFs/hydrogen_3-wheeler/3-wheeler_hydrogen_17jul05.pdf
viii.   http://economictimes.indiatimes.com/articleshow/1826194.cms
 ix.    http://www.fuelcelltoday.com/FuelCellToday/IndustryInformation/IndustryInformatio
        nExternal/NewsDisplayArticle/0,1602,8521,00.html
 x.     http://www.usfcc.com/resources/Connection_March2006.pdf
xi.     http://mnes.nic.in/html_folder/ch7_pg1.htm;
xii.    http://fuelcellsworks.com/news/2010/03/21/india-new-milestone-hydrogen-fuel-cell-
        technology/
xiii.   http://timesofindia.indiatimes.com/city/delhi-times/Hydrogen-the-new-fuel-
        Zen/articleshow/943083.cms




                                                                                  Page | 39

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Product project final (repaired)

  • 1. Introduction of Hydrogen Fuel by Indian Oil Corporation Limited in Andhra Pradesh Submitted to: Prof: Rajdeep Chakrabarti Submitted By: Riteeka Gupta Richa Baid Rohit Singh Shallabh Bhatia Shilpi Sarkal Shristi Bubna
  • 2. Contents 1. About The Hydrogen Fuel Industry ............................................................................... 4 1.1 Evolution ..................................................................................................................... 4 1.2 Hydrogen Industry in India .......................................................................................... 4 1.3 National Hydrogen Energy Roadmap Technology Development: ................................ 5 3 Tier set -up ..................................................................................................................... 5 1.4 Hydrogen Energy Companies ...................................................................................... 5 1.4.1. Hydrogen Energy Research Institutes................................................................... 5 1.5 Hydrocarbon Vision India 2025: .................................................................................. 6 2. Pestel Analysis for the Hydrogen Fuel Industry ............................................................. 7 2.1 Political ....................................................................................................................... 7 2.2 Economic .................................................................................................................... 8 2.3 Socio/Cultural ............................................................................................................. 9 2.4 Technological .............................................................................................................. 9 2.5 Environmental ........................................................................................................... 11 2.6 Legal ......................................................................................................................... 11 3. Porter‟s Five Force Model ........................................................................................... 12 3.1 Threat of new Entrants............................................................................................... 12 3.2 Bargaining of Power of Buyers .................................................................................. 12 3.3 Bargaining Power of Suppliers .................................................................................. 12 3.4 Threat of Substitutes .................................................................................................. 13 3.5 Competitive Rivalry .................................................................................................. 13 3.6 CONCLUSION ......................................................................................................... 13 4. Company Analysis – Indian Oil Corporation Limited. ................................................. 14 4.1 Evolution of the company ......................................................................................... 14 4.2 Market Share and Network ........................................................................................ 16 4.3 Products offered by Indian Oil at present are - ........................................................... 18 4.4 Competitors of Indian Oil .......................................................................................... 18 5. SWOT Analysis .......................................................................................................... 19 6. The Marketing Mix – 4 P‟s of Marketing ..................................................................... 21 6.1. Product .................................................................................................................... 21 6.1.1. Needs for the product ......................................................................................... 21 Page | 2
  • 3. 6.1.2. Features of the product:...................................................................................... 22 6.1.3. How can customers use such green fuel ............................................................. 22 6.1.4. What is it to be called? ................................................................................... 23 6.1.5. How the product will be branded? .................................................................. 23 6.2. Place ..................................................................................................................... 24 6.3 Promotion.................................................................................................................. 25 6.3.1 Above the line promotion: .................................................................................. 25 6.3.2 Below the line promotion: ................................................................................... 25 6.4 Price .......................................................................................................................... 26 7. Need of Hydrogen Fuel ............................................................................................... 28 7.1 Data Collection .......................................................................................................... 28 7.1.1.Primary Sources:................................................................................................. 28 7.1.2 Secondary Sources: ............................................................................................. 28 7.2. Focus Group Discussion ........................................................................................... 28 7.2.1.Observations of Focus Group Discussion: ........................................................... 28 7.2.3 What‟s next?? ..................................................................................................... 29 7.2.4. TOTAL ENERGY CONSUMPTION (www.Eia.Doe.Gov/Oiaf/Ieo) ................. 29 7.3 Hydrogen Energy ...................................................................................................... 29 7.4 Hydrogen Production Technologies ........................................................................... 30 7.5 Why Indian Oil Corporation Limited? ....................................................................... 30 7.5.1. Hydrogen fuel: ................................................................................................... 30 7.5.2. Product feasibility .............................................................................................. 30 7.5.3Strong Research & Development Capabilities: ..................................................... 31 8. Segmentation, Targeting and Positioning ..................................................................... 32 8.1 Segmentation ............................................................................................................. 33 8.2 Targeting ................................................................................................................... 35 8.3 Positioning ................................................................................................................ 37 Positioning Map .......................................................................................................... 37 9. Future Prospects .......................................................................................................... 38 10. References ................................................................................................................ 39 Page | 3
  • 4. 1. About The Hydrogen Fuel Industry 1.1 Evolution   1.2 Hydrogen Industry in India Indian industry is producing hydrogen commercially for use in: Oil refineries, fertilizer plants, and chemical industry. Chlor-alkali industry produces hydrogen as a byproduct Over 3 MMT per annum of hydrogen is currently produced in petroleum refineries and fertilizer plants Hydrogen Storage in pressurized cylinders is the most common method of commercial supply  For the development of hydrogen fuel, the National Hydrogen Energy Board has been constituted in October, 2003 with Hon‟bleMinister, of Non-Conventional Energy Sources as Chairman. The board involves high level representation from Government, Industry, Research and Academia, Public Figures and other stakeholders Two major initiatives with goals and targets upto2020 A. Green Initiative for Future Transport (GIFT) B. Green Initiative for Power Generation (GIP) The National Hydrogen Energy Road Map (NHERM) for the country prepared in January 2006 and keeping in view the broad directions provided in the NHERM, the Ministry has supported four Mission Mode Projects in the areas of hydrogen production through biological route, hydrogen storage in hydrides and carbon materials and development and demonstration of hydrogen fuelled internal combustion engines for vehicles. Two Technologies Mission Mode Project proposals relating to development of PEMFC and SOFC in collaboration with the industry are under development and evaluation. Page | 4
  • 5. 1.3 National Hydrogen Energy Roadmap Technology Development: 3 Tier set -up 1.4 Hydrogen Energy Companies Eden Energy Ltd. Eden Energy Ltd., through its wholly-owned subsidiary Hythane Company LLC, has been selected by Indian Oil Corporation to install and supply the first public hydrogen fueling station in India. The $1 million retail outlet will be sited in the heart of Delhi at one of India‟s busiest natural gas fuelling stations. 1.4.1. Hydrogen Energy Research Institutes Department of Energy Systems & Engineering Indian Institute of Technology Bombay A fuel cell and hydrogen research center is being planned in the department. The department will have a new building (approx 80,000ft2 of built up area) as a zero energy building using passive solar, building integrated PV, day lighting. There are plans for specialized laboratories like efficiency laboratory, solar PV laboratory, fuel cells and hydrogen laboratory, energy innovation laboratory, alternative fuels laboratory apart from the existing solar and energy systems laboratories. Shri AMM Murugappa Chettiar Research Centre (MCRC) Shri AMM Murugappa Chettiar Research Centre, popularly known as MCRC, is a non profit research organization. MCRC‟s ideologies are centered on science and technology applications for rural development thereby improving the quality of life of the rural people, particularly the under privileged and the marginalized. Hydrogen energy technology has been Page | 5
  • 6. a part of MCRC research for two decades. With financial assistance from the Ministry of Non Conventional Energy Sources (MNES), MCRC has developed a biological process for generation of hydrogen from sugar and distillery wastes using the effluents at M/s. E.I.D. Parry Ltd., at Nellikuppam, Tamil Nadu. MCRC has been working on scaling this technology using a 125 m3 bioreactor which has produced 18,000 liters of total gas per hour with about 60% hydrogen mixed largely with CO2 and CO. 1.5 Hydrocarbon Vision India 2025: The government has released a report in order to remove barriers of demand & supply in energy. The study conducted suggests the following measures : A. Revisions of foreign ownership regulations for refinery operations allowing 100% foreign ownership. B. Elimination of government subsidies for petroleum for next 3-5 years C. Target to meet 90% of petroleum & diesel needs through domestic sources D. encouragement to allow gas prices to float to international level The planned future: Intermediate Stage: Ultimate Objective: Present Scene: Electric & Hybrid Environment Friendly Petrol /Diesel /CNG based Vehicles; Bio-Fuel / and Carbon Free Automobiles & Power Synthetic Fuel based Hydrogen Based Vehicles Generation Vehicles & Power & Power Generation Generation Page | 6
  • 7. 2. Pestel Analysis for the Hydrogen Fuel Industry 2.1 Political For the development of hydrogen fuel, the National Hydrogen Energy Board has been constituted in October, 2003 with Hon‟bleMinister, of Non-Conventional Energy Sources as Chairman. The board involves high level representation from Government, Industry, Research and Academia, Public Figures and other stakeholders. The following activities are controlled by the board: i. Guides the preparation and implementation of National Hydrogen Energy Roadmap. ii. Creates policy framework cutting across different sectors. iii. Guides research & development programme in Hydrogen and Fuel cells iv. Business development initiatives for hydrogen fuel v. Nationwide education and training programme. vi. Manages issues relating to Production, Storage, Delivery / Transport, Applications, Safety and Awareness, capacity building addressed In the year 2006, India was the first country selected to participate on the US government steering committee for the Future Gen project, which was seeking to develop a coal-based power plant that removes and sequesters CO2 while producing electricity and hydrogen. As per the plan, The Indian government would contribute $10 million to the initiative and Indian companies would be invited to participate in the private sector segment of the programme. In the same year, the Indian government had unveiled a National Hydrogen Energy Roadmap with the goal of having one million hydrogen-fuelled vehicles on the road by 2020 and Page | 7
  • 8. generating 1,000 MW from hydrogen through public-private initiatives. To achieve these outputs, the national plan included two major new programmes: i. The green initiative for future transport (GIFT) The green initiative for power generation (GIP) that would develop and demonstrate a hydrogen-powered engine and fuel cell-based cars ranging from small cars and taxis to buses and vans (Tech Monitor). Currently, to boost the development of hydrogen fuel, The Indian Ministry for Non- Conventional Energy Sources (MNES) is funding a number of public institutes involved in research on hydrogen fuel cell vehicles, hydrogen production and storage among other hydrogen-driven applications .Examples include BHU for fuel cell vehicles; IIT (Chennai) in collaboration with SPIC Science Foundation to assess the a range of polymers that can be used as electrolytes in fuel cells and the Indian Institute of Chemical Technology (IICT) and BHEL (Hyderabad) for the development of catalysts and two fuel reformers for producing hydrogen from methanol (MNES) Increasing importance of renewable energy resources: in 2007, share of power generated by renewable energy resources in India was only 8%, and Indian government had setup a target to increase this percentage to up to 12% by year 2012, benefits like tax holidays, lower customs duties, sales tax, and exemptions from excise tax are offered to promote use of alternative fuels. It is expected that fuel cells will have an increased share in this renewable energy pie. 2.2 Economic In terms of mileage efficiency, cost of fuel and emissions, hydrogen is superior to CNG. “It depends on how you use hydrogen fuel. If used in a fuel cell car, the mileage efficiency obtained is twice that of a conventional internal combustion (petrol) engine,” says Chetan Maini, deputy chairman and chief technical officer, Reva Electric Car Company (RECC.) Demand and Supply of Energy With the growth of the economy comes an increase in demand for energy. India imports 80% of its crude oil consumption.. Hydrogen fuel is about 3 times better in Calorific Value than Petrol or Diesel/LPG/CNG, hence projected kilometre average for a given by car would be near about three times, while currently being high priced (tentatively) INR 100/kg and would prevent our further increase in Oil Pool Deficit. Power supply in India face several problems like poor quality and reliability of grid supply, high tariffs, and high T&D losses. The Indian power sector has not been able to meet demand-supply gap, and this gap is expected to increase in foreseeable future. A big chunk of this demand is expected to be fulfilled by alternative energy sources like small hydro projects, biomass gas, biomass power, urban and industrial waste power, wind energy, fuel cells, etc. Such Plants are of importance Page | 8
  • 9. particularly in the rural areas and outskirts of cities where there is scope for Industrial development. Costs It is difficult and costly to convert to liquid because hydrogen is a gas, it cannot be compressed into a liquid form without intensive cost and energy input. Hydrogen is the lightest element on earth hence it dissipates rapidly. Commercial production and use of hydrogen fuel cells is also costly as some of the component pieces are made from highly expensive materials. As for example there are fuel cells which can be operated on or near room temperature - requires precious metal platinum as catalyst for the reaction to take place. One very important challenge is to find a cheaper and alternative catalyst for the process. Significant research is being done in this area and solutions are on their way. Requirement of Fiscal Policy There is a need for the government to design a fiscal policy to cushion the R&D cost, to enable commercialization -- and rapid commercialization. Only large scale can impact this program." Employment and Reduction of Power Costs Sick Public Sector Units/ Sick Private companies, can employ persons and boost industrial productivity. The local persons can be inducted and trained which will assist to solve unemployment problem to a substantial level. The Project Cost is approximated at INR 1.5 CRORES PER MEGAWATT, while one unit can be sold to Hydrogen Electricity Consumers at an appx price INR 1.50, with appropriate security deposit in advance assuming that by- product is sold. 2.3 Socio/Cultural With the widespread use of hydrogen fuel, people will become aware of use of non- renewable sources of energy. There will be a shift in the mindset and lifestyle of consumers. People will be more conscious in terms of using environment friendly products. 2.4 Technological Production of hydrogen fuel involves a lot of R & D. The technology in India involved is: Production The Banaras Hindu University (BHU); Murugappa Chettiar Research Centre (MCRC), Chennai; and IIT, Kharagpur are among the leading research groups working on biological, biomass, and other renewable energy routes to produce hydrogen. With R&D support from the MNES (Ministry of Non-Conventional Energy Sources), the MCRC has demonstrated hydrogen production in batch-scale from distillery waste. The pilot plant is able to produce up to 18 000 liters of hydrogen per hour. Page | 9
  • 10. Storage The BHU, IIT Chennai, and the National Physical Laboratory are working on the hydrogen storage methods. The BHU has developed various types of metal hydrides with storage capacities of up to 2.4 weight%. It has also demonstrated the use of 1.6% weight storage in metal hydride on a pilot scale. Hydrogen-Fuelled Vehicles Hydrogen-operated motorcycles and three-wheelers have been developed and demonstrated. The BHU has modified a commercially available motorcycle (100 cc, four strokes) and a three-wheeler (175 cc, four strokes) to operate on hydrogen as a fuel. Biggest problem in cars running with hydrogen fuel cell is that it needs refilling from outer source. Because of this, these cars are not considered good for long distance travelling. To overcome this problem, he worked on „onward fuel generation‟ technique. It means hydrogen will be generated in the car itself. His team has added some new techniques in it. They prepared cell with aluminum electrode with saline water (salt and water solution). With electrosis process, cell will produce hydrogen fuel frenziedly in car. He used special type of air filters and thin film membrane to separate fuel from hydrogen. By this way, purity of hydrogen will increase. In addition, pollution level in environment will fall considerably. On a test drive, it was found that pollution level from cars running with hydrogen fuel cell is very less in comparison to cars running with gas/petrol. Status of Major Technologies of Hydrogen Fuel Technology International Status National Status Biological route for Hydrogen In Pre-Commercial stage Demonstration Plant set up Production Metal Hydrides for Hydrogen Metal Hydrides for Hydrogen Hydrides with 2.42wt% storage storage storage Hydrides with 1.5 - capacity for ambient conditions 2.0wt% storage capacity for developed ambient conditions developed Carbon Nano-structures for In R&D Stage In R&D Stage,Further R&D Hydrogen Storage efforts underway IC Engine for Hydrogen Not commercially available Dedicated engine to be developed Problems with hydrogen Fuel Technology: i. Separation Issues: Hydrogen is an energy carrier rather than an energy source. While hydrogen always exists in conjunction with other elements, such as in water, it must be separated from these elements and is therefore considered an energy carrier, as opposed to an energy source. Page | 10
  • 11. ii. Costly to convert to liquid - . Because hydrogen is a gas, it cannot be compressed into a liquid form without intensive cost and energy input. Hydrogen is the lightest element on earth. As a gas, it dissipates rapidly. To compress this gas is very difficult. iii. Fossil Fuels May be needed to produce Hydrogen - Most methods to produce hydrogen must use energy to separate the hydrogen from the oxygen. This may require fossil fuels such as coal or oil. So, in a sense, we are spinning our wheels in trying to get away from fossil fuels. Along with that, coal, which is a major feedstock for hydrogen, is a major contributor to pollution. iv. Infrastructure :Existing infrastructure has not been built to accommodate hydrogen fuel 2.5 Environmental There has been a concentrated effort around the globe to curb rising levels of pollution so as to control global warming and its possible adverse effect on humanity in large. As fuel cell emits no harmful gases they are expected to be used in this war against climate change, resulting in there improved acceptance and use.Automobiles are the leading cause to the world‟s air pollution problem. Cars also release toxic emissions that damage our environment. Pollution is hurting our environment by adding to the greenhouse effect, damaging air quality and decreasing the ozone level. By this technology, it has been proved that we can reduce pollution level more then CNG. In Mumbai & New Delhi Auto-exhaust pollution contributes to over 70 % and similar figures in other metros. Hydrogen Car is the only solution as there is no pollution to air of any kind as water is the by-product of combustion. The other advantages are about 10% higher rpm/power is achieved during the same time, less noise and vibration (due to lowest density of MHG) and naturally free from Carbon, Sulphur and more notorious Benzene (a carcinogen) in Indian Fuels & its compounds. Hydrogen is not only clean and renewable, it is also indigenous. One big advantage of using the fuel is that it is found in abundance in solar energy and water. Not only is it eco-friendly, it will also bring down the oil deficit 2.6 Legal Patents are granted from the Ministry of New and Renewable Energy, for the production of new and renewable energy. The Indian patent entitled „Hydrogen Gas Burner „has been awarded to Mr. S. M. Degaonkar, Consulting Engineer with decades of Industrial experience, for the production of Hydrogen Fuel. Professor Y K Vijay and his team from the Physics department, Rajasthan University are also to take patent as his research for hydrogen fuel production is going under this ministry since 1984. When this project will be cleared, it will not only be a blessing for industrial sector, but also will help to clean environment. Automobile companies are free to experiment on hydrogen fuel cell technology under guidance of Professor Vijay. Page | 11
  • 12. 3. Porter’s Five Force Model 3.1 Threat of new Entrants Setting up Hydrogen Plant, Development of Engine for Hydrogen Fuel and Fuel Cell Technology involves huge costs supported with proper infrastructure Development costs and Research and Development. Also It is difficult and costly to convert to liquid because hydrogen is a gas, it cannot be compressed into a liquid form without intensive cost and energy input.All these factors put together increase the entry barrier making it capital intensive and proper infrastructure pre requisite for this industry. RESULT: HIGH 3.2 Bargaining of Power of Buyers Buyers do have other alternative sources of fuel options include both Renewable and Non Renewable source energy. With wide range of energy choices available for the consumers, the end decision maker is the solely the buyer commanding huge bargaining power. RESULT: HIGH 3.3 Bargaining Power of Suppliers Suppliers to this industry will mainly consist of Machine Suppliers because the hydrogen is processed by the manufacturer. Bargaining power of suppliers also depend on supplier Page | 12
  • 13. relations, maintaining good supplier relations give the companies the power of negotiating power. However the no. of companies into manufacture of hydrogen fuel is very less. Hence suppliers of Machines do not command Bargaining power. RESULT: LOW 3.4 Threat of Substitutes Hydrogen Fuel has threat of substitutes from both the renewable and non renewable sources like oil, petroleum, CNG, firewood, coal, biogas, natural gas, solar energy, wind energy etc, and with people becoming aware of use non-renewable sources of energy there will be shift in the minds of the consumers towards more environmental friendly products. RESULT: HIGH 3.5 Competitive Rivalry Currently there are no players in this industry supplying hydrogen fuel, but the industry has a bright potential with big players investing in this sector. Therefore once this industry gains momentum, great competition can be expected. But the industry being characterized by high capital and Research & Development costs will see huge players betting money in this segment. RESULT: LOW TO MODERATE 3.6 CONCLUSION From the analysis of porters 5 forces it can be concluded that the Industry is moderately attractive to enter due to high R&D however there is a growth potential in the industry and a bright future towards use of environment friendly fuel Page | 13
  • 14. 4. Company Analysis – Indian Oil Corporation Limited. The Indian Oil Corporation Ltd. operates as the largest company in India in terms of turnover and is the only Indian company to rank in the Fortune "Global 500" listing. Its business interests straddling the entire hydrocarbon value chain – from refining, pipeline transportation and marketing of petroleum products to exploration & production of crude oil & gas, marketing of natural gas, and petrochemicals. The oil concern is administratively controlled by India's Ministry of Petroleum and Natural Gas, a government entity that owns just over 90 percent of the firm. Since 1959, this refining, marketing, and international trading company served the Indian state with the important task of reducing India's dependence on foreign oil and thus conserving valuable foreign exchange. 4.1 Evolution of the company Indian oil was formed by government after independence to end the monopoly of foreign private companies like Burmah and Shell. To implement this policy Indian government passed the Industrial Policy Resolution, which states that its oil industry should be state-owned and operated. In 1958, the government formed its own refinery company, Indian Refineries Ltd. with Soviet and Romanian assistance .In 1959, the Indian Oil Company was founded as a statutory body. At first, its objective was to supply oil products to Indian state enterprise. Then it was made responsible for the sale of the products of state refineries. By the early 1990s, Indian Oil refined, produced, and transported petroleum products throughout India. Indian Oil produced crude oil, base oil, formula products, lubricants, greases, and other petroleum products. It was organized into three divisions. The refineries and pipelines division had six refineries, located at Gwahati, Barauni, Gujarat, Haldia, Mathura, and Digboi. Together, the six represented 45 percent of the country's refining capacity. The division also laid and managed oil pipelines. The marketing division was responsible for storage and distribution and controlled about 60 percent of the total oil industry sales. Indian Oil also established its own research center at Faridabad near New Delhi for testing lubricants and other Page | 14
  • 15. petroleum products. It developed lubricants under the brand names Servo and Servoprime. The center also designed fuel-efficient equipment. The oil industry in India changed dramatically throughout the 1990s and into the new millennium. Reform in the downstream hydrocarbon sector--the sector in which Indian Oil was the market leader--began as early in 1991 and continued throughout the decade. In 1997, the government announced that the Administered Pricing Mechanism (APM) would be dismantled by 2002. To prepare for the increased competition that deregulation would bring, Indian Oil added a seventh refinery to its holdings in 1998 when the Panipat facility was commissioned. The company also looked to strengthen its industry position by forming joint ventures. In 2006, Indian Oil and Korea Institute of Science and Technology (KIST) signed a MoU to conduct joint research on hydrogen storage, transportation, safety codes and fuel cell power generation. In early 2007, the government signed a MoU with Indian Oil to optimize Hydrogen-CNG blend ratios for best performance in automotive vehicles (Economic Times, March, 2007). India is expected to launch its first hydrogen filling station in 2008. A petrol pump owned by the Indian Oil Company will become the first to offer hydrogen refuelling capabilities, delivering hydrogen and hydrogen mixed with CNG (Fuel Cell Today, November, 2006). In early 2002, Indian Oil acquired IBP, a state-owned petroleum marketing company. The firm also purchased a 26 percent stake in financially troubled Haldia Petrochemicals Ltd. In that year, Indian Oil's monopoly over crude imports ended as deregulation of the petroleum industry went into effect. As a result, the company faced increased competition from large international firms as well as new domestic entrants to the market. During the first 45 days of deregulation, Indian Oil lost Rs7.25 billion, a signal that the India's largest oil refiner would indeed face challenges as a result of the changes. Nevertheless, Indian Oil management believed that the deregulation would bring lucrative opportunities to the company. Page | 15
  • 16. 4.2 Market Share and Network Indian Oil and its subsidiary (CPCL) account for over 46% petroleum products market share, 34.8% national refining capacity and 71% downstream sector pipelines capacity in India. With a steady aim of maintaining its position as a market leader and providing best quality products and services, Indian Oil is currently investing Rs. 47,000 crore in a host of projects for augmentation of refining and pipelines capacities, expansion of marketing infrastructure and product quality up gradation. REFINING - % SHARE PRIVATE IOCL 34% REFINERS PRIVATE ONGC REFINERIES 41% HPCL BPCL 13% BPCL HPCL7% ONGC 5% The Indian Oil Group of companies owns and operates 10 of India's 20 refineries with a combined refining capacity of 65.7 million metric tones per annum (MMTPA, .i.e. 1.30 million barrels per day approx). Indian Oil‟s cross-country network of crude oil and product pipelines, spanning 10,899 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and environment-friendly manner. PRODUCTS PIPELINE - % SHARE PIL 8% PIL HPCL 21% IOCL HPCL 54% BPCL 17% BPCL IOCL Page | 16
  • 17. Indian oil has the largest and widest network of petrol & diesel stations in the country, numbering over 18643 regular ROs & 2947 kissan Sewa Kendra. The company has also started auto LPG dispensing stations (ALDS). Termin al/ Depots 140 About 35000 Customer Touch Points Indian oil has till date invested close to Rs 1000 crore in setting up world class facilities at its R&D center and it plans to invest about Rs. 500 crore during the period 2007 -2012, to maintain its leader ship in petroleum industry. Indian Oil has the largest and most sophisticated integrated petroleum products supply chain in India. Indian Oil's marketing operations network of storage, distribution and supply hubs is backed by efficient sourcing, on-time logistics and round-the-clock after sales service and consultancy. As a leading oil supplier, IOCL has the challenge of maintaining its leadership position and meeting its vision. To meet this challenge effectively appropriate marketing strategies need to be developed by focusing on consumer‟s needs. Page | 17
  • 18. 4.3 Products offered by Indian Oil at present are - SERVO Indane Natural Petrol/Gas ATF/Jet Diesel/Gas Auto gas lubricants Gas Gas oline Fuel oil & greases Marine Bulk/Industrial Petrochemicals Bitumen Kerosene Fuels & Fuels Lubricants 4.4 Competitors of Indian Oil BHARAT PETROLEUM • Impressive track record as an innovator: from fuelling the pioneer of Indian Industry – JRD Tata’s solo flight in 1932 to providing India with the first modern refinery in 1955, to manufacturing the country’s first bottled gas ‘Burshane’ in the mid 50s. • Wass awarded the 'SAP Star Implementation Award' being the first Public Sector Oil Company to implement Enterprise wide Resource Planning (ERP) solutions - SAP. • 1st to start the concept of convenience stores and loyalty cards as promotional strategy. RELIANCE • largest private sector enterprise, with businesses in the energy and materials value chain. • Group's annual revenues are in excess of US$ 27 billion. • The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India. materials and energy value chain. SHELL • leading and most diversified global investor in India's energy sector with nearly US$1 billion already invested. • 5 core business exploration and production of oil, chemicals, renewable energy and power. HINDUSTAN PETROLEUM • State-owned oil company of the Government of India • Fortune 500 company of India listed at number 311. • Operates 2 major refineries producing wide variety of petroleum fuels. Page | 18
  • 19. 5. SWOT Analysis Strengths Weaknesses i. The first and foremost strength of IOCL is that it is a i. Though being PSU is Government owned company. an advantage to this ii. It has a huge group refining capacity of 60.2 million metric company but it is also tons per annum and a share of 33.8% share in the national a seen as a weakness refining capacity. because most the PSU iii. It has huge amount of cash holding which is evident from its in recent time is high earning per share ratio which is comparatively higher than lacking the proper its competitors i.e. BPCL and HPCL. monitoring and thus iv. Being initiated in the year 1950 it has got a vast array of refining subjected to huge and distribution network. losses. v. By virtue of entering extensive joint venture and out its own ii. The company has its initiatives the company has a diversified product elements in major weakness in the other related activities like petroleum storage, pipelines, lube R&D department. additives, explorations, petrochemicals, gas, training, and iii. It has got a low price consultancy etc. earning ratio. vi. The company has already entered overseas markets such as Sri iv. The technological Lanka, Oman, and is presently considering entering in Turkey drawback is through a joint venture. It has also weighing the possibility of considered to be entering Indonesia. another weakness of vii. It is the market leader in the branded fuel sector with a 60% the company. market share which gives them the goodwill of initiating a new product. viii. Its assets turnover ratio is 3 times larger and revenue is 2 times larger than that of BPCL. ix. It has a higher operating profit margin which implies that its turnover is greater than its sales. x. It has also acquired management control of the marketing company IBP, thereby strengthening its position in these activities. It also has a dominant share in all segments in terms marketing infrastructure. Page | 19
  • 20. Opportunities Threats i. The company has an opportunity to build its own pipelines, so i. Prices are that it will be a independent player. governed by ii. Global trend is to move from fossil fuels to carbon free fuels, MoPNG including renewable. ii. As the technology iii. Increase crude oil price. in private and iv. Growing gap between demand and supply of commercial foreign companies energy with increasing dependence on imported oil. is much more v. Urgency for containing environmental pollution caused by advanced so the burning of fossil fuels and biomass energy. prices at which vi. Inadequate development of eco-friendly energy resources they are sold are including hydro and renewable energy very cheap than vii. Oil intensification of Indian economy due to declining self- this company. sufficiency in oil and increasing oil demand. iii. This type of viii. Centralized production of electricity based on increasing share energy is diffused of hydro, nuclear and renewable. and dispersed. ix. India has set up as the largest programmers of renewable iv. They are not energy in the world. storable. x. Hydrogen best fulfills the requirements of lightness, highest v. Not fuel for energy density, clean, versatility and inexhaustible. transportation xi. Increased emphasis on the environmental policies of available. Government. vi. Higher cost of hydrogen. vii. Development high pressure cylinders. viii. Regulations and codes. On analyzing the Strengths weaknesses opportunities and threats of Indian Oil foraying into the hydrogen fuel industry it is clearly visible that the strengths outnumber the weaknesses and opportunities outnumber the threats. Hence Indian Oil should consider foraying into this industry. Page | 20
  • 21. 6. The Marketing Mix – 4 P’s of Marketing 6.1. Product 6.1.1. Needs for the product  Global fuel demands will be scorching high along with factors like high fuel cost, increasing energy security thus leading to wealth that will be uncontainable, change in ownership, economic empowerment, massive job creation, construction and development of new cities and ultimately a new energy order. The Indian economy itself is growing at 7- 8% p.a. which is thereby increasing the demand for Commercial energy which will grow at 4.5% per annum till 2020. There is a need for sustainable energy pathway for India which will ensure energy security.  Given the backdrop of a continuously widening gap between demand and supply there is immense necessity to diversify the given energy sources and continuously explore alternative ways to satisfy the country‟s energy need in order to sustain our economic growth. Oil imports expected to rise from present 70 percent to 100 percent in next fifteen years. There has been Oil intensification of Indian economy due to declining self-sufficiency in oil and increasing oil demand.  Growing dependence on non-commercial energy sources like fire-wood, cow-dung and agricultural wastes in rural areas which pollute the environment. Inadequate development of eco-friendly energy sources including hydro and renewable energy. There is an urgency of having renewable sources of energy that are safe, cleaner, and even inexhaustible. Increasing environmental concerns is also posing a serious Page | 21
  • 22. challenge for concerned energy companies. Urgency for containing environmental pollution caused by burning of fossil fuels and biomass energy  By 2025, petroleum production is expected to go down significantly. The present oil production is 25 billion barrels of oil per year and by 2025, the oil production annually most likely will be somewhere between 18 and 19 billion barrels which is even less than the annual production of the oil during the oil crisis and shortage during the 1970s. 6.1.2. Features of the product:  Green fuel is basically a solid, liquid or gaseous fuel which can be obtained from comparatively recently lifeless or living biological material. It is different from fossil fuels which are derived from long dead biological material.  Known the fact that hydrogen is the most abundant element on the earth, it comprises more than 75 % of the environment and thus if it becomes a primary fuel our dependence on other foreign sources of fuel would be drastically eliminated.  The other feature of hydrogen is that it can store approx 2.8 times the energy per unit mass as gasoline.  Hydrogen fuel has the capacity to store more energy than batteries and in a fuel cell it burns with double the efficiency of gasoline in an engine which means it helps in saving money.  There is only one by-product that is produced from burning hydrogen is water unlike the carbon based products that is produced by burning regular gasoline.  Undoubtedly hydrogen is amongst the cleanest fuel available. The hydrogen-fueled ICE's and other gas turbine engines based on it have very negligible emissions of different air pollutants. Again the hydrogen-powered-fuel-cell vehicles have no emissions.  Green fuel is non-toxic, fully biodegradable and is safer to store than fossil diesel. It has a flash point more than twice that of fossil diesel.  The low carbon footprint it has when compared with coal gives its clean combustion features 6.1.3. How can customers use such green fuel Page | 22
  • 23.  Green Fuels like Hydrogen fuel can be used by the customers as it can blend up to 100% in any diesel vehicle and its performance will not be affected as long as correct procedures are followed.  Hydrogen can be derived from a variety of feedstock which includes coal, natural gas, oil, water, and biomass.  Companies like DaimlerChrysler, Mazda, and BMW have successfully developed and tested ICE's fueled with hydrogen and has concluded that hydrogen fuel can be used effectively and successfully as a vehicle fuel.  Also these Fuel cell vehicles will be within budget by the time it will reach the marketplace.  Critics to the technology claim that the price of today‟s hand-built prototypes and other stationary power generation systems are very high and thus they leap to the conclusion that fuel cell vehicles will not be very much cost-competitive. In the process, they ignore that prototypes and first-generation systems are almost always very expensive like gasoline powered cars, personal computers, digital cameras, and many other innovative products compared with mass produced units.  Again this works well in any diesel engine with very little or almost no modification to the fitted fuel system. Findings even suggest that using it can actually prolong the engine‟s life by as much as 50 percent over other traditional fossil fuel as it leaves very less or no carbon deposits and thereby reducing friction and abrasion. 6.1.4. What is it to be called? IOCL can foray in this market and the name of the hydrogen fuel could be “Naveen”. This name signifies the new innovation which will foster the growth objective of the company and will bring a new way of seeing the fuel products as more eco friendly alternatives could be explored. 6.1.5. How the product will be branded? Creating a positive emotional association in the market for hydrogen fuel will be the key. If the product is good, it needs comparatively less effort to sell. Awareness will create want and desire by the mere mention of how their act is serving the nature and a greater cause of protecting it. For instance, the mere mention of McDonalds conjures up images of numerous unique burgers and other offerings with the anticipation for our favorite. Such positive emotional associations will be built over time through branding practice and a time-tested Page | 23
  • 24. relationship between IOCL and their customer based on intrigue, trust, understanding and support. To create a brand promise that creates such emotional connections, it should be:  A relevant proposition for the target customers in order to engage our target market  The brand must be able to create some sort of positive emotional attachment beyond just being “good”  It should be adaptable to the prevailing business climate  It must be continually reinforced  It must maintain consistency across advertising and marketing mediums  Also it should be known and echoed by business partners Different aspects of Hydrogen Fuel as a substitute product. 6.2. Place IOCL has its products which get distributed directly to bulk customers and to the other retail customers via a network of different retail outlets and dealers or distributors. IOCL‟s overall Page | 24
  • 25. distribution network is encompassing over 35,000 different sales points incorporating IOCL‟s own franchise as well as other independent outlets, distributors, consumer pumps etc. the substantial majority of which are governed by dealership agreements. Hydrogen being an energy carrier and not an energy source like wind; it not only needs infrastructure for its production but also for its distribution. Different products are transported to the various distribution points by pipeline, rail tankers and road tanker trucks, ship tanker etc. Thus consumers will be able to buy hydrogen at the established “energy stations” of IOCL. The company can choose to build a massive centralized national hydrogen distribution system, but there‟s no need for coming on a national basis. It can get started for much less. Getting hydrogen in consumers‟ hands will require new production and delivery systems, but they need not be built all at once, and they may begin as widespread small scale facilities. Located near to the market Convenient to Existing sites customers Easy to locate / find out Why is place important in about Near to marketing? other facilities Good transport Staff availability links Geographical needs Fig. Importance of selecting appropriate place. 6.3 Promotion 6.3.1 Above the line promotion: TV, radio, newspapers, internet 6.3.2 Below the line promotion: Sponsorship, sales promotion, merchandising, public relations, trade shows. a) Advertisements: Advertising will be a 'paid for' communication. It will be used in order to transmit information, develop attitudes and to generate awareness, and also it helps in gaining and analyzing responses from the target market. There are many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising Page | 25
  • 26. (such as posters, bus sides).IOCL can opt for advertising in prominent dailies for selection of dealers who will be dealing with the proposed hydrogen fuel for their proposed retail outlet dealerships at various locations in various states. b) Sponsorship: Sponsorship is where IOCL will be paying so that it can be associated with a particular event, cause or image. All the marathons for saving the environment or any green initiative could get the sponsorship by IOCL..The underlying attributes of the event which has been sponsored should then be associated with the sponsoring organization i.e. IOCL. c) Personal Selling: IOCL is selling Hydrogen fuel which is a very new concept and such complex products usually use salespeople to sell their products in a business to business aspect. As IOCL can work with Mahindra & Mahindra, personal Selling will be an effective way to manage personal customer relationships. The respective sales person will act on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. d) Relationship Marketing: This type of marketing refers to a philosophy that IOCL wishes to succeed. It should be able to sustain a strong, continuous, long-term relationship with all its respective customers, its suppliers and distributors. For this, IOCL should work with umbrella branding. In order to make sure this happens, customers and intermediaries have to feel good about doing business with the company. e) Sales Promotion: Sales promotion tends to be thought of as being all promotions apart from advertising, personal selling, and public relations. Schemes like free accessories and introductory offers could work. Each single different sales promotion should be cautiously checked and then costed and compared with the next best available alternative present. 6.4 Price Hydrogen has long been championed as the ultimate environmentally-friendly fuel, potentially offering zero-emissions motoring and freedom from oil addiction. Hydrogen is readily available, in natural gas or in water and burning hydrogen in an internal combustion engine or combining it with oxygen in a fuel cell to produce electricity, produces only heat and water vapor. The lure of CO2-free driving has persuaded governments and the auto industry to invest billions of dollars in the last decade researching hydrogen fuel cells, developing demonstration cars and, more recently, installing hydrogen refueling stations. And, therefore, as far as pricing is concerned, it is going to be on a higher side. The major reasons being: Page | 26
  • 27.  Although Hydrogen is readily available, in natural gas or in water, but storing hydrogen is a challenge as compressed hydrogen tanks need to The Telsa Roadster is a fully be specially built in which can carry compressed hydrogen in a electric car with zero emission and a top speed of small available space in the vehicle. 125 km/hr  Also, distribution of hydrogen is a problem. But, this can be overcome by Home Energy Station, which drivers can use to produce energy (or make hydrogen) at home via electrolysis by tapping into the domestic natural-gas supply. But, this would also incur cost.  Huge amounts are being spent on the Research and Development of the hydrogen fuel.  IOCL spends around 20 million INR annually to educate its customers and others on protecting the environment as its CSR activity. Also, a lot of money is being spent on the promotion of the fuel. All these factors and many more have led the way for hydrogen fuel to be priced high. But here, the probable price can be lowered if IOCL by any chance convinces government to subsidize the fuel and make it cost effective and affordable to the common man. Fuel Cell IOCL being such an old player in crude oil production and now being the first mover in the hydrogen fuel category in the market and with other available domestic fuel prices touching the skies, if in such a scenario IOCL comes up with a fuel which is a green fuel with no or almost Zero Emission; then pricing should not be problem for them as the cost incurred till now in all the R&D etc will easily cross the break even. Page | 27
  • 28. 7. Need of Hydrogen Fuel 7.1 Data Collection 7.1.1.Primary Sources: Primary Data till date has been collected on the basis of the focus group discussion and face to face interviews.  Focus Group Discussion: FGD was conducted to infer the attitude and viewpoints of target population towards introduction need of Hydrogen fuel in today’s Scenario.  Face To Face Interviews They were conducted with the faculty members of IBS so as to have a deep insight in the opportunity. 7.1.2 Secondary Sources: Secondary Data Sources being used in research include- Manuals, Research Papers, Brochures Website‟s Journals and Publications 7.2. Focus Group Discussion A focus group is a qualitative data collection method in which one or two researchers and several participants meet as a group to discuss a given research topic. 7.2.1.Observations of Focus Group Discussion: Most of the participants wish for a cleaner environment. People conscious about energy preservation. Prefer less travel through vehicles Believe in technology usage. . People find renewable sourse as a savior for coming generation. They want to adopt the renewable sources for maximum products The time frame for development of such alternate resources is a major issue Talking about prices customers were willing to pay extra to avail this service however they said that if the base price increase then the demand will decrease. Few people also suggested introduce such services in government aided vehicles – buses. Page | 28
  • 29. In addition it will help to reduce the the pollution. For such products, initial step to be taken by government. Finally people were positive to adapt this service as they believe this will be a value added Product as it will provide them a healthy environment. 7.2.3 What’s next?? With depleting oil resources and degradation of atmosphere we are planning to go green. As an alternative to fuels the company decided to work on hydrogen fuel cell technology, production of hydrogen on mass scale through various processes, technological upgradations in the development and analysis of key physical component, the catalyst. 7.2.4. TOTAL ENERGY CONSUMPTION (www.Eia.Doe.Gov/Oiaf/Ieo) The average annual rate of energy consumption and the gross domestic product have been growing at a significantly greater rate in India COUNTRY 1999 2005 2010 2020 % DAMAGE USA 96.7 107 114.1 120.7 13 JAPAN 21.7 22.8 23.5 26 0.9 CHINA 32 43.2 55.3 84.1 4.7 INDIA 12.2 15.5 18.4 26.1 3.7 In India, the 2 and 3 wheelers are mainly responsible for the air‟s poor quality. Conversion of some vehicles to run on hydrogen fuel will improve the quality dramatically. With the advancement of industry towards a hydrogen economy production of such alternative sounds positive. 7.3 Hydrogen Energy Hydrogen holds the potential to provide a clean and reliable source of energy that can be used in a wide range of applications, including the transport sector and power sector mainly. The road map is to identify the path that would lead to gradual introduction of hydrogen energy in India. The road map also aims to accelerate commercialization efforts and facilitate creation of hydrogen energy infrastructure in the country. With the progress in technology, a lot of focus is being put on development and demonstration of hydrogen energy and fuel cell technologies. Page | 29
  • 30. 7.4 Hydrogen Production Technologies Hydrogen does not exist by itself in nature. It has to be produced from hydrocarbon compounds. It can also be produced from available resources including natural gas and nuclear, Biomass and other renewable including solar , wind , hydro-electric or geothermal energy. The development of fuel from renewable sources – clean , sustainable and cost-competitive hydrogen production processes. The production can be done from three different process : i. Thermal Processes ii. Electrolytic Process iii. Photolytic Process 7.5 Why Indian Oil Corporation Limited? In March 2010, IOC entered into a limited liability partnership agreement with Ruchi Soya Industries, a leading manufacturer of edible oils. The agreement sought to establish a model bio-diesel value chain for production of bio-diesel in Uttar Pradesh and covered nursery management, contract farming and oil seed processing. Further in March 2010, IOC signed a MoU with Honeywell International for collaboration on research and development for a range of bio fuels technologies and projects in India 7.5.1. Hydrogen fuel: The product can be manufactured under GIP (Green Initiative for Power Generation) programme of the company with a tie up with IIT-Madras and SPIC-SF as they are the two major institutes which are working on hydrogen and fuel cell technology. It will involve the development and demonstration of fuel cell power packs (50-100 kW). 7.5.2. Product feasibility Hydrogen-fuel-cell-powered cars are the best alternatives to polluting, gasoline-powered cars for several reasons: o The cars are completely emission-free Page | 30
  • 31. o The fuel cells have no moving parts o Hydrogen is renewable and abundant o The cars are compatible with cold weather o The fuel cells are compact and lightweight--not overly bulky or heavy o The cars are about 3 times as efficient as gasoline-powered cars o The cars will have incredible mile ranges o The tanks will be refueled quickly o Hydrogen is safe, has been tested rigorously for use in vehicles, and is being used in many vehicles already. 7.5.3Strong Research & Development Capabilities: IOC‟s R&D Centre has made successful developments in lubricants formulation, refinery processes, pipeline transportation, and alternative fuels. Indian Oil Technologies, a wholly- owned subsidiary, commercializes the innovations and technologies developed by IOC‟s R&D Centre. The centre is also the nodal agency of the Indian hydrocarbon sector for developing hydrogen fuel usage in the country. The centre is setting up a commercial hydrogen-compressed natural gas (CNG) station at an IOC retail outlet in New Delhi. It holds 214 active patents, including 113 international patents. Page | 31
  • 32. 8. Segmentation, Targeting and Positioning Page | 32
  • 33. 8.1 Segmentation The fuel market has been segmented on the basis of various factors which are shown as follows: On The Basis Of Resources Used Renewable Resource Non-renewable Resource On The Basis Of Geography West North South Central Foriegn East India India India India India Countries On The Basis Of Industry To Be Served Automobile Industry Telecom Industry Power Sector Others On The Basis Of Nature Of Existing Relationships Existing Companies With Existing Companies Desirable Companies Stong Relation On The Basis Of Purchasing Criteria Of Customer Quality Service Price On The Basis Of Specific Application Automobile Fuel Power Others - Like Batteries Etc Generator On The Basis Of Attitude Towards Risk Risk Seeker Neutral Risk Averse Page | 33
  • 34. THE BASIS OF CATEGORIES SEGMENTATION Resources Used Renewable Resource Non-renewable resource Geography East India West India North India South India Central India Foreign Countries Industry to be Served Automobile Industry Telecom Industry Power Sector Others Nature of Existing Relations Existing Companies with Strong Relations With Customer Existing Companies Desirable Companies Purchasing Criteria of Quality Customers Service Price Specific Application Automobile Fuel Power Generator Other Utilities – Batteries, etc. Attitude Towards Risk Risk Seeker Risk Averse Risk Neutral Page | 34
  • 35. 8.2 Targeting The highlighted part in the segmented market shows the target market of the company. On The Basis Of Resources Used Renewable Resource Non-renewable Resource On The Basis Of Geography West North South Central Foriegn East India India India India India Countries On The Basis Of Industry To Be Served Automobile Industry Telecom Industry Power Sector Others On The Basis Of Nature Of Existing Relationships Existing Companies With Existing Companies Desirable Companies Stong Relation On The Basis Of Purchasing Criteria Of Customer Quality Service Price On The Basis Of Specific Application Automobile Fuel Power Others - Like Batteries Etc Generator On The Basis Of Attitude Towards Risk Risk Seeker Neutral Risk Averse   Page | 35
  • 36. The target market of IOCL is classified on the following basis: Industry: the hydrogen cell of IOCL will initially cater to the automobile industry as the company is already into the production of hydrogen fuel and targeting other sectors would require the advancement of technology. Geography: Initially the company is targeting the capital region of the country seeking the help of the government. However, the product will be made available at other metropolitan cities in the near future with the success of the project. The company is also making the presence of its product felt in the entire country by tying up with Mahindra & Mahindra and TATA Motors by implementing its hydrogen fuel cell kit in its certain specified models. Resources used: the product will act as a substitute to the exhaustible sources of energy. Power structure: Serve companies that are engineering dominated. Nature of existing relationships: apart from just focusing on existing strong 3relationships the company would concentrate more on desirable companies. Purchasing criteria: Serve companies that are seeking quality and service? Specific application: focusing on a specific application initially rather than all applications. Size or order: Depending on the size of fuel cell required for specific application.                 Page | 36
  • 37. 8.3 Positioning  As IOCL in itself has a great brand name and standing for itself in the market, it‟s new product i.e. the hydrogen fuel cell will be able to bring revolution.  Act of designing the company‟s offering and image to occupy a distinctive place in the minds of the target markets. The goal of positioning is to locate the brand in the minds of the consumer.  IOCL has the biggest advantage of its name which it can use for capturing a huge chunk of the hydrogen fuel cell market.  Positioning Map zero Hydrogen fuel CNG LPG low Petroleum (Pollution caused) Diesel kerosene medium Coal wood high Low Medium High (Energy Efficiency)   Page | 37
  • 38. 9. Future Prospects  The hydrogen fuel cell of IOCL has the potential of developing into a full fledged alternative to automotive fuel in the future. Studies say that-  As the research and development activities go on the cost of hydrogen is expected to be brought down to Rs. 70 / kg at the fuelling station or actual point of use.  Studies say that by 2020 there will be large scale use of hydrogen based Engines and fuel cells for power generation.  Also, there are expected to be one million hybrid vehicles on road by 2020.  All these findings point out that there is a huge scope of hydrogen fuel being used on a large scale as an ultimate inexhaustible source of energy for power generation in the country, environment friendly automobiles and other energy requirements.  This would further dominate in future as an energy resource decreasing the dependency of the country on International player for the same.  Thus it can be said that development in hydrogen fuel can lead to great profit earnings for the company and so we can say that the hydrogen fuel cell of IOCL will prove to be a very successful product for the company. Page | 38
  • 39. 10. References i. Annual Report Analysis of Indian Oil Corp. Ltd, September 2004, (online), available at www.IndiaInfoline.com ii. http://www.usfcc.com/resources/Connection_March2006.pdf iii. http://mnes.nic.in/html_folder/ch7_pg1.htm; iv. http://www.techmonitor.net/techmon/06jan_feb/nce/nce_news.htm v. http://www.hydrogenassociation.org/newsletter/ad102_india.asp vi. http://iahe.org/News.asp?id=28 vii. http://www.ovonic.com/PDFs/hydrogen_3-wheeler/3-wheeler_hydrogen_17jul05.pdf viii. http://economictimes.indiatimes.com/articleshow/1826194.cms ix. http://www.fuelcelltoday.com/FuelCellToday/IndustryInformation/IndustryInformatio nExternal/NewsDisplayArticle/0,1602,8521,00.html x. http://www.usfcc.com/resources/Connection_March2006.pdf xi. http://mnes.nic.in/html_folder/ch7_pg1.htm; xii. http://fuelcellsworks.com/news/2010/03/21/india-new-milestone-hydrogen-fuel-cell- technology/ xiii. http://timesofindia.indiatimes.com/city/delhi-times/Hydrogen-the-new-fuel- Zen/articleshow/943083.cms Page | 39