A

Presentation

on

“Investment Opportunity in France

and Oil and Gas Industry STEEPLED

Analysis in France And

Motul and IOCL Business

Opportunity in India and France”

Presented by

Utkarsh Amaravat (03)

Investment Opportunity in France and Oil and Gas Industry STEEPLED Analysis (Overview)

Sr. No. Based On France India

1 Demographic Profile National language

knowledge,

higher literacy,

Single religion,

Wide speedy transportation.

Population ,

Increase in GDP.

2 Sector Hybrid and electric car

sector,

Creative architecture

construction sector,

Pharmaceutical sector,

Telecommunication sector.

Automobile sector,

Chemical sector,

Construction sector,

Pharmaceutical production

sector,

Oil and gas sector,

IT sector.

3 STEEPLED Analysis

(Oil and Gas Industry)

Technological factor,

Demographic factors

(As per Point 1).

Social factor,

Economical factor,

Environmental factor,

Political factor,

Ethical factor,

Demographic factors

(As per Point 1). 2

Introduction Motul

• Motul is leading oil Company in France. Motul has large number of

product worldwide where formulates produces and sells lubricants for all

types of vehicle engines in more than 80 countries.

• Motul makes and sells best quality lubricants according to standards that

incorporate technologies proven and validated in the most extreme

conditions, imposed by the manufacturers of motors and the most

demanding industries.

• Motul have their presence in more than 80 countries including India. In

today situation Motul makes more than 70% of its turnover outside its

original market and more than 50% outside the borders of the European

Union. Motul has structured itself in 8 strategic zones worldwide; these

decentralization approach entities ensuring the development and support of

more than 80 markets.

3

Introduction IOCL

• IOCL is leading company in India in oil and gas sector with market

share of 53 % in comparison of its competitor BPCL 23 % and

HPCL 20 % market share – based on 2012 records.

• IOCL major customers are Corporate, countries like Bangladesh, Sri

Lanka, Nepal, etc. and individuals looking to fulfill energy needs in

term of oil and gas.

• IOCL has more numbers of Petrol Stations than whole of Canada or

UK. This shows power of IOCL in oil and gas sector in Indian

market.

4

0

0.5

1

1.5

2

2.5

3

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

bb

l/d

ay p

er 1

000

peo

ple

Year

25

26

27

28

29

30

31

32

33

34

35

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

bb

l/d

ay

pe

r 1

00

0 p

eo

ple

Year

Oil consumption per capita in India Oil consumption per capita in France

India crude oil productions and consumption

5

France Import/Export Scenario

France Crude Oil Import by source6

India Import/Export Scenario

0

50000

100000

150000

200000

250000

300000

350000

400000

2006 2007 2008 2009 2010

Crude Oil

Petroleum products

Natural Gas

Import

0

20000

40000

60000

80000

100000

120000

140000

160000

2006 2007 2008 2009 2010

Crude Oil

Petroleum products

Natural Gas

Export

7

SWOT Analysis of Motul

Strength

Presence in more than 80 countries.

Constant improvement of exist over

time.

Most advanced E Technology.

Value creation approach.

Weakness

Poor marketing and positioning

strategy.

More focus on motor cycle oil

segment only.

Opportunity

Relationship with their Clients and

their loyalty.

Increasing oil requirement in

developing country.

Threat

Decreasing France oil consumption.

Increase in global competition.

Difficulty in managing worldwide

operation.

8

SWOT Analysis of IOCL

Strength

40 % of India’s overall refining

capacity.

58 % refinery located in high demand

and high growth areas (Northern and

Western India).

Strong Distribution Network

Presence in Foreign market (Sri

Lanka, Bangladesh, Oman, etc.).

Weakness

Research and Development; and

petrochemical product development

technology.

Volatility in the crude market and

subsidy burden.

Opportunity

Increasing oil demand in India.

Easier buying process.

Own pipelines.

Great scope in E&P.

Threat

Entered new foreign players.

Crude oil supply and its prices.

Privatization of oil and gas section in

India.9

Tows Matrix of Motul

India

Opportunity Threat

Motul

Strength

Indian local companies have

Strong Distribution Network that

creates opportunity for Motul to

use that network using business

relationship with them.

Indian Company presences in

foreign market but only in Sri

Lanka, Bangladesh and Oman but

Motul have global presence,

which creates more opportunity

for Motul.

Indian local company IOCL have 40 %

of India’s overall refining capacity in which 58

% refinery located in high demand and high

growth areas (Northern and Western India) that

creates threat for Motul in terms of capturing

market in India while France oil consumption is

decreasing.

Indian local companies Strong Distribution

Network is a threat for Motul to creates own

new distribution network.

Indian local company’s presences in foreign

market like Sri Lanka, Bangladesh, and Oman

increase global competition for Motul.

Weakness

Indian local companies have weak

R&D, which creates great

opportunity for Motul to provide

best product at suitable price and

capture market.

Indian local companies get subsidies, which

encourage them to run without more worried

about profit and compete in market in terms of

fewer prices with good quality that creates

threat for Motul.

10

Tows Matrix of IOCL

France

Opportunity Threat

IOCL

Strength

IOCL can buy new Innovation

technology from France.

France Value creation product IOCL is

able to sale using it well define

distribution network to provide their

consumer more range.

France Company like Motul global

presence creates threats in terms of

current scenario to purchase global

brands.

New technology and value creation

product creates problem in terms of

customer diversification towards

France Globle Company.

Weakness

Poor marketing and positioning strategy

of France Company (Motul) in India

help IOCL to invest less in Integrated

Marketing Communication tools, and

get benefit of leadership in oil and gas

segment.

France companies like Motul more

focus on motor cycle oil segment only,

which help IOCL to maintain leadership

power in 4-wheeler segment easily.

France Companies like Motul More

focus on motor cycle oil segment may

result in loss of motor cycle oil

segment by IOCL.

11

Motul Opportunity for investments in India

• Motul have its presence already in India it operate through various place

like

Baroda, Visakhapatnam, Pune, Coimbatore, Indore, Kolkata, Banglore, Jai

-pur, Chandigarh, Delhi, NCR Delhi, Ahmedabad, Mumbai, and chennai.

• Motul is selling its products Lubricants, gear oil, engine oil, Hydraulic

Lubricant Oil, Mould Lubricating Oil, Emkarate Compressor Oil, Motul

Hi-Performance Engine Oils, Lubricant Motul, Marine Gear Oil

• In India good opportunity due to,

Population

Industrialization

12

IOCL Opportunity for investments in France

• France Oil consumption is reduce because France is moving

towards Hybrid and electric car, and nuclear and renewable

energy sources of power which reduce scope for oil

industries in France.

• A result IOCL don’t have more business opportunity in

France.

13

Legal Factors affect India and France Oil and Gas Industries

France

• FDI Policy - Policies on Direct Investment flaws are there since

1984-1985. Both Inward and Outward Flows are at a higher rate

compare to India.

• Taxes and maximum price mechanism - The tax difference

between gasoline and diesel in France is EUR 17.2 euro cents per

liter. The current standard rate is at 19.6%.

14

Cont…

• India

• FDI policy- The present policy on FDI in the Petroleum &

Natural Gas sector permits FDI up to 100% under the automatic

route in all activities other than refining.

• Government Policy and Regulations

The Petroleum Act to control issues relating to

import, transport, storage, production, refining and blending of

petroleum was already in place since 1934.

• NELP (New Exploration Licensing Policy)

• Policy for Change in Price of Petroleum Products

• Petroleum and Natural Gas Regulatory Board

15

Cont…

• Legal Aspects of Oil and Gas Industry - Oil and Gas sector is

divided into 3 parts – Upstream, Midstream and Downstream

1. Upstream Sector - The upstream sector is also known as the

Exploration and Production of Oil and Gas.

2. Midstream Sector - The midstream industry

processes, stores, markets and transports commodities such as

crude oil, natural gas, natural gas liquids (LNGs, mainly

ethane, propane and butane) and sulphur. Generally midstream

is clubbed with downstream industry.

3. Downstream Sector - The downstream sector includes oil

refineries, petrochemical plants, petroleum product

distribution, retail outlets and natural gas distribution

companies.

16

Global Strategic Problem to Motul with reference toIndia

• Strong Distribution Network of local companies like

IOCL, BPCL, HPCL, etc. which creates lots of difficulty for Motul

to survive in Indian market.

• Indian customer loyalty towards local companies like

IOCL, BPCL, HPCL, etc.

• IOCL have 40 % of India’s overall refining capacity in which 58 %

refinery located in high demand and high growth areas (Northern

and Western India) and same way other local companies also have

that creates problem for Motul in terms of produce locally and

capture market in India.

• Major problem or challenge in front of Motul to manage or price oil

products when raw crude oil prices are fluctuating in international

market.17

Global Strategic Problem to IOCL with reference to France

• The major challenge from the business point of view is thefluctuation of crude oil prices in the global market along withthe control of the retail prices by the government in thedomestic market.

• During times of crude oil price fluctuation, like we had in2008 and 2009, maintaining the cash flow and sustainingprojects have been a major challenge. Every year we facesimilar challenges

• With reference to France this problem does not affect IOCLbecause in France Oil consumption is reduce due to France ismoving towards Hybrid and electric car, and nuclear andrenewable energy sources power plant which reduce scope foroil industries in France

18

Motul Winning Strategy and Future plan

Motul Strategy

• Decentralization approach

• Value creation approach

• High quality Standards

Future Plan• ALSL has a three-year technical licensing agreement with Motul to

manufacture and market Motul products in India, Bangladesh, SriLanka, Nepal and Bhutan.

• It has partnership with global auto majors and is closely associatedwith Motor sport.

• The agreement is a timely one when the premium range of cars likeLancer, Pajero are seeing perked up sales of 300 to 400 cars amonth.

19

IOCL winning Strategy and future plan

IOCL

• Overall Cost Leadership

• Extra Care

• KisanSeva Kendra

• Swagat

• Strategic Alliances

Future Plan

• IOCL planning refinery on west coast in Gujarat or

Maharashtra as part of its plans to raise the refining capacity.

• IOCL will carry out project of Acetic Acid Project at Baroda in

partnership of JV and M/s BP Chemicals (UK)

20

Motul Marketing Strategies in India

Objectives

“To Create and Manage Motul as Brand in Indian Market.”

Need for doing

• Motul have its presence already in India since 2003 but still

more than 10 years presence in India and variety of products

then also Indian customer/people don’t aware about Motul

due to its poor marketing communication strategy. So it

required to spread awareness and create Motul as brand is

important aspect to get success in Indian market.

21

Motul Strategic Marketing Mix

Product

•The Motul focus on global positioning strategy,

and only focus on the motorcycle oil. In motor cycle

oil also

•Motul have excellent Research and Development

department so using this Motul will be developed

engine oil for all motorcycle segment and also for

all car segment.

Place

•Motul have its presence already in

India

•India is the place for various business

units as well as due to higher

population it is great place for

automobile industries

•The uses for oil in two or four

vehicles are increase that is the good

opportunities for MOTUL in India

Price

• By comparing engine oil prices one can say that

Motul engine oil prices are quite high compare

to IOCL engine oil prices because Motul charge

engine oil price based on international market

price and Motul believe in premium product of

supreme quality which creates difficulty for

Motul in Indian market.

Promotion

•Advertisement

•Direct Marketing

•Personel selling,

•Internal selling

•Sales promotion

•Public Relation

22

Finance requirement

• Cost of Project

• Sources of FinanceMotul, which is big global private limited company, can invest all neededfinance from their reserves, from other countries profit margin, or throughissuing equity share in India. Equity share is best suitable option, whichreduced risk in high competitive oil market segment.

• ProfitabilityMotul main objective is to create and manage Motul as brand which don’trelate with sales. Thus, Motul estimate to increase brand equity in millionsbut sales at less amount in initial starting 3 years stage. So Motul willestimate to increase 2 to 5 % in profit margin during next 3 years.

Expenses Cost (Rs.)

Advertisement 100000000

Personal Selling 60480000

Internet Marketing 1000000

Direct Marketing 2500000

Public Relation 500000

Other Cost 100000

Total Cost 164680000

23

Resources Required by Oil and Gas Industries

Men

• In France any oil and gas industry can get better educated

expert human resource but In India market is huge and

cheapest human resource is available.

• Motul can hire Indian people in Middle and lower

management and in Top management mixture of France and

Indian people such that Top management make strategy by

considering Indian culture and behavior.

24

Cont…

Materials

1. Oil - Most of India's crude oil reserves are located in the western

coast (Mumbai High) and in the northeastern parts of the

country, although considerable undeveloped reserves are also

located in the offshore Bay of Bengal and in the state of Rajasthan.

• The combination of rising oil consumption and fairly unwavering

production levels leaves India highly dependent on imports to meet

the consumption needs.

• In compare to India, France doesn’t have any oil resources so

France is mainly depend on import only (Refer Fig. 1.6), so

compare to France in India Motul have good chances to get raw oil

easily through government or supplier.

25

Cont…

Technology required

• For Oil and Gas Industry required lots of technologies like efficient

and effective Furnace, Filters, cleaner, Corrosive Pipe

Line, Motors, Crain, and various supply chain management

instrument or machines.

• But these technologies have following feature to get competitive

benefits -

1. Software “Eats” Oil and Gas: The Digital Oilfield and Beyond

2. Accessing the Previously Inaccessible

3. Working in Remote Environments

4. Minimizing the Harm of Hydrocarbons26

Cont…

Financial Resource

• Finance is most important aspect to start anycompany or project. To start oil and gas companyhuge investment is required in billions where capitalis block for number of years. If any establishedcompany like Motul or IOCL is looking forexpansion then they can get fund through,

1. Equity Share

2. Preference Share

3. Debenture

4. Loan and subsidies

27

Cont…

Market

• Motul have good business opportunity in India because in

India consumption oil is increase.

• India is the place for various business units as well as due to

higher population it is great place for automobile industries.

• It is say that in India consumption oil is increase at

increasing rate but production of oil is not increase at

increasing rate. This gap is opportunity for outsider to enter

in to Indian market. Thus Motul has big opportunity in

Indian market where demand is increase at increasing rate.

28

Findings

• Motul has big opportunity in Indian market where demand is

increase at increasing rate but IOCL don’t have that much

business opportunity in France because in France Oil

consumption is reduce because France is moving towards

Hybrid and electric car, and nuclear and renewable energy

sources power plant which reduce scope for oil industries in

France.

• Also find out that India’s social factor, economical

factor, environmental factor, political factor, legal

factors, ethical factor and demographic factors such as market

in term of population and increase in GDP are more support oil

and gas Industries like Motul and IOCL compare to France

29

Suggestions

• Motul must work on its marketing and positioning strategy to

get better response from new developing big market like India

because France oil consumption is decreased and standing

against global competition; also not only focus on one segment

motor cycle oil but also give focus on all segments where oil is

used and use geographical decentralization approach to

manage worldwide operation effectively.

• IOCL must improve its petrochemical product technology

using Research and Development department because new

foreign players entered and Privatization is allowed in Indian

market; and effectively manage Volatility in the crude market

and subsidy burden.

30

Conclusion

• Motul which is leading oil Company in France which has large

number of product worldwide around 80 countries where formulates

produces and sells lubricants for all types of vehicle engines having

great chance in invest in India because of various reasons.

• Motul Indian market is more feasible and has big opportunity in

Indian market where demand is increase at increasing rate.

• IOCL which is leading company in India which has maximum

market share in comparison of its competitor BPCL and HPCL

• France is moving towards Hybrid and electric car, and nuclear and

renewable energy sources power plant which reduce scope for oil

industries in France

31

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