overview of market conditions in the sub-continent: …...overview of market conditions in the...
TRANSCRIPT
Overview of Market Conditions in the Sub-Continent: India
A.B ThosarExecutive Director-LPG
Hindustan Petroleum Corporation Ltd.
WLPGA Sub-Continent Regional Summit
Indian LPG Scenario
Overview
LPG Market Opportunities
Regulatory Influence
Infrastructure Development
Summary
About HPCL
• Mega Public Sector Undertaking withNavratna status & a Fortune 500Company
• Engaged in business of Refining andMarketing of petroleum products
• Turnover of USD 31,546 Million• HP Gas selected as Superbrand-India• Catering to 35 Millions Customers• Pan India strong network of 2750
distributors• 44 LPG bottling Plants with 3385 TMTPA
bottling Capacity and equipped withElectronic Carousel
1. Indian LPG Scenario
• LPG Marketing in Indiacommenced in 1950s by BurmahShell & Stanvac
• LPG Demand started picking upfrom 1980s when demand was 0.41MMT
• India is now fourth largest consumerof LPG in the World
• Third largest consumer of LPG indomestic sector in the World
• Total Demand of LPG: 13.9 MMT in2010-11 which shall increase to 20MMT by 2015-16
10052
10531, 5.5%
11333, 7.8%
11778, 4%
12746, 8.2%
139129.3%
8500
9500
10500
11500
12500
13500
14500
05-06 06-07 07-08 08-09 09-10 10-11
19680
1469712631
87896945
5000
10000
15000
20000
25000
China USA India Japan Mexico
LPG Demand (TMT) & Growth
Top 5 Consumers-Domestic 2010
1. Indian LPG Scenario
• Daily 3 Million LP Gas cylindersare delivered to doorstep ofconsumers
• Total 200 Million Cylinders in themarket
• 12.5 Million cylinders procuredannually
• 182 LPG Bottling Plants pan Indiawith installed capacity of11.3 MMTPA
1. Indian LPG Scenario
Demand & Supply (Indigenousproduction)
– Demand in 2010‐11: 13.9 MMT
– Indigenous Production in 10‐11: 9.5 MMT
– 31% of total LPG Demand is met from Imports
– Indigenous LPG production through State Run/Private Refineries & Fractionators
Demand Vs Supply (TMT)
10531 11333 1177812746 13912
8409 8973 928710323
9516
0
5000
10000
15000
06‐07 07‐08 08‐09 09‐10 10‐11Demand Availability
State Run; 41%
Private, 36%
Fractionators; 23%
Indigenous Production
1. Indian LPG Scenario
Domestic Growth is 8-9%; still penetration in rural areas is low Commercial & Industrial Consumption is increasing: (from 7%
of total pie in 07-08 to 10% in 10-11) Auto LPG consumption is 2% of total pie as compared to 9%
World wide
Domestic88%
Commercial8%
Industrial2% Auto
2%
Product Share-India
Domestic47%
Chemical26%
Industrial11%
Auto9%
Agriculture2%
Refinery5%
Product Share-World
Product Portfolio
1. Indian LPG Scenario
Vision 2015 of MOP&NG1. Increase in Domestic LPG
Connections:• Focus on areas where LPG penetration is low by giving incentives ‐ Raise population coverage from 50% to 75%.
• Increasing LPG customer population from 107 millions to 160 millions by 2015
• Switch Over from Kerosene to LPG
2. Common LPG Kitchen‐Making LPG affordable:• Opening up Community Kitchens in villages as a part of Corporate Social Responsibility
1. Indian LPG Scenario
Vision 2015 of MOP&NG:
Rajiv Gandhi Gramin LPG VitaranYojana(Low Cost Distribution Model):
• Improving reach of LPG in rural market
• A low cost model of distribution sustainable for cluster of villages having about 4500 families
• Expected Refill Sales: 600 cylinders of 14.2 kg per month
2. LPG Market Opportunities
Rural Market: Domestic Segment
Industrial/Commercial Sector
Transport/ Automobile Sector
2. LPG Market Opportunities
Rural Market: Domestic Segment
72% of population lives in rural areas
LPG penetration is 19.6%
87% of villages have population less than 2000
Reduced barriers: Road connectivity, literacy, awareness and purchasing power
Distribution of Villages in India
Population Number of Villages % of Total
< 200 114267 18%
200 ‐ 499 155123 24%
500‐ 999 159400 25%
1000‐ 1999 125758 20%
2000‐ 5000 69135 11%
5000‐ 9999 11618 2%
>10000 3064 0%
Total 638365 100%
Target Market
Formulating strategies to reach villages with population less than 2000
2. LPG Market Opportunities
Industrial & Commercial Sector:• Commercial & Industrial Segmentgrowing at 27% CAGR for last 5 years
• LPG‐ Gaining popularity in Industries
– Commitment towards climatechange
– Return on Investment:Economical than various otherconventional fuel
• In Commercial Segment
– Boom in Retail Industry: ShoppingMalls & Food Courts
353,1446
653,3
831,6963,5
1158,2
1321
0
200
400
600
800
1000
1200
1400
Sales in TMT
Commercial & Industrial LPG Sales
Create Awareness in Industries / Commercial Sector about Benefits of LPG
Opportunities in Industry
• Calcination• Gloss Firing• Stoneware• Porcelain
Ceramic Industry
• Heating• Drying• Feedstock in Chemical Ind.
Chemical /Drugs
• Annealing• Billet Heating•Melting• Descaling• Stress Relieving• Pre‐heating
Metallurgical
•Melting• Holding• Blowing• Polishing• Stress Relieving
Glass
Opportunities in Industry
• Drying• Singing• Calendering• Dyeing• Velvet Processing
Textile
• Heating• Drying• Feedstock in Chemical Ind.
Agriculture
• Paint Baking• Heat treatment
Automobile
• Baking• Boiling• Frying• Drying
Food
Automobile /Transport Sector:
0
1000
2000
3000
4000
5000
6000
1886
943 851
5157
1900 16671011
1646 1434
3158
451
• Auto LPG sales has increased by 30% CAGR between 2005‐06 and 2009‐10 • With 0.5 Million vehicles running on Auto Gas, per vehicle consumption is 451 Kg per annum against world average of 1428 kg per annum.
Source: WLPGA 2009
135
200178
319 321
222327
447
892
1078
0
200
400
600
800
1000
1200
0
50
100
150
200
250
300
350
400
06‐07 07‐08 08‐09 09‐10 10‐11
No. of A
LDS
Sales in TMT
Auto Sales ALDS
Transport-Auto LPG Consumption per Vehicle: Kg/annum
2. LPG Market Opportunities
3. Regulatory InfluenceRural Market: Focused approach of Govt. of India to increase penetration of LPG in Rural Areas:• Vision 2015 of Ministry of Petroleum & Natural Gas
Raise population coverage from 50% to 75% Low cost Distribution model (under Rajiv Gandhi Gramin LPG
Vitaran Yojana) Deposit Free Connections to BPL customers
• Other Govt. Policies to increase purchasing power of rural folks: Direct subsidy to farmers Extension of Debt waiver Allocation under NREGA increased (NREGA‐National Rural
Employment Guarantee Act)
Projected Growth in LPG Demand shall be 8-9% year on year till 2015
3. Regulatory Influence
Industrial / Commercial Segment• Sectoral Initiatives taken by Govt. of India and OMCs for:
Conversions from conventional fuels to LPG
Creating Awareness about LPG as cleaner fuel
Capital Investments in Industries for LPG Installations
• Stricter pollution control norms propagating use ofefficient fuels
•FDI in retail sector
3. Regulatory Influence
Pricing of LPG
• Pricing based on Import Parity Price (Saudi CP)
• Subsidy on Domestic LPG by Govt. of India
• Market driven Prices for Commercial & Industrial LPG
4. Infrastructure Development
S.No Infrastructure Capacity in TMTPA
Project Investment
2009-10 2014-15 USD Million
1 Import Handling Terminals 4700 6500 220
2 Pipelines Capacity 4000 9400 532
3 Tankage (Storage Capacity) 685 912 700
4 Bottling Capacity 12097 18037 450
Increasing demand of LPG: State owned companies have planned for Infrastructure Augmentation
4. Infrastructure Development
Mumbai
Vizag
Panipat
Guwahati
Haldia
Vijayawada
Kochi
Barauni
Kanpur
Kandla
Jalandhar
Delhi
Chennai
MumbaiHigh
Mangalore
Secunderabad
Ajmer
Paradip
Jamnagar
Loni
Hazira
Trichy
Gurgaon
Bangalore
Chakan
Existing Pipelines
Proposed Pipelines
Ennore
JNPT
Durgapur
NEW IMPORT TERMINALSLOCATION Capacity Cost USD
Ennore 600 TMTPA 90 M
JNPT 600 TMTPA 70 M
Kochi 600 TMTPA 60 M
Existing Refinery
Bhatinda
BinaProposed Refinery
PROPOSED PIPELINES
Proposed Pipelines Length Cost USD
Paradip – Haldia – Budge Budge – Kalyani – Durgapur
673 km 202 M
Ennore – Chenglepet –Pondy – Trichy
382 km 115 M
Mangalore – Bangalore 376 km 110 M
Mumbai ‐ Uran – Chakan 166 km 105 M
5. To Summarize
• Opportunity in LPG market in India lies in Rural Domestic Segment– Focused strategies to address issues of
Availability, Affordability and Awareness
– Opening up of low cost distribution model in large scale
• 8‐9% Growth projected in LPG Demand up to 2015
• Strategic infrastructure planned year‐wise to meet the growing demand
Thank You