LPG MARKETING Domestic & Non Domestic

The Scenario
Stringent environmental norms would drive industries to
switch to gaseous fuels

In India, LPG is fast growing into a multi utility

environment friendly fuel

Delivering on customer needs and expectations will be

key to customer acquisition & retention

Value added services along with competitive pricing

would be the key to success

HPCL: Dom. LPG Sales over the Years

3000 2500

Sales (TMT)

2000 1500 1000 500 0

1940

2184

2372 2359

2515 2631 2392

'02-03 '03-04 '04-05 '05-06 '06-07 `07-08 '08-09

Year

HPCL: ND LPG Sales over the Years

1200 1000

964 832 653 353 86

'02-03

Sales (TMT)

800 600 400 200

447

98
'03-04 '04-05 '05-06 '06-07 `07-08 '08-09

Year

Market Share
Total Sales

Commercial Segment

HPC 26% IOC 48%

IOC 32%

HPC 37%

BPC 26%

BPC 31%

HPC

BPC

IOC

HPC

BPC

IOC

HP GAS Market Leader in Commercial Segment

Domestic LPG Mktg.

Proposal for Location for New Dship Feasibility Selection Process LOI Appointment Dship Agreement Enrolment of Customers Domestic Non Domestic Packed (Commercial) Non Domestic Exempted Making Supplies Monitoring Activities Provisions of MDG & Dship Agreement EC Act & LPG Control Order

HP Gas Initiatives Rasoi Ghar

Current Status 2050 benefiting 26,000 families Rasoi Ghar Models:
In villages in association with Nehru Yuva Kendra Sangathan (NYKS) In Forest Villages in association with Forest Department At Hospitals such as AIIMS, Bombay Hospital etc. At Pilgrim Centers such as Nasik Kumbh, Maruthamalai Temple etc. At construction sites such as Natya Gruh, Yavatmal HPCL has been awarded the National Excellence for Innovative technologies and Golden Peacock for its Rasoi Ghar concept.

LPG Reticulated System

Background : Traditionally LPG marketed as Domestic Fuel bottled in Cylinders. Need For Change : Large number of Housing complexes to small townships. Multi storied Buildings. Change in life style of people in Metropolitan Towns. Co-operative Societies not allowing Delivery boys to take cylinders through lifts. Space/time availability. Hence need for an innovative alternate option.

LPG Reticulated System

What Is Reticulated System :

Reticulated System is supply of domestic LPG through pipeline network from a centralised cylinder bank or bulk installation.

Reticulated System Safety Features

Handling of cylinders outside the house. Storage system fitted with safety fittings i.e. Pressure Relief Valve, Excess Flow Check Valve. Auto changeover with OPSO & UPSO. First & second stage isolating valve. Three stage Pressure Regulation Quick shut off valve in the kitchen Interactive safety training to operators. Availability of Fire Extinguishers

 Commissioned 35 projects in Mumbai, Pune,

Jaipur, Hyderabad, Visakh, Delhi, Kolkatta & Cochin comprising of 3900 flats covering major Builders like Heera Constructions, RNA and Lokhandwala. 15 projects are under implementation for 2400 flats MOU signed with Jallandhar improvement trust for

Reticulated System HPC Projects

developing modern housing scheme spread over 250 acres

with state-of-the-art facilities including piped LPG supply to over 3000 flats. Basic Infrastructure consisting of bulk LPG storage upto the battery limits will be provided by HPC.

LPG Marketing Non-Domestic

a) Parallel Marketing Scheme introduced in 1993 b) Non-Domestic LPG - outside APM in 1998 c) Dismantling of APM - 1.4.2002

Non domestic share is 13%

LPG Marketing Non-Domestic

Non-domestic segment - potential area for profitability . ND Market Size 964TMT , HPCL -353TMT

Parallel Marketers share gone up from 47% to 54% at the cost of Industry.

Our market share is 37%

LPG Marketing Non-Domestic

Categories
Non-domestic -Essential (at domestic rate)
Non-domestic non-Essential category.

Why HP Gas .
Assistance in assessment of Fuel Requirement. Planning & Design of Installation. Selection of Equipments, appliances and Accessories. All statutory approvals Facilitating in setting up LPG Installation Training to concerned personnel Regular maintenance and periodic inspection of Installation Technical assistance for any related issues Single point contact to address all your queries.

LPG Applications By Industry

1. GLASS 2. CERAMICS 11. PHARMACEUTICAL 12. FOOD PROCESSING

3. REFRACTORIES
4. PRINTING & FORGING 5. STEEL INDUSTRY 6. THREAD MANUFACTURING UNIT 7. PAINTING INDUSTRY 8. FOUNDRIES 9. MOULD AND CAST 10. AUTOMOBILE

13. CATTLEFEED
14. CHICK BRODING 15. TEXTILE SINGEING 16. POWDER COATING 17. BRICK MAKING 18. RUBBER PROCESSING 19. BITUMEN 20. DAIRY

CONVERSION FROM VARIOUS FUELS TO LPG:

Fuel Cal Value in Efficiency K Cal/Kg. 10200 10300 10800 10500 4400 60 55 69 60 40 Equivalent LPG requirement in Kgs. 550 Kgs. 1000 Ltrs. FO 500 Kgs. 1000 Ltrs. LSHS 600 Kgs. 1000 Ltrs. HSD 600 Kgs. 1000 Ltrs. LDO 175 Kgs. 1000 Kgs. of Wood

FO LSHS HSD LDO WOOD

COAL

3800

40

150 Kg. 1000 Kgs. of Coal

PIONEERING EFFORTS BY HP GAS

Alternate Applications of LPG

Promoted alternate application of LPG in
Textile, Bakery, Powder coating, Ceramic and Chic Brooding segments

Piloted new industries such as Foundries, Paint

Manufacturing Units, flame weeding, Steel Roll Mills etc.

Working in coordination with Major Burner

Suppliers like Riello (Neotech Systems), Kanthal (Sandvik Asia) & Wesman, Eclipse & Vinosha Burners for conversions in various Segments.

Valley View Farms, Khopoli Advantages

Clean Burning Humid heat to provide growth Suitable for open and closed areas Accurate temperature control Uninterrupted heat reducing mortality rate Financial benefit of Rs.9140/- per month. Per Kg cost of Chic is reduced. Cost of conversion per chic is
Rs.2/- for a batch of 8000 chics
Healthy Chicken, Higher return

Chick Brooding-Flame Weeding

Poultry Equipments

Corrugated Box Industry

Corrugated Box Manufacturing Unit running on Electricity

Electricity was being used for heating 3 drums. Heating of rolling drums is required for effectively pasting two paper sheet with glue and maintaining the hardness of the final pasted sheet.

Post LPG conversion

Feedback from the customer :

Electrical heating : Start Time required was min. 1 hrs to attain temperature
Production Rate has increased as drum rotation speed can be increased as LPG burner is given more heat than that of produced by electrical burner Quality of finished product has improved, Finished product has become more stiff than the earlier one Customer has even agreed to convert his second unit from electricity to LPG

To Summarize
By converting the unit from electricity to LPG customer has benefited in

Powder Coating
M/S.M.J.Coaters Pvt Ltd, Navi Mumbai HSD consumption is 16 Ltrs/hour 8 hour Operation per day Total cost 16x8xRs.40=Rs.5120 LPG consumption 10.8 Kg/hourx8xRs.40
=Rs.3456 I.e. savings of Rs 1664 per day Rs.1664 per day x 30 days Saving of Rs.49920/mth 30%

Pioneering efforts by HP Gas in other Segments

Glass & Ceramic Making

Stain free finished product Ensures mould surface remain clean at all
times. Used to heat, purify and condition molten glass Can be used as feeders for glass Also used in fire polishing, Lehrs etc.

Metal Cutting

Gives better shape to metals Cost effective and safer Catalyses the process making metal cutting quicker thus saving a lot of time

Textile Singeing
More Efficient and Economical Singeing is Uniform Customized flame control Safer compared to other fuels

Bakery Conversion

M/S.Palekar Foods, Satara Prodn is one batch/hourx12 hrs per day HSD reqd 7Ltrs/batchxRs.40per Ltr Rs.280/per batch x12 hours = Rs.3360 LPG reqd is 4.5KgxRs.40 per Kg =Rs.180x12 hours = Rs.2160 Savings per dayRs.1200=35%

Application-Paint Baking
Application Equipment Oven Type Oven Heat Source shell & Maximum Thermal Load Oven Size : : Paint Baking Paint Baking

Batch Type

Indirect fired tube type 78 Kw 8 x 8 x 8

: :

Pioneers in Fuel conversions

Converted more than 200 industries to LPG
Industrial segments :
Type of Industry Poultry Glass Bakery Hotmix Plant Corrugated Box Power Coating Ceramic & Tiles Fuel Electricity Electricity HSD HSD / LDO HSD HSD / LDO HSD Savings 62% 56% 54% 52% 40% 30% 35%

Matsyafed & MOF helping HPCL to bring revolution in segment of Fishing Boats !!!

Ceiling limit
For bench mark level of appropriate customer holding, planning new distributorship & viability of existing distb. Towns over 40 L (15 K), up to 21L (12K), up to 10 L(10K) & below 10 L(8K). Exemption for a Coop. Society.

Marketing/Trading area
Compact, defined & with adequate potential. Town limit (Urban) or road etc. in a town. Must be defined in LOI, appointment letter & distbship agreement . Extension upto 30 kms. unviable & not part of other distbs. area.

LPG PRICING- CATAGORIES

LPG Bulk - Non Domestic LPG Domestic Pkd - 14.2 , 5 , 47.5 LPG ND Pkd 19, 35, 47.5

LPG PRICING
During APM regime prices of LPG were decided by Oil Coordination Committee Non Domestic ( Bulk & Packed ) pricing was deregulated eff. April 1, 1998. After deregulation price of non domestic LPG is market driven Though Govt. deregulated the prices of all petroleum products, including domestic LPG eff. April 1, 2002, the prices of domestic LPG was frozen at the levels prevailing on 17-3-02. In June 04 and Nov 04 increase of Rs. 20/- each was approved. Eff 5.7.08, there is further hike of Rs 50/- per cyl.

ND BULK LPG
Price developed for ten port plus four Inland refineries IPP includes Customs duty 5.15% Marketing margin, cost, import cost, Terminalling charges ( Rs 5000/MT app) Ex-storage price is advised. State surcharge of receiving state Excise Duty 8.24% (AV / TV) Discount if any Sales Tax as applicable

LPG PRICING FOR NON DOMESTIC

NON DOM. PKD LPG

Cost price concept No subsidy for ND PKD Pricing uniformity with OMCs maintained Multiple plants at same location highest cost price of industry plant is considered. Cost price for each plant is different.

NON-DOMESTIC PKD LPG Actual PBU

Import parity Price (with 5.15% CD,cess) Marketing margin, CVR , Filling cost, import cost, Terminalling charges Freight Actual from port to plant - Rail/ Road/ P/L State surcharge, Bulk Octroi- if any, Plant wise cost Price Excise Duty- 8.24% Packed Frt ( Rs 13/16/19 per cyl) CBR Sales Tax , Dealer commission, Vat on DC RSP

Price build up for Dom and ND packed Delhi Market for July 2008
14.2 kg EX STORAGE POINT PRICE RS/MT 19689.50 19 kg 46492.62

BULK NRF FROM SOURCE TO PLANT(DOM NRFSAME AS UNDER APM)

STATE SPECIFIC COST PRICE ADJUSTMENT FACTOR (PAF) ISSUE / COST PRICE AT PLANT EXCISE DUTY ON ABOVE @ 8.24%

RS/MT
RS/MT RS/MT RS/MT RS/MT

99.70
2.00 1509.00 21300.20 0.00

1909.45
2.00 0.00 48404.07 3988.50

TOTAL
ABOVE PRICE PRORATED FOR 14.2/19 KG CYL. LOCAL DEL CHARGES(PKD FRT) BILLABLE RATE FOR DEALER

RS/MT
RS/CYL. RS/CYL. RS/CYL.

21300.20
302.46 10.00 312.46

52392.57
995.46 13.00 1008.46

Delhi Subsidy
SALES TAX @ 4% DOMESTIC AND 12.5 % NON DOM. SUB TOTAL - I DEALER COMMISSION VAT ON DEALER COMMISSION SUB TOTAL - II RSP ROUNDED OFF TO NEAREST FIVE PAISA RS/CYL. RS/CYL. RS/CYL. RS/CYL. RS/CYL. RS/CYL.

-40.00
10.90 283.36 20.54 0.82 304.72 304.70 40.34 1048.80 50.00 2.00 1100.80 1100.80

DOMESTIC LPG - Subsidy

Monthly plant wise Cost price issue price = Gross Loss for claim purpose i.e (IPP +BF + TC+ Margin+ FC+ Cyl comp) (BCSP+NRF+PAF) Plant wise Gross loss 1/3 of frozen subsidy rate of April 2002 = Total Loss 1/3 of Total Loss shared by ONGC/GAIL. Remaining loss is partially compensated by Oil Bonds.

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