Petrochemicals Industry overview Production process – Cracking Crude Oil and Polymerization (polymers, polyesters, fibre intermediaries and other industrial chemicals) 4 main players Reliance Industries Ltd (RIL) Indian petrochemicals Corporation Ltd (IPCL) Gas Authority of India Ltd (GAIL) Haldia Petrochemicals Ltd (HPL) RIL and IPCL account for 70% of production capacity in India
Petrochemical Industry – Entry Barriers Capital Requirements The minimum economic size of an integrated plant is around 1 million tonnes per annum High lead-time before the assets generates a reasonable return on investments Investment in R&D Economies of Scale Lower operating costs Product Differentiation Minimal product differentiation, ccompetition is largely price based International competition from countries like China and other South East Asian countries Manufacturing flexibility Level of integration in operations
Petrochemical Industry – Entry Barriers contd.. Government Policy Deregulation in Natural Gas pricing Lowering of Import duties Technology requirement Developed in-house and kept as a closely guarded secret Competitive advantage
GOVERNMENT POLICIES The Mines and Minerals (Regulation and Development) Amendment Act, 1958 The Mines and Minerals (Regulation and Development) Amendment Act, 1972 The Mines and Minerals (Regulation and Development) Amendment Act, 1986 The Mines and Minerals (Regulation and Development) Amendment Act, 1994 The Mines and Minerals (Regulation and Development) Amendment Act, 1999
the minimum period of a mining lease is twenty years and a maximum period of thirty years. Area restrictions notified for reconnaissance permit, prospecting license and mining lease have been made applicable state-wise, instead of the country as a whole.
In the interest of scientific mining, minimum area for grant of mining lease has been fixed as one hectare in respect of small deposits (including float ore deposits), two hectares for beach sands or placers; and four hectares for all other mineral deposits.
The royalty that companies have to pay state governments for extracting minerals is around 2-3 per cent of the price that minerals fetch in the market!
Barriers to entry-Consultancy High Barriers to Entry-Low exit barriers High profit margins
Barriers to Entry- New Entrant Customer loyalty Network Effect Intellectual Property Globalization
Barriers of entry-Mindtree Service Differentiation Poaching Local Networks R&D
Non Disclosure Agreement A non-disclosure agreement (NDA is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to by third parties. It is a contract through which the parties agree not to disclose information covered by the agreement.
A non-compete clause or covenant not to compete (CNC), is a term used in contract law under which one party (usually an employee) agrees not to pursue a similar profession or trade in competition against another party (usually the employer).
As a contract provision, a CNC is bound by traditional contract requirements including the consideration doctrine..
Patent A patent is a set of exclusive rights granted by a state (national government) to an inventor or their assignee for a limited period of time in exchange for a public disclosure of an invention.