2. DECLARATION
In partial fulfillment of MBA for the duration from 2013-2015, I hereby
declare that the project entitled “COMPETITIVE MARKETING OF IMPORTED
AND IN-HOUSE MANUFACTURED FOOD GRADE HEXANE-“
It is the record of original work done by me, under the guidance of Shri
RadhaRamana (Asst.Manager) Marketing, CPCL and Dr.R.Jayaraj, Professor,
Department of Economics, College of Management studies, University Of
petroleum and energy studies
Place: CPCL,Manali. Arjun Udayashankar
Date: 15-January 2014
3. ACKNOWLEDGEMENT
I Arjun.U have done some original research on this industry as well as the trade.I
have made some specific notesupon the company as well.I have tried to provide my
perspective on the same. It has been a great platform for me to comprehend the
Hydrocarbon industry, its trendsand functioning. I was made to feel at ease by the
management of CPCL especially to name the department functionaries-
Mr. Premchand
Mr. Chakravarthy
Mr Mahendran
4. Letter of Transmittal
Arjun.U.
MBA- IBM , UPES
Dehradun-248007
November 22nd, 2013
To
Professor Dr.Anshuman Gupta
UPES, MBA-IBM
Dehradun- 248007
Respected Sir,
I would like to present to you the report made on “THE BRIEF STUDY MADE
ON THE HEXANE MARKET IN THE SOUTHERN REGION” for the partial
fulfillment of the Course MBA (Masters in Business Administration in
International Business.
I have prepared this report to the best of my abilities. I have taken due
diligence and care in gathering the sources of data provided within.
Finally, I would like to thank you for the opportunity to make this report that
made me familiarize with oil and gas field and the different intricacies in this
sector of business.
Yours Sincerely,
Arjun.U.
6. EXECUTIVE SUMMARY
This study is mainly aimed at the understanding the
functioning of the hexane market. The prime focus
being a specialty product manufactured by the
organization in concern –CPCL.
A questionnaire was floated as a part of this process
to various enterprises to understand their need and
priorities in their purchases. These priorities are
parameters causing significant influences.
Some limitations associated with the study would be
the time constraints and the number of sample data
collected. The report would be primarily focused on
the southern region of the Indian market, Andhra
Pradesh and Tamil Nadu in specific.
The study is concluded with a SWOT and some
findings.
7. INTRODUCTION
Hexane is an alkane of six carbon atoms, with the chemical
formula C6H14.
The term may refer to any of the five structural
isomers with that formula, or to a mixture of
them. In IUPAC nomenclature, however, hexane is the
unbranched isomer (n-hexane); the other four structures
are named as methylated derivatives
of pentane and butane. IUPAC also uses the term as the
root of many compounds with a linear six-carbon
backbone, such as 2-methylhexane (C7H16), which is also
called "isoheptane".
Hexanes are significant constituents of gasoline. They are
all colorless liquids at room temperature, odorless when
pure, with boiling points between 50 and 70 °C. They are
widely used as cheap, relatively safe, largely unreactive,
and easily evaporated non-polar solvents.
8. Specification of Hexane (Food Grade):
Sr.No Characteristics Requirements Method
[P:] of
IS:1448
Ref. to
Appendix
1 Distillation
a) Initial (IBP)OC, Min
b) Dry pointOC, Max
c) Temperature range of
final 10%OC, Max
63
70
2
[P:18]
Method B
--
--
--
--
--
--
--
2 Composition :
a) Aromatics, % v, Max
b) Saturates, % v, Min
1.0
98.5
[P:63]
[P:23]
--
--
3 Density at 25OC, gm/ ml,
Max
0.687 IS:3470-66 A
4 Color (Say bolt), Min (+) 30 [P:14] --
5 Sulphur content, ppm,
Max
75 IS:3470-66 B
6 Copper strip corrosion, 3
hrs. at 50OC
1 [P:15]
Method C
--
7 Doctor test Negative [P:19] --
8 Lead, gm/ litre, Max 0.0005 IS:3470-66 C
9 Phosphates, ppm, Max 20 [P:54] --
10 Chlorides (as Cl), ppm,
Max
20 IS:3470-66 D
11 Bromine number, Max 1 [P:44] --
12 Non-volatile residue, gm/
100ml, Max
0.001 IS:3470-66 E
13 Reaction of non-volatile
residue
To pass the test IS:3470-66 F
Conforms to IS:3470-1966 Specifications for Hexane, Food Grade
As specified by Bharat petroleum.
It also conforms to the specifications of various International organizations like
WHO/FAO/UNICEF protein advisory group.
9. OVERVIEW
N-Hexane is a highly volatile component of the paraffin
(also the alkane or aliphatic) fraction of crude oil and
natural gas, and it is a constituent of heating and motor
fuels refined from petroleum. Exposure from contact with
vapors or emissions from these refined petroleum products
is the most widespread form of low-level exposure for the
general population. Most n-hexane in these fuels is
oxidized (and therefore destroyed) as part of the
combustion process to provide heat or drive internal
combustion engines. Small amounts of n-hexane, along
with other petroleum compounds, volatilize to the
atmosphere during handling, storage in fuel tanks, or
through incomplete combustion. Recent research (Ahearn
et al.1996) suggests that certain fungi may be able to
produce n-hexane. These fungi may be common in older
buildings, and in some parts of the country may provide
exposures from previously unsuspected indoor sources. n-
Hexane is also produced as a relatively pure product for a
number of specialized end uses, primarily as a solvent or
as a component of certain glues and adhesives. Especially
in urban areas, n-hexane may be a typical component of
nonpoint source runoff when rainfall washes hydrocarbons
deposited on roads and other surfaces into surface waters.
Spills of refined petroleum products or of commercial n-
hexane products may introduce n-hexane into soils or
surface waters.
Around urbanized areas, spill sites, refineries, tank
10. storage facilities, underground storage tanks (e.g., at gas
stations), or waste sites, can be sources of n-hexane
subsequently transported into sediments or groundwater.
Once introduced into deeper sediments or groundwater, n-
hexane may be fairly persistent since its degradation by
chemical hydrolysis is slow and opportunities for
biodegradation may be limited under anoxic conditions or
where nutrients such as nitrogen or phosphorus are in
limited supply. In the atmosphere, the main degradation
pathways involve destruction through the action of free
radicals such as hydroxyl radicals
Major uses of Hexane, Food Grade :
The product is essentially used as solvent in the
extraction of vegetable oils like Groundnut, mustard,
cottonseed, gingili seed, and rape-seed. Most of these
oils are used for edible purposes and in the
manufacture of soaps.
It is used for the extraction of essential oils from
flowers.
For the preparation of rubber adhesives and can
sealing compounds.
Gas generation plants basically for laboratories.
In pharmaceutical industries as a carrier.
Safety Information :
Reactivity Data - Chemically stable and incompatible
with strong oxidizers. Reacts vigorously with oxidizing
agents. Mixtures with di-nitrogen tetraoxide.
Health hazard Data - Routes of entry may be through
inhalation, ingestion, dermal absorption and eye.
Effects of Exposure / Symptoms :
Inhalation causes irritation of respiratory tract may
11. lead to cough, mild depression, and cardiac
arrhythmia. Higher concentrations produce
drowsiness fatigue and loss of appetite. Causes severe
lung irritation coughing pulmonary oedema,
excitement followed by depression.
Ingestion may lead to nausea, vomiting, swelling of
abdomen, headache and depression.
Skin and eye contact causes irritation.
Emergency contact :
Inhalation - Maintain repulsive, give oxygen if needed.
Enforce Bed rest. Ingestion - Do not induce vomiting.
Skin - Wipe off the affected area and wash with soap and
water. For any type of exposure seek medical
aid immediately.
Eye - Wash with plenty of water for 15 minutes.
Handling and Storage Precaution :
Store in a dry, cool and explosion-proof area. Avoid contact
with liquid or vapours. Provide face sheets or safety
googles to protect eyes, plastic or rubber hand gloves, eye
wash facilities.
It should be stored in closed container away from heat &
source of ignition. As handling and safety precaution, avoid
contacts with liquid or vapours and use personnel
protective equipment.
The firefighting media to be used is foam, DCP/CO2. Do
not use water jet.
12. IMPORT LAWS CONCERNING HEXANE
As per Article XI of GATT, maintenance of Quantitative
Restrictions (QRs) on imports is not permitted. However, to
provide protection to the domestic producers the
government can, if the situation so warrants, utilize the
mechanism of raising the applied tariffs within the bound
rates, if such a gap exists and take measures such as anti-
dumping action, imposition of countervailing duties and
safeguards actions which are permissible under the WTO
Agreements. Imports are being closely monitored and the
governments are determined to ensure through the
appropriate use of the above mechanisms that imports do
not cause any serious injury to the domestic producers.
Some of the recent measures taken in this regard are :-
Import of 131 products has been made subject to
compliance of the mandatory Indian quality standards
as applicable to domestic goods.
Import of all packaged commodities has been made
subject to compliance of all the conditions of the
Standards of Weights and Measures (Packaged
Commodity) Order 1977, as applicable on domestic
producers.
IS 3470 Hexane, Food grade
13. Manali Refinery (Tamil Nadu) -Chennai Petroleum
Corporation Ltd. (CPCL)
Chennai Petroleum Corporation Limited (CPCL), formerly
known as Madras Refineries Limited (MRL) was formed as a
joint venture in 1965 between the Government of India
(GOI), AMOCO and National Iranian Oil Company (NIOC)
having a share holding in the ratio 74%: 13%: 13%
respectively. From the grassroots stage CPCL Refinery was
set up with an installed capacity of 2.5 Million Tonnes Per
Annum (MMTPA) in a record time of 27 months at a cost of
Rs. 43 crore without any time or cost overrun. In 1985,
AMOCO disinvested in favour of GOI and the shareholding
percentage of GOI and NIOC stood revised at 84.62% and
15.38% respectively. Later GOI disinvested 16.92% of the
paid up capital in favour of Unit Trust of India, Mutual
Funds, Insurance Companies and Banks on 19th May
1992, thereby reducing its holding to 67.7 %. As a part of
the restructuring steps taken up by the Government of
India, Indian Oil Corporation Limited (IOCL) acquired
equity from GOI in 2000-01. Currently IOC holds 51.88%
while NIOC continued its holding at 15.40%. Therefore, the
CPCL became a subsidiary of IOCL in 2001. The Manali
Refinery has a capacity of 10.5 MMTPA and is one of the
most complex refineries in India with Fuel, Lube, Wax and
Petrochemical feedstocks production facilities. CPCL has
also implemented the following “First of its kind” Project in
the Oil industry:
.
14. . CPCL has commissioned a Wind Mill
farm having22 windmills with an
installed capacity of 17.6 MW at
Pushpathur,Tamil Nadu in September,
2007.The power generated is being
used by the Company’s captiveSea
water Desalination Plantthrough a
wheeling arrangement with tamil
nadu electricity board.
• Under its Renewable Energy
Initiative,a Wind Energy Farm
with a capacity of 17.6 MW was
commissioned atPushpathur,
Tamil Nadu in 2007 at a costof
Rs.90 Crores
• 5.8 MGD Sea Water
Desalination Projectto augment
the water requirements of its
Refinery at a costof Rs.231 Crores
15. A Sample of the questionnaire floated
A Project based upon the study of –
“A BRIEF STUDY OF THE HEXANE MARKET”
Kindly circle or tick your options
Name and Address of the Respondent
Nature of Industry
Solvent Extraction
Floral Extraction
Chemical
Describe the nature of product your manufacturing unit produces-
How long have you been in this business?
Less than 3 Years
3-6 yrs
6-10 yrs
10-15 yrs
15-20yrs
Above 20 yrs
Are you a registered firm?
Yes
No
If yes under what
TNGST
CST
Identify the relationship between you and the hexane manufacturer.
16. Direct contact
Intermediary- Wholesaler, trader etc.
Others- please specify
How often have you changed your supplier?
Within every 3years
3-5 yrs
5-7 yrs
7-10 yrs
10-15 yrs
15-20 yrs
Greater than 20 yrs
If other please specify
What is your average consumption of Hexane per month?
Less than one tonne
1-2 tonnes
2-4 tonnes
4-6 tonnes
6-10 tonnes
Above 10 tonnes
How frequent do your purchase?
Once in 15 days
Once in a month
Once in two months
Once in three months
Based upon the below mentioned factors that affect your
consumption, please tick the boxes about the level of your
satisfaction- In case of other factors please do mention them as
well.
17. S.No Factors Highly
satisfying
Satisfied Less
Satisfied
Not
Satisfied
1. Quality
2. Price
3. Credit Terms
4. Delivery
Schedule
5. Logistics Terms
6. Order
Processing
Terms
Do you maintain any separate warehouse for the storage of Hexane?
Yes
No
Are you an importer of Hexane?
Yes
No
If yes please identify the source-
If you are not a user of Hexane, would you like to prefer the same in
your manufacturing process?
Yes
No
18. Some of the important firms that were survey are
PONPURE CHEMICALS - TAMIL NADU
KEDIA SOLVENTS - ANDHRA PRADESH
CETHAR OIL LTD - TAMIL NADU
MAA SHARADA AGRO - ANDHRA PRADESH
KANAGADURGA AGRO - ANDHRA PRADESH
MAA VENKATADRI AGRO - ANDHRA PRADESH
The manufacturers were obtained from the Solvent Manufacturers
Association of India
FINDINGS
Most of these companies that were spoken to were very interested in
the price of the product, since the quality was universal everywhere
and the BIS standards had to be complied with.
The other conditions seemed relatively trivial for them during the
time of purchase.
The interesting fact that could be noted is that FG- Hexane is also
imported in spite availability among the local market.
20. Above 10
tonnes
30%
6-10 Tonnes
10%
4-6 Tonnes
20%
Below 4 Tonnes
40%
Average Hexane consumption P.M.
No
0
2
4
6
8
10
Price
Quality
Credit
terms
Delivery
Schedule
Logistics
Terms
Order
Process…
Very Highly
significant
Moderately
significant
Less Significant
Not Significant
21. SWOT
Opportunities
Variety of uses of the speciality product- Vast market.
Integration of developments in contemporary
technologies such as electronics, material science,
computer, bio-technology etc. offer vast scope for
rapid improvement and progress.
3. Opening of global markets may lead to export of
our developed technologies and facilitate
generation of ad
Weakness
Increased cost of raw material due to the
high imports of crude oil.
Inadequate developement of R7D
Inadequate automation- Information
Management
Strengths
Vast domestic market and an array of consumers
High Brand Value
PSU - Resource Allocation
Threats
Competition from global players
Constantly changing global scenarios- Increased
oil prices
Cheaper prices offerred by competitoes
22. CONCLUSION
Some of the findings made from the study can
be seen as:
A very closely dealt supplier to consumer
related market, which is hugely dependent
upon the pricing of the product.
There is great need to market according to the
volatile pricing prevailing in the FG-Hexane
market.
It would very useful to research on further uses
of the product for better profits.
Research checks can be done to discover
superior processes by which the quality and
efficiency of output can be increased.
The most important of all would be to tap the
wide export market.
