A PRESENTATION ON

DEMAND ANALYSIS OF GAIL(I)’SNATURAL GAS IN NCR

INDEX

PART 1

EXECUTIVE SYNOPSISINTRODUCTION ABOUT GAIL(I)OBJECTIVERESEARCH METHODOLOGYENERGY INDUSTRYINDIAN ENERGY INDUSTRYNATURAL GAS

PART 2

DATA ANALYSISFINDINGS

PART 3

SWOT ANALYSISCONCLUSION

Industry exposure is the most crucial part of the management studies in which a student is able to synchronize his technical knowledge with practical knowledge gained in the any of the organization.

The project titled “Demand Analysis of GAIL’s Natural Gas in NCR ” which was a great learning experience.

This project was not only learning about Marketing

but it was also about Operation and Finance.

Natural gas is a major source of electricity generation through the use of gas turbines and steam turbines.

To analyse both qualitatively and quantitatively the demand of natural gas in DELHI (NCR) region I went for a descriptive research design.

My sampling units were the existing and potential customers and I took a sample size of 76 (existing + potential) such customers.

Data was collected through both primary and secondary sources.

Tool used for collecting the primary data was a questionnaire.

Findings suggested that if GAIL(I) is investing ` 1 crore to supply gas to any customer then to earn a profit of 18% ), GAIL(I) should charge approx. ` 5.054 lacs per month, provided if the life of project is 10 years.

There is no significant difference in the ratings for price, timely delivery, and service quality among the customers of Sikandrabad, Ghaziabad, Sahibabad, Gurgaon and Bahadurgarh & Sonepat region.

However there is significant difference in the rating for technical support among these customers.

At present time GAIL(I) is importing Natural gas only from Rasgas (QUATAR) so GAIL(I) should locate other Natural Gas supplier countries.

GAIL(INDIA)

“BE THE LEADING COMPANY IN NATURAL GAS AND BEYOND, WITH GLOBAL FOCUS, COMMITTED TO CUSTOMER CARE, VALUE CREATION FOR ALL STAKEHOLDERS AND

ENVIRONMENTAL RESPONSIBILITY.”

GAIL(I)

→India's principal GAS transmission and marketing company.

→Set up by the Government of India in 16th August 1984.

→ GAIL(I) owns and operates more than 7,700 km of pipeline.

→GAIL commissioned the 2800-km Hazira-Vijaipur-Jagdishpur (HVJ) pipeline in 1991.

→GAIL(I) Natural Gas value chain activities includes:

  Gas Exploration & Production. Gas Processing. Gas Transmission. Gas Distribution. Gas Marketing.

→GAIL(I) began its city gas distribution in New Delhi in 1997 .

→In 1999, GAIL(I)set up northern India's only petrochemical plant at Pata (U.P).

→ GAIL(I) commissioned world's longest and India's first Cross Country LPG Transmission Pipeline from Jamnagar to Loni (1269km).

→The government of India owns 57% of the company.

→78% Market Share in Natural Gas Transmission

→70% Market share in Natural Gas Marketing

→ Turnover of ` 24,996 cr for the year ended 31st March 2009-10

→ Net Profit to the tune of ` 3,140 cr for the year ended 31st March 2009-10

COMPETITORS OF GAIL

To envisage a project of supplying and marketing of natural gas to consumers in NCR region.

To analyze the demand of existing customers as well as new potential customers.

To find out the monthly rental which GAIL(I) has to be levied from customers.

To study the business of GAIL(I) and its competitors.

RESEARCH METHODOLOGY

PLACE OF STUDY The Study was conducted over the existing customer of

GAIL(I) as well as the potential customers who want to switch over their energy need from traditional fuels to Natural gas in NCR.

OBJECTIVE Qualitative and quantitative assessment of demand Natural

gas in NCR.

SAMPLE SIZE The sample size considered in our study is 76 (B2B).

TOOLS USED Microsoft office.

SAMPLING PLANSample Unit: Existing and potential customers.Sampling Size: 76 (B2B)Sampling Technique: existing customer of GAIL (I) and interested

firms in different industrial areas of NCR.Research design: Descriptive.

METHOD OF DATA COLLECTIONThe research was conducted on the availability of information from

Primary and Secondary sources.

SECONDARY SOURCES OF DATAJournals, magazines of GAIL(I).Internet, website of the company

PRIMARY SOURCE OF DATAInteraction with the customers of GHAZIABAD region.

A proper Questionnaire was designed to collect the primary data.

Other than the GHAZIABAD region questionnaire was send to the customers through courier.

TIME TAKEN IN STUDYThe time taken for the research study was nearly 6

weeks.

ENERGY INDUSTRY

The energy industry is a generic term for all of the industries involved the production and sale of energy, including fuel extraction, manufacturing, refining and distribution.

COMPONENTS

Petroleum industryGas industryElectrical power industryCoal industry Nuclear power industry

Industry energy consumption of different fuels

INTERNATIONAL FUEL DISTRIBUTION

Top Ten Natural Gas Producing Countries

1. Russia … 656.2 billion cubic meters (19.9% of estimated world total)

2. United States … 490.8 billion cubic meters (14.9%)3. Canada … 178.2 billion cubic meters (5.4%)4. Iran … 101 billion cubic meters (3.1%)5. Algeria … 84.4 billion cubic meters (2.6%)6. United Kingdom … 84.2 billion cubic meters (2.6%)7. Norway … 83.4 billion cubic meters (2.5%)8. Netherlands … 77.3 billion cubic meters (2.3%)9. Indonesia … 74 billion cubic meters (2.2%)10. Turkmenistan … 72.3 billion cubic meters (2.2%).

23. India … 28.7 billion cubic meters (0.9%)

Top Ten Natural Gas Consuming Countries

1. Russia … 610 billion cubic meters (20.2% of estimated world total)

2. United States … 604 billion cubic meters (20.0%)3. Iran … 98.2 billion cubic meters (3.2%)4. Germany … 96.8 billion cubic meters (3.2%)5. Canada … 92.8 billion cubic meters (3.1%)6. United Kingdom … 91.2 billion cubic meters (3%)7. Japan … 83.7 billion cubic meters (2.8%)8. Italy … 82.6 billion cubic meters (2.7%)9. Ukraine … 73.9 billion cubic meters (2.4%)10. Saudi Arabia … 68.3 billion cubic meters (2.3%).

20. India … 34.5 billion cubic meters (1.1%)

INDIAN ENERGY INDUSTRY

Major Oil Terminals Bombay, Cochin, Haldia, Kandla, Chennai, Vizag

Major Oil Refineries Jamnagar Koyali-Gujarat Mangalore Mathura-Uttar Pradesh Madras Mahul-Bombay

Major Pipelines IndiaOil- Salaya-New Delhi, Barauni-Digboi Kandla-Bhatindu (products)

Natural Gas Hazira-Bijapur-Jagdishpur (HBJ) ,

STORAGE AND TRANSPORTATION

Advantages Of Natural Gas

Is more environment friendly than oil or coal. Is cheap (less expensive than gasoline) therefore, very

cost effective.

Can be safely stored and burned.

Most of the natural reserves of natural gas fields are still underutilized

Emits 60 to 90% less smog-producing pollutants.

Due to clean burning process, doesn’t produce ashes after energy release.

DISADVANTAGES OF NATURAL GAS

It’s a nonrenewable energy resource.

Is highly volatile (highly flammable) and can be dangerous, if handled carelessly.

Is colorless, odorless and tasteless that makes detection of its leak very difficult.

In gas pipelines, a substance (contains carbon monoxide) that has a strong odor is added to help detect a leak. But, these substances may be harmful and cause deaths, in fact, natural gas use is the most common cause of carbon monoxide deaths.

Constructing and managing such pipelines cost a lot.

DATA ANALYSIS

No. of existing customers in different regions of NCR

10

4

410

14

  Region No. of

customer Sahibabad 10

Gurgaon & balance NCR 4

Sikandrabad 4

Ghaziabad 10

Bahadurgarh & Sonepat 14

 

No. of new customers

2

2

15

9

4

SahibabadGurgaon & balance NCRsikandrabadGhaziabadBahadurgarh & Sonepat

Region wise Average demand per customer

REGION NO. OF CUSTOMERS

TOTAL DEMAND(scmd)

AVG. DEMAND(scmd)

SAHIBABAD 12 360500 30041.66667

GURGAON 6 4282732 713788.6667

SIKANDRABAD 19 313100 16478.94737

GHAZIABAD 19 355800 18726.31579

BHADURGARH & SONIPAT

18 394660 21925.55556

GURGAON

SAHIBABADSIKANDRABAD

GZBB&S

pie chart of region wise Average demand per customer

COMPARISON

GURGAON SONEPAT GHAZIABAD

BUHADURGARH

SIKANDARABAD

SIKANDRABAD

PRICE SAME SAME SAME SAME SAME SAME

TIME DELIVERY

SAME SAME SAME SAME SAME SAME

SERVICE QUALITY

SAME SAME SAME SAME SAME SAME

TECH.SUPPORT

DIFF. DIFF. DIFF. DIFF. DIFF. DIFF.

Mohan Meakins is the biggest existing customer of Sahibabad region. But with new demand of 150000 SCMD of gas Bhushan Steel – It will be the biggest customer in 2010 end.

In Sahibabad region new additional demand (223000 SCMD) is much greater than present contracted quantity (137500 SCMD). It means potential of market for GAIL is good.

There are very few existing customer in Gurgaon region but consumption of natural gas is much large that is because of two power-generating companies.

In Sikandrabad region “Orient Ceramics Ltd.” is the largest consumer. And this is the region where no. of customers are more than other region who are interested to take gas from GAIL.

Ghaziabad Industrial area is also a good place to locate new buyers.

In Bahadurgarh & Sonepat region existing customers are there who are demanding for additional quantity but new customers are less in number.

In regionwise comparison of existing gas demand, GURGAON is leading with 85% share. In case of new demand also Gurgaon is leading with 37% share.

In case of no. of existing customer Bahadurgarh & Sonepat region is leading with 33% share but in respect of new customer Sikandrabad region region is leading with 47% share.

There is no significant difference in the ratings for price, timely delivery, and service quality among the customers of Sikandrabad, Ghaziabad, Sahibabad, Gurgaon and ‘Bahadurgarh & Sonepat‘ region. But there is significant difference in the rating for technical support among the customers of Sikandrabad, Ghaziabad, Sahibabad, Gurgaon and ‘Bahadurgarh & Sonepat‘ region.

Gas transmission 78%

Gas marketing 70%

STRONG HOLD ON THE GAS BUSINESS.

TOP COMPANY IN INDIA IN THIS SECTOR

STRONG HOLD ONALL EXISTING AS WELL AS NEW CUSTOMERS

There is a great potential in the market but supply of Natural gas is not meeting its demand so,

GAIL (I) should search alternatives to get more Gas. At present time GAIL is importing Natural gas only from Rasgas (QUATAR) so GAIL should locate other Natural Gas supplier countries.

GAIL should run a “Natural Gas Awareness Program” to make aware about different uses of Natural Gas.

To increase profit margin GAIL should not concentrates only to locate new customers but company should also focus on the existing customer to increase their existing demand. As GAIL has no need to fix a new setup.

GAIL(I) IS MAKING IT’S PRESENCE IN POLYMER SECTOR.

NEW VENTURES WITH GULF COUNTRIES. MORE & MORE NEW CUSTOMERS & MAJOR

PRIVATE PLAYERS ARE JOINING HANDS WITH GAIL(I).

GAIL(I) LAYING MORE NEW PIPELINES. NORTH & WEST CONNECTION. NORMAL DEMAND & SUPPLY.

MAIN FROM ONGC & RIL.

NEW COSTUMERS FIND IT VERY HARD TO DEAL WITH THE REQUIREMENTS OF GAIL(I).

GLOBALIZATION.

After doing the demand analysis it has been concluded that demand of Natural gas is very much there in the market as a alternative fuel. It is very much cheaper than other fuels. Also in respect of efficiency there is no comparison with Natural gas. So it is two way benefit for the customers because in one way it is cheaper and in other way it is more efficient than any other fuel. Natural gas gives 91-93% efficiency.

Although it is cheaper and more efficient then also Natural gas is not being used as Oil. There are two reasons of it, first is its heavy initial investment and second is unavailability of gas with respect to demand.

Gurgaon is the leader region in demand of gas whether it is present contracted quantity or additional demand.

Demand of Natural gas is more than its supply. It means market has a great potential.