A BRIEF STUDY OF FOOD GRADE

HEXANE

SAP ID 500026980

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

ACKNOWLEDGEMENT

I Arjun.U have done some original research on this industry as well as the trade. I

have made some specific notes upon 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 trends and 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

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.

TABLE OF CONTENTS

S.No Particulars Page No

1. Executive Summary 1

2. Introduction 2

3. Specification, uses and brief 3-6

4. Import Laws concerning Food Grade Hexane

7

5. CPCL- An overview 8-9

6. Sample Questionnaire 10-12

7. Findings 13

8. SWOT Analysis 14

9. Conclusion 15

10. Remarks 16

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.

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.

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.

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

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

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.

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

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:

.

. CPCL has commissioned a Wind Mill farm having 22 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 captive Sea water Desalination Plant through 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 at Pushpathur, Tamil Nadu in 2007 at a cost of

Rs.90 Crores

• 5.8 MGD Sea Water Desalination Project to augment

the water requirements of its Refinery at a cost of Rs.231 Crores

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.

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.

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

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.

50%50%

Relationship with Suppliers No

Direct contact Intermediary, wholesaler

No change60%Change

after 20 years

20%

2-3 years20%

Frequency of change in supplier No

Above 10 tonnes

30%

6-10 Tonnes10%

4-6 Tonnes20%

Below 4 Tonnes40%

Average Hexane consumption P.M. No

02468

10Price

Quality

Credit

terms

Delivery

Schedule

Logistics

Terms

Order

Process…

Very Highly

significant

Moderately

significant

Less Significant

Not Significant

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

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.

Remarks