Indian Oil Corporation Limited
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INDIAN OIL CORPORATION LIMITED
MARKET STRUCTURE:
The market scenario of IOCL is composed of a high entry barrier mainly due to the magnitude of the product handled; it requires a very deep pocket to enter in this business along with a dependence on various components of the industry; environment, government policy & regulation, suppliers. It all adds up to the complexity of the business model.
The competitors to IOCL in this market are few involving BPCL, HPCL, RIL, Shell and Essar. Though the industry is complex and players are few the product catered is of a common commodity, Fuel. Due to this nature IOCL operates as a Generic Oligopoly entity.
COMPETITIVE ADVANTAGE:
The major competitive advantage posed by IOCL in the Indian Oil and gas scenario is the extensive reach and brand recall in the consumer mind. Though suffered by loss in fuel sales, with huge number of ROs in cities all over the nation, IOCLs Servo is able to remain the market leader in the lubricant industry in a fiercely competed field along with the private majors like BP, Exxon, RIL and other NOCs.
An aided advantage to the organisation is the operating refineries across the nation with more than 50 MMTPA refining capacity. This opens a wide opportunity for the organisation to diversify its product portfolio, with our nation widely accredited as the refining hub of the world it also provides as a service to foreign players. IOCLs extensive pipeline also opens up a jubilant business opportunity for the case of upcoming unbundling of pipeline capacity in the industry.
PROBLEM IDENTIFICATION:
The main problem IOCL faces is the government restriction on the prices of its products involving diesel, LPG, kerosene etc., resulting in huge loss in each quantity sold. Another issue faced by IOCL is the entry of global pioneer like Shell, Essar in the oil and gas industry, with their expertise and technological capability they are able to provide their products at much superior quality in comparison to IOCL.
ALTERNATIVES:
For the sustainable Development and nations mission to go towards green, Indian Oil is working on various ambitious projects in alternative energy such as bio fuels, solar energy, wind energy, biomass and Nuclear energy. Already IOCL has joint ventured with the Chhattisgarh Renewable Energy Development Agency (CREDA) to form “Indian Oil – CREDA Bio fuels Limited”. This JV involves the production of 30,000 metric tonnes (MT) of biodiesel per annum from energy crop plantation on 30,000 hectare of revenue wasteland, having an authorized share capital of Rs 400 Crores.
In solar business, A 5 MW Solar-PV power plant in Rajasthan is expected to commence power generation