Market Share Indian Oil is the highest ranked Indian company in the prestigious Fortune Global 500 listing.

It is also the 18th largest petroleum company in the world and the No. 1 petroleum trading companies among the National Oil Companies in the Asia-Pacific region ranked as the Most Trusted Fuel Pump Brand in the country by Economic Times Brand Equity and as the Most Trusted Gasoline Brand by readers digest- AC Nielson Survey.

Market Share of Major Petro Players S.no. Player 1 2 3 4 5 IOC HPCL BPCL Other PSUs Private Parties 2008-09 2009-10 46% 17.8% 19.7% 1.6% 14.9% 100% 45% 17.5% 19.5% 1.4% 15.5% 100%

TOTAL

Rewards and Recognition

y y y y y y y

#33 in Platts Top 250 Global Energy Rankings 2009 #1 in BW Real 500 Rankings Business World, November 2009 #1 in ET 500 Economic Times listing of India's corporate giants for 2009 SCOPE MoU Excellence Award in the Petroleum Sector during FY2010 Most Trusted Brand Readers Digest, Petrol Station Category in India, 2009 World Petroleum Congress Excellence Award 2008 in Madrid, Spain for R&D work in hydro-processing technology for Green Fuels One of the Best Employers Hewitt Associates survey, 2009

Market Structure
Due to government hold on oil companys there is no private player & market is oligopoly market, where 2-3 government under taking company are major player. Major players IOCL, BPCL & HPCL are dominating players in downstream sector, and in upstream sector, ONGC & OIL (Oil India Ltd.) claiming 84% share of the total market.

The trend in the deregulated markets that is being followed by the players is to move towards integration of refining and marketing activities on a greater scale.
y y

Entry of downstream players like Reliance, IOC and Essar Oil into the oil exploration field Exploration major ONGC is moving into refining operations, albeit in a small way in the form of commissioning a 0.1 MT mini refinery in Andhra Pradesh. However, by establishing a 71.59% stake in MRPL, the company has signalled its entry into this sector in a big way.

In this section, we take a look at the Indian refining sector through Michael Porters model of competitive forces.

Michael porter s five forces analysis

THREAT OF NEW ENTRANTS: The barriers to entry are high for the industry. Following are factors that vindicate this view: 1. Economies of scale: Benefits from economies of scale are derived in the form of better bargaining power when it comes to sourcing of raw materials, ability to use various crude products for a given output and selling the end product to the consumers. Refining is highly Capital intensive in nature (Reliance is setting up a 29.4 MMT refinery in India for a sum of Rs 270 billion or Rs 9,200 m per MT). While the cost of this refinery is lower than industry standards, this is the benefit of a larger size complex refinery. In addition to the refining capacity, companies should have presence on the marketing side as well so as to capture marketing margins (in a completely de regulated environment). Though the current government policy is unfavorable towards the marketing companies (which are forced to subsidies the customers on behalf of the government), globally, companies with presence in refining and marketing are able to increase/decrease prices driven purely by business environment. Even in the high crude price scenario like what we are witnessing currently, global integrated players are making profits. In India, currently, IOC, HPCL, BPCL, ONGC and RIL account for a lions share of the industrys refining capacity. In this sense, the sector is fairly consolidated. 2. Government policy: Considering the current policy environment, perhaps, this is the major entry barrier for companies (especially those with a marketing network plan). The government plays an active and integral role in policy determination, especially when it comes to pricing of petroleum products. Even though the energy sector was supposed to have been deregulated in April 2002, much has been on paper with very little implementation. Thus, regulations act as deterrent to new entrants.

3. Capital requirement: As mentioned earlier, refining is a capital-intensive business. The costs associated with establishing a refining is in the vicinity of Rs 9,000 m to Rs 10,000 m per MT (depending on the complexity of the refinery). Also, a presence on the marketing front requires investments worth Rs 2 billion as per government regulations. Further, to establish retail outlets, it costs roughly Rs 15 m to Rs 20 m per outlet (depending upon the location). Even if one has the capital to set up the marketing network, space is unavailable in many larger cities (another entry barrier). Also, integrated players need to shell out money in building pipeline facility, which costs around Rs 15 m per kilometre.

THREAT OF SUBSTITUTES: It is moderate to low. Though much has been talked about bio-fuels and fuel cell-based technologies, these are still not a meaningful threat to petroleum products, especially petrol and diesel. At the same time, higher natural gas finds (in India and liquefied natural gas transported from Middle East) is threatening the demand for naphtha and furnace oil in India (the substitution effect has been significant in the past three years). BARGAINING POWER OF BUYERS: It is currently high due to the government policy. As far as the sale of refined products is concerned, either the refineries sells it directly (to the industrial sector and marketing companies) or through their own distribution networks. Exports are also an opportunity. As far as the industrial sector is concerned, the bargaining power of refineries is less. This is because prices in this segment are internationally benchmarked (the sector is de-regulated at the refinery gate level). As far as the revenues from the marketing network are concerned currently diesel, petrol, LPG and kerosene are subsidized. Government decides the pricing of these products and therefore, the bargaining power of consumers is high (indirectly, owing to the vote bank). Subsidized products account for 70% of total industry sales. As far as exports are concerned, margins are lower. BARGAINING POWER OF SUPPLIERS: Bargaining power of suppliers is high. The major raw material for the sector is crude oil (90% of total cost), prices of which are determined by global demand-supply factors (OPEC has a major say in determining global crude prices). Since India imports 70% of its total crude requirement, that too largely Brent crude, bargaining power is close to nil (unless there are specific government-to-government arrangements). COMPETITION WITHIN EXISTING PLAYERS: Competition is moderate in refining. Demand outpaces supply, which can be seen from higher capacity utilization across the board. The balance is in favour of producers. Competition is high on the marketing front. Viewing all the factors in conjunction with the global scenario, we believe that refining margins are likely to be higher going forward. That said, considering the capacity expansion in India in the next five years, supply is likely to far outpace demand, thus forcing players to

depend on exports to maintain capacity utilization at optimum level (some of the expansions are dedicated for exports). On the other hand, growth prospects of marketing companies are bleak, based on the current government policy regime.