TITLE OF PROJECT

MARKET ANALYSIS OF CASTROL INDIA LTD

RATIONALE OF STUDY BACKGROUND Castrol India Limited (CIL) began operations in India in 1919, and steadily established a reputation for high quality lubricant products and marketing prowess. CIL has market capitalization of Rs 29.54 billion with sales of Rs 13.57 billion for the calendar year ending 2001. CIL had gone through three phases during the last one and a half decades: the survival phase prior to 1991, a dramatic growth phase during the period 1991 to 1996 and the supply chain and cost management phase. Survival: Before 1991, CIL was constrained in its growth due to base oil controls and its canalization through the Indian Oil Corporation Ltd. (IOCL). The Indian economy was characterized by moderate gross domestic product growth rate and dominance of nationalized oil companies. CILs focus was on managing within the limited availability of base oil rather than growth in terms of volume. It focused on margins, made entry into the top end and value-added products, and controlled cost. The issue was that of survival and how to get the next base oil consignment. Growth: In 1991 the oil sector was deregulated. In the first phase of deregulation, the private sector lubricant companies were allowed to import base oil. Subsequently, MNCs viz. Shell (with Bharat Petroleum Corporation Limited (BPCL) being Indian partner), Exxon Mobil (with Hindustan Petroleum Corporation Limited (HPCL) being Indian partner), and Gulf Oil (with Hindujas being Indian partner) ventured into this sector. CIL changed its focus from 'survival' to 'growth in market share in volume terms. At the marketing end, it focused on creating new opportunities and new brands, segmenting the market, and packaging of the products. At the back end of the business, the strategy in the supply chain was to keep pace with the explosive growth by upgrading quality and service to compete with Shell and other major players, revamping the packaging completely, and modernizing all filling lines in the plant. THE SITUATION Maturity: In 1997, CIL took a hard look at the economic scenario and its competitive position. There has been unprecedented increase in the base oil cost and sales volume pressure because of reduced oil usage rates of newer and more efficient engines. The growth rate in the agricultural sector had become negative. The competition from the PSUs had increased as they prepared

themselves for dismantling of the administered pricing mechanism (APM). The challenge before CIL was to grow on sustainable basis. It effectively responded to the challenge by changing its focus from chasing capacity/chasing growth to cost effectiveness. The range of BP lubricants, in the diesel engine oil segment (mainly in the trucking segment), were launched in India in 2001 after the CILs acquisition by BP in March 2000. The BP brand has delivered its promise for volume growth for CIL in the popular price segment: a significant presence in the premium automotive segment and progress in the new generation commercial vehicles, passenger cars and motorcycle oils. Table 1 provides the sales value and volume, and cost of materials data for the period 1998 to 2007 of CIL. Table 2 provides capacity and sales volume data of key players. Table 1: Sales and Material Cost data of CIL
Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sales value 1079 1196 1238 1357 1339 1361 1523 including Sales volume (in million litres) 213 220 214 219 209 212 224 Cost of materials (per litre) 24.1 24.0 29.9 31.7 28.7 31.8 34.7 Gross sales value per litre 50.7 54.4 57.9 62.0 64.1 64.2 67.9 excise duty (Rs in crores)

Table 2: Indian Lube Industry data of key Players Lubricants Sales Volume (tonnes) 2000-01 2001-02 2002-03 2003-04 BPCL 99,841 104,532 117,276 111,704 Castrol 213,846 219,099 209,066 211,840 Gulf Oil 51,878 10,744 33,089 51,511 HPCL 253,600 259,670 329,230 334,080 IBP 30,820 30,538 29,602 32,567 IOCL 359,000 345,000 339,000 389,000 Tide Water Oil 31,696 30,747 31,153 34,999 Lubricants Installed Capacity Volume (tonnes) Per Shift

2000-01 2001-02 2002-03 2003-04 BPCL 90,000 90,000 90,000 90,000 Castrol 164,426 148,806 148,806 148,806 Gulf Oil 86,179 86,179 67,328 67,328 HPCL 319,779 319,779 319,779 319,779 IBP 35,010 35,010 35,010 35,010 IOCL 226,000 286,000 286,000 286,000 Tide Water Oil 82,648 82,648 82,648 82,648 Castrol figures are for the calendar year, ending December 31. HPCL operates in two shifts. Tide Water oil INDIAN LUBE INDUSTRY ANALYSIS IN THE FIVE FORCES FRAMEWORK The lubricant industry is now a global business and major international players are ExxonMobil, Shell, BP, and ChevronTexaco. Economies of scale are an advantage that these leading players are achieving in this very competitive market. Industry consolidation continues to have a major impact on company market share and ranking, on the manufacturing and business economics, on base oil supply positions, and on the competitive environment. The market share (in quantity terms) of CIL during the year 2003 - 2004 was 18.2% as against 33.4% of IOCL, 28.7% of HPCL, 9.6% of BPCL, 4.4% of Gulf Oil, 2.8% of IBP and 3% of Tide Water Oil. 1 The Indian lube industry analysis in terms of Michael E. Porter (1985)s Five Forces framework is as under: Force 1: The Degree of Rivalry The intensity of rivalry will determine the value lost in industry through cutthroat competition. It is only one of the five that determine the industry attractiveness. The Indian lube industry is profitable, as all the players have realized higher gross sales value per litre during the period 2000 2001 to 2003 2004 and have passed on the incidence of base oil price increase to the ultimate consumer. It is more concentrated industry and competitors appear to have realized their mutual interdependence and have restrained themselves from price rivalry. The competition is based more on brand identification with respect to performance rather than on price. The major components of costs are base oil cost; marketing, sales & distribution costs; and an after-tax operating margin of Castrol India is in the range of 8% to 12%. The employee cost is 5% of sales revenue. The Indian lube industry neither has excess capacity nor is characterised as capital intensive (Table 2). The switching costs are low.

OBJECTIVE OF STUDY To study the Indian electronic product market in the wake of LG Electronics. To study the Growth strategy of LG electronics To analyze the core capabilities of LG electronics To find the corporate culture through which the company implements perfect management. To study and list the products of LG Electronics and to find out through dealer survey which are the new variants of electronic. To do a market research though a Dealer survey to identify the attributes that buyer looks in the product and what a customer demands.

RESEARCH METHODOLOGY Research will be more of descriptive research. Purposes of the research are to search for knowledge. Also research defines a scientific and systematic search for pertinent information on a specific topic. The data will be collected to achieve above-mentioned objectives. This data will be collected as 1. PRIMARY DATA: LG Electronics, a leading electronic companys data is gathered generally by observations, surveys, Questionnaires, personal interviews, and opinion polls. 2. SECONDARY DATA: it consists of information that already exist somewhere in documents. A document is a very important dependable and valuable source of information. Many researchers made use of this vital source. Document is nothing but a written record that contains important information about a problem or aspect of study. It may be purchased material, journals; company profiles company annual reports, and Internet search etc. The collected data will be processed critically examined and analyzed in terms of i. Existing market scenario. ii. Customer viewers. iii. Dealer opinion. iv. Company trends etc. v. Problems.

SAMPLE SIZE The sample size designed for the research consists of some Delhi and based LG and other electronic product showrooms and the people involved with biscuit company it means dealer and customers. The company selected for the study is LG electronics and for ranking the product quality of LG electronics, I compare it with two other more companies name Samsung, Whirlpool and Hitachi etc. EXPECTED CONTRIBUTION The study will bring out the various new strategies that have been implemented in the company for fast growth of the company. This Research will find out the factors, which influence the motivational level of dealers. The report will evaluate the customers perceptions as to what they want and what do the expect from the company which will help the companies to form the policies in such a way that these suit the customer maximum. Improvement in communication Improvement in Management Information System Technology Development Improvement in Quality Assurance System Motivation, morale in Management group Increase in profit Leadership LIMITATION During study I may have to force certain problems related to time due to the high no of product manufactured by the L.G Electronics. There I would select the product having more potential of Indian market especially in Delhi. There may be some data, which I will not be in a position to disclose exactly because of company rules and regulations. There I would fame some round figures affecting the justice of my study.