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A Project Report

Marketing Strategy for
Hindustan Dorr-Oliver Ltd. (HE/PV) Division

Prepared By:
(Reg. No. : 510824056)

in partial fulfillment of the requirement for the award of the degree


MBA Marketing Management


Center Code No. 1951, 3rd Floor, Shyam Shikhar, Bapunagar, Ahmedabad 380024.

I hereby declare that the project report entitled

Marketing Strategy for

Hindustan Dorr-Oliver Ltd. (HE/PV) Division

Submitted in partial fulfillment of the requirements for the degree of

Master of business Administration

to Sikkim Manipal University, India, is my original work and not

submitted for the award of any other degree, diploma, fellowship, or
any other similar title or prizes.

Modi Hitesh Navnitlal

Place: Ahmedabad

Date: 20/12/2009 Reg. No: 510824056


The project report of

(Modi Hitesh Navnitlal)

Marketing Strategy for

Hindustan Dorr-Oliver Ltd. (HE/PV) Division

Is approved and is acceptable in quality and form

---------------------- ----------------------

Internal Examiner External Examiner

Vikas Rajput Sandhya Harkawat


This is to certify that the project report entitled

Marketing Strategy for

Hindustan Dorr-Oliver Ltd. (HE/PV) Division

Submitted in partial fulfillment of the requirements for the degree of

Master of Business Administration of

Sikkim Manipal University of Health, Medical and technological sciences

(Modi Hitesh Navnitlal)

has worked under my supervision and guidance and that no part of
this report has been submitted for the award of any other degree,
Diploma, Fellowship or other similar title or prizes and that the work
has not been published in my journal of Magazine.

(Reg. No. 510824056) Certified by

Milap Shah

( MBA )

I would like to acknowledge and extend my gratitude to the following

persons who have made the completion of this project possible:

First of all, I would like to thank my Project Guide Mr. Milap Shah for
his great help. As he is being my Project Coordinator he provided me very
necessary and important guidance and support until the submission of my

I would also like to thank Mr. Saket Bhatt (General Manager) of

Hindustan Dorr-Oliver Ltd. (HDOL), to provide me such a very exiting
opportunity and for their good help to provide a better coordination and
control among all the activities related to completion of the project.

Lastly, I would like to be very thankful to the whole HDOL Family for
their continuous effort in making the whole Project Activity very much
learning and Interesting.

I delivered my special thanks to my family members and friends for their

constant support during the project.

(Hitesh Modi)

Sikkim Manipal University

Executive Summary
Primary objective of this study is to understand business prospectus of
Process Plant Equipment (includes heat exchangers & pressure vessels)
division of Capital Goods Industry. HDOL is chosen based on its excellent
capability to grow in such a competitive world and this business unit adds a
steady stream of revenues to the business model through sustained demand
from various industries like Water, Pulp and Paper, Fertilizers etc where
HDOL is already present. This study shows that how to encash business
opportunities by market research, appropriate product mix and new product

Developing niche products using the latest technology and supplying to new
industry verticals is an integral part of growth strategy. HDOL is working
towards gaining a strong foothold in catering to the Nuclear Energy, Oil &
Gas and Power sectors.

The Indian Capital Goods Industry has been witnessing a turnaround after a
prolonged period of recession. Capital goods manufacturers have been
experiencing excellent growth both in the top and bottom line. Their order
books are in a very healthy state which indicates the beginnings of an
investment cycle in India. This observation is also borne out by the upward
trend seen in the BSE Capital Goods Index. The capital goods industry
needs to now strategize its future in order to maintain this momentum.

The objectives of the study were to focus on the national as well as

international competitiveness of these sectors in terms of benchmarking of
costs, measuring cost effectiveness, productivity, marketing strategies,
manpower development and R&D apart from looking at technology gaps and
tariff protection required.
In todays scenario, just looking inward is no longer enough for survival. A
presence in the export markets as a diversification strategy has become a
must. The study has therefore looked at overseas business opportunities and
tried to identify potential countries and projects.

Competitive strategy involves positioning a business to maximize the value of

the capabilities that distinguish it from its competitors. It follows that a
central aspect of strategy formulation is perceptive competitor analysis.

HDOL has adopted three prolonged approach in its quest to remain a top
player in the global process plant equipment market. The initiatives centre on
capacity augmentation, capability build up and enhancing the product
portfolio through advanced technologies.

This study reveals that the whole industrys growth will be increased due to
investments in sectors like Oil & Gas, Petrochemicals, Power etc. and the
companies are performing well due the fact of increased technological
innovation and quality of the units. The stock price also got affected by the
same making the Capital Goods sector favourable for the investors.
Table of Contents
1 Introduction 1
1.1 Definition 2
1.2 Purpose of Strategy 3
1.3 Factors Influencing Marketing Strategy 4
1.4 Marketing Strategies And Target Customers 4
1.5 Types of Marketing Strategies 5
2 Organization Profile 8
2.1 About Hindustan Dorr-Oliver Ltd. 9
2.2 Business Divisions 11
2.3 Business Performance Translating Into Numbers 12
3 Portfolio of Products 13
3.1 Product Range 14
3.2 Pressure Vessels 15
3.3 Heat Exchangers 17
3.4 General Details 20
3.5 Manufacturing Process 22
4 Organizations as Buyer 25
4.1 Organizations Buying Center or Decision making unit 26
4.2 Organizations Buying Situations & Process 27
4.3 Organizational Factors 28
5 Literature Review 29
6 Research Methodology 35
7 Analysis and Interpretation for Hypothesis-1 (H1) 40
7.1 Analysis 41
7.1.1 Oil & Gas Sector 41
7.1.2 Petrochemicals Sector 47
7.1.3 Fertilizers Sector 50
7.1.4 Power Sector 52
Table of Contents
7.1.5 Sector wise Area of Interest 53
7.1.6 Business Sector wise contribution for order
booking during 2008-2009
7.2 Interpretation 55
8 Analysis and Interpretation for Hypothesis-2 (H2) 56
8.1 Analysis 57
8.1.1 Design & Engineering Capability 57
8.1.2 Key Facilities Installed in Workshop 58
8.1.3 SWOT Analysis 61
8.1.4 Assessment of Competition 62
8.1.5 Workshop facility comparision 64
8.1.6 Few Equipment manufactured by LEVEL-1 65
8.2 Interpretation 67
9 Analysis and Interpretation for Hypothesis-3 (H3) 68
9.1 Analysis 69
9.2 Interpretation 72
10 Recommendations & Conclusions 73
10.1 Major Findings & Conclusion 74
10.2 Road Map to Rs. 500 Crores 75
10.2.1 Marketing Strategy for year 2010-11 80
10.2.2 Marketing Strategy for year 2011-12 82
10.2.3 Marketing Strategy for year 2012-13 84
10.3 Limitations of the study 85

Bibliography 87
Chapter - 1

1.1 Definition

The term strategy is drawn from the armed forces. It is a strategic plan that
interlocks all aspects of the corporate mission designed to overpower the
enemy or the competitor. An appropriate strategy is considered to be
essential to face adverse situations such as cut-throat competition.

Strategy may imply general or specific programmes of action outlining how

the resources are deployed to attain goals in a given set of conditions. If
these conditions change, the strategy also changes. Strategies give direction
for the achievement of objectives necessary through the deployment of

The American Marketing Association defines marketing as "the process of

planning and executing the conception, pricing, promotion, and distribution
of ideas, goods, and services to create exchanges that satisfy individual and
organizational objectives." Marketers use an assortment of strategies to
guide how, when, and where product information is presented to consumers.
Their goal is to persuade consumers to buy a particular brand or product.

A marketing strategy is a plan or an approach for marketing your products

and services. Successful marketing strategies create a desire for a product. A
marketer, therefore, needs to understand consumer likes and dislikes. In
addition, marketers must know what information will convince consumers to
buy their product, and whom consumers perceive as a credible source of
information. Some marketing strategies use fictional characters, celebrities,
or experts (such as doctors) to sell products, while other strategies use
specific statements or "health claims" that state the benefits of using a
particular product or eating a particular food.

1.2 Purpose of Strategy

A strategy is an operational tool to achieve the goals, and thus, the corporate
mission. Strategies do not attempt to outline exactly how the enterprise is to
accomplish its objectives. A company may view downsizing as a strategy in a
competitive market to render cost-effective services. Thus, strategy provides
a framework to guide thinking and action. Strategies are very much useful in
organizations for guiding, planning and control.

Strategy is a way of life both at the macro as well as micro levels for
everyone, whether it is a nation or a company. To win over in a given
complex situation, the organizations, even trans-nationals adopt strategies.
They make changes, if necessary, even to their global strategies. An
individual company may formulate its own strategy to bring out the desired
results. The eventual success of the organization depends upon strategy
formulation and implementation.

The recently initiated moves such as globalization, privatization and

liberalization are strategies to attain a globally competitive economy.

Some marketing strategies are created for the purpose of capturing a certain
segment of the market, but the majority of small business strategies are
more generic in nature. Even so, it's important to understand what your
strategy is trying to achieve.




The results of analyzing market segments lead the marketer to consider one
of the following target marketing strategies.

Undifferentiated or Mass Marketing Under this strategy the marketer

attempts to appeal to one large market with a single marketing strategy.
While this approach offers advantages in terms of lowering development
and production costs, since only one product is marketed, there are few
markets in which all customers seek the same benefits. While this
approach was very popular in the early days of marketing (e.g., Ford
Model-T), few companies now view this as a feasible strategy.

Differentiated or Segmentation Marketing Marketers choosing this
strategy try to appeal to multiple smaller markets with a unique
marketing strategy for each market. The underlying concept is that
bigger markets can be divided into many sub-markets and an
organization chooses different marketing strategies to reach each sub-
market it targets. Most large consumer products firms follow this strategy
as they offer multiple products (e.g., running shoes, basketball shoes)
within a larger product category (e.g., footwear).

Concentrated or Niche Marketing This strategy combines mass and

segmentation marketing by using a single marketing strategy to appeal to
one or more very small markets. It is primarily used by smaller
marketers who have identified small sub-segments of a larger segment
that are not served well by larger firms that follow a segmentation
marketing approach. In these situations a smaller company can do quite
well marketing a single product to a narrowly defined target market.

Customized or Micro-Marketing - This newest target marketing strategy

attempts to appeal to targeted customers with individualized marketing
programs. For micro-marketing segmentation to be effective the
marketer must, to some degree, allow customers to build-their-own
products. This approach requires extensive technical capability for
marketers to reach individual customers and allow customers to interact
with the marketer. The Internet has been the catalyst for this target
marketing strategy. As more companies learn to utilize the Internet
micro-marketing is expected to flourish.

Marketing strategies may differ depending on the unique situation of the
individual business. However there are a number of ways of categorizing
some generic strategies. A brief description of the most common categorizing
schemes is presented below:

Strategies based on market dominance - In this scheme, firms are

classified based on their market share or dominance of an industry.
Typically there are three types of market dominance strategies:

o Leader
o Challenger
o Follower

Porter generic strategies - strategy on the dimensions of strategic

scope and strategic strength. Strategic scope refers to the market
penetration while strategic strength refers to the firms sustainable
competitive advantage.

o Product differentiation
o Market segmentation

Innovation strategies - This deals with the firm's rate of the new
product development and business model innovation. It asks whether
the company is on the cutting edge of technology and business
innovation. There are three types: Pioneers

o Close followers
o Late followers

Growth strategies - In this scheme we ask the question, How should
the firm grow? There are a number of different ways of answering
that question, but the most common gives four answers:

o Horizontal integration
o Vertical integration
o Diversification
o Intensification

Chapter - 2

2.1 About Hindustan Dorr-Oliver Ltd. (HDOL)

Hindustan Dorr Oliver Limited (HDO) is an Indian EPC (Engineering

Procurement Construction) company having its core business activities in
providing Engineered Solutions, technologies and EPC installations in Liquid-
Solid Separation applications.

Hindustan Dorr-Oliver Limited has a new face. HDO is now a wholly owned
subsidiary of M/s. IVRCL Infrastructures and Projects Ltd., who are one of the
leaders in Indian infrastructure industry, having core business focus on total
Water Management including pumping, conveyance, treatment and
distribution, national highways, roads, buildings, hydro-electric projects,
power distribution, desalination, etc. IVRCL is also executing many projects
on BOOT basis for various Government Departments of India.

HDO has over decades established a unique track record and position as an
extremely dynamic, totally reliable and component-engineering company,
having a cutting edge of superior technologies to emerge among leading
process equipment and plant engineering companies in India.

Today, with every conceivable engineering skill at its disposal, HDO is

engaged in an endless endeavour to upgrade, modify, adapt and invent
products, processes and technologies to design, construct, install, erect and
commission systems on complete EPC basis.

Corporate Vision & Mission :

Vision :

Our aspiration is to become a leading creator of Shareholder Value in the

Engineering Industry.

To achieve this, we will use the ENERGY of our people, develop and
implement LEADING EDGE technologies and draw on both to
deliver EFFECTIVE world-class solutions to our customers.

Mission :

To consistently out perform expectations and deliver superior value to both

our Customers and Stakeholders.

To achieve this, we will ENERGISE our people with a positive culture that
rewards INNOVATION, breeds INITIATIVE and encourages INTELLIGENT risk

Network across the country :

Head Office : Mumbai

Manufacturing Facility : Ahmedabad
Branch Offices :
o Delhi
o Chennai
o Kolkata
o Local site offices wherever projects are under execution
HDO Technologies Ltd. (subsidiary of HDOL), Bangaluru & Hyderabad

Key Facts :

Founded : 1974
Numbers of Employee : 1200
Revenue : Rs. 520.28 Crores
Headquarter : Mumbai, India

2.2 Business Divisions :

Business Divisions

Engineering, Manufacturing Knowledge Process

Procurement & Outsourcing (KPO)
Construction (EPC)

Mineral Processing & Heat Exchangers & Design & Engineering

Beneficiation Pressure Vessels Outsourcing
Environment Proprietary Equipments
Fertilizers & Chemicals
Pulp & Paper

EPC Manufacturing KPO

Diversification Hydrocarbon Sector Addition of Industry End to End skill sets
Opportunity Bulk Material Develop Niche Tap the Global &
Handling, Products Domestic demand
Pelletisation Plants,
Coal Washeries, Oil &
Gas, Power
Expansion New Industries & Capacity Expansion & Delivery Centres and
Processes Product Portfolio client additions
Sustainable Growth Established Brand Proprietary In house
Equipment & Client Equipment & requirements & Low
Relationship Replacement Demand cost High Quality

2.4 Business Performance Translating Into Numbers

Five Years at Glance Operating Results 2005-2009#

600 520.28

Rs. in Crores




2005 2006 2007 2008 2009

HDOL Manufacturing Business Turnover in Crores

Rs. in Crores

60 47
40 28

2005 2006 2007 2008

Chapter - 3

3.1 Product Range :

Heat Exchangers & Pressure Vessels Division :

Pressure Vessels
Tanks, Spheres, Reactors, Columns, Storage Tanks

Heat Exchangers

Proprietary Equipment :

Horizontal Pan Filters

Screw Classifiers / Rake Classifiers / Clarifiers/ Clarifloculators
Kelly Filters
Red Mud Component Filters
Precoat Drum Filters
Rotary vacuum Drum Filters
Brown Stock Washers
Bleach Washers
Digester System for Pulp and Paper Plants
Drier, Cooler, Granulator and Pulverizer for NPK and DAP Fertilizer

Our area of interest will be Pressure Vessels and Heat Exchangers

(Process Plant Equipment) of Capital Goods Sector. This project is
limited to Pressure Vessels & Heat Exchangers only.

3.2 Pressure Vessels :

Vessels, tanks, and pipelines that carry, store, or receive fluids are called
pressure vessels. A pressure vessel is defined as a container with a pressure
differential between inside and outside. The inside pressure is usually higher
than the outside, except for some isolated situations. The fluid inside the
vessel may undergo a change in state as in the case of steam boilers, or may
combine with other reagents as in the case of a chemical reactor.

Pressure vessels often have a combination of high pressures together with

high temperatures, and in some cases flammable fluids or highly radioactive
materials. Because of such hazards it is imperative that the design be such
that no leakage can occur. In addition these vessels have to be designed
carefully to cope with the operating temperature and pressure. It should be
borne in mind that the rupture of a pressure vessel has a potential to cause
extensive physical injury and property damage. Plant safety and integrity are
of fundamental concern in pressure vessel design.

Pressure vessels are used in a number of industries; for example, the power
generation industry for fossil and nuclear power, the petrochemical industry
for storing and processing crude petroleum oil in tank farms as well as
storing gasoline in service stations, and the chemical industry (in chemical
reactors) to name but a few. Their use has expanded throughout the world.
Pressure vessels and tanks are, in fact, essential to the chemical, petroleum,
petrochemical and nuclear industries. It is in this class of equipment that the
reactions, separations, and storage of raw materials occur. Generally
speaking, pressurized equipment is required for a wide range of industrial
plant for storage and manufacturing purposes.

Major Pressure Vessels supplied by HDOL to various customers :

Client : Bharat Oman Refineries

Ltd., Bina, MP
Equipment : HP Air Receiver
Size : 4.5 m Dia. x 17.8 m Lg.
Weight : 140 MT

Client : ONGC, Hazira, Gujarat

Equipment : LPG Drier
Size : 3 m Dia. x 12.5 m Lg.
Weight : 111 MT

Client : Hindustan Petroleum Ltd.,

Equipment : Air Surge Drum
Size : 5.25 m Dia. x 15 m Lg.
Weight : 90 MT

Client : Bharat Oman Refineries

Ltd., Bina, MP
Equipment : Flare KO Drum
Size : 5 m Dia. x 17.4 m Lg.
Weight : 51.5 MT

Client : Hindalco Industries Ltd.,
Renukoot, UP
Equipment : Pressure Decanter
Size : 6.5 m Dia. x 20 m Lg.
Weight : 160 MT
Fabricated at site

3.3 Heat Exchangers :

Heat exchangers transfer heat from a hot fluid to a colder fluid through the
combined mechanisms of conduction and forced convection. In most heat
exchangers, a metal wall separates the two fluids. All heat exchangers are
similar in their principle of operation; however, heat exchangers may differ in
the specific fluids that are used in the heat transfer process, the layout of the
metal tubes, and the configuration of the enclosure.

Main types of heat exchangers :

Shell-and-tube heat exchangers
Air-cooled heat exchangers
Double-pipe heat exchangers
Plate-and-frame heat exchangers

At present HDOL manufactures, Shell and Tube heat exchangers only.
However, HDOL opt for new products viz. Air cooled heat exchangers and
Plate & Frame heat exchangers.

Basic arrangement of a shell-

and-tube heat exchanger

In shell-and-tube heat exchangers, one fluid, known as the "tube side" fluid,
flows inside a set of parallel tubes known as the "tube bundle." These tubes
are enclosed within a metal shell. The other fluid, known as the "shell side"
fluid, flows inside the shell but over the outside of the tubes. Both the metal
shell and the tubes are pressurized, and they must withstand the specified
design pressures during the intended lifetime of the equipment.

Major Heat Exchangers supplied by HDOL to various customers :

Client : Alaqua Inc, USA

Item : Evaporator
Weight : 32 MT

Client : Rashtriya Chemicals & Fertilizers Ltd. Client : Reliance Industries Ltd., Jamnagar
Item : TAIL Gas Preheater Item : Tube Bundle
Weight : 25 MT Weight : 36 MT

Client : Numaligarh Refinery Ltd., Assam Client : Indian Oil Corporation Ltd., Panipat
Item : Trim Cooler Item : LVGO Crude Exchanger
Weight : 54 MT Weight : 29.5 MT
3.4 General Details :


Shell, Heads, Saddle/Skirt/Leg/Bracket Support, Process Connections,

Internals etc.


Shell, Heads, Tubes, Tubesheets, Std. & Non Std. Forgings, Cover,
Baffles, Saddle/Skirt/Bracket Support, Process Connections etc.


Plates, Std. & Non Std. Forgings, Pipes, Fittings, Fastners, Gaskets etc.


Carbon Steel, Stainless Steel, Low Alloy Steel, Non-Ferrous Material

(Ni based alloys, Cu-Ni, Brass, Inconel, Incoloy etc.), Special Metals
like Titanium, Zirconium etc.


Orientation : Horizontal / Vertical Depend on application

Depend on application, Various Loads
Design & Operating Conditions
applicable on equipment
Depend on service, design conditions,
Material Selection
life expected, Cost
Depend on application, Location &
Space, transportability, Cost
Depend on material, size, design
Strength Calculations



Diameter : 7100 mm
Height/Length : 36000 mm
Thickness : 92 mm
Weight : 160 MT


Tube sheet Thickness : 240 mm

Tube OD x Length : 38.1 mm x 12000 mm
Weight : 50 MT


Plate Bending Capacity For shell rolling

Weight Lifting Capacity For size (Dia. & Length) & Weight
Hydrotesting Facility For high pressure equipment
Welding Capability For different material
Drilling & Machining For tubesheet drilling and
Facility machining of other components
Workshop Layout To check suitability of
transportation & movement
Current Workload To ensure availability of spare
capacity for execution of order

Also, financial condition of the company is ensured for successful execution

of order.

3.5 Manufacturing Process :

1) Pre-Order Activities :
a. Enquiry Generation
i. Marketing Efforts
ii. Registration for various products
iii. Enlistment in Vendor List (Client & Project wise)
b. Enquiry Receipt
i. Tenders
ii. Online tender download from e-tendering web-sites
iii. Non-Tender type enquiries (through e-mails, courier)
c. Reviewing Tender Documents
d. Discussion with various departments for specific requirements, if
e. Enquiry for raw materials for competitive pricing
f. Tender/Offer Submission (through Post/Courier/E-mail/e-tendering)
g. Order Receipt through Negotiation / L1 basis / Reverse Auction
2) Pre-Manufacturing Activities :
a. Receipt of Order
i. Contract Review w.r.t. pre-order commitments
ii. Issue of work order to various department with necessary
iii. Kick off Meeting to discuss criticality of equipment, setting up
mile stone for various activities keeping in view of delivery
conditions as per order
b. Design and detail Engineering

i. Design and Detailed Fabrication Drawing preparation

ii. Preparation of technical delivery condition of raw material

iii. Submission of drawings to client/TP for approval and clearing

of drawing till final approval from client/TP

c. Planning
i. Preparation of PERT and Barchart
ii. Production Plan based on 3 months planning keeping in view
of delivery date and availability of raw material
iii. Preparation of Workload chart for each fabrication shop and
d. Production Engineering.
i. Design of Jigs and Fixture
ii. Method improvement
iii. Tooling
iv. Automation and mechanization of various production related
e. Welding Engineering

i. Qualification of new procedures for the future material

ii. Qualification of welding procedure for the order

iii. Welder qualification

iv. Maintain Qualification record of welders

v. Training of welders for new processes

vi. Maintain record of all welding procedures

vii. Analysis of weld repairs and taking corrective action

f. Material Management (Procurement)

i. Procure material for manufacturing in a sequence as required

by Planning

ii. Control on inventory of raw material and components

iii. Procurement of plant and machinery

iv. Ensure that the material cost is within the estimate

v. Provide material prices to proposal engineering during

3) Manufacturing Activities :

a. Micro Planning
i. Planning activities for 2 weeks
ii. Check availability of raw material
iii. Planning for activities like X-ray, Rolling, Crane, Welding
b. Production
i. Material Identification, Marking & Cutting
ii. Rolling
iii. Fit-up, Welding
iv. Radiography
v. Assembly
vi. Heat Treatment
vii. Sand/Shot Blasting and Painting
c. Quality Control
i. Preparation of welding and testing plan
ii. QAP
iii. Certify TDC for material to be procured
iv. Inspection of material as per TDC
v. Coordination with third party inspection
vi. Quality check for various manufacturing activities
d. Despatch
i. Route Survey and Transporter finalization
ii. Ensure pre-despatch requirement of customer

Chapter - 4


Consists of all individuals and groups who participate in the purchasing

decision making process, who share some common goals and the risks
arising from the decisions.

Depending on the size and complexity of the organization/buying

situation, decision may be made by just one person or even by a group of
persons from several relevant departments.


(information &
evaluation criteria)
Initiators Deciders
(initiate purchase (formal decision
idea) making authority)

(control access)

Users Approvers
(use purchased (top management
material / services) approves deciders
(purchase &


Gatekeepers: Those who control access to other members in the buying

centre (e.g., receptionists & telephone operators)

Initiators: Those who initiate the idea of purchase; may or may not be a part
of the organization

Influencers: Those who directly or indirectly influence the purchase decision

by providing relevant information and suggesting relevant criteria for
evaluation of alternatives

Deciders: Those who are formally authorized to make the final choice from
among the available alternatives

Buyers: Those who are formally authorized and directly responsible for
making the purchase and contractual documentation with the supplier

Approvers: Those who approve the purchase proposals made by the

deciders/buyers (usually the top management)

Users: Those who actually use the purchased material and services




New product requires complex decisions, high involvement and lot of time

Modified Rebuy - Changes in quantity, quality, price, time of supply based

on needs

Straight Rebuy - Repurchase of items bought regularly from selected



Problem Recognition
Recognition General Need Description

Product Specification

Supplier Search
Proposal Solicitation & Evaln

Supplier Selection
Order & Purchase

Post Performance Review



Purchasing- Cross- Decentralized

Department Functional Centralized Purchasing
Upgrading Roles Purchasing of Small

Internet Long-Term Performance Lean
Purchasing Contracts Evaluation & Production
Pro. Buyers

Chapter - 5

Opportunities in Oil & Gas (India Brand & Equity Foundation)
Growing energy demand of India and necessity to service that to ensure
economic growth is not compromised, presents business opportunities in the
complete value chain of oil and gas sector. Exploration for domestic
production growth, development of discovered fields, transportation of crude
oil, gas and products, refining to service the petroleum product domestic
demand and exports, retailing infrastructure; prospective blocks to
encourage all these sectors provide business and investment opportunities.

Basic Statistics on Indian Petroleum & Natural Gas, 2008-09

Ministry of Petroleum & Natural Gas
The sales/consumption of petroleum products during 2008-09 were 133.400
million metric tonnes (including sales through private imports) which is
3.45% higher than the sales of 128.946 million metric tonnes during 2007-
The total number of exploratory and development wells and metreage drilled
in onshore and offshore areas during 2008-09 was 381 and 888 thousand
metres respectively.
The total refinery crude throughput during 2008-09 at 160.77 million metric
tonnes is 2.99% higher than 156.10 million metric tonnes crude processed in
2007-08 and the prorate capacity utilisation in 2008-09 was 107.9% as
compared to 104.8% in 2007- 08.

The Oil and Gas Sector Overview in India 2009 (KPMG)

India today boasts of surplus refining capacity, with further large expansions
planned. The major expansions are for the Vadinar refinery of Essar, the
Indian Oil Corp oration (IOC) refinery at Paradeep and the planned refineries
at Bina in Madhya Pradesh by BPCL and Bhatinda in Punjab by HPCL-Mittal

India is aiming to emerge as a refining hub even as global refining markets
have tightened with the closure of small refineries in North America and
Europe mainly due to challenges in investing in cleaner fuels and high
compliance costs. In addition, permits for Greenfield refineries are hard to
obtain in these countries due to environmental concerns. Therefore, capacity
addition is primarily coming from emerging economies like India, China and
some Middle Eastern countries. The Government of India has been providing
tax incentives and fiscal incentives to new refineries.


(Department of Heavy Industries, Govt. of India)

The process plant equipment industry has evolved primarily on the basis of
the requirement to set up core process industries in India after
Independence. The demand today is also from these process industries being
set up but the size of the plants have increased and are at times comparable,
or larger than global capacities.

The industry caters to a wide variety of process industries like oil & gas,
petroleum refining, petrochemicals, chemicals, fertilizer, pharmaceuticals,
metal industry, cement, paper, sugar, cryogenics, distilleries etc.

Internationally the trend that is witnessed in the heavy engineering sector is

that of a shift in base from Europe to Japan to now Korea, Taiwan, East
European countries and China & India due to logistics and cost.

Today in India there are a few companies who have made a mark in the
export arena due to their manufacturing skills and quality. Today the
manufacturing facilities are equipped with modern machinery and are
producing very sophisticated equipment such as high pressure heat

exchangers, spiral heat exchangers, multiwall vessels, airfin coolers, multi-
tubular reactors etc.

The internationally renowned consultants in the process industries like Flour

Daniel, Bechtel, Foster Wheel, LG, Daelim, Jacobs, Kvaerner, Mitsui Babcock,
Linde, ABB Lummus, Technip, Jacobs, Stone & Webster, Udhe and Toyo
Engineering have offices in India. They are increasingly using the Indian
process plant manufacturers expertise in engineering and manufacturing for
outsourcing since they are in the process of creating global vendor databases
for the purpose of expanding their low cost structure purchase options.

When asked what should be the companys strategy to enhance market

share, 47 percent said that they followed no strategy at all. Out of the
remaining 53 percent companies who have or followed a strategy to enhance
their market share, the majority felt that the top most priority in enhancing
market share was by achieving high quality and service. The second priority
they felt was aggressive marketing. Third was to reduce costs and lastly they
felt increasing the product range may help them to increase their market

However, surprisingly it was noted that an aggressive marketing strategy

was followed only by 28 percent of the companies, 30 percent do not even
collect competitors information and the balance 42 percent have a basic
understanding of marketing strategies and are aware of their competitors /
own competitive advantage.

Competitive pressures in the global manufacturing environment are forcing

manufacturing organizations to re-engineer in order to become more
competitive in the marketplace. Toward that end, management of these
organizations is paying closer attention to the changing nature of

manufacturing performance, and the systems, processes and measures used
in its evaluation.

Competitor Analysis (Adapted from Michael E. Porter, Competitive

Strategy, 1980, p. 49.)

In formulating business strategy, managers must consider the strategies of

the firm's competitors. While in highly fragmented commodity industries the
moves of any single competitor may be less important, in concentrated
industries competitor analysis becomes a vital part of strategic planning.

Competitor analysis has two primary activities, 1) obtaining information

about important competitors, and 2) using that information to predict
competitor behaviour. The goal of competitor analysis is to understand:

with which competitors to compete,

competitors' strategies and planned actions,
how competitors might react to a firm's actions,
how to influence competitor behavior to the firm's own advantage.

Casual knowledge about competitors usually is insufficient in competitor

analysis. Rather, competitors should be analyzed systematically; using
organized competitor intelligence-gathering to compile a wide array of
information so that well informed strategy decisions can be made.

Michael Porter presented a framework for analyzing competitors. This

framework is based on the following four key aspects of a competitor:

Competitor's objectives
Competitor's assumptions
Competitor's strategy
Competitor's capabilities

Objectives and assumptions are what drive the competitor, and strategy and
capabilities are what the competitor is doing or is capable of doing. These
components can be depicted as shown in the following diagram:

Competitor Analysis Components

What the competitor is doing

What drives the competitor
or is capable of doing

Objectives Strategy

Response Profile

Assumptions Resources
& Capabilities

Adapted from Michael E. Porter, Competitive Strategy, 1980, p. 49.

Chapter - 6

This chapter describes the way in which the study is conducted in terms of
methods of data collection Analyzing, Interpreting and Reporting Results. It
also describes the motivation, scope and limitations of the study along with
the objective of the study.

6.1 Research motivation

India's economy is on the fulcrum of an ever-increasing growth curve. With

robust growth of the Indian economy, the demand for commodities has been
on the rise which has already enforced huge investment into various sectors
and has resulted into heightened activity in the domestic sectors like Oil &
Gas, Petrochemicals and Nuclear Power. In turn, Engineering Industry is also
showing continuous upward trend in growth for last couple of years by
catering the need of expansions and new projects of these sectors. This
clearly indicates that a study is required for an untouched manufacturing
sector of process plant equipments in India from global recession.

6.2 Problem Definition

How different business sectors growth affects Process Plant Equipment

manufactures growth. How this opportunity can be encased by correct
product mix, diversification, and new product development. What are the
areas of improvement to cater industry demand.

6.3 Research Objectives

The specific objectives of the research were:

1. To identify business opportunities in various business sectors for

process plant equipments

2. To understand organization buying behavior
3. Marketing Strategies to be adopted for heavy engineering company
4. Importance of detailed competitive analysis to develop future business
5. Importance of Correct product mix and New Product Development in
process plant equipment industry

6.4 Scope of study

India is flooding with expansion of existing plants and development of new

projects in Oil & Gas, Petrochemicals, Power, Fertilizers, Metal etc. It is
importance to tap these opportunities by proper market research, identifying
area of interest, strengthening companys capabilities and developing
marketing strategy. Scope of Study is limited to Hindustan Dorr-Oliver Ltd.

6.5 Hypotheses

There are a set of hypothesis that has to be substantiated to bring justice to

research topic and they are:

H1: Oil and Gas Sector is having better business prospectus than other
business sectors with current workshop facility.

H2: HDOL cannot become LEVEL-1 Company with current workshop


H3: Heat Exchangers are better than Pressure Vessels in terms of


6.6 Research Approach

Both qualitative to better define our research problem and get a deeper
insight into it and quantitative methods to produce data that can be
statistically analyzed and whose results can be expressed numerically were

6.7 Type of research

Exploratory research is a type of research design that has its primary

objective the provision of insight and understanding of problem setting. The
nature of research is exploratory based on sample that provides insight
understanding and problem setting. It involves approaches such as informal
discussion with HDOL officials in the initial stage.

The research was also descriptive research i.e. to identify the cause of
something that is happening or something happened because of that cause.
The research will be a quantitative analytical research which will be
descriptive in nature.

6.8 Sampling Technique :

Broadly there are two methods of sampling were used:

Judgmental sampling is a form of convenience sampling in which the

population elements are selected based on the judgment of the researcher.
Here, we have selected four major business sectors like Oil & Gas,
Petrochemicals, Fertilizers and Power. Other business sectors are also
contributing in growth, but their contribution is very less, hence, not

The sampling technique used here is a non random sampling technique called
quota sampling i.e. the population is divided into subclasses and then picking
up the data non-randomly. In the present case, we have selected
Competitors as well as Business Sectors based on their revenue among the
groups. The company showing the highest revenue in their respective field is

6.9 Data Collection strategy

Both primary and secondary data was collected. In Primary data collection,
HDOLs status of enquiries, order booking, interview of HDOL official are
evaluated. The secondary data was gathered through books, journals,
articles, web-sites of Ministry of Petroleum, BSE, NSE and various companies
website of different business sectors.

6.10 Data Analysis Strategy :

The analysis of the available data will be based on the tools and techniques
used in financial management and statistics. Mainly MS Office Excel Package
would to use to carry out the hypothesis testing and descriptive statistics.
The analysis will include the performance of the sample companies for last
five years.

The analysis will include both technical and fundamental analysis, which
includes comparison of annual results of companies from different business
sectors for selection of companies. We have also done simple competitive
analysis of competitors.

Chapter - 7
Analysis &
Interpretation for
Hypothesis 1 (H1)

Hypothesis 1 :

H1: Oil and Gas Sector is having better business prospectus than
other business sectors with current workshop facility.

7.1 Analysis :

7.1.1 Oil & Gas Sector :

Growing energy demand of India and necessity to service that to ensure

economic growth is not compromised, presents business opportunities in the
complete value chain of oil and gas sector. Exploration for domestic
production growth, development of discovered fields, transportation of crude
oil, gas and products, refining to service the petroleum product domestic
demand and exports, retailing infrastructure; prospective blocks to
encourage all these sectors provide business and investment opportunities.

Indian companies are expanding refinery capacity and putting up green-field

refinery projects. Global oil majors are seriously evaluating investments in
India. Recently BP announced understanding for forming a joint venture with
HPCL (Hindustan Petroleum Corporation Ltd.) for a grassroots refinery. RIL
has also announced their interest in increasing refining capacity from 33

India has ambitions to become the hub for petroleum products exports.
Demand for petroleum products in the Asia Pacific region is estimated to be

around 25 to 27 million barrels per day (1.2-1.3 billion tonnes per year) in
the year 2010. However, the refining capacity in the Asia Pacific region is
expected to increase from the current 21.9 million barrels per day (1.09
billion tonnes per year) to a maximum of 25 million barrels per day in the
year 2010 (Source : Industry Sources). The export potential coupled with the
additional capacity additions and new refineries provide a unique opportunity
for potential investors. The opportunity exists in the form of investment in
capacity additions to the existing refineries and forming consortium with
private and NOCs to set up new refineries.

Institutional Arrangements

Ministry of Petroleum & Natural


Upstream : Downstream : Industry Bodies / Others

Exploration & Production Refining & Marketing

ONGC Hindustan Petroleum Petroleum Planning &

(Refining & Marketing) Analysis Cell

Mangalore Refineries &

GGSR (Refining) Centre for High Technology
Petrochemicals (Refining)

Indian Oil
Petroleum Conservation
ONGC Videsh Ltd. (Refining & Marketing)
Research Association
(Overseas E&P)
IBP (Marketing)
Petro Fed
Oil India Ltd.
Chennai Petro (Refining)

Oil Industry Safety Directorate

Private E&P Players : Bongaigaon Refinery (Refining)
Cairn, RIL, NIKO, etc.
Bharat Petroleum Petroleum India International
(Refining & Marketing)
Engineers India Limited
Kochi Refinery (Refining)

Numaligarh Refinery (Refining)

Gas Transport & Petrochemicals

Reliance Industries Ltd.

(Refining & Marketing)
Outlook for the Exploration & Production

Exploration activity, prior to NELP (The New Exploration Licensing Policy),

was dominated by public sector firms such as Oil and Natural Gas
Corporation Ltd. (ONGC) and Oil India Ltd. (OIL). The sector received a
major boost in 1974, when the massive Mumbai High fields were discovered
off India's west coast. Even after three decades, these fields continue to be
the mainstay of India's indigenous production. Realizing that these fields
would gradually deplete over time and no major discoveries were being
brought into production, the Government introduced the NELP, with an aim
of encouraging private sector participation in the oil and gas sector.

Recent rounds of NELP have proved attractive in gaining the interest of

Indian private sector and foreign players, with the private sector giant, RIL,
winning the maximum number of blocks after the state-owned ONGC. A
number of foreign players such as Cairn, BHP Billiton etc have also
participated in the bidding rounds, forming consortiums with domestic and
other foreign players. However, some of the super-majors, such as
ExxonMobil, Shell etc. continued to watch from the sidelines, rather than
mark their presence in the bidding rounds.

Exploration Status 1998-99 (3.14 million sq. km)

M o de ra t e t o We ll

E xplo re d, 16%

Une xplo re d
, 40%
P o o rly
E xplo re d


E xplo ra t io n

Init ia t e d, 27%
Source : DGH

Exploration Status 2006-07 (3.14 million sq. km)

Une xplo re d
M o de ra t e t o We ll
E xplo re d,

P o o rly
E xplo re d

21% E xplo ra t io n

Init ia t e d, 44%

Source : DGH

Outlook for the Refining Sector
India is aiming to emerge as a refining hub even as global refining markets
have tightened with the closure of small refineries in North America and
Europe mainly due to challenges in investing in cleaner fuels and high
compliance costs. In addition, permits for Greenfield refineries are hard to
obtain in these countries due to environmental concerns. Therefore, capacity
addition is primarily coming from emerging economies like India, China and
some Middle Eastern countries.

Installed Capacity of Refineries (As on January 1, 2009)

Sr. No. Refinery Location Capacity (MMT)
1 IOCL Digboi 0.65
2 Guwahati 1
3 Barauni 6
4 Koyali 13.7
5 Haldia 6
6 Mathura 8
7 Panipat 12
8 CPCL Chennai 9.5
9 Narimanam 1
10 BRPL Bongaigaon 2.35
11 HPCL Mumbai 5.5
12 Visakhapattanam 7.5
13 BPCL Mumbai 12
14 Kochi 7.5
15 NRL Numaligarh 3
16 ONGC Tatipaka 0.078
17 MRPL Mangalore 9.69
SUB TOTAL (PSU) 105.47
18 RIL Jamnagar 33
19 RPL Jamnagar 29
20 EOL Jamnagar 10.5
MMT : Million Metric Tonnes
Source : MoPNG - Ministry of Petroleum & Natural Gas

Refinery wise Capacity Addition during XI Plan New Projects
Public Sector
No. Refinery MMTPA
1 Indian Oil Corporation Ltd., Haldia 1.5
2 Indian Oil Corporation Ltd., Panipat 3
3 Indian Oil Corporation Ltd., Paradip 15
4 Hindustan Petroleum Corporation Ltd., Mumbai 2.4
5 Hindustan Petroleum Corporation Ltd., Vizag 7.5
6 HPCL-Mittal Energy Ltd., Bhatinda 9
7 Bharat Oman Petroleum Ltd., Bina 6
8 Bharat Petroleum Corporation Ltd., Kochi 2
9 Chennai Petroleum Corporation Ltd., Chennai 1.7
10 Mangalore Refinery & Petrochemicals Ltd., Mangalore 5.31
11 Oil & Natural Gas Corporation Ltd., Tatipaka 0.08
Private Sector
12 Essar Oil Ltd., Vadinar 3.5
13 Nagarjuna Oil Corporation Ltd. (NOCL) 6
MMTA : Million Metric Tonnes per Annum
Source : MoPNG - Ministry of Petroleum & Natural Gas

Indias Refining Activity has been steadily growing

250 235

Refining 149
Capacity 150 127 127.4 132.5
MMT 114.6


1998 2001 2004 2005 2006 2007 2009 2012
7.1.2 Petrochemicals Sector :

The petrochemical industry of India is less than 40 years old. Petrochemicals

cover basic chemicals like Ethylene, Propylene, Benzene and Xylene. The
other major components are the intermediates like MEG, PAN and LAB etc,
Synthetic fibres like Nylon, PSF and PFY, Polymers like LDPE/HDPE, PVC,
Polyester and PET etc and Synthetic rubber like SBR, PBR. The sector has a
significant growth potential. Although the current per capita consumption of
petrochemicals products is low, the demand for the same is growing: The
major players in this field include Reliance, Indian Petrochemicals Limited
(IPCL), National Organic Chemical Industry Ltd (NOCIL) and Gas Authority of
India Ltd (GAIL) etc.

The Petrochemical industry is seen to hold good growth potential in the
medium-term as domestic per capita consumption of petrochemical
derivatives is fraction of world levels, indicating significant potential for
future growth in India.
Demand growth in India is fuelled by several factors :
Higher GDP growth than global rates;
Higher presence of traditional materials leading to greater
opportunities for substitution and
Increased application development carried our by large players to fuel
downstream demand.

State wise production of Maharashtra
11% West Bengal
Other States

Gujarat Hub of Petrochemicals

15% 61%
Source : Ministry of Chemicals & Fertilizers

Major Customers in Petrochemicals Sector :

Reliance Industries Ltd.- Jamnagar & Hazira

IPCL- Vadodara, Gandhar, Nagothane (now RIL)

GAIL India Ltd.

Haldia Petrochemicals Ltd., Haldia

Mangalore Refinery & Petrochemicals Ltd., Mangalore

Deepak Fertilizers & Petrochemicals Ltd.




New Projects under progress :

ONGC Petro-additives Ltd., Dahej (OPaL) Petrochemical Complex

GNFC, Dahej New TDI Plant

ONGC Mangalore Petrochemicals Ltd. Petrochemical Complex

7.1.3 Fertilizer Sector :

The Indian fertilizer industry has emerged as the fourth largest producer of
fertilizers in the world after China, USA and Russia. Nitrogenous and
phosphatic fertilizers are produced indigenously, while requests for potassic
fertilizers are met through imports.

Indias requirements for 2007-08 were 26 MM Tons urea going up to 29 MM

Tons in 2008-09 against a production of 20 MM Tons
The requirement for 2011-12 is around 35.5 MM Tons for which
availability should be approx. 39 MM Tons and thus under the present
production scenario the import will rise to 19 MM Tons
The demand-supply gap is expected to grow further and may worsen
in view of the fact that 16 out of the 29 urea units are over 20 years
Immediate need to install 13-15 MM Tons urea capacity by 2011-12
equivalent to 11 to 13 Ammonia Plants of 2200 MTPD each

Major Customers in Fertilizers Sector :

IFFCO Kalol, Kandla, Phulpur & Aonla

Rashtriya Chemicals & Fertilizers Ltd. Chembur & Thal


Gujarat Narmada Valley Fertilizers & Chemicals Ltd. Bharuch

Gujarat State Fertilizers Co. Ltd. Vadodara

National Fertilizers Ltd. Nangal, Bhatinda & Panipat

Mangalore Fertilizers & Chemicals Ltd. - Palambur

Chambal Fertilizers & Chemicals Ltd. - Chambal

Nagarjuna Fertilizers & Chemicals Ltd.

Paradeep Phosphates Ltd. - Paradeep

New Projects under progress :

KRIBHCO, Surat Revamp Project (on verge of completion)

IFFCO, Kalol Expansion Project

7.1.4 Power Sector :

India has been one of the fastest growing economies in emerging markets.
Indian economy has posted more than 9% growth for three years
consecutively and has seen a decade of more than 7% growth. One of the
key factors behind any growing country is the energy requirement and supply
in that country.

India's per capita consumption of energy is extremely low as compared to

other countries and the world average. For example, the Total Primary
Energy Consumption (TPES) in India is just 0.51 tonnes of oil equivalent,
while the world average is more than three times this figure, as the table
below indicates. Similarly, the per-capita electricity consumption stands at
just 503 Kilowatt-Hour (KwH) per year, less than one-fifth that of the world
average of 3 2659 KwH and a massive 13515 KwH in the United States.
These figures illustrate the fact that there is a massive potential in India for
the growth of energy consumption, should the supply rise to meet the
demand as it increases.

Per capita TPES consumption Per capita Electricity consumption

(toe/capita) (Kwh)

India (2006) 0.51 India (2006) 503

Europe (2006) 4.7 Europe (2006) 8381

World Avg (2006) 1.8 World Avg (2006) 2659

US (2006) 7.74 US (2006) 13515
China (2006) 1.44 China (2006) 2060
Korea (2006) 4.48 Korea (2006) 8063

Japan (2006) 4.13 Japan (2006) 8220

0 5 10 0 5000 10000 15000

Source: International Energy Agency, Key World Statistics 2008

Major Customers in Power Sector :

Alstom Power VA TECH Antrz
Voith Siemens McNally Bharat Engineering
Thermax Ltd.

No new projects are in Thermal/Hydro Power sector. There will be big

projects in Nuclear Power Sector, but current HDOL capability is not

7.1.5 Sector wise Area of Interest :

Business Business
Area of Interest
Sector Opportunity

Vessels, Heat Exchangers, Columns, Excellent

Reactors, Driers with metallurgies like CS,
Oil & Gas LTCS, SS, NACE/HIC, Low Alloy, Duplex
SS, Super Duplex SS, Claded material, Cu-
Ni, Brass, Al-Br, Monel

Vessels, Heat Exchangers, Columns, Good

Reactors with metallurgies like CS, LTCS,
SS, Low Alloy, Duplex SS, Super Duplex
SS, Claded material

Vessels, Heat Exchangers, Columns with Average

metallurgies like CS, SS, Low Alloy, Claded
material, Special Urea grade materials like

Surface Condensers, Feed Water Heaters, Average

High Pressure Heat Exchangers

7.1.6 Business Segment wise contribution for

HDOL Orders Booked



8% 2% 5%

Oil & Gas Petrochemicals Fertilizers Power Others

HDOL Enquiry Pattern





Oil & Gas Petrochemicals Fertilizers Power Others

7.2 Interpretation :

Looking to growth pattern of various sectors discussed above, Oil & Gas
sector dominates others sectors. There are many big players like ONGC,
IOCL, HPCL, BPCL, RIL etc. Also, it should be noted that Exploration &
Refining supplies feed/raw material for other sectors like Naphtha to
Petrochemicals/Fertilizers/Power sectors and Natural Gas to Fertilizers/Power.
Further, existing refining capacity is 177.97 MMTPA and new projects are
coming with refining capacity of 62.99 MMTPA, means this sector is growing
by 64.6%, hence, it proves heavy investment in this sector. It is proved that
Oil & Gas sector is one the driving force of economy.

Petrochemicals Sector is also emerging sector. Few expansion projects like

OPaL, OMPL are under progress and there will be good requirement of
process plant equipments. There are no major investments in Fertilizers &
Power Sector.

Looking to HDOL product range, it is clear that Oil & Gas Sector is full of
opportunities and we can supply variety of high value equipment. Analysis of
enquiry received and orders booked by HDOL also shows that Oil & Gas
Sector contributes more than other sectors.

Hence, the hypothesis that Oil and Gas Sector is having better business
prospectus than other business sectors with current workshop facility is
proved correct.

Chapter - 7
Analysis &
Interpretation for
Hypothesis 2 (H2)

Hypothesis 2 :

H2: HDOL cannot become LEVEL-1 companies with current

workshop facility.

8.1 Analysis :

8.1.1 Design & Engineering Capability :




AutoCAD 2008

Codes & Standards

American Society Mechanical Engineers (ASME)

American Society of Testing Materials (ASTM)

Tubular Exchanger Manufacturers Association (TEMA)

American National Standards Institute (ANSI)

American Welding Society (AWS)

Indian Standard (IS)

Indian Boiler Regulations (IBR)

PD 5500

SMPV RULES (For Explosive Applications)

GAS CYLINDER RULES (For Explosive Application)

8.1.2 Key Facilities Installed in Workshop :

* All dimensions are in mm.

No. Machinery Purpose*

1 Heavy Duty Plate Bending 50/32 Thk. x 3000 Wide CS/SS Plate
110/65 Thk. x 3000 Wide CS/SS
Plate (Order Placed, will be
commissioned in January, 2010)

2 CNC Deep Drilling Machine 1000 Thk. x 4000 Diameter

3 Electric Overhead Crane 50 MT + 50 MT = 100 MT

20 MT + 20 MT = 40 MT

Others cranes 10 MT, 7.5 MT (2

nos.), 5 MT (2 nos.), 3 MT

4 Semi Automatic Submerged 4 nos.

Arc Welding

5 Welding Machineries 80 nos.

6 Machine Shop Lathe Machines, Drilling Machines,

Milling Machines, Gear Hobbing
Machine, Horizontal & Vertical Boring

7 CNC Plasma Cutting Machine 1 nos.

8 Electric & Pneumatic Tube Up to 50 mm OD tubes 6 nos.


9 Testing Facility Radiography In house

Ultrasonic Testing sub contracted

Hardness Testing sub-contracted

Destructive Testing sub-contracted

10 Heat Treatment Sub-contracted to United Services

Entrance View

4th & 5th Fabrication Shop

Machine Shop CNC Drilling Machine


8.1.3 SWOT Analysis (HDOL)

Strengths Weaknesses

Part of a bigger infrastructure company Insufficient enlistment with some PMC /

(IVRCL) LSTK / Clients / Consultants / Project
Key facilities and machineries available Specific Vendor List
Experienced Manpower Past failures and insecure clientele due
Accreditation & Certifications to the same
SAP implemented Weak past track record for higher
Good tie-up with suppliers for support metallurgy
Prime Location for Mfg. Lack of high end technology in the core
Network across the Country product range
Full support from Management Slow execution and high over head
Capability to carry out site jobs compared to same size / turn over
Facilities like dished end mfg. & testing
lab is not available
Unexplored Export Market

Opportunities Threats

Recession is over Easy market entry for competition

New Projects in Oil & Gas Sector and Stiff competition for low value items
Petrochemicals Late action could leave company behind
Good Market rapport due to successful in new / emerging areas
and timely execution of orders Loss of Key Staff
Heavy investments in Nuclear Power Competition from Chinese & Korean
Strategic long term collaboration with Suppliers
(foreign) technology partners Margin squeeze
Export Market

8.1.4 Assessment of Competition

Level - 1 (Big Players having huge developed facilities)



Godrej and Boyce

Level 2 (Companies having medium level facilities)

HDOL Hindustan Rediators,

Anup Engineering Fab Tech

Patels Air Temp Precision Equipments

Gansons Engineering GMM Pfaudler

GR Engineering,

Level 3 (Small capacity)

Minakshi Industries ME Heat

Reynolts Engineering Gemini Industries

Aero Engineers Bhillai Steel

Aerotherm Unique Chemoplast


LEVEL 1 COMPANIES : Companies are having high end technologies, skills,
facilities, technological tie-ups, strong proven track records. They are
normally interested in very large to large equipment, critical metallurgy, very
high value items.

LEVEL 2 COMPANIES : We fall under category of LEVEL-2. Companies are

having comparable skills, facilities, good proven track records. They are
normally interested in medium to large equipment, critical metallurgy, high
value items.

LEVEL 3 COMPANIES : Companies are having small to medium size

workshop facilities. They give very tough competition to Level-2 companies.
They are normally interested in small to medium equipment and medium
value items.

HDOL stands at LEVEL-2 at present. HDOL competes with LEVEL-2 & 3

companies. To enjoy comfortable situation, HDOL has to raise its capabilities
comparable to LEVEL-1 companies, where HDOL can secure orders with good

Lost Order Analysis :

8.1.5 Workshop facility comparison :

At present, L&T is No.1 heavy fabrication company in India. HDOL is keeping

eye on L&T and see as a role model. Below is the comparison of facilities
among LEVEL-1 companies and HDOL.


Over seas
Over seas offices Over seas offices Over seas offices No
Dust Free
Environment for SS
Yes No No No
& High Alloy
Heavy Duty shops
175 MT 230 MT 150 MT 100 MT
with 230 MT Cranes
Indigenous design
for High Pressure Collaboration NO Collaboration No
Heat Exchangers
U, U2, N, R, S, CE U, U2, U3, R, S, CE U- 2, U, S, R U, U2, R, S, CE
marking, SQL marking, NBBPVI, and NB , SQL, marking, U
Approval SQL Approval CE Stamp Approval
Fusion Welded
Fusion Welded Fusion Welded
Pressure Vessels
Pressure Vessels up Pressure Vessels up
up to 200 mm No No
to 200 mm (8) to 200 mm (8)
(8) thickness by
thickness by Lloyds thickness by Lloyds
Sea-going jetty Sea-going jetty Sea-going jetty No No
Very High Level Very High Level Very High Level Very High Level
Design Heads Design Heads Design Heads Design Heads
Global Supplier Global Supplier Working
Global Supplier Base Global Supplier Base
Base Base on it
Narrow Gap SAW (Submerged Arc Welding)
Electro Slag / Submerged Arc Strip Cladding
Long Seamer
Not Known No
Nozzle to Shell / Head Welding Systems
Inner Bore Overlay (min. 38mm ID)
Orbital Tube to Tube Sheet Welding
Rolling 250 mm Rolling 225 mm Rolling 250 mm Not Known 50 mm

8.1.6 Few Equipments manufactured by LEVEL-1
companies :
Godrej & Boyce Mfg. Co. Ltd., Mumbai
HCGO (ULSD) REACTOR supplied to a
Refinery in USA
Weight (Kgs) : 665,000
Thickness : 153 + 5 = 158 mm

HDOLs Limitation for such jobs :

HDOL cannot handle such a heavy job.

HDOL do not have plate rolling capacity of

158 mm

HDOL do not have U2 Stamp

HDOL do not have jetty to dispatch such

large size equipment

D HYDRO COLUMN supplied to a Refinery in

Length (mm) : 73 meters
Weight (Kgs) : 467,000

TEMA India Ltd.

HDO do not have technology for High

Pressure Screw-Plug Heat Exchangers

L&T Ltd., Powai & Hazira Works

Screw Plug type Heat Exchanger

HDOLs Limitation for such jobs :

HDOL cannot handle such a heavy job.

HDOL do not have plate rolling capacity of

more than 50 mm

HDOL do not have jetty to dispatch such

large size equipment

HDO do not have technology for Screw Plug

type heat exchanger

HDOL do not have design capability for such

a critical equipment

FCC Reactor supplied to a Reliance,

Size : 10.2 m ID x 45.7 m Length
Weight : 1148 MT

ISGEC, Yamunanagar, Haryana

Site Fabricated Columns at IOCL, Panipat Refinery

Atmospheric Column:
Diameter - 6,800mm
T/T Length 59,800mm
Weight - 390 MT

Vacuum Column:
Diameter 10,000mm
T/T Length 52,450mm
Weight - 580 MT

HDOL do not have capability to carry out site work for such
large & heavy equipment

8.2 Interpretation :

As reviewed and analyzed above, HDOL is having very good design

capabilities, machineries, space, infrastructure etc. among LEVEL-2 & 3
companies. HDOL stands at LEVEL-2 at present. HDOL management aims to
compete LEVEL-1 companies for critical high value equipment. HDOL is
lacking behind from top companies in many respects like technological tie-
ups, machineries, skilled man power, certifications and accreditations, proven
track record, welding capabilities, sea front, global presence, automation in
fabrication & welding techniques etc.

Lost order analysis also reveals that small and medium category suppliers
giving stiff competition and to secure order, HDOL has to squeeze margins.
SWOT analysis also indicates lots of scope of improvement to come out this
situation. To enjoy comfortable situation and exploit niche market, HDOL has
to raise its capabilities comparable to LEVEL-1 companies, where HDOL can
secure orders with good margins. Above analysis proves that HDOL cannot
become LEVEL-1 Company unless it expands his wings across every area

Hence, the hypothesis that HDOL cannot become LEVEL-1 companies with
current workshop facility is proved correct.

Chapter - 9
Analysis &
Interpretation for
Hypothesis 3 (H3)

Hypothesis 3 :

H3: Heat Exchangers are better than Pressure Vessels in terms of


9.1 Analysis :

Overview of both Heat Exchangers and Pressure Vessels is already given in

chapter Product Portfolio. We are repeating few thing herebelow :


Shell, Heads, Saddle/Skirt/Leg/Bracket Support, Process Connections,

Hardware, Internals (if required) etc.


Shell, Heads, Tubes, Tubesheets, Girth Flanges, Forgings, Cover,

Baffles, Saddle/Skirt/Bracket Support, Process Connections, Hardware



Shell, Heads, Baffles Plates
Heat Exchanger Tubes Tube
Tubesheets Forging
Process Connections Pipes & Flanges
Girth Flanges, Cover Non-Std. Forgings
Mild Steel Plates & Structural Parts
like Beam, Channel, Angle


This cost distribution is arrived in consultation with HDOLs estimation &

costing department. Present order product mix covers 70% pressure vessels
and 30% heat exchangers. This cost analysis is arrived by studying 50 nos.
pressure vessels and 50 nos. heat exchangers of various types.

Cost of Item in Percentage (%)

Pressure Heat
Component / Part
Vessels Exchanger

Plates 64% 13.5%

Mild Steel Plates / Structures 2% 2%

Forgings 5% 22%

Tubes/Pipe 1.5% 44%

Hardware 3% 6%

Welding Electrodes / Consumables 9.5% 6%

Painting / Packing 2% 1%

Labour and other cost 13% 5.5%

Total Cost 100% 100%


Minimum HOLDs compared to pressure vessels (so manufacturing

activities can be started quickly)

Tubes are required before approx. 2 months of job completion so

interest burden of tube cost (44% of total cost) is less. In case of
pressure vessels, major cost contributor is plate which is necessary to
start work which we need at early stage of manufacturing

HDOL is having capability of Thermal as well as Mechanical design of

heat exchanger, so economical design with optimization can be done
by playing various technical parameters

Basically heat exchanger is having two sub-assemblies viz. Main Shell

& Tube Bundle. Both sub-assemblies can be fabricated separately so
overall cycle time of manufacturing is less compared to pressure

If we compare Price v/s Weight (like Rs. / kg) then heat exchanger is
having high value compared to vessels

Compact in construction, hence requires less space and handling


Variety of construction options like Screw-Plug type, Helix heat

exchanger, Plate-Frame type, Air Cooled type etc. These options
contributes value addition

Interpretation :

HDOL is having all capabilities right from design to dispatch. It should also be
noted that market requirement of both the product is not controlled by us.
We can only choose market mix to be adopted depending capacity utilization.
If spare capacity is available, then opportunity for pressure vessels can be
materialized. Above analysis reveal many advantages of heat exchangers
which prove it superior to pressure vessels.

Heat Exchangers are having different kind of construction models, which can
make product mix rich. If we consider unit time period (say a year), then it is
sure that HDOL can manufacture more nos. of heat exchangers compared to
pressure vessels of similar weight. Price ranges for pressure vessels from
Rs.100/kg to Rs.125/kg and for heat exchanger from Rs.200/kg to Rs.
225/kg. So, above analysis proves that heat exchangers generate more
revenue than pressure vessels.

Hence, the hypothesis that Heat Exchangers are better than Pressure Vessels
in terms of profitability is proved correct.

Chapter - 10
Recommendations &

An attempt is made to identify the factors that influence Process Plant
Equipment manufacturers in terms of business opportunities from various
business sectors, future prospectus, product mix, high technology products
and awareness of technological developments in market. The major findings
of the study are listed below:

10.1 Major Findings & Conclusion :

Process Plant equipment sector is a highly capital as well as labour intensive

sector with a strong engineering orientation where the products are mostly
custom built. The industry at present is equipped with modern machinery in
addition to competent engineers with management skills, skilled technicians
and qualified welders.

Looking to growth pattern of various sectors discussed, Oil & Gas sector
dominates others sectors and this sector is growing by 64.6%, hence, it
proves heavy investment in this sector. Looking to HDOL product range, it is
proved that Oil & Gas Sector is full of opportunities and we can supply variety
of high value equipment, hence, it is having better business prospectus than
other sectors. Petrochemicals Sector is also emerging sector with few new

HDOL management aims to compete with LEVEL-1 companies for critical high
value equipment. To reach at LEVEL-1, improvement and enhancement are
required in areas like technological tie-ups, machineries, skilled man power,
certifications and accreditations, proven track record, welding capabilities,
new workshop having facility jetty near by and penetration in export market.
Hence, it is proved that with current workshop facility, HDOL cannot become
LEVEL-1 company. There is huge requirement of heat exchangers and
pressure vessels in oil & gas sector globally. There are huge oil refineries in
gulf countries, so efforts are required for market penetration.

Better product mix is always necessary for overall growth of the company.
Though market requirements are not governed by us, efforts must be made
to tap business opportunities for heat exchangers. Heat exchangers are
having many plus points; hence, it is having good profitability compared to
Pressure Vessels.

10.2 Recommendations :


Road map to Rs. 500 Crores turn over includes general marketing strategy,
market research, future prospectus and 3 years Marketing Strategy.

General Approach to secure orders :-

Vendor Registration

Personal approach with decision makers and shop visit by client

Up gradation of the Product in terms of Metallurgy, Size & Product

A total support and access to client through out the execution and
make them feel special

Expand customer base Generate Brand Name

Tracking of new projects in pipeline

Regular information to the existing and potential clients regarding

development at HDO. Arranging visit.

Exploring new vendors for competitive raw material costing

Penetrate into the market for Maintenance Requirements

Optimize costing & become more cost effective to clients

Present Market Scenario :-

Recession is over

Rise in Global Oil demand

Oil prices have reached up to 80 $ per Barrel

OPEC has started increasing their production of Oil

All related project which went on hold during recession have resumed
and peaking up speed

Indian refinery has also put projects on fast track

To utilize byproduct of refineries, various new refineries in India are

coming up with petrochemical complex

As per 11th plan Investment of Rs. 1,00,000 Cr. per year has been
planned on power plant.

Industry is also concentrating on renewable energy resources (i. e.

Solar Power Plant, Wind Energy etc.)

Investment of Rs. 1,50,000 Cr. has been planned in solar power plant

Indian process plants are 15 year old and hence replacement market is
also significant.

Upcoming Projects for next 5 years in India

Refineries Petrochemical Complexes

IOCL, Paradip OPAL, Dahej

MRPL, Manglore OMPL, Manglore

HPCL, Mumbai RIL Petrochemical

HPCL, Visag.
Kakinada Refinery,
BORL, Bina
Essar Oil Refinery, Complex)
BCPL, Assam

Fertilizer Plants Oil & Gas Sector


IFFCO, Kalol ONGC, Hazira

Power Plant


Sasan Power Limited (M.P.)

Akaltara Power Limited (C.G.)

Coastal Gujarat Power Limited

Coastal Karnataka Power Limited

Maharashtra Ultra Mega Power Project Co.

Solar Power Plant


Electrotherm, Ahmedabad

Clinton Foundation

Few Upcoming Projects (Global)


Jubail Refinery, Saudi Arabia

KNPC, Kuwait

Yanbu Refinery, Saudi Arabia

Petrobrass, Brazil

Petrochemical Complex

Petrochemical Complex, Abu Dhabi

Fertilizer Plant

Ruwais Fertilizer, Abu Dhabi

Oil & Gas Project

Gasco, Abu Dhabi

Product wise Potential :

Actions required to add Valuable Products :

Development of Welding Capabilities to cater high grade of metallurgy

Develop Production Facility to deal with Higher Thickness Product

Increase Resources in terms of Man & Machineries

Commitment of all cadre of employee toward quality & system

Aggressive & Continuous Marketing in Targeted Area

Rigorous Market Research

10.2.1 Marketing Strategy for year 2010-11 :

Products, which can be developed:

Equipment with Duplex & Super Duplex Materials

Equipment with Low Alloy Steels (LAS GR 11 & LAS Gr 22)

Equipment with Higher Thickness (Up to 100mm)

Air Cooled Heat Exchanger for refinery application

LP Heater for Power Plant through BHEL

Equipment for Solar Power Plant (Low & Medium Pressure


Note: Potential in the range for FY 2010-2011 is Rs. 2500 Cr.

Facility to be augmented with required investment :

Description Investment
in Rs. Lac
Duplex Qualification as per EIL specification 10
LAS welding Qualification. 10
Welding preheating facility to be developed , required for 5
LAS Material
Finning facility for Air Cooled Heat Exchangers 300
ASME U2 Stamp, CE Marking 50
Machine for Nozzle Opening (Baggo make) 20
Technical Tie up / Collaboration for Air Cooled Heat 200
Automatic SAW Machine to weld Nozzle with Shell. 30
Faros Blator to avoid Manual Weld edge preparation. 150

Shop Floor Area (Bay with 200MT Capacity). In Process
Dedicated Shop for SS fabrication. 2
Welding Expert and Metallurgist. 5
Training of employees. 5
Higher Thickness Plate Rolling Machine Received

Competitor in the range

1. ISGEC 5. Techno Process
2. Godrej 6. GR Engineering
3. Precision 7. Gansons Engg.
4. Essar Heavy Engineering 8. Anup

Result Expected:
Price advantage as competition with few big names of industry.
Present shop floor capacity is 850 MT/Month will enhanced to 1500
Higher return in Rs./MT due to higher metallurgy.
Offer to order conversion ratio of 15 % (present rate) will improve.

Expected order booking will be Rs. 250 Cr.

10.2.2 Marketing Strategy for year 2011-12

Products, which can be developed:

Equipment with High thickness up to (100mm to 200mm)

Screw Plug Heat Exchangers

High Pressure Feed Water Heater

Air Cooled Heat Exchanger for Power plant

Ammonia Convertor

Secondary Prereformar

Carbamate Separator

Power plant equipment (High Pressure Heat Exchangers).

Equipment with Exotic Metallurgy (i. e. Incoloy, Inconel, Hast


Equipment Weighing higher than 300 MT for Site Fabrication

Total Potential of for this range of product: Rs. 4000 Cr.

Facility to be augmented with required investment:

Description Investment in
Rs. Lac
Plate Rolling Machine up to 250mm shell thk 500
Furnace to facilitate hot rolling. 50
Welding qualification for Low Alloy Steels for higher Thk. 05
(up to 200mm)
ASME U3 Stamp. 50
Technical Tie up / Collaboration for Screw Plug Heat 200

Exchanger & Power Plant Equipment
Strip Cladding Facility. 15
Qualification for WOL with strip cladding. 05
Shop Floor Area (Bay with 250MT Capacity) In Process
Clean room facility for Exotic Metal. 25
150-200 MT capacity crane for site fabrication 1000
Plate rolling machine up to 80mm for site fabrication 300
TOTAL 2150

Competition for above said product range:

1. ISGEC 5. GR Engineering
2. Godrej & Boyce 6. TEMA
3. L & T Limited 7. And many international
4. BHEL Supplier.

Result Expected:
Can be a sixth largest fabrication company of India
More Price advantage as competition with the biggest names of
Present shop floor capacity is 850 MT/Month will enhanced to 2200
Higher return in Rs./MT due to higher metallurgy
Offer to order conversion ratio of 15 % (present rate) will further

Expected order booking will be Rs. 400 Cr.

10.2.3 Marketing Strategy for year 2010-11 :

Products, which can be developed:

Large Surface Condenser for Power Plant

Complete Steam Line including Piping & Instrumentation for
Solar Power Plant
Boiler Drum
Urea Reactor
Urea Stripper
Carbamate Condenser
EO Reactor
Polypropylene Reactor
DHDS Column for Refinery Applications
Methanol Convertor
Equipment weighing 500 MT for site fabrication
Equipment with very high metallurgy (i. e. Ti, Zr, SS 31050
Urea Grade)

Total Potential of for this range of product: Rs. 7000 Cr.

Description Investment in
Rs. Lac

Qualification for welding of forged shell 10

Qualification of exotic metallurgy (i. e. Ti, Zr, SS 31050 20
Urea Grade)
Welding qualification for Low Alloy Steels LAS Gr 22 V 20
Shop floor area near jetty. 4000
Automatic Tube to Tubes-sheet welding Machine 150
Experts to handle Super critical equipments. 100
Heat Treatment Furnace 8m X 8m X 18m 500
TOTAL 4800

Competition for above said product range:
1. L & T Limited 6. HITACHI, Japan
2. BHEL 7. Borsig, Germany
3. ISGEC 8. Vijay Tank & Vessels (VTV)
4. Godrej & Boyce 9. Luigi Rasta, Italy
5. Mangiarotti, Italy 10.Korean Heat Transfer

Result Expected:
Can be a fourth largest fabrication company of India
Can handle super critical equipment
Further Price advantage as competition with the international industry
Present shop floor capacity is 850 MT/Month will enhance to 2200
Higher return in Rs./MT due to higher metallurgy
Offer to order conversion ratio of 15 % (present rate) will further
Expected order booking will be Rs. 500 Cr

10.3 Limitations of the study

As with any exploratory research, the findings of this study are to be

accepted with several limitations. Since limitations of a study can be viewed
as directions for future research in the field, it is pertinent to list limitations
and future research opportunities simultaneously.

Scant and adequate secondary data on technology products market in

India was available

This study does not take companies who are the part of the industry
but are small & medium players.

This study does not cover many equipment of Capital Goods Sector.
Various analyses carried out from the basic data available from HDOL
which may not cover picture of whole industry.
Survey could not be done due to scatted locations of companies and


Books & Journals

Text Books of SMU

Research Methodology C. R. Kothari
Principles of Marketing Philip Kotler
Final Report on The Indian Capital Goods Industry (by CII)
Fundamentals of Heat Exchanger Design Ramesh Shah & Dusan
P. Seculic
Pressure Vessel Design Manual Dennis Moss
A report on Indian Engineering Industry Corporate Catalyst India
A Report on Oil and Gas - IBEF

Websites and Database :

www.dghindia.org (Directorate General of Hydrocarbons)
www.petroleum.nic.in (Ministry Petroleum & Natural Gas)
www.commerce.nic.in (Ministry Commerce & Industry)
www.dhi.nic.in (Ministry of Heavy Industries and Public Enterprises)
www.ibef.org (India Brand Equity Foundation)
www.fert.nic.in (Ministry of Chemicals & Fertilizers)

www.energy.gov (U.S. Department of Energy)