Management
1. Industry Structure and development.
The companys main business was that of LPG marketing after bottling into cylinders and
trading of lubricants. Total LPG business is in the hands of Govt. owned oil companies who
are placed at a advantageous position because of sale at a subsidised price. There is
revival of LPG business in a small way because of the recent change of policy in selling
LPG by Govt owned oil companies.
2. Opportunities & Threats
Because of the subsidy given by Govt, oil companies have monopolized LPG business.
Recently the govt. has announced new distribution policy of sale of LPG by Govt owned
companies. This policy too is not open market policy and LPG Bottling plants in private
sector are still facing resistance from the customers because of higher sale rate. This
policy of the Govt. is a threat towards the business opportunities of LPG Bottling Plants
in private sector. Company has started marketing activities in lubricants and other
products during the year.
3. Outlook
Private sector LPG bottling plants cannot compete with Govt. oil companies who sell LPG
at subsidized and Govt. controlled rates to domestic consumers. Since Govt owned oil
companies sell at a much cheaper rate, people have tendency to take new connection and
refilling from them. The future of LPG bottling plants is linked with Govt. policies. It
is only when subsidy is completely abolished, and Govt. control over sale rate of LPG by
public sector oil companies is lifted, the LPG bottling plants in private sector can look
for some business. Untill that time, it is not possible to forecast any future prospects.
Govt. has its own political compulsions to take decision for abolishing subsidy and allow
the govt. owned oil companies to fix prices in line with international rates.
The company is making efforts to revive sale of LPG to commercial segment and have
started marketing LPG to industrial & commercial customers but the response is not
encouraging. Company has entered into an agreement with LPG Infrastructure India Ltd. for
filling of their LPG cylinders on contract basis. To cover up the losses the company has
also started trading activities for marketing of industrial consumables.
4. Risk and concerns.
Govt. decision to continue price control and allowing subsidy on LPG to Govt. owned oil
companies to demostic comsumers and fluctuations in prices of petroleum products in
international market are matters of great risk and concern to the company.
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