Hoc Final

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CHAPTER 1
INTRODUCTION

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INTRODUCTION

An organization is established with the purpose of achieving certain objectives; these
objectives can be achieved only when the company is put into best use. For this the company
should have very clear vision and mission. Well established firms are always great assets for
the country, it generates income, employment and increasing standard of living. The Business
world helps the country to build goodwill for the country.
The chemical industry is one of the key industries in India. Hindustan Organic Chemicals
Limited was setup by the department as one of the initiatives for manufacturing and
promoting chemical production in India. Hindustan Organic Chemicals Limited (HOCL), a
Government of India Enterprise, was established in 1960 with the objective of attaining self-
reliance in basic organic chemicals needs. It was expected that indigenous manufacture of
these chemical intermediates will give impetus to downstream industries resulting in setting
up of chemical units and achieving self-sufficiency for the country in this area.
The Company engaged in the business of manufacture and sale of chemicals. They
provide the basic organic chemicals essential for vital industries like resins and laminates,
dyes and dyes intermediates, drugs and pharmaceuticals, rubber chemicals, paints,
pesticides and others, touching virtually facet of everyday life. They have one subsidiary
company, namely Hindustan Fluorocarbons Ltd. This subsidiary company produces the
versatile engineering plastic polytetrafluoroethylene (PTFE).
The main products manufactured by the company are Phenol, Acetone, Nitrobenzene,
Aniline, Nitrotoluenes, Chlorobenzenes, Nitrochlorobenzenes and Hydrogen Peroxide.
The raw materials used by the company are Benzene, Toluene, LPG, Methanol, Naphtha
and Sulphur, Majority of which come from petroleum refineries. The company has two
manufacturing units, one at Rasayani, Dist. Raigad in Maharashtra & the other at Kochi in
Kerala. Their subsidiary unit is located at Hyderabad in Andhra Pradesh. Hindustan
Organic Chemicals Ltd was incorporated in the year 1960 by the Government of India.
The company was established with the objective of attaining self-reliance in basic organic
chemicals needs. Initially, the company started as small chemical unit, has now acquired
the status of a multiunit company with two fast growing units and one subsidiary unit. In
April 1971, the company established their R&D unit at Rasayani in Dist. Raigad,
Maharashtra State. The unit was recognized by DSIR, Ministry of Science and
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Technology, Government of India. The present study is an attempt to evaluate the
functional performance of HOCL.
Hindustan Organic Chemicals Ltd is a central public sector undertaking (CPSU) under
the Department of Chemicals and Petrochemicals which is under the Ministry of
Chemicals and Fertilizers, Government of India. HOCL was formed in 1960 to provide
self-sufficiency in basic organic chemicals, the life blood of many vital industries. In
1987, the Kochi unit of HOCL was commissioned. The Kochi plant, employing 431
employees, has an installed capacity of 40,000 TPA of Phenol and 24,600 TPA of
Acetone. Phenol and Acetone are highly versatile organic chemicals. Universal Oil
Products Inc,(UOP), USA, one of the world leaders in the field of petrochemicals have
supplied the technology for this plant. In 1995, the Hydrogen Peroxide plant was
commissioned at Kochi unit with a capacity of 10,000 TPA. With its modern process
technology, rigid quality control, competitive pricing, regular guaranteed supply to
customers, prompt delivery and a committed work force, HOCL was able to survive and
grow continuously until 1995. However in the subsequent period of globalization and
liberalization, the complex and continuously changing scenario in the petrochemicals
market has posed great challenges in the marketing of HOCL products.

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OBJECTIVES OF THE PROJECT WORK :
The following are the objectives :
(a) Surveying relevant literature pertaining to marketing management.
(b) Collecting information about the marketing organization, the marketing
practices and policies and sales process of HOCL.
(c) Collecting, analyzing and interpreting data on attitudes of HOCL customers
using questionnaire
(d) Analysis of marketing mix of HOCL.
(e) Giving suggestions to improve Marketing management based on the above,
enabling the organization to achieve full plant capacity utilization and higher
profits.

SCOPE OF THE STUDY:
This project work was confined only to marketing of two finished products of Kochi unit of
HOCL only viz: Phenol and Acetone.
LIMITATIONS OF THE STUDY:
The following are the limitations of the study :
a) The product, Hydrogen Peroxide manufactured by HOCL is not considered in this study
due to the following reasons (i) This is a low value inorganic chemical produced by HOCL
and sold through long term contracts to regular customers. (ii) The marketing practices for
Hydrogen Peroxide are distinct as compared to that for Phenol and Acetone. (iii) This product
has a relatively very low impact on profitability of HOCL as compared to Phenol and
Acetone.
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(iv) The raw materials for Phenol and Acetone are petroleum products whose prices fluctuate
frequently, necessitating frequent changes in prices. This does not apply to Hydrogen
Peroxide due to which it can be sold with lower variations in prices over the year.
The conclusions and suggestions therefore apply only to Phenol and Acetone and not to
Hydrogen Peroxide.
b) Due to difficulty experienced in getting responses from customers spread over the country
in a short span of time, attitude survey had to be carried out through e-mail from some
customers and by direct response from those customers who visited HOCL during the project
work.

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INDUSTRY PROFILE
Department of Chemicals and Petrochemicals was established by the Government
of India in order to promote self-sufficiency of the country in Chemicals and Petro-
Chemicals. This department was formed with the motive of grooming the Chemical,
Pharmaceutical and Petrochemical industries to meet domestic needs and to compete
globally.
The Chemical Industry in India generates almost 13% of country's total export with
an annual growth rate of10% -12%.
The Chemical Industry in India is based on the idea of Diversification. The
industry is a multi-product and multi-faceted one. Depending on these product categories
we can divide the Chemical Industry in India in following sectors:
Inorganic Chemicals-In this sector the growth rate is near about 9% and the
chemicals produced in this sector are mainly used in alkalis, fertilizers, detergents
and glass.
Drugs and Pharmaceuticals- This sector of Indian Chemical Industry holds the 4th
place in the world in terms of volume. Export led growth is the characteristics of this
sector.
Plastics and Petrochemicals-This sector of the Indian Chemical Industry is the
fastest growing one among all the sectors. Reliance Petrochemical is the company
which dominates this sector.
Pesticides, Fertilizers and other Agro-chemical products- This sector of the
Chemical Industry in India account for almost 2.5% of the global market. It
possesses an impressive domestic market growth rate of 10%.
Specialty and Fine Chemicals like Dyes and Paints- This sector is characterized
by high level of fragmentation. The sector is involved in production of paints, dyes,
inks, polymers and a lot of other chemical products. The sector has a growth rate of
near about 12%.

India was a net importer of chemicals in early 1990s, but has now become a net
exporter due to reduction in Imports because of implementation of many large scale
petrochemical plants like Reliance etc. and also because of tremendous growth of exports
in sectors like bulk drugs and pharma, pesticides, dyes and intermediates.

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Exports of the basic chemical sector in 1995-96 surpassed the target of Rs 6,742 crore by
reaching a figure of Rs 7,979.30 crore and showing a massive growth of 24% over the
preceding year's figure of Rs 6,403.90 crore. During 1994-95 exports totalled Rs 6,403.90
crore against the target of Rs 5,504.60 crore.
The drugs and pharmaceuticals and the organic/inorganic/agro-chemicals
contributed as much as 63% of total exports. This has been a herculean task, which has
been achieved by competing with big multinational corporations of the world. Turnover
for the year ended 1998-99 is close to Rs.15, 000crores

Evolution
The origin of the world chemical industries can be traced back to 7000BC. In those early
days of civilization, some artisans from Middle East refined Alkali and Limestone for
producing Glass. After them people from China invented Black Powder which was nothing
to chemical explosive. In 1635, different chemicals were produced for training in
Massachusetts.
The chemical industry is nearly a $3 trillion global enterprise and both historically and
presently, it has been concentrated in three areas of the world, Western Europe, North
America and Japan (the Triad). The largest corporate producers worldwide, with plants in
numerous countries, are BASF (Germany), Dow (US), Degussa (UK), Eastman Chemical
Company (US), Formosa (Taiwan), DuPont (US), Bayer (Germany) and Mitsubishi (Japan),
along with thousands of smaller firms.

World Scenario
Global production of organic chemicals was around 400 million tonnes during 2010-
11.Major producers of organic chemicals are USA, Germany, U.K, Japan and China and
India. Few Latin American countries like Brazil and Chile are increasing their presence in
global organic chemicals market.
In 2011, with the clear conditions and trends, signs of instability and uncertainly bedevil the
chemical industry chiefly, in demand growth. Though demand will certainly rise over the
next few years, the steepness of the curve is impossible to predict. With GDP growth in
developed nations projected to be well below 3 percent under the best scenarios in the next
few years, the chemical companies are counting on emerging countries especially China
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and India for robust revenue and profit streams. But even in these markets, hints of
trouble are apparent. In both China and India, inflation is rising and growth is slowing. In
September, Chinas inflation rate rose about 6 percent, well above the governments 4
percent target, while third-quarter GDP gains dropped to 9.1 percent from 9.5 percent in the
prior three months. As business conditions tighten in these regions, chemical demand will be
a victim. Consequently, chemical companies must develop well-thought-out strategies and
skills to deal with the changing dynamics in emerging countries, including establishing
reasonable production and R&D footprints in Asia to best compete with local suppliers for
both market share.
Major players of global chemical industry are as follow:-
a) BASF(Germany)
b) Dow Chemicals
c) DuPont
d) PPG Industries
e) Chevron Phillips

Indian Scenario
The Indian chemical industry, which has several characteristics specific to Indian context,
has evolved from a producer and supplier of basic chemicals to the domestic market in a
highly regulated environment to an industry with diverse product portfolio in an open
Economy. The size of the Indian chemical industry was estimated at USD 83 billion in the
FY 2011 of this 53% was accounted for by base chemicals and 24% by pharmaceuticals.
With this size, its contribution in total Indian industrial output is 14%. The chemical
industry is among the oldest and fastest growing domestic industries in India, contributing
substantially towards industrial and economic growth of the nation. The industry in India
produces nearly 70,000 types of commercial products over a wide range of categories
ranging from cosmetics and toiletries, to plastics and pesticides. This multi-product and
multi-faceted industry is mostly concentrated in the western part of India where almost half
of the industry is located. These main areas are as follows:
1. Jamnagar Gujarat (Micro Marine, FarmaInterchem, Munna Dye Chem Industries)
2. Mumbai Maharashtra (Vinayak Industries, Parmar Petrochem, Good Will
Industries)
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3. Chennai Tamil Nadu (National Organic Chemical Industries, Raju Chemical
Industries, Kemco Chemical Industries)
4. Hyderabad Andhra Pradesh (Kiran Metals, Vasanth Chemical Limited, PhytoChem
India Ltd)
5. Cochin Kerala (Hindustan Organic Chemical Ltd, Marine Chemicals, Indo German
Carbon Ltd)
6. Calcutta West Bengal (Himadri Chemicals & Industries Limited, Dendrite
Adhesive Manufacturer Kolkata India, Kanoria Chemicals & Industries Limited)
7. Udaipur Rajasthan (Amar Chemical Industries, Niki Chemical Industries, Modi
Chemical Industries)
Almost all segments such as organic chemicals, inorganic chemicals, agro-chemicals,
coatings, dyes and pigments, soaps and cosmetics, fertilizers and specialty chemical
Almost all segments such as organic chemicals, inorganic chemicals, agro-chemicals,
coatings, dyes and pigments, soaps and cosmetics, fertilizers and specialty chemicals have
a sizeable share of the overall market. Besides global corporations such as ICI, Hoechst,
DuPont, BASF, Bayer, there are thousands of large, medium and small-scale companies in
this sector.
India had been a net importer of chemicals in early 1990s, but has changed its status to
being an exporter in the subsequent years. From the trade flow perspective, export of
chemicals and petrochemicals together accounted for 10.9% of the countrys total exports
in 2010-2011 and the corresponding figures for imports was only 6.7%. The change has
come due to implementation of various large scale chemical units in the country which
help towards achieving self-sufficiency in their domestic demands. The chemical exports
are notably high in basic chemicals and petroleum products. Along with petroleum, plastics
and linoleum segment is also witnessing a high growth rate in the recent years.
The Indian chemical industry manufactures a wide spectrum of products spanning
basic, specialty and knowledge. As of now, basic segment leads with 57% but the
knowledge segment is growing at a much faster rate than basic or specialty.
The major constituents of the Indian chemical industry are Petrochemicals, Inorganic
Chemicals, Organic Chemicals, Paints and Dyes, Agro-chemicals Fine and Specialty
Chemicals
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The main Indian companies in the Indian chemical industry are Reliance Industries
Limited (RIL), Indian Petrochemical Corporation Limited (IPCL), Finolex, Gas Authority
of India Limited (GAIL), Indian Oil Corporation (IOC) and Haldia Petrochemicals Limited
(HPL)

State Scenario
Kerala's chemical industry improved its performance in the October-March period
last fiscal by increasing production and sales by 20-25 per cent and 15-20 percent
respectively. Phenol, acetone, and hydrogen peroxide are the major products manufactured
in HOCL. Phenol is a versatile industrial organic chemical. The largest end use of Phenol
is in Phenol-formal Hyde resins used in wood additives as well as moulding and laminating
resins, paints, varnishes and enamels. Phenol is also used in the manufacture of
preservatives, disinfectants, lubricating oils, herbicides, insecticides, pharmaceuticals, etc.
Acetone is an important commercial solvent and raw materials with wide usage in the
chemical explosives and lacquer industry.it is commonly used as a solvent for cellulose
Acetate, Nitrocellulose, celluloid, cellulose ether, chlorinated Rubber, various resins, Fats
and oils and an absorbent for Acetylene Gas. And Hydrogen Peroxide is an eco-friendly
chemical product from HOCL Kochi Unit with wide application in Paper and Textile
Industries for Bleaching purpose as a substitute for hazardous Chlorine.

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COMPANY PROFILE

A PROFI LE OF HINDUSTAN ORGANI C CHEMI CALS LI MI TED
History
Hindustan Organic Chemical Limited (HOCL) was set up by the Government of
India in 1960 with the objective of attaining self-reliance in basic organic chemicals
needs. In fact this was the first endeavour to indigenize manufacture of basic chemicals
and to reduce countrys dependence on import of vital organic chemicals. HOCL, started
as small chemical unit, has today acquired the status of a multiunit company with two fast
growing units and one subsidiary unit.
It was expected that indigenous manufacture of these chemical intermediates will
give impetus to downstream industries resulting in setting up of chemical units and
achieving self-sufficiency for the country in this area. This objective of setting up HOCL
has been achieved and at present more than 500 units based on HOCLs products have
been set up all over the country which have not only succeeded in meeting the goal of self-
sufficiency but also entered the international markets earning precious foreign exchange by
exporting chemicals, dyes and drugs. HOCL has 6 marketing offices all over India, Head
office at Mumbai and regional offices at Baroda, Cochin, Delhi, Hyderabad and Chennai.
Vision
To produce and market basic chemicals efficiently and economically in
environment friendly manner is the vision of the company.
Mission
The mission of the company is to maintain optimum level of efficiency and productivity in
the use of resource and secure optimum return on Investment.

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Corporate Objectives
1. To maintain growth in turn over & to optimize return on investment
2. To maintain health of plant & equipment to realize all its objectives
3. To ensure up gradation of technology and innovations of value added products
through R&D efforts
4. To maintain international quality standards & optimum level of efficiency
5. To practice customer friendly culture
6. To Continue Development of Human resource efforts
7. To adhere to safety, Health and environmental policy standards
8. Implementation of growth strategy
Company Policies
It is the policy of HOCL, Cochin unit marketing and selling phenol, acetone and
hydrogen peroxide to operate the quality management system that will fully meet the
requirement of ISO9001; 2000. The objective is to enhance the customer satisfaction by
providing consistent quality products and to achieve continual improvement through
business reviews and customer focus.
a) HRD Policy
HOCL believe that HRD is one of the important aspects for the successful operation of
an organization. HOCL intend to improve the following through the most dynamic tool
called training:-
a) Competence of individuals.
b) The dynamism of the team/group
c) The effectiveness in the organization.
d) Develop right kind of organizational climate and work culture.
e) Prepare to achieve higher results by strategic planning, continuous monitoring,
Updating of skills, knowledge and information.

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b) Environmental Policy
The policy of HOCL Kochi unit, manufacturing and selling Phenol, Acetone and Hydrogen
Peroxide is to operate an environmental management system to meet the requirements of
ISO14001-2004 . HOCL Kochi unit commit themselves to,
a) Operate all the plants based on good process control system with continuous
improvements through review of the objectives and targets to minimize waste,
prevent pollution and conserve natural resources and energy.
b) Comply with applicable legal and other requirements
c) Promote safety and better house-keeping at work place.
d) Be an environmentally responsible neighbor to the community
e) Air pollution control Measures
f) Process Waste Management
g) Water pollution control

c) Health and Safety Policy
a) All possible preventive steps, precautions and protective measure against any
anticipated hazardous.
b) A safe, Healthy and accident free working environment by adhering to safety
rules and regulations and through the active participation of the safety
organization of the company.
c) A responsible workforce, including contract labours, committed to safety through
training and retraining.
Major Customers of HOCL
The major customers of phenol are Alta Laboratories, Gargi Huttens Albertus, IVP,
Pioneer Dyechem Corporation-Maharashtra ; P:H Tradings, Kolkata and Mumbai;
Shubham Chemicals & Solvents Delhi; AS Moosani & CO-AP, Ashok iron Work-
Karnataka,esterkote, Orchid Chemicals Tamil Nadu,West Coast Polymers Kerala.
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The major customers of Acetone are, Aurabinodo Pharma, GSFC-Gujarat, Pioneer
Chemical Industry, Mumbai and Dr Reddys Laboratories, Hyderabad, Sheenlac Paints
Corp-TN; etc
The major customers of Hydrogen Peroxide are Hindustan News Print Ltd.
Kottayam, BPCL-KR Kerala, Tamilnadu Newsprint Ltd, shivaalik Chemicals Traders Gem
Enterprise Tamil Nadu; Jeans Knit (p)Ltd-Karnataka , etc

Future Plans
The future plan of the company is as follows,
1. HOCL has signed the Gas transmission Agreement with M/s GAIL with the
availability of Natural Gas from GAIL, the Company would change the feed stock of
Hydrogen from Naphthato Natural Gas and also for boiler operation in place of furnace oil
natural gas would be used.
2. Further, with the availability of natural gas, company also plans to put up Captive
Power Plant based on Natural Gas to economize on the operation.
3. Development of a vapor phase continuous process to produce specific grade
kerosene fuel-ISRO project.
4. Further studies on improved commercial catalyst for cyclohexylamine from aniline.
5. Exploratory research for a vapour phase continuous process for para-aminophenol
from nitrobenzene.
6. Creation of intellectual property rights Patent Marketability

Cochin Plant
Kochi unit was incorporated during 1987. The company is ISO certified, ISO 9001 -
Quality Management and ISO 14001 - environment friendliness by M/s. Bureau VERITAS
Quality International. They produce 40000 tons per annum of Phenols, 20000 tons per
annum of Acetone and 5274 tons per annum of Hydrogen Peroxide.
HOC- Cochin unit has 13 functional departments. Each of these functional departments is
headed by HODs. There are 427 employees working here.

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Company Profile
Date of Establishment 1960
Revenue 165.517 ( USD in Millions )
Market Cap 1366.972585 ( Rs. in Millions )
Corporate Address Rasayani, Raigad Dist-410207, Maharashtra

Management Details

Chairperson - V.B.RAMACHANDRAN NAIR
Directors Sri.J.N .Suryawanshi, Sri.Suresh Kumar.
R, Sri.S.B.Bhide, Sri .V.K Subburaj ,AS&FA,
Dr.A.J.Vara Prasad, Dr. N.J Gaikwad
Business Operation Chemicals
Background Hindustan Organic Chemical Limited (HOCL) was
set up by the Government of India in 1960 with the
objective of attaining self-reliance in basic organic
chemicals needs. In fact this was the first endeavour
to indigenize manufacture of basic chemicals and to
reduce countrys dependence on import of vital
organic chemicals.
Financials Total Income - Rs. 4,35,35,89,389.00( year ending
Mar 2012)
Net Profit - Rs. 260.248 Million ( year ending
Mar 2012)

Bankers State Bank of India
Auditors OM Agarwal& Co
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Awards and recognitions:

I.
FACT MKK Nair Memorial Productivity Award from
Kerala State Productivity Council.

1 FACT MKK Nair Memorial Productivity Award from
SECOND 1989-
90
2. - FACT MKK Nair Memorial Productivity Award from
Kerala State Productivity Council.-
FIRST 1990-
91
3. FACT MKK Nair Memorial Productivity Award from
SECOND 1991-
92
FIRST 1994-
95
SECOND 1996-
97
SECOND 1997-
98
7. - FACT MKK Nair Memorial Productivity Award from
FIRST 2000-
01
8 FACT MKK Nair Memorial Productivity Award from
SECOND 2004-
05
II Pollution Control Award from Kerala State Pollution
Control Board for making substantial & sustained
Effort in Pollution Control

1. Pollution Control Award from Kerala State Pollution
FIRST 1988
SECOND 1994
Effort in Pollution Control -
FIRST 1996
SECOND 1997
III Industrial Safety Award from National Safety Council
(Kerala Chapter) for outstanding performance in
Industrial Safety

1 Industrial Safety Award from National Safety Council
(Kerala Chapter) for outstanding performance in
Industrial Safety
SECOND 1989
2 - do - SECOND 1990
3 - do - SECOND 1991
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4 - do - FIRST 1993
5 - do - FIRST 1994
6 - do - FIRST 1995
7 - do - FIRST 1996
8 - do - FIRST 1997
9 - do - FIRST 1998
10 - do - FIRST 1999
11 - do - FIRST 2000
12 - do - FIRST 2001
13 - do - FIRST 2002
14 - do - SECOND 2003
15 - do - SECOND 2004
16 - do - SECOND 2005
IV. National Safety Award from Ministry of Labour
&Employment, Government of India for outstanding
performance in Industrial Safety

1 - do - RUNNER
UP
1994
2 - do - Under Scheme III FIRST 1996
3 - do - Under Scheme IV FIRST 1996
4. - do - FIRST 2005
5. Industrial Excellence Award from Institution of
Engineers(I) Ltd.
SECOND 1999
VI National Safety Award from Ministry of Labour, G.O.I
for longest accident free period
FIRST 2003
VII Yogyatha PramanPatra Award from National Safety
Council for the achievements in Safety Performance
FIRST 1999
VIII Award from Dept. of Factories & Boilers, Government of
Kerala for Outstanding Performance in Industrial Safety
SECOND 2008
IX Safety award from Gov. of Kerala, Dept. of Factories &
Boilers.
FIRST 2009
X Runner up 2009 for outstanding performance in Industrial
Safety from National safety Council Kerala Chapter
RUNNER
UP
2009
XI Safety awards 2010 for outstanding performance in
Industrial safety (First Prize) from Dept. Of F&B Gov. of
Kerala.
FIRST 2010
XII Award for Outstanding Performance in Industrial Safety
(Winner) from National Safety Council Kerala Chapter
WINNER

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ACCREDITATIONS

HOCL, Kochi has been certified for the Quality Management System (ISO
9001:2008) By Bureau Veritas Certification (India) Pvt. Ltd.

QUALITY MANAGEMENT SYSTEM

CERTIFICATE

QUALITY POLICY
It is the policy of Hindustan Organic Chemicals Limited, Kochi Unit to manufacture
and market Phenol, Acetone and Hydrogen Peroxide, meeting the requirements of
Quality Management System ISO 9001:2008.
Our objective is to enhance customer satisfaction by providing consistent Quality
product at better prices by continual improvement through controlled processes,
Energy conservation, Business review, and Customer focus.
This policy is communicated to all the employees.
Date : 29.07.2008
Sd/-
GENERAL MANAGER
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ENVIRONMENTAL MANAGEMENTSYSTEM

CERTIFICATE

ENVIRONMENTAL POLICY
The policy of Hindustan Organic Chemicals Ltd., Kochi unit, manufacturing and
selling Phenol, Acetone and Hydrogen Peroxide, is to operate an Environmental
Management System to meet the requirements of ISO 14001:2004.
We commit ourselves to:

Operate all the plants based on good process control system with continuous
improvements through review of the objectives and targets to minimise waste,
prevent pollution and conserve natural resources and energy.

Comply with applicable legal and other requirements.

Promote safety and better housekeeping at work place.

Be an environmentally responsible neighbour to the community.

This policy is documented and communicated to all working for and on behalf of
the organisation and also made available to the public.
Rev. 01
01-9-2005

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PRODUCTS OF HI NDUSTAN ORGANI C CHEMI CALS LI MI TED

The present chapter gives the details about the various products of HOCL.
CHEMICALS
Hindustan Organic Chemicals Limited (HOCL), Kochi unit situated at Ambalamugal,
15Kms away from Ernakulam city was commissioned in the year 1987 to manufacture
Phenol &Acetone. The installed capacity is 40,000 TPA of Phenol and 24,640 TPA of
Acetone. A new project was commissioned in the year 1997 to manufacture Hydrogen
Peroxide with an installed capacity of 5225 TPA.
The main products manufactured by HOCL are Phenol, Acetone, Hydrogen Peroxide,
Nitrobenzene, Aniline, Nitrotoluenes, Chlorobenzenes and Nitrochlorobenzenes. The
rawmaterials used by HOCL are Benzene, Toluene, LPG, Methanol, Naphtha and Sulphur,
majority of which come from petroleum refineries.
Important Milestone in Cochin unit
1. The Cumeneplant was commissioned in 1987.
2. Phenol and acetone production commenced in 1988.
3. A Captive power plant was added in 1992.
4. Hydrogen Peroxide plant was commissioned in 1997.
5. The concentration unit of H2O2 plant was commissioned in1998.
6. The unit is marching with further growth plans on the anvil

Main Products manufactured at Kochi unit.
PHENOL
ACETONE
HYDROGEN PEROXIDE

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4.1 PHENOL

Phenol is a versatile industrial organic chemical. The largest end use of
phenol is Phenol-formaldehyde resins used in wood additives as well as moulding and
laminating resins, paints, varnishes and enamels. Phenol is a versatile industrial organic
chemical. Phenol is also used in the manufacture of preservatives, disinfectants,
lubricating oils, herbicides, pharmaceuticals etc.

4.2 ACETONE.

Acetone is an important commercial solvent and raw material with wide
usage in the chemical explosive and lacquer industry It is commonly used as the solvent
for cellulose acetate, Nitrocellulose, celluloid, cellulose ether, Chlorinated Rubber, various
resins, fats and oils and as an absorbent for acetylene gas .It is being increasingly used in
the synthesis of a number of chemicals such as Diacetone Alcohol, Methyl Methacrylate
and certain resins, pharmaceuticals and perfumes.

4.3HYDROGEN PEROXIDE

Hydrogen Peroxide is an eco-friendly chemical product with wide application
in paper and textile industries for bleaching purpose as a substitute for hazardous chlorine.
It is also used in electronic and metallurgical industries, Effluent Treatment Plants,
Sewage Treatment and removal of Toxic Pollutants from Industrial Gas Streams.

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BY PRODUCTS:
In the process of manufacture of Cumene, phenol and acetone, some waste products are also
obtained at different stages of manufacture.
4.4. HEAVY END OF CUMENE
Alkylation of benzene with propylene is the basic reaction taking place in the
production process of Cumene. Apart from and addition to main reaction some secondary
reaction may also possibly taken in to yield. These being heavy in nature, settle down bottom
of cumene column, such waste products are known as heavy end of cymene. It may be used
as a fuel for furnace since it has a very high caloric value
4.5. DRAG BENZENE
The unreacted benzene in the alkalization process is recycled successively. Even after
this some benzene may remain unreacted due to non-aromatic impurities present. Such
benzene is not desirable in the Cumene process is removed from the system is called drag
benzene.
4.6 CUMOX OIL
The bottom portion of acetone column consists of impurities. It is sent to tar cracking section
for removal of tarry wastes. This is called Cumox oil. It is partially soluble in water

APPLICATIONS OF THE PRODUCTS
a) Phenol: Pharmaceuticals, dye, PF resins, molding resins, laminations, pesticides,
Bisphenol-A
b) Acetone: Surface coating, MMA, MIBK, diacetone alcohol, explosives,
pesticides.
c) Hydrogen Peroxide: Pulp and paper bleaching, textile, chemical industry,
environmental protection, electronic industry, production of detergents, cosmetics

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FUNCTIONAL DEPARTMENTS OF HOCL
The following are the functional departments of Hindustan organic chemicals

1. PRODUCTION DEPARTMENT
2. HUMAN RESOURCE DEPARTMENT
3. FINANCE DEPARTMENT
4. MARKETING DEPARTMENT
5. QUALITY CONTROL
6. MATERIALS DEPARTMENT
7. CIVIL ENGINEERING
8. MANAGEMENT SERVICE & SYSTEMS
9. TECHNICAL SERVICE DEPARTMENT
10. PLANT ENGINEERING
ELECTRICAL
MECHANICAL
INSTRUMENTATION

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MARKETING DEPARTMENT

CMD
ED
DM (MUMBAI)
CGM(MUMBAI)
CM
(KOCHI)

Sr MO
(DELHI)
MM
(DELHI)
CMM (2)
(HYDERABAD)
DGM(2)
(MUMBAI)
DGM
(CHENNAI)
Sr MO (kochi)
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Duties and responsibilities
1Chief marketing manager
CMM/MM reports to CGM Mumbai and administratively to the ED Cochin.
2 Managers Marketing I & II
a. Responsible for receipt orders from customers.
b. Responsible for the follow up with the customer regarding delivery scheme
payments and other related communication documents.
c. Responsible for the inter phase departmental activities.
d. Responsible for the maintenance quality records and analysis of data.
SENIOR MARKETING OFFICER responsible for Phenol Acetone and Hydrogen
Peroxide and other products. In the absence of 1 of the Marketing Manager the other one
coordinates the work of the later too.
Functions

Devising schemes to ensure that the production targets are met.
Deciding price and discount revisions as appropriate from time to time.
Handling of the enquiries (both domestic and export) generated.
Issuing of the delivery order.
Coordinating with various other departments (Finished Products, Finance, Quality)
for the proper execution of the order received.
Collection of the payment towards the orders executed.
Handling the major accounts of HOCL customers and involve them in customer
engagement.
Handling customer complaints with the help of Quality control department in case of
qualitative issues and with the Dispatch department in case of quantitative issues.
Conducting regular customer surveys.
major inputs for the Marketing Department:
Purchase Order/Fax/Mail/Telecom from the customer towards the purchase of the
product sold by HOCL.
26

Advance payment in the form of a Demand Draft/Cheque/RTGS through bank
towards the products purchased.
Payment against invoices (Bank Guarantee/Letter of credit) by Demand
Draft/Cheque/RTGS through bank.
Instructions from the branches for generating Delivery Orders.
The delivery orders from Mumbai office.
Export orders from customers.
Approval for the different types of proposals.
Letter of Credit and Bank Guarantee from the customers.
Complaints from the customers.
Information System Department
Inputs
Purchase Order/Fax/Mail/Telecom from the customer towards the purchase of the
product sold by HOCL.
Instructions from the branches for generating Delivery Orders.
The delivery orders from Mumbai office.
Export orders from customers.
Approval for the different types of proposals.
Letter of Credit and Bank Guarantee from the customers.
Complaints from the customers.

Process Description

HOCL business strategy falls into the category of Make to Stock since the products are
more or less widely available in the market. Marketing tries to achieve targets set by Unit-
in-Charge.
Orders are received by branch offices and are then converted to a Delivery Order (DO)
for Kochi Unit or Rasayani unit as per the order. Kochi office also directly (either by Fax
or Telephone, for Kochi Products) receives the enquiry. Enquiry is then converted to
Delivery Order. This DO is then passed on to the Finished Products Section (FPS) as an
authentic document to dispatch the goods.

27

Outputs from the process
1. Delivery orders for Kochi orders as well as Mumbai and other branch offices.
2. Payment details forwarded to the finance department.
3. Different types of proposals generated.
4. Export orders execution.
5. MIS reports

CUSTOMERS OF HOCL KOCHI:
The customers of HOCL can be classified into (i) Actual users and (ii) Dealers. Actual users
are the real consumers who consume the product in their manufacturing process. Dealers buy
product from HOCL and deliver these to other Actual users. The above two categories of
customers exist for Phenol, Acetone and Hydrogen peroxide.
Actual users of Phenol belong to different categories like manufacturers of PF Resins,
Foundry resins, Leather, Speciality chemicals, Pharmaceuticals, Mineral wool, Insecticides,
Pesticides and Chlorophenols.
Actual users of Acetone belong to different categories like Surface coating, Pharmaceuticals,
Agro chemicals, Defence, Speciality chemicals, Industrial gases, Rubber chemicals, and Oleo
resins.
Actual users of Hydrogen peroxide belong to various categories like Textile, Paper, Coir
processing ,Asceptic container manufacturers, Medical institutions, Water theme parks and
various other industries that consume Hydrogen peroxide for effluent treatment purposes.

28

Some of the major Phenol customers of HOCL whose responses were obtained are Gargi
Hutens Albertus Ltd, Esterkote Ltd, Tipco Industries Ltd, Western India Plywoods Ltd, IVP
Ltd, Alagar Resins P Ltd, Alta Laboratories Ltd, and Andhra Sugar Ltd.
Some of the major Acetone customers whose responses were obtained are Sheenlac Paints
Corporation Ltd, Dr. Reddys Laboratories Ltd, Hetro Laboratories Ltd, Pharmazell Ltd, and
Bostick Ltd.

MARKET COMPETITION FACED BY HOCL KOCHI:
HOCL faces stiff competition in the market due to domestic players as well as importers.
Herdillia Chemicals Ltd is the major domestic competitor for Phenol and Acetone. The
domestic competitors for Hydrogen peroxide include Gujarath Alkalies & Chemicals Ltd,
National Peroxide ltd, and Asian peroxide Ltd. There is a lot of imports taking place for all
these products. Dumping of imported products in the market is a serious issue that makes it
extremely difficult for HOCL to survive in the market. Dumping denotes importing and
selling the product below cost of production with the objective of causing damage to
domestic industries. HOCL has to periodically file an application for imposition of Anti-
dumping duty with the Directorate of Antidumping & Allied duties under the Department of
Commerce, Government of India. Based on this application, the Directorate conducts a
detailed investigation. If there is evidence that dumping has taken place and the domestic
industry has sustained injury as a result of dumping, it imposes antidumping duty for a certain
period.

29

CORPORATE MARKETING ORGANIZATION: The Registered office of HOCL is at
Mumbai. The CMD and Directors of the company and the corporate marketing office are
located at the same place. The company has marketing branch offices at Kochi, Chennai,
Hyderabad, Baroda and Delhi. The marketing organization of HOCL is given in Fig 3(i). The
Branch in charge of each branch office directly deals with the customers in their region. The
receipt of customer orders and payment as well as issue of Sale orders is done by the branch
office for customers under their geographical area. The branch offices keep track of the
developments in the local market and give feedback to the corporate marketing office for
marketing decision making.

COMMUNICATION NETWORK:
The corporate marketing office and branch offices at various locations are linked with
HOCL, Kochi unit through the SAP system (ERP network). Sale orders issued by branch
offices using the SAP system can be immediately accessed at Kochi unit for carrying out
sales. Likewise, sales from Kochi unit can be immediately tracked by branch offices for
giving feedback to customers in their region.

FLUCTUATIONS IN DEMAND:
The monthly sales of the products Phenol and Acetone in the last twelve calendar months is
given in). It can be seen that there is variation in monthly sales quantities. This variation in
demand is due to a large number of factors like (i) Variation in consumption pattern of
individual customers due to constraints in capacity utilization (ii) Competition from import
parcels received at various Indian ports (iii) Entry of new domestic customers as well as
competitors (iv) Closure of units of domestic customers (v) Developments in the global
petrochemical market causing the global product prices to be very high, leading to shrinkage
of global demand.(vi) Variation in volume of export orders received by Pharmaceutical
industries.

30

MONTHLY SALES INFORMATION
(2012-02013)

MONTH PHENOL ACETONE
MT MT
April 1687 1346
May 2547 1606
June 2444 1611
July 2861 1245
August 2452 1555
Septme 2116 1113
October 2296 1408
November 2496 1359
December 1403 1152
Januvary 1595 1159
Februvary 1746 1178
March 2030 1499

31

OBJECTIVES OF MARKETING MANAGEMENT: The objectives of
marketing management as enumerated by the Head of Marketing department at HOCL,
Kochi unit is given below:
(i) Ensuring that products are sold at the rate that facilitates continuous production and full
capacity utilization.
(ii) Ensuring that products are sold to customers at the maximum price possible so that profit
is maximized.
(iii) Ensuring that a high level of customer satisfaction is maintained continuously so that
customer loyalty is maximized.
(iv) Ensuring that customer complaints if any are redressed promptly.
(v) Obtaining accurate local market information and transmitting the same to the corporate
office for facilitating speedy marketing decisions.
(vi) Ensuring that the interests of HOCL are protected in the sale process.
(vi) Providing the top management with customer sales statistics to facilitate customer
specific marketing decisions like credit limit, special incentives etc.
(vii) Providing assistance to the top management in deciding the optimum marketing mix in
consonance with changes in market.
(viii) Statutory compliance Ensuring that Acetone is sold only to customers having
Explosive licence.

MARKETING POLICY OF HOCL: HOCL has a written marketing policy that
deals with pricing, discounts, credit payment terms, criteria for permitting overflow of credit
limit etc. Any changes in the marketing policy is communicated to all regular customers in
writing by the branch in charge.
Sale orders are issued by marketing officers against customer orders as per the marketing
policy.
32

PRICING OF PRODUCTS: To ensure continuous sales, the prices of products are
revised from time to time after evaluating market supply and demand conditions, cost of
production, competitors activities, arrival of import consignments at the ports etc. The pricing
decisions are taken by a high level pricing committee consisting of DM, DF, and CMD. The
committee reviews the price once every week. The revised prices are updated on HOCL
websites on the date of price revision for the information of customers. The branch marketing
officers are responsible to communicate to the customers all information regarding price
revision by email. As per the marketing policy, price valid on the date of sale shall be
applicable for invoicing. Details of price revision is ratified in the subsequent board meeting.
Marginal cost pricing method is used where only variable costs are considered in pricing
decisions. This allows HOCL to develop an aggressive pricing policy particularly useful in
the market of cut throat competition. In favourable market conditions, the contribution to
Fixed costs and profits is high. In unfavourable market conditions, there is contribution to
fixed cost only. The objective is to operate at the price and volume which will maximize
profits, provided the price is atleast equal if not greater than the variable costs per MT.
TERMS OF CREDIT: The marketing policy covers terms of credit that can be extended
to customers. Credit is normally extended only against Bank Guarantee (BG), or Letter of
credit (LC) as security. The credit payment terms offered is according to market norms as
given below:>
Product
group
Credit payment terms offered to customers
Phenol 30 days credit against BG or 60 days credit against LC
Acetone 45 days credit against BG or 60 days credit against LC
Table 3.1
Depending on sales volume, 30/45/60 days interest free credit is given in exceptional cases
without any security. Such credits are normally given only to other state or central PSUs like
Ordnance Factory (Defense), GSFC etc.
Overflow exceeding credit limit shall not exceed 100% of the security amount. Overflow is
allowed only after assessing many parameters like volume of business, credit worthiness of
33

customers, financial ratios, bank reference, payment schedule maintained by the customer in
the past etc. Any overflow in credit limit has to be ratified by the Board of Directors.
Credit against PDC (post dated cheque), is permitted to regular customers. However such
customers have to execute an undertaking with the terms and conditions of sale mentioned
therein.
FINANCE CHARGES: For regular customers who request for additional credit over
and above normal credit terms, this may be allowed after scrutiny and approvals. However
finance charges @ 1.5% per month shall be payable.
CASH DISCOUNT: Customers shall be eligible for cash discount on invoice value or
extent of payment, whichever is less @ 13% per annum. This works out to 1.08% for 30
days, 1.62% for 45 days and 2.16% for 60 days.
OTHER DISCOUNTS: In order to achieve uniform sales and to keep maximum
customers in fold, discounts of various types are offered to customers. The various types of
discounts offered by HOCL, to customers is explained below.
(a) ANNUAL QUANTITY LINKED DISCOUNT (AQLD) : Here, the discount given to
the customer depends upon quantity uplifted in the financial year. There are various discount
slabs. Higher the discount slab quantity, higher the discount offered in Rs/MT. Table 3.2
below gives information on the discount slabs and applicable discount for the various
products. The higher the quantity purchased by the customer, the greater will be the discount
per MT obtained for the entire quantity of sales in the year. AQLD, makes it attractive to the
customer to purchase there entire requirements from HOCL. AQLD is paid to the customers
by way of credit note at the end of each quarter based on the quantity lifted by customer upto
that time at the applicable discount slab rate. Final settlement is made at the end of the year
based on total quantity lifted in the year at the applicable higher discount slab rate.

34

ANNUAL QUANTITY LINKED DISCOUNT (AQLD) SLABS

SLAB DISCOUNT SLAB QTY IN
MT
PHENOL
Discount Rs/
MT
ACETONE
Discount Rs/
MT
1 Upto 100 Nil Nil
2 > 100 1300/- 1800/-
3 > 200 1400/- 1900/-
4 > 500 1500/- 2150/-
5 > 750 1600/- 2350/-
6 > 1000 1700/- 2600/-
7 > 1500 1800/- 2850/-
8 > 2500 1900/- 3100/-
9 > 3500 2000/- 3300/-
10 > 4500 2100/-
11 > 5500 2200/-
12 > 6500 2300/-
Table 3.2

The discount slabs and rate of discount may be revised according to the market situations in
the beginning of the year.

(b) SHORT TERM SPECIAL INCENTIVE: Special incentive is to compensate for the
additional transportation costs incurred by customers in buying product from HOCL, Kochi
as compared to the transportation costs incurred while buying imported product from ports
located nearest to their factory. The special incentive is in addition to the AQLD. The current
35

rate of Special incentive for customers located in all states other than Kerala is Rs 2500/MT
for Acetone and Rs 3500/MT for Phenol. For customers located within Kerala state, the
special incentive is Rs 1500/MT both, for Acetone and Phenol. This is revised periodically
based on changes in freight charges in the market.
( c) ACTUAL USERS DISCOUNT: Actual users are customers who use the product in their
manufacturing process, ie the actual consumers. Actual user discount is given only to such
actual consumers and not to dealers. This is to ensure that big consumers buy products
directly from HOCL instead of through dealers. Such discounts are given to actual users
based on their consumption quantity.
(d) PHARMA DISCOUNT: This is the discount offered only to pharmaceutical industry
consumers. This is applicable only for Acetone. 60% of Acetone consumption is by
pharmaceutical industries. If HOCL is able to keep pharma customers in its fold, difficulty in
marketing of Acetone is eliminated to a great extent. Pharma discount is extended keeping
this in view. Pharma customers are in general financially very sound and capable of directly
importing big parcels of Acetone. The Pharma discount encourages them to buy from HOCL
instead of resorting to imports. Pharma discount of Rs 1000/MT is given only to actual users
in Pharma category.
FLEXIBLE PRICE CONTRACTS: In the case of Phenol and Acetone, as the list
price fluctuates considerably during the year, it is not possible for HOCL to execute fixed
price contracts. In such cases, contracts are executed at a base price attractive to the
customer. However the base price is revised upwards and downwards from time to time by an
amount equal to the upward or downward revision in list price. Such contracts are flexible
price contracts.
CLUBBING OF CUSTOMERS OF SAME GROUP: Some customers have their
manufacturing units at different locations with same or different names for availing various
tax benefits. Such customer groups can negotiate and get better prices from suppliers in the
market for the total quantity consumed by the group. Eg: Hetro Drugs Ltd, Hetro laboratories
Ltd, and Cirex Pharmaceuticals Ltd are sister companies (Acetone consumers) under the
same business group. For the purpose of calculating the AQLD, the total consumption
quantity of the customer group will be considered by HOCL. Similarly there are various
36

customer groups for Phenol also. Eg IVP Ltd, Tarapur and Jamshedpur belong to the same
customer group.

SALES PROCESS OF HOCL: The Sales process of HOCL is briefly covered below:
(a) ORDER PLACEMENT BY CUSTOMER: The customer contacts the manager of the
marketing branch concerned to get information on price, discounts applicable, payment
terms, terms of delivery etc. Based on this, the customer prepares purchase order on HOCL
and sends the purchase order to the branch office concerned with advance payment or
applicable security in the form of BG or LC.
(b) ISSUE OF SALE ORDER BY BRANCH OFFICE: The marketing officer in the
branch office, scrutinizes the purchase order and payment particulars including security
(BG/LC) as applicable. If everything is in order, a Sale Order (SO) is generated from the SAP
system and two copies are printed and given to the customer.
(c.) CUSTOMER ENGAGES TRANSPORTER: The customer entrusts the work of
transportation of product from HOCL to his factory to a reliable transporter who is
experienced in the transportation of applicable hazardous product of HOCL. The customer
gives the duplicate copy of sale order to transporter for taking delivery of product from
HOCL.
(d) TRANSPORTER TAKES DELIVERY FROM FPS: The transporter produces the
duplicate copy of sale order at Finished Product Section (FPS) which is a part of materials
department of HOCL. The FPS issues Delivery Order (DO) based on SO, indicating the
number of the transport vehicle that is to be loaded with product. The FPS also checks by
visual inspection and scrutiny of vehicle permits that the vehicle is fit for loading the
hazardous products. The vehicles are expected to have Emergency Information Panels on all
three sides indicating product details, UN NO, Hazchem code, Hazard class labels and action
to be taken in case of emergency. The vehicle if found to be fit, is loaded with product. The
quantity of product filled in the transport vehicle is ascertained by weighing the vehicle in the
weigh bridge.

37

(e) INVOICE PREPARATION: Based on the quantity filled in the transport vehicle, and in
accordance with the price in the sale order, the FPS prepares the Excise cum Tax Invoice.
The invoice indicates the quantity of product, customer address, price, value, discount if any,
excise duty and taxes as applicable. For sales to EOU/SEZ customers, excise duty is not
applicable. The tax will be VAT or CST depending on whether sales is within Kerala state or
outside Kerala state. In cases of advance payment, cash discount is also mentioned in the
invoice.
(f) DESPATCH OF CONSIGNMENT: The consignment is dispatched by HOCL to the
customer. Along with the invoice, quality certificate, TREM card and sealed product sample
in bottle are sent to the customer along with the vehicle. The TREM card is a document that
indicates the safety procedures to be followed in case of spillage of product in the process of
transportation due to accidents etc.
(g) DESPATCH INTIMATION TO CUSTOMER: The marketing officer concerned of
the applicable branch office that deals with the customer is able to know about the details of
dispatch through the SAP system as soon as FPS prepare the invoice. Intimation is given to
the customer with details of invoice so that the customer can arrange to insure the
consignment. Incase of any loss of product in the process of transportation, the customer
claims insurance.

CONDITIONS OF SALE: The following are the general conditions of sale of HOCL:
(1) The List Price on the date of delivery shall be applicable.
(2) All taxes, cenvat duties or levies imposed retrospectively or prospectively by Central
or State Governments shall be payable by the customer.
(3) Arrangement for transportation of product will be made by the customer at his cost. It
shall be the responsibility of the customer to ensure that the tankers authorized for
taking delivery are thoroughly clean and fit for transportation of product.
38

(4) The customer may insure the product at his cost.
(5) No claim for losses, shortage or delay in transportation shall be accepted by HOCL
for supplies on ex-works basis.
(6) The customer or his transporter shall be responsible for transit risk including public
liability in case of accidents. Customer shall ensure that transportation is entrusted to
only transporters with valid public liability insurance policy as per the Public
Liability Insurance Act.
(7) Weighment carried out in the weighbridge of HOCL shall be final. Invoice shall be
prepared by HOCL for quantity in the weighment slip.
(8) Force Majeure: Neither party shall be responsible for failure to perform or delay in
performance of any of their obligations if the same is due to circumstances beyond
their control such as acts of God, fire, flood, storms, earthquakes, typhoons,
epidemics, strike, lockout, riot, civil commotion, war etc or Government laws, rules,
actions, embargo that prevent parties from performing their obligations.
THE MARKETING MIX OF HOCL: The 4 Ps of marketing mix in the marketing of
products are (1) Products (2) Price (3) Place/Physical distribution (4) Promotion by suitably
manipulating the 4 Ps a product can be sold to customers under different market conditions.
Below, the 4 Ps of marketing mix are analyzed in the context of HOCL.
(a) PRODUCT: The products of HOCL viz: Phenol and Acetone are manufactured using
most modern manufacturing technology in continuous process plants. The raw materials used
for production, intermediate products, and finished products are all subjected to rigid quality
control. HOCL is an ISO-9001 certified company having an excellent Quality Management
System ( QMS).
Product quality: HOCL produces products of highest grades of purity that can be even used
by pharmaceutical industries that have very stringent quality control. The quality
specifications of the three products as required by the customers of HOCL are given below in
Table 3.3:>

39

PROPERTIES OF PHENOL AND ACETONE
Property Phenol Acetone
Colour Colourless to light pink 10 HU Max
Purity 99.5 Min 99.5 Min
Residue on evapouration (Wt%) 0.05 Max 5 Max
Moisture 0.1 Max 0.4 Max
Crystallizing point 40.5 Min -
Distillation Range - 1 deg incl 56.4 deg C
Acidity (gm/100 ml) - 0.002
Stability - -
Table 3.3
Samples of products are taken from the storage tanks and analyzed by the Quality Control
department on a daily basis to ensure that product conforms to all the quality parameters
mentioned above. Only on getting clearance from Quality Control does the FPS section load
product into customers transport vehicles. The above specifications are widely accepted by
the trade. The actual specifications of HOCL products is much better than the above
specifications. Therefore in terms of product quality HOCL finds wide acceptance among
customers.
Product varieties: Even though HOCL Kochi unit has three finished products, each product
is sold in different forms as mentioned below.
Phenol is sold in three forms, (a) As Molten Phenol in bulk with 100% concentration (b) As
Hydrated Phenol in bulk with 6% water content (c) In packed form in 210 litre capacity olive
green coloured MS drums of 215 kg net weight. This is to cater to the requirements of various
customer segments.
Acetone is sold in two forms, (a) In bulk (b) In packed form in 210 litre capacity cherry red
coloured MS drums of 160 kg net weight.

40

PERCENTAGES OF SALES IN VARIOUS FORMS

Table 3.4
(b) PRICE: In the chemical industry, demand is highly elastic. ie, demand is very sensitive
to variation in prices. It is very important that HOCL changes the prices of products in
accordance with market trends. For this purpose, there is a high level committee that
frequently meets and decides on prices. 85% of the production cost of HOCL products is due
to raw material cost. Since the raw material prices are revised by the supplier BPCL on the 1
st

of every month, HOCL also has to consider revising the prices accordingly. However in
addition to the raw material prices, market conditions are also considered in revising the
prices. In many situations, HOCL cannot change the prices of its products proportionate to
the change in prices of its raw materials. At times, price is not revised as it would be better to
wait and watch for changes in short term market trends. This sometimes results in
fluctuations in monthly sales. The pricing policy of HOCL is to price products at the lowest
possible to earn a reasonable profit.
(c.)PROMOTION: Promotion is aimed at ensuring that customers buy more quantity of
product. HOCL offers various types of discounts to customers like (1) Annual Quantity
Linked Discount (AQLD) (2) Short Term Special Incentive (3) Pharma Discount etc, to
attract regular customers and retain their loyalty. Details about these discounts are covered in
chapter 2 para 2.10. As HOCL products are chemical products purchased only by industrial
70%
(HYDRATED)

92%
IN TANKERS

97%
IN
TANKERS
13%
PURE (MOLTEN)

BULK
8%
CARBUOY
3%
DRUMS
17%
DRUMS
PACKED
H202 ACETONE PHENOL TYPE

41

customers, the various methods of promotion employed by marketers of FMCG are not
suitable for implementation in this context.
(d) PHYSICAL DISTRIBUTION: HOCL offers Phenol and Acetone to customers on ex-
factory basis. Customers have to arrange transportation of product from HOCL to their
factory. However, in the case of major customers, as demanded by them, HOCL delivers
product at destination. Eg: HOCL delivers Acetone to various defence establishments.

42

CHAPTER - 2

REVIEW OF LITERATURE

43

REVIEW OF LITERATURE

INTRODUCTION: The objective of this project work is to study the marketing
management in HOCL and offer suggestions for improving profitability through improving
customer satisfaction. It was necessary to gain knowledge on factors contributing to customer
satisfaction, principles of marketing management and legal requirements in the transportation
of products of HOCL since they are hazardous in nature. The key challenges and
opportunities of the organic chemicals industry also had to be covered.
FACTORS CONTRIBUTING TO CUSTOMER SATISFACTION :
Unless an organization makes continuous efforts to create and maintain customer satisfaction,
it cannot succeed in the market in the long run. The four factors that contribute to customer
satisfaction are (i) Quality of product. (ii) Responsiveness to customers needs. (iii)
Productivity. (iv) Innovation. Responsiveness to customers needs requires customer focus
and includes timely and uninterrupted supply, response to customer queries, timely feedback,
meeting specific needs of customer, meeting supply quantity commitments, handling
customer grievances etc. Productivity is the efficiency in utilizing resources of production.
Higher the productivity, lower the cost of production and the lower the price at which product
can be sold to customers. Innovation, in this context means, using creativity and modern
technology to improve methods, processes in the supplier-customer interface to improve
customer satisfaction.
THE MARKETING MIX : In the marketing of a product , there are four basic
elements which are together referred to as marketing mix. These four elements are (i) Product
(ii) Price (iii) Promotion and (iv) Place (or physical distribution). These are referred to as the
four Ps in marketing. To succeed in the market, the marketer has to design and implement an
appropriate marketing mix and change it as and when required depending upon the
developments in the market.
PRODUCT PRICING : Pricing of products is a very important area of decision making
for any enterprise. These decisions have a great impact on the sales performance, capacity
utilization and profitability of an enterprise.
44

The factors that should be considered in pricing decisions are (i) Demand (ii) Product cost
structure (iii) Competitive forces in the market (iv) Marketing strategy.
Pricing methods include (i) Cost-plus pricing (full cost pricing) (ii) Pricing for a rate of return
(iii) Marginal cost pricing (iv) Going rate pricing. An appropriate method has to be adopted
after considering the merits and demerits of using each method and its suitability to the
product and its marketing conditions.
MARKET SEGMENTATION : Market segmentation may be defined as the
division of a market into groups of segments having similar wants.
Market segmentation provides the following benefits (i) It helps the company to exploit its
market better (ii) It helps in focusing strategies more sharply on target groups. (iii) It is likely
to result in instilling customer loyalty since the companies offerings is better matched to
those customers in the segment.
In industrial markets, segmentation may be based on (i) Geographical location (ii) Sector of
industry, eg. Pharmaceuticals, paints, resins, etc. (iii) Customer category (dealer/ actual user,
government/private) (iv) Product consumed. Suitable methods of segmentation should be
implemented depending upon nature of product and marketing conditions.
NATURE AND USES OF PHENOL AND ACETONE AND LEGAL
REQUIREMENTS IN THEIR TRANSPORTATION:
NATURE: Phenol and Acetone are hydrocarbons. Both of these chemicals are hazardous
products. Both are colourless liquids with a perceptible odour. Phenol is toxic and corrosive.
Acetone is highly inflammable, volatile and can form an explosive mixture with air. Acetone
has a very low flash point .
USES : Phenol is used for the manufacture of Phenolic Resins ( a vital input for wood
adhesives), moulding and laminating Resins, chemical intermediates, Plasticizers,
preservatives, disinfectants, lubricating oils, herbicides, insecticides, and pharmaceuticals.
Acetone is used for making Methacrylate esters, protective coatings, pharmaceuticals, paints
and varnishes, rubber chemicals, and solvents.
LEGAL REQUIREMENTS: Provisions of various statutes like Petroleum rules, Central
Motor Vehicles Act and Public Liability Insurance Act have to be complied in the
45

transportation Phenol and Acetone. Since sales involve storage and transportation, these were
reviewed.
Acetone is a Class A petroleum product with flash point below 23 deg C. As per the
Petroluem rules 1972, manufacturers of Acetone are legally bound to sell Acetone only to
customers having storage tanks with a valid explosive license issued by the Chief Controller
of explosives.
Similarly, as per Petroluem rules 1972, Acetone can be transported only in a tanker vehicle
having a valid explosive licence issued by the Chief Controller of explosives.
As per the Central Motor Vehicle rules, tanker vehicles used to transport hazardous chemicals
like Phenol and Acetone are expected to have Emergency Information Panels on all three
sides indicating product details, UN NO, Hazchem code, Hazard class labels and action to be
taken in case of emergency. Transport Emergency card must be issued to the drivers of all
vehicles carrying such products and it is to be ensured that the drivers of transport vehicles
are specifically trained and certified to drive vehicles carrying hazardous chemicals like
Phenol and Acetone. Transport Emergency card should indicate the nature of hazard, and
action to be taken in case of spillage, fire etc due to accidents in transit and First aid
information It is the duty of the manufacturer and transporter to ensure that statutory
requirements are met in the transportation of hazardous products. Public liability Insurance as
per Act of 1991 has to be taken by the transporter who engages in the transport of hazardous
products. The manufacturer shall check whether the transporter has a valid insurance policy
as per the Public liability Insurance Act before loading the vehicle. Public liability denotes
the liability to the public in the event of Fire or spillage of product during transportation that
could result in loss of property, health or life.

46

KEY CHALLENGES OF ORGANIC CHEMICALS INDUSTRIES IN INDIA:
(i) Power and feedstock from crude oil are critical inputs for the organic chemicals
industry. Cost of these raw materials are high in India as compared to China,
Middle east and other South East Asian countries like Thailand and Indonesia.
Domestic manufacturers therefore are able to procure raw materials only at a
higher price making their output less competitive.
(ii) Domestic prices of organic chemicals are highly correlated with international
prices. Given the small size of domestic operations, local manufacturers are more
influenced by global demand and supply forces.
(iii) Huge capacity expansions in the global market is another major threat to the
Indian organic chemicals industry.

KEY OPPORTUNITIES FOR THE ORGANIC CHEMICALS INDUSTRY IN INDIA:
(i) Small players in the Indian organic chemicals industry can explore the opportunity
for economies of scale through consolidation.
(ii) Discovery of oil slicks in India could result in reduction in raw material costs in
the future.
(iii) By having a wider product portfolio including specialty chemicals, organic
chemical manufacturers of India can increase their margins.
Successful companies in the west are shifting their resource base to rich nations like Saudi
Arabia, Qatar, Russia etc. Organic chemical manufacturers in India also can explore the
opportunities outside the country.

47

CHAPTER - 3
RESEARCH METHODOLOGY

48

Research simply means a search for facts answers to questions and solutions to problems
.It is a purposive investigation .It seeks to find explanations to unexplained phenomenon to
clarify the doubtful facts and to correct the misconceived facts .Research may be defined as
the systemic effort to gain new knowledge .Research refers to the systematic method
consisting of enunciating the problem ,formulating a hypothesis ,collecting the facts or data,
analyzing the fact and reaching certain conclusion either in the form of solutions towards the
concerned problem or in certain generalization for some theoretical formulation .Research is
directed towards solution of a problem .The ultimate goal is to discover the cause and effect
relationships between variables. Research demands accurate observations and descriptions.
According to Clifford Wood research comprises defining and redefining problems,
Formulating hypothesis, or suggested solutions, collecting, organizing and evaluating data,
making deductions and conclusions, and at last carefully testing the conclusions to determine
whether they fit the formulating hypothesis.

RESEARCH DESIGN
The study adopts Descriptive research design. Descriptive design is one which gives a
snapshot of the prevailing environment. It is used to provide a summary of some aspects of
the environment when certain aspects of the problem are speculative in nature.

SAMPLING DESIGN
The population (universe) of this study is 438. The sample size is 50 (i.e.) 12% of the
population. Since the population from which a sample is to be drawn does not constitute a
homogeneous group, non-probability sampling technique is applied.

Questionnaire Design
Proper care has been taken to ensure that the information needs match the objectives which in
turn match the data collected through the questionnaire. The basic cardinal rules of
Questionnaire design like using simple and clear words, the logical and sequential
arrangement of questions has been taken care of. 31

49

DATA SOURCE
Data was collected through both primary and secondary data sources. Primary data was
collected through a questionnaire. The research was done in the form of direct personal
interviews.

Primary Data
Using questionnaire and telephonic/ email/ direct enquiry method, data on customers
attitudes were collected. Data on marketing practices, pricing, sales etc were collected by
interviewing managers of Marketing and Logistics functions of HOCL, direct observation of
sales process and through inspection of procedure manuals. For collecting data on customers
attitudes, 15 customers each of Phenol and Acetone were selected from about 30 regular
customers for each product. A combination of Judgment and convenience sampling was used.

Secondary Data
Secondary data consist of information that already exist somewhere, having been collected
for some other purpose, Secondary data is collected from company website, magazines and
brochures.

Pilot Study
A pilot study was made to identify the deficiencies and shortcomings if any in the
questionnaire and some small changes were made. The pilot study was conducted for 50
respondents and the questionnaire was fine tuned and revised.

STATISTICAL TOOLS
The data has been mainly analyzed by using the following methods and tests.

weighted score value
50

DATA COLLECTION: Primary data on Customer attitude was collected using an
attitude survey questionnaire. The questionnaire was prepared after study of the marketing
practices and sales process and after discussions with Marketing managers. Since the
customers of HOCL are spread throughout the country, data was collected by circulating the
questionnaire and obtaining responses by email. Some customers have representatives
stationed at Kochi and some customers visited HOCL during the project work. In such cases,
direct response was obtained. Data collected using questionnaire on customer attitude were
processed further to arrive at Weighted score value (WSV) to facilitate interpretation.
SAMPLING FOR DATA COLLECTION : A combination of Judgement sampling
and convenience sampling was used to collect data. Questionnaire was sent by email to
selected customers located in different locations out of which 13 were Phenol customers and
9 were Acetone customers. Responses were obtained from 13 Phenol customers and 9
Acetone customers. Out of this, some responses had to be obtained from local representatives
of customers and from some customers who visited HOCL, during the period. Thus, a total of
22 responses were obtained.

THE DATA AND ITS PROCESSING : The rank data collected from customers
using questionnaire is tabulated in separately for Phenol and Acetone customers.
Tthe above mentioned rank data has been subjected to further processing using the factorial
method by computing the waited score value (WSV). The method followed in arriving at
WSV for each factor in a question is briefly explained below.:>

(i) For each factor corresponding to a question, the number of respondents who have
given a particular rank is determined. Eg, for question number 7, the number of
Phenol customer respondents who gave rank 1 and rank 2 to factor (a) are 2 and
10 respectively.
(ii) Each rank is given a weightage in such a way that last rank has a weight of 1 and
first rank has a weight equal to number of factors in the question. Eg, for question
7, there are 9 factors from (a) to (i). So rank 1 is given a weight of 9, and rank 9 is
given a weight of 1.
51

(iii) The number of responses is multiplied by weight and the sum total of products is
taken to arrive at the WSV for a particular factor. Eg, for question 7 factor (a), the
number of respondents who have given ranks 1,2,4 respectively are 2, 10, 1. Since
ranks 1,2,4, have been assigned weightage of 9,8,6 respectively, the total WSV = (
2x9 + 10x8 + 1x6 ) = 104.
The factors are then arranged in the descending order of WSV as the higher the WSV the
greater the importance perceived by the customer

52

CHAPTER - 4
DATA ANALYSIS AND INTERPRETATION

53

CHAPTER - 4
DATA ANALYSIS AND INTERPRETATION
Analysis is the process of breaking a complex topic or substance into smaller parts to gain a
better understanding of it. The technique has been applied in the study of mathematics and
logic since before Aristotle. though analysis as a formal concept is a relatively recent
development. An examination of data and facts to uncover and understand cause-effect
relationships, thus providing basis for problem solving and decision making. Analysis of data
is a process of inspecting, cleaning, transforming, and modeling data with the goal of
highlighting useful information, suggesting conclusions, and supporting decision making.
Data analysis has multiple facets and approaches, encompassing diverse techniques under a
variety of names, in different business, science, and social science domains.

Interpretation refers to the task of drawing inference from the collected facts after an
analytical and experimental study. In fact, it is a search for broader meaning of research
findings. The task of interpretation has two major aspects viz., (i) the effort to establish
continuity in research through linking the results of a given study with those of another and
(ii) the establishment of some explanatory concepts. In one sense, interpretation is
concerned with relationships within the collected data, partially overlapping analysis.
Interpretation also extends beyond the data of the study to include the result of other research,
theory and hypotheses. Thus ,interpretation is the device through which the factors that seem
to explain what has been observed by researcher in the course of the study can be better
understand and it also provide a theoretical conception which can serve as a guide for further
researches.

The purpose of the data analysis and interpretation phase is to transform the data collected
into credible evidence about the development of the intervention and its performance.

54

INTERPRETATION OF DATA: Below, results of processing data obtained from
Phenol and Acetone customers has been interpreted question wise.
(i) The objective of question number 7 was to rank the various criteria the customers
would consider to evaluate the supplier. The responses obtained from Phenol and
Acetone customers is summarized below:>

Result of responses from Phenol customers:

FACTORS BASED ON WHICH PHENOL CUSTOMERS EVALUATE
SUPPLIER
FACTOR FACTOR DESCRIPTION WSV
(a) Timely and uninterrupted supply of product 110
(b) Quality of product supplied 104
(d) Pricing schemes 94
(e) Responsiveness to specific needs of customer 58
(c.) Customer communication 57
(g) Capability to supply complete consumption
requirements 50
(h) Offering better payment terms longer credit
period 42
(f) Delivery of product at customers factory 38
(i) Offering interest free credit in sales 32
Table 4.1

55

Fig 4(i)

Result of responses from Acetone customers:

FACTORS BASED ON WHICH ACETONE CUSTOMERS EVALUATE SUPPLIER

(a) Quality of product supplied 77
(b) Timely and uninterrupted supply of product 71
(d) Pricing schemes 68
(e) Responsiveness to specific needs of customer 54
(c.) Customer communication 45
(g) Capability to supply complete consumption
requirements 30
(h) Offering better payment terms longer credit
period 30
(f) Delivery of product at customers factory 21
(i) Offering interest free credit in sales 9
0 20 40 60 80 100 120
Quality of product supplied
Timely and uninterrupted supply of product
Pricing schemes
Responsiveness to specific needs of customer
Customer communication
Capability to supply complete consumption
Offering better payment terms longer credit
Delivery of product at customers factory
Offering interest free credit in sales
(
a
)
(
b
)
(
d
)
(
e
)
(
c
.
)
(
g
)
(
h
)
(
f
)
(
i
)
How Phenol customers evaluate supplier?
56

Table 4.2

Fig 4 (ii)
The interpretation of the above, is that Acetone customers attach highest importance to quality where
as Phenol customers attach highest importance to timely and uninterrupted supply of products. The
ranking of other factors such as pricing schemes, responsiveness to specific needs of the customers,
capability to supply full requirements, offering better credit terms if payment, supplying on delivered
basis, and offering interest free credit have identical importance among Phenol and Acetone
customers.
(i) The objective of question number 8 was to determine how Phenol and Acetone customers
evaluate the performance of HOCL as compared to its competitors. The responses
obtained from Phenol and 3Acetone customers is summarized below:>

0 10 20 30 40 50 60 70 80
Quality of product supplied
Timely and uninterrupted supply of product
Pricing schemes
Capability to supply complete consumption
Offering better payment terms longer credit period
Delivery of product at customers factory
Offering interest free credit in sales
(
a
)
(
b
)
(
d
)
(
e
)
(
c
.
)
(
g
)
(
h
)
(
f
)
(
i
)
How Acetone customers evaluate supplier?
57

EXTENT TO WHICH HOCL IS RATED HIGH AS COMPARED
TO COMPETITORS BY PHENOL CUSTOMERS
FACTOR FACTOR DESCRIPTION : WSV
(a) Product quality 104
(g) Reliability in supplies 91
(h) Capability in meeting supply quantity
commitments
78
(d) Responsiveness to specific needs of
customer
59
(b) Customer communication 53
(c.) Convenience in purchasing 35
(e) Consistent low product pricing 29
(f) Terms of credit payment offered 17
Table 4.3

Fig 4 (iii)
0 20 40 60 80 100 120
Product quality
Reliability in supplies
Capability in meeting supply quantity
Convenience in purchasing
Consistent low product pricing
Terms of credit payment offered
(
a
)
(
g
)
(
h
)
(
d
)
(
b
)
(
c
.
)
(
e
)
(
f
)
Perception of Phenol customers about HOCL
Series1
58

EXTENT TO WHICH HOCL IS RATED HIGH AS COMPARED
TO COMPETITORS BY ACETONE CUSTOMERS
FACTORS FACTOR DESCRIPTION WSV
(a) Product quality 72
(g) Reliability in supplies 63
(h) Capability in meeting supply quantity
commitments
54
(d) Responsiveness to specific needs of
customer
39
(b) Customer communication 36
(c.) Convenience in purchasing 25
(f) Terms of credit payment offered 21
(e) Consistent low product pricing 12
Table 4.4
59

Fig
4 (iv)
The interpretation of the above results is that HOCL excels in product quality, reliability in supplies,
capability in meeting supply quantity requirements. These are the strengths of HOCL as a supplier as
compared to its competitors. HOCL must continue to maintain its performance on these factors.
(ii) The objective of question number 9 was to determine the areas HOCL must focus upon in
the future to succeed in the market. The responses obtained from Phenol and Acetone
customers is summarized below:>

0 10 20 30 40 50 60 70 80
Product quality
Reliability in supplies
Capability in meeting quantity commitments
Convenience in purchasing
Terms of credit payment offered
Consistent low product pricing
(
a
)
(
g
)
(
h
)
(
d
)
(
b
)
(
c
.
)
(
f
)
(
e
)
Perception of Acetone customers about
HOCL
60

RELATIVE IMPORTANCE OF AREAS TO BE FOCUSED BY HOCL AS PERCEIVED BY
PHENOL CUSTOMERS
(c.) Offering more competitive prices 102
(d) Introducing an improved quantity discount
scheme
93
(e) Increasing credit period 76
(f) Offering interest free credit 67
(g) Arranging transportation of product to
customers factory
49
(b) Improving customer communication 40
(h) Supplying product in time 24
(a) Improving product quality 15
Table 4.5
RELATIVE IMPORTANCE OF AREAS TO BE FOCUSED BY HOCL AS PERCEIVED BY
ACETONE CUSTOMERS
FACTORS FACTOR DESCRIPTION WSV
(c.) Offering more competitive prices 71
(d) Introducing an improved quantity
discount scheme
64
(e) Increasing credit period 52
(f) Offering interest free credit 47
(h) Supplying product in time 34
(b) Improving customer communication 29
(g) Arranging transportation of product to
customers factory
16
(a) Improving product quality 10
61

Table 4.6

Fig 4(v)
Based on the above, it is clear that customers expect HOCL to focus on offering more competitive
prices, introducing better quantity discount schemes, and increasing credit period.
(iv) The objective of question 10 was to determine whether customers faced any problem in
the process of sales/ transportation of product from HOCL. Out of total 22 responses
received, 18 respondents confirmed that they experienced occasional shortages in
supplies on account of pilferages during transportation. No other types of problems were
faced by any customer. Since transportation is arranged by customer, HOCL needs to
help customers to change their transporters incase such instances of shortages due to
pilferage is noticed.
(v) The objective of question 11 was to determine whether customers purchase products from
importers out of 13 responses obtained from Phenol customers, 8 confirmed that they buy
product from importers (61%). Out of 9 responses received from Acetone customers, 6
confirmed that they buy product from importers (67%).
0
20
40
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80
100
120
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(c.) (d) (e) (f) (g) (b) (h) (a)
EXPECTATIONS
RELATIVE MEASURE OF CUSTOMERS
EXPECTATIONS
62

(vi) The objective of question 12 was to determine the non-price factors that attract customers
to buy imported product. 5 Phenol customers confirmed that importers offer higher credit
period than HOCL without any security. Others confirmed that price is the only factor.
(vii) The objective of question number 13 was to determine the disadvantages perceived by the
customers in buying product from importers. All confirmed that continuous availability of
product cannot be ensured by importers. This was discussed with marketing officers of
HOCL who confirmed that since imports are carried out only based on opportunity to
make profits, importers may not have stock of product on a continuous basis. Customers
buy from importers only when they have stock and product is offered at a low price.
(viii) The objective of question 14 was to enable respondents to give any relevant feedback.
However none of the customers gave any response to these questions.

63

CHAPTER - 5
FINDINGS AND SUGGESTIONS

64

FINDINGS: Below is discussed the findings of the study. The findings based on responses
obtained from customers against customer attitude survey and the findings based on studying
the marketing policies and practices, sales process, pricing policy etc of HOCL are separately
discussed below.
(a) FINDINGS BASED ON CUSTOMER ATTITUDE SURVEY: The following are the
findings:
(i) Acetone customers attach highest importance to quality where as Phenol customers attach
highest importance to timely and uninterrupted supply of products. Factors like Competitive
pricing schemes, responsiveness to specific needs of the customers, capability to supply full
requirements, offering better credit terms of payment, supplying on delivered basis, and
offering interest free credit have been perceived with same importance by Phenol and
Acetone customers.
(ii) Customers perceive that HOCL excels in product quality, reliability in supplies, and
capability in meeting supply quantity requirements. These are the strengths of HOCL as a
supplier as compared to its competitors. HOCL must continue to maintain its performance on
these factors.
(iii) Customers expect HOCL to focus on offering more competitive prices, introducing better
quantity discount schemes, and increasing credit period.
(iv) HOCL should help customers to change their transporters in instances of shortages due to
pilferage during transport. HOCL can maintain an approved panel of transporters to service
its customers.
(v) Out of respondents, 62% of Phenol customers and 67% of Acetone customers confirmed
that they buy product from importers also.
(vi) While buying from importers, other than lower price, higher credit period without
security is the advantage cited by 38% of Phenol customer respondents.
(vii) All customers who buy from importers have cited that importers cannot ensure
continuous availability of product. This is because imports are carried out in parcels based on
opportunities available to make profits.

65

(b) FINDINGS BASED ON INTERVIEWS AND OBSERVATIONS IN HOCL:
(1) HOCL has a good marketing organization with branches at six different locations. With
these six branch offices, HOCL is able to efficiently cater to the requirements of its customer
network.
(2) HOCL has a written marketing policy, which is updated from time to time depending
upon market requirements. A high level committee prepares the marketing policy after
interactions with marketing managers of branch offices.
(3) The marketing policy is communicated to all regular customers as and when it is revised.
(4) HOCL revises prices of products frequently according to changes in the marketing
environment. It always attempts to offer competitive prices to its customers through adopting
the marginal cost pricing policy.
(5) Through efficient coordination between marketing, QC and FPS, the quality requirements
of customers are fully met. HOCL also has ISO 9001 certified quality management system.
The certification is by BVQI, an organization of world repute in the field of quality system
certification.
(6) HOCL offers products in different varieties to cater to requirements of wide range of
customers.
(7) HOCL marketing branch offices circulates forms to customers for customer satisfaction
survey. Based on responses obtained, efforts are made to improve customer satisfaction.
(8) SAP system of HOCL is an excellent means of communication and coordination between
marketing branch offices.
(9) Reports can be easily generated from SAP system in Excel format and emailed to
customers as and when required by them.
(10) When demanded by regular customers HOCL supplies product on delivered basis.
66

(11) The various types of discounts extended to customers like AQLD, Special incentive,
Actual user discount and Pharma discount are attracting customers to HOCL fold even in
highly competitive market conditions.
(12) Credit payment terms are offered to customers against security. Overflow in credit limit
is permitted only after carefully evaluating the customer details. This ensures that the
interests of the organization are protected well.
(13) The cash discount offered on advance payment encourages customers to make advance
payment if they have funds with them. This helps the organization in efficient working
capital management.
(14) The Actual user discount encourages all big actual users to buy directly from HOCL.
Only small customers who find it difficult to buy directly from HOCL (due to their
incapability to offer advance payment or provide security), buy through dealers.

SUGGESTIONS: The following are the suggestions offered based on the study.
(a) PHYSICAL DISTRIBUTION : HOCL marketing team is efficiently managing the
following three Ps of the marketing mix (i) Product (ii) Promotion and (iii) Price.
Physical distribution is the area where HOCL can make further improvements.
In the case of Phenol and Acetone, product can be shipped by sea to the ports of Kandla,
Kolkotta and Mumbai and stocked in hired storage tanks in Tank terminals at the port. The
product can be sold from the ports to major customers in Gujarat, Maharashtra and Kolkotta
areas.
Presently customers in these areas are transporting product from HOCL by road. HOCL is
offering Special incentive to customers to compensate for the cost of transportation.
Sometimes, when import parcels are available at the ports, HOCL finds it difficult to sell
product without reducing price further as it is cheaper for customers to buy imported product
due to reduced transportation expenses.
67

Since the cost of water transport is lesser than the cost of road transport, HOCL can explore
the possibility of shipping products Phenol and Acetone to the ports as mentioned above and
sell from the ports. Special incentive can be withdrawn in this case.
The services of third party logistics agencies can be effectively utilized in cost effectively
arranging the sea transport and product storage at port.
(b) COMPETITIVE PRICING AND DISCOUNT SCHEMES: Customers expect HOCL
to be more competitive in pricing. HOCL must offer lower prices matching the market trends.
A more attractive quantity discount scheme should be offered.
Some importers are offering higher period of interest free credit to customers. However this
is not being suggested as it is confirmed by Marketing Managers of HOCL that since the
company is Government of India Enterprise, this is not permitted as per government
guidelines.
(c.) HOCL CAN START IMPORT TRADING: If importers can earn profits out of
importing and selling Phenol and Acetone, HOCL can also earn profits by importing and
selling its products. This way, the company can hope of maintaining its profits at times where
there is a squeeze in profit margins. The company can also serve its customers in a better way
thus by enabling them to depend on a single source of supply. The imports can be carried out
to various ports like Kandla, Kolkatta and Mumbai so that customers have to incur only lower
costs on transportation. The special incentive given to customers may be withdrawn for sale
of imported product from the ports.
(d) DIVERSIFICATION: In the highly competitive market environment, HOCL may
consider the prospect of manufacturing other high value products using Phenol. Some
quantity of Phenol produced can be captively consumed to produce other saleable products
that do not have much market competition.
Some suggested products that can be manufactured using Phenol (obtained by searching the
internet) are given below:
Tetra bromo bisphenol Fire retardant
Ortho Phenyl Phenol Fungicide
Benzophenon-3 Used in sunscreen products
68

Tricolosan - Anti-bacterial (microbicide) ingredient used in a wide variety of home care
products such as detergents and dish soaps, personal care products such as anti-acne
cleansers, deodorants, hand soaps, cosmetics, lotions, creams, toothpastes.

69

CHAPTER - 6
CONCLUSIONS:

70

CONCLUSIONS:
The objectives of this project work were to conduct a detailed study of the marketing
policies, practices, sales process of HOCL, attitudes of customers and to suggest ways and
means of solving the marketing problems of HOCL. In conformance to the objectives,
detailed study was carried out within the scope of the project work and the findings have been
listed. The responses obtained from the customers have been tabulated, processed and
interpreted. The findings and interpretation of responses clearly show that HOCL is a supplier
held in high esteem by its customers. Dumping of Phenol and Acetone from foreign countries
gives an opportunity to Indian importers to make huge profits by importing Phenol and
Acetone. In such situations HOCL is finding it difficult at times to match the prices offered
by importers. This leads to piling up of Phenol/Acetone stocks in HOCL leading to stoppage
of production and low capacity utilization.
Based on the study, suggestions have been put forward to enable HOCL to tide over market
conditions of stiff competition and maintain its profits, satisfying the customers to a greater
extent. With the implementation of these suggestions, it is expected that HOCL will be
greatly benefited.

71

CHAPTER 7
REFERENCE

72

REFERENCE

BOOKS
Kotler; Philip, Marketing management Eleventh Edition, New Delhi, Prentice hall of
India Pvt Ltd.2003.
Kothari C.R; Research Methodology- Methods & Techniques Second Edition, New
Delhi, New Age International Pvt. Ltd. 2002
Malhotra , Marketing Research Third edition, Prentice hall of India Private Limited
New Delhi.

WEBSITES
www.hoclkochi.com

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