ACKNOWLEDGEMENT

During the perseverance of this project, I was supported by different people, whose names if not mentioned would be inconsiderate on my part. I would like to extend my sincere gratitude and appreciation to Miss Devki sanzagiri. who initiated me into the study of Future demand for furnace oil/Coal by the captive power plants and its alternative fuel . It has indeed been a great experience working under her during the course of the project for her invaluable advice and guidance provided through out this project. I also owe my sincere gratitude to Mrs Smita Mam HR head of Vinergy. I would also like to thank the following people who through their experience have enlightened me on the practical aspects of this subject without whom the study would not have been carried out successfully. Jiten sampat Devki sanzagiri

EXECUTIVE SUMMARY

PURPOSE OF THE STUDY

The purpose is to study the petrochemical segment of vinergy international with respect to its maketing and distribution phenomena.The study also tries to understand the major fuel been used by power plants for generating electricity. To understand the Indian and international scenario about the fuels.Telephonic and mail survey has been conducted. OBJECTIVES OF THE STUDY

To study the demand for furnace oil and coal by power plants. To analyse the future demand for furnace oil and coal. To find out which alternative fuel will be preferred by power plants if price of furnace oil goes up. To understand the Indian as well as international scenario about the fuels being used by power sector. To study the impact of government taxes and policies. SCOPE OF THE STUDY

The study considers only fuels segment and revolves around marketing and distribution strategies done by competitive firm for making their presence in the current scenario. It also includes the detailed study about coal which is one of the most preferred fuel by the power plants for generating electricity. DATA COLLECTION The approaches used for compiling of the project are both primary and secondary sources of data: Primary data: Telephonic interview of respondents Survey of few customers Mail survey Secondary data: Through reference books Related websites Companys annual report News articles

INTRODUCTION TO THE TOPIC ABOUT FURNACE OIL AND COAL

PRODUCT-FURNACE OIL

Description Furnace oil is defined as a dark colored fuel, either distilled or residual fraction of crude oil that is extracted while petroleum distillation and is used for the purpose of generation heat and power. This fuel is sticky, thick and glutinous in nature. Furnace oil is known by the name of fuel oil internationally and also as bunker fuel. The fuel oil consists of lengthy chains of hydrogen and carbon mainly alkanes, cycloalkanes and aromatics. Basically furnace oil is termed for relatively heavier commercial extracts from crude oil. Overview Furnace oil is largely an industrial fuel. It acts as a key ingredient in the generation of electricity and heat in a number of production units. It has been used since a long time for such purposes and has gained much importance and inevitable value. Fuel oil comes under the category of the heavier oils that include furnace oil, low sulfur heavy stock, residual fuel oil, lube oil, bitumen, petroleum coke, paraffin wax and other waxes which can be extracted from crude oil. Crude oil is the major source of furnace oil. The furnace oil production in the world including distillate and residue oils is estimated around 2500 million metric tons for the year 2008-2009. Major crude oil producing countries are also the major fuel oil producing countries in the world. Indian furnace oil market In India, fuel oil is known and traded as furnace oil. India is blessed with ample natural resources and due to this reason, is known to be one of the fastest developing countries in the world. Furnace oil helps in the growth of the countrys industries as it powers the transportation network and forms the base of various Indian industries. The figures of production of furnace oil in India in the year 2008-09 hovered around 8.74 million metric tons.

India had a total consumption demand of around 8.03 million metric tons in context of furnace oil. The country has a large appetite for furnace oil that is used in the following industries serving the nations. The consumption figures in the following list :Transport sector (263000 tons) Shipping sector (135000 tons) Other transport (128000 tons) Food/plantation sector (376000 tons) Power sector (488000 tons) Miscellaneous services (1100000 tons) Fertilizer (445000 tons) Chemical and allied (1372000 tons) Textile (670000 tons) Iron and steel (574000 tons) Other industries (1653000 tons) Market influencing factors World demand and supply of crude oil Weather conditions Seasonal cycle Fluctuations in the value of dollar Stocks of fuel oil Price fluctuations Cost fluctuations Regional operating costs Competition in local markets

Major trading centers of furnace oil The major trading centers where fuel oil is traded are Singapore Shanghai Futures Exchange (SHFE) Furnace oil is traded in the Indian commodity exchanges like Multi Commodity Exchange of India (MCX) and National Commodities and Derivatives Exchange of India (NCDEX).

RAW-MATERIAL CRUDE-OIL Crude oil is the major source of furnace oil. The furnace oil production in the world including distillate and residue oils is estimated around 2500 million metric tons for the year 2004-2005. Major crude oil producing countries are also the major fuel oil producing countries in the world.

FUTURE DEMAND FOR FURNACE OIL:The cost of furnace oil imports during the next five years is expected to jump from 170 million dollars to over half a billion dollar at current prices At present the power sector is consuming around 2.35 million metric tons of fuel oil. Under 1.7 million tons is being produced in the local refineries of which Karachi Refineries are producing 1.25 million tons and Attock Refinery over 400,000 tons. The balance quantity of 2.1 million tons is being imported at a cost nearly 170 million dollars. FURNACE OIL PRICE:Product:-FURNACE OIL SellingUnit:-MT Mumbai:-33260 Delhi :-33970 Chennai :-33630 Kolkata:-33800

COAL:

Coal production
The world currently consumes over 4000 Mt on coal each year. The largest consumers are mainly power generation and steel industry. Cement manufacturing and coal liquefaction are two a medium consumers. A small proportion of coal is also used for various chemical processes. Coal production has increased with 38% the last 20 years. Asia is the fastest growing coal producer, while European production actually has declined. Global coal production is expected to reach 7 billion tones in 2030 with China accounting for nearly half the increase

Coal transportation
How coal is transported depends on the distance to the place where it will be used. Coal is generally transported over short distances with trucks or conveyors. Trains and barges are used for longer distances within a domestic market, alternatively the coal can be grinded into a fine powder and mixed with water to form a coal slurry that can be transported through pipelines. Ships are used for the longest distances. Coal transportation can be very expensive. In many cases up to 70% of the total cost is due to transportation expenses. Only high-rank coal is traded internationally. Lignite and sub-bituminous coal can be traded regionally but is too expensive for shipment over longer distances, due to the low energy content compared to high-rank coals.

Global Coal market and trade:The global coal market is large and diverse,with many different producers and consumers from every continent. Coal supplies do not come from one specific area, which would make consumers dependent on the security of supplies and stability of only one region. They Total World Electricity Generation (% by Fuel, projected for 2030) are spread out worldwide and coal is traded Coal contributes to around 39% of the global electricity and this number is expected to change very little over the next 30 years. The growth of steam coal and lignite, both used for power generation, is projected to an increase of around 1% per year. Demand for coking coal in steel industry is likely to increase with a similar number. Most of the coal is consumed in the same country as it was produced, typically due to high transportation costs involved in coal trade. Only around 18% of hard coal production goes the international market. The biggest market for coal is Asia. Currently 54% of the global coal consumption takes place in Asia, mostly in China, Japan, India and Korea. Logistical reasons is another explanation of why a major coal producer imports foreign coal. It is easier to import foreign coal directly to major consumption areas than mining domestic coal in faraway regions with undersized transportation systems. Australia, with a total hard coal production equal to 274 Mt, is the worlds largest coal exporter. Australia is also the worlds largest supplier of coking coal, accounting for 51% of world total export. Coking coal is quite expensive compared to other types of coal and that makes it possible for Australia to afford the high freight costs involved in exporting coal worldwide.

ADVANTAGES OF COAL: Coal reserves are very large and will b available for the foreseeable future without raising geopolitical or safety issues. Coal is readily available from a wide variety of sources in a well-supplied worldwide market Coal can be easily stored at power stations and stocks can be drawn on in emergencies. Coal-based power is not dependent on the Weather and can be used as a backup for hydropower. Coal does not need high pressure pipeline or dedicated supply routes Coal supply routes do not need to be protected at enormous rate. Coal can be easily stored at power station and stocks can be drawn on in emergencies.

Conversion of coal to electricity:-

Importance of Electricity Worldwide

Access to energy, and specifically electricity, is a driving force behind economic and social The provision of household electricity development. Dependable and affordable provides for the use of modern appliances access to electricity is essential for improving public health, providing modern information and education services, labour and frees time. from subsistence tasks, such as gathering fuel. Around 2.4 billion people rely on primitive biomass fuels such as wood, dung and crop residues for cooking and heating. Improving access to electricity and allowing people to move away from the combustion of fuels in household fires would have a significant health impact. The World Health Organisation has estimated that smoke from burning solid fuels indoors is responsible for 1.6 million deaths each year in the worlds poorest countries. Improving access to energy also supports economic development.

Coal in Iron & Steel Production

Steel is essential to everyday life cars, trains, buildings, ships, bridges, refrigerators, medical equipment, for example, are all made with steel. It is vital for the machines which make nearly every product we use today. Coal is essential for iron and steel production; some 64% of steel production worldwide comes from iron made in blast furnaces which use coal. World crude steel production was 965 million tonnes in 2003, using around 543 Mt of coal.

Coal and Cement

Cement is critical to the construction industry mixed with water, and gravel it forms concrete, the basic building element in modern society. More than 1350 million tones cement are used globally every year. Cement is made from a mixture of calcium carbonate (generally in the form of limestone), silica, iron oxide and alumina. A hightemperature kiln, often fuelled by coal, heats the raw materials to a partial melt at 1450C, transforming them chemically and physically into a substance known as clinker. This grey pebble-like material is comprised of special compounds that give cement its binding properties. Clinker is mixed with gypsum and ground to a fine powder to make cement Coal is used as an energy source in cement production. Large amounts of energy are required to produce cement. Kilns usually burn coal in the form of powder and consume around 450g of coal for about 900g of cement produced. Coal is likely to remain an important input for the global cement industry for many years to come Coal combustion products (CCPs) can also play an important role in concrete production. CCPs are the by-products generated from burning coal in coal-fired power plants. These by- products include fly ash, bottom ash, boiler slag and flue gas desulphurisation gypsum. Fly ash, for example, can be used to replace or supplement cement in concrete.

OTHER USES OF COAL

Other important users of coal include alumina refineries, paper manufacturers, and the chemical and pharmaceutical industries. Several chemical products can be produced from the by-products of coal. Refined coal tar is used in the manufacture of chemicals, such as creosote oil, naphthalene, phenol, and benzene. Ammonia gas recovered from coke ovens is used to manufacture ammonia salts, nitric acid and agricultural fertilisers. Thousands of different products have coal or coal by-products as components: soap, aspirins, solvents, dyes, plastics and fibres, such as rayon and nylon.

TYPES OF COAL:Lignite coal :The softest of the four types of coal. It is a brownish black in color, very crumbly and primarily used for the generation of electricity. The heating content of lignite is approximately 4,000-8,000 Btu's per pound. Sub-bituminous coal:This is a medium soft coal that contains much less moisture than lignite and is not nearly as crumbly. Like lignite, its primary use is in the generation of electricity. The carbon content of subbituminous coal runs from 35%-45% and its heat value generally ranges from 8,000-13,000 Btu's per pound.

Bituminous coal:Contains even less moisture than the sub-bituminous type. The carbon content of bituminous coal is generally from 45%-85%. Its heat value ranges from 10,500-15,000 Btu's per pound - greater than either lignite or the sub-bituminous types. In addition to being used for electrical generation, it is also used in making coke or coking coal, an essential ingredient in making steel. Anthracite coal:- -

is the hardest of the four types. It averages 85%-95% carbon content and has the highest heating value of the four types of coal. It is not uncommon to find anthracite that produces well in excess of 15,000 Btu's per pound. To put that in perspective, that is roughly one and one-half times as much heat as the same volume of oil and four times as much as seasoned hard-maple firewood. Anthracite makes excellent home heating fuel because it burns cleanly, does not produce volatile gases and does not deteriorate. It can be stored on the ground for long periods of time without creating environmental problems.

Heating Value:
The heating value of coal varies from coal field to coal field. The typical GCVs for various coals are given in the Table Table 1.4 GCV for Various Coals Parameter Lignite Indian Coal (Dry Basis) GCV (kcal/kg) 4,500* 4,000

Indonesian Coal 5,500

South African Coal 6,000

The common coals used in Indian industry are bituminous and sub-bituminous coal. The gradation of Indian coal based on its calorific value is as follows:

Grades of Coking Coal

Grade Steel Grade I Steel Grade -II Washery Grade -I Washery Grade -II Washery Grade -III Washery Grade -IV Ash Content Not exceeding 15% Exceeding 15% but not exceeding 18% Exceeding 18% but not exceeding 21% Exceeding 21% but not exceeding 24% Exceeding 24% but not exceeding 28% Exceeding 28% but not exceeding 35%

Grades of Non-coking Coal

Grade Useful Heat Value (UHV) (Kcal/Kg) UHV= 8900-138(A+M) A B C D E F G Exceeding 6200 Exceeding 5600 exceeding 6200 Exceeding 4940 exceeding 5600 Exceeding 4200 exceeding 4940 Exceeding 3360 exceeding 4200 Exceeding 2400 exceeding 3360 Exceeding 1300 exceeding 2400 but but but but but but Corresponding Gross Calorific Value GCV Ash% + Moisture % (Kcal/ Kg) at (60% RH & 40O (at 5% moisture level) C) Not exceeding 19.5 Exceeding 6454 not19.6 to 23.8 Exceeding 6049 but not exceeding 6454 not23.9 to 28.6 Exceeding 5597 but not exceeding. 6049 not28.7 to 34.0 Exceeding 5089 but not Exceeding 5597 not34.1 to 40.0 Exceeding 4324 but not exceeding 5089 not40.1 to 47.0 Exceeding 3865 but not exceeding. 4324 not47.1 to 55.0 Exceeding 3113 but not exceeding 3865

PRICE CHART FOR COAL:-

PRIMARY REPORT ANALYSIS:-

ANALYSIS: Raw material-basic rawmaterial is crude oil as per the price of crude oil furnace oil price keeps on fluctuating which have ultimate impact on demand of furnace oil by power plants. As per my analysis demand for furnace oil by captive power plants is going to decline in coming future even currently, it is used in very less quantity due to increasing cost of furnace oil and alternative fuel used is Coal. Major furnace oil based power plants are switching to Coal Power plants using furnace oil as a fuel is very less as compare to coal based power plants. Company may generate more returns in terms of profitability if it starts supplying coal as a fuel to power plants because it is demanded in very huge quantity and more affordable t in terms of cost. Today furnace oil is being used by the power plants only at the initial stage i.e 16-18 k.l in monthly to generate power further coal is used as a primary fuel. In power generation coal contributes 75%. Power sector consumes78% of total countrys coal production. Currently only four per cent power plants run on furnace oil. In terms of sectorwise consumption ; Furnace oil is used as a fuel more in plantation and transportation sector whereas in power generation the growth rate of furnace oil from 2009 to 2010 was decreased from 788 to 729000 tonnes.. Non coaking coal are used for power generation because it gives approximately 3500 GCV and coaking coal gives approximately 2000 GCV.and for generating electricity more then 3000 GCV is required.\ Coal based companies use imported coal in maximum quantity because it gives nearly 30% more calorific value than coal offered by CIL,and the price of imported coal are also less as compared to price offered by CIL.

 Research is based on comparative study between furnace oil and coal used by captive power plants
REGIONS NORTHERN SOUTHERN WESTERN EASTERN FURNACE power plants 5 24 14 5 OIL captive COAL 32 28 35 50 captive plants:-

Customers
STEEL PLANTS POWER PLANTS PAPER INDUSTRY CHEMICAL INDUSTRY TEXTILE INDUSTRY CEMENT INDUSTRY SUGAR INDUSTRY

 Suppliers
FURNACE OIL SUPPLIERSIOCL BPCL HPCL Local suppliersBombay Lubricants oil co. MP power energy company ltd. COAL SUPPLIERSCCL SECL WCL SINGRANIES CO.LTD. OPEN MARKET IMPORTED COAL:Indoneasia Australia South africa

COLLARIES

Mehta petrochem Reliable chemicals Power lube

TAX:The revenue board has decided to waive duty on import of furnace oil in order to expedite the establishment of rental and peaking power plants now in the pipeline. TAXES ON FURNACE OILEXCISE DUTY- 14% CUSTOM DUTY- 10% VAT12.5% TAXES ON COALEXCISE DUTY- 5% LOCAL TAX - 5 TO 10% CENTRAL TAX- 2% VAT - 4%

 PRICING:FURNACE OIL

Price of the furnace oil range between 32000-34000 per tonne.and the price of furnace oil fluctuates as per the increase in price of crude oil as crude oil is the basic rawmaterial for producing furnace oil. Price of the Coal differ as per the grade and quality of coal demanded as per the primary data collected major coal based power plants use E and F Grade coal and their price range between 1000-3600 per tonne

COAL

Quantity demanded by power plants FURNACE OIL COAL Quantity of furnace oil demanded by captive Whereas coal demanded by the power plants range between 500-600 tons monthly. plants is Approximately 500-600 tons daily.

KEY ISSUES FURNACE OIL World demand and supply of crude oil Fluctuations in the rate of tax Stocks of fuel oil Price fluctuations Cost fluctuations

COAL Short supply Inferior quality of coal Prices Movement from time to time

 Sectorwise consumption of furnace oil in india(000 tonnes)

Analysis through the above chart is as follows: Furnace oil is used more in transporation sector followed by plantation,industry sector. Growth rate of furnace oil consumption:1.Transportation sector- increased from 778 to 881000 tonnes. 2.Plantation:- increased from 172 to 190000 tonnes. 3.Industry:- increased from 2,858 to 3,150000 tonnes 4.Power sector:- decreased from 788 to 729000 tonnes.

 Industrywise consumption of coal

Analysis through the above chart is as follows: Coal is used more in paper industry,followed by power sector,cotton,cement and steel industry. Growth rate of coal over year 2009-2010:paper industry:- increased from 2.16 mt to 3.50 mt. power sector:-increased from 381.06 mt to 411.06 mt. cotton industry:-increased from0.21 mt to 0.27 mt Cement industry:-increased from 19.85 mt to 21.34 mt. Steel industry:-increased from 38.85 mt to 41.11 mt. CONCLUSION:Consumption of furnace oil has decreased by 7.49%, whereas coal consumption has increased by 7.87 %. For the year 2009-2010 in power sector.

Problem faced by the power plants to Procure coal from private companies: The power companies always complain of poor quality coal supply by the private companies. Coal supplied is invariably mixed with stone and over burdens which if not removed would invariably damage the coal pulverizing units and also adversely affect the boiler lining. Lot of investment in manpower is required by the power companies for quality check and manual removal of stones and over burdens Price of Indian and imported coal: In the international market, the price is governed by the demand supply situation whereas in India, the price is a monopoly price.

The price in the international market has been declining due to industrial recession whereas the price in India has been increasing due to monopolistic increases in price caused by cost- push inflation. The cost of imported coal depends on international price of coal, sea freight rates, import duty and inland transportation etc. In case the landed cost of imported coal is less than that of indigenous coal, POWER PLANTS are likely to resort to import of coal on cost considerations. Coal is imported by the consumers either due to non-availability/inadequate availability of the required quality and quantity indigenously or on consideration of cost. Calorific value of indigenous and imported coal:-

The calorific value of the available deposits of Indian coal is in the range of 4000 to 5000 Kcal/Kg(UHV 2500 to 4000 Kcal/Kg) as compared to about 6000 Kcal/Kg of imported coal.

ADVANTAGES OF IMPORTED COALS: Usage of imported steam coal for power plants in India is today a good alternative, driven more by techno-economic considerations than due to the present shortage in availability of Indian steam coal. The attractiveness of using imported coal vis-a-vis Indian washed coal at coastal based thermal power plants needs to be considered, both from the qualitative as well as quantitative perspective the qualitative aspects, imported coal has higher calorific value, low ash compared to Indian coal The government has also taken positive steps to encourage use of imported coal by drastically reducing customs duty, which was earlier in the range of 32% three years ago to 5% at present.

 Considering that there is no coal available in southern India except for the coal fields in Singareni (which is already overutilised and committed to existing users), the nearest coal fields available are at Talcher in Orissa. The rail-sea-rail transportation arrangement from Talcher-Paradip-western coast location, amounts to multi-handling of coal at various locations apart from very high transportation and handling cost Indicative rates are about Rs 1,600 to Rs 2,000 per tonne. Compared to this, the transportation cost of coal from South Africa, Indonesia and Australia (based on offers available with us) are in the range of Rs 500- Rs 700 ($11-20) per tonne Moreover, the quantity of coal to be transported will be nearly half (due to high calorific value of imported coal), thereby reducing the overall transportation cost. It is possible to get imported coal of 6200 kcal gross calorific value (GCV) at around Rs 2,500-Rs 2,600 per tonne compared to around Rs 2,000 per tonne for Indian coal having a calorific value of 4300 kcaL. .

SUPPLY CHAIN MANAGEMENT FOR COAL:-

Research on Supply Chain Management and Application in Coal Industry Group

Economic globalization and diversified demands from customers impel the markets all over the world to compete severely. As a traditional mining resources oriented enterprise, the large and comprehensive group management mode of the coal industry group cannot meet the demands of the new competitive situation. The rising of scientific and technological development and knowledge economy adds a profound meaning to management which must involve the whole process of enterprise activities including that of supplier, salesman, customer etc. For management, it is no longer the traditional sense of "vertical integration" mode but "horizonal integration" . Global manufacturing and the mode of supply chain management(SCM) is the typical idea of "horizonal integration" .Under this macro environment, this thesis laid special emphasis on SCM and its application in coal industry groups. SCM developed through harsh market competition and has a history of more than 20 years during which many scholars and administrative constantly put new theory, new technology into apply SCM so as to enrich and strengthen its theory and practical skills such as military logistics, business process reengineering, information tech and artificial intelligence. All theories and methods mentioned above make great contributions to the development of SCM. Thereafter virtual supply chain (VSC) , agile supply chain(ASC) come into being which demand a high level in basic management on the one hand, from the aspect of research object, on the other hand, most research concentrate on manufacturing industry and retailing industry while less on supply chain in coal industry. On the basis of comprehensive analysis of SCM, the author establishes a supply chain management model which meets the demands of coal industry group in China. On choosing supply chain partnership, the existing document emphasize the establishment of the index and its methods. This thesis makes the following research: establishing combination evaluation model based on previous work; in recent year, a great research has been made and many achievements have been got about the technical issues in supply chain such as purchase problem but electric purchase as a relatively advanced method plays an important role.in coal industry supply chain; long time ago foreignexperts have started their research in stocking issues. These previous research are only about inventory optimizing strategy for single enterprise. With the development of SCM and finding of bullwhip of SCM, the scholars at home and abroad shift their eyes on the optimizing of whole supply chain invertory. Recent research focus on invertory method and states that various inventory methods should be made according to different materials and its market structure. All in all, new ideas are summarized as follows,(1) Establishing coal industry group apply chain (outer chain, inner chain)which meet the demands of Chinese coal industry management. Through research on the current situation of Chinese coal industry, the author puts forward the basic frame, analysis of its organization basis, basic rules and basic objects .(2) On the choosing of cooperative partnership, a supply chain cooperative model has been made based on fuzzy evaluation, artificial neural netwrork , extension theory and combination evaluation ?(3) A systematic design method has been chosen to analyze thoroughly electric purchasing system in coal industry group supply chain. Based on current analysis, concrete analysis of electric purchasing system from all aspects of model, network structure, network safety and functionalstructure has been made.(4)Putting forward ABC and market analogy methods by taking into consideration traits of material management in supply chain. Its practical application greatly improves the scientific nature.

SWOT ANALYSIS OF COAL:-

Coal is one of the most abundant sources of energy, more so than oil and natural gas Inexpensive source of energy Easy accessibility Very large amount of electricity can be generated using coal as compare to oil.

High rate of accidents or deterioration Mining cost of indian company are 5% higher then coal exporting countries like australia,indoneasia,& south africa. Coal storage cost is high.

Govt. provides concession for the import of coal so there is a opportunity for coal supplying companies to increase their Exports. Many power plants are switching to Coal from oil due to cost factor.

Stricter environment rules restricting mining activities. Entry of International coal market. Changes in government policies.

DATA INTERPRETATION:

RESEARCH, SWOT ANALYSIS,FINDINGS AND RECOMMENDATIONS for vinergy

RESEARCH OBJECTIVES To identify most preferred fuel amongst the power plants for generating electricity. The comparative study of furnace oil and coal has been done. And with the help of research study coal was found to be one of the most preferred fuel by captive power plants so main focus of the researcher was on finding out the demand for the coal and the key issues relating to coal supply and its competitor. RESEARCH SCOPE I have done the survey for finding out and analyzing the demand for coal and furnace oil by captive power plants.I had ask to do telephonic interview with the customers to know their demand and key issues relating to fuels. The sample size taken was approximately 150-200 customers. My major focus was on the factors that were affecting the demand for furnace oil and finding out the more detailed information about coal.My sample plan was to capture the information about future demand for coal and furnace oil by captive plants. RESEARCH METHODOLOGY Research design is the basic framework,which provides the guidelines to the study.it is the arrangement of condition and analysis in a manner that aims to combine relevance to the research purpose with economy in procedure.it was a DESCRIPTIVE RESEARCH which has been done by making an in-depth study to get knowledge about the subject. Descriptive research is more rigid than exploratory research and seeks to describe users of a product, determine the proportion of the population that uses a product, or predict future demand for a product. As opposed to exploratory research, descriptive research should define questions, people surveyed, and the method of analysis prior to beginning data collection. In other words, who, what, where, when, why, and how aspects of the research should be defined. RESEARCH LIMITATION The researcher tried to make the research work as accurate & authentic as possible.however the following constraints were still unavoidable: The information provided by the respondents on which all the results were drawn cannot be denied that here was always a possibility of response error. The study was conducted within a time frame of two months duration only. The respondents feel reluctant about the survey conducted. Secondary data could not be fully utilized because of difficulty in assessing it. Some Customers were busy with their work so did not answer the interview been conducted by researcher.

ANALYSIS AND SUGGESTION FOR VINERGY: SWOT ANALYSIS OF VINERGY:

 Vinergy is already into bus iness of fuel supply to power plants. It has large c hain of established customers for furnace oil so coal can be supplied to same customers . There is also presenc e of ample ports and depots. Good network of marketing and distribution team.

Vinergy is in marketing $ distribution of furnace oil but when company plans to get into coal business lot many efforts would be require to create a good market for coal s upply as there are many private and government players for supplying coal,

Power sector is rapidly growing so ultimately coal demand will also grow. Govt. provides conc ession for the import of coal so there is opportunity for c oal supplying companies to increase their Exports. Many power plants are switching to Coal from oil due to cost factor.

Government suppliers for coal Entry of International c oal market. Changes in government policies.

FINDINGS FOR VINERGY As per the price of crude oil furnace oil price keeps on fluctuating which have ultimate impact on demand of furnace oil by power plants.

Demand for furnace oil by captive power plants is going to decline in coming future At present, furnace oil is used in very less quantity due to increasing cost of furnace oil. Alternative fuel used is Coal and diesel. Majority of furnace oil based power plants are switching to Coal Power plants using furnace oil as a fuel is very less as compare to coal based power plants. Today furnace oil is being used by the power plants only at the initial stage i.e 16-18 k.l in monthly to generate power further coal is used as a primary fuel. In power generation coal contributes 75%. Power sector consumes78% of total countrys coal production. Currently only four per cent power plants run on furnace oil.

RECOMMENDATION FOR VINERGY

Company may generate more returns in terms of profitability if it starts supplying coal as a fuel to power plants because it is demanded in very huge quantity and more affordable in terms of cost. The company should try to minimize the price(cost) of fuel to the customers & quality should be upgraded so that they will not affect the demand and the market. The company should try to focus on effective and efficient coal supply to the power plants as today most of the power plants demand for coal and they give special attention towars cost,quality, and timely supply of coal. Since, vinergy is already in a business of supplying furnace oil to power plants it will be not much difficult to switch its fuel distribution from furnace oil to coal. Company has well established customers (power plants) to whom coal can be suggested as a alternative to furnace oil if cost is a concern to the power plants for decrease in a demand for furnace oil. Imported coal is the most preferred coal by the power plants due to cost and quality consideration,vinergy may import coal from indoneasia,south Africa, Australia and distribute the same to captive power plants. Company also gets the tax benefit if it supplies coal because VAT for furnace oil is 12.5% whereas for coal it is 4% and excise duty for furnace oil is 14% whereas coal is 5%.

CONCLUSION BIBLIOGRAPHY ANNEXURES QUETIONNAIRE

CONCLUSION: There was a great opportunity for me to do my research work in vinergy international pvt. ltd..I have Learn about the demand for fuels by captive power plants their main concern for giving preference to the particular fuel. companys history, how they Purchase the fuels from supplier ,key isues being faced by the company. I started my research in the company and as well as I was looking at other works that was allotted to me. The best learning experience was that I started from the very basics of getting the overall idea. This helped me get useful insight and understanding of petrochemical products, the market details about them and the benefits provided by them to the customers. I had a very pleasant learning there, I got to know about corporate and its working style of different departments. The guide helps me to understand the customers in the market. In conclusion, I would like to state that by the experience of this training, the theoretical knowledge has no meaning without the practical approach. Both theoretical and practical knowledge serves as the two faces of the same coin. This learning experiences is valuable for me because I got a opportunity to understand the market situations and customer values and preferences.

BIBLIOGRAPHY:

www.iocl.com/ www.shell.com www.mypetrolprice.com/

www.commodityonline.com/.

http://www.financialexpress.com/news/imported-coal-makessense/134661/ http://www.eia.gov/steo/ http://www.crnindia.com/commodity/foil.html http://www.slideshare.net/Harijan29/coal resourceoverviewofworldcoalinstitutereport2009 http://articles.economictimes.indiatimes.com/2011-0622/news/29689802_1_coal-prices-private-power-reliance-power http://www.thefinancialexpress-bd.com/more.php?news_id=114698 www.kshitij.com/research/petrol.shtml

ANNEXURES

QUESTIONNAIRE 1) Do your company use furnace oil as a fuel for power generation?

2) Which is the primary fuel and secondary fuel been used? 3) Who are the major suppliers for the fuel (Coal/Furnace oil)? 4) What is the heating capacity of Coal or Furnace oil? 5) What are the major issues concerning government regulation and fuel purchase with the supplier? 6) What be the alternative fuel if price of the furnace oil rises? 7) What will be the future demand for furnace oil? It wil increase or decrease in cuming future? 8) What is the quantity of fuel demanded by your power plant? 9) What is the current price of coal/furnace oil? 10) Do your supplier provide any discount in purchasing coal/furnace oil from them? 11) Which grade of Coal is preferred more for power generation?why? 12) Which mode of transportation is used for supply of fuel to the company? 13) Do you purchase the ffuel from Local supplier or Government supplier? 14) Which coal is most preferred imported coal or indigenous coal?why? 15) Who is the global supplier for the imported coal?