NAG was set up by Pushcart SOB Ran and his family in technical and financial collaboration with Sank gas industries, Bombay, and NAG is one of the leading gas companies in Nepal. Its bottling facilities are located at Katmandu and Samara having the advantage of servicing the capital. Its cylinders and bottling facilities conform to international standards. The cylinders are procured from India manufacturers and are SIS certified. They are periodically put to hydro testing to rule out damages and maintain the usability; all obsolete and outdated cylinders are scrapped.
Nepal gas has total employee strength of 210 employees between Katmandu and samara plants. NAG has its plant in ballad industrial district, industrial estate located in Katmandu. A subsidiary company, Nepal gas industries (maharani) pit. Ad (NAG) was established in 1991 to cater to the tetra market. NAG has its plant in samara, pars 200 kilometers west of Katmandu adjacent to border town of burning. Literature Review NEW DELHI, JAN 28 – The Indian government has directed the state-owned Indian Oil Corporation (OIC) to increase the supply of liquefied petroleum gas to Nepal without any delay.
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Indian Minister of State for Petroleum and Natural Gas directed the OIC to supply cooking gas as per Napalm’s demand as it has been reeling under a gas shortage. Minister Dreamer Piranha informed Acting Nepal Ambassador to India Krishna Parkas Dakar on Tuesday that he had directed the authorities to instantly increase LAP shipments. “Preparations are being made to supply 30,000 tones of LAP from February,” said Piranha. Nepal has been facing a severe shortage of the essential fuel for the last two months. OIC had cut LAP shipments due to maintenance work at its depot in Brain two months ago.
Piranha said the obstacle had been removed and that the refinery had started maintaining adequate LAP stocks as per Napalm’s demand. Despite the resumption of normal services from the depot, the Nepal market has been suffering from an LAP shortage which has been lamed on black marketing and hoarding. The state-owned Nepal Oil Corporation (NCO) said shortages had persisted even though it had issued LAP in quantities higher than the normal market demand. During the meeting, OIC chief B Shoo and high-ranking Indian government officials were also present.
Earlier, Commerce Minister Sunnis Buddha Tap had informed the Indian authorities about the crisis in Nepal. He had urged them to increase the supply up to 29,000 tones as per the demand. More than 70 percent of Napalm’s LAP imports come from Brain while OIC depots in Holiday (West Bengal), Mature (Attar Pradesh) and Carnal (Harridan) revived the rest. Concerned by the problems seen in the distribution of LAP from National Trading Limited which was mobbed by customers, Minister Tap had directed the Nepal Embassy in India to talk to the concerned Indian authorities to address the problem.
The severity of the fuel shortage was all apparent in National Trading being sold out of LAP on Sunday and Monday. The government halted sales from National Trading from Tuesday. “Around 15,000 tones of gas should have entered Nepal from Brain every month, but only 8,000 tones have been shipped presently,” said a source at the Petroleum Ministry in New Delhi. Meanwhile, officials of NCO and OIC are organizing a meeting in New Delhi this week in a bid to address the Pig scarcity. (http://www. Jauntier. Mom/201 5/01 /28/top-story/India-tells-OIC-to- boost-Pig-supplies-to-Nepal/400916. HTML) Micro environment Micro environment consist of the factors in the companies immediate area that directly effects the decision of the company. These factors include: l. Product:- Any goods or item and services created to satisfy the wants of the customers is known as product. It is a combination of both tangibles (goods or item) and intangibles (services) attributes. (http://www. Contraindications. Com/definition/ product. HTML) In case of Nepal gas, which has been producing only cooking gas since its establishment, the cylinders they product is their only product they provide. Due to their limitations they have many limitations they have not been able to expand their area of production. II. Price:- The price of product is determined by the work done for the production of the product and profit incurred on it. It can be also determined by the cost of materials used, wages paid and percentage of profit. (http://www. Objectifications. Com/ definition/labor-rate-price-variance. Ml) Nepal gas although does not determine the price of its product because as it produces the final product of a natural resources. So, price of their product is fixed by the government. Ill. Place(distribution):- It is the process of flow of the product from the main producer or suppliers to the final customers or consumer. It is also define as the place where an item is sold to the customer by the producer through different mediums. (http:// www. Objectifications. Com/definition/distribution. HTML) Nepal gas, as being the producer of cooking gas which we use every day, has its own distribution channels.
These distribution channels receive from the suppliers (Nepal Gas) and deliver to the market where consumers or customers like us can easily purchase. ‘V. Promotion:- Promotion is the one of the most important anomalies of the micro environment. Promotion is done to let the general public know about the producer’s product. (http://www. Objectifications. Com/definition/promotion. HTML) Nepal Gas,(although does not need any promotions) used to demonstrate how to make use of the cooking gas in different sectors of the local market. Porter’s five forces Porter’s Five Forces is named after Michael E.
Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry strengths and weaknesses. 1. BUYER POWER:- In the Nepal gas industries, the buyer bargaining power should have been high because there are many other gas lines and many alternatives to consider, but because of the constant gas shortage our country faces the bargaining power is low. There is also no significant switching cost on the buyers. For instance, price difference between Nepal gas and Baby gas is so insignificant that buyers can switch the products at no cost.
Brand loyalty is also currently dwindling giving consumers a gig bargaining power. Nepal gas which currently covers 30 of the market share in Katmandu valley is highly preferred by the consumers. On a national scale as cooking gas is a daily used product has considerably low buyer bargaining power. 2. Supplier power:- Supplier power in Nepal gas industry is very high. As, the present gas crisis in Nepal is going on, from the primary research it has been concluded that the reason behind it is because Indian’s refinery are not providing according to our needs.
As, it is a daily used product and the product is not enough the suppliers are very powerful at the moment. Cost of switching is very low or no cost at all. The substitute product for gas would either be electric cooking appliances or firewood. But since, gas is the best option overall, the supplier power is high. 3. Threat of new entrants:- In the Nepal gas industries, the threat of new entrants is very low as currently the current competitors have already occupied huge market share and customers loyalty.
The time as well as the cost of entering this field is very high. It is not easy to get quotas from the government or get gas from the refinery which makes it hard for new entrants to easily break-even. The present market share is split among giant companies who have brand recognition and have achieved low-cost distribution and production capabilities through economies of scale that cannot be matched easily. The Nepal gas industry is therefore considered to have low threats of new entrants in relation to porter’s five forces. 4.
Threat of alternative products:- The Nepal gas industry is faced with alternative product. New reports claim that the increasing prices of gas and improving electric appliance efficiency is making electricity a cheaper option for many traditionally gas fuelled energy needs – including space heating, water heating and cooking. Efficient electric appliances include heat pump hot water systems, induction cook tops and split system reverse cycle air conditioners. Consumers are seeking safer options which make electric appliances even better option.
Switching cost to alternative product is minimal which gives a certain edge to alternative products. However, Nepal being a developing country which faces almost 12 hours of load shedding everyday may be a reason for consumers to stick to cooking gas. 5. Industry Rivalry:- Defense of existing market share, availability of alternative product and insignificant witching cost creates rivalry among the industry players. As there is still room for growth in the industry there is rivalry. Players put emphasis on their branding, marketing and distribution strategies to beat competition.
In the case of Nepal Gas, the inbound logistics only comprises of the gas, cylinders and plant. LAP gas is imported form Brain, Halide and sometimes Mature of India through Nepal Oil Corporation. SIS (Institute Standard of India) trademark cylinders are imported directly from India. It has its own complete infrastructures including automatic bottling plant, testing stands at its remises in an industrial environment. The operational section consists of filling the cylinders along with other additional works required to be done before delivery.
The Plant has devices and processes for testing the cylinder’s reliability. It’s net refilled weight and pressure is always checked thoroughly before making it available to the consumers. Each cylinder has a guaranteed full weight of 14. 2 keg after filling and the filled gas cylinders are provided with a red seal with “Nepal Gas” printed on it and a logo of Nepal Gas is printed on the cylinders. White Polymer Safety Caps are provided tit each new cylinder for customers to keep it and to use when required and also to control incidental leakage.
Hydraulic Testing, Valve change is done before releasing the cylinders to the market for the safety of the customers. The Company also re- paints the cylinders regularly. The outbound logistics comprises of delivering the gas cylinders to the customers. Nepal gas has 200 dealers in Katmandu Valley and the surrounding areas for the household consumer’s service and always has sufficient stock due to which smooth supply of gas is done throughout the year. It covers most f the five stars and registered hotels, restaurants, schools and embassies in Nepal.
It provides gas on demand at a very short notice given by telephone calls for registered dealers and regular bulk customers. Delivery is done in large amounts mostly by trucks and vans. Free delivery is done to the registered dealers and the dealers also provide home delivery facilities to the customers when the demand arises. The price of the gas cylinders are subjected to change as announced by Nepal Oil Corporation but the current rate is RSI. 1,470 (Including 13% VAT) The Company also sells on credit basis to its registered dealers. It provides its own bills.
Also, Nepal gas is submitted with deposit slips through dealers when new cylinders are purchased by the customers. The customers get refund per cylinder if the customers desire to return the cylinder. The company provides after sales service to its customers. To provide maintenance service to the valued consumers, NAG has engaged experienced Technicians. Technicians immediately visit the consumers on their request over the phone for repair and maintenance and guide them on safety aspects. It also provides services, trainings and provides information on coking gas related problems efficiently and timely.
It attends telephone enquiries instantly if a customer calls on the numbers they are provided by NAG. MACRO ENVIRONMENT Macro environment consists larger factors that affect the micro environment, also known as PESTLE analysis, includes: 1. Political 2. Economic 3. Socio-cultural 4. Technological 5. Environmental A. Political: Various political orders may affect the company in many ways. If the political status is stable then the company will run smoothly and if not then there might be complications occurring in the business. B.
Economic: The economic factor of the company directly affects the company’s success. The economic factors include regulating market structures, applying government’s policy, trading blocks, taxation and handling the interest rates. C. Socio-cultural: The Company should adapt the society and their cultural aspects of the particular place and therefore analyzing its basic environment, it should plan its strategy accordingly. They should also regard the current and ethical issues of the society. D. Technological: Technology is the major factor in today’s world in uplifting the business activity.
The more technologically advanced the company is, the easier it will be to operate the company. Basically, technology affects all the sectors in the business such as in productions, materials, marketing, and distribution and so on. E. Environmental: The Company should make sure about the environmental surroundings too. They should make sure that they operate the company in such a way that the nearby surroundings or other environmental factors do not get affected. Above was the brief introduction about the PESTLE analysis. Now here is the implementation done by Nepal gas on the following topic.
Political: As per the Nepal government, they have set some certain quotas for all the gas companies to their sales. So therefore the company doesn’t have to worry about the market capture. Whatever the government has offered, the quota must be filled respectively . They must go through by the rules and regulations set by the NEPAL OIL CORPORATION. The government of Nepal notification published on 8 June 2005 stated that private sector is also allowed to trade in LAP. As per regulation, interested player must fabricate necessary storage facilities and bottling plants within the given mime frames.
Furthermore, press release of 1 5 august 2005 of government of Nepal has provided flexibility and clarified that any private player having objective of importing LAP could import LAP in bulk and supply the same bulk to the existing bottlers. Economic: Sales to households and small consumers are made through dealer network. The company also runs its own central sales depot. The institutional buyers are serviced directly from the plant. The deliveries to institutional customers and dealers are done through company owned vehicles and through transport contractors.
The overspent has put up certain quotas for the gas companies in order to sell their products. One company cannot sell their product exceeding the quota. Therefore Nepal gas has 2200 metric tons of quota set by the government out of k total quota. Moreover the bank loans they take cost them low interest rates which makes the company easy to run. The banks they are with are: Nebula bank, SIB bank, Nepal investment banks and so on. Socio-cultural: Nepal gas focuses only on cooking gas so therefore it is targeted to all the households across the nation. It has two plants which covers the hilly and Tetra egging.
As we all know Nepal is a developing country so hence some of the people in the rural areas have not developed the concept of LAP gas yet. They still use firewood and “gobos gas” as their means of cooking. But on the other hand most of the country’s population uses gas as their means. Due to the price hikes of LAP and the numerous amount of shortage we face time to time are making people change their idea about using gas and hence switching into alternatives. However Nepal gas has managed to cover most of the country sales because they have loyal customer chain as it is the first LAP gas in Nepal.
Technological: Nepal gas has updated its plant and offices through latest technologies. The equipment they such as compressor, pumps and weighing scale are all updated according to the latest machineries possible. The gases that they bring from India are all bought in highly protected tankers which are also updated according to the requirement. Now soon they are coming up with a fully automated machine known as the “coronal system” . Len this following system the human labors are not needed. The machine itself fills the cylinders, weighs them and seals them.
Only one person is added to control the machine and the work will be done within less time. Environmental: The climate change does not affect the company as the work is done within plant. On the other hand it doesn’t affect the environment as well. But they should be careful about the leakage, or else there will be a great chance of huge fire. The expired cylinders are cut into pieces and are given to recycle from which more new cylinders can be made. All in all they do not use any raw materials that affect the global environment as such. S. W. O. T Strengths: More market share and more dominating market because Nepal gas is the oldest LAP as.
Brand loyalty Nepal gas is run by the Moist party so it has no political issues. Nepal gas is the only one with gas plant inside Katmandu valley increasing its cost advantage. More buyers, less suppliers so suppliers dominate. Easier to start a business as banks in Nepal give low interest rates. Nepal gas has very good reputation with media. Weakness Less production, high demand according to the market. Importing gas from Indian’s refinery so they are facing gas shortage. Retailers are corrupted as they don’t supply to the ones in need for more money. Customer service is not so good. Opportunities