B2B Project on Praxair

B 2 B project onB 2 B project onB 2 B project onB 2 B project on

Orientation and Operation of Orientation and Operation of Orientation and Operation of Orientation and Operation of

Praxair in the B2B fieldPraxair in the B2B fieldPraxair in the B2B fieldPraxair in the B2B field

By,

Indranil BhowmickIndranil BhowmickIndranil BhowmickIndranil Bhowmick

FtFtFtFt----08080808----659659659659

1

AAAAcknowledgementcknowledgementcknowledgementcknowledgement

I am deeply indebted to Prof. NAUSHAD MULLICK, IILM, for her constant encouragement and

guidance to complete the project. He was like a guide, whose relentless support helped me to

get a hold on the project.

I am thankful to Mr. Suvendu Choudhury, Chief Financial Officer, Praxair, for his constant

participatory support. His presence and guidance helped me to complete my project. Without

his presence the completion of the project could not have been done. There are some things

that cannot be acknowledged, only be confessed. Mr. Choudhury’s contribution to this work is

like that and this is my arrogance to acknowledge him.

I am also grateful to Mr. Subir Ganguly, marketing head of Eastern Region, Praxair India, for

taking me under his kind supervision and his guidance to enable me to complete the task.

I am much thankful to Mr. Amitabh Sadhu, marketing manager, Praxair, who helped me a lot

with his vast knowledge of marketing. Acknowledgement is a very narrow thing for him and I

am not willing to disgrace him.

Indranil Bhowmick

2

1.1.1.1. IntroductionIntroductionIntroductionIntroduction::::

Praxair adopted its name from the Greek word "praxis", or practical application, and "air", its

primary raw material.

Industrial gas is in every field now a day. It is not only used in industries for cutting and

wielding purposes but it is used in diversified ways by different organization. By the word,

industrial gases, we mainly understand that oxygen, hydrogen, acetylene, carbon di oxide and

nitrogen. But other than the commonly delivered gases, other gases like helium, HCL, etc can

be delivered on demand. Importance of the industrial gases is increasing day by day.

Different industries use gases in the following ways:

1. Nitrous gas is being used in small surgery.

2. Ceramic industries uses gas to burn the raw material at a specific temperature.

3. Different educational institutes, universities etc. use gas for different scientific

processes.

4. In medicine manufacturing industries, the industrial gases are essential to give fixed

temperature to the raw materials and to apply different gases like oxygen or HCL or

different %N2 to make different medicine.

5. Wasteland management companies uses oxygen to reduce the pollution.

6. Indian railways use oxygen and other gases for their specific purposes.

7. Domestic (cooking) gas manufacturer like HP, Indian oil uses industrial gas in their

manufacturing process.

8. Electric transformer uses Zero Year gas to increase the longevity of the transformer.

9. Different gases are used in the food packaging industries to keep the food crispy and

hygienic.

10. Cold storages uses gases (CO2) to preserve the food items.

3

11. Cold drink industries use mainly CO2 gas to make the beverages carbonated.

12. Paint industries uses gases for effective blend of 2 or more colours.

1.1 COMPANY HISTORY

Headquartered in Danbury, Connecticut, the company was originally founded in 1907 when it

was the first company in North America to commercialize cryogenically separated oxygen.

The company introduced the first distribution system for liquid gas in 1917, and developed

on-site gas supply by the end of WWII. In the 1960s, Praxair introduced non-cryogenic means

of air separation, and since then has continued to introduce innovative applications

technologies for various industries.

Praxair, Inc. (NYSE: PX) is the largest industrial gases company in North and South America by

sales, and among the biggest worldwide. Its primary products are atmospheric gases (gases

that can be extracted directly from the air, such as oxygen, nitrogen, and argon) and process

gases (gases that must undergo special processes to be manufactured, such as hydrogen,

helium, and carbon dioxide). The company's gases are used in many industrial processes, such

as the production of steel, semiconductors, medical devices and oil.

The industrial gas business is regional in nature because transporting industrial gases over

long distances (more than 250 miles) is cost-prohibitive due to the high expense of liquefying

gas for long periods of time. Because industrial gases are commodities that are fairly cheap to

produce, customers are often unwilling to pay high shipping costs. A majority of Praxair's

operating income comes from long term (usually 10-20 years) contracts, in which the

company builds plants for the customer, at the customer's site. This is capital intensive but

has the benefit of allowing PX to deliver gas more cheaply by cutting out transportation costs

altogether. The long length of the contracts also ensures steady sales.

As the foremost industrial gas provider in the emerging markets of Mexico, Brazil, China, and

India, by sales, Praxair is poised to benefit from rapidly expanding usage of gases in these

4

countries. These countries have very low per capita but rapidly rising consumption of gases

compared to the U.S. and thus represent large potential markets for Praxair.

Praxair is one of the few companies that benefits from rising oil prices. Hydrogen is one of the

company's staple gases and plays an important part in the process of extracting crude oil.

Sales of the gas grew 23% in Q1 FY2008. As world demand for energy grows, so too will

demand for hydrogen gas as more non-conventional oil is used. Although energy costs are the

company's largest expense, that nature of its long term contracts allows it to pass along some

of its energy costs to its clients.

Praxair india has started its operation in 1998. And only in 2 years of time, it surplus the

revenue of BOC india, who has its presence for about 65 years in India. The main reasons of

success are

1. Convert the captive market (where the consumer himself produces the gas), into

merchant market. They did it by making consumers realized that they should not

waste their energy in doing exercise that is not their main business. They encouraged

the glass or steel manufacturer to make glass and steel, where they are the best and

Praxair promised to supply the gas, where Praxair is the best. Companies agreed as it

was a win-win situation for Praxair and them.

2. Acquisitions helped Praxair to gain the huge market share in very short time. They

started their journey as 50-50 collaboration with Jindal, but now they remain as single

unit. They acquired a lot of small Indian companies to gain the market share. Some of

the acquisitions are the following,

5

PRAXAIR’S ACQUISITIONS Year of Acquisition

HINDUSTAN GAS

Bangalore + Calcutta + Delhi + Mumbai

DEEP OXYGEN

Bangalore + Chennai + Hyderabad + Vizag

ASIATIC OXYGEN

Calcutta+ Hyderabad + Ranipet + Vizag

ASIATIC INDUSTRIAL OXYGEN

Bangalore + Hyderabad

MIGA GASES

Chennai + Goa

POONA OXYGEN & ACETYLENE

Pune

Praxair India, set up a 370 tpd plant in Hospet (Karnataka). Set up at a cost of Rs.40 crore, the

plant is a dedicated gas supplier to Hospet Steel, a joint venture between the Kalyani and

Mukand Groups for making pig iron and finished steel. Other main tonnage plants are Haldia

petrochemical Complex (220 MTPD), St Gobain Glass [India] Ltd (115 MTPD), Jindal Vijaynagar

Steel Ltd. (2500 MTPD), Tata Iron & Steel Company Ltd. (875 MTPD), Owens Corning [P] Ltd.

(200 MTPD), Birla Copper [Unit: Hindalco Ltd.](950 MTPD), Reliance Industries Ltd. (100

MTPD, India Glycols Ltd. (200 MTPD)

Small scale tonnage plants are, Usha Martin Steel Ltd. (70 MTPD), SWIL (80 MTPD), Epcos

Ferrites Ltd. (9 MTPD n2 plant), Sundaram Fasteners Ltd. (7MTPD N2 plant). the global gas-

maker also has a third Indian entity – Praxair Carbon Dioxide (Praxair CO2), in which Praxair

India has a 90 per cent stake and the Chemi-Con Group of Bangalore, 10 per cent, Praxair CO2

has 4 carbon dioxide recovery plants of FACT (Cochin), MRPL (Mangalore), Duncan Fertilizer

(Kanpur), and IFFCO (Kalol) at a total cost of Rs.50 crore.

1996

1997

1998

1999

1999

1999

1.2 CRYOGENIC AIR SEPARATION

Praxair operates hundreds of cryogenic air separation plants around the world

on-site customer facilities - to the largest plant of its kind in India.

Praxair's cryogenic air separation technology is used by many industries that rely on an

uninterrupted supply of atmospheric gases. C

oxygen, nitrogen, and argon efficiently and safely every day.

1.2.1 1.2.1 1.2.1 1.2.1 HowHowHowHow It WorksIt WorksIt WorksIt Works

The process begins with the intake of huge volumes of air from the atmosphere. The air

compressed and purified before entering the cryogenic equipment package. The air is cooled

to about -300°F (-185°C) and then, relying on different boiling points, separated into its

elemental components in the form of liquid oxygen, argon and nitrogen.

Praxair cryogenic system components include:

» An air compressor

» A pre-purifier

» An insulated package containing cryogenic equipment (cold box)

» A cooling system

» Computer controls

» Back-up supply

Cryogenic air separation process is one of the most popular air separation process, used

frequently in medium to large scale plants. It is the most preferred technology for producing

nitrogen, oxygen, and argon as gases and/ or liquid products and supposed to be the most

cost effective technology for high production rate plants. In today's market scenario, all

liquefied industrial gas production plants make use of cryogenic technology to produce liquid

products.

6

1.2 CRYOGENIC AIR SEPARATION

axair operates hundreds of cryogenic air separation plants around the world -

to the largest plant of its kind in India.


supply of atmospheric gases. Cryogenic air separation plants produce tons of

oxygen, nitrogen, and argon efficiently and safely every day.

The process begins with the intake of huge volumes of air from the atmosphere. The air


185°C) and then, relying on different boiling points, separated into its

elemental components in the form of liquid oxygen, argon and nitrogen.

Praxair cryogenic system components include:

An insulated package containing cryogenic equipment (cold box)

process is one of the most popular air separation process, used



ctive technology for high production rate plants. In today's market scenario, all


- from smaller


ryogenic air separation plants produce tons of

The process begins with the intake of huge volumes of air from the atmosphere. The air is


185°C) and then, relying on different boiling points, separated into its

process is one of the most popular air separation process, used



ctive technology for high production rate plants. In today's market scenario, all


7

1.2.2 1.2.2 1.2.2 1.2.2 What is CWhat is CWhat is CWhat is Cryogenic ryogenic ryogenic ryogenic Air Separation PAir Separation PAir Separation PAir Separation Process?rocess?rocess?rocess?

Cryogenic air separation is a process to produce highly purified gases or liquids and it is done

by taking large volumes of air from the atmosphere, which is then compressed, cooled,

liquefied. This is then separated into its major components by distillation. After the air is

compressed, impurities must be removed. There are different variations arising from

differences in user requirements in the cryogenic air separation cycles to produce industrial

gas products. The cycle of processing depends on:

• How many products are required (whether simply oxygen or nitrogen, both oxygen

and nitrogen, or nitrogen, oxygen and argon).

• Required purities of the products.

• Gaseous product delivery pressures.

• Lastly whether the products need to be stored in liquid form.

In the cryogenic gas processing, various equipment is used like the distillation columns, heat

exchangers, cold interconnecting piping etc. which operate at very low temperatures and

hence must be well insulated. These items are located inside sealed "cold boxes". Cold boxes

are tall structures with either round or rectangular cross section. Depending on plant type,

size and capacity, cold boxes may have a height of 15 to 60 meters and 2 to 4 meters on a

side.

8

1.2.3 1.2.3 1.2.3 1.2.3 Cryogenic Air Separation Flow DCryogenic Air Separation Flow DCryogenic Air Separation Flow DCryogenic Air Separation Flow Diagramiagramiagramiagram

The cryogenic air separation flow diagram given below does not represent any particular plant

and shows in a general way many of the important steps involved in producing oxygen,

nitrogen, and argon as both gas and liquid products.

9

2. 2. 2. 2. Business in DetailsBusiness in DetailsBusiness in DetailsBusiness in Details

Praxair does business in over 40 countries, but focuses on eleven core geographies where the

company has large amounts of capital on the ground, which lets the company deliver its

products to the customer at the lowest cost. In 2007, 94% of Praxair’s sales were generated

from the sale of industrial gases in four regional segments: North America, Europe, South

America, and Asia. They are totally in a B2B business scenario and don’t have any B2C process.

Gas sales and distribution methods were broken down as follows:

• On-site/Pipeline - 24% of sales came from gases sold to large customers with on

plants. Building the pipelines and plants is expensive, but it creates long

contracts and steady sales, protected by the ability to pass

More than 50% of Praxair’s operating profit comes from the on

In India, the main large customers who receives gases through the pipeline are shown

pictorially below

To Onsite Purchaser(big

ger clients)

On-site/Pipeline

Excess gas to nearby small

10

24% of sales came from gases sold to large customers with on

Building the pipelines and plants is expensive, but it creates long

contracts and steady sales, protected by the ability to pass-through energy costs.

More than 50% of Praxair’s operating profit comes from the on-site business.

rge customers who receives gases through the pipeline are shown

B2B Marketing

Purchaser(big

Excess gas to nearby small

factories

To Individual Clients(much

smaller clients)

Merchant Market

Packaged

24% of sales came from gases sold to large customers with on-site

Building the pipelines and plants is expensive, but it creates long-term

through energy costs.

site business.

rge customers who receives gases through the pipeline are shown

To Individual Clients(much

Packaged-Gas Market

11

• Merchant Market - 30% of sales came from gases sold to the merchant market. In the

merchant market, excess comanufactures (extra gases generated by a plant) are

liquefied and transported by truck to the customer’s facility. These contracts are

shorter in duration, but allow Praxair to leverage existing investments.

• Packaged-Gas Market - 33% of sales came from gases sold in the packaged-gas

market. Bulk gases are packaged into high-pressure cylinders for small-scale users.

• The remaining 14% of gases were distributed in other manners.

6% of total sales were generated by the Surface technologies segment, which supplies

high-performance coatings to protect metal from wear, corrosion, and high temperatures.

Surface technologies sales came mostly from the United States and Europe, with smaller

operations in Asia and Brazil.

The business idea is based on these steps,

1. Prospecting

2. Presenting

3. Negotiating

4. Deal completion

The other way of doing business is through tender acquisition.

In case of the first type of business, the following steps are taken

In the tendering, Praxair eliminate its smaller competitor with the advantages like the low

price, technology to produce more than

deliver any type of gas that could be ordered.

Proper dealer management is one of the the main success factor for the company to deal

with the smaller clients.

4444. Financial Overview . Financial Overview . Financial Overview . Financial Overview

4.1 GLOBAL SCENARIO

Praxair increased sales by 13% and 9% in FY2008 and FY2007

more than 10% for the three preceding years as well. Gross margins increased by

Smaller companies are

Measure their potential to be a client of Praxair

Influencing the directors

contract period and price

12


price, technology to produce more than 180 tonns of gas per day and the speciality to

deliver any type of gas that could be ordered.


. Financial Overview . Financial Overview . Financial Overview . Financial Overview

ed sales by 13% and 9% in FY2008 and FY2007, respectively; sales increased by

more than 10% for the three preceding years as well. Gross margins increased by

Smaller companies are targeted

Measure their potential to be a client of Praxair

Influencing the directors to go for Praxair

Negotiating for the contract period and price

Seal the deal


and the speciality to


, respectively; sales increased by

more than 10% for the three preceding years as well. Gross margins increased by 15% and

13

11% in FY2008 and FY2007. The fastest growing segments of Praxair’s business are Asia and

South America.

Sales By Segment (millions of dollars) 2006 2007 2008

North America $4,429 $4,696 $5,185

Europe $1,088 $1,163 $1,345

South America $1,123 $1,348 $1,604

Asia $543 $636 $746

Surface technologies $473 $481 $522

Total $7,656 $8,324 $9,402

Revenue Growth 2006 2007 2008

North America - 6.02% 10.4%

Europe - 6.89% 15.6%

South America - 20.0% 19.0%

Asia - 17.1% 17.3%

Surface technologies - 1.7% 8.5%

14

Operating profit is increasing most rapidly in South America and Europe. This makes sense

because the majority of Praxair's operating profit comes from long-term contracts that

involve pipelines or on-site plants, and the company's major pipelines outside the U.S. are

located in Brazil, Spain, and Germany. In addition, operating profit and net income grew at a

faster pace than sales as a result of the company’s focus on pricing (it increased prices on

several products in 2008), fixed-cost management, and productivity programs.

Praxair serves 25 diverse industries, broken down as follows for FY2008:

2006 2007 2008

Sales by end market (2008)

15

Geographic Analysis and presence of Praxair throughout world

While Praxair works in over 40 countries around the world, it focuses on eleven core

geographies. These are: Canada, United States, Mexico, Brazil, Spain, Italy, Germany/Benelux,

China, India, Thailand, and South Korea. Major countries by sales are the United States and

Brazil, with sales (in millions of $) of $4,093 and $1,351, respectively, in FY2008.

4.2 INDIAN SCENARIO

India is comeing out to be one of the most prominent power in global economy. With the

increasing number of new industry, the demand for the industrial gas is also increasing.

Praxair, with its financial and operating experience, giving a tough competion to BOC, which is

operating in india for more than 70 years.

• Sales is rising every year. The sales fighure in graphical representation is given below:

FyFyFyFy2008200820082008

• From 2005 to 2006, the sales have increased 11.17%, where as it showed a growth in

the next year at the rate of

period of 2007-2008.

• Operating and other expenceses contributes a huge fighure as the safety

measure increase the cost. The detail fighure is given below

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

fy2005

sale

s

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

fy2005

exp

en

ces

Operating and other expences(,000)

16

From 2005 to 2006, the sales have increased 11.17%, where as it showed a growth in

the next year at the rate of 21.49% but growth rate has reduced to 13.06% in the

Operating and other expenceses contributes a huge fighure as the safety and other

measure increase the cost. The detail fighure is given below

fy2005 fy2006 fy2007 fy2008

year

sales(,000)

fy2005 fy2006 fy2007 fy2008

year

Operating and other expences(,000)

From 2005 to 2006, the sales have increased 11.17%, where as it showed a growth in

21.49% but growth rate has reduced to 13.06% in the

and other

fy2008

• From 2005 to 2006, the expences have increased 5%, where as it showed a growth

in the next year at the rate of 18.6% .

expences have increased 26.5% over the previous year.

• Profit before tax of the company of the period 2005

below:

• The PBT increased by 212.2% from the year 2005 to year 2006.

% from 2006 to 2007. But in1008, the growth reduced by (73.2%) over the past year.

In India, praxair has an prominent presence. They have installed their facilities in different

part of India to meet the demand nationally.

convenient locations across India to cater to the gas requirements of users in local markets.

These stations distribute packaged gas in cylinders up to the customers' doorsteps and meet

their daily requirements with speed and

0

50000

100000

150000

200000

250000

300000

350000

fy2005

pro

fits

(,0

00

)

profit before tax(in ,000)

17

From 2005 to 2006, the expences have increased 5%, where as it showed a growth

in the next year at the rate of 18.6% . in the year 2008, the operating and other

expences have increased 26.5% over the previous year.

of the company of the period 2005-2008 is graphically represented

The PBT increased by 212.2% from the year 2005 to year 2006. Growth becomes 84.5



part of India to meet the demand nationally. Cylinder bottling stations are located at



their daily requirements with speed and efficiency. They are in the following locations:

Asansole Hyderabad

Kolkata Bangalore

Parbangla Chennai

Faridabad Pune

fy2005 fy2006 fy2007 fy2008

year

profit before tax(in ,000)

From 2005 to 2006, the expences have increased 5%, where as it showed a growth

in the year 2008, the operating and other

2008 is graphically represented

Growth becomes 84.5



tling stations are located at



efficiency. They are in the following locations:

fy2008

Speciality gases and helium are supplied through a specialty gas facility at Murbad, near

Mumbai.

Praxair India successfully commissioned an air separation plant for Tata Steel at Jamshedpur

in October 2005. Praxair's in-depth experience and expertise in supplying

industry with advanced technologies ensures a reliable and efficient supply to consistently

meet Tata Steel's requirements. Features of this plant:

» 875 metric tons per day gas on

» State-of-the-art plant with advanced control systems

» Supplies dedicated oxygen, nitrogen and argon gas to Tata Steel

» The plant capacity is sufficient to also take care of the local merchant market

5555. Trends/Forces. Trends/Forces. Trends/Forces. Trends/Forces

• Demand for Praxair's Products is Growing in

Praxair is the leading industrial gas provider in several emerging markets, such as Mexico,

China, India, and especially Brazil, where is has a 65% market sha

consumption in these countries is as low as 1% of that of the United States, demand in these

markets will continue to grow for some time. Praxair’s solid position in China is demonstrated

by its contract to provide drinking water

gasification projects also provide

• Helium Demand Grows Quickly Amidst Shortage; Hydrogen's Use in Heavy

Crude Extraction Causes Demand to Grow Rapidl

A worldwide helium shortage began towards the end of 2007, due to increasing demand and

diminishing world helium reserves.

manufacturing and healthcare industries, both of which are major end markets for

(see above). Praxair stands to gain from a similar opportunity with hydrogen. Hydrogen is a

18

y gases and helium are supplied through a specialty gas facility at Murbad, near


depth experience and expertise in supplying the worldwide steel


meet Tata Steel's requirements. Features of this plant:

875 metric tons per day gas on-site air separation plant

plant with advanced control systems

Supplies dedicated oxygen, nitrogen and argon gas to Tata Steel

The plant capacity is sufficient to also take care of the local merchant market

Demand for Praxair's Products is Growing in Emerging Markets


China, India, and especially Brazil, where is has a 65% market share. Because per capita gas



by its contract to provide drinking water to the 2008 Olympic Games. China’s huge coal

projects also provide a substantial upside to Praxair's business in that country.

Helium Demand Grows Quickly Amidst Shortage; Hydrogen's Use in Heavy

Crude Extraction Causes Demand to Grow Rapidly


diminishing world helium reserves. Helium is important to many sectors, including the

manufacturing and healthcare industries, both of which are major end markets for


y gases and helium are supplied through a specialty gas facility at Murbad, near


the worldwide steel


The plant capacity is sufficient to also take care of the local merchant market


re. Because per capita gas



to the 2008 Olympic Games. China’s huge coal-

a substantial upside to Praxair's business in that country.

Helium Demand Grows Quickly Amidst Shortage; Hydrogen's Use in Heavy


Helium is important to many sectors, including the

manufacturing and healthcare industries, both of which are major end markets for Praxair


19

key component in the production of heavy and non-conventional crude oil, such as tar sands

or shale oil. Because such production is growing rapidly, hydrogen consumption will increase

correspondingly - demand for hydrogen from Praxair's refinery customers grew 20% in

FY2008. Praxair's hydrogen sales, which grew 23% in Q1 of FY2008, stand to benefit further

from this situation.

• Environmental Regulation is a Double-Edged Sword

As discussed above, hydrogen is an area of increasing growth for Praxair. Hydrogen processing

plants, however, have been identified as a source of carbon dioxide emissions under

California law. On the other hand, environmental legislation and regulation of other industries

provides Praxair with a business opportunity, as it continues to develop application

technologies that reduce customers’ energy consumption and lower emissions.

• Energy is Praxair's Single Largest Cost Item

Energy is the single largest cost item in the production and distribution of industrial gases, in

the form of electricity needed to power separation plants and oil for delivery trucks. As such,

increasing energy costs have the potential to damage Praxair’s margins if it cannot pass

through increased energy costs to customers. The company notes, however, that the supply

of energy has not been a significant issue in the geographic areas where the company

conducts business. This is in part due to the fact that Praxair's long term contracts often

include clauses that allow it to pass along some or all of its energy related costs. Note,

however, that increasing energy demand is also causing use of heavy and non-conventional oil

(oil extracted from tar sands, shale oil, or other non-traditional sources) to rise. See above

section on hydrogen for how this affects Praxair.

20

• Commercialization of Hydrogen-Powered Vehicles Would Greatly Increase

Hydrogen Demand

Many major car companies, including Honda Motor Company (HMC) and Bayerische Motoren

Werke AG (BMW), have released cars that use liquid hydrogen as a fuel source. While these

vehicles are not yet ready for mass consumption, hydrogen-powered vehicles do have the

potential for commercialization in the future. However, in addition to further development of

hydrogen-powered technology, new infrastructure, such as hydrogen refueling stations,

would need to be built and hydrogen-powered vehicles would have to meet stringent safety

requirements. Furthermore, a challenge to hydrogen-powered cars has appeared in the form

of electric cars that can simply be plugged in to charge, such as the Tesla Roadster or GM's

Chevy Volt. This being said, if hydrogen-powered cars do become commercialized in the

future, it would greatly stimulate demand for liquid hydrogen and could thus positively impact

Praxair's business.

6666. Competition. Competition. Competition. Competition

Global Competitors

• Linde

• Air Liquide

• Air Products and Chemicals (APD)

Since the late 1990s, the industrial gas industry has seen a wave of consolidation that led to

the current oligopoly; Praxair, along with the above three major competitors, form the global

industrial gases oligopoly.

FY 2008 Praxair Air Products and Chemicals (APD)

Sales/Revenues (million of $) $9,402 $10,038

1-Year Sales Growth 13% 15%

21

1-Year Growth in Volume of Gases Sold 4% 12%

Operating profit $1,786 $1,408

1-Year Growth in Operating Profit 17.6% 33%

Indian Competitors

In India, the main competitors of Praxair are BOC and Ellenberrie. BOC has the presence in

India for about 70 years where as Ellenberrie is restricted in the eastern side of India and

market leader in West Bengal. Recently Ellenberrie is planning to expand in Vizag to tap the

Southern market. Other than those Big 2 numerous small local ASU operators established

under the SSI give a good competition to Praxair as all of them holds a small market share, but

altogether they hold a big market share.

7777. SWOT . SWOT . SWOT . SWOT analysisanalysisanalysisanalysis

Praxair is a multinational company. It does not work in isolation. It has competitors, some are

big and some are small. In the market, it has some strength as well as it has some weakness to

be solved. If a solid SWOT analysis of the company is done, then the overall picture of the

market as well as the operation of the company will be reviled. It will also help to find out the

internal and external threat or opportunity that the company is facing or will face in the

future. It will also strengthen the company and reduce the weakness.

7777.1 Strength.1 Strength.1 Strength.1 Strength

• One of the biggest strength of the company is that, it is a fully owned subsidiary of

Praxair. It is backed by the experience and finance of world’s one of the leading

company in the business.

22

• Organised workflow and clear idea about the business help the company to excel in

the field.

• Constant training to its employees to upgrade their skill and be up to date with the

changing business environment helps the employees to feel confident to do business

efficiently for the company.

• Praxair’s do business to gain trust of the customers and don’t follow any short cut

measure to gain and retain the customers. They maintain the quality of the product

and supply everything on time. This technique helps the organisation to build good

reputation in the market, to build rapport with the existing customers and gain new

customers through word of mouth.

• Safety is one of the most important issues that is taken care of with highest priority.

The USP of Praxair is thus Safety. The product of Praxair is known in the market for the

features taken for the safety of customers.

• Praxair has an internetworked presence all over India. So it can supply the anywhere

any time throughout the India.

• Huge plants, small plants, refilling centres are interconnected with each other through

an intranet system to monitor and deliver the on slot demand and expected demand.

7777.2 Weakness .2 Weakness .2 Weakness .2 Weakness

• One of the weaknesses of the company is its excessive expenditure to maintain

extensive safety measure in the factory to produce the gas and to ensure safety

measure in the cylinders. Where, other companies who are in the same business,

they cut their operating cost by reducing the safety measures.

• As a private limited company Praxair doesn’t receive any kind of tax redemption

from the government as other companies who are registered under the SSI act of

India usually get various tax holidays on power etc.

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• Because of being a MNC and reputation that it possesses and because of its Brand

Equity it cannot fluctuate its price as the other small players in the market can do.

Indian market, as predominantly governed by the price of the product, Praxair is

facing problem sometime.

7777.3 Opportunity.3 Opportunity.3 Opportunity.3 Opportunity

• The market has a huge demand for the industrial gases which is increasing day by

day.

• The new coming companies do not have the technological and financial backbone

strong enough to compete with Praxair.

• In northern side of India, there is almost no unit for the production of gas. Even

Praxair has only one unit in Uttaranchal and one CO2 plant in Punjab, which is

significantly low if the market size is considered. Presence of different industrial

hubs like Gurgaon, Noida etc signify the huge demand for industrial gases in those

areas. So a huge untapped market is present in northern India to be tapped.

• To get out of the recession, the India government are taking different measures

like infrastructural development, tax benefits to different sectors, bail out to

different companies to carry out the their original business which will in turn

influence the business of Praxair.

7777.4 Threat .4 Threat .4 Threat .4 Threat

• Increased price of the cylinders

• Various new competitors budding out frequently as the market is growing and the

market has a huge demand for the gas.

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• The recession has slowed down the pace of the industry growth in general, which

in turn affected the sales of the Praxair.

• Price of every material, from power charges to cost of cylinders are increasing. But

the price of the product has to keep constant otherwise the demand will fall. But

to keep the price almost constant, company has to sacrifice the revenue.

B2B Project on Praxair

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Transcript of B2B Project on Praxair