Objective Broad Objective
Objective Broad Objective
Objective Broad Objective
Oil Refinery Ltd. is prepared to fulfill the requirement of BBA Program of Marketing Department, Southeast
University.
Objective
Broad Objective:
The broad objective of this report is to prepare a detail market study on Bangladesh Edible Oil Limited and
understand the industry and its consumer.
Specific Objective:
The specific objectives of the study are listed below
To know the factor that has significant impact on this industry regarding market price, product quality
Primary:
Qualitative: For the sources of information, there was a detail analysis of type and sources of information,
and the analysis, categories of marketing professionals were selected as targeted sources of information. Indepth interviews were conducted with the key management personnel of Bangladesh Edible Oil Ltd.
Secondary:
Annual Reports
Newspaper Articles
Journals
Websites
Analysis Techniques:
Descriptive statistical measures have been taken to analyze data where mean, percentage, growth rate etc.
were used.
Limitation
Confidentiality of information has limited the extent of presentation in the report. Respondents declined to
furnish categories of information treated as confidential, for obvious reasons. As industry participants are
not listed in capital market, financial data are not publicly available and its a drawback for analyzing financial
performance of the whole industry.
Oraganization Part
T. K. Group of industries
T. K. Group of industries began its journey in 1972 in commodity trading. The entrepreneurial spirit of the
founders helped the business grow and new ventures were launched in manufacturing and marketing of
consumer and industrial products.
Most preferred supplier of edible oil by developing and building brands and setting new standards in
availability and visibility
Corporate Foces
SVOIL is committed to providing the highest quality products and customer services to ensure customer
satisfaction in order to achieve business growth.
Technical Part
Production process
The production process includes three major steps
Neutralization is the section to make the crude to neutral by acid & caustic dosing.
Neutralization is known as chemical refining.
Description of Neutralization process is given belowA CDSO feed pump is used to carry the crude oil to the N-Plant. The specifications of the feed pump is
shown below
1.
2.
3.
4.
5.
At pump deliver there is a Metallic Strainer (Mesh 2 mm) to remove foreign particles.
Process block diagram of Neutralization
1.
2.
A flow meter is used to observe the flow rate of crude oil. range of flow rate is 8~9.25 m 3/Hr.
The crude oil goes through a Plate Heat Exchanger [PHE EX-201] (Economizer). The heat is exchanged
between crude oil (300C-350C) and Neutralized Soybean Oil (90 0C-950C). The crude oil temperature rise up to
600C. The specifications of the PHE is shown below
1.
As the process temperature is 90 0C-950C, the temperature is further raised up using second PHE-EX 401
by steam.
2.
Though CDSO is de-gummed, still it contains some gum particle. Gum is generally Phosphatides. It
contains mostly
The
CONTROL
AUTOMATION
Paddle mixer is a high efficiency mixer which provides fast, thorough, uniform mixing for a wide variety of
products. The scooping and lifting action of the blades and the cross mixing configuration provides an
accurate and homogenous mix, even where bulk densities of ingredients vary greatly. The paddle design
ensures thorough clean-out and positive discharge. Heavy duty construction ensures long life and reliable
performance
1.
After mixing phosphoric acid, reaction occurs and CDSO gets de-gummed.
2.
FFA in CDSO is 0.6~1.2%. To decrease FFA, other than FFA there is Phospholipid, Carbohydrate, Proteins.
Caustic Soda (NaOH) is used to make FFA to water soluble soap. Hydration is done to convert Phospholipid,
Carbohydrates & Proteins to water soluble substance.
3.
Solid NaOH is mixed with water and heated up to make a dilute NaOH solution. It is stored in the Solution
tank on ground floor.
4.
Solution goes from solution tank to Reserve tank. Then from reserve tank the solution goes to an
Intermediate Storage Tank
5.
NaOH is dosed from intermediate tank to the crude oil using a pump. Dosing ratio is 0.18%~0.45% (Dosing
depends on the amount of free fatty acid in oil.)
6.
NaOH solution is mixed with CDSO (and H3PO4) by paddle mixture and static mixture.
7.
After mixing caustic soda, reaction occurs and CDSO gets separated from FFA. In SVOIL, FFA reduces to
0.085 %.
8.
Thus we get a mixture of neutralized oil, gum and free fatty acid. Gum and FFA together is called soap.
9.
To separate this soapy part from the oil, at first hot water (Temp. 90C) is mixed with the Oil and Soap
mixture. Then the mixture is passed through SRG Separators.
10. SRG separators separate the soapy part from oil. By using centrifugal force it separates the free fat and
gum. In the center of SRG Separator, oil is separated and in the outer side fat and gum is separated.
11. There are two SRG machines. One SRG separator is used at a time and the other is Standby. Separator
Origin-ALFA LAVAL, Made in Sweden, Model 214. There are 108 disks in a SRG Separator. RPM is 18002000. Three output lines from SRG Separator separate the soapy part (soap and gum), oil & carbon seal
cooling water. Pump-204 pushes the oil to SSG Separator. SRG Separators are cleaned every 24 hours
(bowl disc, top/bottom seal if required) by soap/phosphoric acid.
12. The oil still contains some soapy particles. So to wash all soapy parts out, before entering the SSG
Separator, the oil is mixed with hot water (1200 Liter/Hr). The hot water is mixed with oil by paddle mixture.
Then the mixture goes through SSG Separator. The SSG separator separates the remaining soapy parts
from oil. Thus Neutralized Oil (NSO) and Soapy water gets separated and comes out from two output lines.
This soapy water is transferred to Acidulation Plant for next process. We get a byproduct from soap
named Acid oil.
1.
2.
To remove the moisture from neutralized oil, it is passed through a Vacuum Dryer (650 mm Hg).
The temperature of NSO is (900C-950C). This NSO is passed through PHE EX-201 (Economizer). The heat
is exchanged between crude oil (30 0C-350C) and NSO (900C-950C). NSO temperature decreases to 450C-500C.
This dry NSO is stored to the tank T1 and T7. Neutralization capacity is 7.5 M Tons/Hr.
Refinery
Description of process flow of refinery section (Physical Refining)
To remove foreign particles from NSO and CPO (Crude Palm Olein), Metallic Strainer is used before pump.
The flow rate of oil is 8.5 M Tons/Hr. The oil temperature is 45 0C~500C and amount of Free Fatty Acid is
0.085% (NSO) / 6.0% (CPO).
To increase the temperature of oil, it is passed through an Economizer (E001A). Heat is exchanged between
De-odorized Soyabean Oil (Or DESO Oil) [Temp. 180 0C] and NSO/CPO. As a result NSO/CPO temperature
increases to 1100C~1200C and DESO Oil temperature reduces to 800C.
Initially starting up the operation, another heat exchanger (E001) is used as there is no DESO Oil initially.
This heat exchanger uses steam and increases oil temperature to 1000C~1200C.
To remove the moisture from NSO/CPO, it is passed through a Vacuum Dryer.
Still the oil may contain some gum particle. To remove this gum, food graded Phosphoric Acid (85% H 3PO4) is
used again. Now the dosing ratio is 2.5 kgs/hr/Ton.
The acid is mixed with the oil by Knife Mixture and Static Mixture.
After mixing phosphoric acid, reaction occurs and the oil gets de-gummed.
Then the oil is passed to Bleacher Vessel. Bleacher vessel is under vacuum. Here oil is dosed with Fullers
Earth (Calcium Montmorillonite) and Activated Carbon. Fullers Earth is used de-colorize the oil and
Activated carbon is used to increase shining. This is done to decolorize the oil. Oil contains coloring material
such as Chlorophyll & Carotenes.
Dosing rate of Fullers Earth is 10~12 Kgs/Hr/Ton and Activated carbon is 600 Gms/Hr/Ton.
Casual Worker prepares the mix of Fullers earth & Activated carbon with the ratio of 25 kg Fullers earth + 2
kg Activated Carbon.
De-colorization and shining depends on reaction time. The more reaction time, the better performance it
gives. That is why there are two bleacher vessels
After processing 10,000 M Tons of Oil, Bleacher Vessel is cleaned. For this work all oil is drained from
Bleacher. Then open Vessel Top and Side manhole is opened. Then air blowing is started into the vessel to
cool down until normal work environment. After proper cooling, operator enters the vessel and opens all
striping coil/nozzle and takes out for cleaning than casual worker enters the vessel to clean all used earth
from bottom chamber and shell plate. On other side operator opens all the accessories of the earth dosing
line and clean them and fix them back.
The whole cleaning and fitting operation of Bleacher Vessel needs 48 Hrs. All cleaning operation is
manual/mechanical.
The bleached oil is passed to Ama filter (601 A/B/C) with the help of Bleacher Pump (P-602 A/B, Pressure4.5~5 bar).
There are 3 Ama filters [Capacity 1.5MT (2) and 2.75 MT (1)]. Two of them are used simultaneously. The
filters separate bleached oil and Used Earth (spent earth). Bleached oil goes to the Bleached Oil Tank and
used earth goes to ground floor. The 1.5MT capacity filter is cleaned after running 60days and the 2.75MT
capacity filter is cleaned after running 90days (Depending on oil quality). 12Be Caustic solution is prepared
in a cocking Tank. Cocking starts by steam 90C to 95C up to 36 Hrs. At cocking running time, cocking
performance is checked. If performance is poor then cocking time is increased. After that washing is started
by normal fresh water with a high pressurized water shooter pump. Filter sets are washed by water shooter
for 16 Hrs (For big sets at least 24 Hrs to 30 Hrs). If foreign particle (gum) is not removed after normal wash,
acidic (phosphoric) washing is done. In this case 10% acid solution is cocked for 12 Hrs. After acid cocking
we filter sets are washed by fresh normal water and dry in air than until it becomes ready for operation.
For better refining, oil is passed from bleached oil tank to a polish filter.
To increase Oil temperature to 130~140C, a Shell & Tube heat exchanger is used.
Then the oil is passed through a Deaerator to remove moisture. The Deaerator is under vacuum.
To heat up bleached oil, a Spiral Heat Exchanger (Economizer) is used. Heat is exchanged between
NBDSBO and bleached oil. NBDSBO temperature decreases from 260 0C to 1800C where bleached oil
temperature rises to 1900C.
To clean the Shell and Tube heat exchanger, at first all oil is drained from inside. Then Top cover is opened
and caustic solution is poured into it. After 24hrs the tube is cleaned inside by round steel brush and water.
The cleaning operation needs approximately 36 Hrs. Spiral heat exchanger is cleaned every six months. First
all oil is drained from inside channel by air flashing. Then all inlet-outlet line is closed. Then 12Be caustic
solution is pushed into Bleacher oil side of the spiral. Than circulating starts and heat is raised up to 80C.
After 24 Hours, caustic action solution is drained out and the top cover is opened. Then final cleaning starts
by water shooter until it is cleaned fully. In the same way deodorize oil channel is cleaned. After cleaning top
and bottom cover gasket is cut and then fixed back with all necessary fittings. The full cleaning operation
needed 72 Hrs.
The oil is then passed to the Deodorizer for 100% quality. Deodorizer has 5 stages. There are barometric
condensers and ejectors connected with the deodorizer. High Pressure Super Heated steam coil is used to
heat up Oil up to 260~2650C. Steam temperature is 3300C and Pressure is 57 bar. Deodorization is a vacuum
steam distillation process for the purpose of removing undesirable flavors and odors, mostly arising from
oxidation (Aldehydes & Ketons), in fats and oils. Deodorizer normal cleaning schedule is one time in a year.
For this work, the vessel is cooled down under vacuum 60C to 65C. Then all oil is drained out to the
storage tank and the vessel is kept under full vacuum for 24 Hrs. When temperature decreases to 45C, five
chamber manholes are opened. The vacuum is continued further for 4 Hrs so that all toxic gases are
released to atmosphere. Then security light is arranged inside the vessel in five chambers. At least three fans
are used for blowing fresh air into the vessel. Then the operator, casual worker enters to clean the chamber
mechanically. After mechanical cleaning, 12Be caustic is pushed into five chambers and manhole is closed.
Then heating up is done by open steam striping and caustic circulation for three days. Then all caustic is
drained out and five chambers are washed by normal water jet. After water cleaning, water is drained out and
Citric acid/Phosphoric acid solution (10%) is pushed. Circulation goes for 24 Hrs. Then the solution is drained
out and the Deodorizer becomes ready for operation. This cleaning operation needs 12 days.
We get NBDSBO (Neutralized Bleached Deodorized Soyabean Oil) or RBDPO (Refined Bleached
Deodorized Palm Oil) from deodorizer (Temp. 260 0C). Temperature is decreased to 180 0C after passing it
through Spiral Heat Exchanger.
Then the oil passes through the economizer E001A and temperature decreases to 80C.
The oil is further cooled down to 40C. Two coolers (E-704) are used for this purpose.
The oil is passed through polish filter for further refining.
Then the oil is stored in the tank. NBDSBO is stored in T13, T14, T15 and RBDPO is stored in T2.
PFAD(Palm Free Acid Distillate) contains
Palmitic Acid (CH3 (CH2)5CH=CH (CH2)7COOH)
Stearic Acid (CH3 (CH2)16 COOH)
SFAD (Soybean Free Acid Distillate) contains
Olic Acid (CH3 (CH2)7CH=CH (CH2)7COOH)
Linolic Acid (CH3 (CH2)4CH=CHCH2CH=CH (CH2)7COOH) FFA (Free Fatty Acid) contains
Caproic acid (CH3 (CH2)4COOH)
Caprilic acid (CH3 (CH2)6COOH)
Capric acid (CH3 (CH2)8 COOH)
Lauric acid (CH3 (CH2)10COOH)
Myrstic acid (CH3 (CH2)12COOH)
PFAD &
SFAD
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
SFAD contains Tocopherol & Vitamin E which are used for Skin & Eye. Natural TOCOPHEROL exists as a
mixture of 4 homologues, Alpha, Beta, Gamma, Delta available as a mixed product known as MIXED
TOCOPHEROL which is also known as vitamin E. Alpha-Toc has strong vitamin E activity, while Beta,
Gamma, and Delta-Toc have strong antioxidant activity outside the body (in foodstuffs etc.). Therefore, Toc
preparations which have a high Alpha-Toc content are suitable for health foods and vitamin E enrichment.
Dry- Fractionation
Dry fractionation is by cooling the feedstock under carefully controlled conditions in crystallizers to create
slurry of high melting stearin crystals in low melting olein liquid. Description of process flow of fractionation
section
1.
Dry fractionation is a batch process. RBDPO from T2 is pump to T401, T402 & T403 each about 35 MT per
batch.
2.
T401, T402 & T403 are crystallizers with spiral coil of both cooling water & chilled water.
3.
Automatic heating of the feed oil while filling the crystallizers melts any pre-existing crystals that would
interfere with later process steps.
1.
2.
3.
4.
5.
6.
Computer programmed cooling creates a saturated stearin solution and nucleates stearin crystals.
Extended holding at the crystallization temperature allows crystals to grow into the desired composition
and form and creates slurry that is efficiently separated.
Filtration by membrane filter press separates the olein from the stearin and allows recovering a higher olein
yield, with the extra olein being of the same quality as the original yield.
Fractionation is a physical modification process so there is no chemical change to the products. And of
course in the dry fractionation process, there is no use of costly of hazardous chemical additives, no yield loss
and no contamination of the oils. Because it produces no effluent, the dry fractionation process is also
environmentally friendly.
RBDOL is stored in Tank T10. SRPL is stored in Tank T4 and T6. HOL is stored in Tank T5 and T11.
Double Hard Olein (DHOL) can be produced after fractioning HOL.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
In chemical mixing tank Chamber-2, here Magnafloc-1011 Anionic Flocculant is dosed by dosing pump for
forming sludge. In this chamber air and Flocculant is stirred, then it passes into the last chamber where
continuous agitation goes on by Dissolved Air Flotation Pump (DAF Pump).
Then the Sludge mixed water is passed to Skimmer Tank.
Skimmer Tank is a specially designed tank with three chambers inside.
In the first big chamber there is a skimmer motor with chain-conveyor and special type weeper.Sludge
mixed water circulates in the big chamber last end to first end by DAF Pressure Pump with 30 to 35
m3/Hr(measured by DAF flow meter). High air agitation through DAF Pressure Pump Delivery Header is
maintained.
Due to air agitation action, all Sludge comes to the top surface of the water.
Rotating skimmer weeper pushes the sludge to the second chamber.
Fresh water (PH 7.0) from bottom side of the last end of the big chamber comes to third storage chamber
by over flow line.
After some interval fresh water is drained out to river by drain Pump.
Sludge from the second chamber of the Skimmer tank goes to the Techno filter for further filtering.
Sludge is collected from Techno filter and kept under earth.
Pusti Soyabean Oil: PUSTI Soyabean Oil is a flagship premium brand in soyabean oil market of
Bangladesh. Due to excellence in sourcing and state-of-the-art German refining technology, PUSTI
Soyabean Oil preserves the inherent goodness and properties of soyabean to give consumers light, tasty
and healthy edible oil. The great taste enhancer along with their quality has won the consumer loyalty across
Bangladesh. As these oils are rich in Polyunsaturated Fatty Acids, they help in keeping cholesterol level
under check and are preferred by health-conscious home makers for their families.
Available SKUs:
the medicinal and preservative qualities of mustard kept intact, PUSTI is ideal for massage and pickling
purposes.
Family Vegitable Oil: The Family Palm olein is the pure range of vegetable oils introduced for delivering high
value, taste and to keep healthy life. This offers the benefits of imported palm oil to its consumers by
extracting it from natural palm sources in Indonesia and Malaysia. The modern refining process keeps the
source benefit Beta-Carotene intact and makes our Oil an ideal choice for cooking.
Soybean and Palm Cultivation in Bangladesh
Soybeans are native to East Asia but only 45 percent of soybean production is located there. The other 55
percent of production is in the Americas. U.S.A. produced 75 million tons of soybeans in 2000, of which more
than one-third was exported. Other leading producers are Brazil, Argentina, Paraguay, China, and India.
Palm Cultivation:
Broadly, there are three varieties viz., Dura, Piscifera and Tenera. Tenera, a hybrid of Dura and Piscifera is
characterized by a thin shell and medium to high mesocarp (65-90%) and high oil content (16-20%). It is a
commercially cultivated variety. Deep well-drained medium loam soil, rich in humus is the most suitable for oil
palm cultivation. Oil palm requires a well distributed rainfall of 2500 to 4000 mm per annum and a
temperature range of 19-33 C. It is a water-loving crop and it requires adequate irrigation. The crop
responds well to drip irrigation and yields are reported to increase by at least 20%. Oil palm is planted in
triangular system at spacing of 9 X 9 X 9 m accommodating 143 plants in a hectare. Planting can be done in
any season. However, the best period is June to December. Seedlings of 10-14 months age are best suited
for planting. Oil palm requires adequate irrigation, as it is a fast growing crop with high productivity and
biomass production. For yielding palms of above three years age, a minimum of 150 liters per day is
required. In older plantations the requirement goes up to 20 liters per day.
Inter crop and Yield: During the initial stages of plantation in oil palm i.e., upto 3rd year, some of the light
feeder inter crops such as pulses, cereals, vegetables, grasses etc., can be grown.
grown 1 m. away from the basin in 1st year of oil palm plantation. In two-year-old plantations, it should be
grown 2 m away, followed by 3 m in the third year plantations. Oil palm starts bearing from 4th year onwards
and its economic life varies from 30 to 35 years. The yield of oil palm varies according to age and
management. Under average management conditions in a mature plantation (8 to 9 years old), yield of 15-18
tonnes of fresh fruit bunches (FFBs) per hectare is expected. Under good maintenance and management,
yield up to 25-30 tones of FFBs per hectare is possible.
Soybean Production, Growth and Its Prospect in Bangladesh
Soybean production in Bangladesh
Local soybean production is on the rise, as the industries, mainly poultry feed makers and edible oil refiners,
are strongly in need of the item, according to industry insiders.
Of the local companies, City Group of Industries and S. Alam Group have been procuring the crop from the
local market for its soybean crushing factories, while poultry feed makers such as Kazi Farms and Aftab are
also buying it to make feed.
They, however, pointed to the fact that the output is far from the quantity edible oil processors and poultry
farm owners demand. The major portion of such demand is met by imports. Bangladesh could meet much of
its local demand through bringing about 7 lakh hectares of coastal and char lands under soybean production,
which in turn will also help reduce the countrys dependence on importing over one million
Due
to
economic
condition of major segment of 150 million populations of the country, almost 75% of the total oils and fats
consumed annually are sold in loose form, where palm olein is dominant and the rest 25% market share is
under consumer packs, where soyabean oil is in leading position and palm oils position is second.
Market Analysis Summary
Bangladesh Edible Oil Industry
Presently 15 refineries are actively refining soya and palm oil. These refineries have their own coordinating
organization the Bangladesh Vegetable Refineries Association but refineries act individually when it
comes to importing. In the 1980s, the Government of Bangladesh had control over the import of CDSO but,
since the early 1990s, any refinery can import CDSO by opening an L/C. There is no Duty on the import of
crude or refined edible oils.
Among the 15 working refineries, the seven largest, in terms of capacity and market share, are: City
Vegetable Oil Mills Ltd, MM Vegetable Oil Mills Ltd., Meghna Vegetable Oils ltd, Multi Oil Refinery, T. K. Oil,
Tripty Industries Ltd, and Shah Amanat Edible Oil. Bangladesh Edible Oil Mills Ltd is a hundred percent
foreign owned company, and they are producing soy oil under technical collaboration with a Singapore-based
company.
City Oil Mills Ltd is one of the largest importers and refiners of CDSO, and Teer is one of the most popular
brands in the country. City Oil Mills operates under the City Group, which owns the recently established
solvent extraction plant.
Growth Trend
Although edible oil has always been the most important ingredient for any Bangladeshi cuisine, indigenous
production is only around 15% of the total edible oil consumption. The rest is met by imported crude palm oil
and soybean oil. As the countrys per capita consumption of total oils and fats was in increasing trend in pace
with economic growth and rapid urbanization, import of oils and fats also being increasing steadily in pace
with the upward trend of consumption.
Major segment of 150 million populations of the country, almost 75% of the total oils and fats consumed
annually are sold in loose form. Branded oil penetration across the country is 19% where as loose oil
penetration is 84%. In rural the scenario is worse only 13% household penetration for edible oil brands. So
there is a huge loose oil market still untapped by the branded oil.
Sales performance of Bangladesh Edible Oil Limited is somewhat interesting that is its sales volume is
gradually decreasing from 2005 but sales amount is increasing since 2003. The reason is nothing but price
change of raw materials in international market and its impact on local market.
The key success factor of making profit in this industry is purchase of raw material at favorable price and
terms, increasing productivity and improving operational efficiency so that cost of goods sold become lower
and eventually increasing sales volume.
SVOIL brands: Urban Vs Rural
Two flagship brands of Bangladesh Edible Oil ltd. Pusti and Meizan since their inception have been the
symbol of the healthiest and most preferred edible oil brand. AC Nielsen retail audit data and Sirius
Household panel data shows both Pusti and Meizan have poor distribution coverage hence poor sales and
worst household penetration.
In Urban SVOIL has a Market share (volume) of 30.8%. It also has a Numeric distribution of 39.9% and
weighted distribution of 84.7%. where as in rural the scenario is little different, market share (Volume) for all
SVOIL brands in the total Rural consumer pack sales is mere 16%, Numeric distribution 17.4% and weighted
distribution of 47.3%. This implies that our traditional distribution coverage cannot reach the potential outlets.
More over the price premium of both Pusti and Meizan was responsible for
this poor market share and outlet coverage. To address this huge rural market Bangaldesh Edible Oil ltd.
launched the price competitive sachet packs for both Pusti soybean oil and Meizan vegetable oil. The poly
packs SKUs are 100 ml, 200 ml, 500 ml and 1 ltr. Pusti poly packs were launched to grab the consumers of
the competitor consumer pack users by offering the best quality Pusti soybean oil in competitive price. And
where as Meizan polypacks were launched to convert the huge rural and semi urban consumers of loose oil
to the Meizan branded polypacks user. To create a demand and awareness for Pusti and Meizan polypacks
and make the product available to the the consumers Bangaldesh Edible Oil Ltd. launched a project Winning
in Rural.
Winning in Rural:
Winning in Rural is an ambitious project for Bangaldesh Edible Oil Ltd. this project is thought to be one of the
main aide in achieving SVOILs vision plan for 2011 of achieving a sale volume of 100,000 Tons. The project
has two focus- one is to generate demand and another is to make product available.
For demand generation SVOIL under took a nationwide activation project called Project purity and for
making the product available we have another project called Project Runner which runs simultaneously with
project triumph. Project Runner is
Market Share Pusti has gained market share while Teer lost some share in Urban across the country. Market
SharePusti gained rural market share over the last five months which caused overall market gain of SVOIL in
rural
Family
Vagetable
Oil
Performance
All
Bangladesh
Market Share Family Vagetable Oil has a steady trand where Natural and Pure showed some drastic change
Market ShareFamily Vagetable Oil had a fluctuating trend and lost share in the last two months where
natural gathered a huge share. Pure has a drastic market share loss while Family Vagetable Oil , Natural and
Jibon had a growth
Price Trend
We already know that 90% of our total demand for vegetable oil has been meeting through import. Thats why
the domestic market depends on international market price movement. Despite government has no
significant control over the market regarding price fluctuation, they can play role in different way to keep the
market stable through taking different steps and measures which can be either proactive or reactive. Like,
import a certain percent of the total demand for edible oil through the state-run marketing outfit, TCB, or
under government-to-government deal so that the price can be kept stable like the Bangladesh government
has a good relation with Malaysia, it can import palm oil through government (Malaysia) directly. Sometimes
government fix prices or price range at which trade between parties will occurred and the government will
take necessary steps against the traders, if price of edible oil increases more than the fixed price. This is kind
of government intervention to the market.
Consumption Pattern
Palm oil occupies around 65% share of the countrys edible oil market where Soybean holds around 30%
market share. Rural consumption is around 70% of the total edible oil category. Branded oil occupies only
around 4% in rural consumption of edible oil.
Due to economic condition of major segment of 150 million populations of the country, almost 75% of the total
oils and fats consumed annually are sold in loose form, where palm olein is dominant and the rest 25%
market share is under consumer packs, where soybean oil is in leading position and palm oils position is
second. The graph below shows the consumption trend of soybean and palm for six years from 2003 to 2008
says that the use of palm oil has been increasing over the year on the other hand soybean consumption has
on significant change. It increased in 2007 from 2005 and again decreases in 2008.
The graph below soybean and palm consumption trend over six year says palm uses increases and soybean
has no significant change. The line graph below indicates the penetration remains stable through the months
of a moving year. Loose oil penetration is much higher than branded oil. There is an increase in Branded oil
during Qurbani Eid.
The graph above says amount of liter consumed by each house hold per month where on an average only
branded oil user use more oil than loose oil user. The figure circled during September 2008 is Korbani Eid
time and was the highest consumption. The curve indicates during winter season edible oil consumption
decreases.
House hold penetration:
From Sirius Household panel we can find the household penetration rate of the branded consumer pack in
the households. 75% of edible oil consumption is in loose oil so house hold penetration is very low for all the
brands. But for Pusti soybean oil the penetration rate is improving over the last couple of quarters data.
Brands
Jan-
Apr -Jun
Jul-Sep
Oct-Dec
Jan-Mar
Apr-Jun
Jul-Sep
Oct-Dec
Jan-Mar
(Soybean)
Mar
2009
2009
2009
2010
2010
2010
2010
2011
2009
FRESH
5.72
3.89
3.48
5.17
4.19
3.81
3.32
3.37
3.70
MUSKAN
1.69
1.84
2.64
3.43
3.60
2.45
3.27
3.77
3.04
RUPCHADA
3.35
3.55
3.96
4.52
3.83
2.68
2.44
3.64
3.11
PUSTI
5.41
5.94
7.94
7.60
5.18
6.56
6.99
7.68
8.81
TEER
4.87
5.09
7.69
10.07
8.88
7.23
7.30
7.80
6.90
25.7%
14%
9.1%
5.1%
4%
Far and way the most powerful and widely used tool for systematically diagnosing the principal competitive
pressures in a market and assessing the strength and
Rivalry is moderate
Strengths:
Brand is the most renowned one. Its quality is best in the market and has been in the market for quite a long
time. People make immediate connection with oil when they hear about Pusti. It brings some traits to the
brand automatically. Company is eager to develop its human resource strength which can be a competitive
edge for SVOIL in the industry implies management awareness of employee development.
Weaknesses:
The company is operating with a single brand which is risky. And currently SVOIL has low geographical
coverage due to weak distribution channel.
Opportunities:
In spite of the weaknesses the brand has immense potential. Presence in the scenario for quite a long time
has brought trust into the brand. It is the name of a trusted brand. It just needs the proper association with the
consumers. Today, demand for product is very high in the market. Market share can be increased by
increasing production capacity, which is very possible.
Threats:
Emergence of new competitors and their distribution policy of giving higher margins to the traders are the
threats now. In terms branding they are no threats. So we believe this problem can easily be handled by
creating brand pull.
International Market
The world of oilseeds, meals, and oils has been evolving. New issues have emerged for researchers and
policymakers. The United States is the largest player, mainly due to its dominant the world of oilseeds mainly
due to its dominant position in soybeans and soybean meals. Nevertheless, the position of the United States
has been challenged by several countries. The growth by Brazil and Argentina in the production of soybeans
and soybean meal has especially eroded the market share of the United States in recent years. Malaysia and
Indonesia have been aggressively marketing their palm oil, intensifying the competition for U.S. soybean oil
exports. Other issues include changing trade policies and demand in major importing countries, trade
liberalization, and genetically modified crops.
Although
no
evidence are there but it seems price trend of soybean, palm and crude oil are in similar pattern and palm
and soybean follow the trend of crude for petroleum.
Financial Analysis
Bangladesh Edible Oil Limited
Liquidity
Position
of
Return on average common equity (ROE) of SVOIL is 10.32 % in 2008 reflecting firms inefficiency at
generating profits from every dollar of net assets, and shows they are not properly uses investment dollars to
generate earning growth in 2008.
Inventory turnover ratio has decreased from 2005 to 2007 implies poor sales and, therefore, excess
inventory. But in 2008 the turnover ratio is higher than 2007 while sales volume decreased by 8.17 % and
sales in taka increased by 30.82 % and cost of goods sold increased by 41 % indicates the efficiency of the
firm in producing and selling its products is become poor .The asset turnover ratio has increased by 15.89 %
in 2008 seems the ratio improved in 2008 over 2007. Here the ratio going up in value but the underlying
changes might not so good. That is, SVOIL current asset and fixed asset both has decreased by respectively
30.62 % and 6.56 %. Generally shorter the no of days inventory on hand better for the firm and in 2008 DSI
has decreased from 2007 which is a positive sign for SVOIL. On the other hand SVOIL performing very good
in maintaining length of time for outstanding accounts receivables.
Findings
Palm oil occupies around 65% share of the countrys edible oil market where Soybean holds around 30%
market share. Rural consumption is around 70% of the total edible oil category. Branded oil occupies only
around 4% in rural consumption of edible oil. Almost 75% of the total oils and fats consumed annually are sold
in loose form, where palm olein is dominant and the rest 25% market share is under consumer packs, where
soybean oil is in leading position and palm oils position is second. The use of palm oil has been increasing
over the year on the other hand soybean consumption has on significant change.
In Bangladesh, our edible oil industry is highly dependent on international market.
Soybean has growth potential in our country because government, industry and farmer all have willingness
and efforts to enhance soybean cultivation and demand for soybean oil is also increasing.
Teer and Pusti are leading brand and both of them have around 30% market share in branded oil category.
Industry is competitive for branded oil category and here rivalry is moderate, customers do not possess
bargaining power where as supplier possesses.
Recommendation
As edible oil is a commodity and the industry is highly dependent on import, government should emphasis on
increasing local production and should promote this industry by expanding soybean producing zone
nationwide and motivate farmers to grow soybean by providing them necessary fund and subsidize them
when necessary. Moreover, develop proper market and channel for farmer to reach producer is essential and
fair price as well.
1.
SVOIL should expand geographical coverage by increasing distribution network to grasp loose oil market in
rural area.
2.
SVOIL should extent its existing product line to create a brand portfolio to reduce dependency on single
brand.
Conclusion
Bangladesh edible oil market size is around 1.4 million Tons where around 1 million tons are consumed by
the rural people and 15 refineries are actively refining soy and palm oil. These refineries have their own
coordinating organization the Bangladesh Vegetable Refineries Association but refineries act individually
when it comes to importing. Branded oil penetration across the country is 19% where as loose oil penetration
is 84%. However the market of rural for branded edible oil is still in a nascent stage. In rural the scenario is
worse only 13% household penetration for edible oil brands[1]. So there is a huge loose oil market still
untapped by the branded oil. Now to penetrate this huge rural loose oil market Bangladesh Edible oil Ltd.
launched a cost competitive poly packs of its two flagship brands Pusti Soyabean Oil, Pusti Mustard oil,
Family Vegetable Oil .
In international market the United States is the largest player, mainly due to its dominant the world of oilseeds
soybeans and soybean meals. Nevertheless, the position of the United States has been challenged by
several countries. The growth by Brazil and Argentina in the production of soybeans and soybean meal has
especially eroded the market share of the United States in recent years. Malaysia and Indonesia have been
aggressively marketing their palm oil, intensifying the competition for U.S. soybean oil exports. And
Bangladesh, our edible oil industry is highly dependent on these exporting countries. This industry is
competitive for branded oil category and here rivalry is moderate, customers do not enjoy bargaining power
whereas supplier possesses. Teer and Pusti are leading brand and both of them have around 30% market
share each in branded oil category.
Soybean has growth potential in our country because government, industry and farmer all have willingness
and efforts to enhance soybean cultivation and demand for soybean oil is increasing as well.
Telephone :
+880 2 7410527, 7410907, 7411537,
7414101, 7410527
Fax :
+880-2-7411006, 7411571
Email : forhad[at]citygroupbd.com
Website : www.citygroupbd.com
Telephone :
+880 2 9887545, 9889490, 9884791,
9884856
Fax :
+880-2-9884896, 9889361
Email : info[at]meghnagroup.biz
Website : www.meghnagroup.biz
Telephone :
T.K. GROUP OF INDUSTRIES
Fax :
+880-31-610003, 631583
Email : tkg[at]globalctg.net
Website : www.tkgroupbd.net
Telephone :
+880-31-611001, 611002, 842120
Fax :
+880-31-610850
Email : mebgroup[at]bttb.net.bd
Website : www.mebbd.com
BEOL Factory :
North Rupshi, Rupshi Bazar
Established in 1993, Bangladesh Edible Oil Limited (BEOL) is a leading importer, Rupgonj,
manufacturer and distributor of consumer pack edible oil under the well known Narayangonj, Bangladesh.
household brands like Rupchanda, Meizan, King's in Bangladesh.
Telephone :
BEOL Brands :
+88 02 8815319
Fax :
Rupchanda
+88 02 8832965
Meizan
KINGS
Olivoil
Lucky
Vikings