G1 00255 STRATEGIC PLANNING FOR BUSINESS DEVELOPMENT OF MEKONG PETROLEUM JOINT-STOCK COMPANY (PETROMEKONG) DURING 2011 – 2015, VISION TO 2020 QUY HOẠCH CHIẾN LƯỢC PHÁT TRIỂN KINH DOANH CỦA CÔNG TY CỔ PHẦN DẦU KHÍ SÔNG CỰU (PETROMEKONG) GIAI ĐOẠN 2011 – 2015, TẦM NHÌN ĐẾN NĂM 2020
Overview of the field of petroleum production and business
Petroleum and the wholesalers participating in petroleum business
Petroleum is a strategic item in each country The petroleum market in Vietnam currently is the great interest of both the State and consumers The rate of retail petroleum accounts for 50-60% of Vietnam, compared with 10% of the years before 2000, therefore fluctuations in petroleum prices have become a major concern of the public
Figure 2-1: Vietnam petroleum business system at present
Currently, there are 12 wholesalers (including 9 State-owned enterprises) who have the right to import and export petroleum then give them to the hands of consumers through general agents or directly through the distribution system including nearly 10,000 petroleum agents and outlets nationwide; of which about 7,500 outlets directly under the enterprises of different economic sectors, and nearly 2,500 outlets of the import wholesalers The wholesalers distribute petroleum through general agents, agents and affiliated outlets Petrolimex has about 1,800
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UNIVERSITY x afitfenipke$saut Ege, Vier SOM narket share and more than 4.000 outlets under agents and general agents The other wholesalers share the remaining 43%
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In 2007, with the advent of Decree 55, petroleum business is said to be a breakthrough: business following the market mechanism, however according to the judgment of many experts, this Decree has not really operated, especially for the price mechanism Since petroleum is a strategic commodity, has strong influence on all aspects of the economy, the State has still intervened quite deeply in the business, mainly in price This situation led to the same retail prices of nearly 10,000 outlets retailing petroleum in Vietnam, although the costs of wholesalers are different; the distance trom the wholesale pool and transit warehouse of fuel outlets is very different leading to different transportation costs of these outlets, therefore the profits and losses of each enterprise are also different Petrolimex with the advantage of the system of petroleum distribution pipeline has reduced fuel transportation costs and losses, created competitive advantage
The State sets too many goals in one liter of petroleum while applying the only measure of subsidy, which made the domestic prices have not kept pace the world prices The proof is that when the world prices fall deeply, the domestic prices fall drop by drop, when the world prices increase strongly, the domestic prices remain the same or increase disproportionately due to inflation containment Therefore, the enterprises still do not have the real power to decide the selling prices However, from February 15, 2009, Decree 84 specified that the enterprise have the right to adjust the selling prices when the component factors of price change — that means, the State ignores the price fixing mechanism.
Petroleum market situation in the Mekong Delta (MD) 0000.00.0.0ccccccccececceee 24
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Table 2-1: the petroleum market share in the MD in 2010
No NO - Unit joining the > Un! 1 ket | troleum pate
Mekong Delta Petroleum Market Share in 2010
: Petimex C ử Petrolmex 2BSCL esos m Saigon Petro | 35% 20%
Figure 2-2: Chart of Mekong Delta Petroleum Market Share
The above data table showed clearly that PetroMekong’s market share accounts for around 17%, ranked 3™ in the MD The top rank is still Petrolimex of 35%, next Petimex of 20% and Saigon Petro of 13%, Pvoil of 10%
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2.1 lofceR\Pb098WAẢb00nefElfffhd of the petroleum industry
2.1.3.1 Development prospects of petroleum business
Petroleum is a strategic commodity, meets the demand for most sectors of the economy such as industry agriculture, forestry and fisheries and transport Up to now, no fuel can substitute this energy resource efficiently, therefore, the amount of products sold is not fluctuated much, although the prices are affected by the factors involved The petroleum business development has close relation with the economic growth rate A development economy will inevitably lead to increasing demand for petroleum consumption
The amount of monthly average petroleum consumption over the country Is 1,000,000 m3 equivalent to approximately 3.3 million liters/day Demand for petroleum in the country keeps growing, from 7,640 tons in 2000 to 13.2 million tons in 2008, 14.3 million tons in 2009 and 15.4 million tons in 2010 Vietnam is a developing country, so demand for petroleum product consumption will increase rapidly in coming years The master plan project of petroleum industry development during 2006-2010 also showed that the demand in Vietnam is about 80-10%/year during this period, 6-7%/year during 2011-2020 and about 4-4.5%/year during 2021-2050
According to the market forecast result of the project “development plan of petroleum depot system nationwide until 2015 and orientation to 2020” by Institute for Development Strategy - Ministry of Planning and Investment, the demand for fuel consumption in Vietnam as showed in Figure 2-3:
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Forecast on development trend of the petroleum indusfry . 22c s5 26 ) Development prospects of petroleum: DUSÌfi€SS.::‹.cccisecoccicciieadsa„ao 26
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Figure 2-3: Chart of forecast of demand for petroleum in Vietnam until 2020
(Source: Ministry of Planning and Investment)
Demand forecast for petroleum consumption is calculated based on the average economic growth index of the area, of which it is expected to grow by around 10%/year during 2008-2015 For categories of items, gasoline of various types will consume rapidly due to road traffic development together with the living standards of the people's increasing, an increasingly common demand for purchase of automobiles, motorcycles as means of transport In addition, the oil items of Diesel, Mazut will also increase because means of waterway transport grow at high level; the industrial customers and food processing plants use more fuel
2.1.3.2 Forecast of PetroMekong’s petroleum yield:
According to the actual survey of Department of Business under PetroMekong, petroleum consumption yield during 2010-2015 as forecasted by PetroMekong tn table 2-2 is as below: al Adva jaster of Business Administratior
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PetroMekong’s establishment history 2220222222 se 28
On 26 April 1997, PetroVietnam Oil Processing and Distribution Company (PDC under Petrovietnam), General Gymnastics & Sports Service Company under People's Committee (PC) of Can Tho Province (now Can Tho City), and trading companies under People's Committees of Mekong Delta (MD) provinces signed and established a joint venture company to build and operate petroleum base depot to import and deal petroleum products in the MD The joint venture will engage with partners to set up distribution systems of wholesale and retail in MD provinces as per Prime Minister’s Decision No 345/QD dated April 20, 1998 approved for Can Tho petroleum base depot project On 15 May 1998, PC of Can Tho province issued establishment license No 007083 GP/TLDN-02, marking the establishment and official operation of Mekong Petroleum Joint Venture Company — PetroMekong
The chairman of the Board of Directors issued Decision No 128/QD-HDTV dated December 31, 2008, renaming Mekong Petroleum Co., Ltd into Mekong
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PctfRJft90WðIMỀSStIckr€&M@EAl0'(PetroMekong) with its chartered capital of
VND113 billion including the founding members: Petrovietnam Oil Corporation
Capstone Project Report-COlo-Group 2 accounts for 56% of the chartered capital, Can Tho Agricultural Exports Company 20% Vinh Long Trading Company 4%, Tra Vinh Trading Company 4%, My Tho1 Port Company 4%, Soc Trang high quality rice Company 4%, Bac Lieu Tourism and Trading Company 4%, Ca Mau Tourism and Trading Company 4%.
PetroMekong’s functions and duties 2-1 n2 2n ng rng 29 dê: lá up ĐÊY (HO TỔ cóc scvygt 006050 0100508030530 NÓ cá Ä 4s ẤM kh vs An th Học E9 0t 0g Sg S950 geeeer 29 4:4 4-2): EEONE sociccsoosesc 899012806 =_ ốẽốẽố ốc ố x h 29
The main operating areas of the Company are in 11 MD provinces The Company’s main functions consist of importing petroleum trom abroad or Dung Quat Oil Refinery (PetroMekong is one of the nine wholesalers importing petroleum), processing, blending and trading petroleum products Besides, the Company also strengthens the establishment of petroleum distribution system in order to expand gradually the market share to bring the highest efficiency, contribute the supplying source stability and price stabilization in the area, and promote the economic development and social stability in the region
Based on the functions and capabilities of the Company, and also the policies of the State, locality, and the industry as well as the direct guidance of a higher authorities; the Company's main duties are to build himself a petroleum distribution system according to the law, directly import petroleum to ensure the supplying source for the system under the Company’s management, and be responsible for the business-operating result In addition, the Company also has several other duties as prescribed by the law.
Organizational structure and operating scale - c2 on, 29
Currently, the Company's management is implemented in the organizational model of online - functions as following:
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Capstone Project ReportC OMO-Group 2
Dept Dept Dept Chemical Dept Dept Dept of of of of Laboratory of of administrat
Business | | Logistics | | Gauging planning- | |internation ion import/exp| jal business] |manageme ort nt
Dept Dept Dept Dept of of Of of
Engineering Accounting &Organiz Managemen ation t
Sales groups Affiliated Local Can Tho Affiliated transit Cambodia outlets branches Petroleum base warehouse branch depot
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Besides the Company's headquarter located in central Can Tho City, the
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Company currently has established a petrol distribution system throughout MD localities The Company has 13 branches located in the provinces of Long An, Tien Giang, Ben Tre, Tra Vinh, Vinh Long, Dong Thap, An Giang, Kien Giang, Soc Trang, Bac Lieu, Ca Mau, Hau Giang and | branch in Phnom Penh Capital - Cambodia.
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With the function as one of the wholesalers importing petroleum directly over the whole country, the Company’s major business field is petroleum, investment and trade Details are as follows:
- Direct Import and Export of petroleum products;
- Producing and processing of oil products;
- Trading kinds of petroleum, lubricants etc.;
- Trading chemicals and fertilizers for industries and agriculture;
- Growing, processing and exporting aquatic and seafood products;
- Transporting petroleum inside and outside the country.
Analysis of the current status of PetroMekong’s production and business ĐEN ĐỀ gu ng 0000103061G80100G00400ã601000181G0GG3GGSQQSIAGAQGIDAO-Alllueieses= 3I
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Up to April 2011, there have been more than 900 retail sites of the petroleum distribution system in the whole Company, including agents, sub-agents, and outlets
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Table 2-3: PetroMenang: S Etfmiloitin distribution ate
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No AFFILIATE SYSTEM |p 0T nọ] — i l General agent (GA) 25 24 16 18 17
(Source: Dept of Business — PetroMekong in 2011) The outlet system (including affiliated outlet), direct agents of the Company tend to gradually increase over time The above distribution system has basically met the demands for the Company’s product output
PetroMekong’s storage system is developed throughout the MD provinces The Company currently owns a wholesale petroleum base depot with a capacity of 72,000 m3 of petroleum of various types in the area of 8.63 ha located at Hung Phu Industrial Zone 2, Cai Rang District, Can Tho City
Last March, 2011, a petroleum transit warehouse with a capacity of 1,800 m3 was also completed and put into use in Long Duc commune, Tra Vinh province, rising total capacity of the entire Company until April 2011 up to 89,153 m3 of different kinds (the average capacity of 1,500 m3 per warehouse) to meet the distribution system and consumers in a timely manner
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Capstone Project Report OHO-Group 9 te he hrs ei ech snes OR elon ca
No NAME Total export amount ee ee | See Day Month
| an tye teiidleu lonp Bơi ˆ 72.000 | 8.000 240.000
TH Warehouses under investment - 14,300 / 3,100 83,000 _ ra Hau Giang Industrial Zone ˆ of 10,000 ˆ 2,000 50,000 ˆ 2 | Song Doc 2,500 500 15,000
5 | Chau Thanh District 150 i 6 | Chau Phu - An Giang 500 200 6,000
(Source: Dept of Bussiness — PetroMekong, May 2011)
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Implementing strictly as per the Government's Decree No 84/2009/ND-CP
Capstone Project Report COo-Group 9 dated October 15, 2009 regarding petroleum business, the Company invested a part of the petroleum transportation system for provision of the whole Company’s system, including six specified vessels with the total capacity of 2,000 tons, 21 petroleum tank trucks of different kinds with the total transportation capacity of over 210 m3 of petroleum of various types
In addition, to serve the demands of imports and cargo transportation by seaway, PetroMekong contributed to invest two specialized petroleum transportation vessels from 5,000-7,000 tons, this load is suitable for specific draft in Dinh An estuary, which 1s able to receive goods at the seaports in the region e.g Singapore, Thailand, Malaysia and the warehouses, ports of Dung Quat Oil Refinery
NO | NAME OF MEANS OF | UNIT | CAPACITY | REMARK
| Mekongtran 01 Ton 7,000 | own 30% of the shares
_ 2 [Mekongtran02 | tom | _ 5,000 | own 30% lt | LOCAL VESSEL M> 2,380
; Petroleum tank truck Nos 21 capacity:
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2.3/4 Ua PPONRY St Prod heihs ah blending
Besides the supplying source from import, the Company is capable of blending petroleum from materials such as high-octane gasoline (Reformate, M97, M95, M92) Condensate and Naphtha etc The Company is currently studying a project mixing gasoline from anhydrous ethanol and implementing a state-level project producing additives against delamination in bio-fuel ES
Table 2-6; Gasoline blending products in recent years
(Source: Dept of Product Quality PetroMekong, 2011) 2.3.5 Current business products
At present, the Company’s major business products include the following categories:
- Unleaded gasoline of various types: M95, M92, M83
- Materials for mixing gasoline: Naptha with octane number (RON) varied between 65 and 72
- Kerosene (KO) _ : lighting and cooking ˆ Other products : lubricants and fertIl1zers
2.3.6 Sales methods and customers of the Company
In the spirit of the Government's Decree 84/2009/ND-CP dated October 15,
2009 regarding petroleum business, import wholesalers are responsible for building a petroleum distribution system for their companies and consuming petroleum products through this system, jointly responsible for the quantity and quality from
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Current business produets - - 2s 11 122121181111 n1 11 01H ri 35
At present, the Company’s major business products include the following categories:
- Unleaded gasoline of various types: M95, M92, M83
- Materials for mixing gasoline: Naptha with octane number (RON) varied between 65 and 72
- Kerosene (KO) _ : lighting and cooking ˆ Other products : lubricants and fertIl1zers.
Sales methods and customers of the Company 0.cccccccccseeceevecseveeseven a0
In the spirit of the Government's Decree 84/2009/ND-CP dated October 15,
2009 regarding petroleum business, import wholesalers are responsible for building a petroleum distribution system for their companies and consuming petroleum products through this system, jointly responsible for the quantity and quality from
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UNIVERSITY ơ imdoNui9'BrE?AAidiKff W€FSI9Rsumers and only allowed to sell after the petroleum distribution system of the Company Details are as follows:
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- Dhirect retail: selling directly to end customers through the petroleum pumps at affiliated retai! outlets
- Industrial wholesale: selling to the manufacturers of cement, steel, power plants, ferry administration, bridge and road company, factories, fishing vessels, etc consuming gasoline directly
- Commercial sale: today this sales is the main form of the Company through two channels: agents who have retail outlets and signed directly an affiliate contract with the Company; general agents who have at least 5 retail outlets and 20 sub-agents and signed a general agent contract with the Company, then the general agents will redistribute to outlets and sub-agents; or sell to other wholesalers importing petroleum
- Temporary import for re-export: selling to the foreign markets such as Cambodia, Singapore, Thailand etc Currently, the major market of the Company 1s Cambodia.
PetroMekong’s strategic planning for business development
PetroMekong ensures the petroleum supplying source for the distribution system with the motto “right quality, adequate quantities, reasonable price”, and strives to achieve 40% of the MD market share
Capital growth and conservation, contributing to price stabilization, satisfying the resources for the socio-economic development requirements of localities and completing infrastructure and expanding warehouses and yards
The Company will strive to account for 40% of the MD market share in
2015, rise the retail rate up to 10%, direct agents 50%, industry 20%, and others
20%; take the Company’s shares posted up at the securities trading floors of
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LIPỄ ĐDG0—bBGS391nF26@fIV@1đÌ981 2 respectively, increase its chartered capital of over VNDS50OO billion in late 2010, over VND1,000 billion in 2015, over VND
1,200 billion in 2020 as oriented; conserve and grow capital, stabilize the supplying source and participate in market price stabilization
Gathering data on PetroMekong’s financial targets during 2007-2010 as a basis for analysis of financial operations of the Company with following details:
Table 2-7: Results of PetroMekong’s business operations during 2007-2010
1 | Sales of goods and services _ 2,696,326 | 3,749,073 | 6,339,861 | 5,449,861
3 Net sales of goods and services 2,677,547 | 3,743,987 | 6,284,725 | 5,323,929
5 | Gross profit of goods and services | 76,046 | 102269 | 352,100 | 39,295
— 8 | Salesexpenses 49.967 | 66603 | 125883 | 111731 s 9 General and administrative expenses 1.152 3,130 2,794 4364 |
(Source: Financial Audit Report during 2007 — 2010, PetroMekong)
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PDF Compressor Free ¥isi?3_8- Balance Sheet
Capstone Project Report COMO-Group 5
Il- Long-term financial assets 0 0 6.408 0 7 ie Short-term receivables 11,453 $1.13] 134,258 143,607
B- SHORT-TERM ASSETS 85,513 94,861 176,829 | 208,531 l- Long-term receivables 0 0 0 1,069 ifiess ‘| cor ree eee
3 Construction in progress 1,370 9 634 32,822 12,647 ne Other long-term receivables 0 15,545 40,291 26,978
IV Other long-term assets 5.184 3,238 1,356 105 -
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| - Financial Reserve funds |2z682 |3909 |3909 |258 | © Undistibute profit after tx ——T ” 10,580 | 42,624 - | (184579)
(Source: Financial Audit Report during 2007-2010, PetroMekong)
From the balance sheet and the results of business operations, some key financial indicators of the Mekong Petroleum Joint stock Company can be analyzed and evaluated as following:
This target is a measure of ability to pay debts of the enterprise, it indicates the scope and scale that the claims of creditors are covered by current assets which can be converted into cash up to due-time
Short-term assets (million VND) | 562458 1,065,390 | 1,789,066 | 1,665,474
Short-term debt (million VND) — | 525,563 | 1,030,588 | 1,805,883 | 1,910,089
(Source: Financial Audit Report during 2007-2010, PetroMekong)
The short-term ratio in 2007 and 2008 is relatively good (ratio > 1) and from
2009 onwards, the short-term debt solvency of the Company has been reduced gradually (ratio