It can happen because of-
internal coolant leak
transmission fluid
cracked cylinder head
fuel injector
broken fuel pumping injection
faulty piston
oil level
water contamination of fuel
If you want to know them in detail, check this blog about white smoke from exhaust.
It looks like a deep scratch. You can follow the steps below-
clean the surrounding area
use a scratch repair kit
apply a rubbing compound
and finally, cover it up with touch-up paint
Once I faced deep scratch and light scratches for several times. These steps worked for deep and a scratch...