indian oil corporation ltd
TRANSCRIPT
Indian Oil Corporation Ltd.
An Internship Report
Giselle Charisma Sequeira
SSN: 889-94-0978
In Partial Fulfillment of the Master’s Program in Business Administration, Ohio University, Athens, USA
OHIO University Christ College Academy for Management Education
Christ College Campus,
Hosur Road, Bangalore-29
April 2007
ACKNOWLEDGEMENTS
Completing a task is never a solo effort. It is often the result of invaluable
contributions by a number of individuals in a direct or indirect manner, which helps
in the shaping and achievement of success.
Firstly, I would like to express my sincere gratitude to Mr. Nilesh Nekaljay, Manager
(T&D) for granting me the opportunity to undertake an internship at the Indian Oil
Corporation Ltd. (Marketing Division, Mumbai).
I am extremely grateful to my project guide, Mr. Vigyan Kumar, Manager (Retail
Sale) for his encouragement and patience throughout the duration of this project.
Without his vision, guidance and support this report would not have materialized.
I would also like to deeply thank the various people at IndianOil who, during the
period of my internship, provided me with useful and helpful assistance. Without
their care and consideration this report would not have been completed.
I am thankful to the Internship Coordinators at Ohio University Christ College, Dr.
Amalendu Jyotishi and Mr. Girish M. for their invaluable support and guidance during
the internship period.
Last but not the least, I would like to thank my parents for their inestimable love,
support and encouragement which gave me the confidence and determination to
carry out this project.
EXECUTIVE SUMMARY
The deregulation of the Indian Petroleum sector in 1999 brought about a major
change in the way Petroleum companies conduct their business. This sector has
been exposed to new market forces and competition has grown enormously. With
the entry of private players, the consumers’ demands have increased. The existing
players have thus come to recognize the need to evolve at a quick pace and to be
market driven, service driven and most importantly relationship driven. Loyalty
programs is the new trend which is catching up at a relatively fast pace in India.
Indian Oil Corporation Limited (IOCL) is running its own loyalty based fleet card
program known as the XTRAPOWER Fleet Card Program. Launched in March 2004,
this program has emerged as the largest and most wide-ranging fleet card program
in the country and has crossed the mark of one million customers.
In spite of this program’s huge success and active promotional schemes being
undertaken by IOCL, the current customers are not using the cards to the full
extent.
The main objective of my project at IOCL was to, thus, study the XTRAPOWER Fleet
Card Program Proposition and to recommend steps to be taken to enhance card
usage.
This project report includes the methodology of the research undertaken, findings
and solutions to the current problems being faced by customers.
TABLE OF CONTENTS
Particulars Page No.
The Oil Industry in
India…………………………………………………………………………………………5
Oil Industry Structure In
India……………………………………………………………………..6
Indian Oil Corporation
Limited…………………………………………………………………………………7
Vision, Mission &
Values……………………………………………………………………………...8
Organization
Structure…………………………………………………………………………………9
Business of
IndianOil………………………………………………………………………………….10
IndianOil Products………………………………………………………....
…………………………14
IndianOil
Brands……………………………………………………………………………………….16
Group of
Companies………………………………………………………………………………….22
Financial
Analysis………………………………………………………………………………………27
Project Findings……………………………………………………………………..
……………………………28
Petrol Retail & Consumer Loyalty In
India……………………………………………………29
XTRAPOWER Fleet Card
Program……………………………………………………………….31
1. Program
Details…………………………………………………………………………………..32
2. Additional Information on Fleet
Tracking………………………………………………..37
3. Additional Information on Reward
Program…………………………………………….38
4. Additional Information on Insurance
Cover…………………………………………….40
Objective & Scope of the
Study………………………………………………………………….42
Market Research
Methodology……………………………………………………………………42
1. Defining the Research
Problem………………………………………………………………42
2. Selecting & Establishing the Research
Design………………………………………….43
3. Collecting & Analyzing
Data…………………………………………………………………..44
4. Statistical Inference &
Findings………………………………………………………………46
Total Customers Contacted [Diagram]……………………………………………..46
Problems Faced by Inactive Customers [Diagram]…………………………....47
Problems Faced by Active Customers (Customers
Temporarily Inactive During Oct-Nov, 2006) [Diagram]…………….……….47
Reasons Why Customers are Not using the Cards………………………..……48
Branches of Delhi Assam Roadways Corp. Ltd. (DARCL)
Contacted and Reasons for Cards Not Being Used………………………………
50
SWOT Analysis…………………..
……………………………………………………………………..52
Recommendations……………………………………………………………………………
………..53
Conclusion & Future Line of Work…………………………………………………..
…………..56
References………………………………………………………………………………………………
…………..58
Appendix……………………………………………………………..
……………………………………………..59
Appendix 1………………………………………………………..
……………………………………..59
Appendix
2………………………………………………………………………………………..……..61
THE OIL & GAS INDUSTRY IN INDIA
India is the sixth largest consumer of oil. There exists a huge gap between the
demand and supply of oil and gas in India. The country imports more than 70% of
its crude oil requirements. In the year 2005, oil and gas accounted for 38% of
primary energy consumption in India, followed by coal at 55%. The oil and gas
industry is broadly classified into Upstream, Midstream and Downstream segments.
Midstream operations are usually included in the downstream category. The Indian
Oil Industry comprises of 18 refineries with a total refining capacity of 132.47
MMTPA as of April 1, 2006. During the same year, the consumption of crude oil and
that of natural gas was estimated at 130.11 MMT and 31.02 BCM respectively. The
production and consumption of petroleum products was estimated at 119.75
MMTPA and 111.92 MMT respectively. India has recently emerged as net exporter of
petroleum products.
UPSTREAM SECTOR:
The upstream sector, also known as the exploration and production (E & P)
sector, is concerned with the search for potential underground or underwater
oil and gas fields, the drilling of exploratory wells, and subsequently operating
in the wells that recover and bring the crude oil and/or raw natural gas to the
surface.
MIDSTREAM SECTOR:
The midstream sector processes, stores, markets and transports commodities
such as crude oil, natural gas and natural gas liquids (NGLs) such as ethane,
propane and butane.
DOWNSTREAM SECTOR:
The downstream sector includes oil refineries, petrochemical plants, petroleum
product distribution, retail outlets and natural gas distribution companies. The
downstream sector reaches thousands of products such as gasoline, diesel, jet
fuel, heating oil, asphalt, lubricants, synthetic rubber, plastics, fertilizers,
antifreeze, pesticides, pharmaceuticals, natural gas and propane to
consumers.
OIL & GAS INDUSTRY STRUCTURE IN INDIA
Oil and Natural Gas Corporation Ltd. (ONGC)
UPSTREAMOil India Ltd.
Indian Oil Corporation Ltd. (IOCL)
Reliance Industries Ltd. (RIL)
DOWNSTREAM Bharat Petroleum Corporation Ltd. (BPCL)
Hindustan Petroleum Corporation Ltd. (HPCL)
Mangalore Refinery & Petrochemicals Ltd. (MRPL)
GAS TRANSPORT & DISTRIBUTION Gas Authority of India Ltd. (GAIL)
INDIAN OIL CORPORATION LTD.
Company profile:
Formed in 1964 through the merger of Indian Oil Company Ltd. (Estd. 1959) and
Indian Refineries Ltd. (Estd. 1958), Indian Oil Corporation Ltd. (IndianOil) is
presently India’s largest commercial enterprise with a sales turnover of Rs. 1,83,204
crore (US$ 41 billion) and profits of Rs. 4,915 crore (US$ 1.10 billion) in the fiscal
year 2005.
IndianOil also enjoys the status of being the highest ranked Indian company in the
prestigious Fortune ‘Global 500’ listing, having moved up 17 places to the 153rd
position this year based on the performance of the fiscal year 2005. In addition to
being the 21st largest petroleum company in the world, it also tops the list of the
petroleum trading companies among the National Oil Companies in the Asia-Pacific
region.
IndianOil, along with its subsidiaries, accounts for a market share of 47% in
petroleum products, 41% refining capacity and a petroleum product capacity of
51% in India.
In the year 2005-06, the IndianOil Group sold 54.6 million tonnes through exports.
The IndianOil Group of companies presently owns and operates 10 out of 18
refineries with a combined refining capacity of 54.20 million tonnes per annum (1.1
million barrels per day). These include two refineries of the subsidiary Chennai
Petroleum Corporation Ltd. (CPCL) and one of the Bongaigaon Refinery &
Petrochemicals Ltd. (BRPL). The Corporation’s cross-country crude oil and product
pipeline network spanning over 9,000 km meets the vital energy needs of the
country.
VISION, MISSION & VALUES
Vision
A major diversified, transnational, integrated energy company, with national
leadership and a strong environment conscience, playing a national role in oil
security& public distribution.
Mission
To achieve international standards of excellence in all aspects of energy and
diversified business with focus on customer delight through value of products
and services, and cost reduction.
To maximize creation of wealth, value and satisfaction for the stakeholders.
To attain leadership in developing, adopting and assimilating state-of- the-art
technology for competitive advantage.
To provide technology and services through sustained Research and
Development.
To foster a culture of participation and innovation for employee growth and
contribution.
To cultivate high standards of business ethics and Total Quality Management
for a strong corporate identity and brand equity.
To help enrich the quality of life of the community and preserve ecological
balance and heritage through a strong environment conscience.
Values
IndianOil nurture a set of core values, which are:
Care
Innovation
Passion
Trust
ORGANIZATION STRUCTURE
The organization structure of the Indian Oil Corporation Ltd. is divided on the basis
of the company’s functions comprising of pipelines, refineries, research &
development, marketing, human resource, finance, and planning and business.
Each division is headed by a director with general managers and executive directors
working under him.
On the basis of my observations, I can state that the organization structure of
IndianOil is fairly flat with few levels of intervening management between staff and
managers. Rather than being closely supervised by many layers of management,
workers are more directly involved in the decision making process concerned with
the company. There are many individual units within the organization which enables
the existence of a horizontal organization structure. Employee involvement is thus
encouraged through a decentralized decision making process.
BUSINESS OF INDIANOIL
Refining
Pipelines
Marketing
Research & Development
Petrochemicals
Gas
Exploration & Production
Refineries:
IndianOil presently owns and operates 10 out of India’s 18 refineries with a current
combined capacity of 54.20 million tonnes per annum (1.1 million tonnes per day).
During the year 2005-06 IndianOil refineries recorded a crude oil throughput of
38.52 million tonnes. The seven refineries together achieved a capacity utilization
of 93.1%, higher than the Asia-Pacific average of 91.5% which also happens to be
the highest in the last six years. The fiscal year 2005 also witnessed IndianOil
becoming the first public sector organization in the country to have its own ship
Chartering Cell, which is functioning under the Refineries Division.
All refinery units are accredited with ISO 9002 and ISO 14001 certifications. The
refineries are as follows:
Guwahati Refinery (Assam)
Digboi Refinery (Upper Assam)
Barauni Refinery (Near Patna, Bihar)
Haldia Refinery (Near Kolkata, West Bengal)
Mathura Refinery (Near Delhi)
Panipat Refinery (Near Delhi)
Koyali Refinery
BRPL (Bongaigaon Refinery & Petrochemicals Ltd.)
CPCL (Chennai Petroleum Corporation Ltd.)
Pipelines:
IndianOil owns and operates a pipeline network of 9,024 km, the largest network of
crude oil and product pipelines in India. This widespread network of pipelines
achieved the highest ever throughput of 45.35 million metric tonnes during the year
2005-06.
The major pipelines of IndianOil are:
Salaya Mathura Pipeline
Kandla-Bhatinda Pipeline
Mathura-Jalandhar Pipeline
Guwahati-Siliguri Pipeline
Barauni-Kanpur Pipeline
Haldia-Barauni Pipeline
Koyali-Roorkee Pipeline
Marketing:
IndianOil has a wide spread marketing network with over 23,000 sales points. These
include petrol/diesel stations, consumer outlets, lube distributors, SERVO shops,
SKO/LDO dealers, LPG distributors. The regional offices are in charge of the North,
East, West and Southern Regions of India, and Assam Division supplements
operations in the North-East. State level, Divisional and Indane Area offices have
also been set up in each region. IndianOil commands a dominant market share in
the petroleum retail segment in India and has over 10,144 petrol and diesel stations
spread throughout the country along with an additional 3,272 of the subsidiary
company, IBP Co. Ltd.
Research & Development:
Operating the first R&D Centre to get ISO 9002 and 14001 Certifications, IndianOil
boasts of having the best Research & Development Centre in Asia which is also one
of the finest in the world. It has been involved in world-class petroleum research
and is carrying out extensive work on refinery processes and transportation of
pipelines.
IndianOil’s R&D Centre developed 85 cost-effective formulations during the year,
out of which 74 were commercialized. Marking a new milestone in the march
towards a Hydrogen-fuelled
economy, the R&D Centre commissioned IndianOil’s first Hydrogen-CNG (H-CNG)
dispensing station in October 2005.
Petrochemicals:
IndianOil has been continuously striving for growth by incorporating its core
business with opportunities available in the petrochemicals sector. The company is
currently executing a plan to achieve Rs. 30,000 crore (US$ 6.8 billion) investment
by the year 2011-12. In order to implement this plan, a world-scale Linear Alkyl
benzene (LAB) plant at the Gujarat Refinery and an integrated Paraxylene/Purified
Terephthalic Acid (PX/PTA) plant at Panipat are already in operation. A Naphtha
Cracker with downstream polymer units, designed to produce 8,00,000 tonnes per
annum of Ethylene and 6,00,000 tonnes per annum of Propylene is coming up at
Panipat. In order to strengthen its presence in the petrochemicals sector, IndianOil
also plans to develop a refinery cum petrochemicals complex at Paradip on the east
coast of India.
Gas:
As a step towards expanding its business in the Natural Gas sector, IndianOil has
signed an MOU with Iran to implement the import of 1.75 million tonnes of LNG per
annum starting from the year 2009 onwards. The corporation is already marketing
1.43 million tonnes per annum.
IndianOil has entered into a joint venture with GAIL (India) Ltd. called Green Gas
Ltd. in 2005 to distribute city gas. This project initially launched in Agra and
Lucknow, is another emerging growth area for IndianOil.
Entry in the shipping business is being actively pursued in order to implement the
corporation’s strategy to participate in the entire gas value chain.
IndianOil has also embarked on a pilot project to supply LNG through cryogenic
road/rail tankers as the limited gas pipeline infrastructure in the country presents
good opportunities in this area.
Exploration & Production (E&P):
Having participated actively in the bidding rounds to increase the indigenous
production of Oil, IndianOil, under the New Exploration Licensing Policy (NELP) in
consortium with other companies has bagged nine blocks in the first three rounds.
The corporation has also obtained participating interest in on-shore blocks in Assam
and Arunachal Pradesh.
IndianOil has undertaken overseas ventures including two gas blocks in the Sirte
basin of Libya, the Farsi exploration block in Iran and onshore farm-in arrangements
in Gabon.
Opportunities are being explored to acquire a suitable medium-sized E&P company
in order to consolidate its upstream portfolio.
INDIANOIL PRODUCTS
Indian Oil Corporation Limited has a number of products which are as follows:
1. Fuels & Feedstock
Naphtha
Light Diesel Oil
Furnace Oil/ LSHS/ HHS
2. Lubricants & Greases
Automotive Lubricating Oils
Automotive Specialty Oils
Railroad Oils
Industrial Lubricating Oils
Metal Working Oils
Agricultural Spray Oils
Automotive Greases
Railroad Greases
Industrial Greases
Marine Lubricating Oils
Defense Grade Lubes
Industrial Specialty Oils
3. Petrochemicals & Specialties
Benzene
Calcined Petroleum Coke
Hexane
Jute Batching Oil
Paraffin & Microcrystalline Waxes
4. Liquefied Petroleum Gas
5. Motor Spirit/ Gasoline
6. Superior Kerosene Oil/ KERO
7. High Speed Diesel/ Gas Oil
8. Aviation turbine fuel/ Jet Kero
INDIANOIL BRANDS
1. SERVO
2. Indane LPGas
3. AutoGas
4. IndianOil Aviation Service
5. Premium Fuels-XtraPremium & XtraMile
6. XtraPower
7. XtraRewards
8. ‘Swagat’ Highway Flagship Retail Outlets
9. XtraCare
10. Kisan Sewa Kendras
1. SERVO:
IndianOil’s Global Brand, SERVO is also India’s largest selling lubricant brand.
The SERVO range of lubricants is available to customers at over 9,000 Retail
Outlets and a countrywide network of SERVO SSLs and SSAs Bazaar traders.
This range of lubricants is used in nearly all applications covering automotive,
industrial and marine sectors and is approved by major Original Equipment
Manufacturers (OEMs) including new generation cars. Having emerged as a
Superbrand, Servo has genuine oil tie ups with a wide range of companies
like Hyundai, Maruti, Bajaj and Lancer. It is also fast making its mark in
overseas markets such as the UAE, Malaysia, Mauritius, Bangladesh, Bahrain,
Sri Lanka, Nepal, Yemen, Kenya, Kuwait, Burkina Faso, Reunion Islands and
others.
Having been developed at IndianOil’s world-class R&D Centre at Faridabad,
SERVO enjoys a market share of 42% and is sold through over 8,100 IndianOil
petrol/diesel stations, over 1,300 SERVO shops and a nationwide network of
bazaar traders.
2. Indane LPGas:
IndianOil’s Indane LPGas, with a market share of 48% and a network of 4,350
Indane distributors, is widely used in commercial sectors like industries,
hotels & restaurants,
medical labs, etc. It is used daily in over 40 million homes as cooking fuel.
Around 87 bottling plants are spread across the country with a combined
bottling capacity of 3.77 MMTPA. Presently, new and improved 5 kg Indane
LPGas cylinders are being introduced in rural and hilly regions to implement
wider usage by the economically weaker sections.
3. AutoGas:
AutoGas is Liquefied Petroleum Gas (LPG) used as an alternative fuel for the
propulsion of road vehicles. It has an excellent safety record both in terms of
its storage, transportation and use. Extensive safety tests have led to the
conclusion that Autogas is substantially safer than petrol due to its more
robust fuel tank having a resistance to impact damage.
AutoGas has been introduced in Hyderabad, Bangalore and Mumbai through a
network of 48 stations out of an industry total of 103 Auto LPG Dispensing
Stations. This alternative fuel is a good long term business proposition, and
IndianOil intends to further expand its marketing in a big way.
4. IndianOil Aviation Service:
IndianOil’s Aviation Services, with a 68% market share and a network of 95
Aviation Fuel Stations (AFS), meets the fuel and lubricant needs of domestic
and international airlines, Defence Services and private aircraft operators.
IndianOil Aviation service is ISO 9002 certified and is not only the largest
aviation fuel marketer in the country but is also the most preferred supplier
of jet fuel for customers in India and abroad. Besides the domestic airlines,
IndianOil Aviation Service serves over 71 International airlines.
IndianOil Aviation Service caters to over 90% demand of the Indian Defence
Services as well as the sensitive requirements of WIP flights at all airports
and at remote helipads across the Indian subcontinent. It not only maintains
world-class standards in operations and safety but also conforms to the
severe global quality requirements of Aviation fuel storage and handling.
5. Premium Fuels-XtraPremium & XtraMile:
Launched on September 24, 2002, the premium fuels – XtraPremium and
XtraMile (originally IOC Oremium and Diesel Super respectively), mark a new
beginning for IndianOil and offer the benefits of convenience and enhanced
comfort to its customers.
XtraPremium: India’s first 91 octane petrol, XtraPremium is reinforced with
multifunctional additives including ‘Friction Buster”. It is available at over
2,000 Retail Outlets all over the country and has the following attributes:
o Super Mileage and Pick-up
o Enhances cleaning of engines
o Minimizes exhaust emissions
o Restores peak engine power and acceleration
o Reduces maintenance cost
XtraMile: IndianOil’s new generation High Speed Diesel with world-class
additives, XtraMile is the leader in its market segment. Offered at over 4,400
Retail Outlets nationwide, it has the following features:
o Extra mileage leading to a Greater Acceleration
o Faster pick up, resulting in lower Maintenance Costs
o Longer engine life, thus providing Enhanced Overall Performance
o Eliminates engine knockings
6. XtraPower:
XtraPower is a Smart Card based Fleet Card Program, which enables the
cashless purchase of fuel and lubes from designated retail outlets of IndianOil
through flexible prepaid and credit facilities. The fleet card program aimed at
solving the needs of fleet owners/operators offers many benefits which
includes an exciting rewards Program, Personal Accident Insurance Cover and
Vehicle Tracking Facilities.
Launched in March 2004, XtraPower, having crossed the one million mark, has
emerged as the largest fleet card program in the country. It has the widest
Retail Outlet coverage
with over 4,800 Retail Outlets in its network and has locked in about 22% of the
Fleet market share in the retail segment.
Any Fleet Owner/Operator, Corporate or Business Entity owning or operating
commercial vehicles can sign up for membership of the XtraPower Fleet Card
Program at an annual charge of Rs. 100/-. Each fleet owner is issued one
Fleet Control Card and Vehicle-Specific Fleet Cards for every vehicle enrolled
under the program.
Backed by IndianOil/s vast infrastructural network as well as service providers
through its dedicated site www.iocxtrapower.com, XtraPower provides many
facilities to its members through the numerous salient features such as
Flexible Pre-paid and Credit options, Card Limits for better control, Web-bases
allocation of funds on specific cards, Card-to-Card Fund Transfer, Attractive
Reward program, Option for Real Time tracking of vehicles at subsidized cost,
interest-free credit with an option for customers to choose from more than
one credit partners, discounts on purchase through reward points,
redemption of points not only for fuel/lubes but also for a wide range of
consumer goods and novelties and Free Personal Accident Insurance Cover
for fleet owners, Drivers, Co-drivers and Helpers.
The XtraPower Fleet Card Program is thus a solution to every Fleet
Owner/Operator’s Fleet management Problems.
7. XtraRewards:
The country’s first online loyalty card for cash customers, XtraRewards was
launched in Bangalore on the 26th of March 2007.
XtraRewards is a loyalty program for urban vehicle owners through which the
customers can add further value to their purchases by piling up loyalty
points. These loyalty points can also be accrued by customers paying through
credit and debit.
Having been launched in 60 outlets all over Bangalore, this program will be
unveiled later in Chennai followed by Hyderabad. In the first phase, 1,250
outlets of IndianOil and IBP will be automated by September at a cost of Rs.
169 crore to be followed by 1,178 outlets at Rs. 163 crore to be implemented
by the middle of 2008. IndianOil has launched this reward program with an
aim to leverage technology in its retail business in order to provide maximum
facilities and benefits to its customers and also to help the
dealers plan and manage inventory, monitor activities of their fore-court and
to maintain records for dealing with customer complaints and queries online.
The card is backed by Tata Indicom’s CDMA based PDSN technology which
will act as the communication backbone with HDFC Bank providing Point of
Sale Terminals (POST) at the designated IndianOil Retail Outlets.
8. ‘Swagat’ Highway Flagship Retail Outlets:
The ‘Swagat’ Retail Outlets have been launched by IndianOil to cater to the high
growth areas of National Highways forming a part of the golden Quadrilateral
and the North-South, East-West corridors. These Flagship retail outlets are
spread across the country and 45 out of the total 111 “Swagat’ retail outlets
have already been commissioned with fuel and non-fuel facilities. These retail
outlets have been designed to provide customers with fuel/lubes including
XtraMile and XtraPremium as well as non-fuel facilities such as food/rest,
communication, healthcare, parking, vehicle care etc. These retail outlets
maintain high Q&Q standards through retail outlet site and tank truck
automation, third party certification through Bureau Veritas, fortnight
sampling through Quality Audit Officers and training through a professional
agency.
9. XtraCare:
IndianOil’s ‘XtraCare’ outlets are benchmarked against international standards of
Q&Q, housekeeping, maintenance and customer service as certified by the
global agency Bureau Veritas. The launch of XtraCare was a result of a series
of plans in retail design, product and service upgradation, capability training,
automation, loyalty programs and retail site management techniques.
The non-fuel services are boosted in the IndiaOil XtraCare plan with a wide
range of loyalty programs- XtraPower, more recently XtraRewards and co-
branded cards like IndianOil-Citibank credit cards. XtraCare has the most
state-of-the-art automation with cutting edge technology including automatic
tank level gauges, temperature sensors, density measurement sensors, back-
office server with DU controls, automatic bill printing facility, customer
database, etc.
IndianOil had recently introduced the Platinum Circle and Gold Circle as a
precursor to the XtraCare launch. The Platinum Circle and Gold Circle are
exclusive, top of the line clubs for high selling retail outlet dealers and these
dealers have emerged as peer leaders and are an integral part of the
XtraCare dealer ‘sensitization’ strategy.
10. Kisan Sewa Kendras:
IndianOil launched ‘Kisan Sewa Kendras’ for the rural markets as a new growth
area in retail business. These outlets offer a variety of products and services
besides autofuels and kerosene, thus meeting the diverse needs of the rural
population. The Kendras mainly market petroleum fuels, SERVO lubricants,
fertilizers and agro inputs like seeds, pesticides, farming equipment;
vegetables, stationery and other items. Besides serving the farming
community through wide-ranging products, services and facilities, this
initiative is also expected to create employment avenues in rural India, which
is fast emerging as one of the largest consumer bases, thereby providing
attractive returns to the operators.
GROUP OF COMPANIES
The IndianOil Group of Companies comprises of:
1. Lanka IOC Limited (LIOC)
2. IndianOil (Mauritius) Limited.
3. IBP Co. Limited (IBP)
4. Chennai Petroleum Corporation Limited (CPCL)
5. Bongaigaon Refinery and Petrochemicals Limited (BRPL)
6. IndianOil Technologies Limited
1. Lanka IOC Limited (LIOC):
IndianOil’s subsidiary in Sri Lanka, Lanka IOC, is the only private oil company
other than the state owned Ceylon Petroleum Corporation (CPC) that
operates retail petrol/diesel stations within Sri Lanka.
IndianOil entered into Sri Lanka with a view to accomplish its objective of
becoming a transnational energy major. IndianOil’s vast experience in
downstream petroleum operations in India creates a healthy and competitive
petroleum industry in Sri Lanka which largely benefits the island nation.
Lanka IOC Limited has been incorporated mainly to carry out retail marketing of
petroleum products, bulk supply to industrial consumers, building and
operating storage facilities at the Trincomalee Tank farm, etc. Thus it not only
provides energy security and supply stability to Sri Lanka but also upgrades
the overall standards of service, particularly in the retail sector of the nation.
Having a market share of 22% and operating over 160 outlets, the company
occupies the NO. 2 position among the top 50 listed companies operating in
Sri Lanka. Its oil terminal at Trincomalee is Sri Lanka’s largest petroleum
storage facility.
In order to provide world class quality petroleum products and services at the
most competitive prices to the Sri Lankan customers, Lanka IOC is making
periodic investments to the tune of about INR 450 crore. The retail outlets are
being refurbished with state-of-the-art facilities and services at par with
international standards. Through
its retail chain, the company is also making available non-fuel facilities like
convenience stores, 24-hour ATMs, automatic carwash, food marts, etc.
These revamped stations of Lanka IOC have earned praises for the company
from all sections of the Sri Lankan society.
2. IndianOil (Mauritius) Limited.
IndianOil is investing US$ 36 million to set up a range of marketing
infrastructure in Mauritius through its wholly owned subsidiary IndianOil
Mauritius Ltd. (IOML). A state-of-the-art petroleum storage terminal with a
capacity of 15,500 metric tonnes has already been commissioned at Mer
Rouge to serve as the supply base of petroleum products. This
microprocessor-controlled facility with automated product level monitoring,
truck loading and computerized access control is the first-of-its-kind in
Mauritius. As part of this project, separate import lines for Motor Gasoline
(petrol), Gas Oil (Diesel), Jet Fuel (Aviation Fuel) and Fuel Oil have also been
laid. IOML has also strengthened the bunkering facilities with new lines to
various quays in the port, which is fast emerging as the region’s busiest port.
IOML has undertaken means to set up a network of 25 world class petrol stations
in Mauritius in order to provide the Mauritian customers with auto fuels and
lubricants of international quality. These outlets will be equipped with a range
of value-added services including both fuel and non-fuel facilities.
IOML has also joined a consortium of four existing oil companies to operate
aviation fuel storage, hydrant lines and aircraft fuelling facilities in Mauritius.
The consortium will soon build a new Aviation Fuel Terminal at Sir
Seewoosagar Ramgoolam International Airport.
IndianOil (Mauritius) Ltd. which has attained a 14% market share includes
aviation fuelling and bunkering business. Besides the expansion of the retail
network, a modern product-testing laboratory is also being set up in
Mauritius. It now occupies the 25th place among the top 100 companies in
Mauritius in less than 30 months after commencement of operations there.
3. IBP Co. Limited (IBP):
IBP Co. Limited, a subsidiary of IndianOil, is a stand-alone petroleum
marketing company with exclusive Business Groups for Petroleum, Explosives
and Cryogenics.
IBP’s marketing efforts are fully focused on improving its sales of petrol and
diesel. During the period April – Dec 2006 the company achieved a sales
volume of 798,559 KL of petrol and 2,959,018 KL of diesel which resulted in a
sales growth of 2.8% in petrol and 6.4% in diesel as compared to same period
last year. The revenue from the Business Group (Petroleum) witnessed an
increase of 16% during the fiscal year 2005-06.
A pioneer in introducing quality and quantity assurance of all products and
services at its retail outlets, IBP is constantly striving to keep up with industry
standards by implementing third party audits by reputed agencies. The
branding activities are further reinforced through an initiative called “Project
Horizon” in which IBP’s 422 select top of the line high-volume outlets are
specially branded with an upgraded retail visual identity. Independent
agencies are appointed to collect samples from these retail outlets in order to
test them on a monthly basis so as to guarantee that products available to
customers meet the specified standards.
As part of synergy with the parent company IndianOil, the Company has begun
marketing branded fuels, viz., ‘XTRAPREMIUM’ petrol and ‘XTRAMILE’ diesel
at select retail outlets of the Company. IBP has also introduced Indian Oil’s
XtraCare Fleet Card Program in its network. This program is designed to help
transporters in efficient management of their fleets besides rewarding them
for their loyalty to the Company.
4. Chennai Petroleum Corporation Limited (CPCL):
A subsidiary of IndianOil, Chennai Petroleum Corporation Limited has two
refineries with a combined capacity of 10.5 Million Tonnes Per Annum
(MMTPA). The Manali Refinery, with a capacity of 9.5 MMTPA is one of the
most complex refineries in India with Fuel, Lube, Wax and Petrochemical
feedstock production facilities. CPCL’s second refinery is located at Cauvery
Basin at Nagapattinam with a capacity of 1.0 MMTPA.
The main products of the company are LPG, Motor Spirit, Superior Kerosene,
Aviation Turbine Fuel, High Speed Diesel, Naphtha, Bitumen, Lube Base
Stocks, Paraffin Wax, Fuel Oil, Hexane and Petrochemical feed stocks.
The crude throughput for the year 2005-06 was highest-ever at 10.36 Million
Metric Tonnes (MMT) against the Memorandum of Understanding (MoU)
target of 10.2 MMT. The crude processing was 16% higher than the previous
year crude throughput of 8.92 MMT. During the year, the Manali Refinery
processed 9.68 MMT and Cauvery Basin Refinery (CBR) processed 0.68 MMT.
CPCL’s MoU target for 2006-07 has been set at 10.4 MMT. The turnover for
the year 2005-06 was the highest-ever at Rs.25,409 Crore as against
Rs.16,270 Crore in the previous year registering an increase of about 56%.
The turnover was higher mainly due to increase in crude throughput and
higher prices for the products based on import-parity.
CPCL has commissioned many new facilities including a Zero Discharge Plant,
Additional 2.5 MGD Capacity Sewage Reclamation Plant and a 5.8 MGD
Desalination Project. The new project and initiatives being implemented are
Crude Oil Pipeline Project, Resid Upgradation Project, Propylene Recovery
Project, Windmill Power Project, Quality upgradation Projects to meet Euro-IV
Products and Refinery Capacity augmentation at Manali.
5. Bongaigaon Refinery and Petrochemicals Limited (BRPL):
Bongaigaon Refinery and Petrochemicals Limited (BRPL) has its registered office
and production units at Dhaligaon in the Bongaigaon District (now under
recently constituted Chirang District) of Assam. The company has its
Regional/Marketing offices at Guwahati, Kolkata, Mumbai and Delhi.
The core activities of BRPL are refining of crude oil and production of petroleum
products. The Company is also engaged in the production and marketing of
value-added petrochemical and PSF products. The Company has a Refinery
with a rated capacity of 2.35 million tonnes per annum of crude oil, a
petrochemicals complex comprising of a Xylene plant, a Dimethyl
Terephthalate (DMT) plant and a Polyester Staple Fibre (PSF) plant.
Commercial production of the refinery started in 1979 and other plants were
commissioned in stages. The Refinery, which normally processes crude oil
available in
Assam, is presently processing crude from Ravva Oil Fields of Krishna Godavari
Basin also. The Petrochemicals units consume Naphtha as its major raw
material, which is supplied from the Refinery itself.
The major products from the refinery are LPG, Unleaded MS, Naphtha, ATF, SKO,
HSD, LDO, LSHS, LVFO, RPC & CPC. The major products of the Petrochemicals
and PSF units are DMT and PSF. The petroleum products (except RPC & CPC)
are marketed by Indian Oil Corporation Ltd. (IOCL). BRPL markets RPC, CPC,
Petrochemicals and PSF products through its own marketing network.
6. IndianOil Technologies Limited (ITL):
A wholly owned subsidiary of IndianOil, IndianOil Technologies Limited (ITL) is
the technology-marketing arm for the entire range of technologies developed
at IndianOil’s R&D Centre at Faridabad. This centre, which was set up over
three decades ago, has developed several technologies and technical
expertise both in refining and the lubricant sector. The R&D activities in
refining technology are targeted in the areas of fluid catalytic cracking (FCC),
hydro processing, catalysis, residue upgradation, distillation, simulation and
modeling, lube processing, crude oil evaluation, process optimization,
material failure analysis, remaining life assessment and other technical
services.
ITL also offers state-of-the-art sludge disposal technology based on
biotechnology which is widely accepted in the hydrocarbon sector. ITL also
markets the R&D developed lubricants technology, which possesses USPs,
established through wide market acceptance. The company imparts training
in the areas of FCC, Hydroprocessing, Catalytic Reforming, Delayed coking,
Simulation and Modeling, Bio-remediation, Crude Assay, Material Failure
Analysis, Remaining Life Assessment, Analytical techniques, Lubricants &
grease etc. covering the basics, plant trouble shooting and technical
solutions. In the recent past ITL carried out such trainings in Kuwait, Iran etc.
IndianOil has adopted the approach of nurturing human talent as a means to
nurturing technology. This approach has worked well as the hydrocarbon
sector is both technology and knowledge intensive. As a result, the
Corporation is now in a position to offer a bouquet of technologies, products,
processes and solutions that are aimed at improving performance and
profitability.
FINANCIAL ANALYIS OF INDIANOIL
BALANCE SHEET
As on 31Mar06 31Mar05 31Mar04
Assets Rs mn %BT Rs mn %BT Rs mn %BT
Gross Block
435588.10
50.71 397824.40
57.08 363413.60
56.86
Net Block 249193.90
29.01 233037.20
33.44 220018.10
34.42
Capital WIP 96453.00 11.23 87339.10 12.53 52865.70 8.27
Investments
145263.80
16.91 57049.20 8.19 55954.30 8.75
Inventory 242777.90
28.26 195048.20
27.98 149510.80
23.39
Receivables
66994.80 7.80 56898.70 8.16 39731.20 6.22
Other Current Assets
58329.70 6.79 67608.40 9.70 121088.60
18.94
Balance Sheet Total(BT)
859013.10
100.00
696980.80
100.00
639168.70
100.00
Liabilities Rs mn %BT Rs mn %BT Rs mn %BT
Equity Share Capital
11680.10 1.36 11680.10 1.68 11680.10 1.83
Reserves 279731.20
32.56 247061.90
35.45 217613.10
34.05
Total Debt 264037.20
30.74 173199.30
24.85 121776.10
19.05
Creditors and Acceptances
128307.40
14.94 112479.20
16.14 79699.60 12.47
Other current liab/prov.
175257.20
20.40 152560.30
21.89 208399.80
32.60
Balance Sheet Total(BT)
859013.10
100.00
696980.80
100.00
639168.70
100.00
RATIO ANALYSIS
CURRENT RATIO = 1.224
The current ratio being 1.224 implies that for every one rupee of current liabilities, current assets of 1.224 are available to meet them.
QUICK RATIO = 0.26
The quick ratio is a measure of the firm’s ability to service short term liabilities. A large part of the firm’s current assets are tied up in slow paying debts.
DEBT EQUITY RATIO = 0.903
Debt equity ratio is the related contribution of creditors and owners of the business in its financing. This ratio thus signifies that a portion of 0.903 of equity and debt of the company is being used to finance its assets.