vision - iocl.com€¦ · disruptions in the supply chain • carrying out rigorous energy audits...

VISION*

A major, diversified, transnational,integrated energy company, with national

leadership and a strong environmentconscience, playing a national role in oil

security and public distribution

Introduction 3

A word from our Chairman 4

Sustainability Outlook 7

Key Strategies & Management Approach

Economic 25

Environment 31

Labour Practices 41

Human Rights 47

Community 51

Product Responsibility 57

Epilogue 67

Scope of the Report 68

Annexure

List of Abbreviations 69

GRI Index 69

Contact information 74

*IndianOil's Vision statement was articulated in the year 1999. Sincethen, there have been paradigm changes in the business environmentand several new critical issues have come upfront. The Corporationhas embarked on a new initiative to re-visit the existing Visionstatement and evolve a 'shared vision' that would address the newchallenges and evolve long-term goals and strategies. The exerciseinvolving everyone in IndianOil is to be concluded soon.

ContentsContents

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SustainabilityReport

2007-08

IndianOil’s Downstream Leadership

CORE ACTIVITIES

Petroleum Refining

Pipelines – Crude Oil & Petroleum Products

Petroleum Products Marketing

Research & Development

INTEGRATION

Exploration & Production

Petrochemicals

DIVERSIFICATION

Natural Gas – Import & Marketing

City Gas Distribution

OVERSEAS BUSINESS

Equity Oil & Gas

Petroleum Products Marketing

Lubricants Blending & Marketing

Exports –Petroleum Products & Petrochemicals

OFFERINGSConsultancy –

Refinery & Pipelines Projects

Refinery Revamp, Turnaround, O&M

Refining Process Technologies

Manpower Secondment

Training & Development

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Introduction

About IndianOil

IndianOil is India’s flagship energy major andthe country’s largest commercial enterprise

with a turnover of Rs. 2,47,479 crore (US$ 61.7billion) and profits of Rs. 6,963 crore (US$ 1.7billion) for the year 2007-08. It is also thehighest ranked Indian company in theprestigious Fortune ‘Global 500’ listing at 116th

position. IndianOil is the 18th largest petroleumrefining company in the world.

IndianOil and its group companies account for47.4% petroleum products market share, 40.4%refining capacity and 56% downstream sectorproduct pipelines capacity in India. For the year2007-08, IndianOil sold 60.7 million tonnes ofpetroleum products, including 1.91 milliontonnes of natural gas, and exported 3.33 milliontonnes of petroleum products.

Sustainability Reporting

At IndianOil, sustainable development meanshelping meet the growing energy needs of thenation in economically, environmentally andsocially responsible ways. This involves running

our operations responsibly today and buildinga dependable and sustainable energy system fortomorrow.

We see sustainability as the capability to carryon as a group: in renewing assets; creating anddelivering products and services that meet thechanging needs of society; contributing to asustainable environment; and retaining the trustand support of our customers, stakeholders andthe communities in which we operate.

The Sustainability Report is not intended toreplicate the information contained inIndianOil’s Annual Report, which gives detailsof the Corporation’s financial performance aswell as the Management’s Discussion andAnalysis, highlighting the business scenario andthe challenges faced by the Corporation. TheAnnual Report for the year 2007-08 is availableon the corporate website www.iocl.com

This report is, therefore, aimed at focussing onthe significant economic, environmental andsocial factors that impact the way IndianOil doesbusiness through constant engagement with itskey stakeholders.

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A Word from our Chairman

With a view to measure our progress in ourjourney of sustainable development we

bring out a report on our initiatives towardsthis while bringing together our team,stakeholders and all those who partner ourjourney.

Over the past decade, the call for betterstewardship of natural resources has transcendedfrom a small but vocal group of advocates tothe broad majority of consumers andgovernments worldwide. In response, businessentities in particular are expected to adopt fairtrade policies and environment-friendly practicesthrough implementation of 'sustainablestrategies.'

The Triple Bottom Line (TBL) frameworkconceptually provides us scope to expand thetraditional financial framework to encompassreporting on the organisation's performance onsustainability issues. We believe that its unifyingprinciples help align sustainability issues withbusiness strategies, thereby leading to improvedefficiency and performance regardless of the size.

Looking back at 2007-08, it was definitelyanother year of sustained growth for us atIndianOil in the face of stupendous odds. Inthe backdrop of crude price volatilities andliquidity constraints, we managed our operations

efficiently. As India's largest refining andmarketing company, we had to bear the bruntof the under-recoveries on sale of the four majorproducts - petrol, diesel, Kerosene for publicdistribution and LPG for domestic use - belowcost price.

In all this, IndianOil takes pride that itscorporate strategy is fully aligned to nationalpriorities. We envision a greater role forourselves in the coming years in accomplishingthe cherished goal of a truly developed India,where all sections of citizens live with dignity.

IndianOil's commitment to inclusive growth isreflected in its efforts to reach precious fuelsto every nook and corner of the nation; as wellas items of daily use to the rural hinterland. Ithas been supporting development initiativesacross the country, especially in and around itsmajor installations - in fostering education,provision of health care and basic amenities likepotable water to the poorer sections of the ruralpopulace, and empowerment of women.

The strong environment conscience enunciatedin our Vision guides our day-to-day operations.Whether it is continuous improvements in energyefficiency and fuel conservation at our refineriesand operating locations, up-gradation oftechnology to produce superior quality fuels,

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2007-08

Gold Trophy of the Standing Conference of Public Enterprises (SCOPE) Meritorious Award for Environmental Excellence &Sustainable Development and Commendation Certificate for Good Corporate Governance for the year 2006-07 for IndianOil.

initiatives for promotion of renewable bio-fuelsand alternatives like Hydrogen as automotivefuels, etc., all are ultimately aimed at fosteringsustainable development.

This report is in accordance with the GRI-G3guidelines and I am confident that it would alsoprovide a new impetus to the drive forsustainable development in the coming years.

I invite you to join us in our efforts as weenvision the path we plan to travel in the future,facing many exciting challenges in creating asustainable business agenda.

(Sarthak Behuria)

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IndianOil’s eco-friendly, energy-efficient Corporate Office building at Sadiq Nagar, New Delhi.

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In order to sustain an economic growth rateof 8-9%, India needs to address the issue of

sourcing its growing energy requirements in aneconomically viable and environmentallysustainable manner. Considering the limitedavailability of the primary energy mix, thecountry faces formidable challenges in ensuringcontinuous operations in a competitive energymarket, both in the medium and long-term.

Environmental concerns about fossil fuels, rightfrom exploration to end-use, are alreadybecoming major sustainability issues across theworld.

In keeping with the policy initiatives of theGovernment of India concerning the energysecurity of the nation, IndianOil has committeditself to a process of sustainable developmentand has firmed up an action plan along theentire hydrocarbon value chain, as below:

• Enhancing the resource base of oil & gas forthe country through upstream integrationinto the oil exploration & production domain

• Increasing the gas component in thecountry’s energy basket by sourcing gas

supplies from both domestic andinternational markets

• Value addition through downstreamintegration into petrochemicals business

• Undertaking significant investments inprojects for upgrading product quality in linewith stringent environmental norms

• Diversifying the crude oil import base, bothin terms of quality and supply sources, foreffecting economy and minimisingdisruptions in the supply chain

• Carrying out rigorous energy audits andtaking mitigating action for improvedoperational performance in all refineries andinstallations

• Emphasis on improving energy efficiency atend-use to address demand side management

Key impacts, risks and opportunities

IndianOil’s strategic planning process involvesboth development and deployment of strategies,along with evaluation of key business risks andopportunities. All business proposals undergorigorous scrutiny based on a robust evaluation

Outlook For Energy

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process with in-house defined hurdle rates andkeeping in view the Corporation’s businesschallenges, its overall responsibility as anational oil company as well as the extant policyguidelines of the Government of India, theadministrative ministry and the Department ofPublic Enterprises.

The Board of Directors regularly reviews the riskmanagement practices of the Corporation. Awell-defined Enterprise Risk Management (ERM)policy, supported by a detailed manual, ensuresthat risk management and control are effectedthrough a properly defined framework,procedures and periodic review. In the same way,the Unit heads of the Divisions and key principalexecutives (in consultation with legal) areresponsible for ensuring legal and regulatorycompliance. Well-defined processes exist forcomplying with legal and regulatoryrequirements and managing risks across theoperations.

Products and Services

Refineries

IndianOil owns and operates seven of India’s19 refineries with a combined refining capacityof 47.35 million metric tonnes per annum. Itscross-country network of crude oil and productpipelines, spanning about 9,300 km and thelargest in the country, meets the vital energyneeds of the consumers in an efficient,economical and environment-friendly manner.IndianOil is investing Rs. 43,394 crore (US $10.8billion) during XI Plan (2007-12) in augmentingrefining and pipeline capacities, expandingmarketing infrastructure and upgrading product

quality as well as in integration anddiversification projects.

Service network

Petroleum products

As the flagship national oil company in thedownstream sector, IndianOil reaches preciouspetroleum products to millions of peopleeveryday through an unmatched countrywidenetwork. The number of touch points and sharein the industry are given below:

IndianOilís XI Plan (2007-12) OutlayRs. in Crore (Percentage)

IndianOilís Marketing Infrastructure(Percentage)

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IndianOil Group Refineriesand Pipelines Network

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IndianOil has developed a unique businessmodel to reach fuel and non-fuel products ofeveryday use to the rural hinterland through achain of retail outlets known as Kisan SevaKendra (KSK). These Kendra are emerging asfacility-providers to the rural populace.

Petrochemicals

IndianOil has achieved major success inintegration into petrochemicals in the past fewyears and is envisaging investments of overRs. 30,000 crore (US$ 7.4 billion) by the year2011-12 to set up world-scale plants for valueaddition to existing refinery streams. The currentportfolio includes a 1,20,000 tonnes per annumLinear Alkyl Benzene (LAB, used in themanufacture of detergents) plant at theCorporation’s Koyali Refinery and a world-scaleParaxylene/Purified Terephthalic Acid (PX/PTA,building blocks for polyester industry) plant atPanipat, with a capacity of 5,53,000 tonnes ofPTA per annum. IOCLAB has already captured asignificant market share in India, besides exportsto China, Indonesia, Norway, Oman, Pakistan,the Philippines, Thailand, Turkey and Vietnam.A Naphtha Cracker with a capacity of 800,000tonnes of ethylene per annum, along withdownstream polymer units, is coming up atPanipat for commissioning by 2009 end.

Oil Exploration & Production (E&P)

E&P is a long-gestation and risky but a rewardingbusiness. IndianOil and its consortium partnersexpanded their existing overseas portfolio ofseven blocks during the year 2007-08 by winningthe bid for Area 95/96 in Libya. Addition todomestic assets includes four oil & gas blocks

INDIA

OVERSEAS

New Businesses for Sustained Growth

and two CBM blocks under New Exploration &Licencing Policy (NELP) of the Government ofIndia and a farm-in block in Assam-Arunachal.

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IndianOil and its consortium partner, Oil IndiaLtd. (OIL), have incorporated a special purposevehicle – Ind-OIL Overseas Ltd – in Port Louis,Mauritius, for acquisition of overseas E&P assets.

Gas Marketing

Gas has emerged as the fuel of the 21st century.Having entered natural gas marketing in the year2004, IndianOil reached sales of 1.91 milliontonnes of gas during the year 2007-08 and istargeting 2 million tonnes in 2008-09. Atechnology innovation project ‘LNG at thedoorstep’ was initiated during the year to reachLiquefied Natural Gas (LNG) in cryogeniccontainers directly to the doorstep of bulkconsumers located away from pipelines, forindustrial as well as captive power applications.

Technology Solutions

For over a decade now, IndianOil has beenproviding technical and manpower secondmentservices to overseas companies. Consultancyservices for reduction of Fluidised CatalyticCracker (FCC) shutdown time were also providedduring the year 2007-08.

A wholly-owned subsidiary, IndianOilTechnologies Ltd., is engaged in commercialisingtechnologies developed by IndianOil’s R&DCentre.

Brand Leadership

IndianOil has over the years nurtured nearly adozen product and service brands, which areleaders in their own individual segments and

whose combined trademark value was estimatedat Rs. 17,987 crore (US$ 4.5 billion) during2007, as per Brand Finance (London) survey ofthe most valuable (company) brands in India.

Energy Brands that Make a Difference

Card for fleet operators Loyalty programme forurban cash customers

Special formatoutlets for

rural populace

Large-format highwayRetail Stations

Refuelling servicesfor civil aviation and

defence aircraft

Retail Stationswith a bouquet of

value-addedservices

LPG for automotive useLPG cooking gas

World-class lubricants One-stop shop forautocare

Branded petrol Branded diesel

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Corporate Governance

IndianOil being a Government Company underthe administrative control of the Ministry ofPetroleum & Natural Gas (MoP&NG), theDirectors are nominated by the Government ofIndia. The Board consists of an optimum mix ofexecutive (whole-time functional) Directors andnon-executive (part-time) Directors with provenrecord in diverse areas like energy policy,academics, finance, marketing, government andpublic sector, etc.

The Board strength was 16 as on 31st March2008, comprising eight executive Directors(including Chairman) and eight non-executiveDirectors, of whom six are independent Directors& two are Government nominees. The Companyhas requested the Government of India to inductthe requisite number of independent Directorsto enable it to comply with the requirement of50% independent Directors on its Board asrequired under Clause-49 of the ListingAgreement.

An Audit Committee has been constituted inline with the provisions of Clause-49 of theListing Agreement and to meet the requirementsof Section 292-A of the Companies Act, 1956.

A Shareholders/Investors’ Grievance Committeeexamines the grievances of shareholders/investors and the system of redressal of thesame. It comprises three members, with a part-time non-executive independent Director asChairman and Director (Finance) and Director(Human Resources) as members.

In addition, the Board has delegated certainpowers to the under-noted committees withdistinct roles and responsibilities:

• Projects Evaluation Committee

• Planning & Projects Committee

• Contracts Committee

• Establishment Committee

• Marketing Strategies Committee

• Committee for de-leasing of immoveableproperties

There have been no materially significant issue-related party transactions, pecuniarytransactions or relationship between theCompany and its Directors for the year ended31st March 2008 that may have a potentialconflict with the interests of the Company atlarge.

There were no cases of non-compliance by theCompany and no penalties / strictures wereenforced on the Company by the StockExchange/ Securities & Exchange Board of India(SEBI) or any other statutory authority on anymatter related to the capital markets during thelast three years.

The Company has framed a whistle-blower policy,wherein the employees are free to report anyimproper activity resulting in violation of laws,rules, regulations or code of conduct by any ofthe employees, to the Competent Authority orAudit Committee for review, as the case maybe. The confidentiality of those reporting theviolations shall be maintained and they shallnot be subjected to any discriminatory practice.The policy is being implemented with effect fromthe current financial year, i.e., 2008-09.

IndianOil has entered into a Memorandum ofUnderstanding (MoU) with TransparencyInternational India (TII) in January 2008 for

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WHERE EAGLES DARE – A convoy of tank trucks, carrying precious petroleum fuels from Ambala to Leh in Ladakh,negotiates Tanglang la, the world’s second highest motorable pass in the Himalayas.

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Pics on cover page & this page courtesy Palashranjan Bhaumick, Business IndiaPics on cover page & this page courtesy Palashranjan Bhaumick, Business India

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implementing an Integrity Pact Programmefocussed on enhancing transparency in itsbusiness transactions, contracts andprocurement processes. Four independentexternal monitors nominated by TII inconsultation with the Central VigilanceCommission (CVC) shall monitor theactivities.

Investor Service Cells are operational at theRegistered Office in Mumbai and Corporate Officein New Delhi to address the grievances andqueries of shareholders and a separate e-mailID ([email protected]) has been createdfor shareholders to write in.

The Company has complied with all themandatory requirements of Clause-49 of theListing Agreement as applicable exceptcomposition of the Board of Directors, as statedearlier.

A Strategy Meet of the Board is held once ayear to deliberate in detail strategic issues,policy decisions and perspective plans for thefuture.

The IndianOil board is deeply committed todelivering competitive, secure returns byapplying its distinctive capabilities across theentire hydrocarbon value chain through use ofan equally distinctive set of assets in the countrybesides converting new business opportunitiesinto commercial success, both within thecountry and overseas.

The system of ‘Memorandum of Undertaking(MoU)’ was introduced by the Government ofIndia in 1987-88 as a part of the reform packagefor public sector enterprises to progressivelyenhance their performance. IndianOil has

consistently displayed the highest level ofmanagerial performance in all its physical andfinancial parameters, as evidenced in its MoUrankings.

Following the liberalisation of the Indianeconomy, the Government of India decided toidentify public sector companies that havecomparative advantages and support them intheir drive to become global giants. Accordingly,IndianOil was in the first batch of ninecompanies granted ‘Navratna’ status in July 1997with enhanced autonomy and delegation ofpowers.

IndianOil’s philosophy on Corporate Governance

IndianOil believes that good corporategovernance practices ensure efficient conductof the affairs of the Company and help maximisestakeholder value. The Company endeavours touphold the principles and practice of corporategovernance to ensure transparency, integrity andaccountability in its functioning, and are vitalto realising its Vision of becoming a diversified,transnational, integrated energy major.

IndianOil has a well-defined policy frameworkfor implementing corporate governancepractices, consisting inter alia of the following:

• Code of Conduct for Directors and seniormanagement personnel

• Code of Conduct for prevention of insidertrading

• Enterprise Risk Management policy• Integrity Pact to enhance transparency in

business• Whistle-blower policy• Conduct, Discipline and Appeal Rules for

employees

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The Code of Conduct for the Directors and seniormanagement personnel of the Company has beenlaid down by the Board, and has been circulatedto all concerned. The same is also hosted onthe corporate website www.iocl.com. As required

under Clause-49 of the Listing agreement, theDirectors and senior management personnel ofthe Company have affirmed compliance with theprovisions of the Code of Conduct for thefinancial year ended 31st March 2008.

Key Sustainability IssuesIssues Stakeholders IndianOil’s approach

affectedMaintain Government, • Optimisation of resource utilisation andadequate Employees, supply chain managementprofit margin Shareholders • Benchmarking with the best in the industry

• Diversification of the business line andintegration across the value chain

• Engagement with the Government for policy supportEnergy Government, • Focus on equity oil & gas overseas and insecurity Industries, domestic basins through strategic initiatives

General public • Development of renewable, alternative fuels• Demand-side management at end-use

Employee Employees, • Manpower planning and recruitmentrecruitment Academic • Motivation through upgradation of skill setsand retention Institutions, • Enhancing job satisfaction, compensation

Organisation packageEthical Employees, • Transparency, valuesbusiness Customers, • Compliance through company-wide Enterprisepractice Suppliers, Resource Planning (ERP) implementation,

Government e-transactions.Customers Customers, • Customer feedback through surveyssatisfaction Dealers, • Q&Q (Quality & Quantity) initiatives

Distributors, • Focussed response to customer requirementsGovernment

Environmental Environment, • Energy conservationconcern Society, • Mitigating environmental impact of operations

People • Innovations, process optimisation• Eco-friendly approach & studies

Social Community • Utilisation of CSR funds based on a well laidresponsibility down policy

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Mega projects for sustained growth.

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Precautionary Approach

Some of the precautionary initiatives taken byIndianOil are

• Enterprise Risk Management policy• Integration and diversification of business

portfolio• Broad-basing of crude oil basket for supply

security and improvement of refinery margin• Thrust on occupational health, safety and

environment• Progressive HR policies• Focus on growth potential of rural markets• Community welfare aiming at inclusive

growth• Thrust on development and

commercialisation of alternative fuels.

Charters and Memberships

IndianOil plays an active role through itsassociation with several professional bodies intheir respective areas of focus. An illustrativelist of such memberships is given below:

• All India Management Association (AIMA)

• Associated Chambers of Commerce andIndustry (ASSOCHAM), India

• Confederation of Indian Industry (CII)

• Council of Indian Employers (CIE), India

• Federation of Indian Chambers of Commerce& Industry (FICCI)

• Indian Institution of Industrial Engineering

• Institute of Chartered Accountants of India

• National HRD Network (NHRDN), India

• Petroleum Federation of India (PetroFed)

• PETROTECH Society, India

• Standing Conference of Public Enterprises(SCOPE), India

• The Energy & Resources Institute (TERI),India

• World LP Gas Association, Paris

Stakeholders Engagements

The major stakeholder groups for IndianOil areits employees, shareholders, customers, dealers& distributors, financial institutions,subsidiaries, joint ventures, Governmentdepartments and academic institutes.

Employees

IndianOil is a 32,000-strong corporation with12,000 officers. It offers a unique work culturebased on openness and trust, and a commitmentto innovation, creativity and consultation.Bright and professionally qualified people arerecruited at the entry level of its executive cadrethrough open and campus recruitment. Aplethora of opportunities awaits them acrossmore than 600 locations, including refineries,pipeline installations, marketing units such asLPG bottling plants, bulk storage terminals,aviation fuel stations, as well as in Sales (Retail,Consumer and Lubricants), Technical Servicesand R&D. Career growth opportunities are basedon the individual’s performance and contributionto the common goal of sustained growth.

The Chairman and functional Directors, apartfrom their routine interaction with employeesduring the course of normal work, communicatethrough face-to-face interactions and in-houseportals and publications such as Chairman’sStraight Talk monthly column.

Stakeholder communication through corporate website (www.iocl.com).

Shareholders

IndianOil has always valued its customerrelations. This philosophy has been extendedto investor relations too. The Company hasconstituted a Shareholders/Investors’ GrievancesCommittee of Directors to redress complaintsof investors such as transfer or credit of sharesto dematerialised accounts, non-receipt ofdividend / notices / annual reports, and so on.

The quarterly, half-yearly and annual financialresults of the Company are published in leadingnewspapers in India and posted on the corporatewebsite (www.iocl.com). Presentations are alsomade to institutional investors and analystsafter declaration of the results.

Customers

Apart from normal business, IndianOil meets thebulk petroleum requirements of manyGovernment organisations (viz., Defence,Railways, State utilities, paramilitary groups,etc.) as a part of the strategic requirement ofthe nation. It is also the sole canalising agentto meet the petro-goods requirements of theneighbouring countries, Nepal and Bhutan.

As part of its relationship-building process,IndianOil has been nurturing its relations withmajor clients through specific servicecommitments coordinated through a set ofdedicated ‘Key Accounts Managers’ operatingfrom different locations. It also carries outcustomer satisfaction surveys throughindependent consultants. The relationship-building initiatives have helped it secure strongcustomer loyalty. The Chairman’s Panelcomprising high- performing dealers and

distributors is another important forum forcommunication with our stakeholders.

IndianOil has a policy of engagement with localcommunities in the areas in which it operates.Its concerted social responsibility programmepartners communities in health, family welfare,education, environment protection, provision ofclean drinking water, sanitation andempowerment of women and other marginalisedgroups.

Industry bodies, Government bodies,NGOs, Charitable Trusts

IndianOil engages with a wide range oforganisations to help provide focus andleadership in different areas of corporatecommitments. Apart from active membership ofa host of organisations, it has been nominatedby the Government of India on a number of

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Weather-proof services in all terrains - 365 days a year.

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occasions as the nodal agency of the industryfor undertaking research activities or forimplementation of projects of national interest.

Academia

IndianOil set up the IndianOil Institute ofPetroleum Management (IiPM) as an apex centreof learning in the year 1995 with a view tocreate a vibrant bank of knowledge managersfor the post-deregulated era. The only one ofits kind in the petroleum sector, IiPM has sincebeen conducting global standard internationalbusiness management and managementdevelopment programmes for executives.

choice to practising managers. IndianOilPeopleare also sent to external institutes offeringcourses for career advancement. Professors ofIITs and IIMs regularly participate in theCorporation’s management developmentprogrammes as course coordinators and facultymembers. The officers themselves are nominatedto advanced courses in reputed managementinstitutes in India and abroad.

The IndianOil Group has paid Rs.36.14 crore in2007-08 and Rs.10.93 crore in 2006-07 as itscontribution to the Rajiv Gandhi Institute ofPetroleum Technology being set up in Rai BareliDistrict of Uttar Pradesh. The institute will offerB.Tech programmes in Petroleum Production,Reservoir Management and Petroleum Refiningand an MBA in Petroleum Management.

Partners/Suppliers

IndianOil’s partners, subsidiaries and vendorsare also stakeholders in the organisation:

IndianOil offers summer training for studentspursuing professional courses from reputedinstitutes at its various units. Similarly, summerschools run by its training cells offer courses of

Partner/Supplier Key Relationship Relationships CommunicationRequirements Mechanisms

Academic Skills update Contracts, guest Through learning centresInstitutions of employees faculty

Subsidiaries / Synergy in Nomination on Policy and operationalJoint Ventures operations Boards matters through the

Corporate Affairs set-up

Vendor / Operational matters Contracts Regular meetings,Supplier vendor development

programme

Business Analysts Competitive reports, Meetings Reports, surveysindustry trends

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RecognitionsBesides being the highest ranked Indiancompany in the Fortune “Global 500” listing,some of the major recognitions are as follows:• Rated amongst the top 5 in Refining &

Marketing worldwide and 8th overall in Asia

in Platt’s’ Top 250 Global Energy Companyranking for 2007

• Ranked 2nd among the top 50 most valuablebrands of India by Brand Finance, a London-based global valuation firm

• Conferred the SCOPE Meritorious Awardduring 2007-08 for Best Practices in HumanResource Management for the year 2005-06

• Won the Infraline Energy Excellence Awardfor its contribution to the nation’s energysecurity, community development andenvironment protection

• Topped the annual listings of BusinessStandard (BS 1000), Business India (Super100), Business Today (BT 500) and EconomicTimes (ET 500) for 2007

Emphasis on fast-tracking infrastructure projects.

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Economic Strategyand Management Approach

India’s economic landscape, propelled byaccelerated growth rates in the past few

years, provides an opportunity for restructuringthe policy imperatives to achieve the new visionbased on faster, more broad-based and inclusivegrowth. The country is now much moreintegrated with the global economy and hasbenefited from it in many ways. Management ofdiversity through a pluralist democracy is itsinherent strength. This has in turn evoked ahigh level of confidence amongst foreigninvestors. Sustained growth, as envisaged inthe coming years, will, however, call for makingenergy services available across all sectors ofthe economy at affordable prices. The oil & gasindustry will, therefore, play a pivotal role inthe economic value addition to the nation.

IndianOil is deeply committed to helping builda robust economy. In our management approach,we always try to create opportunities for smalland medium enterprises, which in turncontribute to the development of a localbusiness framework and the necessaryinfrastructure to support sustained economic

growth. As our suppliers and contractors grow,they in turn create financial, technical andmanagerial expertise that continues to expanddomestic capacity and capability to support theoil & gas industry in the long term. Weendeavour to foster the development of a reliableand sustainable supply chain of our products,carrying it to the remotest part of the country.

IndianOil is a Navratna company in terms ofthe empowerment conferred on it by theGovernment. It does not receive any budgetarysupport from the Government. All its capitalexpenditure is financed through internalresources and external borrowings. No financialsupport or contingent liability is involved onthe part of the Government.

Market Presence

IndianOil’s recruitment policy is broadly guidedby the administrative instructions and policyguidelines issued by the Department of PublicEnterprises (DPE) and the Ministry of HeavyIndustries, Government of India (GOI). In caseof appointment of dealers and distributors for

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Employee Benefit Schemes

The various facilities/welfare measures provided by IndianOil to its employees are given here under:

retail sales, there is a very well defined selectionprocedure which, besides addressing thecommercial interests, also accommodatesdifferent social objectives criteria as desired bythe Government from time to time. This broadlyinvolves recruitment of individuals and selectionof dealers/distributors from the weaker sectionsof society classified under the categories ofScheduled Castes, Scheduled Tribes, physicallyhandicapped and women.

Selection of employees for direct recruitmentwith the company is done on the basis of

uniform policy guidelines applicable across thecountry and supported by a robust selectionprocess. IndianOil has been continuouslybenchmarking its HR processes and has wonrecognition as a pioneer in evolution of robustHRD systems, including succession planning andother sub-systems. With IndianOil’s emphasison ‘growing its own timber’, most of its topmanagement personnel, including Boardmembers, have risen from within. It has providedleadership positions to the industry as well, withseveral CEOs in PSUs and private enterprisesbeing ex-IOCians.

Housing facility Medical facilities Transport facility, running &maintenance expenses

Rationalisation adjustment/ House building Conveyance advanceskills update expenses advance

Computer advance Festival advance Furniture advance

Service awards Subsidised canteen Protective clothing

Liberal leave for women LTC and holiday homes Sports & recreationalemployees facilities

Incentive scheme for higher Children’s educationaleducation assistance

Social Security Benefits

Contributory provident fund Employees’ Pension Scheme Gratuity

Rehabilitation scheme Superannuation Benefit Fund Group savings-linked insurance

Compensation on death or permanent total disablement due to accident

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IndianOil Performance at a Glance

2007- 2006- 2007- 2006- 2005- 2004- 2003-08 07 08 07 06 05 04

(US $ Million) (Rs. in Crore)

I FINANCIALTurnover (Inclusive of Excise Duty) 61,700 50,777 247,479 220,779 183,172 150,729 130,203Gross Profit * 3,575 3,363 14,339 14,622 9,931 8,722 12,013Profit Before Interest & Tax 2,900 2,758 11,631 11,990 7,728 6,538 10,144Profit Before Tax 2,513 2,412 10,080 10,485 6,706 5,955 9,691Profit After Tax 1,736 1,725 6,963 7,499 4,915 4,891 7,005Dividend 164 518 656 2,251 1,460 1,694 2,453Dividend Tax 19 83 76 362 205 237 314Retained Earnings 1,553 1,124 6,231 4,886 3,250 2,960 4,238Value Added 6,156 5,684 24,693 24,716 17,132 16,611 18,659Contribution To Central Exchequer 8,539 6,539 34,249 28,431 24,449 22,148 24,601(including Dividend paid to Central Govt.)Cumulative Dividend 3,617 3,186 14,509 13,853 11,602 10,142 8,448

* Profit before Depreciation,Interest Expenditure and Tax.

What Corporation OwnsGross Fixed Assets 14,169 12,612 56,832 54,837 43,695 39,869 36,388Depreciation & Amortisation 5,999 4,937 24,060 21,467 18,672 16,488 14,341Net Fixed Assets 8,171 7,675 32,772 33,370 25,023 23,381 22,047Capital Work In Progress 2,286 1,011 9,170 4,395 9,646 8,734 5,286Investments 5,372 4,599 21,546 19,998 14,526 5,705 5,596Finance Lease Receivables 8 11 31 49 71 95 119Working Capital 4,575 2,151 18,350 9,351 10,806 9,662 6,388Misc. Expenditure 31 36 125 157 58 33 73Total 20,443 15,483 81,994 67,320 60,130 47,610 39,509

What Corporation OwesNet Worth - Share Capital 297 269 1,192 1,168 1,168 1,168 1,168 - Share Capital Suspense Account - 5 - 24 - - - - Reserves 9,946 7,743 39,894 33,665 28,135 24,817 21,879 - Total 10,243 8,017 41,086 34,857 29,303 25,985 23,047Borrowings 8,857 6,229 35,523 27,083 26,404 17,320 12,178Deferred Tax Liability 1,343 1,237 5,385 5,380 4,423 4,305 4,284

Total 20,443 15,483 81,994 67,320 60,130 47,610 39,509Note: Figures for the previous year have been regrouped, wherever necessary.

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2007-08

2007- 2006- 2007- 2006- 2005- 2004- 2003-08 07 08 07 06 05 04

(US $) (Rupees)

RatiosDebt Equity Ratio

- Total Debt To Equity 0.86:1 0.78:1 0.86:1 0.78:1 0.90:1 0.67:1 0.53:1

- Long Term Debt To Equity 0.28:1 0.31:1 0.28:1 0.31:1 0.39:1 0.27:1 0.31:1

Earnings Per Share* 1.46 1.45 58.39 62.90 42.08 41.88 59.97

Cash Earnings Per Share* 2.02 1.95 81.10 84.97 60.94 60.57 75.97

Profit After Tax ToAverage Networth (%) 18.34 23.38 18.34 23.38 17.78 19.95 33.38

Book Value Per Share 8.59 6.72 344.58 292.34 250.88 222.47 197.32* Earnings Per Share and Cash Earnings Per Share for all the periods have been calculated after considering the Bonus Issue in line with AS-20- ‘‘Earnings Per Share”.

Note:Exchange rate used:1 US $ = Rs.40.11 as on 31.03.2008

1 US $ = Rs.43.48 as on 31.03.2007

II OPERATIONS

Million Metric Tonnes (MMT)

2007-08 2006-07 2005-06 2004-05 2003-04

Product Sales

Domestic

- Petroleum Products 57.55 53.36 46.22 48.17 46.80

- Gas 1.74 1.48 1.30 0.69 0.01

Total Domestic 59.29 54.84 47.52 48.86 46.81

Export 3.33 3.13 2.09 1.96 1.81

Total 62.62 57.97 49.61 50.82 48.62

Refineries Throughput 47.40 44.00 38.52 36.63 37.66

Pipelines Throughput 57.12 51.69 45.35 43.03 45.17

III MANPOWER Nos. 31,945 * 29,862 30,048 30,430 30,801

* Includes employees of erstwhile IBP Co. Ltd., merged with IndianOil w.e.f. 2nd May 2007.

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2007-08

The compensation structure for officers andworkmen, governed by extant guidelines of DPE,is among the best in the industry. With thepresent structure due for revision with effectfrom 1st January 2007, the Government of Indiahad set up the 2nd Pay Revision Committee forPublic Sector Enterprises under the chairmanshipof Mr. Justice MJ Rao. The committee‘s reportrecommending a new pay-package for officershas been approved by the Government inNovember 2008.

The GOI has issued guidelines for initiation ofnegotiations with the workers’ unions on revisionof their wage structure.

Product Quality ImprovementAs per the Auto Fuel Policy of the Governmentof India, Euro-IV equivalent quality auto fuelsare to be introduced in 13 notified cities andEuro-III equivalent fuels in the rest of thecountry. Accordingly, IndianOil has progressivelyupgraded the quality of auto fuels produced atits refineries in terms of emission-relatedparameters and to meet the quality requirementof new generation vehicles at an investment ofRs.10,000 crore. Of this, Rs. 585 crore was spentduring 2007-08. This is a continuous processand investments are required from time to timeto meet the stringent standards as and whenthey are announced.

Emphasis on fast-tracking infrastructure projects.

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2007-08

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2007-08

We are an energy-needy generation, closelyassociating our economic progress with

increasing consumption of coal, oil and gas. Atthe same time, the challenges of energy security,economic growth and environment protectionare increasingly becoming an unusual confluenceof public policy issues, warranting immediateaction – by individuals, by governments and bybusinesses. Legitimate global concerns aboutenvironmental deterioration & climate changehave created enormous complexity in thebusiness models of the energy companies. In2007, the Government of India set up the PrimeMinister’s Council for Climate Change to drawup the country’s proactive action plan on theissue. Based on the recommendations of theexpert committee, the Government has sinceannounced the National Action Plan on ClimateChange.

IndianOil strives to conduct its business in amanner that is protective of the environment,in a way that reduces the impact of itsoperations to a minimum level. Withenvironment management as a key area of focus,IndianOil continued its efforts in energy

conservation and hydrocarbon loss reduction,water and waste management and auto fuelquality improvement during 2007-08. We tookseveral new strategic initiatives such as entryinto bio-fuel production, wind-powergeneration, etc. Through our operationsmanagement system, we communicateexpectations, measure progress and drivecontinuous improvement in environmentprotection measures.

Environment Reporting &Performance Indicators

Raw Material

Crude oil forms the major raw material in refiningoperations. More than 70% of it is importedfrom oil-producing nations on contractual basis.

During the year 2007-08, IndianOil refineriesachieved the highest ever crude oil throughputof 47.4 million tonnes. Improvement of grossrefining margin (GRM) has been a critical areaof focus for sustained growth. Some of the majorsteps taken for improvement of GRM are:

Environment Strategy& Management Approach

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2007-08

processing of higher volumes of low-cost, high-sulphur crude oils (it is planned to increase thepresent level of 48.8% to 73% by the year 2011-12), sharing of streams among group refineriesand increasing the distillates yield (from thecurrent level of 74% to 77% by 2011-12) byupgrading residues, value addition and bydeveloping an integrated business improvementplan, etc.

IndianOil refineries are committed to supplyingEuro III & IV quality products by April 2010 incompliance with the provisions of the Auto FuelPolicy of the Government of India.

Energy Conservation

IndianOil continuously maintains thrust onenergy conservation at all its seven operatingrefineries through in-house process monitoringand induction of latest technologies. As a resultof various energy conservation measures

undertaken, the energy index in terms of MBTU/BBL/NRGF (MBN) of IndianOil refineries in theyear 2007-08 has come down to 67, which ismuch lower than the industry average of 71.Lower index means better performance. Morethan 20 energy conservation schemes wereimplemented during 2007-08 resulting insavings to the tune of 27,000 SRFT (StandardRefinery Fuel Tonnes) per year.

The Corporation’s targets for reduction of energyindex (MBN) at all its refineries are as follows:

2008-09 2009-10 2010-11 2011-1265 64 63 62

During the year, the carbon dioxide emissionfrom IndianOil refineries in terms of MT/MT ofcrude oil processed came down to 0.265 from0.333 in the previous year.

Water and Effluents

IndianOil refineries fully comply with the MINAS(Minimal National Standard) set by the Ministryof Environment & Forests, Government of India,and the Central Pollution Control Board withregard to use of water resources and the qualityof effluents discharged.

The refineries are equipped with elaborate, well-designed effluent treatment plants (ETPs). Thetreated effluent is reused/recycled for variouspurposes within the unit such as firewater &cooling towers make-up, coke cutting in DelayedCoker Units and also for developing andmaintaining green belts, eco-parks and eco-ponds in the premises. This has helped reducedischarge outside the unit as also fresh waterconsumption for normal operations to thatextent.MBN = Million British Thermal Units per Barrel - Energy Factor

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2007-08

Green belts around operating locations serve as pollution sinks.

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2007-08

Panipat Refinery has been fully reusing thetreated effluent since its commissioning in 1998.However, permission has been granted fordischarge of treated effluent from PanipatRefinery Petrochemicals Complex with effectfrom 2007-08.

Haldia Refinery took action for continuous useof ClO2 (Clorine Dioxide) in ETP-treated waterto maximise its reuse. Similarly, the DigboiRefinery has initiated action for installation ofa reverse osmosis plant for reuse of treatedeffluent. As a result of such steps, reuse of

Effluent quality data for IndianOil refineries for 2007-08:

*BOD – Biological Oxygen Demand; **TSS – Total Suspend Solid

MINAS Quality (mg/litre except pH)

Refinery Location

Parameter Standard Guwahati Barauni Koyali Haldia Mathura Digboi Panipat

pH 6.0-8.5 7.1 7.5 7.4 7.2 7.3 6.9 7.7

Oil 10 (Max) 7.8 5.9 2.5 7.6 5.9 9.0 7.8

Phenol 1.0 (Max) 0.68 0.06 0.08 0.56 0.05 0.52 0.07

Sulphides 0.5 (Max) 0.30 0.35 0.16 0.11 0.17 0.12 0.35

BOD* 15 (Max) 13 10.3 6.5 13.1 8.9 12.8 12.2

TSS** 20 (Max) 18.3 16.6 11.5 16.6 10.5 15.8 16.2

MINAS Quantity (kg/1000 tonnes)

Parameter Standard Guwahati Barauni Koyali Haldia Mathura Digboi Panipat

Oil 7 5.1 0.2 0.2 2.5 1.8 2.7 0.6

Phenol 0.7 0.50 0.00 0.00 0.20 0.00 0.20 0.00

Sulphides 0.35 0.20 0.01 0.01 0.04 0.05 0.04 0.03

BOD* 10.5 8.9 0.3 0.5 4.4 2.7 3.9 0.9

TSS** 14 12.00 0.5 0.8 5.5 3.2 4.8 1.3

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treated effluent went up from 75.3% in 2006-07 to 77.3% in 2007-08.

Green beltsTree plantation – over 10 lakh trees have beenplanted in and around refinery locations – anddevelopment of green belts and ecological parkshas been a significant feature of IndianOil’soperations. Its refineries at Mathura, Barauni,Digboi and Koyali have developed eco-parks inthe vicinity of their treated effluent ponds,whose lush green cover serves as a naturalhabitat for a large number of birds, includingmigratory species from far-flung areas.

EmissionsAnother area of thrust is reduction of emissionfrom refineries. The major sources of gaseousemissions are flue gases from boilers andheaters, FCC regenerators and Sulphur recoveryunits. Hydrocarbon leaks and evaporation duringstorage, handling and transportation ofpetroleum products and crude oil are alsopotential sources of emission.

IndianOil refineries have adopted variousmeasures to control emissions and effectivelydisperse the flue gases. They monitor ambientair quality at fixed monitoring stations. Mobilevans with sophisticated monitoring equipment

Data on effluent generation, recycling and discharge in 2007-08: (m3/hr.)

Parameter Refinery Location

Guwahati Barauni Koyali Haldia Mathura Digboi PanipatEffluent Generated 179 480 1170 462 501 68 746

Recycled 110 461 1061 243 240 49 639

Discharged 69 19 109 219 261 19 107

are also in use at Mathura, Panipat and Koyalirefineries.

During the year, IndianOil refineries fullycomplied with the applicable emission standardsfor process units as also total sulphur dioxide(SO2

) emission limit prescribed by statutory

bodies. On-line SO2 analysers were installed in

three flue-gas stacks at Guwahati Refinery.

SO2 emission data for 2007-08:

Refinery Prescribed ActualLimit (kg per hour)

(kg per hour)

Guwahati - 60 – 85

Barauni 1080 724 - 834

Koyali 1360 975 - 1275

Haldia 1340 766 - 1037

Mathura 450 262 - 346

Digboi 50* 50 - 80

Panipat 1275 1005 - 1196

*mg/nm3 or normal cubic metre

Waste ManagementIndianOil operates its refineries and installationson the principle of ‘prevent, reduce, reuse and

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2007-08

recover.’ Oily sludge in crude oil tanks, chemicalsludge, bio-sludge and spent catalyst arecommon solid wastes in refineries. Sludgemanagement is done as follows:

1. Reduction/prevention of waste generation

2. Oil recovery from sludge

3. Safe disposal of residual sludge

During the year 2007-08, 8,000 metric tonnes(MT) of oily sludge generated at refinery andpipeline installations and 2,800 MT of acid tarat Digboi Refinery were safely disposed ofthrough bio-remediation. About 3,400 MT ofspent catalyst was disposed of to authorisedagencies.

Green Initiatives at IiPM

IndianOil Institute of Petroleum Management(IiPM), the Corporation’s apex learning centre

at Gurgaon near Delhi, has been taking a numberof green initiatives to increase awareness onthe need for definitive action on climate changeissues:

Rainwater harvesting: In view of the continuousdecline in groundwater table in and aroundGurgaon, the institute set up a rainwaterharvesting system in the campus, connectingall stormwater & rainwater drains to anintegrated network that discharges into twogroundwater recharging stations.

CFL lamps: 60-watt GLS lamps in use till 2006were replaced with energy-efficient CFL lampsof 28-watt rating, resulting in substantialsavings in energy bill and replacement cost.

Solar water-heating: For the hostel block, whichhas 60 rooms and 10 suites. An electric boileris used as backup.

R&D Centre, Faridabad

The entire R&D Centre campus is covered with anetwork of stormwater and rainwater drains,

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2007-08

India’s first experimental Hydrogen-CNG dispensing station – at IndianOil’s R&D Centre at Faridabad.

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2007-08

which terminate at four groundwater rechargingstations. Five Piezo meters monitor theunderground water table. During the year 2007-08, an average of 2 feet increase in water tablehas been observed in the campus.

= Replacement of GLS lamps with CFL: About30% of the lights in the campus have beenconverted to CFL.

= A solar water heating system has beenprovided at the canteen and the Synthetic& Biotic Laboratory premises.

= Rain water harvesting systems have alsobeen set up at 30 Marketing locations andtwo pipeline installations.

Other Thrust AreasBio-fuels

Bio-diesel: A business plan for entry into bio-diesel was finalised during the year 2007-08,followed up with signing of a memorandum ofunderstanding (MoU) with the State Governmentof Chattisgarh for the formation of a jointventure company to facilitate bio-dieselproduction on commercial scale. In MadhyaPradesh too, IndianOil has been offered 2,000hectares of non-forest wasteland for raising bio-crops. Efforts are on to take up bio-dieselplantation in Rajasthan and Orissa also.

Ethanol-blended Petrol: IndianOil, along withother PSU oil marketing companies, markets 5%ethanol-blended petrol (EBP) in 14 states and3 union territories and is in the process ofintroducing EBP in the rest of the notified states.

Hydrogen FuelIndianOil R&D has been nominated by theMinistry of Petroleum & Natural Gas (MOP&NG),

Government of India, as the nodal agency ofthe hydrocarbon industry for ushering inHydrogen as an alternative fuel. Accordingly,the Corporation’s R&D Centre has taken thefollowing steps:• A demonstration project was initiated for

use of a mixture of Hydrogen (H2) andCompressed Natural Gas (CNG) in automotivevehicles. A H2-CNG dispensing station wasset up in the campus for running testvehicles on different blends.

• Another H2-CNG dispensing station, partlyfunded by the Ministry of New & RenewableEnergy, Government of India, is being setup at a petrol/diesel station in Delhi.

• As part of collaboration with the leadingorganisations of the world, an MoU has beensigned with M/s. Korea Gas Corporation(KOGAS) for mutually sharing the data onapplications of H2-CNG and LNG asautomotive fuels. Similarly, IndianOil andthe National Renewable Energy Laboratoryof USA have agreed to exchange expertisein select areas of Hydrogen research.IndianOil is also part of the SustainableTransportation Energy Pathways Programme(STEPS) being coordinated by the Instituteof Transportation Studies, University ofCalifornia (Davis).

• Another MoU was signed with New Energyand Industrial Technology DevelopmentOrganisation (NEDO), Japan, for exchangeof information on Hydrogen production,storage, transportation, fuel celldevelopment and safety codes and standards.

• A joint proposal with Mahindra & Mahindrafor development of fuel cell vehicles has

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been submitted to the Scientific AdvisoryCommittee of MoP&NG for allocation of fundsfrom the Hydrogen corpus fund.

Others• During the year, IndianOil initiated action

forv Implementing a 21-MW wind power

project in Gujaratv Developing and implementing a

corporate policy on becoming waterpositive and for reducing carbonfootprint, and

v Developing high-performance andenvironment-friendly specialitylubricants, complying with Euro-IVspecifications, for advanced engines

v Pilot project for solar charging stations

Recognitions

• Safety Innovation Award-2007 from theSafety & Quality Forum of the Institution ofEngineers (India) for the third consecutiveyear.

• National Energy Conservation Award-2007bagged by Guwahati Refinery from theMinistry of Power, Government of India.

• Jawaharlal Nehru Centenary Award (2nd prize)instituted by the Centre for High Technologywon by Mathura Refinery for lowest specificenergy consumption in 2006-07.

R&D focus on novel technologies, products and processes.

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2007-08

Globalisation has enhanced the need forspecialisation in the production of skill-

intensive industrial goods and services. Theassociated rise in the demand for skilled labourhas induced a gradual investment in improvingthe quality of the labour force, expediting ademographic transition, stimulatingtechnological progress and further enhancingthe comparative advantage of the emergingeconomies. Thus, the world over, gains frominternational trade are being utilised primarilyto increase productivity through proactive labourpractices.

At IndianOil, we endeavour to align humancapital with business goals and create a vibrantteam of knowledge managers to exploit theopportunities in a deregulated oil & gas sector.Our work culture encourages openness and trust,and a commitment to creativity andconsultation. We are committed to providingopportunities for skill development andmotivating assignments at each stage of ouremployees’ careers. IndianOil’s efforts inbenchmarking its HR processes and labour

Labour Practices Strategyand Management approach

practices have won it recognition as a pioneerin evolution of robust HRD systems, includingsuccession planning and other sub-systems. Weselect bright and professionally qualifiedyoungsters for our executive cadre through amix of open and campus recruitment.Management development programmes areconducted round the year at several learningcentres set up within the organisation. Most ofIndianOil’s top executives have grown fromwithin – a testimony to the unlimitedopportunities for growth available to themeritorious.

Employee Engagement

Rising competition and technological advancesmake it imperative for organisations to be fastand flexible as well as adaptive and innovativethrough competent and committed employees.Hence, one of the key challenges faced by anorganisation is to be able to attract, motivateand retain able employees who are willing togive their best to the organisation. It isnecessary that the success and well-being ofthe employees be closely aligned with the

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2007-08

IndianOilXpress internal communication portal.

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2007-08

success of the organisation. Engagement occurswhen employees are emotionally connected totheir organisation and to their leaders and co-workers. At IndianOil, we give prime importanceto employee engagement and to this effect haveundertaken several initiatives such as employeeengagement surveys, mentoring, re-visioningexercise as a collective process, suggestionsscheme, quality circles, etc.

Employees Participation in Management: Theemphasis here is on sharing information withthe collectives on a regular basis in order toseek their continuous support and cooperationat various levels in meeting the businesschallenges. The participative culture has takendeep roots in the form of works committees,grievance committees, safety committees, houseallotment committees, canteen committees,Superannuation Benefit Fund trust, EmployeeProvident Fund trust, joint management councilsand other similar groups.

Employee Collectives: There are 21 recognisedunions in the Corporation representing workmenwhile the IndianOil Officers’ Associationrepresents the executive cadre. Major issues suchas pay, work-related allowances revision,promotion policy, etc., are dealt with throughnegotiations between these representativebodies and committees constituted by theManagement, followed by signing of long-termsettlements/MoUs. All employees of theCorporation are covered under these agreements.

Safety & occupational health

IndianOil follows the standards laid down bythe Oil Industry Safety Directorate (OISD) of

the Government of India on matters of safety &occupational health. In respect of environmentalissues, the standards/norms set by the CentralPollution Control Board (CPCB) and StatePollution Control Boards (SPCB) are adhered to.

SafetyDuring the year 2007-08, there were two majorincidents of fire (as compared to four in 2006-07) and six fatal accidents involving oneemployee and five contract workmen (ascompared to eight fatalities, all contractworkmen, in 2006-07) at IndianOil units andproject sites. Detailed analyses of theoccurrences have been carried out andrecommendations that emerged are beingimplemented. While the loss of lives is a matterof deep regret, this has deepened our resolveto further strengthen safety systems andprocedures and improve awareness andknowledge levels among our employees andcontractor workmen. During the year, theCorporation’s refineries, pipelines installationsand Marketing Division units together conducted891 safety training programmes covering 5,963employees and 2020 programmes covering 9,500contract workmen.

Occupational HealthAll IndianOil refineries have well equippedoccupational health centres and OccupationalHealth & Safety Management systems certifiedto the ISO-18001 of M/s. DNV, The Netherlands.As per standard procedure, surveillance auditswere conducted through external auditors atintervals of six months during 2007-08.IndianOil is one of the first few PSU companiesto participate in the ISO certification process.

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2007-08

Workforce Diversity and OpportunitiesAs an equal opportunity employer, IndianOilmakes no distinction on the basis of caste, creed,colour, gender or religion. It is committed toaffirmative action to bring the ‘historicallydisadvantaged’ into the mainstream.

The Corporation scrupulously adheres to theguidelines and instructions issued by theGovernment of India from time to time onimplementation of the reservations policy. Atpresent, a certain percentage of reservations isprescribed for Scheduled Castes (SC), Scheduled

Tribes (ST), Other Backward Classes (OBC) andphysically handicapped (PH) in directrecruitment and for SC and ST beneficiaries inpromotion up to a certain salary grade. IndianOilalso employs one of the largest numbers ofwomen in the public sector, i.e., 2469.

Total Productive Maintenance (TPM)

The Corporation’s TPM initiatives help exploitthe inherent strengths of the people and improveoperations & maintenance practices at itsrefineries.

Employment and Retirement Benefits

IndianOil has won recognition for its progressivepeople practices and employee welfare measures,which are among the best in the public sector.The details have been given in earlier sections.

Training & Development

IndianOil has a well-defined HRD policy andplans for continuous development of its peoplein line with the changing business needs. It

System certification at IndianOil refineries:

Refinery ISO-14001 OHSMS/OHSAS (18001)First Certification First Certification

Guwahati Aug. ’97 April ’99

Barauni June ’97 April ’99

Gujarat July ’97 April ’99

Haldia Aug. ’97 May ’99

Mathura July ’96 Nov. ’98

Digboi Dec. ’97 April ’99

Panipat Feb. 2000 May 2000

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2007-08

prides itself as an academy company with best-in-class training & development resources, aswell as recruitment, career development,assessment and post-retirement schemes.Training processes at IndianOil areinstitutionalized. Training need identification,training evaluation & feedback, post-coursequiz, project work and action planning as ameans to implement learning at the workplaceare internal mechanisms designed to leveragetraining & learning interventions.

IndianOil operates 21 centres of learning, ofwhich seven are located at each of its refineries,four at Marketing Regional Offices, three atPipelines Regional Offices, one at the R&D Centre

in Faridabad and one each at the Refineries andPipelines Division headquarters.

Besides these, IndianOil has set up three centresof higher learning –the IndianOil ManagementAcademy (IMA) at Haldia, the IndianOilManagement Centre for Learning (IMCL) atMumbai and the IndianOil Institute of PetroleumManagement (IiPM) at Gurgaon.

RecognitionAs an ISO 9001-2000 certified institute, IiPMhas been awarded the Golden Peacock NationalAward for ‘Innovative Training Practices’ by theInstitute of Directors (IOD) for 2007 to add toits successes in1998, 2000, 2005 and 2006.

IndianOil has translated the expertise of its personnel in pipeline operations into a business opportunity.

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2007-08

Human Rights Strategy& Management Approach

Even though safeguarding of human rights isthe primary responsibility of the Government,

IndianOil believes that companies can also playa positive role in this area. It recognises theinherent dignity, equal and inalienable rightsof all members of the human family as thefoundation of freedom, justice and peace in theworld.

IndianOil conducts its business on thefoundation of its core values and in support ofthe universal human rights of its employees andthe communities in which it operates. Childlabour, forced labour and discriminatorybehaviour are prohibited and the right tofreedom of association and collective bargainingis recognised. We also prefer that our businesspartners treat their employees similarly.IndianOil is a founder-member and activeparticipant of the Global Compact Society(India), having become a permanent memberin 2007-08.

SuppliersWith its supply chain extending to dealers,distributors, transporters, contractors, vendors,suppliers, associates, etc., IndianOilacknowledges that its responsibility goes rightdown the chain and demands statutorycompliance from all and holds up the code ofconduct as a guide for action.

Ethics, Conduct and DiscriminationIndianOil conforms to the principle of humanrights and accords high priority to preventionof human rights violations. It has an approvedpolicy for handling grievances of employees andcustomers. Issues raised by other stakeholderssuch as contractors, dealers, vendors and villagesand general public in the vicinity of itsoperations are attended to promptly.

Gender SensitivityThe Corporation has created a specially designedtraining programme on gender sensitivity issues

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Aligning individual aspirations with corporate goals.

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2007-08

for its employees. These programmes areconducted by unit-level training groups andWIPS (Women in Public Sector) cells for bothmen and women employees, focussing onenhancing harmony at the work place. IndianOilhas also set up 17 women’s cells across thecompany, each headed by an apex-level WIPSleader, for proper implementation of policies ongender issues. All these steps have resultedin the creation of a conducive work environmentand almost nil gender-related complaints.

Child LabourIn support of effective abolition of child labour,no person below the age of 18 years is engagedby the Corporation in any area of work. ItsGeneral Conditions of Contract (GCC), which actas guidelines for all contracts, prescribe aminimum age limit of 18 years for employment/contract labour. Labourers engaged bycontractors are also monitored. For instance,entry of labourers at refineries is regulatedthrough a system of gate passes issued by theCentral Industrial Security Force (CISF) personnel

in charge of security of the installation and duecaution is exercised to ensure that such gatepasses are not issued to a child.

Training of Security Personnel

IndianOil employs approximately 11,000personnel for the security of its variousinstallations spread across the country. All thesesecurity personnel (including those from CISF,DGR, private agencies and home guards) arethoroughly briefed and trained on human rightsissues, which inter alia cover:

• Frisking & checking of personnel enteringthe Corporation’s premises without offendingthem

• Courteous behaviour while dealing withemployees, visitors and contract labour

• Addressing the need of security personnelwith respect to provision of protectiveclothing, regular wage payment, PFcontributions, medical facilities andfulfilment of contractual agreement.

Environment management is a key focus area...even in refinery townships.

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2007-08

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2007-08

Corporate Social ResponsibilityStrategy & Management Approach

In terms of developing a corporatesocial responsibility strategy, it is

increasingly being recognised that tosuccessfully address a community’s complexproblems and quality of life, it is necessary topromote better integration, collaboration, andcoordination of resources from variouscommunity sectors.

At IndianOil, corporate social responsibility(CSR) has been the cornerstone of success sinceinception. As a constructive partner in thecommunities in which it operates, it has beentaking concrete action to realise its socialresponsibility objectives, thereby building valuefor its shareholders and customers. In the pastfour decades, IndianOil has touched the livesof millions by supporting innumerable social,cultural, educational and environmentalinitiative, with focus on partnering communitiesin health, family welfare, education,environment protection, provision of cleandrinking water, sanitation and empowerment ofwomen and other marginalised groups. IndianOil

is also investing in innovative technologies andsolutions for sustainable energy flow andeconomic growth.

Vigilance

IndianOil is against corruption in all its formsand has adopted a set of Conduct, Disciplineand Appeal rules for its employees. It hasundertaken and implemented widely acceptedinitiatives such as grievance redressalmechanism, whistle-blower policy and a well-defined and strictly implemented policy onprevention of sexual harassment at theworkplace.

The Vigilance Cell of IndianOil carries outpreventive measures like system studies toeliminate irregularities and inconsistencies inbusiness processes and enhance transparencyin award and execution of contracts, andincrease awareness of the Central VigilanceCommission (CVC) rules and guidelines.

Over 50 training courses/workshops on vigilanceawareness and the roles and responsibilities of

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2007-08

individuals were conducted for 1,173 workmenand officers during 2007-08. Special emphasiswas laid on system studies to check whetherexisting rules and regulations are allowing thevarious operations to function in an efficient,transparent and cost-effective manner andadditional measures or changes, if any, neededin the various procedures and manuals to achievethe desired results.

A Vigilance Awareness Week aimed at upholdingthe corporate value of trust and ensuring totalcommitment to corporate ethics, was observedthroughout the organisation from 12

th to 16

th

November 2007.

Participation in Public Policy

IndianOil, through its association with severalprofessional bodies in India and abroad,participates, reviews and espouses opinion onindustry issues that have significant impact onpublic policy. References received from differentministries of the Government of India on issuessuch as trade facilitation, tariffs, budgetproposals, international cooperation in theenergy sector are attended to with in-depthanalysis. It has also been involved in providingextensive review on policy issues relating togas pipelines, preparation of the XI Plandocument through participation in various sub-committees, research and policy formulation onalternative energy sources, etc.

Competition Issues

The Petroleum & Natural Gas Regulatory Boardcarries the mandate for ensuring uninterrupted

and adequate supply of petroleum products andnatural gas across the country through severalregulations. The Board also enforces theprovisions of service obligations for the retailoutlets and the players in the downstream oil &gas sector. All operations of IndianOilaccordingly come under the jurisdiction of theBoard and the Ministry of Petroleum & NaturalGas.

Community Welfare Programmes

As a responsible corporate citizen, IndianOil hasbeen making substantive contributions tonational causes, social welfare and communitydevelopment programmes throughout the

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IndianOil Scholarships... spreading the light of education.

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country, particularly in improving the qualityof life of the people in the vicinity of its majorunits and installations.

Currently, the organisation has the avowedpolicy of setting aside up to 0.75% of its netprofits of the previous year towardscontributions and community developmentactivities taken up in a planned manner basedon the needs of the local communities.

A quarter of the funds allocated for communitydevelopment are spent under the SpecialComponent Plan (SCP) and Tribal Sub-Plan (TSP)for improving the quality of life of the peopleof SCs and STs.

Representative activities supported during theyear 2007-08 are:

• Contribution to India Vision Foundation'sWeaving Behind Bars programme initiatedby Dr. Kiran Bedi for rehabilitation of womeninmates of Tihar Jail, New Delhi.

• Contribution to Udayan Care, Delhi towardsa shelter home for girls at Sant Nagar, Delhi,named as IndianOil Udayan Ghar.

• Contribution to the Governments of Assamand Bihar towards flood relief measures.

• Sponsored 1,000 operations for poliopatients at Narayana Sewa Sansthan (Trust),Udaipur.

• Sponsored education of 275 underprivilegedgirl students of Government schools inAndhra Pradesh through Nanhi Kali initiativeof KC Mahindra Education Trust and NaandiFoundation.

• Financial assistance to Vision ResearchFoundation (Sankara Nethralaya, Chennai)for construction of one whole floor of theresearch institute at Chennai.

• Vehicle for CanSupport Centre, Faridabad, forhome-based palliative care programme forthe people with cancer and other life-limiting conditions in Delhi National CapitalRegion (NCR).

• Mobile science laboratory for VivekanandaKendra Vidyalaya Trust, Arunachal Pradesh

• Two eye screening and cataract operationcamps, at Paradeep and Haldia, throughAnugraha Drishtidaan, New Delhi

• 24 health check-up camps covering about8700 people were conducted by Guwahatiand Digboi refineries.

• Contributed towards vocational trainingclasses on cell-phone repair and computerhardware maintenance for youth in Assam

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• Donated 17 delivery vehicles for ISKCONAkshaya Patra Food Relief Foundation fordistribution of mid-day meals to the studentsof Government schools in Delhi NCR andMathura.

As part of its CSR activities, IndianOil has been sponsoring the annual trans-Himalayan motorbike expedition of the Bikers forIntegration & Conservation of Environment (BICE), Delhi, for many years now.

• Donated 12 ambulances/mobile healthclinics in various parts of the country foruse of patients in remote areas.

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Products are the focal points in a complexweb of material and energy flows. Product-

focussed approaches require a company to takea systems perspective to gain a fullunderstanding of the implications of itsproducts. This perspective enables the companyto look beyond its plant gates to understandthe environmental and resource implications ofthe materials, the energy supply options chosenas well as the transportation, distribution, useand end of life of its products. Productresponsibility, therefore, entails responsibilitiesof the producers for their products, which extendto post-consumer stage.

IndianOil is dedicated to minimising the riskand adverse impact associated with themanufacture, use and disposal of its products.

Product Responsibility Strategy& Management Approach

Among its priorities is production of essentialcommodities in a manner that preserves,protects and ensures the safety of people andthe environment by actively identifying thepotential risks while at the same time improvingproduct performance on a continuous basis. Asa part of this endeavour, we have undertakeninvestments valued at several thousand croresof rupees in various product quality improvementprojects at our refineries. Our R&D efforts arealso aimed at improving the quality of ourproduct offerings and reducing theirenvironmental impact.

Quality Management System

At the instance of the Ministry of Petroleumand Natural Gas, Government of India, the oilIndustry has evolved a uniform quality controlprocedure for handling of petroleum products.The industry quality control manual covers theentire range of petroleum products.

While the manual is meant to ensure productquality, standard operating procedures withregard to safety in handling of petroleum

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the marketing & distribution system in acondition that meets the stipulations laid downin the quality control manual.

A well-defined system of quality control checksand documentation exists to ensure thatadequate care is taken to maintain productquality in each step of the supply chain.

Laboratory support is vital in all the aboveactivities and hence lab facilities arecontinuously upgraded with respect to thetesting methodology and capability to test therequisite number of samples of userdepartments.

Research and DevelopmentIndianOil’s world-class R&D Centre, with state-of-the-art facilities, has delivered pioneeringresults in lubricants formulation, refiningprocesses, pipeline transportation, bio-fuels andfuel-efficient appliances. Over the past threedecades, it has developed over 2,200formulations of lubricating oils and greasesmeeting the needs of diverse sectors of theIndian industry. With 12 patents earned during2007-08, the total number of active patents ofIndianOil is 115, of which 58 are registered inIndia.

IndianOil’s in-house technology focus onupgradation of product quality and services atrefineries, pipelines and marketing operationstakes into consideration the associatedenvironmental impact and responsibilities.

Customer FeedbackAt IndianOil, customer satisfaction is seen as akey performance indicator and a differentiatorin business. It is also a part of our commitment

products in general are followed as laid downin the safety & operations manuals of therespective companies and also in the IndustryManual on Acceptance of Product by MarketingCompanies and Related Issues. IndianOil hasdeveloped a robust system to monitor suchstandard procedures being followed at all timesat all its refinery, pipelines and marketinglocations.

RefineriesAll IndianOil refineries have ISO 9001:2000systems certifications, which ensures that theright kind of product quality processes areadopted all through the operations and productbatches are certified to meeting the stringentindustry quality norms at the marketinglocations for further despatches to the market.

Refinery ISO-9001/9002First Certification

Guwahati Sept. ’95

Barauni Oct. ’95

Gujarat May ’95

Haldia Oct. ’94

Mathura Sept. ’95

Digboi Oct. ’96

Panipat Jan. 2000

Marketing locations

Petroleum products, whether indigenouslyproduced at local refineries or imported, arereceived in accordance with the respectivespecifications and it is ensured that they enter

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Ensuring quality and quantity at each step of the supply chain.

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to the Government of India in the yearlyperformance contract document known asMemorandum of Understanding (MoU), wheresubstantial weightage is given to ‘customersatisfaction index’ in arriving at the compositeperformance score.

Customer Satisfaction SurveysIndianOil conducts an all-India CustomerSatisfaction Survey on an annual basis. Themajor domains of satisfaction include quality,value, timeliness, efficiency, ease of access,environment, response, frontline servicebehaviours, commitment to customer,innovation etc. These factors are emphasisedfor continuous improvement and for measuringorganisational change and are most often usedin developing the architecture for satisfactionmeasurement as an integrated model.

Other InitiativesBesides the above, IndianOil has initiated anumber of steps across different marketsegments as follows:• Strengthening the coverage and quality of

the retail network through performanceimprovement, relocation and backing up ofhigh-volume retail sales with fleet truckprogramme

• Strengthening the Quality & Quantity (Q&Q)proposition and basic service offerings acrossthe retail network through increased use ofautomation and global positioning system

• Rollout of non-fuel proposition aroundvehicle care and superior frontline serviceas differentiators

• Creation of a dedicated group of executivesto focus on customer loyalty programmes

• Creation of Key Accounts Managers forpriority industrial customers

• Improvement of sales force efficiency andeffectiveness through skills update

• Establishing emergency service cells for LPGcustomers

• Promoting higher service standards in LPGretailing network by recognising ‘stardistributors’ in different markets

• Providing customised product-servicesolutions to domestic and internationalairlines

• Establishing IndianOil as a distinct brandwith diverse product portfolios in the marketplace

Marketing CommunicationIndianOil uses marketing communication toensure consistency of its messages with thedelivery of its products and services, and as atransition from customer service to customerrelations. In branding initiatives, marketingcommunication offers opportunities to keep intouch with stakeholders.Through marketing communication initiatives,IndianOil focusses on service and safetyorientation of its products, demandmanagement, selection of dealers & distributors,details of customer service cell and emergencyservice cells operating in different areas,branding of products and services, legal mattersrequiring public notice, etc.

Recognition• Bagged the ‘Retailer of the Year’ award in

the category of ‘Rural Impact’ at Asia RetailCongress and the award for the ‘Most AdmiredRetailer of the Year’ in the ‘Rural Retailing’

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XTRACARE...with a bouquet of value-added services.

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category at the India Retail Forum-2007 forits novel business model of Kisan Seva Kendraretail stations

• XTRAPOWER fleet card was presented withthe Best Loyalty Award at the Brand LoyaltySummit

• Improved its ranking from 97 in 2006 to 93in 2007 in The Economic Times Brand Equityannual survey of India’s Most Trusted Brands;it climbed one step to the 7th position amongthe top 10 service brands

• IndianOil’s Corporate IS set-up at Gurgaonhas been certified by M/s. SAP Singapore as‘Certified Customer Competence Centre’ as atestimony of adoption and practice of

efficient and effective processes andprocedures for SAP software support andservices

• Won two prestigious awards for uniquebusiness continuity solutions, excellence andinnovations — SAP Ace Award (Award forCustomer Excellence) for the year 2007 fromSAP AG, and the national award for‘Exemplary use of ICT by Public SectorUndertakings’ under the aegis of the Ministryof Information Technology, Govt. of India

• Won the prestigious international PTAK prizefor supply chain excellence from theInternational Supply Chain EducationAlliance, USA

Kisan Seva Kendra...facility providers for the rural populace.

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Swagat...large-format retail stations for motorists on highways.

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Combining corporate social responsibility agenda with business offerings.

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This is the third edition of IndianOil’s yearlySustainability Report. For the first time, we

have prepared it in line with the GRI-G3guidelines, aiming at Application Level-A as anentirely in-house effort. We propose to buildon this format in the coming years through amore formal materiality assessment processwhere decisions on corporate responsibilitiesand priorities will include inputs from otherstakeholders such as shareholders, employees,etc.

Sustainability is central to the way IndianOiloperates, thinks and charts its future growthplans. Our actions echo Hon’ble Prime Minister’sclarion call to the Indian corporates toparticipate in the nation’s progress on the pathof inclusive growth, benefiting all sections ofsociety in equal measure.

As a leading public sector enterprise of India,IndianOil has successfully combined itscorporate social responsibility agenda with itsbusiness offerings, meeting the energy needsof millions of people everyday across the lengthand breadth of the country, traversing a diversityof cultures, difficult terrains and harsh climaticconditions. We take pride in our continuousinvestments in innovative technologies andsolutions for sustainable energy flow and

economic growth and in developing techno-economically viable and environment-friendlyproducts & services for the benefit of itsconsumers.

This triple bottom line (People-Planet-Profits)approach of our corporate agenda, reflected inthe past two editions of Sustainability Report,has elicited much appreciation from our well-wishers, for which we are grateful. This timetoo, we look forward to your valuable views,comments and suggestions on our endeavourto bring continuous improvement in ourofferings.

It would be my pleasure to hear from you [email protected]

Thank you.

(V.C. Agrawal)Director (Human Resources)

Epilogue

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SCOPE OF THE REPORT

This Sustainability Report, the first in linewith GRI-G3 (Global Reporting Initiative)

guidelines, provides descriptions, data andperspective on IndianOil’s performance onsocial, economic and environmental parametersfor the year 2007-08. The initiatives andcompliances reflect our honest efforts towardsachieving the objective of sustainabledevelopment.The reporting data relates to the major domesticbusiness lines of IndianOil, primarily carried outthrough its four Divisions, viz., Refineries,Pipelines, Marketing and R&D. We have alsosuitably covered an account of our growthbeyond core business along the expanded areasof operations, viz., Petrochemicals, OilExploration & Production (E&P) and GasMarketing. The reporting data is based on therecordable database of the activities carried outin the various operational areas. This report doesnot include details of IndianOil’s joint venturesand subsidiaries.We request our readers to keep the following inmind while reading the report.i). IndianOil has significant operations at

different consumer locations known as directcustomers (viz., Government agencies andprivate industry locations) where we do nothave much control; hence, the datapertaining to consumer locations has notbeen dealt with in this report.

ii). This report aims to properly reflect theimplications, risks and challenges inherentin each of the Company’s business lines.

Materiality, Boundary, Limitations andCompletenessIn drafting this report, IndianOil has identifiedand selected the material aspects of its activities

within the broad scope of corporateresponsibility. The Company expanded upon theapproach to each issue in accordance with thevarious channels for dialogue, stipulations, andadvice available from its majority stakeholdersfrom time to time. The Government of India ownsa majority of IndianOil shares at 80.35%. TheBoard of Directors of the Company dischargesits responsibilities through devolution of powersunder several provisions of empowermentconferred upon it from time to time. TheGovernment of India, besides issuingadministrative and functional directives, alsohas in place several policy guidelines that impactthe Company’s operations and its socio-economic-environmental agenda. These issueshave been duly considered while addressing themateriality of the report.

The completeness principle requires that theassurance process evaluate the extent to whichthe reporting organisation can identify andunderstand its sustainability performanceassociated with activities, products and services,for which it has management and legalresponsibility. This report aims to properlyreflect the implications, risks and challengesinherent in each of the company’s business lines.

Report Application Levels

G3 disclosure C C+ B B+ A A+level

Profile Report Report 3 ReportManagement externally externally 3 externallyApproach assured assured 3 assuredPerformanceindicators

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AFS – Aviation Fuel Station; ASSOCHAM – Associated Chambers of Commerce andIndustry; BOD – Biological Oxygen Demand; CIE – Council of Indian Employers;CII – Confederation Indian Industry; CISF – Central Industrial Security Force; CSR– Corporate Social Responsibility; CVC – Central Vigilance Commission; DPE –Department of Public Enterprises; E & P – Exploration and Production; EBP –Ethanol Blended Petrol; ERM – Enterprise Risk Management; ETP – EffluentTreatment Plant; FCC – Fluidised Catalytic Cracker; GCC – General Conditions ofContract; GRI – Global Reporting Initiatives; GRM – Gross Refining Margin; IiPM– IndianOil Institute of Petroleum Management, Gurgaon; IMA – IndianOilManagement Academy, Haldia; IMCL – IndianOil Management Centre for Learning,Mumbai; IndianOil – Indian Oil Corporation Ltd.; ITI – Industrial Training Institutes;KSK – Kisan Seva Kendra; LAB – Linear Alkyl Benzene; LNG – Liquefied NaturalGas; LPG – Liquefied Petroleum Gas; LTC – Leave Travel Concessions ; LTS – LongTerm Settlement; MBN – Million Thousand British Thermal Units/Barrel/EnergyFactor; MINAS – Minimum National Standard set by the Ministry of Environment

& Forests and the Central Pollution control Board for use of water resources andquality of effluent discharge; MoP&NG – Ministry of Petroleum and Natural Gas;MoU – Memorandum of Undertaking, Memorandum of Understanding; NELP –New Exploration & Licencing Policy; NGO – Non-Governmental Organisations;NHRD – National Human Resource Development Network; NREL – NationalRenewable Energy Laboratory; PetroFed – Petroleum Federation of India; PTA –Purified Terephthalic Acid; R & D – Research & Development; RO – Retail Outlets;S,H&E – Safety, Health & Environment; SC / ST / OBC – Scheduled Caste /Scheduled Tribe / Other Backward Castes; SCOPE – Standing Conference of PublicEnterprises; SCP – Special Component Plan; SIGC – Shareholders’ / InvestorsGrievance Committee; SRFT – Standard Refinery Fuel Tonnes; STEPS – SustainableTransportation Energy Pathways Programme; TBL – Triple Bottom Lime; TERI –The Energy & Resources Institute; TII – Transparency International India; TPM –Total Productive Maintenance; TSP – Tribal Sub-Plan; TSS – Total Suspend Solids;WIPS – Forum of Women In Public Sector

Index

List of Abbreviations and Acronyms

GRI Reference Report Reference PageStrategy & 1.1 CEO Statement A word from our Chairman 4Analysis 1.2 Key Impacts Key impacts risk & opportunities 8Organisation 2.1 Name of reporting organisation About IndianOil 3Profile 2.2 Major brands & products Brand Leadership 12

2.3 Operational structure Corporate Governance 132.4 Location of headquarters Contact information 742.5 Countries of operation Scope of the Report 682.6 Nature of ownership and legal form Corporate Governance 132.7 Markets served Products & services 92.8 Scale of organisation About IndianOil 32.9 Major changes to operation IndianOil philosophy in Corporate Governance 162.10 Awards received in Reporting Period Recognitions 24, 40,

46, 61Report Parameters 3.1 Reporting period Scope of the report 68Governance, 3.2 Date of previous report Epilogue 67Commitments & 3.3 Reporting cycle Scope of the report 68Engagement 3.4 CR Contact person Contact information 74

3.5 Defining report content Scope of the report 683.6 Boundaries of report Scope of the report 683.7 Limitations on report scope Scope of the report 683.8 Basis for reporting on joint ventures Scope of the report 683.9 Data measurement techniques Scope of the report 683.10 Restatements of information Not applicable -3.11 Significant changes from previous report Not applicable -3.12 Tables for standard disclosures GRI content indent 693.13 Assurance Not carried out by external agencies -

GRI Reference 4.1 Governance structure Corporate governance 134.2 Chair/executive officer status Corporate governance 134.3 Number of independent/non-executive members Corporate governance 134.4 Mechanisms for providing recommendations Corporate governance 134.5 Link between compensation and performance Market presence 304.6 Determining board qualifications Corporate governance 134.7 Process to address conflict of interest Corporate governance 134.8 Internal mission/values statement IndianOil philosophy in Corporate Governance 1, 164.9 Broad identification of opportunities, risks, performance Key impacts, risk and opportunities 84.10 Evaluating board performance Corporate governance 134.11 Precautionary principle Precautionary approach 194.12 External initiatives endorsed Precautionary approach 194.13 Principal membership Charters & memberships 194.14 List of stakeholders Stakeholders engagement 194.15 Basis for identification Stakeholders engagement 194.16 Approaches to engagement Stakeholders engagement 194.17 Key issues raised through engagement Key sustainability issues 17

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GRI Reference Report Reference PageDisclosure of Economic Economic strategies & management approach 26Management Environment Environment strategies & management approach 32Approach Labour Practices Labour Practices strategies & management approach 42

Human Rights Human rights strategies & management approach 48Community CSR strategies & management approach 52Product Responsibility Product Responsibility strategies & management 58

approach

Economic:Economic EC 1 Direct economic value generated and distributed, Performance at a Glance 28Performance including revenue, operating costs, employeeIndicators compensation, donations and other community

investments, retained earning, and payments tocapital providers and governments

EC2 Financial implications and other risks and opportunities - -for the organisation’s activities due to climate change

EC3 Coverage of the organisation’s defined benefit plan Benefits schemes 27obligations

EC4 Significant financial assistance received from government Not applicable -EC5 Range of ratios of standard entry level wage compared Market presence 26

to local minimum wage at significant locations of operationEC6 Policy, practices, and proportion of spending on Market presence 26

locally-based suppliers as significant locations of operationEC7 Procedures for local hiring and proportion of senior Market presence 27

management hired from the local community at locationsof significant operation

EC8 Development and impact of infrastructure investments and Community Welfare Activities 53services provided primarily for public benefit throughcommercial, in-kind, or pro bono engagement

EC9 Understanding and describing significant indirect economic Economic strategies & management approach 26impacts, including the extent of impacts

Environment:Environmental EN1 Materials used by weight or volume Environment reporting & performance indicators 32Performance EN2 Percentage of materials used that are recycled input materials Waste management 36Indicators EN3 Direct energy consumption by primary energy source Energy Conservation 33

EN4 Indirect energy consumption by primary source Energy Conservation 33EN5 Energy saved due to conservation and efficiency improvements Energy Conservation 33EN6 Initiatives to provide energy-efficient or renewable energy Energy Conservation 33, 39

based products and services, and reductions in energyrequirements as a result of these initiatives

EN7 Initiatives to reduce indirect energy consumption and Energy Conservation 33reduction achieved

EN8 Total water withdrawal by source Water & Effluents 33EN9 Water sources significant affected by withdrawal of water Water & Effluents 33EN10 Percentage and total volume of water recycled and reused Water & Effluents 33EN11 Location and size of land owned, leased, managed in, Green Belts 36

or adjacent to, protected areas and areas of high biodiversityvalue outside protected areas

EN12 Description of significant impacts of activities, products, Green Belts 36and services on biodiversity in protected areas and areasof high biodiversity value outside protected areas

EN13 Habitats protected or restored Green Belts 36EN14 Strategies, current actions, and future plans for managing - -

impacts on biodiversityEN15 Number of IUCN Red List species and national conservation - -

list species with habitats in areas affected by operations,by level of extinction risk

EN16 Total direct and indirect greenhouse gas emission by weight Emissions 36EN17 Other relevant indirect greenhouse gas emission by weight Emission 36EN18 Initiatives to reduce greenhouse gas emission and reductions Emission 36

achievedEN19 Emission of ozone-depleting substances by weight Emission 36EN20 NO, SO, and significant air emission by type and weight Emission 36EN21 Total water discharge by quality and destination Effluent quality data 35

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GRI Reference Report Reference Page

EN22 Total weight of waste by type and disposal method Effluent quality data 35EN23 Total number and volume of significant spills. - -EN24 Weight of transported, imported, exported, or treated Waste management 36

waste deemed hazardous under the terms of the BaselConvention Annex I,II,III & IV, and percentage of transportedwaste shipped internationally.

EN 25 Identity, size, protected status, and biodiversity value Waste management 36of water bodies and related habitats significantly affectedby the reporting organisation’s discharges of water and runoff.

EN26 Initiatives to mitigate environmental impacts of products Other thrust areas 39and services, and extent of impact mitigation.

EN 27 Percentage of products sold and their packaging materials Quality management system 58that are reclaimed by category

EN28 Monetary value of significant fines and total umber of Quality management system 58non-monetary sanctions for non-compliance with environmentallaws and regulations.

EN29 Significant environmental impact of transporting products Quality management system 58and other goods and materials used for the organisation’soperations, and transporting members of the workforce.

EN30 Total environmental protection expenditures and Product Responsibility Strategy 58investments by type. and Management Approach

Labour:Labour Practices LA1 Total workforce by employment type, employment Employees 19and Decent Work contract, and region.Performance LA2 Total number and rate of employee turnover by age group, Workforce diversity & opportunities 45Indicators gender, and region

LA3 Benefits provided to full-time employees that are not Benefits schemes 27provided to temporary or part-time employees, by majoroperations

LA4 Percentage of employees covered by collective bargaining Employment engagement 42agreements

LA5 Minimum notice period(s) regarding operational changes, Employment engagement 42including whether it is specified in collective agreements

LA6 Percentage of total workforce represented in formal joint Safety and occupational health 44management worker health and safety committees thathelp monitor and advise on occupational health andsafety programs

LA7 Rates of injury, occupational diseases, lost days, absenteeism, Safety and occupational health 44and number of work-related fatalities by region

LA8 Education, training, counselling, prevention, and risk-control Safety and occupational health 44programs in place to assist workforce members, their families,or community members regarding serious diseases.

LA9 Health and safety topics covered in formal agreements Safety and occupational health 44with trade unions.

LA10 Average hours of training per year per employee by Training & development 45employee category

LA11 Programs for skills management and lifelong learning that Training & development 45support the continued employability of employees andassist them in managing career endings

LA12 Percentage of employees receiving regular performance Training & development 45and career development reviews

LA13 Composition of governance bodies and breakdown of Employee engagement 45employees per category according to gender, age group,minority group members, and other indicators of diversity

LA14 Ratio of basic salary of men to women by employee category. Market presence 30

Human Rights:Human Rights HR1 Percentage and total number of significant investment Ethic conduct & discrimination 48Performance agreements that include human rights clauses or that haveIndicators undergone human rights screening

HR2 Percentage of significant suppliers and contractors that have Suppliers 48undergone screening on human rights and action taken.

HR3 Total hours of employee training on policies and procedures Training of security personnel 50concerning aspects of human rights that are relevant tooperations, including the percentage of employees trained.

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GRI Reference Report Reference PageHR4 Total number of incidents of discrimination and actions taken Gender Sensitivity 50HR5 Operations identified in which the right to exercise freedom Ethic conduct & discrimination 48

of association and collective bargaining may be at significantrisk, and action taken to support these rights.

HR6 Operations identified as having significant risk for incidents Child labour 50of child labour, and measures taken to contribute to theelimination of child labour.

HR7 Operations identified as having significant risk for incidents Child labour 50of forced or compulsory labour, and measures to contributeto the elimination of forced or compulsory labour.

HR8 Percentage of security personnel trained in the organisation’s Training of security personnel 50policies or procedures concerning aspects of human rightsthat are relevant to operations.

HR9 Total number of incidents of violations involving rights of Not applicable -indigenous people and actions taken.

Community:Society SO1 Nature, scope and effectiveness of any programs and practices CSR strategies & management approach 52Performance that assess and manage the impacts of operations onindicators communities, including entering, operating, and exiting.

SO2 Percentage and total of business units analyzed for risk Vigilance 52related to corruption.

SO3 Percentage and employee trained in organisation’s Vigilance 52anti-corruption policies and procedures.

SO4 Action taken in response to incidents of corruption. Vigilance 52SO5 Public policy positions and participation in public

policy development and lobbying. Participation in Public policy 53SO6 Total value of financial and in-kind contributions to political Participation in Public policy 53

parties, politicians, and related institutions by countrySO7 Total number of legal actions for anticompetitive behaviour, Competition issues 53

ant-trust, and monopoly practices and their outcomes.SO8 Monetary value of significant fines and total number of Competition issues 53

non-monetary sanctions for non-compliance withlaws and regulations.

Productresponsibility:Product PR1 Life cycle stages in which health and safety impacts of products Quality management system 58Responsibility and services are assessed for improvement, and percentage ofPerformance significant products and services categories subject to suchIndicators procedures

PR2 Total number of incidents of non-compliance with regulations Quality management system 58and voluntary codes concerning health and safety impacts ofproducts and services during their life cycle, by type of outcomes.

PR3 Type of product and service information required by procedures Quality management system 58and percentage of significant products and services subject tosuch information requirements

PR4 Total number of incidents of non-compliance with regulations Quality management system 58voluntary codes concerning product and service informationand labelling, by type of outcomes.

PR5 Practices related to customer satisfaction, including results Customer satisfaction Surveys 61of surveys measuring customer satisfaction

PR6 Programs for adherence to laws, standards, and voluntary Marketing communications 61codes related to marketing communication, includingadvertising, promotion, and sponsorship by type of outcomes

PR7 Total number of incidents of non-compliance with Marketing communications 61regulations voluntary codes concerning marketingcommunications, including advertising, promotion,and sponsorship by type of outcomes.

PR8 Total number of substantiated complaints regarding Customer Feedback 59breaches of customer privacy and losses customer data.

PR9 Monetary value of significant for non-compliance with laws Marketing communications 61and regulations concerning the provision and use ofproducts and services.

vision - iocl.com€¦ · disruptions in the supply chain • carrying out rigorous energy audits...

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