Indian Oil Corporation Ltd.

An Internship Report

Giselle Charisma Sequeira

SSN: 889-94-0978

In Partial Fulfillment of the Master’s Program in Business Administration, Ohio University, Athens, USA

OHIO University Christ College Academy for Management Education

Christ College Campus,

Hosur Road, Bangalore-29

April 2007

ACKNOWLEDGEMENTS

Completing a task is never a solo effort. It is often the result of invaluable

contributions by a number of individuals in a direct or indirect manner, which helps

in the shaping and achievement of success.

Firstly, I would like to express my sincere gratitude to Mr. Nilesh Nekaljay, Manager

(T&D) for granting me the opportunity to undertake an internship at the Indian Oil

Corporation Ltd. (Marketing Division, Mumbai).

I am extremely grateful to my project guide, Mr. Vigyan Kumar, Manager (Retail

Sale) for his encouragement and patience throughout the duration of this project.

Without his vision, guidance and support this report would not have materialized.

I would also like to deeply thank the various people at IndianOil who, during the

period of my internship, provided me with useful and helpful assistance. Without

their care and consideration this report would not have been completed.

I am thankful to the Internship Coordinators at Ohio University Christ College, Dr.

Amalendu Jyotishi and Mr. Girish M. for their invaluable support and guidance during

the internship period.

Last but not the least, I would like to thank my parents for their inestimable love,

support and encouragement which gave me the confidence and determination to

carry out this project.

EXECUTIVE SUMMARY

The deregulation of the Indian Petroleum sector in 1999 brought about a major

change in the way Petroleum companies conduct their business. This sector has

been exposed to new market forces and competition has grown enormously. With

the entry of private players, the consumers’ demands have increased. The existing

players have thus come to recognize the need to evolve at a quick pace and to be

market driven, service driven and most importantly relationship driven. Loyalty

programs is the new trend which is catching up at a relatively fast pace in India.

Indian Oil Corporation Limited (IOCL) is running its own loyalty based fleet card

program known as the XTRAPOWER Fleet Card Program. Launched in March 2004,

this program has emerged as the largest and most wide-ranging fleet card program

in the country and has crossed the mark of one million customers.

In spite of this program’s huge success and active promotional schemes being

undertaken by IOCL, the current customers are not using the cards to the full

extent.

The main objective of my project at IOCL was to, thus, study the XTRAPOWER Fleet

Card Program Proposition and to recommend steps to be taken to enhance card

usage.

This project report includes the methodology of the research undertaken, findings

and solutions to the current problems being faced by customers.

TABLE OF CONTENTS

Particulars Page No.

The Oil Industry in

India…………………………………………………………………………………………5

Oil Industry Structure In

India……………………………………………………………………..6

Indian Oil Corporation

Limited…………………………………………………………………………………7

Vision, Mission &

Values……………………………………………………………………………...8

Organization

Structure…………………………………………………………………………………9

Business of

IndianOil………………………………………………………………………………….10

IndianOil Products………………………………………………………....

…………………………14

IndianOil

Brands……………………………………………………………………………………….16

Group of

Companies………………………………………………………………………………….22

Financial

Analysis………………………………………………………………………………………27

Project Findings……………………………………………………………………..

……………………………28

Petrol Retail & Consumer Loyalty In

India……………………………………………………29

XTRAPOWER Fleet Card

Program……………………………………………………………….31

1. Program

Details…………………………………………………………………………………..32

2. Additional Information on Fleet

Tracking………………………………………………..37

3. Additional Information on Reward

Program…………………………………………….38

4. Additional Information on Insurance

Cover…………………………………………….40

Objective & Scope of the

Study………………………………………………………………….42

Market Research

Methodology……………………………………………………………………42

1. Defining the Research

Problem………………………………………………………………42

2. Selecting & Establishing the Research

Design………………………………………….43

3. Collecting & Analyzing

Data…………………………………………………………………..44

4. Statistical Inference &

Findings………………………………………………………………46

Total Customers Contacted [Diagram]……………………………………………..46

Problems Faced by Inactive Customers [Diagram]…………………………....47

Problems Faced by Active Customers (Customers

Temporarily Inactive During Oct-Nov, 2006) [Diagram]…………….……….47

Reasons Why Customers are Not using the Cards………………………..……48

Branches of Delhi Assam Roadways Corp. Ltd. (DARCL)

Contacted and Reasons for Cards Not Being Used………………………………

50

SWOT Analysis…………………..

……………………………………………………………………..52

Recommendations……………………………………………………………………………

………..53

Conclusion & Future Line of Work…………………………………………………..

…………..56

References………………………………………………………………………………………………

…………..58

Appendix……………………………………………………………..

……………………………………………..59

Appendix 1………………………………………………………..

……………………………………..59

Appendix

2………………………………………………………………………………………..……..61

THE OIL & GAS INDUSTRY IN INDIA

India is the sixth largest consumer of oil. There exists a huge gap between the

demand and supply of oil and gas in India. The country imports more than 70% of

its crude oil requirements. In the year 2005, oil and gas accounted for 38% of

primary energy consumption in India, followed by coal at 55%. The oil and gas

industry is broadly classified into Upstream, Midstream and Downstream segments.

Midstream operations are usually included in the downstream category. The Indian

Oil Industry comprises of 18 refineries with a total refining capacity of 132.47

MMTPA as of April 1, 2006. During the same year, the consumption of crude oil and

that of natural gas was estimated at 130.11 MMT and 31.02 BCM respectively. The

production and consumption of petroleum products was estimated at 119.75

MMTPA and 111.92 MMT respectively. India has recently emerged as net exporter of

petroleum products.

UPSTREAM SECTOR:

The upstream sector, also known as the exploration and production (E & P)

sector, is concerned with the search for potential underground or underwater

oil and gas fields, the drilling of exploratory wells, and subsequently operating

in the wells that recover and bring the crude oil and/or raw natural gas to the

surface.

MIDSTREAM SECTOR:

The midstream sector processes, stores, markets and transports commodities

such as crude oil, natural gas and natural gas liquids (NGLs) such as ethane,

propane and butane.

DOWNSTREAM SECTOR:

The downstream sector includes oil refineries, petrochemical plants, petroleum

product distribution, retail outlets and natural gas distribution companies. The

downstream sector reaches thousands of products such as gasoline, diesel, jet

fuel, heating oil, asphalt, lubricants, synthetic rubber, plastics, fertilizers,

antifreeze, pesticides, pharmaceuticals, natural gas and propane to

consumers.

OIL & GAS INDUSTRY STRUCTURE IN INDIA

Oil and Natural Gas Corporation Ltd. (ONGC)

UPSTREAMOil India Ltd.

Indian Oil Corporation Ltd. (IOCL)

Reliance Industries Ltd. (RIL)

DOWNSTREAM Bharat Petroleum Corporation Ltd. (BPCL)

Hindustan Petroleum Corporation Ltd. (HPCL)

Mangalore Refinery & Petrochemicals Ltd. (MRPL)

GAS TRANSPORT & DISTRIBUTION Gas Authority of India Ltd. (GAIL)

INDIAN OIL CORPORATION LTD.

Company profile:

Formed in 1964 through the merger of Indian Oil Company Ltd. (Estd. 1959) and

Indian Refineries Ltd. (Estd. 1958), Indian Oil Corporation Ltd. (IndianOil) is

presently India’s largest commercial enterprise with a sales turnover of Rs. 1,83,204

crore (US$ 41 billion) and profits of Rs. 4,915 crore (US$ 1.10 billion) in the fiscal

year 2005.

IndianOil also enjoys the status of being the highest ranked Indian company in the

prestigious Fortune ‘Global 500’ listing, having moved up 17 places to the 153rd

position this year based on the performance of the fiscal year 2005. In addition to

being the 21st largest petroleum company in the world, it also tops the list of the

petroleum trading companies among the National Oil Companies in the Asia-Pacific

region.

IndianOil, along with its subsidiaries, accounts for a market share of 47% in

petroleum products, 41% refining capacity and a petroleum product capacity of

51% in India.

In the year 2005-06, the IndianOil Group sold 54.6 million tonnes through exports.

The IndianOil Group of companies presently owns and operates 10 out of 18

refineries with a combined refining capacity of 54.20 million tonnes per annum (1.1

million barrels per day). These include two refineries of the subsidiary Chennai

Petroleum Corporation Ltd. (CPCL) and one of the Bongaigaon Refinery &

Petrochemicals Ltd. (BRPL). The Corporation’s cross-country crude oil and product

pipeline network spanning over 9,000 km meets the vital energy needs of the

country.

VISION, MISSION & VALUES

Vision

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

leadership and a strong environment conscience, playing a national role in oil

security& public distribution.

Mission

To achieve international standards of excellence in all aspects of energy and

diversified business with focus on customer delight through value of products

and services, and cost reduction.

To maximize creation of wealth, value and satisfaction for the stakeholders.

To attain leadership in developing, adopting and assimilating state-of- the-art

technology for competitive advantage.

To provide technology and services through sustained Research and

Development.

To foster a culture of participation and innovation for employee growth and

contribution.

To cultivate high standards of business ethics and Total Quality Management

for a strong corporate identity and brand equity.

To help enrich the quality of life of the community and preserve ecological

balance and heritage through a strong environment conscience.

Values

IndianOil nurture a set of core values, which are:

Care

Innovation

Passion

Trust

ORGANIZATION STRUCTURE

The organization structure of the Indian Oil Corporation Ltd. is divided on the basis

of the company’s functions comprising of pipelines, refineries, research &

development, marketing, human resource, finance, and planning and business.

Each division is headed by a director with general managers and executive directors

working under him.

On the basis of my observations, I can state that the organization structure of

IndianOil is fairly flat with few levels of intervening management between staff and

managers. Rather than being closely supervised by many layers of management,

workers are more directly involved in the decision making process concerned with

the company. There are many individual units within the organization which enables

the existence of a horizontal organization structure. Employee involvement is thus

encouraged through a decentralized decision making process.

BUSINESS OF INDIANOIL

Refining

Pipelines

Marketing

Research & Development

Petrochemicals

Gas

Exploration & Production

Refineries:

IndianOil presently owns and operates 10 out of India’s 18 refineries with a current

combined capacity of 54.20 million tonnes per annum (1.1 million tonnes per day).

During the year 2005-06 IndianOil refineries recorded a crude oil throughput of

38.52 million tonnes. The seven refineries together achieved a capacity utilization

of 93.1%, higher than the Asia-Pacific average of 91.5% which also happens to be

the highest in the last six years. The fiscal year 2005 also witnessed IndianOil

becoming the first public sector organization in the country to have its own ship

Chartering Cell, which is functioning under the Refineries Division.

All refinery units are accredited with ISO 9002 and ISO 14001 certifications. The

refineries are as follows:

Guwahati Refinery (Assam)

Digboi Refinery (Upper Assam)

Barauni Refinery (Near Patna, Bihar)

Haldia Refinery (Near Kolkata, West Bengal)

Mathura Refinery (Near Delhi)

Panipat Refinery (Near Delhi)

Koyali Refinery

BRPL (Bongaigaon Refinery & Petrochemicals Ltd.)

CPCL (Chennai Petroleum Corporation Ltd.)

Pipelines:

IndianOil owns and operates a pipeline network of 9,024 km, the largest network of

crude oil and product pipelines in India. This widespread network of pipelines

achieved the highest ever throughput of 45.35 million metric tonnes during the year

2005-06.

The major pipelines of IndianOil are:

Salaya Mathura Pipeline

Kandla-Bhatinda Pipeline

Mathura-Jalandhar Pipeline

Guwahati-Siliguri Pipeline

Barauni-Kanpur Pipeline

Haldia-Barauni Pipeline

Koyali-Roorkee Pipeline

Marketing:

IndianOil has a wide spread marketing network with over 23,000 sales points. These

include petrol/diesel stations, consumer outlets, lube distributors, SERVO shops,

SKO/LDO dealers, LPG distributors. The regional offices are in charge of the North,

East, West and Southern Regions of India, and Assam Division supplements

operations in the North-East. State level, Divisional and Indane Area offices have

also been set up in each region. IndianOil commands a dominant market share in

the petroleum retail segment in India and has over 10,144 petrol and diesel stations

spread throughout the country along with an additional 3,272 of the subsidiary

company, IBP Co. Ltd.

Research & Development:

Operating the first R&D Centre to get ISO 9002 and 14001 Certifications, IndianOil

boasts of having the best Research & Development Centre in Asia which is also one

of the finest in the world. It has been involved in world-class petroleum research

and is carrying out extensive work on refinery processes and transportation of

pipelines.

IndianOil’s R&D Centre developed 85 cost-effective formulations during the year,

out of which 74 were commercialized. Marking a new milestone in the march

towards a Hydrogen-fuelled

economy, the R&D Centre commissioned IndianOil’s first Hydrogen-CNG (H-CNG)

dispensing station in October 2005.

Petrochemicals:

IndianOil has been continuously striving for growth by incorporating its core

business with opportunities available in the petrochemicals sector. The company is

currently executing a plan to achieve Rs. 30,000 crore (US$ 6.8 billion) investment

by the year 2011-12. In order to implement this plan, a world-scale Linear Alkyl

benzene (LAB) plant at the Gujarat Refinery and an integrated Paraxylene/Purified

Terephthalic Acid (PX/PTA) plant at Panipat are already in operation. A Naphtha

Cracker with downstream polymer units, designed to produce 8,00,000 tonnes per

annum of Ethylene and 6,00,000 tonnes per annum of Propylene is coming up at

Panipat. In order to strengthen its presence in the petrochemicals sector, IndianOil

also plans to develop a refinery cum petrochemicals complex at Paradip on the east

coast of India.

Gas:

As a step towards expanding its business in the Natural Gas sector, IndianOil has

signed an MOU with Iran to implement the import of 1.75 million tonnes of LNG per

annum starting from the year 2009 onwards. The corporation is already marketing

1.43 million tonnes per annum.

IndianOil has entered into a joint venture with GAIL (India) Ltd. called Green Gas

Ltd. in 2005 to distribute city gas. This project initially launched in Agra and

Lucknow, is another emerging growth area for IndianOil.

Entry in the shipping business is being actively pursued in order to implement the

corporation’s strategy to participate in the entire gas value chain.

IndianOil has also embarked on a pilot project to supply LNG through cryogenic

road/rail tankers as the limited gas pipeline infrastructure in the country presents

good opportunities in this area.

Exploration & Production (E&P):

Having participated actively in the bidding rounds to increase the indigenous

production of Oil, IndianOil, under the New Exploration Licensing Policy (NELP) in

consortium with other companies has bagged nine blocks in the first three rounds.

The corporation has also obtained participating interest in on-shore blocks in Assam

and Arunachal Pradesh.

IndianOil has undertaken overseas ventures including two gas blocks in the Sirte

basin of Libya, the Farsi exploration block in Iran and onshore farm-in arrangements

in Gabon.

Opportunities are being explored to acquire a suitable medium-sized E&P company

in order to consolidate its upstream portfolio.

INDIANOIL PRODUCTS

Indian Oil Corporation Limited has a number of products which are as follows:

1. Fuels & Feedstock

Naphtha

Light Diesel Oil

Furnace Oil/ LSHS/ HHS

2. Lubricants & Greases

Automotive Lubricating Oils

Automotive Specialty Oils

Railroad Oils

Industrial Lubricating Oils

Metal Working Oils

Agricultural Spray Oils

Automotive Greases

Railroad Greases

Industrial Greases

Marine Lubricating Oils

Defense Grade Lubes

Industrial Specialty Oils

3. Petrochemicals & Specialties

Benzene

Calcined Petroleum Coke

Hexane

Jute Batching Oil

Paraffin & Microcrystalline Waxes

4. Liquefied Petroleum Gas

5. Motor Spirit/ Gasoline

6. Superior Kerosene Oil/ KERO

7. High Speed Diesel/ Gas Oil

8. Aviation turbine fuel/ Jet Kero

INDIANOIL BRANDS

1. SERVO

2. Indane LPGas

3. AutoGas

4. IndianOil Aviation Service

5. Premium Fuels-XtraPremium & XtraMile

6. XtraPower

7. XtraRewards

8. ‘Swagat’ Highway Flagship Retail Outlets

9. XtraCare

10. Kisan Sewa Kendras

1. SERVO:

IndianOil’s Global Brand, SERVO is also India’s largest selling lubricant brand.

The SERVO range of lubricants is available to customers at over 9,000 Retail

Outlets and a countrywide network of SERVO SSLs and SSAs Bazaar traders.

This range of lubricants is used in nearly all applications covering automotive,

industrial and marine sectors and is approved by major Original Equipment

Manufacturers (OEMs) including new generation cars. Having emerged as a

Superbrand, Servo has genuine oil tie ups with a wide range of companies

like Hyundai, Maruti, Bajaj and Lancer. It is also fast making its mark in

overseas markets such as the UAE, Malaysia, Mauritius, Bangladesh, Bahrain,

Sri Lanka, Nepal, Yemen, Kenya, Kuwait, Burkina Faso, Reunion Islands and

others.

Having been developed at IndianOil’s world-class R&D Centre at Faridabad,

SERVO enjoys a market share of 42% and is sold through over 8,100 IndianOil

petrol/diesel stations, over 1,300 SERVO shops and a nationwide network of

bazaar traders.

2. Indane LPGas:

IndianOil’s Indane LPGas, with a market share of 48% and a network of 4,350

Indane distributors, is widely used in commercial sectors like industries,

hotels & restaurants,

medical labs, etc. It is used daily in over 40 million homes as cooking fuel.

Around 87 bottling plants are spread across the country with a combined

bottling capacity of 3.77 MMTPA. Presently, new and improved 5 kg Indane

LPGas cylinders are being introduced in rural and hilly regions to implement

wider usage by the economically weaker sections.

3. AutoGas:

AutoGas is Liquefied Petroleum Gas (LPG) used as an alternative fuel for the

propulsion of road vehicles. It has an excellent safety record both in terms of

its storage, transportation and use. Extensive safety tests have led to the

conclusion that Autogas is substantially safer than petrol due to its more

robust fuel tank having a resistance to impact damage.

AutoGas has been introduced in Hyderabad, Bangalore and Mumbai through a

network of 48 stations out of an industry total of 103 Auto LPG Dispensing

Stations. This alternative fuel is a good long term business proposition, and

IndianOil intends to further expand its marketing in a big way.

4. IndianOil Aviation Service:

IndianOil’s Aviation Services, with a 68% market share and a network of 95

Aviation Fuel Stations (AFS), meets the fuel and lubricant needs of domestic

and international airlines, Defence Services and private aircraft operators.

IndianOil Aviation service is ISO 9002 certified and is not only the largest

aviation fuel marketer in the country but is also the most preferred supplier

of jet fuel for customers in India and abroad. Besides the domestic airlines,

IndianOil Aviation Service serves over 71 International airlines.

IndianOil Aviation Service caters to over 90% demand of the Indian Defence

Services as well as the sensitive requirements of WIP flights at all airports

and at remote helipads across the Indian subcontinent. It not only maintains

world-class standards in operations and safety but also conforms to the

severe global quality requirements of Aviation fuel storage and handling.

5. Premium Fuels-XtraPremium & XtraMile:

Launched on September 24, 2002, the premium fuels – XtraPremium and

XtraMile (originally IOC Oremium and Diesel Super respectively), mark a new

beginning for IndianOil and offer the benefits of convenience and enhanced

comfort to its customers.

XtraPremium: India’s first 91 octane petrol, XtraPremium is reinforced with

multifunctional additives including ‘Friction Buster”. It is available at over

2,000 Retail Outlets all over the country and has the following attributes:

o Super Mileage and Pick-up

o Enhances cleaning of engines

o Minimizes exhaust emissions

o Restores peak engine power and acceleration

o Reduces maintenance cost

XtraMile: IndianOil’s new generation High Speed Diesel with world-class

additives, XtraMile is the leader in its market segment. Offered at over 4,400

Retail Outlets nationwide, it has the following features:

o Extra mileage leading to a Greater Acceleration

o Faster pick up, resulting in lower Maintenance Costs

o Longer engine life, thus providing Enhanced Overall Performance

o Eliminates engine knockings

6. XtraPower:

XtraPower is a Smart Card based Fleet Card Program, which enables the

cashless purchase of fuel and lubes from designated retail outlets of IndianOil

through flexible prepaid and credit facilities. The fleet card program aimed at

solving the needs of fleet owners/operators offers many benefits which

includes an exciting rewards Program, Personal Accident Insurance Cover and

Vehicle Tracking Facilities.

Launched in March 2004, XtraPower, having crossed the one million mark, has

emerged as the largest fleet card program in the country. It has the widest

Retail Outlet coverage

with over 4,800 Retail Outlets in its network and has locked in about 22% of the

Fleet market share in the retail segment.

Any Fleet Owner/Operator, Corporate or Business Entity owning or operating

commercial vehicles can sign up for membership of the XtraPower Fleet Card

Program at an annual charge of Rs. 100/-. Each fleet owner is issued one

Fleet Control Card and Vehicle-Specific Fleet Cards for every vehicle enrolled

under the program.

Backed by IndianOil/s vast infrastructural network as well as service providers

through its dedicated site www.iocxtrapower.com, XtraPower provides many

facilities to its members through the numerous salient features such as

Flexible Pre-paid and Credit options, Card Limits for better control, Web-bases

allocation of funds on specific cards, Card-to-Card Fund Transfer, Attractive

Reward program, Option for Real Time tracking of vehicles at subsidized cost,

interest-free credit with an option for customers to choose from more than

one credit partners, discounts on purchase through reward points,

redemption of points not only for fuel/lubes but also for a wide range of

consumer goods and novelties and Free Personal Accident Insurance Cover

for fleet owners, Drivers, Co-drivers and Helpers.

The XtraPower Fleet Card Program is thus a solution to every Fleet

Owner/Operator’s Fleet management Problems.

7. XtraRewards:

The country’s first online loyalty card for cash customers, XtraRewards was

launched in Bangalore on the 26th of March 2007.

XtraRewards is a loyalty program for urban vehicle owners through which the

customers can add further value to their purchases by piling up loyalty

points. These loyalty points can also be accrued by customers paying through

credit and debit.

Having been launched in 60 outlets all over Bangalore, this program will be

unveiled later in Chennai followed by Hyderabad. In the first phase, 1,250

outlets of IndianOil and IBP will be automated by September at a cost of Rs.

169 crore to be followed by 1,178 outlets at Rs. 163 crore to be implemented

by the middle of 2008. IndianOil has launched this reward program with an

aim to leverage technology in its retail business in order to provide maximum

facilities and benefits to its customers and also to help the

dealers plan and manage inventory, monitor activities of their fore-court and

to maintain records for dealing with customer complaints and queries online.

The card is backed by Tata Indicom’s CDMA based PDSN technology which

will act as the communication backbone with HDFC Bank providing Point of

Sale Terminals (POST) at the designated IndianOil Retail Outlets.

8. ‘Swagat’ Highway Flagship Retail Outlets:

The ‘Swagat’ Retail Outlets have been launched by IndianOil to cater to the high

growth areas of National Highways forming a part of the golden Quadrilateral

and the North-South, East-West corridors. These Flagship retail outlets are

spread across the country and 45 out of the total 111 “Swagat’ retail outlets

have already been commissioned with fuel and non-fuel facilities. These retail

outlets have been designed to provide customers with fuel/lubes including

XtraMile and XtraPremium as well as non-fuel facilities such as food/rest,

communication, healthcare, parking, vehicle care etc. These retail outlets

maintain high Q&Q standards through retail outlet site and tank truck

automation, third party certification through Bureau Veritas, fortnight

sampling through Quality Audit Officers and training through a professional

agency.

9. XtraCare:

IndianOil’s ‘XtraCare’ outlets are benchmarked against international standards of

Q&Q, housekeeping, maintenance and customer service as certified by the

global agency Bureau Veritas. The launch of XtraCare was a result of a series

of plans in retail design, product and service upgradation, capability training,

automation, loyalty programs and retail site management techniques.

The non-fuel services are boosted in the IndiaOil XtraCare plan with a wide

range of loyalty programs- XtraPower, more recently XtraRewards and co-

branded cards like IndianOil-Citibank credit cards. XtraCare has the most

state-of-the-art automation with cutting edge technology including automatic

tank level gauges, temperature sensors, density measurement sensors, back-

office server with DU controls, automatic bill printing facility, customer

database, etc.

IndianOil had recently introduced the Platinum Circle and Gold Circle as a

precursor to the XtraCare launch. The Platinum Circle and Gold Circle are

exclusive, top of the line clubs for high selling retail outlet dealers and these

dealers have emerged as peer leaders and are an integral part of the

XtraCare dealer ‘sensitization’ strategy.

10. Kisan Sewa Kendras:

IndianOil launched ‘Kisan Sewa Kendras’ for the rural markets as a new growth

area in retail business. These outlets offer a variety of products and services

besides autofuels and kerosene, thus meeting the diverse needs of the rural

population. The Kendras mainly market petroleum fuels, SERVO lubricants,

fertilizers and agro inputs like seeds, pesticides, farming equipment;

vegetables, stationery and other items. Besides serving the farming

community through wide-ranging products, services and facilities, this

initiative is also expected to create employment avenues in rural India, which

is fast emerging as one of the largest consumer bases, thereby providing

attractive returns to the operators.

GROUP OF COMPANIES

The IndianOil Group of Companies comprises of:

1. Lanka IOC Limited (LIOC)

2. IndianOil (Mauritius) Limited.

3. IBP Co. Limited (IBP)

4. Chennai Petroleum Corporation Limited (CPCL)

5. Bongaigaon Refinery and Petrochemicals Limited (BRPL)

6. IndianOil Technologies Limited

1. Lanka IOC Limited (LIOC):

IndianOil’s subsidiary in Sri Lanka, Lanka IOC, is the only private oil company

other than the state owned Ceylon Petroleum Corporation (CPC) that

operates retail petrol/diesel stations within Sri Lanka.

IndianOil entered into Sri Lanka with a view to accomplish its objective of

becoming a transnational energy major. IndianOil’s vast experience in

downstream petroleum operations in India creates a healthy and competitive

petroleum industry in Sri Lanka which largely benefits the island nation.

Lanka IOC Limited has been incorporated mainly to carry out retail marketing of

petroleum products, bulk supply to industrial consumers, building and

operating storage facilities at the Trincomalee Tank farm, etc. Thus it not only

provides energy security and supply stability to Sri Lanka but also upgrades

the overall standards of service, particularly in the retail sector of the nation.

Having a market share of 22% and operating over 160 outlets, the company

occupies the NO. 2 position among the top 50 listed companies operating in

Sri Lanka. Its oil terminal at Trincomalee is Sri Lanka’s largest petroleum

storage facility.

In order to provide world class quality petroleum products and services at the

most competitive prices to the Sri Lankan customers, Lanka IOC is making

periodic investments to the tune of about INR 450 crore. The retail outlets are

being refurbished with state-of-the-art facilities and services at par with

international standards. Through

its retail chain, the company is also making available non-fuel facilities like

convenience stores, 24-hour ATMs, automatic carwash, food marts, etc.

These revamped stations of Lanka IOC have earned praises for the company

from all sections of the Sri Lankan society.

2. IndianOil (Mauritius) Limited.

IndianOil is investing US$ 36 million to set up a range of marketing

infrastructure in Mauritius through its wholly owned subsidiary IndianOil

Mauritius Ltd. (IOML). A state-of-the-art petroleum storage terminal with a

capacity of 15,500 metric tonnes has already been commissioned at Mer

Rouge to serve as the supply base of petroleum products. This

microprocessor-controlled facility with automated product level monitoring,

truck loading and computerized access control is the first-of-its-kind in

Mauritius. As part of this project, separate import lines for Motor Gasoline

(petrol), Gas Oil (Diesel), Jet Fuel (Aviation Fuel) and Fuel Oil have also been

laid. IOML has also strengthened the bunkering facilities with new lines to

various quays in the port, which is fast emerging as the region’s busiest port.

IOML has undertaken means to set up a network of 25 world class petrol stations

in Mauritius in order to provide the Mauritian customers with auto fuels and

lubricants of international quality. These outlets will be equipped with a range

of value-added services including both fuel and non-fuel facilities.

IOML has also joined a consortium of four existing oil companies to operate

aviation fuel storage, hydrant lines and aircraft fuelling facilities in Mauritius.

The consortium will soon build a new Aviation Fuel Terminal at Sir

Seewoosagar Ramgoolam International Airport.

IndianOil (Mauritius) Ltd. which has attained a 14% market share includes

aviation fuelling and bunkering business. Besides the expansion of the retail

network, a modern product-testing laboratory is also being set up in

Mauritius. It now occupies the 25th place among the top 100 companies in

Mauritius in less than 30 months after commencement of operations there.

3. IBP Co. Limited (IBP):

IBP Co. Limited, a subsidiary of IndianOil, is a stand-alone petroleum

marketing company with exclusive Business Groups for Petroleum, Explosives

and Cryogenics.

IBP’s marketing efforts are fully focused on improving its sales of petrol and

diesel. During the period April – Dec 2006 the company achieved a sales

volume of 798,559 KL of petrol and 2,959,018 KL of diesel which resulted in a

sales growth of 2.8% in petrol and 6.4% in diesel as compared to same period

last year. The revenue from the Business Group (Petroleum) witnessed an

increase of 16% during the fiscal year 2005-06.

A pioneer in introducing quality and quantity assurance of all products and

services at its retail outlets, IBP is constantly striving to keep up with industry

standards by implementing third party audits by reputed agencies. The

branding activities are further reinforced through an initiative called “Project

Horizon” in which IBP’s 422 select top of the line high-volume outlets are

specially branded with an upgraded retail visual identity. Independent

agencies are appointed to collect samples from these retail outlets in order to

test them on a monthly basis so as to guarantee that products available to

customers meet the specified standards.

As part of synergy with the parent company IndianOil, the Company has begun

marketing branded fuels, viz., ‘XTRAPREMIUM’ petrol and ‘XTRAMILE’ diesel

at select retail outlets of the Company. IBP has also introduced Indian Oil’s

XtraCare Fleet Card Program in its network. This program is designed to help

transporters in efficient management of their fleets besides rewarding them

for their loyalty to the Company.

4. Chennai Petroleum Corporation Limited (CPCL):

A subsidiary of IndianOil, Chennai Petroleum Corporation Limited has two

refineries with a combined capacity of 10.5 Million Tonnes Per Annum

(MMTPA). The Manali Refinery, with a capacity of 9.5 MMTPA is one of the

most complex refineries in India with Fuel, Lube, Wax and Petrochemical

feedstock production facilities. CPCL’s second refinery is located at Cauvery

Basin at Nagapattinam with a capacity of 1.0 MMTPA.

The main products of the company are LPG, Motor Spirit, Superior Kerosene,

Aviation Turbine Fuel, High Speed Diesel, Naphtha, Bitumen, Lube Base

Stocks, Paraffin Wax, Fuel Oil, Hexane and Petrochemical feed stocks.

The crude throughput for the year 2005-06 was highest-ever at 10.36 Million

Metric Tonnes (MMT) against the Memorandum of Understanding (MoU)

target of 10.2 MMT. The crude processing was 16% higher than the previous

year crude throughput of 8.92 MMT. During the year, the Manali Refinery

processed 9.68 MMT and Cauvery Basin Refinery (CBR) processed 0.68 MMT.

CPCL’s MoU target for 2006-07 has been set at 10.4 MMT. The turnover for

the year 2005-06 was the highest-ever at Rs.25,409 Crore as against

Rs.16,270 Crore in the previous year registering an increase of about 56%.

The turnover was higher mainly due to increase in crude throughput and

higher prices for the products based on import-parity.

CPCL has commissioned many new facilities including a Zero Discharge Plant,

Additional 2.5 MGD Capacity Sewage Reclamation Plant and a 5.8 MGD

Desalination Project. The new project and initiatives being implemented are

Crude Oil Pipeline Project, Resid Upgradation Project, Propylene Recovery

Project, Windmill Power Project, Quality upgradation Projects to meet Euro-IV

Products and Refinery Capacity augmentation at Manali.

5. Bongaigaon Refinery and Petrochemicals Limited (BRPL):

Bongaigaon Refinery and Petrochemicals Limited (BRPL) has its registered office

and production units at Dhaligaon in the Bongaigaon District (now under

recently constituted Chirang District) of Assam. The company has its

Regional/Marketing offices at Guwahati, Kolkata, Mumbai and Delhi.

The core activities of BRPL are refining of crude oil and production of petroleum

products. The Company is also engaged in the production and marketing of

value-added petrochemical and PSF products. The Company has a Refinery

with a rated capacity of 2.35 million tonnes per annum of crude oil, a

petrochemicals complex comprising of a Xylene plant, a Dimethyl

Terephthalate (DMT) plant and a Polyester Staple Fibre (PSF) plant.

Commercial production of the refinery started in 1979 and other plants were

commissioned in stages. The Refinery, which normally processes crude oil

available in

Assam, is presently processing crude from Ravva Oil Fields of Krishna Godavari

Basin also. The Petrochemicals units consume Naphtha as its major raw

material, which is supplied from the Refinery itself.

The major products from the refinery are LPG, Unleaded MS, Naphtha, ATF, SKO,

HSD, LDO, LSHS, LVFO, RPC & CPC. The major products of the Petrochemicals

and PSF units are DMT and PSF. The petroleum products (except RPC & CPC)

are marketed by Indian Oil Corporation Ltd. (IOCL). BRPL markets RPC, CPC,

Petrochemicals and PSF products through its own marketing network.

6. IndianOil Technologies Limited (ITL):

A wholly owned subsidiary of IndianOil, IndianOil Technologies Limited (ITL) is

the technology-marketing arm for the entire range of technologies developed

at IndianOil’s R&D Centre at Faridabad. This centre, which was set up over

three decades ago, has developed several technologies and technical

expertise both in refining and the lubricant sector. The R&D activities in

refining technology are targeted in the areas of fluid catalytic cracking (FCC),

hydro processing, catalysis, residue upgradation, distillation, simulation and

modeling, lube processing, crude oil evaluation, process optimization,

material failure analysis, remaining life assessment and other technical

services.

ITL also offers state-of-the-art sludge disposal technology based on

biotechnology which is widely accepted in the hydrocarbon sector. ITL also

markets the R&D developed lubricants technology, which possesses USPs,

established through wide market acceptance. The company imparts training

in the areas of FCC, Hydroprocessing, Catalytic Reforming, Delayed coking,

Simulation and Modeling, Bio-remediation, Crude Assay, Material Failure

Analysis, Remaining Life Assessment, Analytical techniques, Lubricants &

grease etc. covering the basics, plant trouble shooting and technical

solutions. In the recent past ITL carried out such trainings in Kuwait, Iran etc.

IndianOil has adopted the approach of nurturing human talent as a means to

nurturing technology. This approach has worked well as the hydrocarbon

sector is both technology and knowledge intensive. As a result, the

Corporation is now in a position to offer a bouquet of technologies, products,

processes and solutions that are aimed at improving performance and

profitability.

FINANCIAL ANALYIS OF INDIANOIL

BALANCE SHEET

As on 31Mar06   31Mar05   31Mar04  

Assets Rs mn %BT Rs mn %BT Rs mn %BT

Gross Block

435588.10

50.71 397824.40

57.08 363413.60

56.86

Net Block 249193.90

29.01 233037.20

33.44 220018.10

34.42

Capital WIP 96453.00 11.23 87339.10 12.53 52865.70 8.27

Investments

145263.80

16.91 57049.20 8.19 55954.30 8.75

Inventory 242777.90

28.26 195048.20

27.98 149510.80

23.39

Receivables

66994.80 7.80 56898.70 8.16 39731.20 6.22

Other Current Assets

58329.70 6.79 67608.40 9.70 121088.60

18.94

Balance Sheet Total(BT)

859013.10

100.00

696980.80

100.00

639168.70

100.00

Liabilities Rs mn %BT Rs mn %BT Rs mn %BT

Equity Share Capital

11680.10 1.36 11680.10 1.68 11680.10 1.83

Reserves 279731.20

32.56 247061.90

35.45 217613.10

34.05

Total Debt 264037.20

30.74 173199.30

24.85 121776.10

19.05

Creditors and Acceptances

128307.40

14.94 112479.20

16.14 79699.60 12.47

Other current liab/prov.

175257.20

20.40 152560.30

21.89 208399.80

32.60

Balance Sheet Total(BT)

859013.10

100.00

696980.80

100.00

639168.70

100.00

RATIO ANALYSIS

CURRENT RATIO = 1.224

The current ratio being 1.224 implies that for every one rupee of current liabilities, current assets of 1.224 are available to meet them.

QUICK RATIO = 0.26

The quick ratio is a measure of the firm’s ability to service short term liabilities. A large part of the firm’s current assets are tied up in slow paying debts.

DEBT EQUITY RATIO = 0.903

Debt equity ratio is the related contribution of creditors and owners of the business in its financing. This ratio thus signifies that a portion of 0.903 of equity and debt of the company is being used to finance its assets.