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Indian Oil Final Copy1

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Eastern Institute For Integrated Learning in ManagementResearch Report on Marketing and Promotional Strategy of Indian Oil Prepared byKAIZEN Section-H4

Submitted to: Prof. P.K.D

KAIZEN Team Members: NAME1. Amal Saikia 2. Ayush Sharmah 3. Jayjeet Bezbaruah 4. Manash Pratim Neog 5. Manvendra Joshi 6. Md. Saymur Karim 7. Newton Dhar 8. Poonam Chokhany 9. Sandeep kundu

ROLL NO.07 18 38 47 48 49 57 60 73


ACKNOWLEDGEMENTIt is indeed our great privilege and opportunity to have an outstanding professional as the project guide: Prof. P.K.D who in spite of his busy schedule managed to squeeze some quality time to guide us in our project. we extend our profound gratitude for his guidance, constant encouragement and enthusiasm throughout the project. Moreover, this project helped us a lot in knowing the various aspect of marketing and its application So we are also very much thankful to him for allocating this project to us.

Finally, we thank Eastern Institute For Integrated Learning in Management for giving us the opportunity to undergo such a project.

Group - Kaizen 2ndsemester, PGPM, Section - H4 Eastern institute for integrated learning in Management, Kolkata3

Table Of Contents

Introduction ..............................................................................................5 Refineries..............................................................................................................................................6 Group companies and joint ventures....................................................................................................7 International rankings...........................................................................................................................8 Competitors...........................................................................................................................................8 Company Analysis:...............................................................................................................................8 Indian Oil Corporation Limited - Price Analysis Snapshot.................................................................9 Indian Oil as a product: ..............................................................................................................10 Indian Oil signs on Yuvraj Singh, Irfan Pathan, Anil Kumble as Brand Ambassadors for Asia Cricket Cup 2004:...............................................................................................................................11 Distinctions Archive........................................................................................................................13 Marketing Strategy:............................................................................................................................16 New Market development Strategy:...................................................................................................19 Market Challenge:...............................................................................................................................21 Indian Oil Corporation Limited: SWOT Analysis:............................................................................22 Conclusion:.........................................................................................................................................23



Indian Oil Corporation

is an Indian public-sector petroleum company. It is Indias largest commercial enterprise, ranking 116th on the Fortune Global 500 listing (2008). It began operation in 1959 as Indian Oil Company Ltd. The Indian Oil Corporation was formed in 1964, with the merger of Indian Refineries Ltd. Indian Oil and its subsidiaries account for a 47% share in the petroleum products market, 40% share in refining capacity and 67% downstream sector pipelines capacity in India. The Indian Oil Group of Companies owns and operates 10 of India's 19 refineries with a combined refining capacity of 60.2 million metric tons per year.

Company History:The Indian Oil Corporation Ltd. operates as the largest company in India in terms of turnover and is the only Indian company to rank in the Fortune "Global 500" listing. The oil concern is administratively controlled by India's Ministry of Petroleum and Natural Gas, a government entity that owns just over 90 percent of the firm. Since 1959, this refining, marketing, and international trading company served the Indian state with the important task of reducing India's dependence on foreign oil and thus conserving valuable foreign exchange. That changed in April 2002, however, when the Indian government deregulated its petroleum industry and ended Indian Oil's monopoly on crude oil imports. The firm owns and operates seven of the 17 refineries in India, controlling nearly 40 percent of the country's refining capacity.

Origins:Indian Oil owes its origins to the Indian government's conflicts with foreign-owned oil companies in the period immediately following India's independence in 1947. The leaders of the newly independent state found that much of the country's oil industry was effectively in the hands of a private monopoly led by a combination of British-owned oil companies Burmah and Shell and U.S. companies Standard-Vacuum and Caltex. An indigenous Indian industry barely existed. During the 1930s, a small number of Indian oil traders had managed to trade outside the international cartel. They imported motor spirit, diesel, and kerosene, mainly from the Soviet Union, at less than world market prices. Supplies were irregular, and they lacked marketing networks that could effectively compete with the multinationals.


Burmah-Shell entered into price wars against these independents, causing protests in the national press, which demanded government-set minimum and maximum prices for kerosene--a basic cooking and lighting requirement for India's people--and motor spirit. No action was taken, but some of the independents managed to survive until World War II, when they were taken over by the colonial government for wartime purposes. During the war, the supply of petroleum products in India was regulated by a committee in London. Within India, a committee under the chairmanship of the general manager of Burmah-Shell and composed of oil company representatives pooled the supply and worked out a set price. Prices were regulated by the government, and the government coordinated the supply of oil in accordance with defense policy.

Products:Indian Oil's product range covers petrol, diesel, LPG, auto LPG, aviation turbine fuel, lubricants, naphtha, bitumen, paraffin, kerosene etc. Xtra Premium branded petrol, Xtra Mile high speed diesel, Servo lubricants, Indane LPG, Autogas LPG, Indian Oil Aviation are some of its prominent brands. Recently Indian Oil has also introduced a new business line of supplying LNG (Liquefied natural gas) by the cryogenic transportation. The branding called "LNG at Doorstep". LNG headquarters are located in scope complex, Lodhi Road Delhi.

Indane GasIndane is today one of the largest packed-LPG brands in the world. IndianOil pioneered the launch of LPG in India in the 1970s and transformed the lives of millions of people with the introduction of the clean, efficient and safe cooking fuel. LPG also led to a substantial improvement in the health of women in rural areas by replacing smoky and unhealthy chullahs with Indane. It is today a fuel synonymous with safety, reliability and convenience. LPG is a blend of Butane and Propane readily liquefied under moderate pressure. LPG vapour is heavier than air; thus it normally settles down in low-lying places. Since LPG has only a faint scent, a mercaptan odorant is added to help in its detection. In the event of an LPG leak, the vapourisation of liquid cools the atmosphere and condenses the water vapour contained in it to form a whitish fog, which is easy to observe. LPG in fairly large concentrations displaces oxygen leading to a nauseous or suffocating feeling. Suraksha LPG hose, flame retardant aprons and energy efficient Green Label stoves are recommended to enhance safety measures while using LPG as fuel. To prevent diversion, the Indane brand is being backed by RFID technology, a new concept that helps track the movement of LPG cylinders. Initial trials are currently going on, after which it will be implemented on a countrywide basis.

Refineries Digboi Refinery, in Upper Assam, is India's oldest refinery and was commissioned in 1901.Originally a part of Assam Oil Company, it became part of IndianOil in 1981. Its original refining capacity had been 0.5 MMTPA since 1901. Modernisation project of this refinery has been completed and the refinery now has an increased capacity of 0.65 MMTPA.


Guwahati Refinery, the first public sector refinery of the country, was built with Romanian collaboration and was inaugurated by Late Pt. Jawaharlal Nehru, the first Prime Minister of India, on 1 January 1962. Barauni Refinery, in Bihar, was built in collaboration with Russia and Romania. It was commissioned in 1964 with a capacity of 1 MMTPA. Its capacity today is 6 MMTPA. Gujarat Refinery, at Koyali in Gujarat in Western India, is IndianOils largest refinery. The refinery was commissioned in 1965. It also houses the first hydrocracking unit of the country. Its present capacity is 13.70 MMTPA. Haldia Refinery is the only coastal refinery of the Corporation, situated 136 km downstream of Kolkata in the Purba Medinipur (East Midnapore) district. It was commissioned in 1975 with a capacity of 2.5 MMTPA, which has since been increased to 5.8 MMTPA Mathura Refinery was commissioned in 1982 as the sixth refinery in the fold of Indian Oil and with an original capacity of 6.0 MMTPA. Located strategically between the historic cities of Delhi and Agra, the capacity of Mathura refinery was increased to 7.5 MMTPA. Panipat Refinery is the seventh refinery of Indian Oil. The original refinery with 6 MMTPA capacity was built and commissioned in 1998. Panipat Refinery has doubled its refining capacity from 6 MMT/yr to 12 MMTPA with the commissioning of its Expansion Project. Subsidiary refineries Bongaigaon Refinery (2.95 MMTPA), Chennai Petroleum (9.5 MMTPA)

Group companies and joint ventures Indian Oil Technologies Ltd: Indian Oil Technologies Ltd. is the marketing arm for the entirerange of technologies developed at the R&D Centre of Indian Oil Corporation Limited. This website gives an overview of the various technologies, products, quality services and solutions, developed and tested to meet or exceed customer requirements. These technologies are tailor made and meant to provide competitive advantage. Indian Oil Technologies is built on the strength of its credibility proven in its sister divisions. Indian Oil Technologies Ltd. headquarters are located at Indian Oil R&D Centre, Faridabad. Indian Oil (Mauritius) Ltd. Lanka IOC PLC - Group company for Sri Lanka retail and storage operations which is listed on Colombo's stock exchange. It was locked into a bitter subsidy payment dispute with Sri Lanka's Government which has since been resolved. IOC Middle East FZE Chennai Petroleum Corporation Ltd. Bongaigoan Refinery and Petrochemicals Ltd.

Green Gas Ltd. - joint venture with Gas Authority of India for city-wide gas distributionnetworks. Indo Cat Pvt. Ltd., with Intercat, USA, for manufacturing 15,000 tonnes per annum of FCC (fluidized catalytic cracking) catalysts & additives in India, for catering to rising global demand. Numerous exploration and production ventures with Oil India Ltd., Oil and Natural Gas Corporation


International rankingsIndian Oil is the highest ranked Indian company in the prestigious Fortune Global 500 listing, the 116th position (in 2008) based on fiscal 2007 performance. It is also the 18th largest petroleum company in the world and the number one petroleum trading company among the National Oil Companies in the Asia-Pacific region. IOCL was featured on the 2008 Forbes Global 2000 at position 303.

CompetitorsIndian Oil Corporation has two major domestic competitors, Bharat Petroleum and Hindustan Petroleum. Both are state-controlled, like Indian Oil Corporation. There are two private competitors, Reliance Petroleum and Essar Oil, which are much smaller than their state-controlled counterparts.

Company Analysis:

It involves analysis of the company at three levels segments, organizational structure and ownership composition. Both business and geographic segments are analyzed alongwith their recent financial performance. It further discusses the major subsidiaries of the company and the recent merger & acquisitions

DistinctionsIndian Oil Corporation Ltd. (Indian Oil) is India's largest commercial enterprise, with a sales turnover of Rs. 2,47,479 crore (US $ 61.70 billion) and profits of Rs. 6,963 crore (US $ 1.74 billion) for the year 2007-08. Indian Oil is also the highest ranked Indian company in the prestigious Fortune 'Global 500' listing, having moved up 19 places to the 116th position in 2008. It is also the 18th largest petroleum company in the world. Indias Downstream Major: Beginning in 1959 as Indian Oil Company Ltd., Indian Oil Corporation Ltd. was formed in 1964 with the merger of Indian Refineries Ltd. (established 1958). Indian Oil and its subsidiaries account for 49% petroleum products market share, 40.4% refining capacity and 69% downstream sector pipelines capacity in India. For the year 2007-08, the Indian Oil group sold 59.29 million tonnes of petroleum products, including 1.74 million tonnes of natural gas, and exported 3.33 million tonnes of petroleum products. The Indian Oil Group of companies owns and operates 10 of India's 19 refineries with a combined refining capacity of 60.2 million metric tonnes per annum (MMTPA, .i.e. 1.2 million barrels per day). These include two refineries of subsidiary Chennai Petroleum Corporation Ltd. (CPCL) and one of Bongaigaon Refinery and Petrochemicals Limited (BRPL). The Corporation's cross-country network of crude oil and product pipelines, spanning about 9,300 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and


environment-friendly manner. Indian Oil is investing Rs. 43,393 crore (US $10.8 billion) during the period 2007-12 in augmentation of refining and pipeline capacities, expansion of marketing infrastructure and product quality upgradation as well as in integration and diversification projects.

Indian Oil Corporation Limited - Price Analysis SnapshotThis Report features up to a ten-year record of the equity Price history for Indian Oil Corporation Limited. Tabular results include the High, Low and Closing price for the quarter. There is also a calculation of percentage change in price for both Quarterly and Annual periods. Price values are adjusted for stock splits and dividends. Indian Oil Corporation Limited. The Group's principal activities are manufacture and market petroleum products, crude oil, lubricants and grease, oil base and additives and other petroleum related products. The Group operates in two segments: Petroleum Products and Other Businesses. Other business includes sale of imported crude oil, sale of gas, oil and gas exploration activities, petrochemicals, polyster staple fibre chemicals and engineering.


Indian Oil as a product:If we see IndianOil as a product then the market situation of IndianOil can be discussed under the following heading:10

BCG Matrix - Boston Consultancy Group (BCG) developed a matrix named, Business Portfolio Matrix.It was developed by BRUCE HENDERSON in early 1970s. It was a simplified version of the matrix which shows the linkages between the growth rate of the business and the relative competitive nature of the firm, identified by the market share. This matrix is used on product-by-product basis, which helps a organization to

evaluate the position of the product in the market. In BCG matrix, there are four quadrants- question mark, star, cash cow and dog. When a product is first launched, its market share as well as the growth rate is low and therefore it is called a question mark product. After a certain period of time, if the product becomes huge hit in the market, then both its market share as well as its growth rate becomes high. At that stage it is called a star product. However a time comes when the products market gets saturated and at that point of time though its market share is high, its growth rate is low. Such a product is called a cash cow product. Then when the product reaches a stage where both its market share as well as growth rate is low, it is called a dog product. Now, the product should be disposed of. Now if we consider IndianOil as a product and evaluate its position through BCG matrix, we can say that at present it is a star product. Indian Oil is the highest ranked Indian company in the prestigious Fortune Global 500 listing, the 116th position(in 2008) based on fiscal 2007 performance. It is also the 18th largest petroleum company in the world and the number one petroleum trading company among the National Oil Companies in the Asia-Pacific region. IOCL was featured on the 2008 Forbes Global 2000 at position 303. Indian Oil Corporation (IOC) is Indias largest downstream oil company. The company is engaged in refining of petroleum, pipelines-crude oil and petroleum products, marketing of petroleum products, and research and development activities. The IOC group of companies owns and operates 10 of Indias 19 refineries with a combined refining capacity of 60.2 million tonnes per annum (1.2 million barrels per day). Therefore, we can say that at present, IndianOil is a star product.

Indian Oil signs on Yuvraj Singh, Irfan Pathan, Anil Kumble as Brand Ambassadors for Asia Cricket Cup 2004:"Torch of Energy symbolises one billion aspirations" says Dr N G Kannan IndianOil, the largest commercial enterprise in the country is the principal sponsor of the Asia Cricket Cup being played in Sri Lanka. The premier petroleum major has also signed on Cricket Stars Yuvraj Singh, Irfan Pathan and Anil Kumble as Brand Ambassadors an association which was launched in Chennai on July 8 by Dr. N G Kannan, Director (Marketing), Indian Oil Corporation Ltd., who also handed over the "Torch of Life Energy" which symbolized the aspirations of a billion Indians, of India winning the IndianOil Asia Cup. Speaking on the occasion of the launch after handing over the Energy Torch to the three Brand Ambassadors, Dr. Kannan said, "The Torch of Energy is the aspirations of a billion Indians who are confident that India will come back with the Indian Oil Asia Cup "Torch of Energy symbolises one billion aspirations" says Dr N G Kannan Indian Oil, the largest commercial enterprise in the country is the principal sponsor of the Asia Cricket Cup being played in Sri Lanka. The premier petroleum major has also signed on Cricket Stars Yuvraj Singh, Irfan Pathan and Anil Kumble as Brand Ambassadors an association which was launched in Chennai on July 8 by Dr. N G Kannan, Director (Marketing), Indian Oil Corporation Ltd., who also handed over the "Torch


of Life Energy" which symbolized the aspirations of a billion Indians, of India winning the IndianOil Asia Cup. Speaking on the occasion of the launch after handing over the Energy Torch to the three Brand Ambassadors, Dr. Kannan said, "The Torch of Energy is the aspirations of a billion Indians who are confident that India will come back with the IndianOil Asia Cup. IndianOil has identified cricket as a primary driver in our branding activities and our primary sponsorship of IndianOil Asia Cup is the first part of a wide range of initiatives to showcase our brands. IndianOil is completely focused on providing a bouquet of offerings to discerning customers. Our brands not only have a dominant market share, but they are also image leaders in whichever segment they are present. SERVO is one the largest lubricant brands in Asia while Indane LPG is one of the largest packed LPG brands in the world. XtraMile is firmly established as a leader in the diesel Vehicle category and XtraPremium our high Octane petrol brand has also carved out a significant market," he said. "SERVO is currently marketed in Sri Lanka, Mauritius, Bangladesh, Nepal, Malaysia and the Middle East. Cricket is also a passion in much of these markets and we wish to be closer to this passion of our customers. Our diversifications abroad also follows the Indian diaspora and the satellite imprint of the Six Nation Series in Sri Lanka will enable us to reach out to this new market. In Sri Lanka, Indian Oil has a fully-owned subsidiary, Lanka IOC which has about 30% market share in less than a year of operation. Our new generation, state-of-the-art retail outlets in Sri Lanka have brought in world class retailing operations in the island nation. Lanka IOC has already taken over a vast terminal in Trincomalee, which is expected to power our marketing activities in Sri Lanka. With the primary sponsorship of the IndianOil Asia Cup we aim to reach out to our valued customers in Sri Lanka in specific and the vast cricket loving audience in India and other parts of the world," he added. IndianOil has been promoting sports in the country on a consistent basis in a wide range of tournaments at the National, Regional and the state level in a wide variety of games as well. IndianOil also has a system of recruiting young, talented sportspersons and then supporting them in their careers. A galaxy of Indian sports stars like P Gopichand & Aparna Popat in Badminton; S Raman, Chetan Baboor in Table Tennis; Asif Ismail, Sai Jailakshmi, Rushmi Chakravarthy in Lawn Tennis; D V Prasad, Abhijit Kunte in Carrom; Wasim Jaffer, Zaheer Khan in Cricket; Deepak Thakur, Viren Rasquinha, Prabhjyot Singh in Hockey and many more high performers are among the 74 players on the rolls of IndianOil in various disciplines like Badminton, Lawn Tennis, Table Tennis, Chess, Cricket, Powerlifting, Trap Shooting, Hockey, Bridge and Carrom, since 1985. IndianOil has also been sponsoring major sporting events in the country like, Surjit Hockey, Subroto Cup Football, International Hot Air Balloon Competition SAARC Golf Tournament, Statesman Vintage Car Rally, SERVO Challenger (Tennis), Raid de Himalaya, Indian Open Golf Tournament, Thomas Uber Cup (Badminton), National Polo Championship, SERVO Beighton Cup, Equestrian/Show Jumping, National/International level cricket tournaments, Drive with Insight Challenge an Indian Oil-Otters Club Squash Tournament among others. Indian Oil has already spread its wings to Sri Lanka, Mauritius, Nepal, Bangladesh, Malaysia and the Middle East. Indian Oil's fully owned subsidiary Indian Oil Mauritius Limited (IOML) which has started operations with the commissioning of a state of the art Terminal at Mer Rouge. IOML is also setting up a network of Retail Outlets, an Aviation Fuel Station, LPG bottling plant as well as a Aviation Quality Control Laboratory. Indian Oil caters to the complete requirement of the Nepal market through its MoU with Nepal Oil Corporation while SERVO has carved out a significant niche in the Bangladesh market..


Distinctions ArchiveFortune Ranking As per Fortune Global 500 listing of the world's largest Corporations for the year 2006 Ranking improved to 153, based on fiscal 2005 performance, from 170 in 2005, 189 in 2004, 191 in 2003, and 226 in 2002.

Forbes Ranking Indian Oil was ranked 311 in The Forbes Global 2000 - a list of world's largest, and mostpowerful, public companies, April 2006

Ranked 279th, as per Forbes Global 2000 listing of the world's biggest public companies for theyear 2004.

Among the 30 Indian companies in the Global 2000, Indian Oil is the third biggest company.

No. 1 Company in Oil Trading in Asia Pacific Region Indian Oil emerged as the top company in oil trading amongst national oil companies in the AsiaPacific region, as per the annual survey conducted by Applied Trading Systems (ATS), Singapore for the year 2004. In the latest survey, IOC is placed at the top of the list followed by Petronas of Malaysia, ENOC of United Arab Emirates, KPC of Kuwait and Saudi Petroleum of Saudi Arabia. The survey covered 80 major petroleum trading companies in the Asia Pacific region.

Indian Oil among top global stock picks: Deutsche Bank In a recent oil strategy report, the prestigious Deutsche Bank has chosen Indian Oil as one of thetop global stock picks in the oil & gas sector. Indian Oil is also the only Asian company to be featured in the list of top global stocks by Deutsche Bank. In the report titled 'Global Oil 2005: Unforgettable Fire', Indian Oil has also been included as one of the top five recommendations of Deutsche Bank for the Indian market for the year 2005. The bank, in a letter addressed to the Chairman, has stated that "The recommendation

reflects our positive view of Indian Oil owing to its solid fundamentals and also the proactive strategies adopted by the Management to deal with the various challenges facing the oil sector".

Platts World Energy Rankings 200513

Indian Oil has moved five places up in the Platts 'Top 250 Global Energy Company' rankings from 26th in 2004 to 21st this year. Only Indian company to be featured among the top 25 energy companies worldwide and is also among the top three energy companies in Asia in the listing. Amongst the Marketing & Refining companies of the world, IndianOil is placed at the second position in the sectoral listing.

IndianOil is also the only Public Sector Undertaking among 'India's Top 10 Companies' listed bytheFar Eastern Economic Review in 2003.

IndianOil retains the #1 spot by sales in ET500 listingIndianOil, India's flagship oil company, has retained its numero uno position by sales in the latest corporate rankings released by the Economic Times. The ET500 report goes on to add, "Indian Oil has been the largest Indian company by sales for as long as anyone can remember". Apart from sales, the ET500 ranking lists companies based on market capitalization, net profit, priceearnings ratio and return on net worth, etc. In the above listings, Indian Oil is also ranked No. 6 by both market capitalization and net profits respectively. These rankings assume significance considering that India's downstream majors in the petroleum industry have been bearing both subsidy and undercovery burden s owing to a steep rise in global crude oil prices throughout the year 2005, thus affecting both net profit and market capitalization.

Ranked as India's most valuable brand Indian Oil and SERVO selected Superbrands (2004-06) Indian Oil topped the list of The Hindu Business Line's "India's Most Valuable Brands 2004" list (Catalyst, January 27th '05).s The report featured the top 500 largest listed companies by market value, that were listed on the Bombay Stock Exchange. The methodology followed values brands in a way that is similar to how analysts value assets. These valuations have used 'relief from royalty' methodology - an intuitive approach that assumes that a company does not own its brand name, and then calculates how much it would have to pay to license it from a third party. The present value of the streams of royalty (hypothetical) represents the value of the brand.

Most trusted petrol pump brand: ET Brand Equity Survey Indian Oil has emerged as the most trusted petrol pump brand in the country in the prestigious Economic Times Brand Equity Survey of India's Most Trusted Brands (ET, Dec. 15, '04). Indian Oil leads the four oil-marketing companies in the new category of petrol pumps introduced in services for the first time this year.


IndianOil is also the only petroleum company among the top 50 in the overall services brand with a ranking of 11, followed by its subsidiary, IBP Co. Ltd, at 51. Indian Oil not only finds a place among the top 150 brands but as the country's top petro-retailer, its score on the survey was almost twice that of its nearest competitor. Survey is the largest of its kind in India, conducted by research agency AC Neilson ORG-Marg, the, with a sample of over 7,000 distributed across socio-economic class, age, income and geography.

Ranked fourth in TNS Corporate Reputation Study In a recent TNS India poll on "Corporate Reputation Study" (Business Today, Dec. 19, 2004), IndianOil has been placed in the 4th position, ahead of several other business conglomerates. IndianOil is the only petroleum company to be featured in the top 25 listing, and with State Bank of India (21st position) being the only other PSU to make it to the listing.

Poll primarily conducted amongst important stakeholders covering financial analysts andstockbrokers, business managers, and prospective employees, besides members of the general public. Indian Oil has a score of 80 (out of 100), which indicates a very good corporate equity.

Among top ten 'Best Employers in India' for second year For the second consecutive year, Indian Oil retained its ranking as one of the top ten 'Best Employers in India' according to a recent study by Hewitt Associates. Indian Oil, at the 9th position, was also the only oil company to be featured in the Top 10 listing. This year, 272 companies with a workforce of 700,000 participated in the Hewitt survey, which makes it the highest participation in any geographical location. Data was collected from 75,000 employee responses from across 15 industry groups.

No.1 Company in business listings Indian Oil has been ranked India's No. 1 company by The BW Real 500 survey, Businessworld,announced in March 2006.

IndianOil was ranked as numero uno Indian company in a survey titled The Analyst 500,Chartered Financial Analyst, February 2006

IndianOil has emerged as India's biggest company in the Business Standard-1000 listingannounced in February 2005.

IndianOil Ranked as India's top corporate in sales in Business Today's annual corporaterankings.

IndianOil also leads corporate India with the highest sales turnover in 2004-05 in BusinessIndia's 'Super 100' list of top private and public sector companies in the country.


Marketing Strategy:Gulf Oil ties up with Indian Oil for sale of car care productsGULF Oil Corporation Ltd has entered into an arrangement with Indian Oil Corporation Ltd for sale of its Gulf Car Care Products through the latter's retail outlets. According to a statement issued here on Monday, Gulf Oil said this arrangement for sale of car care products between the two companies was expected to go a long way in offering value added products. In Phase I, the car care products would be test marketed in five major cities Mumbai, Delhi, Bangalore, Ahmedabad and Chandigarh. After successful completion of the same, the products would be launched on an all-India basis. Speaking about the product launch, Mr N.C. Sekharan, Head - Lubricants SBU of Gulf Oil, said, "We intend to work closely with IOC in order to enhance the value proposition to the Indian customers by introducing a wide range of car care products through the IOC outlets."

During the discussions between IOC and Gulf Oil marketing heads, it was decided that the following products would be introduced into the Indian market: tyre inflate and repair, A/C neutraliser, glass and crystal cleaner, dash board polish, multi functional fluid, tyre black, and wax spray.

JK Tyre signs marketing pact with Indian OilCorporate giants JK Tyre and Indian Oil Corporation (IOC) have entered into a marketing alliance for installing digital air pressure gauges, setting up of tyre sales and service outlets at over 1,000 oil petrol stations throughout the country. A memorandum of understanding was signed by JK Industries marketing director S Rangarajan and Indian Oil (sales) executive director BK Das on Friday.Announcing the tie-up, Rangarajan told newspersons, ``JK Tyre and Indian Oil have joined together to fulfill their passion to translate customer satisfaction to customer delight. Indian Oil, which is India's largest commercial enterprise was our natural choice for a partner, as we not only have a strong synergy in our customer segments, but also share a common philosophy of providing the highest standards of service to our customers.'' Rangarajan said, ``Besides the installation of digital air pressure gauges, we will also provide tyre sales and service facility and organise free consumer educational campaigns at these outlets." he said." This will enable easy access for our customers to world class tyre products and services,'' he added. Speaking on the occasion, Das said, ``The installation of digital air pressure gauges at Indian outlets, besides several other initiatives, by JK Tyres, the market leader of the radial tyre segment is a significant step taken by the two companies towards customer service. With a shared customer base the facility benefits both companies and opens up several new opportunities that can be jointly explored.'' He said providing synergistic facilities at the retail outlets is a significant part of retail marketing strategy of positioning Indian Oil petrol stations as one-stop-shops for all automobile needs.


JK Tyres intends to set up tyre changing, tyre balancing and wheel alignment facilities at select Indian Oil petrol stations. It will also organise campaigns to provide free guidance to the consumers on tyre usage and maintenance, apart from fuel conservation tips. JK Tyre is one of the largest tyre companies in the country and has collaboration with Continental AG of Germany. Continental AG is the fourth largest tyre manufacturer in the world. Indian Oil has over 7,000 petrol stations throughout India and has tied up with Apollo Hospitals for round-the-clock medical servcies and drug stores. Competitor HPCL recently signed a pact with McDonald's to set up restaurants in HPCL petrol outlets.

Indian Oil launches Servo in MalaysiaIndian Oil has launched its popular Servo lubes in Malaysia through a franchising route with a local player, Regal One Sdn Bhd (ROSB). The company, which supplies filling brake fluid for multinationals like Shell, will act as the local blender-cum-distributor for Servo. Interestingly, though ROSB will market Servo lubes blended by them in Malaysia only, IOC is exploring the possibility of exporting the product to Bangladesh as well as Sri Lanka in view of the costeffectiveness of base oils and additives procured from Singapore. Indian Oil's director (marketing) ON Marwaha told The Financial Express: "Plans to introduce Servo in Bangladesh and later in Mauritius form part of a bigger globalization strategy for Servo lubes which are in no way inferior to those made by multinationals." IOC has opted for the franchising route in Malaysia as there are some stumbling blocks as far as the ownership of inputs for blending lubricants is concerned. These comprise base oils and additives which would require the establishment of a wholly owned subsidiary by IOC. Under the franchise agreement, ROSB will buy the base oils and additives based on the specifications outlined by IOC. The blending, packing and marketing of the product will be done by the Malaysian company which would give a royalty of around Rs 1,400 per kilolitre to IOC. IOC has been aggressively promoting the Servo brand both in India and abroad. The company's marketing strategy in Malaysia will focus on the bazaar trade as also identifying direct customers like large fleet operators. The big jump will be in Mauritius where IOC plans to set up an integrated oil company at an investment of $12 million. This will comprise a port terminal, service stations, consumer outlets, aviation and bunkering facilities. The company will install tankage and auxiliary facilities at the Mer Rouge terminal. It will also establish 25 service stations in a three phase programme. These will also include outlets for the high volume consumer. Aviation infrastructure has been planned in the country's SSR international airport. The company plans to build fifteen outlets in the first phase ending December 2000. Of these, eight will be company-owned and the rest will be taken up by dealers. Five more outlets have been earmarked individually in the second and third phases (ending December 2001 and 2002 respectively) and their ownership will be equally divided between IOC and the dealers concerned. Sources say that IOC will welcome any Mauritian partner willing to invest in the project.


Indian Oil charts out marketing pushIndian Oil Corporation (IOC), the largest retailer of automotive fuel in the country, has chalked out an aggressive marketing strategy to face the rising competition in the segment. The fresh strategy includes launching of branded petrol stations and changing the visual identity of the outlets. IOC is planning to launch 1,000 extra branded retail outlets by September-end. Quality of fuel, quantity and services at these outlets would be certified by renowned international agencies, said N G Kannan, managing director, IOC. The company plans to take its total retail outlet strength beyond 10,000 by the year-end from the present 9,155. The oil retailer is also changing the visual identity of its petrol stations to orange and blue combination from the current rainbow colours. The new colour scheme is aimed at giving the outlets a distinct identity. Kannan said IOCs retail push not only includes constant monitoring of fuel quality and service at pumps, but also a new visual identity which would help them stand apart from the competitors. To create a barrier for new players, the company has engaged the services of two advertising agencies to create a separate branding strategy for retailing oil and LPG. The companys project to revamp the existing retail outlets under the sub-brand, IndianOilXtra, includes upgrading the outlets and providing additional facilities to customers. Kannan said the company, along with the 3,000-odd petrol stations of its subsidiary IBP, commands a market share of 57 per cent.

Indian Oil increases market share in branded fuel segmentIn a year when sales of brand-led auto fuel are on a sharp decline, Indian Oil, the market leader, has been able to augment its market share in all the three categories-petrol, diesel and auto LPG. However, the other two companies, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have lost share in at least one of the branded segment. IndianOil has gained market share in branded petrol and diesel (see chart) in the current fiscal In auto LPG too, its share has moved up from 45.1 per cent to 48.1 per cent. Mr. G C Daga, IndianOil's director (Marketing) attributes the rise in market share to the aggressive pricing strategy and communication to the consumers about the advantages of premium fuel. "In auto LPG, we have increased the number of stations," he added. BPCL has lost market share in both petrol (from 33 per cent to 28.5 per cent) and auto LPG (from 33.7 per cent to 29.5 per cent). HPCL, while losing share in branded diesel, has gained marginally in petrol (from 21.5 per cent to 23 per cent) and in auto LPG (from 21.2 per cent to 22.5 per cent). Branded petrol accounts for 20 per cent of total petrol sales, while branded diesel accounts for 12 per cent. "Sales have been coming down for all the industry players. This is directly related to the price gap between branded and non-branded fuel. This gap went up to as high as Rs 4 a liter when the basic fuel price was rising. Now1 that the gap is down to around Rs 2 level and price has stabilized, demand should pick up," said an official at HPCL However, branded fuel sales volume is on a decline. Sale of branded petrol is down by 5 per cent in the current year, while branded diesel has declined by nearly 13 per cent. Regular (non-branded fuel sates


have also slowed but are still showing healthy growth of 8 per cent to 9 per cent. Branded fuels are sold at a marginal premium to regular fuels and they are beyond price control. Besides the general slowdown in demand, sales have fallen this year due to higher excise duty, which had increased the price gap between branded and unbranded fuels. In June 2008, the government reduced the excise duty on non-branded diesel and petrol by Re 1 a litre while keeping it unchanged for branded products.

Indian oil industry seeks shift to market determined prices11-01-06 The Indian oil industry has called for shifting to market-determined prices for all petroleum products, including LPG and kerosene. Concurring with the assessment made by The Energy and Resources Institute (TERI), the industry has pointed out that any dual pricing strategy for petroleum products like kerosene will lead to leakages in the system and will be difficult to control. The need for shifting to a market determined pricing system was highlighted by representatives of major public and private oil companies, including Bharat Petroleum Corporation, Indian Oil Corporation, Hindustan Petroleum Corporation, Reliance Industries and BP India Services at a panel discussion organized by TERI. While recognizing the challenge of making cooking and lighting fuel affordable to the poor, industry representatives felt that the current system was, in reality, subsidizing the richer strata of the society.

Subsidy for select groupsAccording to a TERI analysis, just the top 6.75 % of the population enjoys 40 % of the LPG subsidy; and it is urban areas that benefit from 76 % of the subsidy. Commending recent efforts by the Government to address this problem, the industry representatives maintained that any dual pricing strategy for petroleum products would lead to leakages in the system and would be difficult to control. The oil companies were, thus, in favour of moving to a single market determined price for all petroleum products, including LPG and kerosene. Subsidies could be provided to carefully targeted consumer groups as direct subsidies using technological advances in the form of debit or pre-paid cards. The company representatives endorsed the attractiveness of using LED (light-emitting diode) based solar home lighting systems for meeting energy needs in rural areas, which would also go a long way in enhancing the energy security of the country. Apart from being cleaner and environmentally superior to kerosene lamps, solar home lighting systems were a more efficient source of lighting.

New Market development Strategy:Indian Oil to implement major projects in 2009; competition in petro-retail to increaseIndian Oil Corporation has announced plans to commission major refinery projects during 2009. Reports quoted B N Bankapur, IOC's director for refineries, as saying that projects scheduled for commissioning during this year include the expansion of the Panipat Refinery, a naphtha cracker complex adjacent to the Panipat Refinery, and hydrocracker project at Haldia.


He said capacity at the Panipat Refinery would be expanded by three million tons to 15 million tones, and a naphtha cracker complex adjacent to the unit would be commissioned this year, as would be a oncethrough hydrocracker project at Haldia. Terming 2009 as the 'Year of Commissioning' for IOC, Bankapur said that IOC remained committed to complying with the government's Auto Fuel Policy, and accordingly, petrol and diesel quality for Delhi and the national capital region and 12 other cities would be in accordance with Bharat Stage-IV norms starting 1 April, 2010. Presently, these regions are BS-III stage compliant, while the rest of the nation uses BS-II fuel. The new policy will see the rest of India shift to BS-III fuel. IOC's refineries had a capacity utilisation of 104 per cent in 2008, processing 48.9 million tons of crude oil. Amidst this expansion, public sector oil marketing companies are gearing up to face some competition from private sector players who had exited the petroleum distribution business at the height of the oil price spike last year. Oil prices having come down from $147 per barrel to their current levels of around $40 per barrel have accorded some degree of economic viability to petro-retailing for the private sector, which does not have the option of benifiting from the subsidies given by the government to the public sector oil marketing companies. IOC is reported to be closing loss-making fuel stations, while focusing on increasing throughput. It also plans to garner market share through non-fuel business at its petrol pumps besides setting up new pumps in high-potential areas. Essar Oil is reported to have expanded the number of its fuel retail outlets to over 1,000, with plans to have around 1,400 outlets operational by April 2009. Unconfirmed reports said that Essar claimed a market share of around four per cent, and was aiming to increase it further to over six per cent. Global petroleum major Shell, which has a petroleum retail licence for 2,000 retail outlets in India, currently has only around 50 outlets selling diesel and petrol. Shell India Marketing is reported to be implementing its parent Shell India's retail initiative, having earmarked Rs250 crore for the first phase of its retail operations. Reliance Industries Limited last week matched the refining capacity of India's largest refiner IOC, at 1.2 million barrels per day by commissioning the world's sixth-largest refinery at Jamnagar. It is awaiting a deregulation of petrol and diesel prices before restarting its petroleum retail network, to which the government has reportedly accorded an in principal approval following the crash in crude oil prices. In 2006, with its 1,200-odd retail outlets, Reliance had captured over 14 per cent of the market from the oil marketing companies. However, Reuters reported that India's refinery output had dropped 1.1 per cent in November on a yearyear comparison with the previous year, marking the first annual drop in three years. This was attributed to the planned shutdown of an IOC refinery and lower demand in a slowing economy. It said that data from a week ago showed that domestic oil product sales increased a mere two per cent in November, reflecting weak demand in a faltering economy. It said crude processing at IOC's Panipat refinery was down 22 per cent in November, with almost half the unit shut for most the better part of the month on account of routine maintenance.


Market Challenge:Indian Oil CampusTo meet the emerging challenges of post-deregulated era of the oil sector, IndianOil in 1995 set up the Indian Oil Institute of Petroleum Management (IiPM) as an apex centre for learning. The only one of its kind in the petroleum sector, IiPM aims to create a vibrant bridge of knowledge managers to lead the Indian energy companies. Since the last 12 years, IIPM has been conducting global standard international business management programmes for executive along with various management development programmes. The Institute, with its sprawling campus in 16 acres of lush green landscape, has excellent facilities to accommodate over 100 participants at a time. It also has a 10 executive suites block earmarked to accommodate the visiting faculty. The institute is centrally air conditioned with 100% power backup. In addition to the modem infrastructure, the Institute has a well-equipped library, state-of-the-art computer facility, gym, a swimming pool and other amenities to provide a highly invigorating learning ambience. As an ISO 9001-2000 certificate institute, IiPM has been awarded the Golden Peacock National Award for 'Innovative Training Practices' by the Institute of Directors (IOD), for 1998, 2000, 2005, 2006 and for the year 2007 as well. For the year 2006-2007, the Indian Society of Training & Development (ISTD) also presented the 'Innovative Training Practices' award to IiPM. It also received the 'Best Innovation in Teaching' award from the Association of Indian Management Schools for the year 1998-99. With a mission to align the human resource with corporate business goals and to cater to the pressing organizational needs, IiPM has designed and developed the contents and pedagogy of unique programmes in the areas of Strategic and General Management, Human Resource Management, Marketing Management and Operations & Technology Management to meet the present and future challenges to manage and lead the workplace and organization more effectively. Every year, IIPM conducts more than 35 short duration programmes for about 1200 senior executives. The Institute's programmes have been designed and developed based on the industry experience and inputs. Indian Oil has also been entrusted with the responsibility of training executives from various Iraqi oil companies by the Ministry of Petroleum & Natural Gas (MOP & NG) and the Ministry of External Affairs. Over the last one and half years, around 200 officials from the Iraqi oil industry have already completed their training at IiPM on various facets of the oil industry. Over the years IIPM has evolved into a world-class centre of excellence in leadership development and has become a hub for meaningful interaction between the participants and business leaders from within and outside and best-in-class academia. IIPM, considered as being IndianOil's crucible, where its divisions, diversities and domain expertise fuse to create the integrated minds of future leadership. Indian Oil is also deputing its experts as faculty to impart training to reputed overseas business organizations like Petronas (Malaysia), Oman Refinery Company, Oman (ORC), Abu Dhabi National Oil Company (ADNOC), Qatar Refinery Company, Qatar (QRC), Nigerian Nation Petroleum Company (NNPC), etc. Recently, Indian Oil has sent in-house experts to train executives of various Sudanese oil companies on pipeline operations & maintenance. During the last 12 years of carrying out intensive training development research and consultancy activities, IiPM has sharpened its skills of imparting international standard management development


programmes for executives performing in the highly competitive business of oil & gas. The Institute has a long-lasting academic partnership with premium management institutes like the Indian Institute of Managements (IIMs) based at Ahmadabad, Kolkata & Bangalore, Management Development Institute (MDI), Gurgaon, International Management Institute (IMI), Delhi, Faculty of Management Studies (FMS), Delhi, and the Indian School of Petroleum, Dehradun, for designing of programmes and sourcing faculty. IIPM has also developed a comprehensive data bank on expert faculty members which enables designing & development and delivering highly focussed market-oriented programmes. It has the unique advantage of having information and access to the best faculty to train on the highly critical and significant areas of the ever-growing petroleum industry. Even the vast bank of the case studies, reading material and video films related to real-life business, gives it a noteworthy edge for imparting management education to working executives of the Indian industry in general and the energy sector in particular.

Indian Oil Corporation Limited: SWOT Analysis: The Indian Oil Corporation Limited - SWOT Analysis company profile is the essential source fortop-level company data and information. The report examines the companys key business structure and operations, history and products, and provides summary analysis of its key revenue lines and strategy. Indian Oil Corporation (IOC) is Indias largest downstream oil company. The company is engaged in refining of petroleum, pipelines-crude oil and petroleum products, marketing of petroleum products, and research and development activities. The IOC group of companies owns and operates 10 of Indias 19 refineries with a combined refining capacity of 60.2 million tonnes per annum (1.2 million barrels per day). The company primarily operates in India with limited presence in some Asian and African countries. It is headquartered in New Delhi, India and employs about 32,000 people. The company recorded revenues of INR2,511.3 billion (approximately $62.4 billion) in the financial year ended March 2008 (FY2008), an increase of 15.5% over the financial year ended March 2007 (FY2007). The operating profit of the company was INR116.7 billion (approximately $2.9 billion) in the FY2008, an increase of 15.4% over FY2007. The net profit was INR69.6 billion (approximately $1.7 billion) in the FY2008, a decrease of 7.2% compared with FY2007.

Scope of the Report Provides all the crucial company information required for business and competitor intelligenceneeds

- Contains a study of the major internal and external factors affecting the company in the form ofa SWOT analysis as well as a breakdown and examination of leading product revenue streams

Data is supplemented with details on the companys history, key executives, businessdescription, locations and subsidiaries as well as a list of products and services and the latest available company statement

Reasons to Purchase- Support sales activities by understanding your customers businesses better - Qualify prospective partners and suppliers


- Keep fully up to date on your competitors business structure, strategy and prospects - Obtain the most up to date company information available

Customer FirstAt Indian Oil, customers always get the first priority. New initiatives are launched round-the-year for the convenience of the various customer segments. Exclusive XTRACARE petrol & diesel stations unveiled in select urban and semi-urban markets offer a range of value-added services to enhance customer delight and loyalty. Large format Swagat brand outlets cater to highway motorists, with multiple facilities such as food courts, first aid, rest rooms and dormitories, spare parts shops, etc. Specially formatted Kisan Seva Kendra outlets meet the diverse needs of the rural populace, offering a variety of products and services such as seeds, fertilizers, pesticides, farm equipment, medicines, spare parts for trucks and tractors, tractor engine oils and pump set oils, besides auto fuels and kerosene. SERVOXpress has been launched recently as a one-stop shop for auto care services. To safeguard the interest of the valuable customers, interventions like retail automation, vehicle tracking and marker systems have been introduced to ensure quality and quantity of petroleum products. Synergy through Subsidiaries A wholly-owned subsidiary, Indian Oil Technologies Ltd., is engaged in commercializing the innovations and technologies developed by Indian Oils R&D Centre, across the globe. The year 2007 saw the seamless merger of the marketing subsidiary, IBP Co Ltd with Indian Oil leading to the formation of a larger and more formidable marketing network for Indian Oil. Merger of Bongaigaon Refinery & Petrochemicals Ltd. with the parent company is in process.

Conclusion:As a leading public sector enterprise of India, IndianOil has successfully combined its corporate social responsibility agenda with its business offerings, meeting the energy needs of millions of people everyday across the length and breadth of the country, traversing a diversity of cultures, difficult terrains and harsh climatic conditions. The Corporation takes pride in its continuous investments in innovative technologies and solutions for sustainable energy flow and economic growth and in developing techno-economically viable and environment-friendly products & services for the benefit of its consumers.



Wikipedia www.iocl.com


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