Final report

INDIAN OIL COORPORATION

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Summer Internship report on

―Industry related Profile of the Organisation,

Structural – functional analysis of the Organisation,

Descriptive Analysis of an operational problem faced by the Organisation,

Routine work given by the organisation‖

Submitted to

INDIAN OIL CORPORATION LIMITED

MARKETING DIVISIONAL OFFICE (PANAMPILLY NAGAR, KOCHI)

BY

GHEETHU MARIA JOY

SCHOOL OF MANAGEMENT STUDIES

COCHIN UNIVERSITY OF SCIENCE AND TECHNOLOGY

(2015)


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TABLE OF CONTENTS

Chapter Title Pg. No. 1 OIL & NATURAL GAS INDUSTRY ANALYSIS

1.1 Introduction

1.2 Global Analysis of Oil and Gas Industry

1.3 Oil and Gas Industry Analysis of India

1.4 Oil consumption in India

2 - 8

2 INDIAN OIL CORPORATION – PROFILE

2.1 Introduction

2.2 Corporate Logo

2.3 History

2.4 Vision of IOCL

2.5 IOCL Group

2.6 Values of IOCL

2.7 Mission of IOCL

2.8 Objectives and Obligations

2.9 Organizational Structure

9 - 15

3 FUNCTIONAL DEPARTMENTS

3.1 Corporate Overview

3.2 Major Divisions of IOCL

3.3 Refineries

3.4 Pipelines

3.5 Marketing

3.6 Research & Development

3.7 Business model of IOCL

3.8 Refinery O&M Management

3.9 Operation and Maintenance

3.10 Human Resource Department of IOCL

3.11 Pipelines Network Map of IOCL

3.12 Financial information of IOCL

16 - 31

4 Products offered by IOCL 32 - 43

5 Services of IOCL

5.1 Refining

5.2 Pipeline

5.3 Technology Licensing

44 - 48

6 Training and development 49

7 SWOT analysis of IOCL 50

8 Major competitors of IOCL 51 - 52

9 Loyalty programs 53 - 62

10 Descriptive analysis of an operational problem faced by the organisation

and suggesting solution

63 - 71

11 Routine work given by the organization 72 -74

https://www.iocl.com/services.aspx


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ACKNOWLEDGEMENT

I thank you, Indian Oil Coorporation Limited for giving me such a wonderful opportunity to do

summer internship in your organization.

I am grateful to Bose Joseph, CHRM/KeSO for his support and help during my internship in IOCL.

I express my sincere and whole hearted appreciation towards Shri R . Subramaniam, Chief manager

(Retail Sales), Kerala State Office, for his invaluable guidance during the course of the internship.

I express my sincere thanks to our faculty guide Dr. D. Mavoothu, School Of Management Studies,

Cochin University of Science and Technology who guided me throughout the duration of internship.

I also thank GOD ALMIGHTY for his blessings showered upon me that made me attend this

program without fail.

GHEETHU MARIA JOY


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CHAPTER 1

OIL & NATURAL GAS INDUSTRY ANALYSIS

1.1 Introduction

Oil and natural gas touch our lives in countless ways every day. Together, they supply more

than 60 percent of our nation‘s energy. They fuel our cars, heat our homes and cook our food. They

help generate the electricity that powers our daily lives, the crude oil supplies the building blocks for

everything from dent-resistant car fenders to soft drink bottles to camping equipment. Roiled by

global economic turmoil, untamed competition, and mind-numbing price swings, energy companies

must be bold about transforming their business models.

1.2 Global Analysis of Oil and Gas Industry

Global economic weakness (in particular, slower growth in China and continuing financial

woes in Europe); tougher fuel economy regulations; more viable forms of alternative energy; and the

development of extraordinarily efficient engines on equipment as varied as cars, earthmovers, and

power plants have all combined to dramatically curtail the need for oil. Meanwhile, robust new

reserves, especially of shale oil, in numerous regions around the world are glutting the market. The

increase in the supply of petroleum and other liquid fuels was twice that of consumption.

Little surprise, then, that the U.S. Energy Information Administration estimates that in 2014

the increase in the global supply of petroleum and other liquid fuels was almost twice the increase in

consumption. That was a recipe for lower prices and shrinking profits. And it presents a troubling

outlook for oil giants such as ExxonMobil, BP, Total, Chevron, and Shell that invested tens of

billions of dollars in oil exploration when prices were high but did not enjoy a concomitant boost in

production or profit margins. Though they‘ve slimmed down by shedding unprofitable units and

cutting back on investment more recently, these companies still face increased competition from an

array of state-owned oil companies and independents.


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Fortunately, the picture is a little bit brighter in the gas sector: Global demand for natural gas

is expected to have risen by 2.2 percent per year by the end of 2019, according to the International

Energy Agency. Yet although natural gas will likely continue to represent an increased share of the

global energy mix, a share growing by 2.4 percent annually until 2018, analysts expect production to

exceed demand in the short term.

The industry has demonstrated the ability to be innovative and to lower costs when necessary.

Producers and refiners have harnessed new technological advances, such as digitization, robotics, and

analytics, to squeeze out higher volumes with less investment. But these digital breakthroughs have

not often extended to ―above the ground‖ parts of the operation. For example, the logistics of water

and waste management in shale oil fields are far from best in class, and lean manufacturing

techniques are seldom used by upstream operators.

Additionally, oil and gas producers need to carefully evaluate their portfolios, field by field,

to ensure that each operation is a good fit for the company‘s core strengths, customer demographics,

and preferences and skill sets. Only a few companies will successfully shore up demand and improve

margins by consolidating their strongest assets.

For downstream players, guaranteeing a buyer for their product is everything.The need to

confront demand challenges head-on cannot be underestimated. North American and European

markets are shrinking to the point where they can no longer absorb all of the oil and gas refined in the

region (the U.S. now exports more than 1 million barrels per day of energy products). Increasingly,

refiners must look beyond their borders for customers. But what they inevitably find in global

markets is fierce competition from the Middle East and other longtime exporters that have built large

modern refineries hoping to serve Asian demand. To compete effectively in this environment,

downstream companies must either secure more robust and long-term relationships with established

and new customers or seek out smaller niche markets to avoid head-to-head rivalries that have the

potential to destroy their profit margins.

The biggest mistake that oil and gas companies can make in this difficult business landscape

is to focus solely on reducing costs (either operating or general and administrative) and spending.

This strategy is effective only in a very narrow range of market conditions and rarely effective

enough to make businesses successful over the long term.


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Rather, companies should carefully consider the supply of assets, analyze the logistics of

accessing available markets, and ensure a long-term presence in these markets without getting into a

bidding war. Oversupply and lower prices represent a real challenge to the industry, but that doesn‘t

mean the future is all gloom. It just means that producers and refiners need to be prepared and adopt

strategies that take advantage of the new reality.

1.3 Oil and Gas Industry Analysis of India

The oil and gas sector is one of the six core industries in India. It is of strategic importance

and plays a pivotal role in influencing decisions across other important spheres of the economy.

In 1997–98, the New Exploration Licensing Policy (NELP) was envisioned to deal with the

ever-growing gap between demand and supply of gas in India. As per a recent report, the oil and gas

industry in India is anticipated to be worth US$ 139,814.7 million by 2015. With India‘s economic

growth closely linked to energy demand, the need for oil and gas is projected to grow further,

rendering the sector a fertile ground for investment.

To cater to the increasing demand, the Government of India has adopted several policies,

including allowing 100 per cent foreign direct investment (FDI) in many segments of the sector, such

as natural gas, petroleum products, and refineries, among others. The government‘s participation has

made the oil and gas sector in the country a better target of investment. Today, it attracts both

domestic and foreign investment, as attested by the presence of Reliance Industries Ltd (RIL) and

Cairn India.

India is the fourth-largest energy consumer (2013) in the world. Oil and gas account for 37

per cent of total energy consumption. Oil consumption is estimated to reach four million barrels per

day (MBPD) by FY16, expanding at a compound annual growth rate (CAGR) of 3.2 per cent during

FY08-16.

Domestic production accounts for more than three quarters of the country's total gas

consumption. Total crude oil production in FY14 stood at 37.9 million metric tonnes (MMT). ONGC

accounted for 59 per cent of total crude oil production in India. Total gas production was 35.4 billion

cubic metres (BCM) in FY14.


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India has a network of 9,785 km of crude pipeline having a capacity of 139.25 million metric

tonnes per annum (MMTPA). In terms of length, IOCL accounts for 45.5 per cent of India‘s crude

pipeline network. In terms of capacity, ONGC accounts for 47.4 per cent followed by IOCL at 29.2

per cent.

The Government of India has initiated the National Gas Hydrate Programme (NGHP), a

consortium of national E&P companies and research institutions, to map gas hydrates for use as an

alternate source of energy. It has allowed 100 per cent foreign direct investment (FDI) in E&P

projects/companies and 49 per cent in refining under the automatic route.

In light of mounting LNG production, huge opportunity lies for LNG terminal operation,

engineering, procurement and construction services.

Oil consumption in India

Market Size

Backed by new oil fields, domestic oil output is anticipated to grow to 1 MBPD by FY16.

With India developing gas-fired power stations, consumption is up more than 160 per cent since

1995. Gas consumption is likely to expand at a CAGR of 21 per cent during FY08–17.

Domestic production accounts for more than three-quarters of the country‘s total gas consumption.


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India increasingly relies on imported LNG; the country was the fifth-largest LNG importer in

2013, accounting for 5.5 per cent of global imports. India‘s LNG imports are forecasted to increase at

a CAGR of 33 per cent during 2012–17.

State-owned ONGC dominates the upstream segment (exploration and production), accounting for

approximately 60 per cent of the country‘s total oil output (FY13).

IOCL operates 11,214 km network of crude, gas and product pipelines, with a capacity of 1.6

MBPD of oil and 10 million metric standard cubic metre per day (MMSCMD) of gas. This is around

30 per cent of the nation‘s total pipeline network. IOCL is the largest company, operating 10 out of

22 Indian refineries, with a combined capacity of 1.3 MBPD.

Investment

According to data released by the Department of Industrial Policy and Promotion (DIPP), the

petroleum and natural gas sector attracted foreign direct investment (FDI) worth US$ 6,519.53

million between April 2000 and January 2015.

Following are some of the major investments and developments in the oil and gas sector:

Kirloskar Oil Engines Ltd (KOEL) and MTU Friedrichshafen, GmbH have signed a

memorandum of understanding (MoU). The MoU lays down exclusive cooperation on the

building and commissioning of emergency diesel gensets (EDG).

CDP Bharat Forge GmbH has acquired 100 per cent equity shares of Mécanique Générale

Langroise (MGL) for € 11.8 million (US$ 12.91 million). The acquisition would consolidate

Bharat Forge‘s position in the oil and gas sector by enhancing service offerings and

geographical reach.

Technip has won a € 100 million (US$ 109.37 million) contract from Oil and Natural Gas

Corporation (ONGC) to build an onshore oil and gas terminal in Andhra Pradesh.

Essar Oil Ltd has signed a deal with Russia-based OAO Rosneft to import 10 million tonnes

(MT) of crude oil per year for 10 years.

The oil marketing companies have reduced the price of non-subsidised liquefied petroleum

cooking gas (LPG) by Rs 43.5 (US$ 0.69) per cylinder. The companies have also reduced jet

fuel rates by 12.5 per cent, the sixth straight reduction in prices since August 2014.


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Reliance Industries Ltd (RIL) and Mexican state-owned company Petroleos Mexicanos

(Pemex) have entered into a memorandum of understanding (MoU) for cooperation in the oil

and gas sector.

GAIL Global USA LNG LLC (GGULL) has signed an agreement with the US-based WGL

Midstream Inc for sourcing gas required to produce 2.5 MT of liquefied natural gas (LNG) a

year at the Cove Point Terminal in Maryland, US.

Shares in crude pipeline network by length

In terms of length, IOCL accounts for 45.5 per cent (4,448 km) of India's crude pipeline network.

Government Initiatives

Two landmark initiatives for energy efficiency – Design Guidelines for Energy Efficient

Multi-Storey Residential Buildings and Star Ratings for Diesel Gensets and for Hospital Buildings –

were launched by Mr Dharmendra Pradhan, Minister of State with Independent Charge for Petroleum

and Natural Gas, Government of India.

Some of the major initiatives taken by the Government of India to promote oil and gas sector are:

India and Norway have discussed bilateral relationship between the two countries in the field

of oil and natural gas and decided to extend cooperation in hydrocarbon exploration.


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To strengthen the country`s energy security, oil diplomacy initiatives have been intensified

through meaningful engagements with hydrocarbon rich countries.

PAHAL - Direct Benefit Transfer for LPG consumer (DBTL) scheme launched in 54 districts

on November 11, 2014 and expanded to rest of the country on January 1, 2015 will cover 15.3

crore active LPG consumers of the country.

24 x 7 LPG service via web launched to provide LPG consumers an integrated solution to

carry out all services at one place, through MyLPG.in, from the comfort of their home.

Special dispensation for North East Region: For incentivising exploration and production in

North East Region, 40 per cent subsidy on gas price has been extended to private companies

operating in the region, along with ONGC and OIL.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Mr

Narendra Modi, has approved a mechanism for procurement of Ethanol by Public Sector Oil

Marketing Companies (OMCs) to carry out the Ethanol Blended Petrol (EBP) Program.

By 2015-16, India‘s demand for gas is set to touch 124 MTPA against a domestic supply of 33

MTPA and higher imports of 47.2 MTPA, leaving a shortage of 44 MTPA, as per projections by the

Petroleum and Natural Gas Ministry of India. Moreover, Business Monitor International (BMI)

predicts that India will account for 12.4 per cent of Asia-Pacific regional oil demand by 2015.

Exchange Rate Used: INR 1 = US$ 0.016 as on March 24, 2015


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CHAPTER 2

INDIAN OIL CORPORATION – PROFILE

2.1 Introduction

Indian Oil Corporation Limited, or Indian Oil, is an Indian state-owned oil and gas

corporation with its headquarters in New Delhi, India. It is the world's 88th largest corporation,

according to the Fortune Global 500 list, and the 2nd largest public corporation in India when ranked

by revenue.

Indian Oil and its subsidiaries account for a 49% share in the petroleum products market, 31%

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 22 refineries with a combined refining capacity

of 65.7 million metric tonnes per year. In FY 2012 IOCL sold 75.66 million tonnes of petroleum

products and reported a PBT of 37.54 billion, and the Government of India earned an excise duty of

232.53 billion and tax of 10.68 billion.

The company is mainly controlled by Government of India which owns approximately 69%

shares in the company. It is one of the seven Maharatna status companies of India, apart from Coal

India Limited, NTPC Limited, Oil and Natural Gas Corporation, Steel Authority of India Limited,

Bharat Heavy Electricals Limited and Gas Authority of India Limited.

2.2 Corporate Logo

http://en.wikipedia.org/wiki/Petroleum

http://en.wikipedia.org/wiki/Natural_gas

http://en.wikipedia.org/wiki/New_Delhi,_India

http://en.wikipedia.org/wiki/Fortune_Global_500

http://en.wikipedia.org/wiki/Government_of_India

http://en.wikipedia.org/wiki/Government_of_India

http://en.wikipedia.org/wiki/Maharatna

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Coal_India_Limited

http://en.wikipedia.org/wiki/Coal_India_Limited

http://en.wikipedia.org/wiki/NTPC_Limited

http://en.wikipedia.org/wiki/Oil_and_Natural_Gas_Corporation

http://en.wikipedia.org/wiki/Steel_Authority_of_India_Limited

http://en.wikipedia.org/wiki/Bharat_Heavy_Electricals_Limited

http://en.wikipedia.org/wiki/Gas_Authority_of_India_Limited


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Essential Elements of the logo

A saffron coloured circle/globe. Enclosed by a dark blue coloured outer ring and a dark blue coloured

band across on which is written the name Indian Oil in Devanagri script. The saffron circle represents

energy as a derivative of the Sun, connoting life and the future. The dark blue outer ring and the

horizontal band symbolize technology for harnessing this energy. However, whenever the logo is not

accompanied by the full name "Indian Oil Corporation Limited", the lettering "Indian Oil" in two

colours may be incorporated under the logo. The word "Indian Oil" when incorporated in running

matter should continue to be used as one word with the letter "I" and "O" in capitals as shown. It

should be in single colour (Dark Blue) and not in two colours.

Proportions of the logo

2.3 History

Indian Oil began operations in 1958 as Indian Oil Company Ltd. The Indian Oil Corporation

was formed in 1964, with the merger of Indian Refineries Ltd.

Recently Indian Oil Corp (IOC) has raised $500 million by selling 10-year dollar-denominated

bonds, its fourth such issue overseas in the last three and a half years. In 2003, its Gujarat Refinery

was awarded the "Best of all" Rajiv Gandhi National Quality Award.

http://en.wikipedia.org/wiki/Rajiv_Gandhi_National_Quality_Award


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2.4 Vision of IOCL

A major diversified, transnational, integrated energy company, with national leadership and a

strong environment conscience, playing a national role in oil security & public distribution.


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IOCL Group

IOCL Group consists of Indian Oil Corporation Ltd. and the following subsidiaries:

Lanka IOC Ltd

Indian Oil (Mauritius) Ltd.

IOCL Middle East FZE

Indian Oil Technologies Ltd

2.6 Values of IOCL

Values exist in all organizations and are an integral part of any it. Indian Oil nurtures a set of

core values:

Care

Innovation

Passion

Trust

2.7 Mission of IOCL

IOCL has the following 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.


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2.8 Objectives and Obligations Objectives

To serve the national interests in oil and related sectors in accordance and consistent with

Government policies.

To ensure maintenance of continuous and smooth supply of petroleum products by way of

crude oil refining, transportation and marketing activities and to provide appropriate

assistance to consumers to conserve and use petroleum products efficiently.

To enhance the country‘s self-sufficiency in crude oil refining and build expertise in laying of

crude oil and petroleum product pipelines.

To further enhance marketing infrastructure and reseller network for providing assured

service to customers throughout the country.

To create a strong research & development base in refinery processes, product formulations,

pipeline transportation and alternative fuels with a view to minimising/eliminating imports

and to have next generation products.

To optimise utilisation of refining capacity and maximise distillate yield and gross refining

margin.

To maximise utilisation of the existing facilities for improving efficiency and increasing

productivity.

To minimise fuel consumption and hydrocarbon loss in refineries and stock loss in marketing

operations to effect energy conservation.

To earn a reasonable rate of return on investment.

To avail all viable opportunities, both national and global, arising out of the Government of

India‘s policy of liberalisation and reforms.

To achieve higher growth through mergers, acquisitions, integration and diversification by

harnessing new business opportunities in oil exploration & production, petrochemicals,

natural gas and downstream opportunities overseas.

To inculcate strong ‗core values‘ among the employees and continuously update skill sets for

full exploitation of the new business opportunities.


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To develop operational synergies with subsidiaries and joint ventures and continuously

engage across the hydrocarbon value chain for the benefit of society at large.

Obligations

Towards customers and dealers:

To provide prompt, courteous and efficient service and quality products at competitive prices.

Towards suppliers:

To ensure prompt dealings with integrity, impartiality and courtesy and help promote

ancillary industries.

Towards employees:

To develop their capabilities and facilitate their advancement through appropriate training

and career planning. To have fair dealings with recognised representatives of employees in pursuance

of healthy industrial relations practices and sound personnel policies.

Towards community:

To develop techno-economically viable and environment-friendly products.

To maintain the highest standards in respect of safety, environment protection and

occupational health at all production units.

Towards Defence Services:

To maintain adequate supplies to Defence and other para-military services during normal as

well as emergency situations.

Financial Objectives:

To earn adequate return on the capital employed and maintain a reasonable

annual dividend on equity capital.

To ensure maximum economy in expenditure.


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To manage and operate all facilities in an efficient manner so as to generate adequate internal

resources to meet revenue cost and requirements for project investment, without budgetary

support.

To develop long-term corporate plans to provide for adequate growth of the Corporation‘s

business.

To reduce the cost of production of petroleum products by means of systematic cost control

measures and thereby sustain market leadership through cost competitiveness.

To complete all planned projects within the scheduled time and approved cost.

2.9 Organizational Structure

The whole of Indian Oil Corporation (IOC) works under Corporate Office located at New

Delhi. It follows hierarchical structure where the decision flows from top to bottom and the data

flows from bottom to top. Under the corporate office there are 5 divisions namely- Pipelines,

Refineries, R&D, Marketing & Assam oil division. The Marketing division located at Mumbai co-

ordinates with the regional offices i.e. North, South, East & West Region office, the other Divisional

Offices & SBI for decisions regarding investments. The Regional offices co-ordinates with respective

state office that in turn coordinates with respective location offices.


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CHAPTER 3

FUNCTIONAL DEPARTMENTS

3.1 Corporate Overview

Indian Oil Corporation Limited is the country‘s flagship national oil company and highest

ranked (96th) Indian corporate in the prestigious Fortune ‗Global 500‘ listing in the year 2014, with

business interests straddling the entire hydrocarbon value chain.

With dominant share of national refining and pipeline capacities as well as in petroleum

products‘ market, Indian Oil has been meeting the energy needs of the country for more than five

decades now. A strong workforce of about 33,800 employees has been instrumental in achieving

such glorious milestones.

The company‘s operations are strategically structured along the core business areas viz.

Refineries, Pipelines, Marketing, and Research & Development. Additionally, to keep up with the

rapid changes in business environment, Business Development group was formed with a mandate to

expand the existing portfolio through backward and forward integration such as embarking into

Exploration & Production and venturing into Petrochemicals and Natural Gas business.

3.2 Major Divisions of IOCL

Indian Oil Corporation Limited (Indian Oil) owns and operates a network of crude oil and

petroleum product pipeline in India. It has two divisions: Refineries Division and Marketing

Division. The Refineries Division is focused on managing the public sector refineries and the

Marketing Division is focused on distribution not only the entire production of public sector

refineries but also the deficit products imported. It is organized in two segments: sale of petroleum

products, and other businesses, which comprises sale of imported crude oil, sale of gas,

petrochemicals, explosives and cryogenics, wind mill power generation and oil and gas exploration

activities jointly undertaken in the form of unincorporated joint ventures. The Digboi Refinery of

Assam Oil Division processed 0.623 million metric tons (MMT) of crude oil during the year. The


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Division sold about 1.067 MMT of products. IBP Division comprises the explosives and cryogenics

business.

3.3 Refineries

Indian Oil and its subsidiary company, Chennai Petroleum Corporation Ltd., together own

and operate 10 of India‘s 22 refineries with a total refining capacity of 65.7 MMTPA accounting for

30.54 percent of country‘s refining capacity.

Presently, the Corporation‘s flagship, state-of-the-art 15 MMTPA refinery project at Paradip

is inching closer towards commissioning. Once commissioned, this refinery will improve

Corporation‘s competitiveness in the market and provide enhanced operational flexibility.

3.4 Pipelines

The Corporation‘s cross-country network of over 11,000 kms of crude oil, product and gas

pipelines is the largest in the country, meeting the vital energy needs of consumers in an efficient and

environment-friendly manner.

REFINERIES PIPELINES MARKETING

R& D ASSAM OIL


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Firm action plans are in hand to augment the pipeline capacities for transportation of crude

oil, petroleum products including LPG, develop crude oil tankages to improve blending in order to

enable refineries to process heavier crudes as well.

3.5 Marketing

With indefatigable workforce, robust countrywide dealership/ distributorship network backed

by sprawling infrastructures such as depots, terminals, aviation fuel stations, and LPG bottling plants,

the Corporation caters every corner of the country in every situation, be it scorching heat or freezing

cold. The rural markets of the country are being catered by Kisan Seva Kendra (KSK), special format

retail outlets. The KSKs are not only becoming the new face of the organization but also bolstering

its market presence. Almost every second household in India is fuelled through Indane LPG, through

its vast network of retail distributors. A large network of consumer pumps are also in operation for

the convenience of bulk consumers, ensuring products and inventory at their doorstep. The

corporation enjoys more than 51 percent of infrastructure share in the industry as a market leader.

Indian Oil‘s aviation service commands an enviable market share in the aviation fuel business and

successfully services the demands of the Indian Defence Service, domestic and international flag

carriers as well as private airlines.

Indane LPG, SERVO lubricants, PROPEL petrochemicals, are the most common and much-

respected energy brands of the Corporation amongst other.

Customer centricity has been always the focus of the Corporation. Thrust has been on

modernization of retail outlets through automation, stringent quality control measures, highway

networking, loyalty programmes, fore court management, IVRS etc.

3.6 Research & Development

Indian Oil‘s state-of-the-art Research & Development Centre is a pioneer in lubricants

formulation, refinery processes, pipeline transportation and alternative fuels. This nodal agency of the

Indian hydrocarbon sector has been instrumental in ushering in research on Hydrogen fuel in the

country. DHDT technology, Light Naptha Isomerization technology, INDMAX technology (for

maximizing LPGas yield), INDAdeptG, Oilivorous bio-remediation technology (extended to marine

applications too), Diesel Hydro DeSulphurisation (DHDS) catalyst, a special Indicat catalyst for


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Bharat Stage - IV compliant Diesel, IndVi catalyst for improved distillate and FCC throughput, and

adsorbent based deep sulphurisation process for gasoline and diesel streams are some of the in-house

technologies and catalysts developed by Indian Oil.

3.7 Business model of IOCL

3.8 Refinery O&M Management

Indian Oil has over four decades' experience in operation & maintenance (O&M) of over 180

process units at its seven refineries. Its reservoir of experienced technical teams has been providing

world-class technical support to leading petroleum companies around the world.

Having absorbed state-of-the-art technologies of leading process licensors like UOP, Chevron, IFP,

Stone & Webster, Mobil, Haldor Topsoe, KTI/Technip, Linde, CD-Tech, Stork Comprimo, etc.,

IndianOil in an excellent position to offer O&M services for latest technologies such as distillate

FCCUs, Resid FCCUs, hydrocrackers, reformers (both semi-regenerative and continuous catalytic

regeneration types), lube processing units, catalytic de-waxing units, cokers, coke calciners,

visbreakers, merox, hydro-treaters for kero and gasoil streams, etc. IndianOil refineries also have

units for producing specialty products such as bitumen, LPG, MTBE, Butene-1, Propylene, Xylenes,

Di-Methyl Terephthalate (DMT), polyester staple fibre (PSF) and other petrochemicals like Linear

Alkyl Benzene, Paraxylene (PX), Purified Terepthalic Acid (PTA), etc.


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IndianOil's technical team is committed to continuous improvement in O&M practices to achieve the

highest standards of efficiency & reliability in pursuit of run-length improvement for maximisation of

on-stream days. Special attention is given to safety, health & environment protection practices.

All IndianOil refineries are ISO certified, with the related documentation and manuals updated on a

regular basis. A number of IndianOil clients have benefited from these exhaustive manuals prepared

in-house. The ISO management & documentation is tailor-made to suit the requirements of

individual refineries, taking into consideration the design details of the licensors.

In addition, IndianOil also offers the specialised services of its experts for commissioning/start-up

assistance depending on the client's need. Its team is also well-equipped to prepare operation manuals

with clear instructions for plant start-up, operation, shutdown, emergency handling, etc.

3.9 Operation and Maintenance

IndianOil's Pipelines Division provides services for operations and maintenance. The clientele

includes the existing pipelines companies and companies venturing into pipelines business.

The services provided for Operations and Management are:

Cross country crude and multi-product pipelines

Mainline engines, pumps and motors

Station facilities, crude oil and petroleum product tanks

Automation and advanced control systems

Single Point Mooring (SPM) Systems, submarine pipelines

Development of maintenance procedures, formats, schedules, manuals

Corrosion monitoring and control

Technical audits for better performance of energy consumption, quality, safety and

environment protection

Onsite and offsite disaster management plans

Selection, testing and evaluation of Chemical Drag Reducers and corrosion inhibitors


SMS CUSAT 23

IndianOil's expert group of engineers located in different parts of the country deliver the services

offered above. The customers can contact the Executive Director (Operations) for operation-related

services.

3.10 Human Resource Department of IOCL

HR functions

Training

Interactive sessions with employees to promote interpersonal effectiveness and bring down

barriers to communication

Motivational work groups, discussion forums

Appraisals and Reward system

Recruitment

Talent Acquisition (Recruitment and Selection)

IOCL follows a mix of open and campus recruitment. For open recruitment advertisements are

published in leading national dailies. For campus recruitment, Indian Oil visits IIT‘s , NIT‘s and

other reputed technical institutes of the country. After 2010, IOCL stopped conducting its own exam

and start considering GATE scores.

Selection procedure through GATE score

Written test Group Discussion/Group Task Personal interview

Talent management (Performance, Career and Competence Management)

Implementation of non-monetary and monetary rewards for enhancing corporate and

individual performance. Improved recruitment policy is followed to attract the best talent. Intra and

inter – function job rotation is there. Challenging assignments are given. Online performance


SMS CUSAT 24

management system has been implemented since 2005-06. There are programs for mentoring to

retain talent.

Learning and development

IOCL lays emphasis on training and motivating to keep its workforce constantly engaged.

The learning services IOCL offers are on a select basis to managers from the industry on national and

international basis. Indian oil setup the indian oil institute of petroleum management (IIPM) as an

apex centre for learning.IIPM also offer a 1-yesr MBA programme in petroleum management.IOCL

conducts discipline – specific training workshops from time to time so that employees can constantly

upgrade competencies and strengthen individual capacities and strengthen individual capacities for

organizational effectiveness.

Total rewards (Compensation and Benefits)

There are 3 categories of employees – broad level executives, below board level executives ,

workmen. There is a well defined pay structure for each category. Compensation structure consists

of: Basic pay and DA, Accommodation facilities ,prerequisite and allowances, performance related

payments, superannuation benefits.

Benefits and services

The employee can be posted to any location and IOCL offers best quality of life through all

amenities.

From education of children to health care of parents everything is provided by IOCL to its

employees.

Life – time medical care : Post – retirement medical benefits

Talent Retention (Employee Engagement and Initiatives)

Sport activities

Club facilities

Article writing competition

Recognition in annual magazines.


SMS CUSAT 25

Unique HR practices

e-Sambandh

Electronic performance management system (e-PMS) for performance appraisal.

Women in Public Sector (WIPS) cell.

First company to take GATE scores for recruitment to attract bright talent

In- house training via IIPM.


SMS CUSAT 26

3.11 Pipelines Network Map of IOCL


SMS CUSAT 27

3.12 Financial information of IOCL

Balance Sheet as at 31st March 2014

(` in Crore)

Note Page Particulars March-14 March-13

EQUITY AND LIABILITIES

(1) Shareholders' Funds

2 107 (a) Share Capital 2,427.95 2,427.95

3 108 (b) Reserves and Surplus 63,564.13 58,696.36

65,992.08 61,124.31

(2) Non-current liabilities

4 109 (a) Long-term borrowings 31,683.58 21,414.20

5 111 (b) Deferred tax liabilities (Net) 5,616.18 5,512.66

6 112 (c) Other Long-term liabilities 13,411.58 11,435.18

7 112 (d) Long-term provisions 390.12 375.25

51,101.46 38,737.29

(3) Current liabilities

8 113 (a) Short-term borrowings 48,915.54 56,911.00

9 113 (b) Trade payables 35,697.29 29,667.93

6 112 (c) Other current liabilities 24,319.15 19,914.08

7 112 (d) Short-term provisions 26,388.26 21,664.71

1,35,320.24 1,28,157.72

TOTAL 2,52,413.78 2,28,019.32

ASSETS

(4) Non-current assets

(a) Fixed Assets

10 114 (i) Tangible assets 62,256.62 59,823.45

11 116 (ii) Intangible assets 692.17 809.28

12 116 (iii) Capital work-in-progress 33,150.64 25,646.21

13 117 (iv) Intangible assets under development 728.59 584.11

96,828.02 86,863.05

14 118 (b) Non-current investments 16,311.49 5,032.62

15 122 (c) Long-term loans and advances 4,626.48 4,876.23

16 124 (d) Other non-current assets 70.02 13.86

1,17,836.01 96,785.76


SMS CUSAT 28

(` in Crore)


(5) Current assets

14 121 (a) Current investments 7,282.70 13,638.60

17 124 (b) Inventories 64,697.37 59,314.39

18 125 (c) Trade receivables 11,023.10 11,257.32

19 125 (d) Cash and Bank Balances 2,608.53 503.29

15 122 (e) Short-term loans and advances 41,574.33 39,756.94

16 124 (f) Other current assets 7,391.74 6,763.02

1,34,577.77 1,31,233.56

TOTAL 2,52,413.78 2,28,019.32

1 104 Significant Accounting Policies

2-47 107 Notes on Financial Statements


SMS CUSAT 29

Statement of PROFIT AND LOSS for the Year Ended 31st March 2014

(` in Crore)


(1) Revenue:

20 126 (a) Revenue from operations (Gross) 4,97,114.13 4,70,650.43

Less: Excise Duty 23,904.04 23,554.18

Revenue from operations (Net) 4,73,210.09 4,47,096.25

21 127 (b) Other Income 3,417.29 3,514.79

Total Revenue 4,76,627.38 4,50,611.04

(2) Expenses:

22 128 (a) Cost of materials consumed 2,27,012.01 2,19,744.05

(b) Purchase of Stock-in-Trade 1,96,237.15 1,88,182.20

[Net of Duty Draw Back ` 5.12 crore (2013: ` 21.96 crore)]

23 128 (c) Changes in Inventory (1,153.00) (5,220.03)

24 128 (d) Employee benefit expenses 6,618.97 7,271.27

25 129 (e) Finance cost 5,084.42 6,435.27

(f) Depreciation and Amortisation on :

(i) Tangible Assets 5,616.78 5,056.25

(ii) Intangible Assets 143.31 144.74

5,760.09 5,200.99

26 129 (g) Other Expenses 28,792.73 23,355.79

Total Expenses 4,68,352.37 4,44,969.54

(3) Profit before Prior Period, Exceptional Items and Tax 8,275.01 5,641.50

27 131 (4) Income / (Expenses) pertaining to Prior Years (Net) (96.30) 6.30

(5) Profit before Exceptional Items and Tax 8,178.71 5,647.80

(6) Exceptional Items (Refer point 3 of Note - 47) 1,746.80 -

(7) Profit before Tax 9,925.51 5,647.80

Contd...


SMS CUSAT 30

(` in Crore)


(8) Tax Expense:

Current Tax 2,802.90 821.94

[includes ` (116.31) crore (2013 : ` (25.71) crore) relating to prior years]

MAT Credit Entitlement - (450.09)

Deferred Tax 103.52 270.78

(9) Profit for the year 7,019.09 5,005.17

33 142 (10) Earning per Equity Share (`):

(a) Basic 28.91 20.61

(b) Diluted 28.91 20.61

Face Value Per Equity Share (`) 10 10

1 104 Significant Accounting Policies

2 - 47 107 Notes on Financial Statements


SMS CUSAT 31

Income and expenditure account for the year ended 31st march 2014 on provision of

township, education, medical and other facilities (` in Crore)

Particulars March-14 March-13

INCOME :

1. Recovery of House Rent 7.59 6.76

2. Recovery of Utilities-Power and Water 4.52 4.32

3. Recovery of Transport Charges 0.26 0.21

4. Other Recoveries 7.93 7.08

5. Excess of Expenditure over Income 468.60 422.19

TOTAL : 488.90 440.56

EXPENDITURE :

1. Salaries, Wages and PF & Gratuity Contribution 155.54 141.07

2. Consumable Stores and Medicines 31.12 27.03

3. Repairs and Maintenance 110.03 92.16

4. Interest 16.77 14.79

5. Depreciation 12.65 12.30

6. Miscellaneous Expenses : Taxes, License Fees, Insurance etc. 36.44 30.26 7. Utilities-Power, Water and Gas 99.82 92.63 8. Rent 0.99 0.54 9. Subsidies for Social & Cultural Activities 17.63 23.02 10. Bus Hire Charges 1.81 1.26 11. Club and Recreation 0.54 0.17 12. Others 5.56 5.33

TOTAL: 488.90 440.56


SMS CUSAT 32

CASH FLOW STATEMENT For the Year Ended 31st March 2014

(` in Crore)


A Cash Flow from Operating Activities

1 Profit Before Tax 9,925.51 5,647.80

2 Adjustments for :

Depreciation 5,768.65 5,219.80

Loss/(Profit) on sale of Assets (net) 57.51 21.44

Loss/(Profit) on sale of Investments (net) 42.54 (28.01)

Amortisation of Capital Grants (2.26) (1.46)

Amortisation of Premium on Forward Contracts (583.20) 15.49

Provision for Probable Contingencies (net) 238.11 407.91

Provision for Loss on Investments (net) 483.12 (634.15)

Provision for Doubtful Debts, Advances, Claims and

Obsolescence of Stores (net) 103.84 16.06

Provision for Dimunition in ‘Receivable from trust’ (net) (0.29) (110.15)

Provision for MTM Loss/(Gain) on interest rate swap (30.61) 10.81

Foreign Currency Monetary Item Translation (47.66) -

Difference Account

Interest Income on Investments (1,037.41) (1,118.85)

Dividend Income on Investments (884.91) (999.47)

Interest Expenditure 5,086.60 6,434.91

9,194.03 9,234.33

3 Operating Profit before Working Capital Changes (1+2) 19,119.54 14,882.13

7. Change in Working Capital:

(Excluding Cash & Bank Balances) Trade & Other Receivables (2,291.87) (7,617.18) Inventories (5,391.55) (2,504.96)

Trade and Other Payables 12,340.41 7,855.32

Change in Working Capital 4,656.99 (2,266.82) 5 Cash Generated From Operations (3+4) 23,776.53 12,615.31 6 Less : Taxes paid 1,726.64 1,004.71 7 Net Cash Flow from Operating Activities (5-6) 22,049.89 11,610.60 B Cash Flow from Investing Activities:

Sale/Transfer of Assets 449.63 721.87

Sale / Maturity of Investments 1,117.42 782.27 Interest Income on Investments 1,037.32 1,128.40

Dividend Income on Investments 884.91 999.47

Purchase of Assets (4,876.39) (2,723.23)

Investments in Subsidiaries (6,269.09) (164.04) Investments in Long Term Investments / Others (187.66) (60.83)

Expenditure on Construction Work in Progress (9,992.72) (9,022.20)

Net Cash Generated/(Used) in Investing Activities: (17,836.58) (8,338.29)

Contd...


SMS CUSAT 33

(` in Crore)


C Net Cash Flow From Financing Activities:

Proceeds from Long-Term Borrowings 16,253.67 7,098.44

Repayments of Long-Term Borrowings (2,513.58) (5,078.14)

Proceeds from/(Repayments of) Short-Term Borrowings (8,010.39) 3,426.90

Interest paid (6,075.83) (7,115.08)

Dividend/Dividend Tax paid (1,761.94) (1,408.15)

Net Cash Generated/(Used) from Financing Activities: (2,108.07) (3,076.03)

D Net Change in Cash & Bank Balances 2,105.24 196.28

(A+B+C)

E 1 Cash & Bank Balances as at end of the year 2,608.53 503.29

Less:

E 2 Cash & Bank Balances as at the beginning of year 503.29 307.01

NET CHANGE IN CASH & BANK BALANCES (E 1-2)

2,105.24 196.28

Notes:

1. Cash & Bank Balances as at end of the year 2,608.53 503.29

Less: Other Bank Balances 776.37 1.37

Cash and Cash Equivalents

1,832.16 501.92

2. Cash and Bank balance includes ` 9.94 crore which are not readily available for use (refer Note-19). 3. Figures for previous periods have been regrouped wherever necessary for uniformity in presentation.

SUMMER INTERNSHIP REPORT –INDIAN OIL COORPORATION LIMITED

34

CHAPTER 4

PRODUCTS OFFERED BY IOC

The main products of Indian Oil are petrol, diesel, LPG, auto LPG, aviation turbine fuel,

lubricants and petrochemicals: naphtha, bitumen, kerosene etc. Indian Oil operates the largest and the

widest network of fuel stations in the country, numbering about 20,575 (16,350 regular ROs & 4,225

Kisan Seva Kendra). It has also started Auto LPG Dispensing Stations (ALDS). It supplies Indane

cooking gas to over 66.8 million households through a network of 5,934 Indane distributors.

Brands

1. Indane Gas - Domestic and Industrial Gas

2. AutoGas - Automotive Natural Gas

3. Xtra Premium - Automotive Premium Petrol

4. Xtra Mile - Automotive Premium Diesel

5. Servo - Lubricants and Greases

6. Propel - Petrochemicals

7. Indian Oil Aviation - Aviation fuel

8. LNG at Doorstep - LNG by cryogenic transportation

Indane Gas

Indane is today one of the largest packed-LPG brands in the world and has been conferred the

coveted ‗Consumer Superbrand‘ status by the Superbrands Council of India.

Having launched LPG marketing in the mid-60s, Indian Oil has been credited with bringing about a

‗kitchen revolution,‘ spreading warmth and cheer in millions of households with the introduction of

the clean and efficient cooking fuel. It has led to a substantial improvement in the health of women,

especially in rural areas by replacing smoky and unhealthy chulha. Indane is today an ideal fuel for

http://en.wikipedia.org/wiki/Diesel_fuel

http://en.wikipedia.org/wiki/Naphtha

http://en.wikipedia.org/wiki/Bitumen

http://en.wikipedia.org/wiki/Kerosene

http://en.wikipedia.org/wiki/Indane

http://en.wikipedia.org/wiki/Indane


35

modern kitchens, synonymous with safety, reliability and convenience.

With the status of an exclusive business vertical within the Corporation, the Indane network delivers

1.2 million cylinders a day to the doorsteps of over 8.95 crore households, making Indian Oil the

second largest marketer of LPG globally, after SHV Gas of The Netherlands. Indane is available in

compact 5 kg cylinders for rural, hilly and inaccessible areas, 14.2 kg cylinders for domestic use, and

19 kg and 47.5 kg for commercial and industrial use.

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 cooking fuel.

Auto Gas

Auto Gas (LPG) is a clean, high octane, abundant and eco-friendly fuel. It is obtained from

natural gas through fractionation and from crude oil through refining. It is a mixture of petroleum

gases like propane and butane. The higher energy content in this fuel results in a 10% reduction of

CO2 emission as compared to MS.

Auto Gas is a gas at atmospheric pressure and normal temperatures, but it can be liquefied

when moderate pressure is applied or when the temperature is sufficiently reduced. This property

makes the fuel an ideal energy source for a wide range of applications, as it can be easily condensed,

packaged, stored and utilised. When the pressure is released, the liquid makes up about 250 times its

volume as gas, so large amounts of energy can be stored and transported compactly.

The use of LPG as an automotive fuel has become legal in India with effect from April 24,

2000, albeit within the prescribed safety terms and conditions. Hitherto, the thousands of LPG

vehicles running in various cities have been doing so illegally by using domestic LPG cylinders, a

very unsafe practice. Using domestic LPG cylinders in automobiles is still illegal.


36

The fuel is marketed by IndianOil under the brand name ‗AutoGas‘

"IndianOil has setup 350 Auto LPG Dispensing Stations (ALDS) covering 192 cities across India."

AutoGas impacts greenhouse emissions less than any other fossil fuel when measured through

the total fuel cycle. Conversion of petrol to Auto Gas helps substantially reduce air pollution caused

by vehicular emissions.

The saving on account of conversion to Auto Gas in comparison to petrol is about 35-40%.

Low filling times and the 35-40% saving is a reason enough for a consumer to convert his vehicle to

AutoGas.

Natural Gas

Over the years, Natural Gas has emerged as the 'fuel of choice' across the world. It is steadily

replacing traditional fossil fuels due to its environment friendly characteristics which help in meeting

the stipulated automobile emission norms. Natural Gas has significant cost advantages over fuels

such as Naphtha and commercial LPG. Demand for Natural Gas in India is primarily driven by the

fertiliser and power sectors, which account for almost two-third of the country‘s gas consumption.

Indian oil entered the Natural Gas business in 2004.Since then, by leveraging its inherent

strengths and countrywide reach, Indian oil has significantly enhanced its customer base. In the year

2013-14, it clocked total Natural Gas sales of 3.219 MMTPA (Million Metric tonnes Per Annum)

Indian Oil has co-promoted Petronet LNG Limited (PLL) for setting up LNG (Liquefied

Natural Gas) terminals at Dahej & Kochi. Indian Oil has marketing rights for 30% quantity of the

LNG procured by PLL from Ras Gas on long term basis at Dahej besides long term contract at

Kochi. Demand for Natural gas in India is growing and cannot be met by the current indigenous

production. Hence, Indian Oil is in the process of sourcing more quantities of LNG to meet the

increasing requirements.

Within the gas business, City Gas Distribution (CGD) is a rapidly growing segment. Green

Gas Ltd., IndianOil's joint venture with GAIL (India) Ltd., is already operational in Agra and

Lucknow in the state of Uttar Pradesh and is further expanding to cater to the increased demand in

various sectors. In an initiative to expand the CGD network, IndianOil has formed a consortium with

M/s Adani Gas Ltd. to develop CGD networks on pan India basis.


37

In Gas Transmission business, IndianOil owns and operates Dadri-Panipat Pipeline. IndianOil

has formed a consortium with GSPL and other OMC‘s to build & operate Gas pipelines across the

country.

In a major step to increase Indian Oil‘s presence in Natural Gas industry, Corporation is

currently implementing 5 MMTPA LNG import Terminal at Ennore near Chennai which is targeted

for completion during 2015-16.

Indian Oil is in the process of procuring LNG from world market on long term as well as

short term basis for meeting the Internal Consumption at our own Refineries and for Ennore LNG

Terminal.

Indian Oil has the capabilities to supply re-gassified LNG to customers presently located in

the Northern and Western regions of India. With the expansion of the pipeline network in Southern

region as well as other parts of the country, Indian Oil can supply gas to customers located near those

pipelines. As a committed supplier, Indian Oil is completely responsible for delivery of gas to the

customer‘s premises. The transportation services of the company engaged in transportation of gas are

hired to ensure deliveries. This model is used world over wherein multiple gas suppliers operate

through one transportation system.

The ―LNG at Doorstep‖ initiative involves making LNG available to the customers not

connected by gas pipeline. Gas is transported through a cryogenic system, stored in a cryogenic

holding tank at the target location and re-gassified on-site through vaporizers for use as fuel. The

entire operation being concealed eliminates the possibility of adulteration and pilferage. Introduced in

2007, this initiative has been well received and is attracting more customers located away from the

pipelines. Indian Oil has in-house capabilities in the manufacturing of Cryogenic equipment at the

―State of Art facility at Nasik‖ for the last three decades.

Petrol/Gasoline

Automotive gasoline and gasoline-oxygenate blends are used in internal combustion spark-

ignition engines. These spark ignition engine fuels are primarily used for passenger cars. They are also

used in off-highway utility vans, farm machinery and in other spark ignition engines employed in a


38

variety of service applications.

Gasoline is a complex mixture of relatively volatile hydrocarbons that vary widely in chemical & physical

properties and are derived from fractional distillation of crude petroleum with a further treatment mainly

in terms of improvement of its octane rating. The hundreds of individual hydrocarbons in gasoline range

from c4 to c11.

An oxygenate is an oxygen-containing, ashless organic compound (such as an alcohol or ether)

which can be used as a fuel or fuel supplement. Motor gasoline is sold at retail outlets where it is directly

delivered into the automobile tank. The Indian Standard governing the properties of motor gasoline &

gasoline-oxygenate blends is IS 2796: 2000 (3rd Rev).

The Indian Standard governing the properties of diesel fuels is IS 1460:2005 (5th Rev). Important

characteristics are ignition characteristics, handling at low temperature, flash point.

XTRAMILE

Indian Oil‘s XTRAMILE Super Diesel, the leader in the branded diesel segment, is blended with

world-class multi-functional fuel additives. Commercial vehicle owners choose XTRAMILE because they

see a clear value benefit in terms of superior mileage, lower maintenance costs and improved engine

protection. A growing section of customers who own diesel automobiles, both in the ‗lifestyle‘ and

‗passenger‘ category, prefer XTRAMILE as a fuel for its added and enhanced performance. XTRAMILE

has brought in a huge savings in the high mileage commercial vehicles segment. Transport fleets that

operate a large number of trucks crisscrossing the country are using XTRAMILE to benefit from higher

mileage and reduced maintenance costs.

ATF/Jet Fuel

Indian Oil Aviation Service is a leading aviation fuel solution provider in India and the most-

preferred supplier of jet fuel to major international and domestic airlines. Between one sunrise and the

next, IndianOil Aviation Service refuels over 1500 flights – from the bustling metros to the remote

airports linking the vast Indian landscape, from the icy heights of Leh (the highest airport in the world at

10,682 ft) to the distant islands of Andaman & Nicobar.


39

Jet fuel is a colorless, combustible, straight-run petroleum distillate liquid. Its principal uses are as

jet engine fuel. The most common jet fuel worldwide is a kerosene-based fuel classified as JET A-1.The

governing specifications in India are IS 1571: 2001 (7th Rev).

Indian Oil is India's first ISO-9002 certified oil company conforming to stringent global quality

requirements of aviation fuel storage & handling. IndianOil Aviation also caters to the fuel requirements

of the Indian Defence Services, besides refueling VVIP flights at all the airports and remote heli-

pads/heli-bases across the Indian subcontinent.

Indian Oil Aviation group regularly organises International Aviation conferences that act as a vital

information facilitator with participation from leading international and all domestic airlines, allied

industries, statutory aviation authorities and government agencies from over 35 countries.

Indian Oil is the only oil company in India to market the widest possible range of fuels used by the

aviation industry in India- JP-5, Avgas 100LL, Methanol Water Mixture, Jet A-1 and aviation lubricants,

etc.

Aviation Turbine Fuel (ATF) is dispensed from specially designed refuellers, which are driven up

to parked airplanes and helicopters. Major airports have hydrant refuelling systems that pump the fuel

right up to the filling outlets on the tarmac through underground pipelines for faster refuelling.

Essentially, ATF is pumped into an aircraft by two methods: Overwing and Underwing. Overwing

fuelling is used on smaller planes, helicopters, and piston-engine aircraft and is similar to automobile

fuelling - one or more fuel ports are opened and fuel is pumped in with a conventional pump. Underwing

fuelling, also called single-point is used on larger aircraft.

To ensure that you receive the best service, every one of our 101 AFSs follows specific quality

audits based on a Quality Control Index System benchmarked to global standards. In addition, 15 Quality

Certification Laboratories provide complete specification tests round-the clock. Ensuring that these

standards are always upheld, there is a backup of a highly skilled, qualified and dedicated team of officers

and refueling crew. Indian Oil has a strategic partnership with Air BP, the world leader in aviation

business. Indian Oil regularly organizes seminars, symposiums and workshops to constantly interact with

its partners, which apart from being a two-way channel of communication, helps us to stay abreast with

advances in technology.

Diesel fuel often contains higher quantities of sulphur. In India , emission standards (equivalent to Euro II,


40

Euro III, Euro IV) have necessitated oil refineries to dramatically reduce the level of sulphur in diesel in

view of the auto fuel policy brought in force by Govt of India

BIS has brought out specification for "Diesel with 5% Biodiesel" that may be marketed in near

future.

SERVO lubricants & greases

SERVO brand, from IndianOil, is the brand leader among lubricants and greases in India and has

been conferred the ―Consumer Superbrand‖ status by the Superbrands Council of India. Recognised for its

brand leadership by the World Brand Congress and as a Master Brand by CMO, Asia, SERVO has now

carved a significant niche in over 20 countries across the globe.

With over 1000 commercial grades and over 1,500 formulations encompassing literally every

conceivable application, SERVO serves as a one-stop shop for complete lubrication solutions in the

automotive, industrial and marine segments. Recognised for cutting-edge technology and high-quality

products, SERVO is backed by IndianOil's world-class R&D and an extensive blending and distribution

network.

The recent top-end offerings in the segment are all-new engine oils on a differentiated synthetic

platform—SERVO Futura Synth, a 100% synthetic premium lubricant for diesel & petrol cars

and SERVO 4T Synth, engine oil with advanced synthetic chemistry for 4-stroke two-wheelers—represent

a big leap in bringing technologically advanced motor oils of global standards to the Indian market. Both

the products offer outstanding engine protection and performance that far surpasses the benefits offered

by conventional mineral-oil based lubricants. (Please refer to the product sub-segment on this website for

product specifications and recommendations of the newly-launched products).

In the retailing segment, besides IndianOil petrol stations, SERVO range of lubricants is available

through a network of a unique SERVO Stockist Management System (SSMS) across the country. The

products are available in every corner of the country through various retailing initiatives

like SERVOXPRESS stations, bazaar outlets and thousands of auto spare parts shops across the country

along with a unique concept of Gramin SERVO Stockists to reach the rural hinterland.

SERVOXPRESS vehicle servicing centres are one-stop shops for quick, easy and convenient auto

care, offering a refreshing experience to motorists. Opened in convenient locations like malls, petrol


41

pumps or as stand-alone units, SERVOXPRESS stations have facilities for engine oil change, tyre &

battery check-ups, air-conditioner service, vacuum cleaning, perfuming, upholstery cleaning, polishing,

lamination installation, etc., besides replacement of minor parts for two and four-wheeler vehicles.

Lubrication is the art of reducing friction between rubbing or rolling surfaces. In the recent past

two terminologies have gained currency - Tribology, the science of Rubbing; Rheology, the study of

stream or flow. The earliest knowledge of lubrication is evident from grease lubricated chariot wheels

excavated from the ruins. The rapid development of this science can be said to have started from the 18th

century, with significant technological progress in commercial usage in the 20th century. Most lubricants

are liquids. Water is a natural lubricant but has extremely limited application due to its very low viscosity

and very low boiling point, besides its contribution to rusting and corrosion. Vegetable oils have excellent

lubrication properties but have very poor oxidation stability, high pour point, rapid thickening and may

even let out foul odours in time. Most of the liquid lubricants used at present all over the world are

petroleum-based mineral oils.

Marine Fuels & Lubricants

Indian Oil caters to all types of bunker fuels and lubricants required by various types of vessels

operating throughout the world in the shipping industry. Bunker supplies are made at all major ports of

India; Mumbai, Kandla, Vasco, Chennai, Tuticorin, Kakinada, Visakhapatnam, Kochi, New Mangalore,

Kolkata, Paradip, JNPT, Port Blair and Haldia. Apart from meeting 100% bunker requirement of the

Indian Navy, it also supplies bunker fuels to all major shipping and dredging companies of India. Spot

requirement of different vessels calling at Indian ports are met through nominations received from local

shipping agents and international bunker traders/brokers.

While IndianOil supplies Furnace Oil (FO) and High Flash High Speed Diesel (HFHSD) meeting

stringent BIS specifications, it also offers the entire range of SERVO brand marine grade lubricants.

Supplies are made through pipelines, barges and tank-trucks. Bunker supplies are undertaken

through pipeline at specified jetties at Haldia, Vasco, Port Blair, Mangalore, Visakhapatnam, Kakinada,

JNPT (Mumbai) and Chennai. Tank trucks are used for bunker supplies at Tuticorin, Paradip, Port Blair,

Mangalore and Haldia. Barges are used for bunker supplies at jetties and inner anchorages at Haldia,


42

Mumbai, Kandla, Visakhapatnam, Kochi and Chennai.

Indian Oil has also started supplying Bonded 380 cst FO bunker fuel from Chennai from May

2009 as per ISO 8217:2005 specifications. The price of this product is internationally competitive and

revised on a weekly basis based on MOPS (Mean of Platts-Singapore).

Kerosene

Kerosenes are distillate fractions of crude oil in the boiling range of 150-250°C. They are treated

mainly for reducing aromatic content to increase their smoke point (height of a smokeless flame) and

hydrofining to reduce sulphur content and to improve odour, colour & burning qualities (char value).

Kerosene is used as a domestic fuel for heating / lighting and also for manufacture of

insecticides/herbicides/fungicides to control pest, weeds and fungi. Since kerosene is less volatile than

gasoline, increase in its evaporation rate in domestic burners is achieved by increasing surface area of the

oil to be burned and by increasing its temperature. The two types of burners which achieve this fall into

two categories namely vaporisers & atomisers.

Bulk/Industrial Fuels

In the large volume consumer segment, IndianOil's provides complete Fuel Management Solutions

to customers who require fuels in bulk and have dedicated facilities for storage and handling. These

customers benefit from IndianOil's efficient sourcing and supplies matched to their usage patterns and

inventory. The optimization on and optimization of supplies is especially relevant in the light of high-

energy input costs in the recent past, which is expected to continue in the future too. IndianOil's tankages

are strategically located across the country and are custom-designed to maintain low-cost supplies that can

be rapidly transported through a sophisticated supply-chain management system.

Whether it is an immediate need, a long-term supply contract or even setting up dedicated storage

and handling facilities at your premises, IndianOil's network is at your service.

IndianOil's marketing operations network of storage, distribution and supply hubs is backed by on-

time logistics and round-the-clock after-sales service. Many institutional customers like the railways, steel

plants, thermal power plants, textile mills, power plants, state transport undertakings, large corporates and


43

fleet & logistics companies tie-up for long-term contracts backed by IndianOil's comprehensive fuel &

lubricants consultancy-a formidable expertise that IndianOil has built over nearly five decades of working

with a cross-section of customers from a wide-range of industrial sectors. IndianOil's bulk liquid fuel

supply covers the complete gamut of fuels-Auto fuels, Light Diesel Oil, Low Sulphur Heavy Stock,

Special Products and much more.

Bitumen

Bitumen is a common binder used in road construction. It is principally obtained as a residual

product in petroleum refineries after higher fractions like gas, petrol, kerosene and diesel, etc., are

removed. Indian Standard Institution defines Bitumen as a black or dark brown non-crystalline soil or

viscous material having adhesive properties derived from petroleum crude either by natural or by refinery

processes.

IndianOil produces bitumen from its refineries at Panipat, Mathura, Koyali, Haldia and Chennai

and markets it in bulk as well as packed in steel drums. IndianOil also markets modified Bitumen CRMB

and Emulsion. CRMB is produced at Panipat, Mathura, Koyali, Haldia and CPCL refineries. IndianOil

markets Bitumen Emulsion by the brand name Indemul and it is produced from emulsion plants located in

Haldia.

General uses of Bitumen:

For civil engineering works

Constructions of roads, runways and platforms.

Water proofing to prevent water seepage.

Mastic floorings for factories and godowns.

Canal lining to prevent erosion.

Dump-proof courses for masonry.

Tank foundation.

Joint filling material for mason


44

Business Group (Cryogenics)

Business Group (Cryogenics) of Indian Oil Corporation Limited is a leading manufacturer with

over 30 years of experience in the design and production of state of the art vacuum super insulated

Cryogenic Storage & Transport Vessels with focus on products for long term Cryogenic preservation of

biological samples including a wide range of super insulated Liquid Nitrogen tanks for Laboratories,

Industries and Oil fields service applications and turn-key Cryobank management systems with full

automated controls. BG-Cryo is also catering to Pressure Vessels for application in Refining, Fertilizer

and Gas Industry.

BG-Cryo is one of the largest manufacturers of cryogenics containers in the country with state-of-

the-art manufacturing facilities, located at Nashik, Maharashtra. BG-Cryo is a ISO 9001:2008 certified

unit of IOCL.

Indianoil's BG-Cryo has pioneered LNG at doorstep (LNG by road) concept in India and facilities

have been operational for almost a decade.

Petrochemicals

India is amongst the fastest growing petrochemicals markets in the world. Taking this into

consideration and to enhance its downstream integration, IndianOil is focusing on increasing its presence

in the domestic petrochemicals sector besides the overseas markets through systematic expansion of

customer base and innovative supply logistics.

Petrochemicals have been identified as a prime driver of future growth by IndianOil. The

Corporation is envisaging an investment of Rs 30,000 crore in the petrochemicals business in the next few

years. These projects will utilise product streams from the existing refineries of IndianOil, thereby

achieving better exploitation of the hydrocarbon value chain.

Beginning with a low-investment, high-value projects such as Methyl Tertiary Butyl Ether

(MTBE) and Butene-1 at Gujarat Refinery, Vadodara, IndianOil has set up a world-scale Linear Alkyl

Benzene (LAB) plant at Gujarat Refinery and an integrated Paraxylene/Purified Terephthalic Acid

(PX/PTA) plant at Panipat. A Naphtha Cracker complex with downstream polymer units is also in

operation at Panipat.


45

Crude oil

Crude oil - as petroleum directly out of the ground is called - is a remarkably varied substance, both

in its use and composition. Crude oil is formed from the preserved remains of prehistoric zooplankton and

algae, which have been settled to the sea (or lake) bottom in large quantities under anoxic conditions. It

was formed over millions of years from the remains of tiny aquatic plants and animals that lived in

ancient seas due to compression and heating of ancient organic materials over geological time. The oldest

oil-bearing rocks date back to more than 600 million years, the youngest being as old as about 1 million

years.

Although various types of hydrocarbons - molecules made of hydrogen and carbon atoms - form the

basis of all crude oils, they differ in their configurations. The chemical structure of petroleum is composed

of hydrocarbon chains of different lengths. Because of this, petroleum may be taken to oil refineries and

the hydrocarbon chemicals separated by distillation and treated by other chemical processes, to be used

for a variety of purposes. It can be a straw-colored liquid or tar-black solid. Red, green and brown hues

are not uncommon.

Crude oil is classified by the location of its origin (e.g. West Texas Intermediate, WT, Brent, Dubai

or Minas) and often by its relative weight or viscosity (light, intermediate or heavy); refiners may also

refer to it as `sweet‘, which means it contains relatively little sulphur, or as `sour‘, which means it

contains substantial amounts of sulphur and requires more refining in order to meet current product

specifications. The number of carbon atoms determines the oil's relative `weight‘ or density. Gases

generally have one to four carbon atoms, while heavy oils and waxes may have 50, and asphalts,

hundreds.

Crude oil from an area in which the crude oil's molecular characteristics have been determined and

the oil has been classified are used as pricing references throughout the world. These references are

known as Crude oil benchmarks


46

CHAPTER 5

SERVICES OF IOCL 5.1Refining

Refinery Inspection Services

Indian Oil has full-fledged Inspection Departments in all its refineries, comprising qualified

mechanical/metallurgical engineers, to monitor the health of static equipment. Its R&D Centre also offers

support in conducting detailed health assessment of units. The Centre has state-of-the-art facilities for

carrying out health assessment and material failure analysis.

A thorough inspection of all equipment, along with specific, elaborate inspection of critical equipment,

can also be carried out using visual and non-destructive techniques such as thermography and

radiography. If required, the Applied Metallurgy Group of the R&D Centre conduct micro-structural

analysis to assess the health of equipment. The facilities available include microscopic examination,

chemical analysis by alloy analyser, scanning electron microscopy, in situ metallography, micro-hardness

testing, etc. Based on the inspection studies, recommendations are made for short-term and long-term

remedial actions.

Indian Oil's inspection teams have a deep understanding of the complexities of all the process

units of modern refineries and can offer comprehensive inspection services of a highly professional

nature.

Training & Development Services

Building human competence and a motivated workforce is one of the key strengths of Indian Oil.

Its pool of professionals, with excellent faculty members, regularly update their knowledge and skills in

the areas of refining, marketing, pipeline transportation, R&D and general management. Their portfolio is

enriched with academic inputs as well as hands-on field experience. The Indian Oil Institute of Petroleum

Management (IIPM), located at Gurgaon near Delhi, is the Corporation's apex learning institute supported

by 18 training Centers spread across India.

The skilled manpower offers full support to clients in training their workforce through specialised

https://www.iocl.com/services.aspx


47

programmes in various facets of the downstream petroleum sector. Many nations, including Bahrain, Iran,

Iraq, Kenya, Kuwait, Libya, Madagascar, Malaysia, Nepal, Nigeria, Oman, Qatar, Sri Lanka, Sudan,

Tanzania, Yemen and Zambia, have already benefited from such tie-ups, which may include on-the-job

training.

Indian Oil offers faculty assistance for "tailor-made" training programmes that suit the

requirement of refinery or pipelines personnel or a selection of programmes from the clients" training

calendar.

5.2 Pipeline

Project Management

Indian Oil's Pipelines Division provides services in the field of project management. The clientele


The services provided in the area of Project Management are:

Project management consultancy to ensure timely completion of pipeline projects within approved

cost with international quality standards

Techno-economic feasibility study of new crude oil and multi-product pipelines

Detailed design, engineering of mainline, stations, offshore terminals, tank farm, cathodic

protection, etc.

Engineering, Procurement and Construction (EPC) services for implementation of Pipeline

Projects Instrumentation, dedicated telecommunication system including optical fibre

communication and Supervisory Control And data Acquisition system

Vendor selection, procurement of materials and award of work contracts

Construction supervision

Construction supervision, testing and commissioning

Build, Own, Operate and Transfer (BOOT) contracts for cross country pipeline and terminals

Natural gas and Liquefied Petroleum Gas pipelines


48

For existing pipelines, we offer services in project management in respect of capacity

augmentation, revamping and de-bottlenecking

Indian Oil's expert group of engineers located in different parts of the country deliver the services offered

above. The customers can contact the Executive Director (Projects) for project-related services.

5.2.2 Operation and Maintenance

Indian Oil's Pipelines Division provides services for operations and maintenance. The clientele


The services provided for Operations and Management are:

Cross country crude and multi-product pipelines

Mainline engines, pumps and motors

Station facilities, crude oil and petroleum product tanks

Automation and advanced control systems

Single Point Mooring (SPM) Systems, submarine pipelines

Development of maintenance procedures, formats, schedules, manuals

Corrosion monitoring and control

Technical audits for better performance of energy consumption, quality, safety and environment

protection

Onsite and offsite disaster management plans

Selection, testing and evaluation of Chemical Drag Reducers and corrosion inhibitors

Indian Oil's expert group of engineers located in different parts of the country deliver the services offered

above. The customers can contact the Executive Director (Operations) for operation-related services.

Training and Development Consultancy

Indian Oil's Pipelines Division provides consultancy services in training and development. The


49

clientele includes the existing pipelines companies and companies venturing into pipelines business.

The consultancy services provided in Training and Development are:

Specially designed training programmes to cater to the specific business needs

Operations and maintenance of mainline engines, pumps and pipelines

Electrical and instrumentation systems

Single Point Mooring operations and maintenance

Pipeline construction and commissioning

Operations and maintenance of telecommunication and SCADA system

The services offered above are delivered by Indian Oil's expert group of engineers across the country. For

training of personnel by Indian Oil's experts, the customers may contact Dy. General Manager (Training

& Development).

Cross Country Pipeline Management

With its first pipeline laid in the early 60s, IndianOil is a pioneer in crude oil & product pipelines

in India. The cross-country pipelines network has now extended to over 11,214 km, with two Single Point

Mooring (SPM) systems.

Indian Oil‘s Pipelines team has vast experience and expertise in techno-economic feasibility

studies, design & detailed engineering, project execution, operation, maintenance and consultancy

services for areas such as capacity augmentation, modernisation, etc. Proven project tools and techniques

are used in project management to ensure high-levels of quality, productivity, time schedule and cost

control.

The sophisticated Supervisory Control and Data Acquisition (SCADA) and Applications Software

is used in all stages of project implementation, right from inception to completion, including field

services, maintenance and operations support. Tanker handling, crude oil/product accounting, quality

control, ocean loss control, pigging procedure development & analysis of pigging data, selection/testing


50

and evaluation of drag reducers, O&M of tank farm/pump stations, are the other areas of expertise for

which the Pipelines team offers consultancy services.

5.3 Technology Licensing

Indian Oil's world class R&D Centre, established in 1972, has delivered pioneering results in

lubricants technology, refining process, pipeline transportation, bio-fuels and fuel-efficient appliances.

Over the past three decades, IndianOil R&D Centre has developed over thousands of formulations

of lubricating oils and greases responding to the needs of Indian industry and consuming sectors like

Defence, Railways, Public Utilities and Transportation. The Centre has also developed and introduced

many new lubricant products to the Indian market like multigrade railroad oils.

Indian Oil has a basket of technologies in the areas of lubricants and grease formulations, fuels,

refining processes, biotechnology, additives, pipeline transportations, engine evaluation, tribiological and

emission studies, and applied metallurgy.

The R&D Center‘s activities in refining technology are targeted in the areas of fluid catalytic

cracking (FCC), hydroprocessing, catalysis, reside upgradation, distillation simulation and modeling, lube

processing, crude evaluation, process optimization, material failure analysis and remaining life assessment

and technical services to operating units.

CHAPTER 6


51

TRAINING AND DEVELOPMENT

"If one advances confidently in the direction of his dreams, and endeavors to live the life which he

has imagined, he will meet with success unexpected in common hours" - Henry David Thoreau

Training builds high morale in an employee by developing positive attitude, job satisfaction,

enhanced earnings, job security. Training leads to optimum use of resources and zero waste which

increases productivity and helps to minimize cost of operations per unit. It also leads to economic use of

materials and machinery.

Management Training helps in crisis Management and highlights ways which can enable a

corporation to reach greater heights. Training develops self reliant and well motivated employees, they

need less guidance and control therefore burden on supervisors is reduced.

By adopting right work methods and making use of prescribed safety devices employees reduce accident

rate. It also enables effective communication and dealings with both customers and employees.

The Indian Oil Institute of Petroleum Management, the 'Temple of Learning', as we call it, is a

centre of excellence for nurturing future leadership, situated on the outskirts of New Delhi. It conducts

advanced management education programmes in collaboration with premier business schools and top line

professionals.

To ensure that every employee is working with the same corporate vision and goals in order to be

successful in the Corporation, Various orientation programs for new employees are held.

Orientation provides an opportunity for new employees to become acclimated to their new

company, department, colleagues and work expectations.

Indian Oil operates 18 training centres across the country for up-skilling, re-skilling and multi-

skilling of employees in its pursuit of corporate excellence.

Indian Oil has been serving as a source of technical support and expertise to petroleum companies

of carious countries across the globe.

CHAPTER 7


52

SWOT ANALYSIS OF IOCL

Strength

1. India's largest commercial enterprise with a strong brand

name

2. Has around 50% petroleum products

3. Operates 10 refineries in India

4. Huge distrubtion network through retailing

5. Accounts for a 47% share in the petroleum products market, 3.

4.8% share in refining capacity and 67% downstream sector

pipelines capacity in India

6. Has over 35,000 employees

7. Loyalty programs like XTRAPOWER Fleet Card Program is

aimed at Large Fleet Operators

Weakness

1.Legal issues

2.Employee management

3.Bureaucracy

4.Volatility in the crude market & subsidy burden

Opportunity

1.Increasing fuel/oil prices

2.Increasing natural gas market

3.More oil well discoveries

4.Expand export market

Threats

1.Government regulations

2.High Competition

CHAPTER 8


53

MAJOR COMPETITORS OF IOCL


54


55

CHAPTER 9

LOYALTY PROGRAMS

Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal

buying behavior — behavior which is potentially of benefit to the firm.

Earning customer loyalty goes beyond gaining customer satisfaction. Loyal Customers evangelize the

brand by sharing their satisfactory experience with their friends and colleagues. A great product or service

is the starting point for customer loyalty. Great marketers architect loyalty programs from day one.

Loyalty programs are initiated by businesses with two main goals. The primary goal for most

loyalty programs is the acquisition of information relating to their customers' spending habits, while the

secondary goal is to actively cultivate loyalty amongst customers to ensure they continue patronizing the

business. While some companies do reverse these priorities, the above hierarchy holds true for most.

Loyalty programs may offer benefits in a number of different ways. Many loyalty programs offer a

sustained discount (such as 10%) for a period of time - perhaps a year, perhaps for the life of the business.

Others offer a discount once certain criteria have been met — for example, a 20% discount on a single

purchase once a customer has spent Rs 2000 at the business. Still others offer points which may then be

redeemed for products which may or may not be directly related to the business.

Loyalty cards are the most common form of loyalty programs found throughout the world today. Some of

the first loyalty programs were instituted by airlines in the 1970s in the form of frequent flyer miles. In

these loyalty programs, one accrues points by flying on the airline and then 'cashes in' the points in

exchange for tickets, upgrades, or even third-party benefits. In the past decade, many nonairline

businesses have combined their own loyalty programs with those of the airlines, offering frequent flyer

miles in exchange for everything from telephone usage to purchasing gasoline.

Loyalty programs have gained in popularity immensely in the past fifteen years, in no small part

due to the development of a culture of entitlement, in which consumers feel that they deserve special

treatment. Businesses have capitalized on this when designing their loyalty programs, often offering

benefits that cost little, but carry with them an assumed prestige, such as access to faster-moving lines or


56

special parking spaces.

Ultimately, the success of loyalty programs depends on how well the business uses the data it gathers to

further refine its policies and loyalty programs. Many businesses find little profit in the use of loyalty

programs, while others, such as eBay, attribute much of their financial success to a well-executed use of

such programs.

Loyalty Programs an Integral Part

The immense competition will make loyalty programs an integral program of the day-to-day functioning

of petro-retailing. Of course, right now many such loyalty programs are being run by the petro-retailers

like Smart Fleet (BPCL), Xtra Power (IOCL), Drive track (HPCL), and Petro card (BPCL). However,

these programs are mainly focused at the bulk consumers and the small consumers are left unnoticed more

or less. But in future, there won‗t be such differentiation and loyalty programs will be there for every

segment of consumers.

Customer Relationship Management and Loyalty program

Customer Relationship Management (CRM) can be widely defined as:

Company activities related to developing and retaining customers. It is a blend of internal business

processes: sales, marketing and customer support with technology and data capturing techniques.

Customer Relationship Management is all about building long-term business relationships with

customers.

Most CRM initiatives begin with a strategic need to manage the process of handling customer related

information more effectively. For beginners it could simply mean better lead management capabilities or

sales pipeline visibility. However, as organizations mature in their CRM initiatives, they begin to look at

CRM as tool to acquire strategic differentiators. Despite the immense benefits that the CRM solutions can

deliver, they are not entirely without their share of problems.

Loyal customers are more profitable. Any company will like its mindshare status to improve from being a

suspect to being an advocate. Company has to invest in terms of its product and service offerings to its

customers. It has to innovate and meet the very needs of its clients/ customers so that they remain as


57

advocates on the loyalty curve.

An important facet of CRM is ―customer selectivity‖. As several research studies have shown not all

customers are equally profitable (In fact in some cases 80% of the sales come through 20% of the

customers). The company must therefore be selective and tailor its program and marketing efforts by

segmenting and selecting appropriate customers for individual marketing programs. In some cases, it

could even lead to ―outsourcing of some customers‖ so that a company better utilize its resources on

those customers it can serve better and create mutual value.

With growing competition in the petro-retailing sector, today‗s consumer is becoming more and more

demanding. The emergence of new psychographic segments in petro retail market bears the testimony to

this fact. A closer look at these segments tells us what exactly a consumer is looking for whenever he goes

to a fuel station to purchase fuel.

He looks for-

Quality & Quantity assurance

Quick filling and efficient forecourt service

Rewarding loyalty

Premium fuels

Cashless transactions

Non - fuel services.

XTRAPOWER Fleet Card program

The XTRAPOWER Fleet Card program is a complete smart card-based fleet management solution for

fleet operators and Corporate for cashless purchase of fuel & lubes from designated retail outlets of Indian

Oil through flexible pre-paid and credit facilities.

The fleet card program also offers an exciting rewards program and unique benefits like personal accident

insurance cover and vehicle tracking facilities. In just under two years of its launch, Indian Oil‗s

XTRAPOWER Fleet Card has emerged as the largest fleet card in the country with the widest retail outlet

coverage.


58

Any business entity owning or operating a vehicle fleet can become a member of the XTRAPOWER fleet

card program at a nominal annual charge. Each fleet owner is issued a Fleet Control Card and vehicle-

specific Fleet Cards for every vehicle enrolled under the program.

For enhanced security, the fleet card transactions are authorized through unique Personal Identification

Number (PIN). Moreover, the card can help track each vehicle's movement across remote corners of the

country leading to an improvement in vehicle utilization and route compliance. XTRAPOWER is also

backed by Indian Oil‗s vast infrastructure network and web-based support services.

XTRAPOWER is one-of-a-kind fleet card program of Indian Oil, which gives you XTRA convenience,

XTRA security and XTRA opportunity to earn Truckload of rewards. It is a tailor-made program for Fleet

Owners, Operators & Corporate as well. Xtra Power Fleet Card program is a step of IOC towards building

loyalty among the existing customers. Loyalty program works only when the customer is emotionally

attached to the brand.

Positioning of the loyalty program is very critical so that these benefits do not appear to be a just discount

under the garb of loyalty this greatly affects the customer retailer relationship and greatly reducing the

program to a pure commercial transaction where the customer constantly looks for deals.

We need to enroll the right customers. We can recognize the highest value Customers to recognize and

reward their value to our organization, we can Cultivate high potential customers who currently split their

purchases between us and our competitors or reach out to those most at risk of churning. Knowing which

customer groups are most important to us allows crafting recognition and rewarding strategy that piques

their interest.

Customers should be involved in the program by constant communication to make them understand what

is in for them. Comprehensive surveys should be conducted to find out what should be the ideal way to

reward the loyal customers and retain them for the life time. Activities like checking point balances

online, responding to targeted offers, using kiosks, bidding on auction items, entering sweepstakes and so

on. Such participation is a sure sign of increasing value to the customers.


59

Benefits of IOCL fleet card

Better credit proposition.

Higher value of reward points.

Attractive rewards program.

Personal accident insurance and medi-claim cover for the card member, drivers, co-drivers &

helpers.

Lost card liability cover.

Online PIN unblocking.

Flexible cash loading options - Manual Reload & CCMS Reload (Remote loading of cards by

depositing lump sum cash at one place) or CCMS reload thru' cheque payment at select HDFC

branch.

Card-insert based vehicle-tracking facility thru' website (Offline tracking free, Online tracking at a

nominal charge of Rs.2/-).The online tracking details are immediately made available to the card

members on XTRAPOWER website.

Special discounts from our alliance partners (currently available on JK Tyres only)

Round the clock Customer Helpline Number 1800 425 55 99 (Toll Free) or STD no. 044-6551498.

9.1 Xtrapower fleet card features

Convenience

Largest Network of Retail Outlets pan India (Including very remote and rural locations)

Cashless transactions

Instant MIS

Easy Online Fleet Management

Easy Cash Flow Management – CCMS Recharge

RTGS / NEFT / Online funds transfer or Pay at Pump

SMS Alerts for transactions


60

Manage fleet account by SMS

24 X 7 Toll free Helpline

24 X 7 XTRAPOWER Service Centers to assist your crew

Generic Card Option

No need to wait – Ready to use - OTC Cards available for instant fleet management

8.5.2 Secure

Well Established & Robust Program

Smart Card technology, Password controls for every transaction

Control of entire fleet

Branch level controls

Insurance – Social Security

8.5.3 Rewards

Cost Savings – Improve operational efficiency

Instant Redemption Option

Instant Fuel Redemption at Retail Outlet

Exciting gift options

8.5.4 Value added services

Free Exclusive Health Check Ups for your Truck crew

Expert guidance on choosing retail outlets to derive state specific cost advantages

Dedicated Key Account Managers for large fleet operators

Credit facility through Credit Partners

Customized, Auto generated MIS for large accounts


61

Comparison of loyalty card benefits of other companies

Name of the

company

IOCL BPCL HP

CARDS

REWARD

POINT ON

DISEL AND

PETROL

.4%

.3%

.3%

Cash loading

Manual and by cental

cash management(free)





Online pin

unlocking

Yes(free of cost)

Yes(free of cost)

Yes(free of cost)

INSTANT FUEL

REDEMPTION

YES

YES

YES

INSURANCE

FOR OWNER

Rs.1,00,000/- per card,

max up to Rs.20,00,000/-

NO ANY INSURANCE

FOR OWNER

NO ANY INSURANCE

FOR OWNER

INSURANCE

FOR DRIVER

AND CLEANER

Driver : 50,000/-

Co-Driver : 25,000/-

Helper-cum-cleaner :

Rs.25,000/-

NO ANY INSURANCE

BENEFITS

Free accidental death

Insurance cover of Rs. 1

Lakh for drivers and 1

Lakh for cleaners.


62

MEDICAL

INSURANCE

(Rs.10, 000/- per card):

Owner: Rs.2500/- per

card subjected to

maximum of Rs.50, 000/-

, Driver: Rs.2500/-, Co-

Driver: Rs.2500/- and

Helper-cum-cleaner:

Rs.2500/-. *(Minimum

claim under medical

insurance MUST be over

Rs.500/-

NO ANY MEDICAL

INSURANCE

NO ANY MEDICAL

INSURANCE

Up to Rs 16000/per car

subjected to misuse 24

hrs after lodging loss

complain to Xtra power

24hrs help line.

NO SUCH BENEFIT

NO SUCH BENEFIT

LOST CARD

LIABILITY

INSURANCE

LOST CARD

LIABILITY

A replacement card is

issue to the card holder

after due verification the

pre paid amount balance

of the lost card is

transferred with a fee of

Rs 100 per card.





of the lost card is

transferred after

verification.





of the lost card is

transferred after

verification.

VEHICLE

TRACKING

Card-insert based offline

tracking at no extra cost.

Card insert based online

tracking at a nominal cost

of Rs.2/-



Card insert based online

tracking at a nominal

cost. Vehicle tracking

through sms (fee only for

blue card holder).



At any HP Fleet card

outlet, the driver has to

place the card on the

reader and enter his PIN

Number. This is

regardless of whether or

not your Driver fuels the

vehicle at the outlet. Card

insert based online

tracking at a nominal

cost.


63

SMART CARD

PREPAID

CREDIT

YES

YES

YES

MULTIPLE

CREDIT

PARTNER

(Currently, Sundaram

Finance Ltd.)

SundaramFinanceLtd

Citicorp Finance

IndusInd Bank

ICICI BANK

RELOADING

FACILITY

YES

YES

YES

ENORLMENT

FEE AND

RENWAL FEE

YES , RS 100 PRE

CARD

YES ,RS 250 PER

CARD

NA

LOYALTY

POINT VALUE

PER POINT 1 PAISA

NA

NA

REWARD FUEL

AND LUBE

YES

YES

YES

MINIMUM

POINT

REQUIRED

FOR

REDEMPTION

80,000-1 year from the

date of transaction.

9, 00, 000 - once in year

(for blue and silver)

quarterly for gold and on

demand for platinum card

holder.

25,000-at any point of

time valid up to 3 years.

REDEMPTION

OPTION

THROUGH CRT

MACHINE

YES

YES

YES

24 HRS

HEELPLINE

YES

YES

YES

TYRE AND

BATTERY

BENEFIT

On JK tyre per tyre Rs

100 less and 5 % off on

Exide battery

NO SUCH BENEFIT

NO SUCH BENEFIT


64

SMS BENIFIT

NO SUCH BENIFIT

Free sms alerts for all

balance check and vehicle

tracking (fee only for

blue card holder).

NO SUCH BENEFIT

From this comparison it is clear that benefits provided by iocl is better than its competitor inspite of this to

get more customer the company can consider for benefits such as,

Free sms alert as provided by bpcl for balance check and vehicle tracking

Extra benefit scheme for customer with more transaction.

Multiple credit partner for customers

Redemption at any point of time with increased point validity from 1 year.

Fleet card vehicle for smaller vehicle.


65

DESCRIPTIVE ANALYSIS OF AN

OPERATIONAL PROBLEM FACED BY

THE ORGANISATION AND SUGGESTING

SOLUTION


66

Sl.NO.

QUESTIONNAIRE

Name of the customer

Address

1) What types and how many diesel vehicles you have? (in numbers)

a. CAR

d. HCV

b. LCV

e. BUS

c. MCV

2)

What is your diesel requirement per

tank?

3) Are you filling regularly from IOC?

YES/NO

4) Are you aware of XTRAPOWER fleet card of IOC?

YES/NO

5) If YES , do you have an XTRAPOWER fleet card?

YES/NO

6) How did you come to know about the product?

a. Media

c. Hoardings

b. Retail Outlet d. others

7) How long have you been using this?

a. less than 1 year c. More than 2 years

b.

1-2

years

8) i Do your vehicles fuel from outside Kerala? YES/NO

ii If YES how many litres in a month?

a. < 500

c. > 1000

b. 500 - 1000

9) According to you please rate the product in the following features in the scale of one to five?

(1 : Best 5:Worst)

a. Convenience


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b. Security

c. Ease of Usage

d. Control

e. Rewards

10) What are the additional features you want in this card ?

a.

b.

c.

Sample Population

1. Customers of retail outlets of IOCL

2. Drivers who engage in transportation of products for construction purposes

3. Drivers who transport products from one state to another

4. Customers with small vehicles.

Sample Size : 216 numbers

Place of conducting research : Kochi (Kerala)


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Findings

Are you filling regularly from retail outlets of IOCL?

Almost 77% of the customers of IOCL were regularly filling from the retail outlets of IOCL.

33% of the customers of IOCL are not its regular customers. They also preferred other retail

outlets as well.

Are you aware about the xtrapower fleet card of IOCL?

35% of the customers were alone aware of the xtrapower fleet card whereas 65% of the customers were

unaware of this loyalty program. 65% also included drivers of small companies which had one / two

HCVs

77%

33%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

YES No

PERCENTAGE

RESPONSE

35%

65%

0%

10%

20%

30%

40%

50%

60%

70%

YES No

PERCENTAGE

RESPONSE


69

If yes, do you have xtrapower fleet card?

Among the 35% of the customers who were aware of the xtrapower fleet card, only 20% of the customers

were using this facility.

The major reasons:

1. The entire system seemed so complex (for 80%)

2. There is no proper information available to customers about the fleet card (for 90%)

3. Customers faced technical difficulties while using the cards. This was also the reason as to why

some cards remained idle after the customers purchasing them.

4. Small transporters (45%) were not very keen about the program.

How did you come to know about the xtrapower fleet card?

20%

80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

YES No

PERCENTAGE

RESPONSE

10% 5%

90%

30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Media Hoardings Retail Outlets Others

PERCENTAGE

RESPONSE


70

The main source of information about the loyalty program was through retail outlets which

constituted 90% as information providers to customers.

30% of the customers received information through various other sources such as word – of –

mouth, internet etc.

Media played a very poor role in providing information (only 5%) and so did hoardings (only

10%)

How long have you been using this?

66% of the customers have been using this program for 1-2 years; 20% of the customers have been using

the loyalty program for less than 1 year, which means IOCL has been successful in gaining trust of the

customers.

This data also reveals the reluctance of the customers at the initial stage, as only 14% of the customers

were using this facility since its introduction.

Do you fuel vehicles from outside Kerala?

Only 30% of the customers were filling from outside Kerala. 70% of the customers were having all their

operations within Kerala.

30 %

66 %

14 %

0%

10%

20%

30%

40%

50%

60%

70%

Less than 1 year 1 - 2 years More than 2 years

PERCENTAGE

TIME PERIOD


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If yes, how many litres do you fill in a month from outside Kerala?

Majority (i.e. 70%) of the customers who were filling from outside Kerala were filling 500 – 1000 litres.

Only 10% of the customers filled less than 500 litres and only 30% above 100 litres.

30 %

70 %

0%

10%

20%

30%

40%

50%

60%

70%

80%

YES No

PERCENTA

RESPONSE

10 %

70 %

30 %

0%

10%

20%

30%

40%

50%

60%

70%

80%

< 500 500 - 1000 > 1000

PERCENTAG

in litres


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Level of satisfaction based on various factors

Out of the people who used xtrapower fleet card:

90% was happy with the security these cards offered.

70% felt it to be convenient

Only 10% felt it easy to use

40% were interested in the control facility

30% were happy with the benefits

Additional features customers like to be incorporated in the fleet card program:

10% customers felt they need some special benefits as they had and continued to have large

transactions

45% of the customers were having small vehicles. They received no benefits. So they proposed a

need to include the benefits for small vehicles as well.

75% of the customers preferred to receive information about their reward points through SMS

70 % 90%

10%

40% 30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CONVENIENCE SECURITY EASE OF USAGE CONTROL REWARDS

PERCENTAGE

RESPONSE


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facility.

35% of the customers wanted to receive SMS relating to the balance amount in their card when

they sent SMS to some number.

Complaints of customers

30% of the customers complained that card swiping machines are not properly maintained at some

places.

40% of the customers were unhappy as pump attendants at some places were not interested in

providing this service.

90% customers said that they had lack of information about the operations and benefits of the

xtrapower fleet card.

20% had complaints that there were no dedicated person for collecting the forms. So, there is a

backlog of forms.

60% of the customers felt people at retail outlets didn‘t know much about the program and they

provided information‘s which were often misleading.


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Routine work given by the organization -

Making drivers aware of Xtrapower driver card


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XTRAPOWER DRIVER CARD SALIENT FEATURES

Name of Card: XTRAPOWER Driver Card –Spot Enrolment

Incentive points - 30 points per rupee 100 purchases – 1

Point = 1 Paisa.

15 points to be debited to the Merchant concerned, 15 points to be borne by the

Corporation.

Completed Application Form including Mobile Number,Vehicle No. along with copy of

Commercial Driving , License for enrolment of Driver card

Additional incentives to the Drivers on the occasion of Independence Day, Republic Day,

Driver‘s Birthday, Driver‘s Marriage Anniversary and Drivers‘ Day - 1000 points- borne by

the Corporation.

Cost of each card of Rs.50/- to be recovered from Merchant.

Option for Merchants to recover the cost of the card fromthe driver.

Merchant has facility to request for Driver Card, create Driver‘s Profile and mapping of

Driver Card in the XP Site with their Login ID and Password.

Driver Card not to be issued to those drivers, who are driving vehicles, for which the vehicle

specific /generic cards have already been issued.

Merchant to control the transactions either on Driver card or on vehicle specific/generic

card of the Transporter.

Transaction of Cash Reload and Cash Sale to be done mostly, CCMS sale is also possible (

Minimum Rs.500/- and multiples of Rs.100/- ).

There is no expiry date for Driver card.

Minimum Reward Points for redemption of fuel 10,000.

Reward Point Redemption through CCMS Re-charge-

Driver has to send SMS for Reward Point Redemption from registered Mobile No to Mob

No.9223301330.

SMS Format : REDEEM<space<Customer ID<space>reward Points


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Replacement of lost card/issue of duplicate card will be with redemption of reward Points

i.e. Rs.50/- per card.

Accidental Death Insurance Coverage of the Driver - Rs.1.00 Lac.

Final report

Documents

Transcript of Final report