Table of Contents Introduction3 Overview3 Geographic Coverage3 Technology Solutions4 Customer Focus4 Expansion and Diversification4 International Expansion4 Business Environment and Competition5 Industry Background and Market Structure6 SWOT Analysis of IOCL8 PEST Analysis of IOCL9 Vision and Mission10 Vision10 Mission12 Work Culture12 Organizational Structure and Leadership13 Hierarchical Structure13 Leadership13 UP Operations13 Supply & Demand Management14 Distribution Network14 Knowledge Management14 Training14 People and Processes15
Employee Profile15 Employee Benefit Schemes15 Career Growth Opportunities16 Appraisal16 Awards16 Entrepreneurial Culture17 Welfare of Employees17 Trade Unions17 Celebrations18 Research and Development18 Optimization, Planning and Demand Management18 Quality Management19 Quality Management System19 Quality Assurance19 Product Quality Improvement20 Safety & Occupational Health20 Safety20 Occupational Health21 Total Productive Maintenance (TPM)21 IOCL’s Green Agenda21 Green Initiatives22 Corporate Social Responsibility23 Conclusion25
Introduction Overview IOCL is a government? owned company with stake of over 80% operating in the downstream oil and gas segment, celebrating its Golden Jubilee in 2009. It accounts for 48% of petroleum products sold in the country and 34% of petroleum products produced. It owns and operates a number of crude and product pipelines in the country. It is India’s largest commercial enterprise, with a sales turnover of Rs. 2, 85,337 crore – the highest-ever for an Indian company – and a net profit of Rs. 2, 950 crore for the year 2008-09.
IndianOil is also the highest ranked Indian company in the prestigious Fortune ‘Global 500’ listing, having moved up 11 places to the 105th position in 2009. IOCL and its subsidiaries account for approximately 48% petroleum products market share, 34% national refining capacity and 71% downstream sector pipelines capacity in India. For the year 2008-09, the IOCL group sold 62. 6 million tonnes of petroleum products, including 1. 7 million tonnes of natural gas, and exported 3. 64 million tonnes of petroleum products.
The IOCL Group of companies owns and operates 10 of India’s 20 refineries with a combined refining capacity of 60. 2 million metric tonnes per annum (MMTPA, . i. e. 1. 2 million barrels per day). These include two refineries of subsidiary Chennai Petroleum Corporation Ltd. The Corporation’s cross-country network of crude oil and product pipelines, spanning over 10,000 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and environment-friendly manner. IOCL is investing Rs. 3,400 crore (US $10. 8 billion) during the period 2007-12 in augmentation of refining and pipeline capacities, expansion of marketing infrastructure and product quality upgradation as well as in integration and diversification projects. Geographic Coverage IOCL reaches precious petroleum products to millions of people every day through a countrywide network of about 35,000 sales points. They are backed for supplies by 167 bulk storage terminals and depots, 101 aviation fuel stations and 89 Indane (LPGas) bottling plants.
About 7,335 bulk consumer pumps are also in operation for the convenience of large consumers, ensuring products and inventory at their doorstep. It operates the largest and the widest network of petrol ; diesel stations in the country, numbering over 18,278. It reaches Indane cooking gas to the doorsteps of over 53 million households in nearly 2,700 markets through a network of about 5,000 Indane distributors. IOCL’s ISO-9002 certified Aviation Service commands over 63% market share in aviation fuel business, meeting the fuel needs of domestic and international flag carriers, private airlines and the Indian Defence Services.
The Corporation also enjoys a dominant share of the bulk consumer business, including that of railways, state transport undertakings, and industrial, agricultural and marine sectors. Technology Solutions IOCL’s world-class R;D Centre is perhaps Asia’s finest. Besides pioneering work in lubricants formulation, refinery processes, pipeline transportation and alternative fuels, the Centre is also the nodal agency of the Indian hydrocarbon sector for ushering in Hydrogen fuel economy in the country. It has set up a commercial Hydrogen-CNG station at an IOCL retail outlet in New Delhi this year.
The Centre holds 214 active patents, including 113 international patents. IOCL has joined the league of global technology providers last year with the selection of its in-house developed INDMAX technology (for maximising LPGas yield) for the 4 MMTPA Fluidised Catalytic Cracking (FCC) unit at the Corporation’s upcoming 15 MMTPA grass roots refinery at Paradip in Orissa, as well as for the FCC unit coming up at BRPL. A wholly-owned subsidiary, IOCL Technologies Ltd. , is engaged in commercialising the innovations and technologies developed by IOCL’s R&D Centre.
Customer Focus At IOCL, customers always get the first priority. New initiatives are launched round-the-year for the convenience of the various customer segments. Exclusive XTRACARE petrol & diesel stations unveiled in select urban and semi-urban markets offer a range of value-added services to enhance customer delight and loyalty. Large format Swagat brand outlets cater to highway motorists, with multiple facilities such as food courts, first aid, rest rooms and dormitories, spare parts shops, etc.
Specially formatted Kisan Seva Kendra outlets meet the diverse needs of the rural populace, offering a variety of products and services such as seeds, fertilisers, pesticides, farm equipment, medicines, spare parts for trucks and tractors, tractor engine oils and pump set oils, besides auto fuels and kerosene. SERVOXpress has been launched recently as a one-stop shop for auto care services. To safeguard the interest of the valuable customers, interventions like retail automation, vehicle tracking and marker systems have been introduced to ensure quality and quantity of petroleum products.
Expansion and Diversification To achieve the next level of growth, IOCL is currently forging ahead on a well laid-out road map through vertical integration— upstream into oil exploration & production (E&P) and downstream into petrochemicals – and diversification into natural gas marketing, bio fuels, wind power projects, consulting besides globalisation of its downstream operations. International Expansion IOCL has set up subsidiaries in Sri Lanka, Mauritius and the United Arab Emirates (UAE), and is simultaneously scouting for new business opportunities in the energy markets of Asia and Africa.
Business Environment and Competition More than 80% of India’s crude oil requirements are met through imports. Liquefied Natural Gas and other imported natural gas are also catering to the demand. Moreover, India in recent years had also emerged as a major exporter of petroleum products. Sooner or later, the turbulences of the international oil ; gas market were bound to hit the Indian hydrocarbon sector. In fact, the industry in many respects, found itself operating in an uncharted territory. The Indian basket of crude oil touched $ 142. 4 per barrel on 3rd July 2008 before plunging to $ 35. 83 per barrel on 24th December, 2008. Although there was a steady fall in international oil prices since August 2008, the average price of the Indian basket during 2008-09 was still high at $ 83. 57 per barrel, against the average price of $ 79. 25 per barrel in 2007-08. The domestic consumers were shielded from the spiralling crude oil prices in the initial half of the year. However, when the crude prices fell, the government reduced the prices of petrol and diesel twice, by Rs. per litre and Rs. 2 per litre respectively in December, 2008 and January, 2009. Further, domestic LPG prices were also reduced by Rs. 25 per cylinder in January, 2009. All segments of the industry, upstream companies, refiners and Oil Marketing Companies (OMCs) were affected by the high volatility in the international crude oil prices. The margins of upstream companies and refiners, having gained from rising crude prices, were hit by falling crude prices. The result, overall marketing margins turned positive, and average crude oil price was high.
Additionally a depreciating rupee that accompanied falling crude oil prices neutralized to some extent, the reduction in input costs. The economic slowdown in the country affected petroleum product demand. Moderation was witnessed in the consumption growth of petroleum products. Growth rate of petroleum products in the domestic market decelerated to 3. 5% from 6. 8% in the previous year. Total domestic sales excluding gas stood at 133. 4 MMT and the crude throughput of the Indian refineries was at 160. 8 MMT.
On the external front, exports of petroleum products turned out to be lower in both quantity and value, compared to that in 2007-08. During the year, Indian refining capacity rose to 177. 9 MMTPA with the commissioning of 29 MMTPA refinery at Jamnagar in December, 2008. Of the country’s total refining capacity, 105. 5 MMTPA is in the control of the Public Sector and the balance 72. 5 MMTPA rests with the Private Sector. Production of crude petroleum was at a level of 33. 5 MMT, showing a decline of 1. 8% in 2008-09. Gas roduction, which had declined during 2007-08, picked up during 2008-09 by 1. 4% with a production of 32. 8 billion cubic metre. The gas supply scenario in the country has improved with the flow from Krishna Godavari (KG) Basin in April 2009. The New Exploration Licensing Policy (NELP) of the government has been the main catalyst in improving the domestic supply. After seven rounds of NELP, the area under exploration has progressively increased more than four times to 48% of Indian Sedimentary Basin area from the 11 % before implementation of NELP.
The Hydrocarbon reserves accretion has been more than 600 Million Metric Tonne of oil equivalent (MMTOE). In the latest NELP-VIII, 70 exploration blocks comprising 24 deepwater blocks, 28 shallow water blocks and 18 onland blocks are on offer. On the policy front, the intended medium term reform measures of the government particularly, for energy sector, indicate a thrust on some areas viz. gradual removal of subsidies and market distortion, increase competition, encourage private sector entry and promote renewable resources especially solar energy as a means of removing energy poverty.
Some of the major industry specific announcements of Budget 2009-10 include: • Reduction in customs duty on bio-diesel from 7. 5% to 2. 5% • Full exemption of excise duty of petro-diesel blended with bio-diesel • Extension of tax holiday to commercial production of natural gas • Expansion of LNG infrastructure and proposal to develop a blueprint for National Gas Grid • Introduction of investment linked tax incentives for laying and operating cross country natural gas, crude and product pipelines on common carrier principle Industry Background and Market Structure
The Indian petroleum industry can be traced back to 19th century when petroleum was discovered in Assam. In starting, industry open for international players and global oil majors such as Caltex, Essoand Burmah-shell were operating in country. But after oil crisis of 1970 the government nationalized the Indian divisions of the international company and also nationalized refining, marketing sector. The government established Oil Coordination Committee for regulatory control on production, import, distribution and pricing using APM (Administered Price Mechanism).
Due to the government hold on oil companies, there is no private player and market is an oligopoly market where 2-3 government under taking companies dominate the market. IOCL, BPCL and HPCL are dominating players in downstream sector. In the upstream sector, ONGC and OIL claim 84% share of the total market. After liberalization in 1990 government changed its policy and realized that APM no longer worked as it had been working in the past and decided to open this sector.
As a result, the government initiated the deregulation process in 1995 wherein the APM was replaced with market determined pricing mechanism. Due to this change some private players like Reliance Petroleum Limited, Essaroil etc. entered the market. With increased deregulation, most of the players are moving towards integrating refining and marketing activities on a greater scale as it holds a competitive edge over other players. Moreover, the oil PSUs are also venturing into oil exploration and production activities.
Bearing testimony to this are the entries of downstream players like Reliance, IOC and Essar Oil into the oil exploration field, while the exploration major ONGC is moving into refining operations, albeit in a small way in the form of commissioning a 0. 1 MT mini refinery in Andhra Pradesh. However, by establishing a 71. 6% stake in MRPL, the company has signaled its entry into this sector in a big way. A presence in all the activities will help the players to hedge to a certain extent any volatility in the raw material prices.
Moreover, a presence in the marketing activities will help the company to take benefit of the improved marketing margins that are expected in the post APM period. In the long-term, the industry is likely to witness the global trend of formation of integrated oil companies, having interest in exploration, refining, retail marketing and petrochemicals business. A summary of IOCL’s leadership in the downstream industry as compared to its competitors: SWOT Analysis of IOCL Strengths| Weaknesses| PSU Unit with market leading position * Vast refining & distribution network with control over 48% of country’s pipelines * Diversified out look * Ownership of 10 out of 19 Indian refineries * 58% refining capacity in high demand and high growth areas of northern and western region * Higher autonomy due to Navaratna status * Vertical integration * International expansion in strategic regions like Sri Lanka, Maldives and Oman| * PSU unit with government control * Lack of focus on R&D specifically in Upstream products * Petrochemical development technology * Old refineries leading to poor refinery margins * Inability to check adulteration * Legacy systems and technology| Opportunities| Threats| International expansion through strategic acquisitions and JVs specifically in SE Asia * Ability to become independent E&P player * Effectively leverage and grow its vast distribution network further * Deregulation by the government towards increased foreign funding * Scope of simplifying and enriching the buying process for customers implying more schemes in XTRAPOWER and XTRAREWARD * Rising demand for green and alternative fuels * Gas distribution through pipes| * Increased competition from private and foreign players with more advanced technology * Possibility of government policies to allow the private players to set their own prices * Volatility of crude oil prices * Entry of new players into distribution due to government deregulation * Strengthening regulations and government control on PSU units * Promoting usage of alternative energy sources & destructive technologies like bio-diesel| PEST Analysis of IOCL Political| Economic| * Entire oil industry governed by two government bodies – OIL Ministry and OIDB having control over price, quality specifications etc. * Government control of PSUs * 80% of the government demand met by IOCL * Government focus on growing domestic and foreign investments within the country * Geo political tensions * Weaker legal framework| * Projected GDP growth rate of 7% driving growth of oil consumption * Volatile crude oil prices * 2. 3 mb/day oil consumption * First reason for the Indian trade deficit| Socio-Cultural| Technological| * 70% of India lives in rural areas * Large variation in customer psychology and expectations in different regions * Growing middle class driving growth of oil consumption * Growing environmental awareness and concerns| * Increased R&D expenditures by the company * First experimental H-CNG at R&D center in Faridabad * Latest technology development for bio diesel production * New regulation expected which will increase alcohol mix to 10% from 5%| Vision and Mission Vision The following image captures and summarizes the vision of IOCL.
As can be seen, its vision focuses on six key parameters: Ethics: IOCL strives to be driven by ethics and values. This is at the forefront since being a government controlled body, the perception of unethical behavior and bribery is commonplace among people. IOCL aims at changing that perception, at least as far as IOCL is concerned. People: The people aspect aims at the internal employees and inculcating within them, a passion towards the company and their work through superior employee care. IOCL has been rated as one of the best employers. It prides itself at pampering and caring about the employees like no other company. All employees irrespective of their cadre are treated well.
An example was cited by the General Manager, Marketing Division, UP in which case a lower rung employee who needed some medical attention was airlifted within no time and taken to Delhi for treatment. Innovation: Innovation has been given a major shot in the arm at the company. The only apprehension that the GM had about the future, was the fear of losing its numero uno position. And to quell this, innovation is being given a major boost. A lot of incentives have been designed to foster innovation within the company. Environment: IOCL also shows its responsibility towards the society and the environment by focusing on environment aspect in its vision statement.
It is an active partner of the Global Compact program of the United Nations and aims at sustainable development. All operational set ups of IOCL have been certified by various standards, and a number of initiatives have been taken already to safeguard the environment. Technology: IOCL is highly technology oriented and is quick to adopt any technological improvements or innovations. Further all the systems within IOCL are information technology enabled. SAP has been implemented throughout, and any operational activity details are instantly updated on their online portals. Further, it set up IndianOil Technologies Limited, a subsidiary in order to market the technologies produced through the Research and Development Dept. of IOCL.
Customers: Like any other private player, IOCL is customer focused and works at fostering positive and long lasting relationship with its customers. All these parameters are woven around the values viz Care, Innovation, Passion and Trust. The firm tries to drive these values into its employees and sees them as the DNA of the form culture. Re-Visioning Exercise IOCL had changed its vision through a massive exercise around 2 years back. As mentioned above, it now focuses on six key parameters viz. Ethics, People, Innovation, Environment, Technology and Customers. It was along drawn exercise. A taskforce was established and workshops were conducted throughout all its plants and offices in India. The new vision was a shared vision rather than a vision which is just shared.
The entire employee community had a say in the formation of the vision. Hence even the lower cadres are aware of the focus areas and are constantly pushed in order to be aligned with the vision. As per the General Manager, the driving force for the re-visioning exercise was changing business environment and the market dynamics. The vision needed to be more contemporary. Mission The mission statement of the company is as follows: * 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 maximise creation of wealth, value and satisfaction for the stakeholders * To attain eadership 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 As per the GM, IOCL is doing well with regards to the mission statement. In terms of standardization, it has achieved numerous certificates, and is now positioned as a strong global fortune 500 company. As far as technology is concerned, the R & D department within IOCL is regarded as one of the best in the country. Recently, IOCL has set up IndianOil Technologies Limited, a wholly owned subsidiary to market the technologies produced through the Research and Development Dept. of IOCL.
Being a production oriented company, its essential for it to adopt quality management practices, and it has done so by adopting TQM throughout India. Further, it has been responsible to the community and environment, through various CSR and green initiatives. Work Culture IOCL follows and encourages a very open and healthy atmosphere between its employees and management team. The company focuses on continuous innovation and improvement despite being the unchallenged market leader in the industry. Though unchallenged IOCL has devised its own challenges and has completed them with excellence. Use of IT, infrastructure and processes are some of the examples about the excellence that the organisation is implementing at its work place.
In order to equip their employees with the necessary skills to be competitive in the current industry scenario the company provides cross-functional transfers. Employee welfare is given prime importance as the organisation believes that it is their people who will carry the company’s processes and competence to a higher level. The emphasis that IOCL puts on employee welfare is illustrated by the incident when a line employee (one of the low level worker of the organisation) was air-lifted due to emergency medical evacuation. This shows the amount of importance the company places over every employee of the organisation regardless of their level and position. Organizational Structure and Leadership Hierarchical Structure
IOCL follows a departmental division, which means that it has a functional structure. The organization is headed by a chairman, who presides over all the departments viz. Refineries, Pipelines, Marketing, R&D, Finance, Planning and Business Development and Human Resources. Each of these departments is headed by a Director. Our visit to the regional marketing office at Lucknow gave us further idea about how the hierarchy is shaped at the regional level. A General Manager heads each regional office. Under him, there are several functional divisions like Finance, Aviation, Retails Sales, Engineering, Operations, and Consumer Sales etc. Each of these respective sub divisions are headed by a Deputy General Manager. Leadership
IOCL’s current chairman is Mr Sarthak Behuria. He brings with him an unparallel experience in this sector having worked for more than 35 years in various petroleum companies. The chairman is appointed by the Government of India. Mr behuria believes in openness and transparency and his values have been reflected in the vision of the company as well as in its daily operations. UP Operations Out of the seven divisions that IOCL contains, only the Marketing division, refinery division and pipelines division are present in Uttar Pradesh. The Marketing division in UP takes care of all different products like LPG, Lube, Petrol across all kinds of customers like Retail and Consumer.
Large scale customers namely defence, aviation, railways, roadways and power sector are referred to as Consumers and are taken care by separate division. The marketing division also has many support departments under it like the Operations, Finance, Human Resources, Systems, Engineering and Supply & Distribution (S&D). Supply & Demand Management Quantity of petrol received by each storage location is decided by a central planning team for the entire nation. Variations caused by local events for e. g. , local strikes are then added by the UP office’s S&D department. Only this level of decision making is allowed at the state levels.
Since the planning committee meets every month (around 17th), and since they take inputs from the state level marketing division before arriving at the demand figures, IOCL is able to run the expediting operations smoothly. Otherwise this kind of centralized decision making would have posed a major problem for the organization. Distribution Network Distribution network comes in three different modes of operations. The three operations differ in the ownership of land equipment between IOCL and the dealer. Because the income earned by the dealer is commission based on sales incidents of fraud have been reported in the past. In order to counter the frauds committed, the company has come up with technological solutions. Currently the petrol stations are automated and centrally connected via SAP systems.
With SAP implementation personnel from IOCL can monitor the volume of petrol or diesel to the level of each nozzle present in the petrol station. Knowledge Management IOCL nurtures innovation through monetary and other incentives. Employees at every level of the organisation are encouraged to share his idea on the issue that touches him the most in his day today job. The organisation facilitates sharing of such ideas and innovations through an online portal. Despite such strong drive towards innovation and improvement, IOCL lacked in implementation of deeper knowledge management practices. Their knowledge management efforts are routed through manuals, work documents etc.
Most of the skills learnt by the employees are transferred to their peers through either informal interactions or by updating the relevant document. Training At IOCL, training receives a lot of emphasis. Each entry level graduate is given training at their world class training centre at Gurgaon. IIPM (Indian oil Institute for Petroleum Management) Gurgaon has received accolades from academia and corporate world alike. Apart from the initial training graduates are rotated among various divisions of IOCL in order to understand the entire operation enabling them to contribute to the organisation better. Training is used as a tool of recognition as well. Deserving candidates are identified and provided with training to fast track their career within the organisation.
Apart from these trainings there are counselling, need based trainings and mandatory trainings provided regularly. People and Processes As expected from a large organization, IOCL realizes the importance of keeping well defined processes in place. People are their biggest assets at 33,998 and still growing. A lot of efforts are being put in to ensure employee satisfaction and employee engagement and to ensure over all development of its employees. It is no surprise then that IOCL boasts of an attrition rate less than 1%. As Mr. VC Agrawal, Director (Human Resources) puts it, “IOCL offers the best job content in the industry, though not the best pay.
To provide rich work content, a company needs to have two things: a strong business growth strategy, and transparent and well-defined HR policies. Just having one will not suffice, even if the company promises the best compensation. ” Employee Profile The Corporation’s employee strength as on 31st March, 2009 is 33,998. IOCL’s unique work culture is based on trust, openness and a commitment to creativity and consultation. The organisation recognizes each and every employee as an achiever who will make a difference. The experience and the knowledge gained by its people in building this mammoth organisation is now sought after by other developing countries. Employee Benefit Schemes The various facilities/ welfare measures provided by IOCL include the following: Recruitment
IOCL’s recruitment policy is broadly guided by the administrative instructions and policy guidelines issued by the Department of Public Enterprises (DPE) and the Ministry of Heavy Industries, Government of India (GOI). In case of appointment of dealers and distributors for retail sales, there is a very well defined selection procedure which, besides addressing the commercial interests, also accommodates different social objectives criteria as desired by the Government from time to time. This broadly involves recruitment of individuals and selection of dealers/distributors from the weaker sections of society classified under the categories of Scheduled Castes, Scheduled Tribes, physically handicapped and women.
Selection of employees for direct recruitment with the company is done on the basis of uniform policy guidelines applicable across the country and supported by a robust selection process. IOCL has been continuously benchmarking its HR processes and has won recognition as a pioneer in evolution of robust HRD systems, including succession planning and other sub-systems. With IOCL’s emphasis on ‘growing its own timber’, most of its top management personnel, including Board members, have risen from within. It has provided leadership positions to the industry as well, with several CEOs in PSUs and private enterprises being ex-IOCians. Career Growth Opportunities
IOCL offers a variety of opportunities in 600 locations across India including refineries, pipeline, terminals, marketing units such as LPG bottling plants, bulk storage terminals, Aviation Fuel Stations, Retail/Consumer/Lubricants sales, and at the R&D Centre at the entry level. IOCL inducts officers at the junior-most level of the management hierarchy. First division professional degree holders and post-graduates from relevant disciplines are recruited as management / engineer trainees, accounts officers, medical officers, lab officers, systems officers, communications officers, scientists, etc. Job rotation and inter-location transfers throughout the country facilitate planned development of careers and broaden outlook. Career growth opportunities are based on the individual’s performance and contribution to the common goal of sustained growth.
IOCL’s top executives have grown from within – a testimony to the unlimited opportunities for growth available to the meritorious. Appraisal Appraisal at IOCL happens in a very open environment. It starts with the manager and employee getting together to set the goals for the employee. These goals are set on tangible parameters that are measurable and are in conjunction with the organisation’s goals. Goals are reviewed periodically to facilitate the employee in attaining his full potential. The final appraisal remarks are sent to the employee by the manager that can be accepted or rejected. If rejected the remarks are sent to the skip-level manager for further evaluation. This mechanism makes sure that the organisation takes care of the views of the employees as well.
The complete appraisal system is run over an internet portal for ease of sharing and communication. Awards To keep its employees motivated, IOCL has a system for recognizing and rewarding deserving employees. Every manager is entitled to give appreciation cheques or certificates to their subordinates whenever they feel that the subordinate has done exceptional work. There is also a ‘Suggestion Award’ which is awarded to employees for good suggestions about anything and everything. Entrepreneurial Culture IOCL encourages employee participation in management and suitably rewards innovative suggestions. Participative forums in the form of joint management councils, quality circles, suggestions scheme, etc. enrich its work culture.
IOCL today has one of the best records in the industry for accident-free man-hours. Welfare of Employees Apart from attractive scales and perks, IOCL provides its employees many facilities and welfare measures which are continuously upgraded. The medical facilities extended to the employees are rated amongst the best in the country. Apart from fully equipped hospitals at refinery townships, the Corporation also has nominated hospitals at various locations to meet employee needs. Holiday homes at select locations throughout the country help employees and their families unwind. Trade Unions As a policy, ‘Freedom of association’ is available to all employees.
There are 21 recognized unions representing workmen in various Divisions and one common Officers’ Association for all officers in IOCL. These collectives’ bodies are registered under the Trade Union Act, 1926. The organization has established policies and practices through which the collectives exercises the freedom of collective bargaining on issues of common interest and sign Long Term Settlements on salary and pay related issues and perks. Participative management and effective communication channels between collective bodies and the employees are encouraged. Regular structured meetings are held with the collectives, where the organizational issues are discussed.
The company also signed a Memorandum of Understanding, pertaining to Modification of Leave Rules and Modification of Rehabilitation Option under the Superannuation Benefit Fund Scheme with the recognized unions of Marketing Division during this period. Celebrations After hectic days of work, there is always time and reason to celebrate. Apart from the usual festivals and such celebrations, IOCL also annually celebrates 1st September as the IndianOil Day. Also this year was special for IOCL as it completed 50 years of existence. The Celebrations started on 30th June and went on till 1st September 2009. The main ceremony, held on 30th June, was inaugurated by the Honorable President Mrs.
Pratibha Patil followed by the release of a postal stamp and IOCL’s first corporate song. Cash and gold coins were given to many employees, including those who had parted away from the company to felicitate their contributions. Research and Development IOCL focuses not only on R&D, but also on RD&D (Research, Development & Deployment). The company has invested more than Rs. 1,000 crores in setting up world-class infrastructure at its R&D Centre in Faridabad, for building world-class capabilities in analytical services, engines, test rigs and pilot plants for all major refinery processes, catalyst characterization & development, etc. It also plans to invest about Rs. 00 crores during the period 2007-2012 to maintain its leadership in downstream R&D activities in the hydrocarbon sector. The R&D Centre of IOCL is engaged in the formulations of eco-friendly biodegradable lube formulations. IOCL has also invested about Rs. 7,000 crores so far in green fuel projects at its refineries and ongoing projects account for a further Rs. 5,000 crores. Even though there have been sizeable investments into Research and Development activities, these still account for less than 1% of IOCL’s revenues. Senior management is in cognizance of this and is trying to get more budgetary allocations towards core R&D. Optimization, Planning and Demand Management
Apart from these research activities IOCL has a team taking care of Planning and Demand Management. IOCL tries to forecast demand of its products atleast 1 week before the start of the month and then sets up its processes such that demand is met at all costs. For their demand forecasting processes, they use past historical data along with cutting edge analytical and statistical tools. Their team also takes in inputs from local regions to account for any fluctuations in demand arising out of local factors like carnivals or elections. Apart from historical data, they also track trends in all sectors and predict growth rates for each sector. This also adds to their forecasting methods and results in robust models.
Quality Management Quality Management System At the instance of the Ministry of Petroleum and Natural Gas, Government of India, the oil Industry has evolved a uniform quality control procedure for handling of petroleum products. The industry quality control manual covers the entire range of petroleum products. While the manual is meant to ensure product quality, standard operating procedures with regard to safety in handling of petroleum products in general are followed as laid down in the safety & operations manuals of the respective companies and also in the Industry Manual on Acceptance of Product by Marketing Companies and Related Issues.
IOCL has developed a robust system to monitor such standard procedures being followed at all times at all its refinery, pipelines and marketing locations. All IOCL refineries have ISO 9001:2000 systems certifications, which ensures that the right kind of product quality processes are adopted all through the operations and product batches are certified to meeting the stringent industry quality norms at the marketing locations for further despatches to the market. Refinery| ISO-9001/9002 Certification| Guwahati| Sept. ’95| Barauni| Oct. ’ 95| Gujarat| May’ 95| Haldia| Oct. ’ 94| Mathura| Sept. ’ 95| Digboi| Oct. ’ 96| Panipat| Jan. 2000| Quality Assurance IOCL consistently accorded top priority on Quality Assurance for its products and services.
IOCL continues to be the market leader for testing petroleums products by providing the largest network of testing facilities. In a year IOCL test more than 2 lakh samples in its 37 laboratories located across the country. Apart from 37 standstill laboratories they have more than 23 mobile laboratoies. Laboratory Information Management System was successfully commissioned in a few IOCL laboratories with the Laboratory Documentation and Management System software developed by the Quality Control Department of Marketing Division. On November, 2009, IOCL launched a three month nationwide ‘Check and Fill’ campaign at all the retail outlets for giving assurance to the customers about right quantity and quantity of fuel.
The customers can check the quality and quantity of fuel at any retail outlet across the country. They can also conduct the filter paper test in case of petrol, density test and quantity test in case of both petrol and diesel. Product Quality Improvement As per the Auto Fuel Policy of the Government of India, Euro-IV equivalent quality auto fuels are to be introduced in 13 notified cities and Euro-III equivalent fuels in the rest of the country. Accordingly, IOCL has progressively upgraded the quality of auto fuels produced at its refineries in terms of emission-related parameters and to meet the quality requirement of new generation vehicles at an investment of Rs. 10,000 crore. Of this, Rs. 585 crore was spent during 2007-08.
This is a continuous process and investments are required from time to time to meet the stringent standards as and when they are announced. Safety & Occupational Health IOCL follows the standards laid down by the Oil Industry Safety Directorate (OISD) of the Government of India on matters of safety & occupational health. In respect of environmental issues, the standards/norms set by the Central Pollution Control Board (CPCB) and State Pollution Control Boards (SPCB) is adhered to. Safety Most thrust is given to issues of employee safety. Whenever, any unforeseen event occurs, detailed analysis will be carried out and the recommendations will get implemented.
Though the such events are declining year by year { During the year 2007-08, there were two major incidents of fire (as compared to four in 2006-07) and six fatal accidents involving one employee and five contract workmen (as compared to eight fatalities, all contract workmen, in 2006-07)}, to prevent such event from occurring again the Corporation’s refineries, pipelines installations and Marketing Division units together are conducting training programmes (During the year 2007-08, 891 safety training programmes covering 5,963 employees and 2020 programmes covering 9,500 contract workmen were conducted). IOCL has won the coveted ‘Safety Innovation Award 2009’, for the fifth consecutive year, at the inaugural session of Safety Convention held on September 21, 2009. IOCL’s Marketing Division received the award for the ‘Most Safe Oil Marketing Company (OMC)’ in the last three years, an award category instituted for the first time by OISD. In the Refinery category, Mathura Refinery bagged the first prize whilst Haldia Refinery secured the third position. The Haldia Barauni Crude Oil Pipeline was awarded the first prize in the ‘Cross Country Pipelines- Crude Oil’ category.
The Safety Department of IOCL has brought out four engaging and interesting films on safety, titled ‘Work at height’, ‘Use of respiratory equipment’, ‘Use and maintenance of firefighting equipment and appliances’ and ‘Road safety within premises. ’ These films are extensively and regularly screened for employees and contract workmen to keep them alert and updated on safety practices. Occupational Health All IOCL refineries have well equipped occupational health centres and Occupational Health & Safety Management systems certified to the ISO-18001 of M/s. DNV, The Netherlands. As per standard procedure, surveillance audits were conducted through external auditors at intervals of six months during 2007-08.
IOCL is one of the first few PSU companies to participate in the ISO certification process. Refinery| ISO-14001 First Certification| OHSMS/OHSAS (18001) First Certification| Guwahati| Aug. ’ 97| April’ 99| Barauni| June’ 97| April’ 99| Gujarat| July’ 97| April’ 99| Haldia| Aug. ’ 97| May’99| Mathura| July’ 96| Nov. ’ 98| Digboi| Dec. ’ 97| April’ 99| Panipat| Feb. 2000| May 2000| Total Productive Maintenance (TPM) The Corporation’s TPM initiatives help exploit the inherent strengths of the people and improve operations & maintenance practices at its refineries. Through IOCL want to build the culture of zero breakdowns, zero leakages, zero accidents, zero defects and there by achieve increased productivity.
Different TPM events carried out in IOCL are KAIZAN and MAKIGAMI approach of continuous improvements and LEAF (Lifetime Estimation Analysis based on Failure Mechanism) in the process units. IOCL’s Green Agenda As an active partner of the Global Compact Programme of the United Nations, IOCL is fully focused on “sustainable development. ” As a dominant player, the Corporation recognises protection of environment as a core commitment of its business. As part of this commitment, all operating units and installations of IOCL have a comprehensive safety, health & environment management system in place. The facilities are periodically reviewed and upgraded from time to time for better performance. All IOCL refineries fully comply with the prescribed environmental standards and incorporate state-of-the-art effluent treatment technologies. Sustained efforts are being made to further improve the standards by introducing new state-of-the-art technologies further improve the existing standards and facilities * The environment management systems of all IOCL refineries, pipeline Installations and major marketing installations/terminals are certified to ISO-14001 standards * All IOCL refineries are accredited for Occupational Health & Safety Assessment Series (OHSAS-18001). All refineries are also rated under International Safety Rating System (ISRS).
Panipat and Gujarat Refineries are rated “Level 9” in the scale of 1 to 10 * All refineries have been provided with full-fledged effluent treatment plants consisting of physical, chemical, biological & tertiary treatment facilities. ‘Oilivorous-S’&‘Oilivorous-A’ technologies are being used for the treatment of oily sludge and acid tar respectively. The treated effluent is far superior to the stipulated MINAS quality and quantum standards. Treated effluent is being reused to the extent of 65-70% in the refinery units. Panipat Refinery continues to maintain zero discharge since commissioning in 1998 * IOCL refineries have adopted various measures for control of gaseous emissions.
These include use of low-sulphur fuel oil, desulphurisation of refinery fuel gas, tall stacks for better dispersion of flue gases, advanced process control systems; and energy conservation measures to reduce fuel consumption * The sulphur dioxide emissions at IOCL Refineries are well below the limits prescribed by the Ministry of Environment & Forests and State Pollution Control Boards. Ambient air monitoring stations with automatic continuous monitoring instruments are provided at all the refineries. In particular, Mathura Refinery has set up three ambient air quality-monitoring stations between the refinery and the city of Agra and a fourth one at Bharatpur.
Utmost care is taken to minimise the impact of refinery operations on the air quality of the surrounding areas so that the ambient air quality remains within the stipulated limits prescribed for sensitive areas * Most IOCL refineries have commissioned secondary processing units for improving fuel quality and reducing emissions. Some of the recent commissionings include Hydrogen unit and Diesel Hydrotreater unit at Mathura refinery and Motor Spirit Quality projects at Mathura and Haldia refineries. Sulphur recovery units have been installed at all the refineries Green Initiatives * Low Sulphur (0. 5%) Diesel was introduced in metros from April 1996 * Extra-low Sulphur (0. 5%) Diesel was introduced in the eco-sensitive Taj Trapezium area from September 1996, in Delhi from October 1997, and across the country from 1st January 2000 * Diesel with 0. 05% sulphur content was introduced in the metros in 2001 * Unleaded Motor Sprit was made available all over the country since February 1, 2000 * Green fuels (petrol and diesel) conforming to Euro-III emission norms have already been introduced in 13 cities/states; the rest of the country is getting BS-II fuels * IOCL is fully geared to meet the target of reaching EURO-III compliant fuels to all parts of the country by the year 2010; major cities will upgrade to Euro-IV compliant fuels by that time * IOCL has invested about Rs. ,000 crore so far in green fuel projects at its refineries; ongoing projects account for a further Rs. 5,000 crore * Motor Spirit Quality Improvement Unit commissioned at Mathura Refinery; similar units are coming up at three more refineries * Diesel quality improvement facilities in place at all seven IOCL refineries, several more green fuel projects are under implementation or on the anvil * The R&D Centre is engaged in the formulations of eco-friendly biodegradable lube formulations * The Centre has been certified under ISO-14000:1996 for environment management systems Corporate Social Responsibility At IOCL, corporate social responsibility (CSR) has been the cornerstone of success right from inception in the year 1964.
The Corporation’s objectives in this key performance area are enshrined in its Mission statement – “To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience. ” The corporate campaign “IndianOil – India Inspired”, is aimed at claiming all countrymen as the customers of IOCL. As a constructive partner in the communities in which it operates, IOCL has been taking concrete action to realise its social responsibility objectives, thereby building value for its shareholders and customers. The Corporation respects human rights, values its employees, and invests in innovative technologies and solutions for sustainable energy flow and economic growth. In the past four decades, IOCL has supported innumerable social and community initiatives in India.
IOCL has been touching the lives of millions of people positively by supporting environmental and health-care projects and social, cultural and educational programs. Besides focusing primarily on the welfare of economically and socially deprived sections of society, IOCL also aims at developing techno-economically viable and environment-friendly products and services for the benefit of millions of its consumers, while at the same time ensuring the highest standards of safety and environment protection in its operations. The different initiatives undertaken are: * Sharing Profits: Every year, IOCL sets aside a fixed portion of its profits for spreading smiles in millions of lives across the country through a comprehensive community welfare and development programme.
About one-fourth of the community development funds are spent on the welfare of Scheduled Caste and Scheduled Tribe beneficiaries * Community programmes: IOCL has a concerted social responsibility programme to partner communities in health, family welfare, education, environment protection, providing potable water, sanitation, and empowerment of women and other marginalised groups. IOCL has always been in the forefront in times of national emergencies. IndianOilPeople have time and again rallied to help victims of natural calamities, maintaining uninterrupted supply of petroleum products and contributing to relief and rehabilitation measures in cash and kind IOCL’s community-focussed initiatives include allotment of petrol/diesel station dealerships and LPG distributorships to beneficiaries from among Scheduled Castes, Scheduled Tribes, physically handicapped, ex-servicemen, war widows, etc. Services for farmers: The Corporation has also unveiled kisan seva kendras as small-format retail outlets to reach quality products and services to people in the rural areas * Protect national heritage: IOCL has also set up the IndianOil Foundation (IOF) as a non-profit trust to protect, preserve and promote national heritage monuments * Global compact programme: IOCL is committed to the Global Compact Programme of the United Nations and endeavours to abide by the 10 principles of the programme, some of which are already part of the Corporation’s Vision and Mission statements * Other initiatives: The Corporation also supports a variety of endeavours in arts, culture, music and dance, apart from organizing programmes on its own under the banners of IndianOil Art Exhibition, IndianOil Sangeet Sabha and IndianOil Kavi Sammelan * Protecting Nation’s energy security: As part of its environment-protection initiatives, IOCL has invested close to Rs. 7,000 crore in state-of-the-art technologies at its refineries for production of green fuels meeting global standards.
To further reduce dependence on precious petroleum products and secure the nation’s energy security, the Corporation is now in the process of commercializing various options in alternative fuels such as ethanol-blended petrol, biodiesel, and Hydrogen and Hydrogen-CNG mixture. Conclusion One generally has a skewed perception about PSU companies, especially in India. However our visit to IOCL has completely changed this perception. We obtained invaluable insights into the functioning of a behemoth of such tremendous size. IOCL is in no way less than a private corporate firm as far as its functioning and day to day operations is concerned. The entire re-visioning exercise done by IOCL clearly indicates the importance given by the company to the vision, mission and values and the various steps taken by the company towards achieving the aforementioned shows its seriousness in this regard.
Further, the company is highly focused towards ethics and transparency. IOCL is a market leader by a huge margin. It operates in an industry which has humongous entry barriers, and problems due to regulations. In spite of all these factors, the company does not let complacency seep in. Through its focus on innovation and technology, it has been continuously striving to set industry standards. For a company of its size and stature, another way to expand even further is through international markets. IOCL has indeed expanded, but this expansion can be termed modest at the most. It has subsidiaries mainly in Sri Lanka, Mauritius and Middle East.
We believe, the company should give more fillip to expanding overseas, as it might give it better margins in countries where the prices are not regulated. This might also entail a change in the way the company is structured in case the international operations become huge. Another area of improvement for the firm will be in knowledge management. From our interaction with the personnel from the company, we can infer that knowledge management is still internal and limited. We recommend that the company must take cues from international leaders like Shell and improvise on their processes around knowledge management to make IOCL truly international.
