Principles of Management Soni George

#03 Aditya Anupkumar #09 Riju Dasgupta #35 Elroy Pinto #49 Srishti Nayar #50 Priyank Misra #53 Medha Nayak

Principles of Management: Soni George Indian Oil

Index
(1) About Indian Oil (2) Indian Oil Information (3) Company Mission and Vision (4) The Ideas of Various Management Thinkers (5) How it all Works (6) Meeting Employee Needs

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Principles of Management: Soni George Indian Oil

About Indian Oil

Indian Oil is Indias No.1 Company in Fortune's prestigious listing of the world's 500 largest corporations, ranked 189 for the year 2004 based on fiscal 2003 performance. It is also the 19th largest petroleum company in the world. Indian Oil has also been adjudged No.1 in petroleum trading among the national oil companies in the Asia-Pacific region To maintain its strategic edge in the market place, Indian Oil has planned investments to the tune of Rs. 24,400 crore during the X Plan period (2002-07), mainly in linear integration & diversification projects, besides refining and pipeline capacity expansions, product quality up gradation and retail operations.

Sustaining Superior Performance & Fair Competitiveness As a major diversified, transnational, integrated energy company, with national leadership and a strong environment conscience, Indian Oil plays a national role in oil security& public distribution, furthers the idea of open discussions of companies contracts and projects as well a strategic service available to customers, the awareness of what the competitor is doing and the feedback given by clients and co workers are the chief reasons for sustaining a superior performance along with fair competitiveness.

Corporate Indian Oil is the country's largest commercial enterprise, with a sales turnover of Rs. 1,30,203 crore (US$ 29.8 billion) and profits of Rs. 7,005 crore (US$ 1,603 million) for the financial year 2003-04. Beginning in 1959 as Indian Oil Company Ltd., Indian Oil Corporation Ltd. was formed in 1964 with the merger of Indian Refineries Ltd. (Estd. 1958). As India's flagship national oil company, Indian Oil accounts for 56% petroleum products market share among PSU companies, 42% national refining capacity and 69% downstream pipeline throughput capacity.

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Principles of Management: Soni George Indian Oil The Indian Oil group of companies owns and operates 10 of India's 18 refineries with a current combined rated capacity of 54.20 million metric tonnes per annum (MMTPA) or one million barrels per day (bpd). These include two refineries of subsidiary Chennai Petroleum Corporation Ltd and one of Bongaigaon Refinery and Petrochemicals Limited. Indian Oil owns and operates the countrys largest network of cross-country crude oil and product pipelines of nearly 8,000 km, with a combined capacity of 56.85 MMTPA.

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Principles of Management: Soni George Indian Oil

Indian Oil Information

About the Company, Statistics, Brands Refining Indian Oil controls 10 of India's 18 refineries - at Digboi, Guwahati, Barauni, Koyali, Haldia, Mathura, Panipat, Chennai, Narimanam and Bongaigaon - with a current combined rated capacity of 54.20 million metric tonnes per annum (MMTPA) or one million barrels per day (bpd).

Pipelines Indian Oil owns and operates India's largest network of cross-country crude oil and product pipelines of nearly 8,000 km, with a combined capacity of 56.85 MMTPA. Indian Oil also operates two Single Buoy Mooring systems in the high seas off Vadinar coast in the Gulf of Kutch for receipt of crude oil.

Marketing

Indian Oil's countrywide network of over 22,000 retail sales points is backed for supplies by its extensive, well spread out marketing infrastructure comprising 162 bulk storage terminals, installations and depots, 94 aviation fuel stations and 87 LPG bottling plants. Its subsidiary, IBP Co. Ltd, is a stand-alone marketing company with a

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Principles of Management: Soni George Indian Oil nationwide retail network of over 3000 sales points.

Indian Oil touches every customer's heart by keeping the vital oil supply line operating relentlessly in every nook and corner of India. Indian Oil's vast distribution network of over 22,000 sales points ensures that essential petroleum products reach the customer at the "right place and the right time". Our marketing share is 56% among oil public sector undertakings in India. With sales of 48.61 MMT of petroleum products in fiscal 2003, Indian Oil serves millions of customers everyday - big or small -- with equal zeal and care; with focus on upgrading petrol and diesel stations to international standards by providing additional facilities and value-added services. Indian Oil reaches Indane cooking gas to the doorsteps of 40 million households in over 2,100 markets through the country's largest network of over 4,300 distributors. The country's leading SERVO brand lubricants from Indian Oil, with over 42% market share and 450 grades are sold through over 9,100 retail outlets, besides a countrywide network of bazaar traders. Indian Oil's ISO-9002 certified Aviation Service, with 67% market share, meets the fuel and lubricants needs of domestic and international flag carriers, Defense Services and private aircraft operators. Between one sunrise and the next, Indian Oil refuels over 900 aircrafts. In fact, the refueling never stops and neither does our customer service, which is round the clock. Indian Oil Aviation Service, the leader in the aviation fuels business in the country, has launched a unique initiative for customers on the Internet. An interactive website ioclebiz.com will help customers to log on and do business from anywhere in the world. With this initiative, Indian Oil Aviation Service, which is acknowledged as one of the leading supplier of aviation fuels in the world, is reaching out to customers at their workplace. Research & Development Indian Oil's world-class R&D Centre has won recognition for its pioneering work in lubricants formulation, refinery processes, pipeline transportation and bio-fuels. It has developed over 2,100 formulations of SERVO brand lubricants and greases for virtually 2005

Principles of Management: Soni George Indian Oil all conceivable applications automotive, railroad, industrial and marine meeting stringent international standards and bearing the stamp of approval of all major original

equipment manufacturers. The Centre has to its credit over 140 national and international patents. Apart from leadership in development and commercialization of bio-fuels, the R&D Centre is currently the nodal agency of the hydrocarbon sector in India for ushering in Hydrogen fuel in the country.

Expanding Horizons Indian Oil is currently metamorphosing from a pure sectoral company with dominance in downstream in India to a vertically integrated, transnational energy behemoth. The Corporation is implementing a master plan to emerge as a major player in petrochemicals by integrating its core refining business with petrochemical activities, besides making large investments in E&P and import/marketing ventures for oil and gas in India and abroad.

Spreading Wings Indian Oil is also strengthening its existing overseas marketing ventures and simultaneously scouting new opportunities for marketing and export of petroleum products to new energy markets in Asia and Africa. Two wholly-owned subsidiaries are already operational in Sri Lanka and Mauritius, and a regional office at Dubai is coordinating expansion of business activities in Middle East region. Within a year of incorporation, Lanka IOC Pvt. Ltd. (LIOC) has captured a 25% market share in Sri Lanka, with a target to take it to about 40% in the near future. Indian Oil is investing US$ 18 million in Mauritius through its subsidiary, Indian Oil Mauritius Ltd. (IOML), to set up a range of marketing infrastructure there. The Corporation has launched 11 joint ventures in partnership with some of the most respected corporates from India and abroad -- Lubrizol, Nyco SA, Petronas, Oiltanking GmbH, and Marubeni to name a few. SERVO lubricants are being marketed

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Principles of Management: Soni George Indian Oil in Dubai, Nepal, Bhutan, Kuwait, Malaysia, Bahrain, Indonesia, Sri Lanka, Kyrgyzstan, Mauritius, Bangladesh, etc. Indian Oil has been lending its expertise for nearly two decades to various countries in several areas of refining, marketing, transportation, training and research & development. These include Sri Lanka, Kuwait, Bahrain, Iraq, Abu Dhabi, Tanzania, Ethiopia, Algeria, Nigeria, Nepal, Bhutan, Maldives, Malaysia and Zambia. Indian Oil's sincere commitment to Quality, Safety, Health and Environment is

reflected in the series of national and international certifications and awards (current ones listed separately) earned over the years. The 19th largest petroleum company in the world, Indian Oil, is well on its way to becoming an integrated, trans-national energy corporate. Linear Integration E&P: Indian Oil is focusing on acquiring equity oil & gas in India and abroad. Indian Oil was awarded two exploration blocks under NELP-I (New Exploration Licencing Policy of the Government of India) in partnership with ONGC (Oil & Natural Gas Corporation Ltd). Under the 2nd round of NELP, Indian Oil, in consortium with ONGC, GAIL, GSPC and OIL, was awarded eight exploration blocks. Under the 3rd round of NELP, Indian Oil, in consortium with ONGC, was awarded one exploration block in Mizoram. Indian Oil -ONGC combine has also been awarded two blocks in the first round of bidding for exploration of Coal Bed Methane (CBM). The ONGC-Videsh-IOC-OIL consortium has been awarded Farsi exploration block in Iran under Service Contract. IOC-ONGC combine was also qualified by KOC/KPC as non-operators for the development of Northern oil fields of Kuwait. A consortium of BP-Occidental-IOCONGC, under the operatorship of BP, has been formed for participation in Kuwait bidding round. IOC has acquired a 27% participating interest in the block AAP-ON-94/1 from HOEC, which is operated by Premier Oil with 38% a participating interest. HOEC and OIL have a 25% and 10% participating interest in this block.

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Principles of Management: Soni George Indian Oil LNG: As co-promoter of Petronet LNG Limited (PLL), Indian Oil has tied up the complete sale of 2.52 MMSCMD of LNG allotted to it through strategic gas sales

agreements with key customers. PLL's Dahej terminal received its first parcel of LNG by January-end, 2004 and commercial supplies to customers commenced from April 2004 onwards. Major customers who have signed up with Indian Oil for gas supplies include Essar Steel, Gujarat State Petroleum Corporation, Haryana Sheet Glass, Hindustan National Glass Industries Ltd. and Surya Roshni Ltd. Petrochemicals: Indian Oil has developed a master plan to emerge as a major player in petrochemicals, mainly through vertical integration with its core refining business and using the existing refinery streams. Towards this, it has planned huge investments entailing an investment of Rs 25,000-30,000 crore, to be made in phases by 2011-12. As part of this, the company is setting up a naphtha cracker complex at Panipat in Haryana based on surplus naphtha that would be available from its refineries at Panipat, Mathura and Koyali. The project, estimated to cost Rs 6,300 crore, would involve a naphtha cracker with 80,000 metric tonnes per annum of ethylene production and associated units including hydrogenation, butadiene and benzene extraction besides downstream polymer units like a swing unit (LLDPE/HDPE), a dedicated high-density polyethylene (HDPE) unit, a polypropylene unit and a monoethyl glycol (MEG) unit. Following the LAB (linear alkyl benzene) project at Gujarat refinery and the PX/PTA (paraxylene/purified terephthalic acid) plant coming up at Panipat, this will be the third mega petrochemicals project floated by Indian Oil. Corporate Initiatives Health, Safety & Environment: Indian Oil's business plans always have an underlying concern for the community and the environment. Its seven refineries, four pipeline systems, R&D Centre and select retail outlets have earned ISO-14001 certification for Environment Management Systems. All major installations are surrounded by green belts to serve as pollution sinks. Ecological parks developed at the refineries provide sanctuary for populations of migratory birds.

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Principles of Management: Soni George Indian Oil A Learning Organization

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We believe that to learn is to grow. Continuous growth - that's the focus at Indian Oil. Its a challenging task that calls for non-stop learning and constant upgrading of skills. Indian Oil operates 17 training centers throughout India for up-skilling, re-skilling and multi-skilling of employees in pursuit of corporate excellence. Among these, the foremost learning centers -- the Indian Oil Institute of Petroleum Management at Gurgaon, the Indian Oil Management Centre for Learning at Mumbai, and the Indian Oil Management Academy at Haldia -- have emerged as world-class training and management academies. Indian Oil Institute of Petroleum Management, the Corporation's apex centre of learning, conducts advanced management development programs in collaboration with reputed institutes. Beyond learning, Indian Oil stimulates individual growth through a culture of participation, innovation and cross-functional exposureexploring every dimension of the learning process to open new professional and personal growth avenues for every team member and building competency, confidence and capability to face the challenges of the market place. IT Vision: Indian Oil aims at maintaining its leadership in the Indian hydrocarbon sector by continuous assimilation of emerging Information Technology and web-enabled solutions for integrating and optimizing the Corporation's hydrocarbon value chain. It has recently implemented an IT re-engineering project titled Manthan, which includes an Enterprise Resource planning (ERP) package which will standardize and integrate the Corporation's business on a common IT platform through a robust hybrid wide area network with appropriate hardware. Select Add-On packages are also being customized to work in tandem with the ERP solution with an integrated approach for optimization. Community Development Wherever Indian Oil builds capacity, the local community benefits by way of substantive improvements in the quality of life, in provision of safe drinking water, health care, education, etc Indian Oil scholarships help students pursue higher education in engineering, management and medicine.

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Mission and Vision

Vision To be a major diversified, transnational, integrated energy company, with national leadership and a strong environment conscience, playing a national role in oil security& public distribution. Mission To achieve international standards of excellence in all aspects of energy and diversified business with focus on customer delight through value of products and services, and cost reduction. To maximize creation of wealth, value and satisfaction for the stakeholders. To attain leadership in developing, adopting and assimilating state-of- the-art technology for competitive advantage. To provide technology and services through sustained Research and Development. To foster a culture of participation and innovation for employee growth and contribution. To cultivate high standards of business ethics and Total Quality Management for a strong corporate identity and brand equity. To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience.

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The Ideas of Thinkers

We also researched as a part of this project, the various Management Thinkers that the Company (Indian Oil) perhaps used in their creation of their Mission and Vision, and their business plans and strategies Some of the thinkers used are: (1) Joseph Jurans Total Quality Management (TQM) policies developed along with Edward Demings policy of innovation: The Deming cycle, or PDSA cycle is a continuous quality improvement model consisting out of a logical sequence of four repetitive steps for continuous improvement and learning: Plan, Do, Study (Check) and Act. The PDCA cycle is also known as the Deming Cycle, the Deming wheel of continuous improvement spiral. Its origin can be traced back to the eminent statistics expert Mr. Walter A. Shewart, in the 1920s. He introduced the concept of PLAN, DO and SEE. The late Total Quality Management (TQM) guru and renowned statistician Edward W. Deming modified the SHEWART cycle as: PLAN, DO, STUDY, and ACT. (2) Core competencies of C.K. Prahalad. Business units should use and help to further develop the Core Competencies. The corporate center should not be just another layer of accounting, but must add value by enunciating the strategic architecture that guides the competence acquisition process. Three tests to identifying a Core Competency are: (a) provides potential access to a wide variety of markets, (b) should make a significant contribution to the perceived customer benefits of the end product(s), and (c) a Core Competency should be difficult for competitors to imitate.

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How it all Works

R&D Pioneering R&D is the key factor of success to this company since years. Indian Oil's world-class R&D Center has won recognition for its pioneering work in lubricants formulation, refinery processes, pipeline transportation and alternative fuels. It is purely technical and consists of 400 brands of lubricants. Indian Oil's world-class R&D Centre has won recognition for its pioneering work in lubricants formulation, refinery processes, pipeline transportation and alternative fuels. It has developed over 2,100 formulations of SERVO brand lubricants and greases for virtually all conceivable applications - automotive, railroad, industrial and marine meeting stringent international standards and bearing the stamp of approval of all major original equipment manufacturers. A wholly-owned subsidiary company, Indian Oil Technologies Ltd., is commercializing the innovations and technologies of the Centre, which has over 140 national and international patents to its credit. Apart from leadership in development and commercialization of bio-fuels, the R&D Centre is currently the nodal agency of the hydrocarbon sector in India for ushering in Hydrogen fuel in the country. Recruitment & Promotion Recruitment is only on advertising and first come basis. However there are various MBA programs in the Management Development Institute (MDI) wherein it is necessary to clear IIM level papers for specific posts. They also have on campus recruitment in top universities across India. Promotion strategy consists of incremental wages. Promotion is done on grading system in the month of February. Minimum norms require meeting the qualifications for the post is a suitable grade and a service of a minimum of three years at most levels. However the tenure of service may change from post to post. Employee Training and Motivation Indian Oil training provides training to other organizations as well. Hand on training is given to the staff locally. Regional training centers are also functional in the

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Principles of Management: Soni George Indian Oil north, south, east and west. Development skills up gradation courses are a must for the employees of this company. A good blend of skill development, behavioral and core programmers provide stimulus for growth and career development. 1. Knowledge Management System 2. Technology Management System 3. Leadership Programs 4. Community of Practices (COP)

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The above team building Programs consist of team exercises and the top talent of the company i.e. different people handling the same job. In these Programs employees are to voice their opinions and give solutions to problems thus tackling the situation in a creative manner. Communication System State heads hold a meeting every month. All executive directors and executives have separate monthly meetings where they share company information across the different branches in the country. Conflict resolution also takes part in these meetings. Inter Division Management Communication (IDMC) is a monthly meeting programmed at the chairman level of all the units of different regions.

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Principles of Management: Soni George Indian Oil Employees

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The Corporation's employee strength as on March 31, 2003 was 31,500, including 10,263 in the officer cadre. There are 2,418 women employees (including 754 in the officer cadre), constituting 7.68% of the total manpower. Indian Oil's unique work culture is based on trust, openness and a commitment to creativity and consultation. The organization identifies each and every one of its employees as an achiever who will make a difference. The experience and the knowledge gained by its people in building this mammoth organization is now sought after by other developing countries. Entrepreneurial Culture Indian Oil 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. Indian Oil today has one of the best records in the industry for accident-free man-hours. Career Growth Opportunities Indian Oil 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. Indian Oil's top executives have grown from within -- a testimony to the unlimited opportunities for growth available to the meritorious. Welfare of Employees Apart from attractive scales and perks, Indian Oil 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

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various locations to meet employee needs. Holiday homes at select locations throughout the country help employees and their families unwind. Training & Development Indian Oil conducts structured training programs for its employees both in general management and functional management disciplines. It also provides them opportunities to avail of membership of professional bodies. Monetary incentives are also available for those acquiring additional qualifications. The Indian Oil Institute of Petroleum Management (IIPM) at Gurgaon conducts round-the-year Management Development Programs on organizational goals and strategies, diversification and globalization plans. It has also provided specialized training to employees of other international oil companies having strategic alliances with Indian Oil, besides consultancy services in the area of petroleum management. IIPM offers a one-year, post-experience International MBA Programme with specialization in Petroleum Management in collaboration with the International Centre for Promotion of Enterprises, Ljubljana and University of Ljubljana, Slovenia. Initially starting with Indian Oils own employees in 1996-97, the Institute has now extended this facility to other companies in India and abroad. Vigilance Indian Oils Vigilance Department started functioning as an independent unit from April 1, 1970 with Mr. Gurdas Mal as the first Chief Vigilance Officer at the Corporate Office along with 4 posts of Vigilance Officers in the Marketing Division. From this humble beginning, the Department has come a long way to the expanded set-up that it is today. Its areas of activity have broadened considerably as also its approach, which is now more proactive than ever. From the concept of Vigilance as an investigative agency for punitive action, it has been a long journey to today's concept of Vigilance for Corporate Growth". The emphasis too has shifted from punitive vigilance to preventive and proactive vigilance. Indian Oil, with ten operating refineries, over 7000 km of pipelines network, and a countrywide marketing and distribution network, has its main Vigilance Department at

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Principles of Management: Soni George Indian Oil the Corporate Office in New Delhi. The Vigilance Department is headed by the Chief Vigilance Officer, Mr. Shankar Aggarwal, IAS. Nineteen field locations, called Vigilance units, function in seven operating

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refineries, refinery project site at Paradip, Pipelines Head Office and Regions, Marketing Head Office and Regions, R&D Centre at Faridabad and IOBL, Mumbai (a subsidiary of Indian Oil). These vigilance units are headed by officers of the level of Deputy General Manager, Chief Manager or Senior Managers who report to the Vigilance Department at Corporate Office. The officers working in the Vigilance Department are drawn from Indian Oil as well as other Government departments like Railways, CRPF, BSF, CISF, State Police, etc. The Vigilance Department at the Corporate Office provides guidance, supervision and control of all the Vigilance functionaries of the Corporation. Its major work area comprises handling and investigation of complaints received from individuals, Ministry of Petroleum & Natural Gas, CVC, PMO, Indian Oil Management, and other sources, preventive vigilance like surprise inspections, joint surprise inspections, regular surveillance/scrutiny of procurement and contract files, scrutiny of property returns of employees, coordination with Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC), Chief Technical Examiner (CTE), Ministry of Petroleum & Natural Gas (MOP&NG) and regular investigations, etc. The CVO provides advice to the Chairman and acts as a link between the Corporation and outside agencies like MOP&NG, PMO, CBI, CVC, etc., on vigilance matters. The Vigilance executives function under the direct control and overall guidance of CVO. The unit Vigilance functionaries also provide assistance to the unit heads in respect of interpretation of CVC, CTE instructions, standing instructions of CVO, and other norms of statutory bodies like CBI, etc.

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Acknowledgements

Our thanks to Mr. Satwant Singh, GM-Branding, Indian Oil

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