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India’s flagship national oil company and downstream petroleum major, Indian Oil
Corporation Ltd. (IndianOil) is celebrating its Golden Jubilee during 30th June - 1st
September 2009.
Established as an oil marketing entity on 30th June 1959, Indian Oil Company Ltd.
was renamed Indian Oil Corporation Ltd. on 1st September 1964 following the
merger of Indian Refineries Ltd. (established in August 1958) with it. The integrated
refining & marketing entity has since grown into the country’s largest commercial
enterprise and India’s No.1 Company in the prestigious Fortune ‘Global 500’ listing
of the world’s largest corporates, currently at the 116th position. It is also the 18th
largest petroleum company in the world.
IndianOil Today
From a fledgling company with a net worth of just Rs. 45.18 crore and sales of 1.38
million tonnes valued at Rs. 78 crore in the year 1965, IndianOil has since grown
over 3000 times with a sales turnover of Rs. 285,337 crore, the highest–ever for an
Indian company, and a net profit of Rs. 2,950 crore for 2008-09.
Set up in 1972, IndianOil's R&D Centre has blossomed into a world-class institution
and Asia's finest. Besides its pioneering work in lubricants formulation, refinery
processes, pipeline transportation and alternative fuels such as ethanol-blended
petrol and bio-diesel, the Centre is also the nodal agency of the Indian hydrocarbon
sector for ushering in Hydrogen fuel into the country. It has over 214 active patents
to its credit, including 113 international patents. Its current R&D focus is on the
future business needs of IndianOil in the areas of petrochemicals, including
polymers, and alternative energy sources.
Strategic Origins
IndianOil was born of the vision of Pandit Jawaharlal Nehru, the first Prime Minister
of India, to pursue a policy of self-sufficiency in the petroleum sector as a strategic
requirement of a free nation.
The marketing activities of Indian Oil Company began on 17th August 1960 with the
receipt of the first parcel of 11,390 tonnes of imported diesel of Russian origin from
MV Uzhgorod docked at Pir Pau Jetty in Mumbai. The Indian petroleum market at
that time was ruled by goliaths like Burmah Shell, Esso Eastern Inc., Caltex (India)
Ltd., Indo-Burmah Petroleum Co. Ltd and Assam Oil Company Ltd. Indian Oil
Company’s first and foremost challenge was to assert itself in the face of stiff
competition from these well-entrenched transnational oil companies operating in
India. In its first year of marketing (1960-61), the Company’s volume sales was a
meager 0.038 million tonnes (approximately 5% of industry sale) worth Rs. 0.8
crore.
The first activity that Indian Refineries Ltd. undertook was the construction of a
refinery at Noonmati near Guwahati in Assam with Rumanian help. The refinery was
inaugurated by Pandit Jawaharlal Nehru himself in 1962, and processed Upper
Assam crude oil received through an Oil India Ltd. (OIL) pipeline from Nahorkatiya.
For product evacuation, the 435-km Guwahati-Siliguri pipeline and the Siliguri
terminal were built and commissioned in 1964. Soon after, It was decided to set up
two more refineries, one each at Barauni and Koyali for processing newly-
discovered crude oil at Assam and Gujarat respectively. The Barauni Refinery was
built with Russian collaboration and went on stream in July 1964. The Koyali
Refinery was also set up with technical assistance of Soviet Russia. IndianOil
acquired control of the refinery from Oil & Natural Gas Commission on 1st April 1965
and commissioned it in October the same year after formal inauguration by the then
President of India, Dr. S Radhakrishnan.
Meanwhile, on 1st September 1964, Indian Refineries Ltd. was merged in Indian Oil
Company to form a vertically integrated entity straddling both refining and marketing
functions, and Indian Oil Company was renamed as Indian Oil Corporation Ltd.
(IndianOil). While announcing the historic merger, Prof. Humayun Kabir, the then
Union Minister of Petroleum & Chemicals, hoped that IndianOil would soon handle
at least half of the trade in petroleum products. He was proved right within five
years. By 1969, the Corporation was handling more than 50% of the total petroleum
consumption of the nation and reached 64.2% market participation by the year
1974.
Battle Spurs
As a veteran IOCian put it once, IndianOil has been genetically coded to serve the
Defence services. This was proved beyond doubt during the 1965 war, when
IndianOilPeople maintained the vital supply of petroleum products to the armed
forces with grit and determination. In fact, the Srinagar depot was one of the first
bulk storage facilities set up by the Corporation, in 1963. IndianOil’s entry into the
aviation fuelling business too began with the Defence Services in October 1964 and
then to civil aviation a year later, in November 1965.
Having proved its mettle in the 1965 war, IndianOil plunged into frenetic activity with
new-found confidence – setting up refineries, laying pipelines, building storage
terminals and aviation fuel stations, entering new businesses like bitumen, marine
bunkering, and appointing dealers and distributors across the country. The Haldia
Refinery was set up in 1975, Mathura Refinery in 1982 and Panipat Refinery in
1998. The Corporation is setting up another grassroots refinery at Paradip in Orissa,
for commissioning by the year 2012.
Marketing Innovations
Having set up Its first petrol & diesel station (retail outlet) at Kochi in October 1962,
IndianOil currently operates the country’s largest network of retail outlets numbering
over 18, 278 with focus on customer convenience. It was the first oil marketing
company to introduce the concept of Multipurpose Distribution Centres (MPDCs) at
its retail outlets located in rural areas way back in 1975. These MPDCs served as
one-stop convenience shops, especially for farmers, and were the harbingers of the
modern Kisan Seva Kendra (KSK) successfully introduced by IndianOil in 2006. As
on date, over 2,550 specially formatted Kisan Seva Kendra outlets set up across the
country 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 pumpset oils, besides
auto fuels and kerosene. About 600 such Kendra are being added to the
Corporation’s marketing network every year. IndianOil has been chosen as the ‘Most
Admired Retailer of the Year’ in the category of Rural Retailing at the India Retail
Forum during 2008.
Over the years, IndianOil has also launched several branded products, customer-
focussed speciality products and customer rewards programmes. New generation
branded transportation fuels with multifunctional additives are now available in major
markets. Initiatives for cashless transactions for customer convenience through co-
brand credit cards and fleet cards have met with great success.
IndianOil also enjoys a dominant share of the bulk consumer business, including
that of railways, state transport undertakings, and industrial, agricultural and marine
sectors. Its 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.
Kitchen Revolution
Indane was the first branded product from IndianOil to hit the market, at Kolkata in
October 1965, with product sourced from its Barauni Refinery. Introduction of the
clean and efficient LPG as cooking gas ushered in a revolution in millions of
households. Encouraged by customer response and to ensure dedicated service,
IndianOil undertook massive augmentation of LPG storage and distribution facilities
across the country in 1983. The process continues even today with the setting up of
89 Indane bottling plants, mostly in upcountry locations for quicker turnaround of
cylinders. Several innovations were introduced in LPG marketing from time to time,
like mounded storage and 19-kg cylinders for bulk customers, reticulated supplies
for housing complexes and 5-kg cylinders for customers in inaccessible and hilly
terrain. The Corporation’s in-house IndMax process is aimed at enhancing LPG yield
from crude oil refining. Indane cooking gas today reaches the doorsteps of over 53
million households in nearly 2,700 markets through a network of about 5,000 Indane
distributors. This includes customers in Andaman & Nicobar and Lakshadweep
islands. Autogas (LPG) dispensing stations are being set up in metros and major
cities to cater to the growing vehicle population using LPG as fuel.
New Businesses
In pursuit of its Corporate Vision and to achieve the next level of growth,, IndianOil 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, besides globalisation
of its downstream operations.
In E&P, IndianOil has bagged eight oil & gas blocks and two Coal Bed Methane
blocks under NELP (New Exploration Licencing Policy) rounds in India, in
consortium with other companies. It has also acquired participating interest in two
onshore blocks in Assam and Arunachal Pradesh. Overseas ventures of the
Corporation include two blocks in Sirte Basin and Areas 95/96 in Ghadames basin of
Libya, Farsi Exploration Block in Iran, onshore farm-in arrangements in Gabon, an
onland block in Nigeria and two onshore blocks in Yemen. IndianOil has
incorporated Ind-OIL Overseas Ltd. – a special purpose vehicle for acquisition of
overseas E&P assets – in Port Louis, Mauritius, in consortium with OIL.
Group Synergy
In the year 2001, IndianOil acquired the Government stake and management control
of stand-alone refiners Chennai Petroleum Corporation Ltd. (CPCL) and
Bongaigaon Refinery & Petrochemicals Ltd. (BRPL), substantially enhancing group
refining capacity. Subsequently, capacity expansion of CPCL and laying of the 526-
km Chennai-Trichy-Madurai product pipeline helped further strengthen IndianOil’s
marketing in South India. Similarly, strategic turnaround initiatives taken by the
IndianOil helped BRPL come out of the red and post profits and merger with the
parent company is due soon.
IndianOil acquired IBP in the year 2002 and seamlessly merged it with the parent
company in 2007, leading to the formation of a larger and more formidable
marketing network. IndianOil Technologies Ltd. was launched as a fully-owned R&D
subsidiary in the year 2003 to market the Corporation’s intellectual property.
IndianOil has set up three overseas subsidiaries – in Sri Lanka (2003), Mauritius
(2004) and the United Arab Emirates (2006). Lanka IOC Ltd. operates about 150
petrol & diesel stations in the island nation, besides an oil terminal and a lube
blending plant at Trincomalee. IndianOil (Mauritius) Ltd. operates a modern
petroleum bulk storage terminal at Mer Rouge port, has an overall market share of
nearly 20%, and commands a 32% market share in aviation fuelling business in
Mauritius. IOC Middle East FZE oversees blending of SERVO lubricants and
marketing of petroleum products and lubricants in the Middle East, Africa and CIS
countries.
In addition, IndianOil has eight active joint ventures in operation with reputed Indian
and overseas partners in the areas of aviation refuelling, city gas marketing, LPG
and LNG imports and storage, speciality lubricants and additives, terminalling
services, etc.
Future Plans
In spite of deregulation of the oil sector and stiff competition from private players,
IndianOil has maintained its position as India's flagship national oil company.
IndianOilPeople have been in the forefront in adapting to the changing environment
and enhancing the organisation’s capabilities in providing innovative and value-
added offerings to the customers.
The rising customer aspirations for quality products and services, at par with
international standards, have also thrown up myriad opportunities. IndianOil is
making the most of them mainly in expanding its existing customer base,
customising products for specific market segments, streamlining distribution
infrastructure, etc. As part of the Marketing Transformation Programme to move
closer to the customers, IndianOil has bifurcated its marketing function vertically into
exclusive retail and direct consumer groups, transferred powers from the four
regional offices to 16 marketing offices in State capitals, and set up exclusive groups
for process & systems optimisation, brand management and bio-fuels. The
ambitious Project Manthan IT re-engineering project has enabled the organisation to
assimilate IT and web-based business solutions for real time, integrated transactions
and IT solutions for supply chain optimisation.
India Inspired