50 Golden Years in the Service of the Nation   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 with the mandate of achieving self-sufficiency in refining and marketing operations for a nascent nation set on the path of economic growth and prosperity, IndianOil today accounts for nearly half of India’s petroleum consumption, reaching precious petroleum products to millions of people everyday through a countrywide network of around 35,000 sales points. They are backed for supplies by 167 bulk storage terminals and depots, 101 aviation fuel stations and 89 Indane LPG bottling plants. For the year 2008-09, IndianOil sold 62.6 million tonnes of petroleum products, including 1.7 million tonnes of natural gas. The IndianOil Group of companies owns and operates 10 of India’s 20 refineries with a combined capacity of over 60 MMTPA, accounting for 34% of national refining capacity, after excluding EOU refineries. Projects under execution will take the capacity further to 80 MMTPA by the year 2011-12. Besides setting up state-of-the-art facilities to raise product quality to global standards, IndianOil has undertaken chartering of ships for crude oil imports on its own and is expanding its basket of crudes and upgrading its refineries to handle a wider array of crudes, including high-sulphur types. As a pioneer in laying of cross-country crude oil and product pipelines, the Corporation crossed 10,000 km in pipeline length and about 70 MMTPA in throughput capacity with the commissioning of the 330-km Paradip-Haldia crude oil pipeline recently. Plans are under execution to add about 4,000 km more by the year 2012. In-house capabilities have enabled the Corporation undertake all pipeline projects on its own and even offer turnkey expertise in techno-economic feasibility studies, design and detailed engineering, project execution, operations, maintenance and consultancy services. 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. As part of Panditji’s thrust on oil exploration, refining and marketing operations, Indian Refineries Ltd. was established in August 1958 under 100% Government ownership to erect refineries and lay petroleum pipelines. To take care of marketing of petroleum products across the country, Indian Oil Company Ltd., another 100% Government-owned company, was formed on 30th June 1959. It was entrusted with the task of reaching petroleum products to every nook and corner of the nation, overcoming severe constraints in terms of logistics, terrain and wide seasonal and regional fluctuations in demand. 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. Another opportunity to show its mettle in times of national emergencies came IndianOil’s way during the 1971 war. In fact, in March 1972, during the war for liberation of Bangladesh, IndianOil even arranged for crude oil supplies to the Chittagong Refinery. After the war, the Corporation for the first time extended reservation in award of retail outlet dealerships to war widows, disabled Defence personnel, freedom fighters, etc., and continues to honour this tradition even now. At the time of Operation Vijay at Kargil in 1999, despite shelling of its depots at Leh and Kargil, IndianOil maintained petroleum supplies in the war zone and stood by the families of the war heroes later. 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. As part of customer segmentation, exclusive XTRACARE outlets unveiled in select urban and semi-urban markets offer a range of value-added services to enhance customer delight and loyalty. Large format outlets on highways cater to the needs of motorists, with multiple facilities such as food courts, first aid, rest rooms and dormitories, spare parts shops, etc. SERVOXpress has been launched recently as a one-stop shop for autocare 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. 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 petrochemicals, IndianOil is envisaging Rs. 30,000 crore (US$ 7.4 billion) investment by the year 2011-12. Through the world’s largest single-train Linear Alkyl Benzene (LAB) plant with an annual capacity of 1,20,000 tonnes set up at its Gujarat Refinery, the Corporation has already captured a significant market share of LAB in India, besides exports. A world-scale Paraxylene/Purified Terephthalic Acid plant (annual capacities: PX - 3,63,000 tonnes, PTA – 5,53,000 tonnes) for polyester intermediates is already in operation at Panipat, while a Naphtha Cracker with a capacity of 800,000 tonnes of ethylene per annum, equipped with downstream polymer units is also coming up at Panipat. 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. In natural gas business, IndianOil is targeting sale of 2 million tonnes in 2008-09. A technology innovation has been initiated to reach LNG (Liquefied Natural Gas) directly to the doorstep of bulk consumers in cryogenic containers for industrial as well as captive power applications. An LNG import terminal is proposed to be set up at Ennore near Chennai. City gas distribution projects are in the pipeline in partnership with other companies. Group Synergy As part of inorganic growth through mergers and acquisitions, the refinery operations and marketing activities of Assam Oil Company were vested in IndianOil in October 1981, and it became the Assam Oil Division of IndianOil. The old units of the vintage Digboi Refinery (the first refinery in Asia) were revamped and by 1996 it was transformed into a modern refinery of IndianOil. 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. Against the backdrop of a rapidly changing business environment, IndianOil is focussing on certain key issues for sustained growth in the deregulated market. These are: prudent finance and projects management, optimum capacity utilisation of refineries and pipelines network, competitive business strategies, customer-focussed innovations in product and service offerings, streamlining of business processes, and achieving greater synergy with group companies for enhanced efficiency and effectiveness in the market place. 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 As a leading public sector enterprise of India, IndianOil has successfully combined its corporate social responsibility agenda with its business offerings, meeting the energy needs of millions of people everyday across the length and breadth of the country, traversing a diversity of cultures, difficult terrains and harsh climatic conditions. The Corporation takes pride in its continuous investments in innovative technologies and solutions for sustainable energy flow and economic growth and in developing techno-economically viable and environment-friendly products & services for the benefit of its consumers. Updated on June 03, 2009 Copyright © Indian Oil Corporation Ltd.