Fuelling High Ambition
New Delhi   08-Nov-2007
IT is India’s single largest enterprise at Rs 1,59,984 crore ($36.6 billion). It is also the world’s 18th largest oil company and ranks 170 in the Fortune 500 listing. The next Indian company on the same list is Reliance Industries at 417. But, all this is nothing new for Indian Oil Corporation (IOC), which straddles the entire petroleum value-chain, be it exploration, refining, marketing, pipelines, petrochemicals, gas or global operations. All that has been achieved. IndianOil’s top management is now looking at not just retaining pole position, but moving way ahead. IOC chairman Sarthak Behuria has drawn up a roadmap to make IOC a $301-billion corporation by 2030. That’s a quantum jump from the initial plan of being a $60 billion company by 2011-12. The thinking at IOC is totally different. Says Behuria: “It is not enough to be No. 1 in turnover. We need to be the leader in market capitalisation, be the No. 1 brand in the consumer’s eyes, and the No. 1 employer in the country.” That’s a tall order. The $301-billion turnover is the biggest of its ambitions. It entails a huge expansion of the core business of refining and marketing. For that, IOC is expanding refining capacity from 54 million tonnes today to 80 million tonnes over the next three years. It is also investing Rs 40,000 crore over the next four years in its petrochemicals expansion. This includes a naphtha cracker and an integrated paraxylene/purified terephthalic acid (PX/PTA) plant at Panipat, and a petrochemicals complex at the planned Paradip refinery. In fact, by 2030, it expects petrochemicals alone to account for $19 billion. But, most importantly, all the investment that has been planned will happen out of internal accruals. The other area of expansion is exploration & production (E&P). IndianOil has been awarded 11 exploration blocks in India. The IndianOil-Oil India consortium has bagged two E&P blocks in Libya, and seeks to acquire a mid-size E&P company. That kind of inorganic growth will help it move up the ladder even more quickly. Behuria is also looking to consolidate IOC’s marketing infrastructure. Over the past two years, IOC has lost some market share to private refiners. It now aims to expand the retail network, improve its retail visual identity and get deeper in the rural market. The private players are yet to make a dent in the rural market. At the top end, IOC is bringing high-level automation at around 1,000 outlets. Behuria notes that the attrition rates in IOC are low. He is working towards changing the work culture in the Navratna. This means a work culture that will motivate employees, provide job rotation and skill development. All said, India’s biggest corporation is in the throes of change that will make it a much bigger corporation. It would also, thus, become a benchmark for the host of companies that have always been on its trail. Keeping up with IOC could be the real challenge for the rest.