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| Performance Highlights (Marketing Division) |
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| Last Updated: April 04, 2008 |
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| Shining through performance |
The year 2007-08 was a year of tumultuous growth for the Indian economy. Though, for most part of the year, the GDP growth was hovering between 8-9%, the last quarter saw a marginal downslide, led primarily by higher inflation and even high crude oil prices in the international market. The economic recession in US also had its cascading effect on the Indian economy.
However, the growth in petroleum products during the year reached a new high, though somewhat backed by artificially pegged domestic prices. With this volume growth came the burden of greater under recoveries for the oil marketing companies in general and IndianOil in particular, since as market leaders, we felt the impact greater.
Despite the odds, for IndianOil, the year 2007-08 was clearly a year of sustained growth. During April-March 2008, the Marketing Division registered a sales volume of 58.1 million tonnes, up from 53.4 million tonnes registered during the same period last year. Our market share too grew from 47.9% last year to 48.9%, which is quite spectacular, considering the competitive pressures of the marketplace.
Another feature of our business was that we kept the focus on the big picture and maintained our investments so as to enhance our infrastructure across all markets. With the global oil prices at an all-time high and with no immediate signs of it abating, we need to brace ourselves for the continued shelling, that our retail front-lines withstood for almost the entire year. In fact, unable to withstand the debilitating impact on the pricing front, several big competitors in the private sector are now either virtually winding up or scaling down their presence in retail marketing.
One of the major challenges during the year was forging a seamless merger of IBP with IndianOil's Marketing Division. This we achieved with great success. We swiftly integrated the assets of both companies leading to a larger and more formidable network. The 49 IndianOil Divisional Offices and the 30 IBP Divisional Offices were replaced by a full complement of 66 Divisional Offices covering 450 sales areas. This rationalization helped leverage the strengths of both IndianOil & IBP, and our efforts have been rewarded by the combined good performance we achieved during the year.
The year was also a new milestone in our 'leadership' story. We won a wide range of awards for excellence in 'Leadership and Brand Imagery'. To capture mindshare we also bagged the rights to be the lead sponsors in many international sports events including the IndianOil Cup during India-Pakistan ODI and Test cricket series.
Some of the major accolades and awards won by us during the period were - the Retailer of the Year Award(Rural Impact) for Kisan Seva Kendras, the Most Admired Retailer Award - Rural Marketing from the India Retail Forum for our pioneering efforts in the rural market, the Best Fleet Card Programme Award at the Loyalty Summit for XTRAPOWER and the Best Oil & Gas Corporate of the Year from PetroFed.
The record revenues in non-fuel business (Rs 38 crore) during the period from our Retail and LPG networks was as a result of our sustained efforts in sewing up business partnerships with several leading corporates.
New bottling plants, additional product tankage, setting up state of the art infrastructure at Bangalore International Airport Limited(BIAL) are all new projects that will augur well for our bright future. Our branded fuels XTRAPREMIUM and XTRAMILE emerged as market leaders and maintained its leadership throughout the year registering growth in sales of 89% and 65 % respectively as compared to previous year.
This compilation brings to you, performance results of a year of hard work and determination displayed by our IndianOil People. Every miniscule step that we took during the year, counts in the long run. And the outcome is a combination of contribution and performance from each and every colleague in the Division.
The following are the salient performance highlights of Marketing Division during the year 2007-08.
Retail Sales - Tapping Tyrefalls
- Amalgamation of IBP retail network into Marketing Division was completed seamlessly which consolidated our network strength to 17641 Retail Outlets.
- 49 IndianOil divisional offices and 30 IBP divisional offices were integrated into 66 integrated divisional offices, post the merger with IBP.
- During the period we registered record growth in sales of MS(Retail), which was up 13 %, and HSD (Retail), which was up by 15 %. In fact, MS(R) market share increased by +0.2 % over last year on a cumulative basis.
- Focus on rural marketing continued during the year with the commissioning of 726 Kisan Seva Kendras, taking their total to 2049. In addition, 469 new Retail Outlets were commissioned during the period.
- A revolutionary initiative was the introduction of Kerosene in smart 1-litre pack bottles for which a mini pilot plant was commissioned at Rewari in Haryana.
- IndianOil was adjudged "Most Admired Retailer - Rural Marketing" by India Retail Forum - 2007 for our pioneering initiatives in the rural market.
- XTRAPOWER Fleet Card was presented with the Best Loyalty Award at the Loyalty Summit.
- IndianOil bagged the "Retailer of the Year" Award in the category of "Rural Impact" from Asia Retail Congress for our success with Kisan Seva Kendras.
- During the period we achieved 24% increase in usage of XTRAPOWER Fleet Card. Five new XTRAPOWER service centers were also opened near transport hubs, to provide quick and efficient service to users.
- XTRAPREMIUM and XTRAMILE maintained market leadership with growth in sales of 89% and 65% respectively, over last year.
- The Car in a Tank sales promotion campaign, which was launched under the cover of our high voltage Cricket sponsorship, drove branded fuels saliency to greater heights, besides increasing tyre-falls into our retail outlets.
- XTRAPREMIUM Petrol and XTRAMILE Diesel were introduced in 2095 and 1598 outlets taking their availability to 6488 and 9946 Retail Outlets throughout the country.
- Launched the Jagriti skill up-gradation programme for Social Objective category and Deeksha Capability Building for Officers.
- To enhance non-fuel sales, MoUs/alliances were signed with Reliance Telecom, GTL Infra, AirTel, Rediff, Subhiksha, Vishal Mega Mart, Domino Pizza, PVR Cinema, Mobile Store, Rajdhani Thali, Onida, MTR Food, HUL (KwalityWalls), DHL Couriers, IRCTC, ICICI Bank, JK Tyres, State Bank of India, UAE Exchange, Sagas Autotec Pvt. Ltd., KSD, Ferns & Petals, etc.
- Over 950 retail outlets were converted to XTRACARE standards, taking their total to 1950. In addition 638 outlets were upgraded during the year with RVI standards taking their total to 2071.
- Automated facilities were provided at about 1000 Retail Outlets during the year thus taking their total to 1021. Third Party Certification process continued and now covers 6500 ROs.
- IndianOil Citibusiness Credit Card, a new card to tap the SME segment, was launched with new facilities like higher credit limit and advisory services.
- Non-fuel revenues in Retail increased by 92% to touch Rs.6.12 crore during the year.
- 58 new CNG stations were commissioned during the year taking their total to 74.
Consumer - Driving the Core
- We continued to be market leaders in the direct consumer business by registering a growth in market share of 2.4% during the year. The total direct consumer sales during 2007-08 were 21,042 TMTs as compared to 20,046 TMTs in the previous year.
- Our long-standing relationship with customers in the core sectors like Defence, Railways, and STUs etc was further strengthened by several innovative initiatives that were taken during the year.
- Increased focus on Key Account Management concept helped cement and strengthen our relationship with high-volume customers. This helped us retain existing business and also garner new orders across sectors.
- During the year, over 330 consumer pumps for MS & HSD were commissioned.
- Despite negative growth in Naphtha, LSHS & LDO an overall additional volume growth of over 1000 TMT were registered during the year.
- LSHS supplies were made to Madurai Power & BDPP Power Plants and Essar Steel through imports as well as sourcing through Essar Oil.
- Record sales volumes of Petcoke and Sulphur achieved and new businesses obtained from deep sea drilling rigs of RIL and power plants of Tata Power
- New businesses were also bagged from Railway Consumer Depots at Kakinada in A.P and Kannur in Kerala during the year.
- We continued to retain the 100% POL requirement of the Indian Navy.
- Marine Sales growth of around 12% was also achieved during the period.
Indane LPG - Creating Energy efficient Kitchens
- Enrolled 30 lac new Indane LPG customers during the year, taking the total customer base to 498.50 lac.
- 36 new Indane LPG distributorships were commissioned taking their total to 4996. Also the number of flagship Indane Star Distributors moved up to 608 during the year.
- 50 Auto LPG Dispensing Stations(ALDS) were commissioned in 2007-08, taking their total to 157.
- Autogas sales touched 90 TMT in the current fiscal as against 59 TMT in 2006-07, recording a growth of 53%.
- Non-Domestic Packed LPG sales recorded a 41% growth during the year while bulk LPG sales registered a 38% growth over the previous year.
- A 2-year MoA was signed with the Indian Railways Catering and Tourism Corp. (IRCTC) for supply of 19 KG cylinders to their canteens.
- Non-fuel business turnover by our Indane distributors touched a new high of Rs. 330 crore as against Rs. 182 crore in 2006-07, thus registering a growth of 87%. IndianOil's revenues from this business went up by 71% to touch Rs. 32 crore during the year.
- New tie-ups were forged for marketing of Suraksha Flame Retardant Aprons, CNG/LPG auto Kits, e-booking of Railway Tickets, Money Transfers, KwalityWalls' kiosks, Mysore Sandal Soaps, Courier Services, Telecom Products through our Indane network.
- Commissioned 79 domestic reticulated projects besides two commercial reticulated projects with a large customer base of about 5000.
- Two new Indane LPG Bottling Plants commissioned at Raipur in Chhatisgarh and at Sekmai in Manipur. LPG bottling capacity augmented during the year stood at 59 TMTPA.
- State-of-the-art electronic carousels were commissioned at Tikri, Coimbatore, Cherlapally and Jaipur LPG bottling plants.
- Foundation stone laid for construction of new LPG Bottling Plant at Muzaffarpur in Bihar, with a capacity of 44 TMTPA.
- An agreement was signed with GAIL for pipeline connectivity linking the Jamnagar-Loni pipeline to Gurgaon Bottling Plant.
- A proposal for setting up modern LPG import facilities at Ennore and Cochin has been approved by the Board.
- A state-of-the-art pilot project for Radio Frequency Identification(RFID) technology and smart card for customers has been proposed for tracking movement of LPG refills.
- SMS based refill booking was further extended to new markets and this facility now
- covers over 1150 Indane Distributors.
- Test marketing of composite, lightweight and translucent LPG Cylinders is proposed to begin in 2008 so as to offer an aesthetically superior product to discerning customers.
SERVO - Oiling the Wheels of Progress
- SERVO lubricants achieved over 4.5% growth during the year, while base oil sales grew by 29% as compared to last year.
- OEM partners and bulk lube consumer partners like Maruti Suzuki, Mahindra & Mahindra, Elgi, VST Tillers, Punjab Tractors, L&T Case, Force MAN and Tata Motors have renewed SERVO Genuine Oil agreements and exclusive tie-ups for supplies.
- Leading customers who signed long term MoUs and supply contracts included SAIL, Essar Steel, Ordnance Factory Board, SECL, NCL, MSEB, JP Acc., BHEL, Durgapur Projects, GE Shipping, STUs, ACC, OP Jindal Group, AV Birla Group and Gammon India amongst others.
- Over 130 SERVOXpress Centres were commissioned for enhancing the SERVO experience with one stop autocare service.
- Reward schemes, including incentives like overseas holiday packages, enhanced channel relationships and felicitations of best selling Toppers in Automotive and Institutional sectors were introduced raising their motivational levels.
- SERVO was recipient of Consistent Quality Supplier Award from Tata Steel while our LBP Asaoti received two Safety Awards under Haryana State Safety & Welfare Awards 2006 and the ISO 9001: 2000 Quality Management System Certificate from DNV.
- During the year exports of SERVO Lubricants grew by 56%. New markets were tapped in Indonesia, Vietnam, Nigeria and Oman. Also new SERVO distributors were appointed in Bahrain and Qatar.
- A new Lube Blending Plant in Trincomalee was commissioned besides modification of facilities was undertaken at Taloja Plant for manufacturing of Multi-Functional Additives (MFA).
Aviation - Soaring to new heights
- IndianOil Aviation continued to be the market leader in the Aviation fuel business with a market share of 62.6% during the period
- IndianOil also met the entire requirement of Aviation fuels of Navy, Army and over 88% of Indian Air Force.
- Major business bagged during the period included Cargolux Airlines, Finnair China Southern, China Eastern, Oman Air, Continental Airlines, Air Arabia, SriLankan Airlines, Tiger Airways, Kuwait Airways, MDLR Airlines, Indigo Airways.
- Four new AFSs at Surat, Daman, Colaba and Kolhapur were commissioned during the year taking their total tally to 101.
- A state-of-art Hydrant Refuelling System(HRS) was set up exclusively for IAF at Agra AFS and the tender for setting up the Kolhapur AFS was won against stiff competition
- Prompt refuelling services was extended to provide relief operations during the floods that affected different parts of West Bengal.
- To augment service standards at the tarmac, 59 modern state-of-the-art refuellers of varying capacities were procured and positioned at key Aviation Fuel Stations.
- IndianOil led a consortium of Skytanking and IndianOilTanking Ltd., for successfully commissioning the fuel farm and HRS facilities at Bangalore International Airport(BIAL).
- A tripartite supplier agreement for aviation fuel supply was signed with the new Hyderabad International Airport Ltd and Reliance Industries Ltd.
Engineering & Projects - Building our Future
- Additional Tankage of 3000 kl completed in record time at Leh and Kargil. Also 330 consumer pumps also commissioned during the period.
- Our retail expansion drive was provided the impetus by setting-up about 1200 retail outlets, of which 726 were Kisan Seva Kendras. In addition to this, about 1000 retail outlets were provided with automated facilities.
- A new CRMB Plant was set-up at Mathura at a cost of Rs 8 crore.
- A state-of-the-art Hydrant Refuelling System(HRS) was designed and constructed at Agra AFS for IAF.
- IndianOil pioneered the launch of one-litre SKO bottles to tap the needs of the commercial segment. A mini bottling plant with a monthly capacity of 3 lac bottles was set up at Rewari.
- Six locations received prestigious safety awards from Director General, Factory Advice, Services and Labour Institute (DGFASLI) while 13 locations received National Safety Council awards from NSCI, Mumbai.
- Over 180 locations completed accident-free operations for 10 continuous years
- Stringent monitoring of safety standards and practices improved the All India Safety Index to 98.36 from 98.35 last year.
Supplies and Distribution - The heart of our enterprise
- A state-of-the-art terminal was commissioned at Chittaurgarh in Rajasthan, which will enable reaching products more efficiently to several parts of North West India.
- Some of the infrastructure facilities commissioned during the period were - TW unloading facilities, jetty lines and dock lines at Bassein, Kandla FST, Mangalore Terminal, CPCL and Narimanam. A new LPG unloading facility at Haldia-HOJ-II contributed to recurring savings of over Rs. 6.5 crore per annum.
- Optimised utilization by pumping of select products through KVSSPL and HBPL to Jodhpur, Bhatinda, Barauni and Panipat has resulted in a recurring savings of Rs 5 crore per annum.
- Movements of BTPN rakes commenced for Hissar, Mangliagaon, Bassein, Kandla, IOTL Navghar & Trivandrum in place for the phase outs planned by the Indian Railways for conventional Tank Wagons.
- An alignment of secondary markets to Chittaurgarh, Ongole, Ramagundam, Roorkee, Mourigram & re-commissioning of local supplies ex-Raxaul Depot resulted in a savings of Rs. 22 crore per annum.
- Maintained supply lines through road during the disruption of Rail movement to Silchar, Ramnagar & Dharamnagar in the North East. Similarly, supply lines were maintained to Manipur and Sikkim during the blockade of NH-39 and landslides in NH-31A enroute to Gangtok.
- Duty draw back claims for supplies to NOC were realized to the tune of about Rs 20 crore, while Rs. 416 crore savings were achieved through efficient utilization of advance authorizations for physical exports and deemed exports.
- Closure of uneconomic depots and disposal of assets led to cost savings to the tune of Rs 17 crore.
- Received commendation from the Indian Army, for the exemplary role played by IndianOil in ensuring the completion of the Advance Winter Stocking exercise to Leh and Kargil.
Human Resource - Harnessing Potential
- Ensured a cordial and conducive workplace throughout the year. Excellent relations with the collectives helped in resolving issues like manpower redeployment, etc.
- Additional compensation and facilities were provided at new hardship locations at Farukhabad, Lakhimpur Kheri, Najibabad, Tuticorin, Ramagundam, Cuddapah, Hashimara and Rangpo.
- HR Index implemented at all Units to facilitate effective implementation of HR practices and policies and the best locations were suitably rewarded
- Several new training programmes were introduced during the year to cover around 1500 additional employees.
- The largest pan-India Corporate Quiz-the 4th IndianOil Petro Quiz - was conducted with participation by over 200 officers.
- 'Diksha', a mentoring initiative was launched for the new Probationary Officers with identification of Mentors across Marketing Division.
Finance
- Internet banking facility and dedicated online transfers provided to customers for select banks. SAP enabled instant collections through select banks resulted in quicker execution of indents.
- Centralized receipt of major USD collections and utilization of dealing room facility for best purchase rates with SBI was successfully negotiated.
- Tie-ups with ICICI and Axis Bank for issue of instruction cards to resellers was extended to HDFC Bank also. E-payment to contractors was enabled and 54% of all payments were made through electronic mode.
- Merger of IBP's petroleum business group was successfully completed with Marketing Division Accounts.
- Tax contingent liabilities reduced by Rs.2260 crore (33%) through efficient litigation management while effective income tax rate was reduced to 20%.
Information Systems - Fast Routing
- New software developed during the year included - migration of IBP payroll to IndianOil payroll, modules for re-working of house perks, re-computation of Income Tax perks and printing of certificates
- A web based module for on-line printing of PF slips and a software for leadership excellence survey was also launched.
- The latest anti-spam and firewall was implemented with enhanced client security across IndianOil.
- Software for RO automation and web-based systems were developed in-house for reporting sales figures on a weekly and monthly basis.
Assam Oil Division
- 25 Retail Outlets and 21 Kisan Seva Kendras were commissioned during the year.
- XTRAPREMIUM was introduced in 43 retail outlets and XTRAMILE in 50 retail outlets during the year taking their total to 80 & 131 respectively.
- XTRAPOWER fleet card scheme has been extended to another 30 Retail Outlets taking the total number of retail outlets offering this facility to 74.
- Three Auto LPG Dispensing Stations(ALDS) were commissioned at Guwahati, Tinsukia and Jorhat respectively. A reticulated LPG system was installed at Guwahati
- An automatic valve-changing machine was commissioned at Gopanari bottling plant and five pre-filling units installed at Mualkhang bottling plant to enhance production.
Firing on all Cylinders…
- The year 2007-08 was another milestone in our long and illustrious history. We not only defended our turf splendidly but also captured new business from our competitors. The all round growth was achieved across functions and across markets.
- Perhaps the best reward that a company connecting to over a billion customers can ever receive is public acknowledgement of its performance. This we received in abundance. But we cannot rest on our past laurels. With the looming shadow of high crude oil prices, which are here to stay, we now need to approach the next fiscal with guarded optimism.
- The challenges for the year 2008-09 will have to be met with a combination of tenacity and fervour. Land rates are at record highs, our cash flow is not very encouraging and discount wars are expected to continue. Even sensitive products like LPG and SKO demand more and more attention. And competition in petroleum brand landscape is only going to intensify. Despite all this, our investments, plans and proposals for the future needs to be nurtured. That is the only way we can grow and build stakeholder value.
- The good thing is we have faced similar situations in the past. And we have the wherewithal to draw deep into our collective strengths and come up with solutions to the various challenges. And when we have the best team in the business we can certainly make this happen. Our confidence stems from the knowledge that we have achieved the impossible in the past. And there is no doubt we can continue this success saga into the future.
(For internal circulation only, all figures are provisional)
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