Director (Pipelines)

• The Pipelines network has registered an increase of about 20 % in throughput of crude oil and petroleum products put together in the first four months of the financial year (2007-08). Against 15.72 MMT during the same period in the last year, it is 18.88 MMT this year.
  
• In July 2007, the Panipat-Bijwasan section has pumped a 33,000 KL long batch of ATF parcel to meet the increased demand of ATF in New Delhi. This was the longest batch of ATF, pumped thus far.
  
• During the first four months of this financial year, the offshore crude oil terminal at Vadinar has handled 54 crude oil tankers, which include 24 VLCCs. This terminal operates two Single Point Mooring systems with one spare Buoy. The frequency of dry dock repair of buoy is once in eight to ten years. The latest dry dock repairing of spare Buoy was completed by Cochin Shipyard Limited in June 2007 and this will be installed at SBM 2 during the change out of existing Buoy. The job will be carried out during favourable weather conditions in October 2007 to March 2008.
  
• In June 2007, we have successfully completed evacuation of the entire line fill of Vadinar-Kandla Pipeline, comprising about 25,000 KL of SKO, by nitrogen purging.
  
• We are extremely concerned about the repeated pilferage attempts in Western Region Pipelines are an area of concern as already 15 incidents reported from Gujarat and Rajasthan since April to middle of August this year. The matter has been taken up at the highest levels in the Police setup in Rajasthan and Gujarat for nabbing the culprits and for providing increased surveillance. At our end, we are planning to introduce night patrolling system of certain identified sensitive stretches and are also examining the feasibility of adopting some latest technology which could facilitate quick identification of the miscreants’ activities on the pipeline.
  
• Oil India Limited would soon complete laying of their Numaligarh-Barauni Pipeline. On their request, three batches of executives from Oil India Ltd. have been trained at MJPL, Bijwasan on product pipeline operations.
  
• Lastly, on the projects front, we are currently implementing our first LPG pipeline from Panipat to Jalandhar and also our first gas pipeline from Dadri to Panipat. Both the projects are progressing well. We are laying two ATF pipelines as well - one for the Chennai airport from CPCL and the other to the new international airport at Bengaluru from Devangonthi terminal. These two projects are also progressing satisfactorily. The other important projects that we are currently implementing are Koyali-Ratlam Pipeline and Paradip-Haldia Crude Oil Pipeline.
  
• As regards Koyali-Ratlam Pipeline, there are some issues related to the land for the Ratlam terminal. Director (Marketing) & me have had a detailed discussion on this subject on 27th August 2007. We have drawn up certain joint action plan to proceed further in the matter.
  
• Paradip-Haldia Crude Oil Pipeline Project is awaiting commissioning for want of completion of some balance works in the offshore. This issue has been a matter of great concern to all of us for quite some time. Fresh discussions have been held with the Australian company OES and a work schedule has been firmed up for completing the balance offshore works.
  

Director (Finance)

• Due to excellent physical performance, IndianOil’s profit for the first quarter of 2007-08 was higher at Rs. 1,468.41 crore as compared to Rs. 1,321.82 crore in the corresponding quarter of the previous year. The higher profit in the first quarter is also attributable to exchange gains of over Rs. 700 crore on loans and robust refining margins.
  
• The mechanism for compensating losses suffered by marketing companies on the four sensitive products has not been finalised yet, which is resulting in non-receipt of oil bonds. The Government is seized of the matter and we hope that an appropriate mechanism would be in place before the close of Q2 results.
  
• The sale of oil bonds in April and July yielded about Rs. 4,158 crore, and coupled with appreciation of the rupee, enabled us to contain borrowings at a level of about Rs. 23,000-Rs. 24,000 crore. US private placement launched by IndianOil was quite successful and US$ 300 million were mobilised at very competitive rates.
  
• We had ‘Nil’ comments from CAG on IndianOil’s accounts after seven years. Compliments are also due to the Corporate Affairs Group for launching a package LAMP (Litigation and Arbitration MIS package) for monitoring legal and arbitration cases, which would bring down the number of outstanding cases substantially.
  
• IndianOil has won the SAP award for innovation in implementing Business Continuity solutions. Manthan team has also bagged the consultancy contract for implementation of ERP project at Ceylon Petroleum Storage Terminal Ltd. (CPSTL) and Ceylon Petroleum Corporation.

Director (HR)

• IndianOil is in the process of recruiting 350 officers through open process and they are expected to report for induction in November 2007. 92 engineers were recruited last year and they will join on 6th September 2007. 27 fresh MBAs have already joined on 27th June. 300 engineers / MBAs are being simultaneously recruited through campus selection. Our campus selection process has been streamlined and IndianOil has been allotted good slots by reputed institutes.
  
• The current Vision statement was formulated in 1999 in The Third Eye workshop. In view of the changing business scenario, the vision statement is being re-visited. Boston Consulting Group is facilitating the exercise.
  
• The Employee Engagement Survey coordinated by IMI, Gurgaon, has been completed recently. The first phase comprising officers was completed in January 2007 and the 2nd phase for workmen finished in July 2007. The findings have been presented in various forums and also uploaded on the IndianOilXpress portal. Based on the findings, we have made several plans to improve engagement drivers.
  
• As part of the simplification of HR policies, the following have been simplified / implemented:
  
  • Entitlement of DA on foreign tour
    
  • Special award for meritorious children
    
  • Reimbursement of toll tax
    
  • Hardship allowance for NE locations and some pipeline locations
    
  • Leave Travel Concession/Lump sum LFA facility
    
• The Government of India has appointed the 2nd Pay Revision Committee under the chairmanship of Justice MJ Rao to work out a comprehensive pay package for officers. We have already made a presentation to the Committee on 8th August, 2007
  
• The ESOP scheme has also been approved by the IndianOil Board in its meeting on 30th July, 2007 and has been sent to the Government for final approval.
  
• IOOA had called for a strike on 21st August 2007. After several meetings, including those with the MoP&NG, the strike was called off at around 10 AM on 21stAugust.
  
• The 2nd Hybrid long-duration programme on Project Management has commenced in May. Valuable feedback from the participants has been used to improve the programme. A programme on Value Addition through HR was conducted for EDs and GMs to expose them to the practical aspects of HR. A new swimming pool has been commissioned at IiPM for use of residential trainees.
  
• The third i-2-i workshop conducted at IiPM during August 9-10, 2007, was attended by senior executive, including Chairman and Directors. The Du Pont study report on improving safety culture was also presented during the workshop.
  
• The petroleum business of IBP has been fully merged with IndianOil. 16 new Divisional Offices have been opened w.e.f 1st August 2007 and 30 DOs of IBP have been closed down with redeployment of people. As the next step, the four Regional Offices and HO of IBP will be closed down. The Cryogenics and Explosives businesses of IBP are continuing as usual and would be reviewed later.
  
• IndianOil has won the SCOPE Meritorious Award for the Best Practices in Human Resource Management for the year 2005-06.
  
• During the first quarter of 2007-08, there was no accident or fire incident. However, there were two fatal accidents involving one fatality each in July 2007. One fatal accident occurred at Kandla Foreshore Terminal. A contract workman got hit by a TT inside the TLF area. He died on the spot. The second fatal accident occurred at Mathura Refinery on 29th July 2007, when the sling of the chain pulley block that was hoisting a heat exchanger tube bundle snapped. The tube bundle fell on the contractor who was engaged for the job.
  

Director (Marketing)

• IndianOil has earned several recognitions recently. A survey by Brand Finance of UK placed IndianOil 2nd among the top 50 Most Valuable Brands in India for 2007 valued at USD 4.2 billion. It has been voted as one of the top brands in India (placed at the 93rd position) in a survey conducted by Economic Times-Brand Equity. Out of the 50 top service brands in the survey, IndianOil is listed at the 7th position. The Week magazine has listed it as one of the best brands, and Business & Economy magazine has voted it as the 2nd most profitable one.
  
• Sales performance during April-July 2007: While industry sales grew by 6.6%, IndianOil recorded a growth of 9.2% (1.6 MMT) during the period. Our total market share grew by 1.2% among industry players. The top five State Offices (sales volume wise) are Maharashtra, Andhra Pradesh, Bihar, W. Bengal and Gujarat. In MS (R), we have gained in market share by 0.3% among PSUs. Our share has gone up by 2.8% in consumer sales. Though we lost market share in Bitumen, our FO share has gone up by 1.2%. Market share of XtraPremium petrol has gone up to 46.1% with a conversion ratio of 24.1%. Market share of XtraMile has gone up to 57.6% with a conversion ratio of 16.3%. However, when IBP ROs are also included, the conversion of XtraPremium and XtraMile falls to 21.8% and 14.9% respectively. This reflects scope for improvement in IBP ROs in this area.
  
• During the period April-July 2007, 214 ROs, including 129 KSKs, have been commissioned. KSKs contribute 2.8% of our total HSD sales and clock an average throughput of 43 kl per month. 121 AutoLPG Dispensing Stations (ALDS) have been commissioned and the target by the year-end is more than 200. IndianOil Baord has approved setting up stand-alone ALDS through Indane distributors at land contiguous to the LPG distributorship. A pilot project will be launched soon with 50 such distributorships. (Chairman’s observation – In-principle approval of CCOE to be obtained for layout plan of such contiguous land).
  
• 11 SERVOXPRESS outlets have been commissioned, generating additional volume of 4 kl. A contract has been signed with Apollo Tyres to supply rubber processing oil.
  
• New aviation business has been secured from Jet Airways (international flight), Oman Air, MDLR Airlines, etc.
  
• Automation of 123 ROs has been completed. Ethanol-Blended Petrol has been launched in 15 out of 20 identified states.
  
• Overseas Subsidiaries: Details of LIOC performance have already been shared by Chairman. IOML recorded a 9.8%growth in sales, revenues grew by 17% and PBT rose by 22%. IOME, UAE, recorded sales of 569 kl (against 64 kl last year) and has appointed lube distributors in Oman and Bahrain.
  

Director (Refineries)

• The highest ever crude throughput of 12.02 million metric tonnes (MMT) was achieved in Q1 of 2007-08, leading to capacity utilisation of 101.8% in Q1 of 2007-08 against 93.3% in 2006-07. MBN for IndianOil refineries was 68 in Q1 of 2007-08 as compared to industry average of 71.
• IndianOil refineries registered the highest ever quarterly profit of Rs. 3,679 crore in Q1 of 2007-08 with GRM of $10.7/barrel.
  
• During April-July ’07 period, crude throughput of IOC refineries was 1.1 MMT higher than the MOU 2007-08 pro rata target and in line with our stretched target. The distillate yield was 0.9% higher than the MOU target during April-July’07 but lower than the stretched target by 0.7% due to the use of crude mix having heavier varieties in order to improve GRM.
  
• In order to be competitive and to enhance overall performance and margin many initiatives have been taken at our refineries. Some of the major initiatives are :
  
• On CDM front, seven projects are in progress of which host country approval for four projects has already been obtained. All the seven projects are expected to be registered with UNFCCC by Mar.’08. The expected gain is equivalent to 1,50,000 CER.
  
  • Crude basket has been widened to minimize input cost and widen source of supply. New varieties of imported crude processed during April-July include Azeri Light, Kissanje, Essider, Oriente and Ratawi.
    
  • High sulphur crude processing has gone up by 5% to 48.2% and processing of cheaper heavy crude has gone up to almost 8% during April-July 2007.
    
  • Stream sharing between the refineries has contributed to the enhanced crude throughput and secondary unit utilisation and better product availability. In an innovative way, Straight Run Gas Oil (SRGO) is being moved to Panipat from Gujarat Refinery along with crude for processing.
    
  • We are replacing naphtha with natural gas at Gujarat refinery as fuel. Natural Gas procured by BG-Gas group even at present spot price is economical and would enable savings of Rs. 100 crore. We need to explore availability of natural gas for other refineries too.
    
  • Ocean freight for crude transportation has come down and we could cash-in downward trend by finalising our vessels by about 7% lower than the market average. This has helped us to contain transportation cost.
    
• On the projects front, despite severe constraints w.r.t availability of contractors, consultants and vendors, we are cruising through turbulent waters and our projects at Gujarat, Panipat and Haldia are ahead of schedule. Various decisions have been promptly taken to cancel tenders due to very high cost and change of execution of methodology from LSTK to conventional mode. Some of such packages include VGO-HDT, Diesel–HDT, Hydrogen unit, etc., at Gujarat. There is urgent need to augment manpower of Project Departments both at Delhi and refinery units.
  
• Front End Loading (FEL) work in progress for Paradip Refinery Project Site infrastructure jobs are progressing as per plan Tendering for dredging and reclamation work in progress. Environment clearance obtained in Jul.’07
  
• Under the voluntary retirement scheme (VRS) 39 applications have been accepted, which includes 10 officers and 29 non-officers.
  

• Demurrage costs are higher on the east coast. One of the reasons is occupancy of the jetties for product unloading. Marketing & Refineries Divisions need to work closely to save demurrage charges.
  
• Reliability and shutdown management at refineries needs to be looked into in the light of delay in total refinery shutdown at Mathura by 6-18 days. Any delay in shutdowns not only erodes profitability but also affects availability of products to consumers.
  
• Safety continues to be matter of concern. The recent fatality at Mathura Refinery during the shutdown period highlights our unsuccessful attempts at ensuring a zero-accident operation. There is an urgent need to bring in a culture change and enforce control measures.