Chairman:
Chairman advised that despite our good performance in respect of physical parameters IndianOil registered lower net profit as compared to past. Moody's downgraded our credit ratings, which has a negative impact on our ability to raise loans abroad, accentuating our funding concerns with respect to working capital and projects expenditure.
He however complimented IndianOilPeople’s desire to grow in the face of odds which led to continued ascent in the prestigious Fortune ‘Global 500’ listing of the world’s largest companies.
Expressing his opinion regarding the Chaturvedi Committee’s Report on oil prices, Chairman said that the report was in line with our expectations. If implemented as a package, it would go a long way in mitigating our long-term profitability issues.
He also shared that IndianOil’s forays into the oil exploration & production business received another boost recently when we won two Type-S Cambay onshore exploration blocks under the seventh round of NELP.
Regarding the re-envisioning exercise he informed that locations-wide process of co-creating the new vision had now been concluded and we should be finalizing the new corporate vision soon.
He informed that five new eminent personalities, drawn form the world of academics, business, banking and administration, have joined as Independent Directors from 1st June 2008.
Chairman shared his valuable thoughts on what we need to do to maintain our dominant position and to realise our global ambitions, which are as follows:
- Our ‘attitude to adversity’ will determine our course of growth
- In multi-polar, increasingly competitive and integrated businesses, the future belongs to those organisations that recognize that there are no glass ceilings and build deep roots in multiple cultures and manifest themselves as single cohesive entities
- Organisations change all the time, so do people. Sustaining an environment where each and every employee would be motivated and could contribute to his best potential is an ongoing process
- One of the biggest challenges facing Human Resources managers today is the dire need to re-position their services in a way that represents a strategic fit with the other core business departments within an organisation. HR function still has a long way to go to leverage itself as a strategic business function. By holding on to the image and operation of HR as a back-office, administrative unit, several organizations deprive themselves of the opportunity of attaining human resource excellence. We need to position skills strategically, have an intuitive and effective plan for succession. The need to groom people to take leadership positions is urgent.
- Each of us has a responsibility to keep our teams continually motivated and bring in more enthusiasm at work. This can happen only when all of us take pride in our work and are willing to go that extra mile to give our best.
- When we adopted our corporate values of care, innovation, passion and trust, we pledged to ourselves that we would imbibe them and demonstrate them always in our interactions and dealings. However, it seems we still have miles to go before we completely assimilate the essence of this value system and inject passion in our area of work.
- Something that keeps us going beyond money is our involvement and recognition. When we say we have a transparent, nurturing and fostering work climate, we must mean it. Communication within the teams and doing boundary management is extremely important. It is the key to building stronger and well-bonded teams.
- We also need to enthuse contractors to bid for our jobs. We need our dealers and contractors as much as we need our own teams. Our true reward will be when IndianOil becomes a company of choice for all our stakeholders – our employees, customers, channel partners, vendors, and consultants
- The public image of IndianOil is not as respectable as we would like it to be. Given an option, a customer would probably not prefer to fuel at IndianOil outlets today. We have a chance to re-invent ourselves and our public image.
- IndianOil will be in business for the years to come. Let us introspect and see what each of us is doing to stay relevant to our stakeholders. As a business leader, we need to be ahead of the curve always. However, for that to happen we must step out of our comfort zones
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Director (Planning & Business Development)
Gas - The template for Gas Sales Agreement due for renewal with existing customers are being finalised. The market study for gas sales through city gas distribution network along Dadri–Panipat pipeline has been completed. The detailed feasibility report for city gas distribution in Panipat and Sonepat is under preparation. Discussions ongoing with various players for tying up gas supply and for city gas distribution projects in various parts of the country. The concept of “LNG at Doorstep” is also being expanded in a phased manner, based on demand from potential customers. However, it would be limited to the availability of LNG, additional loading facilities and joint collaboration/participation of technology partners.
Petrochemical Marketing
LAB – Sales grew by over 3.5% during Apr-July’08 over same period last year. The gross margins in LAB business are healthy and the trend is expected to continue in near term. LAB (Linear Alkyl Benzene) / HAB (Heavy Alkyl Benzene) have been exported to nine countries.
PX-PTA – Sales have grown by 11.75% during Apr-July’08 over same period last year. In the current month, a slump in the demand of fibre is resulting in lower PTA demand.
Polymer – Plans afoot to market 1.25 million tonnes per annum of polymers. Polymer Marketing is manpower intensive and channel driven business. Plans are underway to establish a most technically advanced marketing structure and for appointment of channel partners across India. A Polymer Application Development Centre is being set up at Panipat to provide testing facilities and technical & product support to customers. Experienced polymer professionals have been recently recruited.
Petrochemical Projects:
Activities are currently at different stages for –
- Setting up a new Para-xylene unit at Gujarat,
- Implementation of a coal-based power project with Tata Power at Naraj Marthapur, Orissa, for catering to the captive power demand of Paradip Refinery complex
- For implementation of Styrene Butadiene Rubber (SBR) unit at Panipat in JV, based on Butadiene stream from Naphtha Cracker complex.
- For allocation of coal block to pursue coal to liquid project.
Bio-fuels & other alternative fuels:
A joint venture is being formed to straddle the full value chain of bio-diesel business in Chhattisgarh. A production target of 50,000 MTPA is aimed by the year 2015. In Madhya Pradesh, 2000 hectare of revenue wasteland has been allotted in Jhabua district for plantation of energy crops. A proposition for production of bio-diesel from Algae is being examined. To establish the bio-fuel business, appropriate manpower has been positioned.
A dedicated group has been constituted at Corporate Office to focus on renewable energy with an initial thrust is on wind and solar energy. A proposal to put up 21 MW wind power project through M/s Suzlon in Gujarat has been approved by the Board. To promote utilization of solar energy, two pilot projects of Solar Mini Utility Stations (SMU) have been taken up at two KSKs located in Meerut and Bareilly. This project aims to reach solar-based lighting to villages, which are not electrified.
Globalisation:
The Turkish Government has envisaged the Mediterranean Stream project which will transport crude oil from the Mediterranean Sea to the Red Sea. The Black Sea and Caspian Sea crudes will be transported from Ceyhan in Turkey to Ashkelon in Israel through a sub-sea pipeline and thereafter, through the existing Ashkelon – Eilat Pipeline through the Eilat port in Israel. The Eilat port is located on Red sea and is equipped to load VLCCs to India, thereby bypassing Suez Canal. The Turkish Government has sought India’s participation in this project. IOCL conveyed to MoP&NG that IOCL might include Eilat as one of the load port while sourcing crude oil from that area subject to quality assurance by the suppliers.
E&P:
Presently, IndianOil is a non-operator partner in 10 domestic blocks and 8 overseas blocks. The domestic blocks include seven NELP blocks, two CBM blocks and one ‘farm-in’ block. The overseas blocks include three blocks in Libya, two in Yemen, and one block each in Iran, Gabon and Nigeria. Oil and gas discoveries have been made in Farsi offshore block in Iran, and gas discoveries in Mahanadi offshore and Assam-Arunachal Pradesh onshore blocks. The commerciality of gas discovery in Farsi block has been accepted by National Iranian Oil Company (NIOC). The commerciality of other discoveries is being established.
In the seventh round of NELP, IndianOil has won two Type-S Cambay onshore exploration blocks, thereby becoming an Operator. In addition, a consortium of IndianOil (20% PI), ONGC (70% PI & Operator), and GSPC (10% PI) bagged the Krishna-Godavari deepwater exploration block. To work effectively as an operator as well as to manage existing and prospective E&P assets, experienced E&P professionals are being engaged on contract basis and in-house capabilities are being built.
Along with OIL, IndianOil has signed a Farm-in Agreement with Reliance Industries Ltd. for farming in the deepwater Block-K in Timor-Leste with 12.5% participating interest (PI) each. The block was originally awarded to RIL in 2005.
CP&ES:
On the basis of audited data for the year 2007-08, the MoU score is 1.01, which is the best score achieved so far. IndianOil has proposed bringing down the weightage on financial parameters in MoU to the DPE committee.
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Director (Finance)
At the outset, Director (Finance) informed about ‘Nil’ comments from CAG in the accounts for the year ended March 2008, for the second year in succession, and complimented all Finance personnel for this achievement. He also informed that IndianOil’s Corporate Business Technology Centre (CBTC), located at IiPM, Gurgaon, had won the ‘Economic Times Acer Intel Smart Workplace award’, and complimented the IS group on this achievement.
He said that in the last Communication Meeting held in April, financial and liquidity constraints were discussed and that the situation has so far worsened. Everybody was concerned when the under-recoveries climbed to levels of Rs. 2,45,000 crore in June 2008. Then, the Government took major policy decisions to alleviate the situation. Due to a combination of measures such as price increase and duty cuts, the under-recoveries came down to Rs. 2,05,000 crore. The balance was proposed to be met by Oil Bonds, upstream subsidy sharing, etc.
When these measures were announced, international crude oil price was ruling at USD 123. After this, the prices went up to levels of USD 147. Rupee started to depreciate and there was concern all around. In June 2008, IndianOil had Oil Bonds 24,000 for which, there were no takers. In a major relief to IndianOil, RBI agreed to start the Special Market Operations to exchange Oil Bonds at par in lieu of forex. This not only helped OMCs in liquidating the bonds but improved their liquidity position. In an unexpected welcome development, IndianOil exhausted all Oil Bonds soon after. This also helped us by obviating the need for higher borrowings during that period.
Having exhausted all bonds now, our borrowings have again shot up. In addition, RBI has stopped the Special Market Operations. We are yet to receive Oil Bonds worth Rs. 21,000 crore from the Government. Therefore, our borrowings are going up by Rs. 7000 crore every month. As on date, our borrowings have crossed levels of Rs. 48,000 crore.
To top it, banks are also facing problems in meeting the high cash requirements of OMCs. Banks have a 30% limit for a single borrower. In view of the inflation-curbing measures taken by RBI recently, the cash reserve ratio of banks has gone up due to which, the capital in the market is scarcer and costlier. This has impacted our interest liability too. However, the Government has assured us that the Oil Bonds would be issued during the monsoon session of Parliament.
Subsequent to softening of crude oil prices, our debt-equity ratio is 1:1 though we are not out of the woods yet. Although it is down from the earlier levels of Rs. 330 crore, our daily loss is still around Rs. 240 crore. On the other hand, this impacts our refining margins and we may suffer stock losses since we are carrying costlier inventory of crude oil. Considering all these factors, it is likely that refineries may not post high profits in the second quarter and we may post losses unless the Government reviews the burden-sharing mechanism.
Due to the significant erosion in profitability, Moody's have downgraded our credit ratings. Indian and foreign banks are nervous and it is becoming increasingly difficult for us to raise loans to fund working capital and projects expenditure. We anticipate that the next two months are going to be tough.
LIOC has done well in the past year. It was facing problems till June 2008 since retail selling prices of products were not being revised. However, with the softening of crude oil prices, LIOC is in a better position.
As Chairman mentioned, we need to plan properly for our human resource requirements. We are growing & would continue to grow and need to position our people strategically. Proper succession planning is crucial. In the absence of enough senior people in the Finance function by the year 2014-15, we may have to go in for mid-level recruitments which may not be desirable. We could consider giving accelerated promotions to deserving officers.
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Director (HR)
Revision of Pay & Work-related allowances
Revision of pay for officers as well as non-officers is due effective 1st January 2007. The second Pay Revision Committee headed by Justice MJ Rao has submitted its Report on 30th May 2008 which is under consideration of the Government of India. Guidelines on pay revision for officers would be issued by Department of Public Enterprises (DPE) after approval by Cabinet in due course. As far as pay revision of workmen is concerned, it is gathered that Unions would wait for the pay revision guidelines for officers to be issued by DPE.
Pending pay-revision, ad hoc Recoverable Advance was given to all the employees for one year during 2007. Same amount was given for the 1st and 2nd quarters of the year 2008 on quarterly basis (proportionately) and now from July onwards, it is being given on monthly basis. However, 3 unions of Marketing Division i.e. SR, WR and NR, have desired to get the recoverable advance on quarterly basis only. Accordingly, workmen of these three regions are being given recoverable advance on quarterly basis.
Work Related allowances for officers as well as non-officers were due for revision effective 1st October 2005. For officers, allowances have been finalised at the beginning of this current year. Now, MOUs have been signed with Unions of all the Divisions on 16th July 2008 on Revision of Work Related Allowances.
V 2 Confluence
The exercise of recreating Vision and Mission has reached the synthesis phase. A draft vision statement has been formulated, which will now be validated before being accepted.
e-PMS implementation
Appraisals for the year 2007-08 at Reviewer level has been completed up to 85.1%. The target date for performance planning for the year 2008-09 is 31st August 2008. It has been decided to introduce a reduction of 5% on the KPI scores (reviewer rated) on all appraisals where the performance plans for the appraisal year 2008-09are submitted after the stipulated date i.e. 31st August 2008. From the next year onwards, the target date for completing the plan would be 30th June.
Recruitment of officers
- Campus Recruitment: 275 Engineers and 40 MBAs are being recruited from campuses this year. The process for engineers in the current year got underway in June 2008 and interviews have been carried out at 30 engineering institutes so far across the country. 242 candidates have provisionally been selected. Campus recruitment for MBAs will start in November. 200 Engineers/MBAs, who were selected from the campuses last year, have joined IndianOil during last two months. A batch of125 engineers is expected to join during September 2008.
To get the best talent from the campuses, the campus recruitment cycle has been advanced and IndianOil has got a slot on the 1st / 2nd day at most campuses. The average CGPA of the batch has climbed to 8.6 so far compared to 8.20 of last year. Pre-employment medical process has been further streamlined. For this year’s campus recruits, it has been decided to get the pre-employment medical done by the next day of the provisional recruitment itself at a nominated hospital designated for that particular campus.
- Open recruitment: 370 engineers/ MBAs (HR) and CAs/ICWAs were planned to be recruited through open recruitment process in 2008. The first batch is expected to join on 3rd November’08.
- Mid Level recruitment: Interviews for mid-level recruitment of experienced manpower in Petrochemicals, Exploration & Production and Bio-fuels were held in March 2008. 22 candidates have joined so far in the respective business groups.
- Common Corporate Induction Module (CCIM): To ensure close link with the new recruits, CCIM for the new recruits has been shifted to Corporate Office, New Delhi, from Marketing Division HO, Mumbai. So far, four batches of newly joined engineers and management graduates (total 197) have undergone the module at IIPM, thereby effecting cost savings and provision of better inputs through redesigned content to newly recruited officers.
Attrition (Resignations) in 2007-08 and 2006-07:
During April’07 – March’08, 174 officers and 23 workmen have resigned from the organisation. The attrition rate amongst the officers in 2007-08 was 1.44% and amongst the non-officers was 0.12% as against 1.5% amongst the officers and 0.17% amongst the workmen during 2006-07. During April-July ‘08, as per provisional reports, 56 officers and 7 workmen have resigned.
Tatkal Sahayata Yojana for officers:
‘Tatkal Sahayata Yojana for Officers’ for all serving officers has been introduced effective from 1.4.08 on self sustaining basis. The members would be required to make a monthly contribution of Rs.150 p.m., and in the event of death of any member officer a benevolent amount of Rs.15 lakh would be paid to the eligible beneficiary(ies). The other schemes operating on similar lines, namely ‘Voluntary Benevolent Fund’ for officers in Grade G & above and ‘IOOA Tatkal Sahayata Yojana’ have been stopped w.e.f. 1.4.08.
Discontinuance of the GSLI Scheme:
With the introduction of Tatkal Sahayata Yojana for Officers, IOOA has requested to discontinue the GSLI Scheme. Divisions have been advised to take up the matter with LIC for necessary refund to Officers.
Compensation to officers performing additional / extended duty
Officers when required and called upon to perform additional / extended duty during official exigencies are allowed compensatory-off and/or paid compensation at the applicable rate towards transportation and out-of-pocket expenses. The compensation towards transportation & out-of-pocket expenses has been reviewed and revised effective from 1.4.08. The increase is around 100% from the pre-revised amount.
Children Education Assistance
It has been decided to cover a mentally / physically challenged child studying in an un-recognised or recognised special school. The allowance in these cases would be applicable to the category for class upto X standard.
Incentive under PLI
As per the modified PLI scheme, the employees getting less than “Satisfactory” performance rating are not entitled to get performance incentive as per the modified scheme and they get the incentive as per the pre-modified provisions. Due to amendment in the Bonus Act w.e.f. 1.4.06, the maximum limit of Rs.6000 for payment of PLI in such a situation has been revised to Rs.8400.
Review of EDLI Policy:
IndianOil had taken a Group Insurance cover of Rs. 62,000 per employee from LIC in partial fulfillment of the Employees Deposit Linked Insurance Scheme (EDLI) framed as per the provisions of the Employees Provident Fund and Misc. Provisions Act, 1952. The benefits admissible to employees covered under EDLI were reviewed and the sum assured under the Policy has been increased from Rs. 62,000 to Rs. 1,25,000 per employee for the claims in respect of deaths occurring on or after 01.04.08. The enhancement in the Sum Assured has been done without changing the present premium rate table.
Revision of Ex-gratia amount to ex-employees
The Board has approved an increase in the monthly Ex-gratia amount being paid to ex-employees, who retired prior to introduction of the SBF Scheme i.e., 1st Nov. 1987, and to the ex-employees whose monthly benefit under the SBF Scheme was less than the benefit envisaged under Ex-gratia Scheme. The increase in the Ex-gratia amount for various grades is about 40%. The revised monthly ex-gratia amount is admissible w.e.f. 01.08.2008
IiPM
IIPM conducted the third programme on “Value Creation through HR” which was attended by 23 participants in the rank of DGMs, GMs & EDs. For the first time, a contemporary program on “Hedging Workshop” was held to provide insight into complex subject of futures, options, swaps and commodity hedging. The third programme on “Summer School” was held in association with the PETROTECH Society. The third Hybrid Certificate Programme on Project Management was completed in June ’08. With this, 145 Project professionals have been prepared across the Corporation. The fourth batch starts on 19th August ’08.
The long duration programmes of IIPM, viz., Senior Management Programme (SMP), Threshold and Hybrid Project Management Programme - have foreign modules also. In view of austerity measures, it has been decided to keep SMP on hold and conduct Threshold programme without foreign module. Foreign module for these participants would be conducted on lifting of austerity measures. However, Hybrid Project Management Programme would continue as it is.
IBP
The Cryogenics Business Group has received order for fabrication of vessels from the Refineries Division. It has received the biggest order of cryogenic containers from M/s. JK Trust, and the biggest order of industrial container from M/s. Ellen Barrie Industrial Gases.
The Explosives business Group has got an order from M/s. Coal India Ltd. for supply of Bulk Explosives w.e.f. 1.8.08 for a period of 5 years. The notice for closure of Cartridge Explosive Plant at Korba has been filed with Ministry of Labour on 7.8.08. The process of identifying vacancies for redeploying manpower in other business activities is in progress.
Winding-up of R&D Centre at Manesar is in final stage. Redeployment of all Management/non-Management employees has been finalized. The office set-up in Delhi and Nagpur closed and manpower redeployed.
Safety, Health & Environment
The good record of zero fatal accidents during the current year has been broken by Gujarat Refinery on 15.8.08. A contract labour died due to inhaling Naphtha. As per my assessment, such accidents are totally avoidable.
Anti Adulteration Cell (AAC)
During the period April-July ’08, 1365 inspections were carried out by AAC. Various discrepancies were observed in 500 ROs. So far, termination action has been taken against eight ROs due to the serious nature of discrepancies.
PETROTECH-2009
PETROTECH-2009 is being organised by IndianOil between 11-15 January ’09. The Conference is so big and complex that Conference activities would be held simultaneously at Vigyan Bhavan, Pragati Maidan, Hotel Le-Meridien, India Habitat Centre and FICCI Auditorium. Various Nodal committees headed by Functional Directors of IndianOil are working for different activities.
Director (Marketing)
IndianOil’s lubricant brand SERVO has found a commendable place in the latest book by Philip Kotler tilted ‘Marketing Management – a South Asian Perspective’. Its packaging needs to be further strengthened. IndianOil is also the only petroleum company to figure as ‘The Most Trusted Brand’ in the ET-Brand Equity annual survey.
Domestic LPG growth has been restricted to 4.2%. To manage LPG distribution effectively, INDSOFT (software) is being implemented, which would bring in a radical change in marketing of domestic LPG. In response to stressed liquidity situation, cash outlay for 2008-09 has been reduced from 1533 crore to 1130 crore and only critical activities are being undertaken. Expenditure on sales promotion and other controllable items has been curtailed. Video-conferencing is being used extensively to cut travel-related expenses. Though longer time than required has been taken to build non-fuel revenue stream, this initiative would be scaled up soon.
In a thrust to promote e-transactions, over 70% payments and 10% collections were made electronically. It is aimed to create cashless offices where employee payments are also made electronically.
Efforts would be made to wipe out the waiting lists for new domestic LPG connections. In LPG, IndianOil has lost market share by 3%. For the first time, sale of 47.4 kg LPG cylinder has commenced from Jamshedpur. A 0.5 MMTPA LPG pipeline has been commissioned from Essar Oil refinery at Vadinar to Jamnagar to move bulk LPG from Essar refinery to the Northern region through the Jamnagar-Loni pipeline.
Smooth supplies of petroleum products were maintained ex-Siliguri in Sikkim during the Darjeeling bandh. Supply problems persist in Srinagar valley due to the ongoing agitation.
The fully integrated NEISO has started functioning w.e.f April 2008 to bring in operational synergy. To motivate front line sales team, NEISO has introduced a scheme to reward the best sales officers. TNSO has realigned retail markets fed by the Coimbatore terminal to Sankari depot, and those by CMBT-Narimanam to Trichy terminal, thereby effecting annual savings of Rs. 7 crore.
Sales Performance
Overall lubes market share has grown by 4.2% to 35.6%. During April-July 2008, retail sales grew by 18% and consumer sales by 18.6%. Sales of XtraMile grew by 55% and those of XtraPremium by 58%.
Overseas Business
IOML has improved its position to the 16th on the basis of turnover ranking among the top 100 companies of Mauritius. On the basis of turnover growth, IOML has beat the likes of Chevron, Total and Shell and is at the top with 31.9% growth. IOML’s retail business grew by 39% and lube sales has doubled to 52 kl. The profit after tax (PAT) grew phenomenally by 470% to MUR 99.2 million.
IOME – During the first quarter of 2008-09, its PAT increased to Rs. 167 crore as compared to a loss of 0.058 during the same period last year. SERVO has been registered as trademark in UAE and is in process in Oman.
IPPL – The statutory testing facility at Haldia has been commissioned.
Areas of concern –
- Regulating the runaway growth in diesel consumption has been a challenge.
- For speedy disposal of legal cases, the ownership rests with the head of the concerned department who should focus on these issues with assistance form the legal department.
- Heads of State Offices requested to maximize exploiting SAP data. This would also help in redeploying manpower optimally across the organisation.
Director (Refineries)
The performance in the first quarter of 2008-09 has been excellent. Crude throughput of 12.55 MMT achieved is equivalent to 106% capacity utilisation which is the highest ever. During this period, the crack between Diesel and GasOil widened, and the Gross Refining Margin of our refineries during April-June 2008 clocked a record level of USD 16.81 per barrel. More satisfying is the fact that a margin improvement of over $1 per barrel was achieved due to operational improvements.
Initiatives in innovative stream sharing continued to ensure optimum capacity utilisation. For instance, transfer of Straight Run Gas Oil (SRGO) started from Haldia to Barauni.
Teething problems at the PX/PTA unit have been overcome. Our people have gained expertise and experience on the unit and have developed the capability to troubleshoot and handle problems.
In comparison with the freight for the same period last year, freight charges during April-July 2008 have gone up by 180% (for VLCC route from Middle East Gulf to Japan) and 130% (for VLCC route from West Africa to China). As a result, the shipping cost has gone up from USD 1.68 per barrel to over USD 2.5 per barrel this year. In order to secure captive tonnage, it is planned to go in for long term time charters. DGCA (Shipping) was approached for the same. But they were not in favour of approaching international ship owners. We have now sought the help of MoP&NG.
Projects - All major ongoing projects – PNCP, RESID Upgradation at Gujarat, PRDP, Hydrocracker at Haldia and MSQIP at Panipat, Mathura, Barauni, Guwahati and Digboi refineries are progressing well. Due to escalation in price of steel by 50% and stretched capacities of vendors, tough challenges are posed in timely execution of projects.
Since the cost of Paradip Refinery project was substantially high, a detailed feasibility study was advised by the Project Evaluation Committee. The cost has been brought down by deferring the petrochemical portion and it is now decided to go in for the 15 MMTPA refinery only. The Board has approved the same. The petrochemical portion will be taken up subsequently in the second phase. SBI Capital has been appointed for raising funds for the project. The same is expected to be concluded in the next couple of months.
Director (Refineries) said that to enable faster decision making, a flatter, nimble and more responsive organisation is the need of the hour. Talking specifically with reference to demanding jobs such as project execution in the face of odds and operation of complex structures like refineries, he said that the nature of our business presents enough opportunities to our people to innovate and perform. Attrition at top levels causes anxiety. He said that we need to consider de-layering, and keep succession plans ready. If need be, we may even explore the possibility of accelerated promotions. Actionable areas to promote synergy between Divisions should be identified and contractors need to be cared for.
Area of concern
Our country’s energy efficiency is 10 times that of the best countries in the world, such as Japan. We need to bring down our energy bills which make up for one-third of the total refining expenses. We have carried out energy audits of all refineries by expert teams constituted from people within the Division. It is satisfying that 1,51,000 SRFT/yr. of fuel saving has been identified to be achieved. The same is under implementation / at approval stage. Mass awareness programmes need to be carried out at all locations / units.
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Director (R&D)
IndianOil R&D beat Chevron and Saudi Aramco to win the prestigious WPC Excellence Award (2008) for the “Hydroprocessing Technology for Green Fuels in the Technical Development Category (Large Corporations). The award presented to Chairman by the King of Spain during the World Petroleum Congress.
In the last three months, R&D scientists spent around 1460 Man-days in providing technical services support to Refineries, Pipelines and Marketing Divisions, at both off-site and on-site locations, which includes catalyst evaluation activities, material failure analysis, support to petrochemical activities, lubricant technical services, etc.
R&D Centre had started product quality monitoring programmes and so far, only 10 failures have been detected. Though INDMAX Unit has been operating successfully at Guwahati Refinery, it has been facing problems of higher catalyst consumption. The problem has been identified and corrective action is being taken.
The novel catalysts developed indigenously at R&D Centre have been selected by CPCL in the face of stiff global competition. This would earn royalty for IndianOil.
The Centre also carried out a detailed analysis of Rajasthan Mangala crude for establishing its pumping and processing protocols.
IndianOil has become the only company to develop the prototype for 12” Instrumented (IPIG) and caliper pigs (IPIG). IndianOil and BARC have jointly developed the 14” pig that was launched recently in the Delhi-Panipat section.
Seven OEM approvals have been received for various lubricant formulations including a set of specially developed lubricants and synthetic grades approved by Railways. For the first time in India, a fire resistant hydraulic fluids ‘Servo Fyress Series’, based on Phosphate Ester has been developed for steel and mining industries. The product is currently being imported.
For Diesel MFA empanelment, 5 international additives suppliers submitted samples for evaluation. Additives shall be further tested for fuel economy in field trials at an independent lab. The Marketing Division should seek price bids from these bidders to avoid cartel formation at a later date after short listing.
On the recommendations of IndianOil R&D, Ministry has approved field trials with Kerosene marker.
In the area of Petrochemicals, the work on setting up of a state-of-the-art R&D infrastructure for polymer R&D is proceeding as per action plan. Lyondell Basell and NOVA Chemicals have consented to help in developing these facilities. R&D scientists have also visited the R&D facilities of Lyondell Basell and NOVA Chemicals. For sustaining a profitable polymer business, it is very important for us to develop Technical support capability, and as it is an entirely new area, we need hand holding with the licensors of technology for its deeper understanding.
Over the years, IndianOil R&D has developed expertise and knowledge base for bioremediation of oily sludge. Acceptance has been obtained from the Punjab State Pollution Control Board Authorities for bioremediation process to treat oily sludge accumulated in the terminals of Punjab State Office.
To develop eco-friendly renewable and alternate sources of energy, R&D scientists have initiated exploratory research for production of bio-ethanol from lignocellulose biomass, bio-hydrogen from organic waste through biotechnological interventions and work on screening of potential cultures of micro-algae for bio-fuel production and CO2 mitigation.
The Department of Bio-technology (DBT), Ministry of Science & Technology, has approached IndianOil to set up a “Centre of Excellence in Bio-Technology” for conducting R&D in bio-energy. Subsequent to IndianOil’s in-principle approval, the proposal has also been approved by the Board of Governors of DBT.
As decided by the MOP&G, IndianOil R&D has initiated field studies, in association of SIAM and OEMs of automobile, for establishing the effect of blending 10% ethanol with gasoline, on the automobiles older than 2005, and also on those rolled out after 2005.
Area of concern
Attrition of our scientists remains a matter of great concern, with three scientists leaving in the last three months. Development of R&D capabilities has a long gestation period and each time a scientist leaves, the R&D work suffers greatly and has to be re-started from the beginning.
Director (Pipelines)
During the 1st quarter of 2008-09, the Pipelines Division has achieved a total throughput of 14.99 million tonnes, which is 3.44% higher than that of the corresponding period of the previous year and 8.98% higher than the pro-rated MoU target for the current year.
The change out operation of the buoy at SPM-II location at Vadinar was successfully performed in March 2008. In April–May 2008, certain major maintenance works were carried out at SPM-I without causing any disruption in supply of crude oil to the refineries. This involved replacement of submarine hoses and nine floating hoses and in-situ replacement of the rail tracks and wheel assemblies.
The gradual phase-out of old Allen engines in progress.
The first trial run of the 14” Intelligent Pipeline Instrumented Gauge (IPIG), developed as a part of the second MoU with BARC, was conducted in the Delhi-Panipat section during 20-22 July, and data is being currently interpreted.
During the last year, pilferage was an issue. However, due to measures such as re-organised patrolling system, and close interaction with the police authorities at the highest levels in Gujarat and Rajasthan, situation has improved significantly since the beginning of this calendar year. The issue of getting amendments related to addressing the menace of pilferage incorporated in the existing P&MP Act, has also been vigorously taken up through Petrofed with MoP&NG.
PROJECTS:
Bengaluru ATF Pipeline is ready for commissioning.
Chennai ATF Pipeline – Due to extension of the runway at Chennai airport and revision in location of HDD (Horizontal Directional Drilling) crossing across the Adiyar River, some portion o the pipeline route has been realigned. Commissioning activities would commence after mechanical completion by end August or 1st week of September 2008.
Panipat-Jalandhar LPG Pipeline - Commissioning activities would commence after mechanical completion by 1st week of September 2008.
Koyali–Ratlam Pipeline - It is mechanically ready for commissioning. Product would be injected into the system in October 2008. The Ratlam terminal (except the railway gantry loading facilities) would be ready for commissioning by the end of November 2008. The railway gantry loading facility would be ready by December 2009.
Mundra-Panipat Pipeline Augmentation - The 20 km loop line has already been commissioned. With the installation of 3 MLPUs each at Radhanpur and Rewari, the entire augmentation work would be completed by December 2008.
Dadri-Panipat R-LNG Pipeline – It was delayed due to heavy rains and is now scheduled to be ready by January 2009. We have sought training in operations & maintenance of gas pipelines for our officers from GAIL.
Haldia-Paradip Crude Oil Pipeline - The balance offshore work at Paradip would be taken up in November 2008 after the monsoon. If things go as per the present plan, the PHCPL system could get commissioned in the new year of 2009.
Kolkata ATF Pipeline – Survey work for the 35 km line has been awarded. The pipeline route is across the Hoogly river near Vivekananda setu. There is no Right of Way and Marketing Division would need to obtain necessary clearances from various authorities
Guwahati ATF Pipeline – It will be a 42 km line out of which, 20 km is with Oil and balance 22 km resides in private land. The land issues with OIL have been resolved.
Three Hybrid Certification Programmes in Project Management have so far been conducted by IiPM through U21 Global, Singapore. In all the three programmes, the Chairman’s gold medals were bagged by the officers of Pipelines Division. The silver medals in the 1st & 3rd programmes have also gone to the Pipelines Division officers.
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