| Minutes Of Communication Meeting held on 28.10.03 |
| The Quarterly Communication Meeting at IIPM
on October 28, 2003, presided over by the Chairman, was attended by
all Functional
Directors, Advisor (Security), CVO, Departmental Heads in Divisional
Headquarters, unit heads of Refineries, Marketing, Pipelines and R&D
Centre, and State Office Heads of Marketing Division. The meeting, webcast live from IIPM to the various units connected on the LAN network, began with the Chairman welcoming the participants to the Communication Meeting. The following are excerpts from the observations made by the participants at the meeting: Chairman Chairman The Navratna Board of IndianOil has been reconstituted by the Government recently with the induction of three new independent Directors in place of Dr. R K Pachauri, Shri L.Sabaretnam and Mr. M. Kalyanasundaram. The new Directors are: Mr. V Ranganathan (an IAS officer from the Maharashtra cadre), Mr. V K Agarwal (former Chief Secretary to the Government of Maharashtra) and Mr. P M Sinha (former Chairman of PepsiCo Beverage International). Mr. Vineet Nayyar and Prof. S K Barua continue on the Board. Mr. B K Das, Additional Secretary & Financial Advisor, MOP&NG, has been appointed as Government-nominee Director in place of Dr. Surajit Mitra. We are fortunate to have a very knowledgeable and erudite Board represented
by eminent people with wide and varied experience in administration.
I also take this opportunity to welcome Dr. N G Kannan who is attending
the Communication Meeting for the first time as a Director.
The IndianOil Board, which reacted to this news swiftly, undertook a two-fold action:
I am extremely happy to share with you that the response from the media, including the electronic media, English and language press, as moulders of public opinion has been overwhelmingly in support of maintaining the current status of our Corporation. There has also been unprecedented support from the general public. As one of our colleagues mentioned in the Discussion Forum of IndianOilXpress portal, it has been a very humbling experience for us all and we should make the most of this opportunity to encash this tidal wave of support from all quarters. While handing over the dividend cheque recently, we had the opportunity to further reiterate our views on the disinvestment issue clearly to the Hon'ble Minister: that IndianOil is prepared to buy the Government's equity in HPC (BPC is likely to go to retail investors only, with no Government control). With IndianOil's share in retail sales (MS-35%, HSD-40%) not very high, there is no question of monopoly even after acquiring HPC. We have also suggested that the Government should consider selling up to 20% equity in IndianOil, while at the same adhering to its policy of maintaining ONGC, GAIL and IndianOil as flagship national oil companies, especially considering that the world over, the trend is towards creating bigger and bigger entities through mergers to ensure optimised costs. I can assure you that our views have been clearly and forcefully expressed to the Government. Though there has been no response from the Government yet, I am hopeful that IndianOil's voice will be heard while arriving at an amicable resolution of the issue by the end of the three months' time given to the CCD. I am happy to inform you that, on Oct. 18, 2003, the Hon'ble Prime Minister himself laid the foundation stone for our twin initiatives in Panipat -- expansion of refining capacity from 6 to 12 MMTPA and PX/PTA project for production of petrochemical intermediates. The Prime Minister, in his address, praised IndianOil for its consistently good work, and I give the full credit for this to the IndianOilPeople. I should also share with you that the Hon'ble Minister of Petroleum & Natural Gas too, while receiving the dividend cheque, complimented the IndianOilPeople for the excellent performance in 2002-03 and conveyed his best wishes for a much better performance and market penetration in 2003-04. I am also happy to inform you that IndianOil has been once again ranked No.1 in the 'Businessworld Real 500'. Referring to IndianOil as "Everest Rises", they maintained that "IndianOil is charging ahead regardless of plans to split." I would, however, like to conclude on a note of caution. At a time
when competition has begun in real earnest, I find that we are still
losing business due to the so-called work-to-rule in some parts of our
company. This is not acceptable; we can no longer afford luxuries like
work-to-rule. As senior management representatives, I expect all of
you attending this meeting to discuss this issue with your teams, convey
your point of view forcefully, and take appropriate action wherever
necessary. Director (Finance) On the funds management side, we have reduced our loans from Rs. 14,000 crore to Rs. 10,000 crore. Our working capital requirements are also coming down due to better cash flow from the Government. All these are bringing down interest costs. I am happy to inform you that the foreign exchange component of our debts profile, where interest rates are very low, has gone up from 29% to 51%. In the early quarter of 2001, when the oil bonds were yet to be issued, we had borrowed heavily from ICICI; we have now repaid the Rs. 500 crore. Our credit rating is currently under watch. M/s Standard & Poor will be assessing our performance and strengths in the beginning of Nov. 2003. In spite of the disinvestment issue, I hope that they will be able to renew their ratings, failing which our borrowings might be affected. While prices of crude oil and products are on the higher side, increase in crude production in November should bring down crude prices. A lot, however, depends on winter stocks and consumption patterns across the world. We have signed a contract with Brunei for Seria Light crude in July this year. We also have a similar agreement with BP Egypt for Gulf of Suez mix crude oil. As part of our term contract with Iraq, crude oil supplies have started coming in. The unscheduled shutdown of Reliance FCC has resulted in LPG shortage. We are trying to import 5 parcels of LPG to maintain stock levels, which is a prime area of concern. On the export front, we have started ATF and Gas Oil (HSD) exports
to Sri Lanka. Export of Gas Oil from Haldia too will begin in Nov./Dec.
2003. In view of the concerns on declining refinery throughputs, we
should plan more and more product exports from Haldia. Director (Pipelines) I am happy to inform the gathering that our Salaya-Mathura Pipeline has set a new record by completing 25 years of successful operation. Heavy rains and flooding on August 24, cut off Viramgam town, including our pump station, from Ahmedabad, Surendranagar and Kutch. However, operation of the station was maintained. The second quarter performance of the pipelines in comparison to the MoU or stretch targets is not good. More importantly, the utilisation of newly laid branch pipelines has been dismal - that is, only 10 to 15% as of now. We need to negotiate with other marketing companies like HPC, BPC and IBP for better utilisation of these pipelines. I compliment Marketing Division for linking the IBP/HP terminal with our Amousi terminal. I would once again like to reiterate that the more we use our pipelines, the more we earn profits. This is a major area of concern. Now for the silver linings. Some pipelines have already achieved MOU targets. Kot-Salawas has maintained more than 300 kl pumping rate to meet demand. The product interfaces in the Kandla-Sidhpur section of KBPL have been reduced by almost 60% using batching 'pigs during the trial run. Things are OK on the safety and ecology front; mock drills have been completed. SAP has been implemented in HMRB pipeline on 1st Aug. and SMPL on 1st Sept. 03. Chaksu station achieved the highest power factor and has been suitably honoured by the State electricity board with a rebate of 1.4% of the total electric charges. The new 28-inch crude oil pipeline between Viramgam and Koyali has been commissioned; the old 18-inch crude oil pipeline has been cleaned, hydrotested and recommissioned for products service. With this, we now have the option to pump more of Koyali or Reliance products to North. Marketing Division needs to do some fine-tuning for better benefit to IndianOil. We have received Board approval for the Chennai-Trichy-Madurai pipeline
and a branch pipeline to Ajmer; we are also seeking approval for a branch
pipeline to Chittorgarh and one between Koyali and Ratlam. Director (HR) IndianOil has been ranked among the 10 Best Employers in India in the recent Hewitt Associates survey of the Indian corporates. Our Director (Finance), Mr. P Sugavanam has been conferred the 'IISE-Top Rankers Award for Business Excellence' in Finance for the year 2002-03 by the Indian Institute of Special Education, Lucknow. The issue of Computer Advance for workmen has been resolved. Certain allowances and facilities of Officers have also been agreed upon. Review of Rationalisation Adjustment Allowance for workmen will be taken up along with discussions on work-related allowances. The CDA rules have been modified by including adverse criticism of any Director or Officer(s) in Senior Management as misconduct. The ceiling for declaration of expenditure has been raised to amounts exceeding 2 months' basic pay. With the reorganisation of the Marketing set-up, disciplinary authority in respect of officers in Grade A, B & C has been modified to include Heads of Regional and State Offices. The format for charge sheets for major penalties has been modified in line with CVC's advice. Violation of Code of Internal Procedures and Conduct for Prevention of insider trading in dealing with the securities of IndianOil by designated employees has been included as misconduct. Campus selection of Engineers and MBAs & selection of professionally qualified employees under accelerated career progression scheme has been completed and allocations made to Divisions. A revised IndianOil Scholarship Scheme announced in Sept. 2003 received an overwhelming response with about 17,500 applications. Completion of the selection process is targeted by Nov. end. The Corporate website (www.iocl.com), re-launched in mid-Feb. 2003 with new design and technology backend, is already registering about 18,000 visits per month - with sizeable number of hits from the Middle East, Europe, Africa, USA, China and Far East, and even the Pacific islands. This is a clear indication of the global interest in IndianOil's activities. Similarly, the number of registered users of IndianOilXpress internal communication portal stands at 2950 now. For the first time, the portal has given all IOCians an opportunity to interact candidly with colleagues from their own desktop through the Discussion Forum, taking the already bonded IndianOil Family one step further, based on a transparent flow of communication across levels. The portal has not only made it easy to percolate information to every section of the Corporation but also provided a platform to showcase individual talent with contributions for areas like Features, Readers' Choice, Photo Gallery and other sections. The portal has recently launched special sections for women and kids of the IndianOil family. The Xpress team is actively working out further improvements on the portal based on suggestions from across the Corporation to make it a window to the current moods and opinions of the IndianOilPeople. Director (Planning & Business Development) Sri Lanka Lanka IOC sold 176,000 kl of petroleum products and earned a net profit of Rs. 21 crore during April-Sept. 2003. As on date, It has taken over 100 Ceylon Petroleum Corporation ROs and 14 franchisee ROs, with 150 more franchisee ROs to follow. Refurbishment work of all ROs is targeted for completion by June 2004. L Product Exports
Petronet LNG Ltd. (PLL) - Dahej Gas sale and purchase agreement executed between PLL, RasGas and others (IOC, GAIL, BPC, ONGC and GDF) in Sept. 03. The LNG terminal at Dahej scheduled for mechanical completion by Dec. 03 and commercial operation by March end, 04. The gas available for the first year is 2.5 mmscmd, out of which 0.407 can be consumed in IndianOil refineries. Agreements have been executed for 2.72 mmscmd, including an exclusive one with Chambal Fertilisers & Chemicals for supply of 1.8 mmscmd gas. East Coast LNG Project As per a study carried out by IndianOil, the three Southern States of AP, Tamil Nadu and Karnataka have a demand potential for 29 mmscmd of LNG by 2008, which will grow to 43 mmscmd by 2013. The KIOLC consortium is looking at feasibility of shifting the location of the proposed LNG terminal at Kakinada to Krishnapatnam, closer to Chennai, Salem and Bengaluru. Seven HOA aggregating to 4.805 mmscmd have been signed. Iran LNG
Petrochemicals
E&P
Technical Services & Consultancy
Director (R&D) IndianOil's wholly-owned subsidiary, IndianOil Technologies Ltd. (IOTL), was formally inaugurated on 8th Aug. 2003. IOTL has already received orders from ONGC, KPC, MRPL, BRPL, CPCL and ADNOC besides IndianOil's own units for technologies like bio-remediation, sludge disposal and catalyst evaluation. A high-level Iranian delegation visited IOC (R&D) / ITL and showed keen interest in our INDMAX / INDALIN+ technologies. As a follow-up to the agreement signed with TOTAL of France in June 2003, 14 R&D projects have been identified for short-term and long-term. Similarly, six projects have been identified for joint efforts with AXEN / IFP, France, whose team visited IOC R&D in July 2003. MoP&NG has nominated IOC R&D as a nodal agency for oil and gas sector to take up hydrogen research. A corpus fund for research is being created with contribution from oil and gas companies. Besides a status report on hydrogen prepared for MoP&NG, IOC R&D is to organise an international workshop on Hydrogen in December 2003 IOC R&D has initiated trials for a lubricants marker capable
of detecting more than 5% adulteration, especially in 2T oils. Director (Refineries) There has been an overall improvement in refinery operations in the second quarter and a significant improvement in distillates yield. There was, of course, scope for a better performance. The refineries have shown an overall 95% achievement in stretch targets. Haldia's performance has not been up to the mark. A major effort will be required in the second half to catch up. Refinery optimisation packages are in place in Koyali, Mathura and Panipat refineries. For increase in capacity utilisation, we will need to export some products, particularly diesel, which impact refinery margins and hence the need to reduce cost of production. MS and diesel exports from Haldia have already commenced. Strategic initiatives have been included as a performance parameter for the first time. Each Unit Head has taken a few strategic issues for personal monitoring. The benefits of stream-sharing between refineries, currently seen among the Northeast refineries, needs to be extended to Baruani-Haldia and Mathura-Panipat refineries. To ensure zero quality failure of products at the customers' end, the Refineries Division has developed and put in place new norms in consultation with the R&D Centre. Gujarat Refinery of IndianOil received Level-9 ISRS rating, which is not only the highest safety rating in India but in the world as well. This year, IndianOil achieved the unique distinction of being on the
panel of the National Petrochemical & Refiners Association (NPRA)
Q&A session at New Orleans, USA, in October 2003. This is one of
the most eagerly awaited industry events attended by representatives
from refining and petrochemical industries the world over, and IndianOil's
contribution as a panellist was greatly appreciated by NPRA. Director (Marketing) IndianOil's market share for the period April-Sept. 2003 was 50.8% with Kerala, Tamil Nadu, North-East, Gujarat and Orissa State Offices putting in their best performance as the top 5 State Office as per targets agreed in individual MoUs. The top 5 State Offices in terms of increase in market share during the period were: Kerala, Tamil Nadu, Rajasthan, UP and AP State Offices. The Marketing Division commissioned 473 new ROs during April-September 2003 against a target of 446, a commendable performance by the Sales and Engineering groups concerned. As part of the XTRA Retail Branding programme, 425 ROs stand certified by M/s Bureau Veritas for Q&Q, house-keeping, hygiene, maintenance, etc; 1,000 ROs are targeted to be certified by March 2004. XTRAPremium & XtraMile will be the new brand names for Premium Petrol and Diesel Super, and XTRAPower the new name for PowerPlus Fleet card; a new product campaign with the new names is being launched from 31.10.03. An innovative 'Star Distributor' programme was launched on 1.10.03 from Hyderabad with 20 LPG Distributors branded as "Star Distributors". The facilities offered under this programme include -Toll-free customer service cell number, four-digit number for refill booking, mechanical weighing scale, valve and O-ring leak detectors with delivery boys, 7 days showroom working from 8 am to 8 pm, and delivery of refill the same day for bookings till 2 pm. The programme will be rolled out in Chennai, Bengaluru, Lucknow and Delhi by December 2003. The State Offices have launched an intensive programme for long-term tie-ups with State Transport Undertakings in their sales areas for HSD and lubes business, and several tie-ups have already been concluded. Similar longterm tie-ups for lubes and LOBS have been tied up with several bulk customers. An innovative initiative by TNSO of field officers training pump attendants every Saturday has been widely appreciated by motorists and is being institutionalised by retail sales. The Aviation Department gained new business from Thai Airways at Chennai and Gulf Air at Kolkata. As part of strategic initiatives, MITTAI (Market Intelligence Think Tank Action Initiative), a cross-functional team of middle level managers, has been formed at Marketing HO to provide a platform and process for churning out market intelligence from the field, cutting across layers, and to create a platform for sharing of ideas and churning out Action Initiation. Listening Post, a Lotus Notes-based platform, has been formed for sharing information and ideas. An exercise in organisation transformation titled Customer Ambassadors was launched at Mumbai on October 26, 2003 where 52 officers, including GM-MSO, GM-LPG, GM-Ops and DGM-Plg & ES, volunteered to interact with customers at Mumbai-based ROs; 45 ROs were covered with one officer in each and seven senior officers in a roving team. The campaign created a festive atmosphere at the ROs, pleasantly surprising customers, and proving to be an excellent training ground in Customer Service for many officers from other-than-Sales function. Other State Offices will be replicating the campaign on holidays in major towns. A new depot was commissioned at Gulbarga with 8900 kl tankage on 21.9.03. As part of cost-reduction initiatives, 8 locations (Barauni, Balasore, Cuttack, Gondia, Jaipur Depot, Lucknow, Mathura and Nizamabad) were closed during the first half of 2003-04, bringing the total number of such locations to 60. Twelve more locations are slated for closure by March 2004. There has been a reduction in OT hours by 17.5% during April-Aug. 03. Rs 2.8 crore per annum savings were achieved by rationalisation of BCWs in Mathura LPG, reducing manpower by 96. Salem Plant re-modeling has reduced BCWs from 64 to 28. Contract labour was reduced by 31. Targeted dispatches of 92,000 kl for advance winter stocking for 2003-04 were completed on 6.10.03. Profits from SERVO exports during April-September '03 crossed Rs.1 crore vis-à-vis Rs.0.45 crore during the same period last year. Sports: Indian National Hockey team which recently won Asian
Cup at Kuala Lumpur included 4 IndianOilPeople. IndianOil Hockey team
also reached finals of Sri Teghbahadur Hockey Tournament. Brand IOC
was widely covered in the media, during the course of the tournament.
Aparna Popat claimed women's single title in sixth IndianOil Indian
Asian International satellite badminton championship at Jaipur. Advisor (Security) Communications on security sent to locations is taking unreasonably long to reach locations. For instance, our communication on 'Security Week' to be observed in the first week of Oct. 2003 did not reach some locations at all. We need to put such communication on the fast track. The Security Manual has been drafted with a lot of effort. Based on this, all units must put in their best efforts on a continuous basis to raise their security standards so as to create the right security ambience. We look forward to suggestions and comments, which can be institutionalised, to further improve the security of our installations. The rank and file of the company need to be involved in the Security Week, being observed across the Corporation this year onwards. Far from being imposed from the top, it should be seen and understood as a necessity for improving the security ambience of our Corporation. There should be no divergence between personal and organisational interests in this regard. As I had mentioned earlier about the Security Week, some units did
very well while a few could not grasp the concept very well. I would
like to add that each one of us is a force multiplier in security. Therefore,
the process of indoctrination should be seen as a longterm process.
Security Week has been planned only to kick-start this movement and
provide it a momentum. Only sustained commitment from each and every
member of the IndianOil family can ensure total security. Chief Vigilance Officer To begin with, I would like to reiterate the short-term and long-term measures initiated by the Vigilance Department. The short-term measures were aimed at free and frank discussions with the officers concerned, and providing an opportunity to all to explain their version. As part of long-term measures, we have taken steps to bring in greater transparency through systems improvement, and to facilitate quicker and well-informed decisions as well as intelligence collection. The stress was on preventive vigilance rather than punitive vigilance. Based on these two premises, the following steps have already been taken:
System Studies Conducted
As a result of these steps, there has been greater transparency and
opportunity for every one to explain his/her version. The overall picture
is one of mistakes realised and reform taking place, and also removal
of the sense of injustice/ undue harassment. News from Refinery Units: Koyali:
Panipat:
Barauni:
Mathura:
Guwahati: Digboi: · Record production in MS, LPG, candle wax during
August '03 News from Pipelines Units WRPL successfully commissioned 28" Viramgam-Koyali crude oil pipeline, old 18" pipeline being converted into product service for better Koyali-Viramgam-Sidhpur throughput. SMPL completed 25 years' service, went live on SAP on 1st Sept. 03. Six engineers from Sudan are under training in WRPL on chargeable basis. ERPL: 500th tanker on HBCPL account berthed at Haldia on August 23, '03. HSD transfer facility established between IndianOil, IBP and HPC terminals in Amousi to improve Amousi offtake. GSPL and BKPL achieved the highest daily throughput of 7474 kl and 9126 since inception in Oct. 03. Station managers interactive meet with Director (Pipelines) held to discuss operational challenges and resolve long-pending issues. SAO go-live achieved in HMRBPL on 1st Aug. 03; all units of ERPL are now on SAP. Profitability of GSPL and BKPL has gone up due to better throughput and reduction in power consumption. HBCPL fuel consumption brought down by commissioning loopline.To improve Amousi offtake. GSPL and BKPL achieved the highest daily throughput of 7474 kl and 9126 since inception in October '03. Station managers interactive meet with Director (Pipelines) held to discuss operational challenges and resolve long-pending issues. SAO go-live achieved in HMRBPL on 1st Aug. 03; all units of ERPL are now on SAP. Profitability of GSPL and BKPL has gone up due to better throughput and reduction in power consumption. HBCPL fuel consumption brought down by commissioning loopline. News from Marketing Units Sales Campaigns: UPSO launched Jeeto Har Kadam IndianOil Ke Sang sales campaign during August 2-22 at 103 ROs in 40 cities and towns for 2&3-wheelers buying Premium fuel worth Rs.100 and 4-wheelers worth Rs 400. Daily winners in quiz on AIR FM programme Good Morning Lucknow were given Rs.400 worth coupon for XTRAPREMIUM. XTRA PREMIUM candle bowls were distributed during the Diwali season against purchase of XTRAPREMIUM and XTRAMILE Diesel Buyers of Hyundai accent car in Lucknow were also given a coupon for XTRAPREMIUM worth Rs 500. TNSO launched Bag Full of Offers campaign at ROs in Chennai, Madurai, Trichy, Coimbatore and Salem; discount shopping coupons were given away to customers buying XTRAPREMIUM. During Navratri festival, ROs under all the three DOs were decorated with dolls as done in households during the festivities. The event was well covered by the Press and generated considerable interest among people. WBSO extended special benefits on LPG supplies to senior citizen customers by supplying refills within 24 hours, free mechanic service and documentation at customer premises. Orissa State Office commenced a program of field officers spending 2 hours during peak hours in the morning and evenings in ROs by rotation SERVO radio jingles broadcasted on Radio Mirchi at Ahmedabad, Mumbai, Indore and Pune and over Radio FM in Mumbai. MPSO ran a campaign on premium fuels on Radio Mirchi FM channel. Delhi & Haryana State Office launched Tank Bharo campaign Other Highlights NRO: Rs. 672 lakh rental from renting out NRO space. ATM facility launched at Bijwasan terminal. Eight raids conducted on manufacturers of spurious lubes. ERO: Refineries and AOD offices shifted to ERO office. WRO: Maharashtra SO accommodated in WRO, DGS&D outstandings reduced. SRO: Recorded highest profits in Marketing Davison. PL Office accommodated in SRO, DGS&D outstandings reduced by Rs. 25 crore. WBSO achieved 3.2% growth in market share in all products, except LPG and lubes. Maharashtra State Office shifted to Prabhadevi Office on IndianOil Day. MSO, MDO and MAO all together now. Ethanol-blended petrol made available across Maharashtra from Aug. 03. D&HSO improved market share from 38% to 38.2%, LDO recorded a growth of 13.9%. Bijwasan-Palam ATF pipeline commissioned, Gurgaon Indane bottling plant ready for commissioning next month. 52 new ROs commissioned during July-September '03. 5% ethanol-blended petrol made available across Haryana from 29th Sept. 03. KASO commissioned 36 new ROs against target of 26, 32 ROs certified by BVU. 11.8% customers converted to 91-Octane fuel, Diesel Super doing well. State-level marketing plan unrolled. Mangalore-Bengaluru pipeline commissioned on October12, '03. RSO: Jaipur TOP received National Safety Award-2002 for three consecutive years, all 10 locations under the SO received OISD awards for 2001-02. Bharatpur depot adjudged best in M&I and best in overall performance all-India MPSO commissioned 28 new ROs against a target of 13. UPSO commissioned 67 new ROs against a target of 48. Unveiled inter-divisional RO inspection by the field force. Achieved recurrent savings in manpower deployment at Mathura LPG plant. APSO signed MoU with APSRTC for three years business. KESO reports 6.8% improvement in market share during April-Sept. 2003, the highest among State Offices. XtraMile Super doing very well in Kerala. HSD (Direct) - 90% market, gained 10% in lubes. Kochi LPG plant bagged award for the best in manpower redeployment. Bihar State Office commissioned 17 new ROs. Orissa State Office reports improved market share in MS & HSD retail, volume growth in LPG, lubes and HSD (Direct). Treasury Operations
Project Manthan
Chairman's Concluding Remarks
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