| Minutes
of Communication Meeting held on 26.4.2004 (For the period Jan.-Mar. 2004) |
The Quarterly Communication
Meeting at IIPM-Gurgaon on April 26, 2004 was presided over by the Chairman,
and attended by 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 across the
Corporation, began with the Chairman greeting the participants. The following are excerpts from the observations
made by the participants at the meeting:
Chairman Chairman: I am very happy to share with you all that IndianOil has done exceedingly well in almost all parameters in the financial year 2003-04. We have reached new highs in every sphere of activity. My congratulations to all members of the IndianOil family who made 2003-04 a year of success. Our Refineries team registered an all-time high crude throughput of 37.6 million tonnes, an increase of 6.5% over the previous year. The overall capacity utilisation has also gone up to 94.3% as against 92.5% in the previous year. Our Pipelines team posted a combined throughput of 44.5 million tonnes, an increase of 9.5% over the previous year. The capacity utilisation of crude oil pipelines was 95.2% (89.94% in the previous year) and product pipelines was 74.6% (81.95% in the previous year). Our Marketing team deserves special commendation for reversing the trend of declining volumes for the last three years, with a 909 TMT increase in sales volume for 2003-04. They have been able to reclaim lost ground by dint of sheer effort. Our performance in MS (R) and HSD (R) in March this year has been excellent. I hope we will be able to maintain this trend in future and post new records in 2004-05. By the way, our MoU performance for 2003-04 was the best of all the past years, proving that IndianOilPeople are now an unbeatable combination. Last week, the new terminal of IndianOil Mauritius at Mauritius was inaugurated by the Prime Minister of Mauritius in the presence of the Deputy Prime Minister and Lord Mayor. IOML is securing new business at a quick pace. Mauritius has now become the second country where we started marketing in, after Sri Lanka. It is a small country, but with a large Indian diasporia. We need to push ahead in Africa also - there are enough opportunities to be exploited. Petronet LNG Ltd has commissioned their terminal in February 2004. Despite earlier fears, all offtakers, including IndianOil, were able to dispose of their quota of re-gassified LNG. Next year, gas availability will go up further. We want to enter into LNG import contracts on our own, and are trying to secure more re-gassified LNG. With FO getting replaced by LNG at a fast pace, we have to push ahead in gas marketing. Our BD group is pursuing this agenda aggressively. A gas-marketing team has been formed in BD group to service customers and procure more gas. In petrochemicals, the LAB unit in Gujarat refinery will start production in the next 5-6 months. Petrochemicals marketing is a new area for us, but our BD group is fully geared to face this challenge. By 2007, we hope to commission the proposed mega naphtha cracker. Two States are currently competing for the location of the project. We have to take a quick decision. With all these activities in the offing, we propose to moot a full-fledged petrochemicals division. We are taking the agenda to the Board within the shortest possible time. Our HR group deserves compliments for successfully maintaining 31st March as the cut-off date for all promotions and transfers. Even though the number of promotions has been high this year, eventually, at some time in the future, some corrections need to be done. We cannot allow our organisational structure to go haywire. Merit-based promotions need all kinds of new skills. We need to differentiate between performers and non-performers. Promotions in number are not enough; we need to reward people in other ways. I would welcome all of you to share your views with the Management on this issue. Last month, during my visit to our Northeast locations, our colleagues at Guwahati and Digboi were very enthusiastic. Everyone has realised that the business environment is changing. We have successfully lobbied with MOP&NG for 50% excise concession for NE refineries and 1.5 mt of Ravva crude for BRPL. Still, there is a need to increase gross margin by producing value-added production. We need to improve several factors like wax production, onstream factor, IndMax production and energy index. Hydrocarbon loss also needs to come down. Cost-competitiveness is a must, in order to remain in business - this realisation has come among all colleagues. The IndianOil Board has also approved merger of IOBL
with IndianOil for greater synergy and accountability.
Director (Finance): As all of you may be aware, IndianOil has been ranked as first among National Oil Companies in the Asia-Pacific region for the year 2003 recently. Crude prices remained high during the last quarter; however, they were offset to some extent by good refining margins. IndianOil made a beginning in hedging operations with hedging of refinery margins during February and March. We are continuing this through March-April also. Project Manthan has reached 300 locations as on date,
and Southern Region is likely to be the first to go on SAP totally in
Marketing Division. We have procured an additional 1,000 licences for
users in IndianOil. Director (HR): The Voluntary Retirement Scheme had been extended till June 2004, and no further extension was contemplated. Employees availing of VRS could avail of tax benefits depending on their specific situation, details of which had already been circulated. Similarly, if a person below 50 years applied for VRS, he/she would be covered for medical reimbursement under post-retirement medical scheme of the Corporation as soon as he/she attains 50 years of age. Till then, the coverage would be through the insurance scheme. This would eliminate the anomaly between the employees below 50 years age and those above 50 years of age seeking VRS. Simplicification of rules is being undertaken in a
big way. 1st July has been fixed as due date of reimbursement for briefcase
and digital diaries as per eligibility. The existing cumbersome system
for payment for furniture at home is also simplified now and employees
can pay by credit card and subsequently the Corporation shall pay to
the bank directly. Simplification as well as uniformity in leave rules
across divisions based on the committee’s report in this regard would
be taken up next. Board approval for campus recruitments has been obtained. Further, the list of institutes has been revised and finalized based on their rankings published in a number of business magazines. In addition, the recruitment would be as per the order of rank of the institutes. This year's recruitment is almost finished. The psychometric test, administered for the first time for campus recruitments, is under review for administering in the open recruitments as well. Various alternatives have been proposed to the in-house MBA programme discontinued at IIPM and soon a final decision shall be taken. In the meantime, 10 officers are being sent to MDI, Gurgaon this year for MBA studies for which entrance test had already been conducted. Access control systems will be operational at 60 hyper-sensitive locations by August 2004, and all other locations by the end of 2004-05. Each location will be responsible for getting these systems installed, and they are welcome to contact Corporate HR dept for help or guidance. With regard to Superannuation Benefit Fund (SABF), which is extending benefits to 12,000 pensioners as of now, I would like to dispel certain misgivings. LIC has increased the annuity by over 26% with effect from 1st Nov. 2003 because of declining interest rates. The SABF is unable to bear this hefty increase. In some organisations, direct contribution by employees has been raised, which is not acceptable in IndianOil as per the representatives of the collectives. A meeting of the trustees on 24.4.04 considered several alternatives and provisionally decided to provide one-third commutation amount based on pre-revised rates and two-thirds of the pension based on revised annuity rates. The Fund’s liability shall be limited based on this system if someone does not opt for commutation. All concerned were advised to carefully monitor increasing medical and telephone expenses. It was informed that a separate section titled “Personnel
Touch” has been introduced in the IndianOilXpress internal communication
portal to encourage our colleagues to post their views and suggestions,
particularly on HR-related issues, directly to Director (HR) with a
view to further improve the existing HR practices and procedures. However,
personal grievances, if any, need to go through the normal grievance
redressal system. Director (Planning & Business Development): Fiscal 2003-04 has been very satisfying for the BD Group. With a view to seek growth beyond IndianOil’s existing business, the BD Group has drawn a comprehensive business plan with a three-pronged approach – upward integration into E&P and downward into petrochemicals, diversification into gas, tapping the same consumer base, and expanding the existing geographical boundaries of our market through export of products & projects, and setting up downstream marketing ventures overseas. March 23rd 2004 was a historic day for IndianOil. On this day, we began our first gas sales. The total quantity of IndianOil’s share of re-gassified LNG of 2.52 MMSCMD for the year 2004-05 has been sold to GSPC, Essar Steel & a few NCR customers. It is estimated that gas business will generate Rs. 680 crore as revenue and Rs. 32 crore as income during 2004-05. In line with IndianOil's ambitious gas business plan, a full-fledged Gas Dept. has been set-up at Corporate Office with separate groups for Gas Management, Gas Marketing, and Gas Sourcing. Growth in gas business is driven by access to gas supply & infrastructure. A number of steps have been taken in this direction. To meet the additional demand of gas, IndianOil is firming up import of 0.5 MMTPA of LNG on short-term basis. As indigenous equity gas is another feasible source, IndianOil has farmed-in the Cachar block of Premier Oil, UK, which has good prospectively of about 3 TCF of gas. IndianOil is also in discussion with HOEC for farm-in PY01 Block in Kaveri Basin. Moreover, broad term sheet for import of LNG from Iran has been agreed, wherein IndianOil’s share shall be 1.75 MMT LNG per year. As regards to city gas & CNG retailing, IndianOil is in the process of forming a JV company with GAIL for city gas distribution in Lucknow, Agra and Bareilly. IndianOil has executed an MOU with GSPC to develop CNG retailing facilities in Gujarat. Market survey for city gas distribution projects in Chennai and Bengaluru has also been initiated. Commensurate with IndianOil’s strategic plans, petrochemicals
projects worth Rs. 13,000 crore are currently in various stages of implementation.
The LAB project at Gujarat Refinery and the PX/PTA project at Panipat
are in full swing and are expected to be commissioned by Sep ’04 and
Aug ‘05 respectively. The IndianOil Board has approved a Naphtha Cracker
project at Gujarat / Panipat with a capex of Rs. 6,300 crore, to be
commissioned in 2007. As petrochemical is evolving into a major business
activity of IndianOil, this year Petrochemical has also been made an
independent group under BD. In respect of downstream marketing outside India, in Sri Lanka LIOC has successfully negotiated and paid USD 75 million towards 100 ROs and 1/3rd share in joint venture storage company. All agreements towards this have been signed and thus LIOC has become a full-fledged Sri Lankan oil company. As on date, it has 147 ROs with an average per pump throughput of about 300 kl. As regards other initiatives towards International operations, following up a systematic approach, suitable downstream opportunities are being identified in SE Asia and Africa region. IndianOil has identified certain opportunities in Thailand, Madagascar, Tanzania, Uganda and Kenya and now is pursuing these. Exports of bulk products have continued to register a healthy growth. IndianOil had exported 1.85 MMT in the current year, registering a growth of 64% over the previous year. IndianOil has been first time successful in entering into a term contract with M/s Bangladesh Petroleum Corporation for supply of 220 TMT of POL products at Chittagong. IndianOil has also initiated a dialogue with the Govt. of Pakistan and the national oil companies of Pakistan for export of Gas Oil to the tune of 1 million tonnes ex-Jalandhar / Panipat through rail. At present, a proposal is pending with the Pakistan Cabinet for lifting embargo on import of Gas Oil from India. Lubes exports have also registered very good growth during 2003-04. With an export volume of 6,012 kl, lubes export recorded 115 % growth over the previous year. IndianOil has started lube blending at UAE for supplying in Middle East and Africa region. IndianOil is also planning to start lube blending at Sri Lanka. The Govt. of India has decided to develop strategic storage for crude oil for the country. IndianOil has been nominated for developing this storage and accordingly, Board has approved forming an IndianOil wholly owned SPV for its development & operations. For the first time in recent years, actual planned expenditure was more than 100% of budget during 2003-04. The actual expenditure has been Rs 3064 crore. IndianOil has been able to achieve best ever MOU score
(provisional) of 1.031 in 2003-04. Director (Refineries): With the close cooperation of the Marketing and Pipelines Divisions, Refineries team has been able to achieve a record throughput and capacity utilization for the year 2003-04. Without taking into account the expansion of Barauni refinery, our combined capacity utilisation has been over 98%. However, this is slightly less than the industry average of 101.5%. We have also achieved considerable value addition in terms of distillate yield and energy reduction. There has been a major increase (20%) in LPG production, because of FCC and IndMax units. Based on constant prices, IndianOil refineries achieved a 26-cents/barrel improvement in gross refining margin (GRM) for the year 2003-2004 vis-à-vis previous year. For the year 2004-05 also, we have kept a target of 25-cents/barrel further increase in GRM. The crude throughput target has also been raised to 38.7 million tonnes for the current fiscal. We may be able to achieve even up to 39.7 million tonnes, if Haldia and Barauni chip in with 0.5 million tonnes more each, subject to removal of port constraints at Haldia. IndianOil has been nominated to receive crude oil from oil wells of Cairn Energy in Rajasthan. In the first phase, around 5,000 to 10,000 barrels/day is expected to be available by the first quarter of 2005, i.e., equivalent to 0.25 to 0.5 million tonnes per annum. The crude oil will be moved by road tankers from the oil fields to the nearest pumping station of KBPL now. Eventually we may have to lay a new pipeline from the oilfields to KBPL for supply of Rajasthan crude to Panipat Refinery when oil production further increases in the year 2007. The Refineries team has commissioned four new units during 2003-04. These are: IndMax unit at Guwahati refinery, Solvent de-waxing unit at Haldia refinery, Hydrogen & DHDT unit at Digboi refinery, and the new Sulphur unit at Haldia refinery. Our safety record during 2003-04 has not been very
good. We have taken several initiatives during the second half of the
year to improve our safety record. Compared to over 100 interruptions
in the previous year, 2003-04 saw a reduced number of about 70 interruptions.
However, this does not call for celebrations. As the Chairman had said,
let us put our best efforts to make 2004-05 a Zero Accident Year. Also,
with all the seven refineries kicking off TPM initiatives by Sept. 2004,
I am sure we will be able to achieve the best results so far in this
area. Director (R&D) SERVO Marine Oils: Shipboard trials in MT Suvarna Swarajya are progressing well and Shipping Corporation of India has endorsed the good performance of Servo Marine 7050 and 0530 oils after more than thousand hours of operation. MAN B&W, Denmark, has also concurred the good progress and performance of the trial products. Hydrogen Energy: At the behest of MOPNG, a delegation led by IndianOil Chairman visited Europe and USA in April 2004 for a firsthand knowledge of the progress made in other parts of the world in moving towards a Hydrogen-fuelled economy. The team had discussions with senior officials in the Department of Energy, USA, the Institute of Transportation Studies at the University of California, National Hydrogen Association and the California Fuel Cell Partnership (CaFCP). The delegation also acquainted itself with bus fleet operations and gas stations supplying hydrogen-CNG blends, and visited the Hydrogen-refueling stations of Toyota and CaFCP. Discussions were also held with representatives of renowned Hydrogen energy leaders such as Stuart Energy, Hydrogen Systems, Energy Conversion Devices, etc. This visit has helped us identify activities leading to implementation of the road map for Hydrogen research in India. Biodiesel: Trials of 5% biodiesel-blended diesel were launched in ten buses of Haryana Roadways on April 6, 2004. It is planned to gradually change over 20 buses to the biodiesel blend. IndianOil Technologies Limited (ITL) has licenced the biodiesel technology to Venus EthoxyEthers Pvt. Ltd. on a consideration of Rs. 4.5 lakh + 4% royalty on sale, on a non-exclusive basis. Although this is a small amount, it is a significant achievement in view of the fact that many available technologies in the country are not able to produce biodiesel meeting the ASTM specifications from non-edible sources like Jatropha. ITL has received orders from IndianOil refineries and
Marketing Division, ONGC, OIL and HPCL for Oilivorous-S technology.
ITL’s CFC technology has been selected at KRL-Kochi and HPCL-Mumbai
refineries. During the last quarter, the R&D Centre earned
eight Indian patents and filed for 8 more.
Director (Marketing): I take this opportunity to express my gratitude to all my colleagues in Marketing Division for their individual and collective efforts in enhancing the performance of the Division. I would also like to thank all seniors and collectives for their unstinted support, besides my predecessor Shri PK Agarwal who laid the path. For the year 2003-04, the Marketing Division alone registered sales of 46.26 million tonnes, with volumes up by 909 TMT. This is next only to the highest sale of 46.9 MMTs in 1999-2000, in the last 5 years. The year closed with a slight drop in market share by 0.2%. For the period Jan-March 2004, the market share, however, was up by 0.6% with volumes increasing by 1,129 TMT (10.1%). For the year 2003-04, nine State Offices did better than the score of 2.5 (i.e., very good, on a scale of 1 to 5 with 5 being most dissatisfactory), with Rajasthan State Office coming up the best. In the MoU signed with the State Offices on April 16, 2004, we have allocated higher scores for retail initiatives during the current fiscal. While seven SOs achieved increase in market share, 11 SOs have closed the year with increase in sales volumes. Marketing Division commissioned 1,122 retail outlets during the year 2003-04, as compared to 228 in the previous year, besides 217 LPG distributorships and 22 SKO dealerships. Servo was the most advertised brand during the one day Indo-Pak cricket series. HR Helpline, a single window concept to address various
queries other than confidential issues, has been rolled out in Marketing
HO and WR. As a part of the efforts to maintain IndianOil as a learning
organisation, an all-India Petro Quiz is being conducted in May 2004.
All questions would be captured on CD and circulated across the Division
for the information of employees.
Advisor (Security): Effectiveness of security is directly proportional to the quality of its supervision. This is the principle underlying security issues. You must be prepared for the worst in order to enjoy the luxury of a normal situation. Security communication must be put on the fast track. Location heads should do regular checks to see for themselves the sensitivity of security operations in their units. CCTVs may be installed wherever needed. To bridge the knowledge gap of security personnel on security procedures, the Security Department has brought out a film, which shows the right methods of following security procedures, and also dramatises the various possible threats. This film needs to be shown to all ranks in the company since security is the responsibility of one and all. I seek a two-way communication from all on issues raised in this film. The Security Dept. had recently come out with a poster whose message is that men in uniform can also be terrorists. Insist on checking the identity of everyone concerned. Trust no one, take nothing for granted. Here, I would like to mention that units must ensure that retiring officers surrender their ID cards. Chairman’s remarks: All unit
in-charges – Refineries, Pipelines and Marketing, especially supply
locations, should show this film to everyone concerned in their units,
discuss and adopt the correct procedures indicated. All security procedures
have to be followed proactively. I request the Security Dept. to conduct
surprise inspections and audits on a regular basis. Chief Vigilance Officer: As an organisation fully committed to business ethics, we should never forget our value system in the pursuit of our targets. IndianOil’s Vigilance Dept is the first in the country to earn the ISO 9001-2000 (upgraded version) certification. As part of this, we have made all our targets quantifiable. Our focus is customer satisfaction - the Management, organisation and the CVC being our customers. During the year 2003-04, the Vigilance Dept. conducted 25 vigilance workshops and introductory programmes at Regions and units in which 477 officers participated. In line with the CVC’s instructions on e-procurement, most Divisions have started putting all the tender documents on the tenders website. The performance of Panipat refinery is particularly commendable. The Vigilance Dept. has brought about certain changes in the existing zonal contracts system in Marketing Division. Besides calling for tenders on package basis, empanelment will be done through public tendering. We are also working on a vendor rating system. Our new proposal for transport contracts has been sent to CVC for consent. We are also looking at plugging loopholes in acceptance of substandard material on third-party approval. As part of our efforts for two-way communication, we have made provision for IndianOil customers to register their queries and complaints directly with the Vigilance Department through the corporate website. Benefits include customer satisfaction and keeping the Management informed for corrective action. We are also seeking feedback from employees through
Intranets, and putting up a web page to educate them on vigilance matters. Treasury Operations:
News from Refineries Units:
News from Pipelines Units:
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