SUMMER INTERNSHIP PROJECT REPORT

On
“THE BRAND EXCELLENCE ON INDIAN OIL
CORPORATION”
At
INDIAN OIL CORPORATION LTD.

Submitted By
Neha Rawat
(02714201717)

In partial fulfillment of the requirement for the Degree

BATCHELOR OF BUSINESS ADMINISTRATION

At
Jagannath International Management School
(Vasant Kunj, Delhi)
Affiliated by Guru Gobind Singh Indraprastha University

1
 Declaration

I hereby declare that this internship report, submitted to Jagannath institute of

management studies (IPU) is a record of an official work done by me under the
guidance of Mr. Akhilesh Gupta, GM(S&D), NRO IOCL (MD).

The project is submitted in the partial fulfilment of the requirements for the award of
the degree of bachelor of business administration. The results embodied have not
been submitted to any other university or institute for the award of any degree or
diploma.

Mr. Akhilesh Gupta Neha Rawat

(General Manager) (Student)

2
 Acknowledgement

A formal statement of acknowledgement will hardly meet the ends of the justice in
the matter of expression of my deeply felt sincere and allegiant gratitude to all those
who encouraged me and helped me during my study.

I’m extremely grateful to Mr. Akhilesh Gupta for his guidance and encouragement
during the course of the internship despite his extremely busy schedule. I thank him
for giving me the opportunity to do this project and for his support throughout as a
mentor.

I would also like to thank Mr. Vinay Verma and the rest of the S&D team for all the
support they provided me during the internship.

I’m also very thankful to all my respondents who took time out of their busy
schedules and helped me in carrying out this project.

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Table of Content Page No.
1. Introduction 5

2. Indian Oil 15
2.1. Company Profile
2.2. Protochemicals
2.3. Oil Exploration & Production
2.4. Gas
2.5. Bio-Fuels
2.6. Wind Energy Business
2.7. Consultancy
2.8. Globalization Initiatives

3. Divisions 21
3.1. Pipeline
3.2. Marketing
3.3. Refining

4. Business 26
4.1. Research & Development Centre
4.2. Protochemicals
4.3. Gas
4.4. E & P

5. Major Projects 33

6. Supply Chain 37

7. Supply Chain Management 40

8. Crude Oil 46

9. Demand Forecasting 47

10. Modes of Transportation 50

11. Conclusion, Suggestion & Finding 55

12. Bibliography 57

Introduction
Country Energy Scenario

4
India's per capita energy and electricity consumptions are less than one tenth
of developed countries' per capita consumption. The disparities in urban vs
rural; southern, western and northern region vs eastern and north-eastern
region; and higher income vs lower income households are very high.
Unfortunately, the regions where large fossil and renewable energy sources are
available have lower per capita energy consumption. For sustainable and
equitable socio-economic development such a situation needs to change.
Given the country's over dependence on coal, large scale import of oil and gas,
difficulty in meeting the financial burden of import, environmental
consequences of large scale energy production, transformation, transportation
and use, it is not wise to strive to achieve the developed country level of
energy consumption. To improve the quality of life of Indian citizens, there is
no doubt that per capita energy consumption has to increase. Through
judicious approach, higher quality of life can be achieve with moderate increase in
energy consumption.

The country needs to make timely change of our emphasis on non-renewable

energy. Such a change in strategy calls for a paradigm shift in our development
approach, i.e. from a unsustainable growth oriented economic development to
an environmental friendly equitable development. Since three most serious
environment related problems (Global warming, acid rain and ozone layer
depletion) owe their origin to energy, it is in our national and global interest
that we minimise 'energy want' without sacrificing the 'energy need' for a
decent quality of life. A time-bound plan is essential to move to 'renewable
energy dominant decentralised system' from the existing 'non-renewable
energy focused, fossil fuel-centric centralised system'.

Background

Energy is essential for every activity of life. There is a strong positive

Correlation between energy use and the quality of life. At global level, per
capita income of a country is directly proportional to the per capita energy
consumption.

Table 1: Socio-economic Indicator for Selected Countries (2008

Country
India 1139.97 724.4 540 566
China 1325.64 1963.3 1600 2453

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Japan 127.69 40459.5 3880 8072
Germany 82.12 25513.6 4080 7148
US 304.53 38558.7 7500 13647
Sri Lanka 20.16 1198.9 440 409
Population
(Million)
GDP (at 2000
USD
ppp)/Capita
Country
India 1139.97 724.4 540 566
China 1325.64 1963.3 1600 2453
Japan 127.69 40459.5 3880 8072
Germany 82.12 25513.6 4080 7148
US 304.53 38558.7 7500 13647
Sri Lanka 20.16 1198.9 440 409
Population
(Million)
GDP (at 2000
USD
ppp)/Capita

Table 2: Per Capita GSDP and Electricity Consumption in the States and
Country (2006/07)

6
All of the energy sources that we use, except geothermal and nuclear energies,
are derived initially from solar energy. The fossil fuels (coal, oil, and natural gas)
are derived from organisms (primarily ocean plankton) that grew over
several hundreds of millions of years, storing the solar energy which reached
the earth’s surface. Renewable energies (hydro, biomass, and wind) are also
directly or indirectly derived from the energy of our sun. Solar energy, though
technically not renewable, is normally classified as such because it is effectively
inexhaustible on any practical timescale. Nuclear energy is derived from
uranium nuclei contained in the earth. This element was formed in heavy stars and
was scattered in space when those stars died.

Uranium nuclei were present in the dust from which the solar system was formed
about 4.5 billion years ago. The earth formed by accretion of such dust and some
thermal energy due to this process still remains. However, most of the
thermal energy contained in the earth comes from the decay of

7
radioactive nuclei present in the earth and initially produced in

Energy used can be broadly divided into commercial and non-commercial form.
Commercial energy, i.e. traded in the market, includes coal, oil, gas, electricity and
in some cases biomass. Non-commercial energy includes mostly
biomass that is used for cooking, predominantly by the rural communities.
Accurate and more recent data on non-commercial energy use in the country is
not available. In 2000, India's energy mix was 65% commercial and 35% non-
commercial (TEDDY 2010, pp 2). Considering the stage of transformation,
energy can also be classified as primary (coal, crude oil, natural gas, water,
geothermal, wind, solar heat, biomass, etc.), secondary (steam, chilled water,
petrol, diesel, biogas, hydro-electricity, solar electricity, etc.) and tertiary type
(electricity). Primary energy sources are those that present prior to any
human-induced modification. Higher energy sources are obtained from the
transformation of lower sources.

Higher form of energy has advantages of cleanliness, ease of operation and

control, and obviously expensive. A number of political, economic, social,
technological, legal and ecological factors play a critical role in ensuring access
to and use of right quantity and quality of energy by the people.

Energy Resources of India

8
India has all the possible sources of energy. These include all forms of non-
renewable and renewable energy sources. However, the energy sources are not
uniformly distributed. Table 3 indicates the energy sources in major locations
of the country.
According to BP Statistical Review of World Energy, India has the third largest
proven coal reserves totaling 58600 million Ton, and the country's reserve-to-
production ratio (R/P) is 105. In 2008/09, the coal and lignite production in
the country was 525 million Ton (TEDDY 2010, pp 4-5).
The total oil reserve in the country was estimated to be 786 million Ton in
2004-05. The proven reserve-to-production ratio was 23 in 2004-05 (Planning
Commission 2006). In 2009-10 the crude oil production was 33.67 million Ton
(TEDDY 2010, pp 86). In 2009-10, 79% of the country's consumption was
imported. The crude oil import bill amounting to Rs 3753 billion in 2009/10
put a huge burden on the economy

Energy Source Key location Remark

Coal Jharkhand, Odisha,
Chhatisgarh, West Bengal,
Andhra Pradesh, Madhya
Pradesh, Maharastra
Jharkhand, Odisha and
Chhatisgarh constitute
69% of total reserve as on
1 April 2010
Oil Onshore: Assam,
Nagaland, Gujarat,
Rajasthan
Offshore: Andhra Pradesh,
Tamil Nadu, Bombay High
94% of onshore production
from the four states in
2009-10.
Gas Assam, Nagaland, Gujarat,
Andhra Pradesh, Tamil
Nadu, Rajasthan, Tripura
89% of gas production
from Assam, Nagaland,
Gujarat, Andhra Pradesh,
Tamil Nadu
Hydro-electricity All the regions of India 76% identified capacity in
North-eastern and
Northern region
Electricity (hydro and
thermal)
All the regions of India Thermal power plants are
concentrated in coal rich
states
Uranium and Thorium Uranium in Jharkhand and

9
Rajasthan
Thorium in coastal Odisha,
Kerala, Andhra Pradesh
and Tamil Nadu
Wind Energy Karnataka, Gujarat, Tamil
Nadu, Rajasthan,
Maharastra, Kerala,
Madhya Pradesh, Andhra
Pradesh, Odisha, West
Bengal
77% of gross potential in
Karnataka, Gujarat, Tamil
Nadu, Rajasthan and
Maharastra
Biomass Energy All the regions of India
Solar Energy All the regions of India More prominent in
Rajasthan desert because
of cheap land availability
Geothermal Energy Chhatisgarh, Jammu and
Kashmir, Madhya Pradesh
Biogas Energy All the regions of Indi
According to the 2008 BP Statistical Energy Survey, in 2007, India had proven
natural gas reserves of 1.05 trillion cubic meters, 0.59% of the world total
(mbendi, 2010). In 2009-10 the natural gas production was 47.57 BCM
(TEDDY 2010, pp 89). The proven reserve-to-production ratio is 22. Based on
the discoveries made in recent years, the possibility of having large gas reserve
in the sedimentary basins of the country appears to be high.
The estimated deposits of uranium and thorium in the country are respectively
70,000 Ton and 360,000 Ton. Since available uranium is of poor quality (0.06
to 0.07% of the ore) the reactors are designed to take advantage of large
thorium deposits. The country has a plan to develop 20000 MW of nuclear
capacity by 2020 and 63000 MW by 2032. It is expected that by 2050, 25% of
electricity will be coming from nuclear power plants (TEDDY 2010, pp 122).
India has large potential for renewable energy exploitation. However, there is
a wide gap between the potential and actual utilisation (Table 4).

Technological constraints, high cost of production, weak institution and policy

measures are coming in the way of large scale use of renewable energy.

10
As on 30th June 2011, the country has a total installed electricity generating
capacity of 176,990 MW, besides a grid connected captive capacity of 19,509
MW. Out of it, 115,650 MW is thermal (96,743 of coal fired, 17,706 MW of
gas fired and 1200 MW of oil fired) power plants. Balance is contributed by
nuclear (4780 MW), hydro-electric (38,106 MW) and renewable energy
sources (18,455 MW) including small hydro, biomass gasifiers, urban and
industrial waste power and solar. Based on the sources of primary energy for
electricity production, the installed capacity mix of coal, hydro, gas, diesel,
nuclear and renewable energy are 55%, 21.5%, 10%, 0.7%, 2.7% and 10%
respectively (CEA, 2011)
Out of total generation of 766 Billion Units (BU) in 2009-10, the generation
mix of thermal, hydro and nuclear sources were respectively 640.5 BU (84%),
106.6 BU (14%) and 18.6 BU (2%). The supply constrained demand of
electricity had an energy deficit of 9.9% and peak power deficit of 12.6% in
2009/10 in the country. The state-wise electric energy and electric power
deficit during 2008/09 are shown in Figure 2 and Table 5 (TEDDY 2010, pp
167-170).

11
Energy Source Key location Remark

12
Coal Jharkhand, Odisha,
Chhatisgarh, West Bengal,
Andhra Pradesh, Madhya
Pradesh, Maharastra
Jharkhand, Odisha and
Chhatisgarh constitute
69% of total reserve as on
1 April 2010
Oil Onshore: Assam,
Nagaland, Gujarat,
Rajasthan
Offshore: Andhra Pradesh,
Tamil Nadu, Bombay High
94% of onshore production
from the four states in
2009-10.
Gas Assam, Nagaland, Gujarat,
Andhra Pradesh, Tamil
Nadu, Rajasthan, Tripura
89% of gas production
from Assam, Nagaland,
Gujarat, Andhra Pradesh,
Tamil Nadu
Hydro-electricity All the regions of India 76% identified capacity in
North-eastern and
Northern region
Electricity (hydro and
thermal)
All the regions of India Thermal power plants are
concentrated in coal rich
states
Uranium and Thorium Uranium in Jharkhand and
Rajasthan
Thorium in coastal Odisha,
Kerala, Andhra Pradesh
and Tamil Nadu
Wind Energy Karnataka, Gujarat, Tamil
Nadu, Rajasthan,
Maharastra, Kerala,
Madhya Pradesh, Andhra
Pradesh, Odisha, West
Bengal
77% of gross potential in
Karnataka, Gujarat, Tamil
Nadu, Rajasthan and
Maharastra
Biomass Energy All the regions of India
Solar Energy All the regions of India More prominent in
Rajasthan desert because
of cheap land availability

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Geothermal Energy Chhatisgarh, Jammu and
Kashmir, Madhya Pradesh
Biogas Energy All the regions of India
Energy Source Key location Remark
Coal Jharkhand, Odisha,
Chhatisgarh, West Bengal,
Andhra Pradesh, Madhya
Pradesh, Maharastra
Jharkhand, Odisha and
Chhatisgarh constitute
69% of total reserve as on
1 April 2010
Oil Onshore: Assam,
Nagaland, Gujarat,
Rajasthan
Offshore: Andhra Pradesh,
Tamil Nadu, Bombay High
94% of onshore production
from the four states in
2009-10.
Gas Assam, Nagaland, Gujarat,
Andhra Pradesh, Tamil
Nadu, Rajasthan, Tripura
89% of gas production
from Assam, Nagaland,
Gujarat, Andhra Pradesh,
Tamil Nadu
Hydro-electricity All the regions of India 76% identified capacity in
North-eastern and
Northern region
Electricity (hydro and
thermal)
All the regions of India Thermal power plants are
concentrated in coal rich
states
Uranium and Thorium Uranium in Jharkhand and
Rajasthan
Thorium in coastal Odisha,
Kerala, Andhra Pradesh
and Tamil Nadu
Wind Energy Karnataka, Gujarat, Tamil
Nadu, Rajasthan,
Maharastra, Kerala,
Madhya Pradesh, Andhra
Pradesh, Odisha, West
Bengal
77% of gross potential in
Karnataka, Gujarat, Tamil
Nadu, Rajasthan and
Maharastra

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Biomass Energy All the regions of India
Solar Energy All the regions of India More prominent in
Rajasthan desert because
of cheap land availability
Geothermal Energy Chhatisgarh, Jammu and
Kashmir, Madhya Pradesh
Biogas Energy All the regions of India
Oil Industries
The oil industry or the oil patch, includes the global processes
of exploration, extraction, refining, transporting (often by oil tankers and pipelines),
and marketing of petroleum products. The largest volume products of the industry
are fuel oil and gasoline (petrol). Petroleum (oil) is also the raw material for
many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides,
synthetic fragrances, and plastics. The extreme monetary value of oil and its
products has led to it being known as "black gold". The industry is usually divided
into three major components: upstream, midstream, and downstream.
Petroleum is vital to many industries, and is necessary for the maintenance of
industrial civilization in its current configuration, making it a critical concern for many
nations. Oil accounts for a large percentage of the world’s energy consumption,
ranging from a low of 32% for Europe and Asia, to a high of 53% for the Middle East.
Other geographic regions' consumption patterns are as follows: South and Central
America (44%), Africa (41%), and North America (40%). The world consumes 30
billion barrels (4.8 km³) of oil per year, with developed nations being the largest
consumers. The United States consumed 25% of the oil produced in 2007. The
production, distribution, refining, and retailing of petroleum taken as a whole
represents the world's largest industry in terms of dollar value.
Governments such as the United States government provide a heavy public subsidy
to petroleum companies, with major tax breaks at virtually every stage of oil
exploration and extraction, including the costs of oil field leases and drilling
equipment.
In recent years, enhanced oil recovery techniques — most notably multi-stage
drilling and hydraulic fracturing ("fracking") — have moved to the forefront of the
industry as this new technology plays a crucial and controversial role in new
methods of oil extraction.

History

Prehistory:
Petroleum is a naturally occurring liquid found in rock formations. It consists of a
complex mixture of hydrocarbons of various molecular weights, plus other organic
compounds. It is generally accepted that oil is formed mostly from the carbon rich
remains of ancient plankton after exposure to heat and pressure in Earth's crust over
hundreds of millions of years. Over time, the decayed residue was covered by layers

15
of mud and silt, sinking further down into Earth’s crust and preserved there between
hot and pressured layers, gradually transforming into oil reservoirs.
Early history:
Petroleum in an unrefined state has been utilized by humans for over 5000 years. Oil
in general has been used since early human history to keep fires ablaze and
in warfare.

Its importance to the world economy however, evolved slowly, with whale oil being
used for lighting in the 19th century and wood and coal used for heating and cooking
well into the 20th century. Even though the Industrial Revolution generated an
increasing need for energy, this was initially met mainly by coal, and from other
sources including whale oil. However, when it was discovered that kerosene could
be extracted from crude oil and used as a lighting and heating fuel, the demand for
petroleum increased greatly and by the early twentieth century had become the most
valuable commodity traded on world markets.
Modern history:
Imperial Russia produced 3,500 tons of oil in 1825 and doubled its output by mid-
century. After oil drilling began in what is now Azerbaijan in 1846 in Baku, two large
pipelines were built in the Russian Empire: the 833 km long pipeline to transport oil
from the Caspian to the Black Sea port of Batum (Baku-Batum pipeline), completed
in 1906, and the 162 km long pipeline to carry oil from Chechnya to the Caspian.
Batum is renamed to Batumi in 1936.
At the turn of the 20th century, Imperial Russia's output of oil, almost entirely from
the Apsheron Peninsula, accounted for half of the world's production and dominated
international markets. Nearly 200 small refineries operated in the suburbs of Baku
by 1884.[8] As a side effect of these early developments, the Apsheron Peninsula
emerged as the world's "oldest legacy of oil pollution and environmental negligence".
[9]
In 1846, Baku (Bibi-Heybat settlement) the first ever well drilled with percussion
tools to a depth of 21 meters for oil exploration. In 1878, Ludvig Nobel and
his Branobel company "revolutionized oil transport" by commissioning the first oil
tanker and launching it on the Caspian Sea.
Samuel Kier established America's first oil refinery in Pittsburgh on Seventh Avenue
near Grant Street, in 1853. One of the first modern oil refineries were built by Ignacy
Łukasiewicz near Jasło (then in the dependent Kingdom of Galicia and
Lodomeria in Central European Galicia), Poland in 1854–56.[10] These were initially
small, as demand for refined fuel was limited. The refined products were used in
artificial asphalt, machine oil and lubricants, in addition to Lukasiewicz’s kerosene
lamp. As kerosene lamps gained popularity, the refining industry grew in the area.
The first commercial oil well in Canada became operational in 1858 at Oil Springs,
Ontario (then Canada West). Businessman James Miller Williams dug several wells
between 1855 and 1858 before discovering a rich reserve of oil four metres below
ground.[12][13] Williams extracted 1.5 million litres of crude oil by 1860, refining much of
it into kerosene lamp oil. Some historians challenge Canada’s claim to North
America’s first oil field, arguing that Pennsylvania’s famous Drake Well was the
continent’s first. But there is evidence to support Williams, not least of which is that

16
the Drake well did not come into production until August 28, 1859. The controversial
point might be that Williams found oil above bedrock while Edwin Drake’s well
located oil within a bedrock reservoir. The discovery at Oil Springs touched off an oil
boom which brought hundreds of speculators and workers to the area. Canada's first
gusher (flowing well) erupted on January 16, 1862, when local oil man John Shaw
struck oil at 158 feet (48 m). For a week the oil gushed unchecked at levels reported
as high as 3,000 barrels per day.

The first modern oil drilling in the United States began in West Virginia and
Pennsylvania in the 1850s. Edwin Drake's 1859 well near Titusville, Pennsylvania, is
typically considered the first true modern oil well, and touched off a major boom. In
the first quarter of the 20th century, the United States overtook Russia as the world's
largest oil producer. By the 1920s, oil fields had been established in many countries
including Canada, Poland, Sweden, Ukraine, the United States, Peru and
Venezuela.
The first successful oil tanker, the Zoroaster, was built in 1878 in Sweden, designed
by Ludvig Nobel. It operated from Baku to Astrakhan. A number of new tanker
designs were developed in the 1880s.
In the early 1930s the Texas Company developed the first mobile steel barges for
drilling in the brackish coastal areas of the Gulf of Mexico. In 1937 Pure Oil
Company (now part of Chevron Corporation) and its partner Superior Oil
Company (now part of ExxonMobil Corporation) used a fixed platform to develop a
field in 14 feet (4.3 m) of water, one mile (1.6 km) offshore of Calcasieu Parish,
Louisiana. In early 1947 Superior Oil erected a drilling/production oil platform in 20 ft.
(6.1 m) of water some 18 miles off Vermilion Parish, Louisiana. It was Kerr-
McGee Oil Industries (now Anadarko Petroleum Corporation), as operator for
partners Phillips Petroleum (ConocoPhillips) and Stanolind Oil & Gas (BP), that
completed its historic Ship Shoal Block 32 well in November 1947, months before
Superior actually drilled a discovery from their Vermilion platform farther offshore. In
any case, that made Kerr-McGee's Gulf of Mexico well, Kermac No. 16, the first oil
discovery drilled out of sight of land. Forty-four Gulf of Mexico exploratory wells
discovered 11 oil and natural gas fields by the end of 1949.
During World War II (1939–1945) – control of oil supply from Baku and Middle East
played a huge role in the events of the war and the ultimate victory of the allies.
Cutting off the oil supply considerably weakened Japan in the latter part of the war.
After World War II ended, the countries of the Middle East took the lead in oil
production from the United States. Important developments since World War II
include deep-water drilling, the introduction of the Drillship, and the growth of a
global shipping network for petroleum relying upon oil tankers and pipelines. In 1949,
first offshore oil drilling at Oil Rocks (Neft Dashlari) in the Caspian Sea off Azerbaijan
eventually resulted in a city built on pylons. In the 1960s and 1970s, multi-
governmental organizations of oil–producing nations OPEC and OAPEC played a
major role in setting petroleum prices and policy. Oil spills and their clean-up have
become an issue of increasing political, environmental, and economic importance.
With the advent of hydraulic fracturing and other horizontal drilling techniques, shale
play has seen an enormous uptick in production. Areas such as the Permian Basin

17
and Eagle-Ford shales are now huge hotbeds of production for the largest oil
corporations in the United States.

Environmental Impact

Water pollution:
Some petroleum industry operations have been responsible for water
pollution through by-products of refining and oil spills. Though hydraulic fracturing
has significantly increased natural gas extraction, there is some belief and evidence
to support that consumable water has seen increased in methane contamination due
to this gas extraction. Leaks from underground tanks and abandoned refineries may
also contaminate groundwater in surrounding areas. Hydrocarbons that comprise
refined petroleum are resistant to biodegradation and have been found to remain
present in contaminated soils for years. To hasten this process, bioremediation of
petroleum hydrocarbon pollutants is often employed by means of aerobic
degradation. More recently, other bio remediate methods have been explored such
as phytoremediation and thermal remediation.

Air pollution:
The industry is the largest industrial source of emissions of volatile organic
compounds (VOCs), a group of chemicals that contribute to the formation of ground-
level ozone (smog). The combustion of fossil fuels produces greenhouse gases and
other air pollutants as by-products. Pollutants include nitrogen oxides, sulphur
dioxide, volatile organic compounds and heavy metals.
Researchers have discovered that the petrochemical industry can produce ground-
level ozone pollution at higher amounts in winter than in summer.

Climate change:
The greenhouse gases due to fossil fuels drive global warming. Already in 1959, at a
symposium organised by the American Petroleum Institute for the centennial of
the American oil industry, the physicist Edward Teller warned then of the danger of
global climate change. Edward Teller explained that carbon dioxide "in the
atmosphere causes a greenhouse effect" and that burning more fossil fuels could
"melt the icecap and submerge New York".

18
The Intergovernmental Panel on Climate Change, founded by the United Nations in
1988, concludes that human-sourced greenhouse gases are responsible for most of
the observed temperature increase since the middle of the twentieth century.
As a result of climate change concerns, many alternative energy enthusiasts have
begun using other methods of energy such as solar and wind, among others. This
recent view has some petroleum enthusiast’s sceptic about the true future of the
industry.

Future Shortages

As petroleum is a non-renewable natural resource the industry is faced with an

inevitable eventual depletion of the world's oil supply. The BP Statistical Review of
World Energy 2007 listed the reserve/production ratio for proven resources
worldwide. This study indicated a ratio of proven reserves to production in the Middle
East at 79.5 years, Latin America at 41.2 years and North America at 12 years. A
misguided interpretation of the ratio has led to many false predictions of imminent
world oil shortages since the early years of the oil industry in the 1800s. This has
been especially true in the United States, where the ratio of proved reserves-to-
production has been between 8 years and 17 years since 1920. Many have
mistakenly interpreted the result as the number of years before the oil supply is
exhausted. Such analyses do not take into account future reserves growth.
The Hubbert peak theory, which introduced the concept of peak oil, questions the
sustainability of oil production. It suggests that after a peak in oil production rates, a
period of oil depletion will ensue. Since virtually all economic sectors rely heavily on
petroleum, peak oil could lead to a partial or complete failure of markets.
According to market research by IBISWorld, biofuels (primarily ethanol, but also
biodiesel) will continue to supplement petroleum. However output levels are low, and
these fuels will not displace local oil production. More than 90% of the ethanol used
in the US is blended with gasoline to produce a 10% ethanol mix, lifting the oxygen
content of the fuel.

Indian Oil

19
COMPANY PROFILE

India’s flagship national oil company and downstream petroleum major, Indian Oil
Corporation Ltd. (IndianOil) is celebrating its Golden Jubilee in 2009. It is India's
largest commercial enterprise, with a sales turnover of Rs. 2, 85,337 crore – the
highest-ever for an Indian company – and a net profit of Rs. 2, 950 crore for the year
2008-09. IndianOil is also the highest ranked Indian company in the prestigious
Fortune 'Global 500' listing, having moved up 11 places to the 105th position in

2009. India’s Flagship National Oil Company

Incorporated as Indian Oil Company Ltd. on 30th June, 1959, it was renamed as
Indian Oil Corporation Ltd. on 1st September, 1964 following the merger of Indian
Refineries Ltd. (established 1958) with it. IndianOil and its subsidiaries account for
approximately 48% petroleum products market share, 34% national refining capacity
and 71% downstream sector pipelines capacity in India.

For the year 2008-09, the IndianOil group sold 62.6 million tonnes of petroleum
products, including 1.7 million tonnes of natural gas, and exported 3.64 million
tonnes of petroleum products.

The IndianOil Group of companies owns and operates 10

of India's 20 refineries with a combined refining capacity
of 60.2 million metric tonnes per annum (MMTPA, .i.e. 1.2
million barrels per day). These include two refineries of
subsidiary Chennai Petroleum Corporation Ltd.

The Corporation's cross-country network of crude oil and

product pipelines, spanning over 10,000 km and the
largest in the country, meets the vital energy needs of the consumers in an efficient,
economical and environment-friendly manner.

20
IndianOil is investing Rs. 43,400 crore (US $10.8 billion) during the period 2007-12 in
augmentation of refining and pipeline capacities, expansion of marketing
infrastructure and product quality upgradation as well as in integration and
diversification projects. Network Beyond Compare
As the flagship national oil company in the downstream sector, IndianOil reaches
precious petroleum products to millions of people everyday through a countrywide
network of about 35,000 sales points. They are backed for supplies by 167 bulk
storage terminals and depots, 101 aviation fuel stations and 89 Indane (LPGas)
bottling plants. About 7,335 bulk consumer pumps are also in operation for the
convenience of large consumers, ensuring products and inventory at their doorstep.

IndianOil operates the largest and the widest network of petrol & diesel stations in
the country, numbering over 18,278. It reaches Indane cooking gas to the doorsteps
of over 53 million households in nearly 2,700 markets through a network of about
5,000 Indane distributors.

IndianOil's ISO-9002 certified Aviation Service commands over 63% market share in
aviation fuel business, meeting the fuel needs of domestic and international flag
carriers, private airlines and the Indian Defence Services. The Corporation also
enjoys a dominant share of the bulk consumer business, including that of railways,
state transport undertakings, and industrial, agricultural and marine sectors.

Technology Solutions Provider Indian Oil's world-class R&D Centre is perhaps Asia's
finest. Besides pioneering work in lubricants formulation, refinery processes, pipeline
transportation and alternative fuels, the Centre is also the nodal agency of the Indian
hydrocarbon sector for ushering in Hydrogen fuel economy in the country. It has set
up a commercial Hydrogen-CNG station at an Indian Oil retail outlet in New Delhi
this year. The Centre holds 214 active patents, including 113 international patents.

Indian Oil has joined the league of global technology providers last year with the
selection of its in-house developed INDMAX technology (for maximising LPG as
yield) for the 4 MMTPA Fluidised Catalytic Cracking (FCC) unit at the Corporation's
upcoming 15 MMTPA grass roots refinery at Paradip in Orissa, as well as for the
FCC unit coming up at BRPL.

A wholly-owned subsidiary, Indian Oil Technologies Ltd., is engaged in

commercialising the innovations and technologies developed by Indian Oil's R&D
Centre. Customer First at Indian Oil, customers always get the first priority. New
initiatives are launched round-the-year for the convenience of the various customer
segments.

Exclusive XTRACARE petrol & diesel stations unveiled in select urban and semi-
urban markets offer a range of value-added services to enhance customer delight
and loyalty. Large format Swagat brand outlets cater to highway motorists, with
multiple facilities such as food courts, first aid, rest rooms and dormitories, spare
parts shops, etc. Specially formatted Kisan Seva Kendra outlets meet the diverse
needs of the rural populace, offering a variety of products and services such as
seeds, fertilisers, pesticides, farm equipment, medicines, spare parts for trucks and

21
tractors, tractor engine oils and pump set oils, besides auto fuels and kerosene.
SERVOXpress has been launched recently as a one-stop shop for auto care
services.

50 Golden Years in the Service of the Nation

India’s flagship national oil company and downstream petroleum major, Indian Oil
Corporation Ltd. (Indian Oil) is celebrating its Golden Jubilee during 30th June - 1st
September 2009.

Established as an oil marketing entity on 30th June 1959, Indian Oil Company Ltd.
was renamed Indian Oil Corporation Ltd. on 1st September 1964 following the
merger of Indian Refineries Ltd. (established in August 1958) with it. The integrated
refining & marketing entity has since grown into the country’s largest commercial

enterprise and India’s No.1 Company in the prestigious Fortune ‘Global 500’ listing of
the world’s largest corporates, currently at the 116th position. It is also the 18th
largest petroleum company in the world.

Indian Oil Today

From a fledgling company with a net worth of just Rs. 45.18 crore and sales of 1.38
million tonnes valued at Rs. 78 crore in the year 1965, Indian Oil has since grown
over 3000 times with a sales turnover of Rs. 285,337 crore, the highest ever for an
Indian company, and a net profit of Rs. 2,950 crore for 2008-09.

Set up with the mandate of achieving self-sufficiency in refining and marketing

operations for a nascent nation set on the path of economic growth and prosperity,
Indian Oil today accounts for nearly half of India’s petroleum consumption, reaching
precious petroleum products to millions of people everyday through a countrywide
network of around 35,000 sales points. They are backed for supplies by 167 bulk
storage terminals and depots, 101 aviation fuel stations and 89 Indane LPG bottling
plants. For the year 2008-09, Indian Oil sold 62.6 million tonnes of petroleum
products, including 1.7 million tonnes of natural gas.

The Indian Oil Group of companies owns and operates 10 of India’s 20 refineries
with a combined capacity of over 60 MMTPA, accounting for 34% of national refining
capacity, after excluding EOU refineries. Projects under execution will take the
capacity further to 80 MMTPA by the year 2011-12. Besides setting up state-of-the-
art facilities to raise product quality to global standards, Indian Oil has undertaken

22
chartering of ships for crude oil imports on its own and is expanding its basket of
crudes and upgrading its refineries to handle a wider array of crudes, including high-
sulphur types.

As a pioneer in laying of cross-country crude oil and product pipelines, the

Corporation crossed 10,000 km in pipeline length and about 70 MMTPA in
throughput capacity with the commissioning of the 330-km Paradip-Haldia crude oil
pipeline recently. Plans are under execution to add about 4,000 km more by the year
2012. In-house capabilities have enabled the Corporation undertake all pipeline
projects on its own and even offer turnkey expertise in techno-economic feasibility
studies, design and detailed engineering, project execution, operations, maintenance
and consultancy services.

Set up in 1972, Indian Oil's R&D Centre has blossomed into a world-class institution
and Asia's finest. Besides its pioneering work in lubricants formulation, refinery
processes, pipeline transportation and alternative fuels such as ethanol-blended
petrol and bio-diesel, the Centre is also the nodal agency of the Indian hydrocarbon
sector for ushering in Hydrogen fuel into the country. It has over 214 active patents
to its credit, including 113 international patents. Its current R&D focus is on the future
business needs of Indian Oil in the areas of petrochemicals, including polymers, and
alternative energy sources.

Petrochemicals

In petrochemicals, Indian Oil is envisaging an investment of Rs. 20,000 crore (US$ 4

billion) by the year 2011-12. Through the world’s largest single-train Linear Alkyl
Benzene (LAB) plant with an annual capacity of 1,20,000 tonnes set up at its Gujarat
Refinery, the Corporation has already captured a significant market share of LAB in
India, besides exporting the product to Indonesia, Turkey, Thailand, Vietnam, Norway
and Oman.

A world-scale Paraxylene/Purified Terephthalic Acid plant (annual capacities: PX -

3,63,000 tonnes, PTA – 5,53,000 tonnes) for polyester intermediates is already in
operation at Panipat, while a Naphtha Cracker with a capacity of 800,000 tonnes of
ethylene per annum, 6,00,000 TPA of Propylene, besides an annual production of
3,25,000 TPA of Mono Ethylene Glycol, 1,40,000 TPA of Butadiene, 6,50,000 TPA of
Polyethylene and 6,00,000 TPA of Polypropylene, equipped with downstream
polymer units is to be completed by December 2009 at Panipat.

A grassroots refinery at Paradip is proposed to be completed by the year 2011-12,

subsequently followed by the setting up of an integrated petrochemical plants with an
estimated investment of Rs 12,000 crore (US$ 2.5 billion) which will further

23
strengthen the Corporation’s presence in the sector.

Oil Exploration & Production

In E&P, Indian Oil has non-operator participating interest in seven oil & gas blocks
awarded under various NELP (New Exploration Licensing Policy) rounds and two
Coal Bed Methane blocks in India, in consortium with other companies. In addition,
Indian Oil has two onshore type ‘S’ NELP blocks, with 100% participating interest
(PI) and sole operatorship. It also has participating interest in an onshore block in
Assam and Arunachal Pradesh through a farm-in.

Overseas ventures of the Corporation includes two blocks (86 and 102/4) in Sirte
Basin and Areas 95/96 in Ghadames basin of Libya, Farsi Exploration Block in Iran,
onshore farm-in arrangements in one block in Gabon, one on land block in Nigeria,
one deep water offshore block in Timor-Leste and two onshore blocks in Yemen. In
all, Indian Oil has 12 domestic exploration blocks, including 2 blocks where gas
discoveries have been made and 9 overseas exploration blocks, & the Farsi block in
Iran where commerciality of gas discovery has been established. Indian Oil has
incorporated Ind-OIL Overseas Ltd. – a special purpose vehicle for acquisition of
overseas E&P assets – in Port Louis, Mauritius, in consortium with Oil India Ltd.
(OIL).

Gas

In natural gas business, Indian Oil sold 1.849 million tonnes of the product in 2008-
09. A technology innovation has been initiated to reach LNG (Liquefied Natural Gas)
directly to the doorstep of bulk consumers in cryogenic containers for industrial as
well as captive power applications.

To consolidate its city gas distribution (CGD) business, Indian Oil has tied up with
several players such as Adani Energy, Reliance Gas Corporation, OIL and ONGC,
etc., to set up joint ventures in various cities of India. The Corporation has also
entered into franchise agreements with CGD players such as Indraprastha Gas Ltd.,
Mahanagar Gas Ltd., Adani Energy Limited, GEECL, SITI Energy and GSPC Gas
Ltd. to market CNG through its retail outlets.

Bio-fuels

To straddle the complete bio-fuel value chain, Indian Oil formed a joint venture with

24
the Chhattisgarh Renewable Development Authority (CREDA) with an equity holding
of 74% and 26% respectively. Indian Oil CREDA Biofuels Ltd. has been formed for
carrying out farming, cultivating, manufacturing, production and sale of biomass, bio-
fuels and allied products and services.

A pilot project of jatropha plantation on 600 hectares of revenue wasteland is

underway in Jhabua district in Madhya Pradesh to ascertain the feasibility of revenue
land-based commercial biodiesel units and to develop benchmarks for plantation
costs and output.

Indian Oil has also signed an MoU with M/s Ruchi Soya Industries Ltd. to take up
contract farming on one lakh hectare of private and panchayat wasteland in the state
of Uttar Pradesh.

Wind Energy Business

Indian OiI has forayed into wind energy business with the commissioning of a Rs.
130 crore, 21 MW wind power project in the Kutch district of Gujarat. The cumulative
power generation from the 14 wind turbine generators has crossed 159 lakh KW
since commissioning in January 2009.

It has also commissioned two pilot solar lantern charging stations at its Kisan Seva
Kendra at Sathla near Meerut and Chokoni near Bareilly.

Consultancy

For over two decades now, Indian Oil has been providing technical and manpower
secondment services to overseas companies. Such services have been extended to
Emirates National Oil Company (ENOC), Kenya Pipeline Company and Aden
Refinery, Yemen. For the first time, SAP implementation / IT consultancy was
provided in Sri Lanka. Consultancy on pipelines was provided to Greater Nile
Petroleum Operating Company (GNPOC), Sudan.

Globalization Initiatives

Indian Oil has set up subsidiaries in Sri Lanka, Mauritius and the United Arab
Emirates (UAE), and is simultaneously scouting for new business opportunities in the

25
energy markets of Asia and Africa.

Divisions
Pipeline Division:

In India’s infrastructure, the petroleum pipelines form a crucial part enabling

sustained availability of petroleum products in all parts of the country for economic
growth. The pipelines transport petroleum products from refineries to demand areas
and crude oil from import terminals as well as domestic sources to the inland
refineries. India being a vast country, a wide network of pipelines becomes the
paramount requirement of transporting petroleum products to interiors from refineries
and crude oil to the land locked refineries.

It is an established fact that pipelines are preferred as a cost effective, energy

efficient, safe and environment friendly method of transportation for petroleum
products and crude oil and are playing a leading role in meeting the demand for
petroleum products in India. Economic growth and expansion of infrastructure in
India offer opportunities to better utilize the existing pipeline network in addition to
expand by constructing new pipelines.

Indian Oil, the pioneer in cross-country petroleum product pipeline in the Indian sub-
continent constructed and commissioned its first petroleum product pipeline,
Guwahati-Siliguri Pipeline in the year 1964. Since then Indian Oil has mastered the
art and technology of pipeline engineering. Over the last four decades the pipeline
network of Indian Oil has grown to 11,214 km.

Indian Oil’s sustained pursuit and implementation of proven safety and

environmental management systems have brought rich results. All operating pipeline
units have been accredited with ISO 9000 and ISO 14001 certificates.

Various initiatives in the field of project management, operations and maintenance

26
including training in countries like Oman, Ethiopia, Kuwait and Sudan have been
undertaken.

Today Indian Oil is well placed to provide seamless services in the entire spectrum of
petroleum pipelines covering techno-economic feasibility studies, design and
detailed engineering, project execution, operations and maintenance, consultancy
services in augmentation and modernization, etc.

Supervisory Control and Data Acquisition (SCADA) and application software

expertise are available from project implementation to commissioning including field
services, maintenance and operational support. Tanker handling, petroleum product
and crude oil accounting, quality control, ocean loss control, pigging procedure
development and analysis of pigging data, selection, testing and evaluation of drag
reducers, operations and maintenance of tank farm and pump stations are other
areas of expertise available with Indian Oil’s Pipelines Division.

Marketing:
Reaching out to a Billion Hearts

Indian Oil has one of the largest petroleum marketing and distribution networks in
Asia, with over 43,000 marketing touch points. Its ubiquitous fuel stations are located
across different terrains and regions of the Indian sub-continent. From the icy heights
of the Himalayas to the sun-soaked shores of Kerala, from Kutch on India's western
tip to Kohima in the verdant North East, Indian Oil is truly 'in every heart, in every
part'. Indian Oil's vast marketing infrastructure of petrol/diesel stations, Indane (LPG)
distributorships, SERVO lubricants & greases outlets and large volume consumer
pumps are backed by bulk storage terminals and installations, inland depots, aviation
fuel stations, LPG bottling plants and lube blending plants amongst others. The
countrywide marketing operations are coordinated by 16 State Offices and over 100
decentralised administrative offices.

Several landmark surveys continue to rate Indian Oil as the dominant energy brand
in the country and an enduring symbol for high quality petroleum products and
services. The heritage and iconic association that the brand invokes has been built
over four decades of commitment to uninterrupted supply line of petroleum products
to every part of the country, and unique products that cater not only to the functional
requirements but also the aspirational needs of millions of customers.
Indian Oil has been adjudged as one of India's top brands by UK-based Brand
Finance, an independent consultancy that deals with valuation of brands. It was also
listed as India's 'Most Trusted Brand' in the 'Gasoline' category in a Readers' Digest -
AC Nielsen survey. However, the value of the Indian Oil brand is not just limited to its
commercial role as an energy provider but straddles the entire value chain of gamut
of exploration & production, refining, transportation & marketing, petrochemicals &

27
natural gas and downstream marketing operations abroad. Indian Oil is a national
brand owned by over a billion Indians and that is a priceless value.
Enriched customer experience over time converts into customer's loyalty.
Automation, modernisation of the dispensing units, improving visual identity of fuel
stations, imparting training to dealers and customer attendants are key steps being
taken by Indian Oil to enhance customer experience. Indian Oil has modernised
more than 85 percent of eligible A &B site retail outlets and in the coming year, Indian
Oil is emphasising on achieving cent per cent modernization of the rest of fuel
stations.

Refining
Born from the vision of achieving self-reliance in oil refining and marketing for the
nation, Indian Oil has gathered a luminous legacy of more than 100 years of
accumulated experiences in all areas of petroleum refining by taking into its fold, the
Digboi Refinery commissioned in 1901.

Indian Oil controls 11 of India's 23 refineries. The group refining capacity is 80.7
million metric tonnes per annum (MMTPA) - the largest share among refining
companies in India. It accounts for 35% share of national refining capacity.

The strength of Indian Oil springs from its experience of operating the largest
number of refineries in India and adapting to a variety of refining processes along the
way. The basket of technologies, which are in operation in Indian Oil refineries
include: Atmospheric/Vacuum Distillation; Distillate FCC/Resid FCC; Hydrocracking;
Catalytic Reforming, Hydrogen Generation; Delayed Coking; Lube Processing Units;
Visbreaking; Merox Treatment; Hydro-Desulphirisation of Kerosene & Gasoil
streams; Sulphur recovery; Dewaxing, Wax Hydro finishing; Coke Calcining, etc.

The Corporation has commissioned several grassroots refineries and modern

process units. Procedures for commissioning and start-up of individual units and the
refinery have been well laid out and enshrined in various customised operating
manuals, which are continually updated.

Indian Oil refineries have an ambitious growth plan for capacity augmentation, de-
bottlenecking, bottom upgradation and quality upgradation.

On the environment front, all Indian Oil refineries fully comply with the statutory
requirements. Several Clean Development Mechanism projects have also been
initiated. To address concerns on safety at the work place, a number of steps were
taken during the year, resulting in reduction of the frequency of accidents.

28
Innovative strategies and knowledge-sharing are the tools available for converting
challenges into opportunities for sustained organisational growth. With strategies and
plans for several value-added projects in place, IndianOil refineries will continue to
play a leading role in the downstream hydrocarbon sector for meeting the rising
energy needs of our country.

INDIANOIL REFINING - INSTALLED CAPACITY

REFINERIES MMTPA

Digboi 0.65

Guwahati 1.00

Koyali 13.70

Barauni 6.00

Haldia 7.50

Mathura 8.00

Panipat 15.00

Bongaigaon 2.35

Paradip 15.00

Total 69.20

CPCL, Chennai 10.50

29
 REFINERIES MMTPA

CPCL, Narimanam 1.00

CPCL Total 11.50

Group Total (including CPCL) 80.70

NATIONAL REF. CAPACITY 230.07

SHARE % 35.08

BUSINESS
Research & Development Centre

In today's dynamic business environment, innovation through a sustained process of

Research & Development (R&D) is the only cutting edge tool for organisations to
thrive. With emphasis on development and speedy commercialisation of globally
competitive products, processes and technologies, the focus has now shifted from
R&D to RD&D (Research, Development & Deployment).

INDMAX, a hallmark technology developed by the Centre for maximisation of LPG

and light distillates from refinery residue, has been selected by IndianOil for setting
up a 4 million metric tonnes per annum (MMTPA) INDMAX unit as a part of the 15
MMTPA integrated refinery-cum-petrochemicals complex at Paradip, as well as at
Bongaigaon Refinery & Petrochemicals Ltd. (BRPL). The Centre has also licenced
its Diesel Hydrotreating technology to these two refineries. These successes have
catapulted IndianOil R&D into the elite league of multinational technology licensors.

Standing in the company of six worldwide technology holders for Marine Oils, with
the second global OEM (original equipment manufacturer) approval by Wartsila,
Switzerland, IndianOil's SERVO Marine Oils are now technically qualified to cater to
the lubrication requirements of more than 90% of the world's marine engine
population. In the power-generation segment, the newly developed SERVO Marine
K-Series was approved by Yanmar Co. Ltd. of Japan for use in their engines
operating on distillate fuels.

30
The R&D Centre continues to provide significant support to the IndianOil Group
refineries in product quality improvement, evaluation of catalysts and additives,
health assessment of catalysts, material failure analysis, troubleshooting and in
improving overall efficiency of operations. In-house developed FCC models are not
only being used in IndianOil refineries for process optimisation but a similar model
has also been sold to a multinational company. IndianOil has formed a joint venture
company, Indo Cat Pvt. Ltd., with Intercat, USA, for manufacturing 15,000 tonnes per
annum of FCC (fluidised catalytic cracking) catalysts & additives in India, for catering
to rising global demand.

As a step towards ensuring energy security for the nation, IndianOil has launched
several initiatives to exploit alternative sources of energy such as Hydrogen and Bio-
fuels. Subsequent to commissioning India's first experimental H-CNG (Hydrogen-
Compressed Natural Gas) dispensing unit at the R&D Centre campus at Faridabad,
demonstration projects are underway on use of H-CNG blends in heavy and light
vehicles. IndianOil is also setting up India's first commercial H-CNG dispensing
station at one of its retail outlets in Delhi in the year 2008 for fuelling experimental
vehicles running on H-CNG blends as well as on pure Hydrogen. IndianOil R&D is
also working on production, storage, transportation, distribution and
commercialisation of Hydrogen as an alternative fuel.

In Bio-fuels, besides spearheading commercialisation of Ethanol-Blended Petrol in

the country, IndianOil has been in the forefront of technology development for Bio-
diesel production from various edible and non-edible oils and its application in
vehicles. Pioneering studies by IndiaOil's R&D Centre established that Bio-diesel
produced from Jatropha seeds were at par with that produced from vegetable oils. In
the past few years, the R&D Centre has studied the entire value chain of Bio-diesel,
starting from Jatropha plantation to field trials on passenger cars, light commercial
vehicles and railway locos in collaboration with several vehicle manufacturers,
railways and state transport undertakings.

IndianOil, along with its subsidiary IndianOil Technologies Ltd., has been engaged in
successful marketing of in-house developed technologies, technical services and
training not only in India but abroad too.

IndianOil has, till date, invested close to Rs. 1,000 crore in setting up world-class
facilities at its R&D Centre for building world-class capabilities in analytical services,
engines, test rigs and pilot plants for all major refinery processes, catalyst
characterisation & development, etc. It plans to invest about Rs. 500 crore during the
period 2007-12 to maintain its leadership in downstream R&D activities in the
hydrocarbon sector. While continuing with cutting edge R&D in the core areas of
lubricants formulations, refinery process technologies and pipeline transportation, the
thrust would now be on commercialising the developed technologies and initiating
research in new frontier areas such as petrochemicals, residue gassification, coal-to-
liquid, gas-to-liquid, alternative fuels, synthetic lubricants, nano-technology, etc.
Through these R&D initiatives, Indian Oil will continuously enhance value for all its
stakeholders.

LubricantResearch

31
With over 3500 formulations of lubricating oil and greases, the SERVO product line
developed by the R&D Centre enjoys the largest market share in India. While
meeting the diverse needs of the Indian Industry as well as the Defence services,
Railways, public utilities and transportation sectors, the R&D Centre developed and
introduced many multigrade rail road oils and marine oils, making the Corporation
the sixth global player and the sole Indian presence in the select league of marine oil
technology developers the world over. SERVO Marine Oil series for DG sets has
been approved by Wartsila of Finland and Switzerland for their entire series of
Wartsila-Sulzur engines. Another accomplishment is the global approval from MAN
B&W of Denmark for Indian Oil's marine oils.

Technology Provider
In today's dynamic business environment, innovation through a sustained process of
Research & Development (R&D) is the only cutting edge tool for organisations to
thrive. With emphasis on development and speedy commercialisation of globally
competitive products, processes and technologies, the focus has now shifted from
R&D to RD&D (Research, Development & Deployment).

INDMAX, a hallmark technology developed by the Centre for maximisation of LPG

and light distillates from refinery residue, has been selected by IndianOil for setting
up a 4 million metric tonnes per annum (MMTPA) INDMAX unit as a part of the 15
MMTPA integrated refinery-cum-petrochemicals complex at Paradip, as well as at
Bongaigaon Refinery & Petrochemicals Ltd. (BRPL). The Centre has also licenced
its Diesel Hydrotreating technology to these two refineries. These successes have
catapulted IndianOil R&D into the elite league of multinational technology licensors

Standing in the company of six worldwide technology holders for Marine Oils, with
the second global OEM (original equipment manufacturer) approval by Wartsila,
Switzerland, IndianOil's SERVO Marine Oils are now technically qualified to cater to
the lubrication requirements of more than 90% of the world's marine engine
population. In the power-generation segment, the newly developed SERVO Marine
K-Series was approved by Yanmar Co. Ltd. of Japan for use in their engines
operating on distillate fuels.

The R&D Centre continues to provide significant support to the IndianOil Group
refineries in product quality improvement, evaluation of catalysts and additives,
health assessment of catalysts, material failure analysis, troubleshooting and in
improving overall efficiency of operations. In-house developed FCC models are not
only being used in IndianOil refineries for process optimisation but a similar model
has also been sold to a multinational company. IndianOil has formed a joint venture
company, Indo Cat Pvt. Ltd., with Intercat, USA, for manufacturing 15,000 tonnes per
annum of FCC (fluidised catalytic cracking) catalysts & additives in India, for catering
to rising global demand.

As a step towards ensuring energy security for the nation, IndianOil has launched
several initiatives to exploit alternative sources of energy such as Hydrogen and Bio-

32
fuels. Subsequent to commissioning India's first experimental H-CNG (Hydrogen-
Compressed Natural Gas) dispensing unit at the R&D Centre campus at Faridabad,
demonstration projects are underway on use of H-CNG blends in heavy and light
vehicles. IndianOil is also setting up India's first commercial H-CNG dispensing
station at one of its retail outlets in Delhi in the year 2008 for fuelling experimental
vehicles running on H-CNG blends as well as on pure Hydrogen. IndianOil R&D is
also working on production, storage, transportation, distribution and
commercialisation of Hydrogen as an alternative fuel .

In Bio-fuels, besides spearheading commercialisation of Ethanol-Blended Petrol in

the country, IndianOil has been in the forefront of technology development for Bio-
diesel production from various edible and non-edible oils and its application in
vehicles. Pioneering studies by IndiaOil's R&D Centre established that Bio-diesel
produced from Jatropha seeds were at par with that produced from vegetable oils. In
the past few years, the R&D Centre has studied the entire value chain of Bio-diesel,
starting from Jatropha plantation to field trials on passenger cars, light commercial
vehicles and railway locos in collaboration with several vehicle manufacturers,
railways and state transport undertakings.

IndianOil, along with its subsidiary IndianOil Technologies Ltd., has been engaged in
successful marketing of in-house developed technologies, technical services and
training not only in India but abroad too.

IndianOil has, till date, invested close to Rs. 1,000 crore in setting up world-class
facilities at its R&D Centre for building world-class capabilities in analytical services,
engines, test rigs and pilot plants for all major refinery processes, catalyst
characterisation & development, etc. It plans to invest about Rs. 500 crore during the
period 2007-12 to maintain its leadership in downstream R&D activities in the
hydrocarbon sector. While continuing with cutting edge R&D in the core areas of
lubricants formulations, refinery process technologies and pipeline transportation, the
thrust would now be on commercialising the developed technologies and initiating
research in new frontier areas such as petrochemicals, residue gassification, coal-to-
liquid, gas-to-liquid, alternative fuels, synthetic lubricants, nano-technology, etc.
Through these R&D initiatives, IndianOil will continuously enhance value for all its
stakeholders.

Technologies & Services

IndianOil offers services in the field of Research and Development. The clientele
includes defence, railways, automotive oil manufactures, textile producers, industries
producing steel, ferroalloys, power plant industries and multinational companies
involved in the business of petroleum products, petrochemicals and bio fuels etc.
IndianOil R&D Centre also provides expertise to universities, IITs and other
academic institutions for collaborative programmes and joint research ventures.

IndianOil has wide-ranging expertise in setting up and operating greenfield refineries

and brownfield expansions. It has pioneered pipeline transportation knowhow in
India, and has over four decades of experience in putting up marketing infrastructure
across the sub-continent, to reach petroleum products to millions of people everyday.
Backed by cutting edge R&D that offers innovative products, technologies and

33
 services cover the entire gamut of downstream operations.

IndianOil has been lending its expertise for nearly two decades to various countries
in several areas of refining, marketing, transportation, training and R&D. These
include Sri Lanka, Kuwait, Bahrain, Iraq, Abu Dhabi, Tanzania, Ethiopia, Algeria,
Nigeria, Nepal, Bhutan, Maldives, Malaysia and Zambia.

IndianOil's capabilities in the downstream sector of operations in the oil sector

include; technical and consultancy services, operation & maintenance, techno-
economic feasibility/special studies, turnaround maintenance – planning, monitoring
& execution, inspection, quality control: benchmarking, shipping and commercial,
logistics, research & development, safety and industrial hygiene, quality auditing/
management, materials management, training.

These services are rendered through the coordination division of the R&D Centre.
Customers may contact DGM Coordination, to reach the concerned personnel at
R&D Centre. To get an insight into the world of IndianOil's capabilities.

Petrochemicals

Petrochemical new growth path:

IndianOil is continuously striving for growth through integration of its core business
with opportunities available in the petrochemicals sector.

The LAB unit (Linear Alkyl Benzene, used in the manufacture of detergents) at
Gujarat Refinery achieved over 100% capacity utilisation in the year 2007-2008.

The product has been successfully marketed within India, attaining a significant
market share, and has also been exported.

An integrated PX/PTA plant at Panipat Refinery has commenced commercial

production since June 2006.

IndianOil is close to commissioning a world scale Naphtha Crackerproject along with

downstream polymer units at Panipat. In addition, activities for setting up integrated
complex of refinery and petrochemicals at Paradip in Orissa have also progressed
significantly

LAB (Linear Alkyl Benzene):

The year 2004-05 marked IndianOil’s big-ticket entry into petrochemicals with the
commissioning of the country’s largest Linear Alkyl Benzene (LAB) plant at Gujarat
Refinery in August 2004. It is also the largest grassroots single train Kerosene-to-
LAB unit in the world, with an installed capacity of 1,20,000 metric tonnes per annum
(MTPA). Currently, two grades of LAB – high molecular weight and low molecular
weight – are being produced. The quality of the LAB produced here has found wide

34
acceptance in the domestic and overseas markets

Built at a cost of Rs. 1,248 crore and commissioned in a record 24 months’ time, the
plant produces superior quality LAB for manufacturing environment-friendly
biodegradable detergents, using state-of-the-art Detal technology from M/s UOP,
USA. The key raw materials for the plant, catering to domestic as well as export
market requirements meeting the latest and most stringent quality standards, are
Kerosene and Benzene produced at Koyali Refinery.

PX/PTA (Paraxylene / Purified Terephthalic Acid)

The PX/PTA project marks IndianOil’s major step towards forward integration in the
hydrocarbon value chain by manufacturing Paraxylene (PX) from Naphtha and
thereafter, converting it into Purified Terephthalic Acid (PTA). The integrated
Paraxylene/Purified Terephthallic Acid (PX/PTA) complex was built at a cost of Rs.
5,104 crore within the Panipat Refinery in Haryana

The PTA Plant is the single largest unit in India with a world-scale capacity of
5,53,000 MTPA, achieving economy of scale. The process package for the PTA plant
was prepared by erstwhile M/s Dupont, UK (now M/s. Invista) and that of the
Paraxylene Unit was prepared by M/s UOP, USA. M/s EIL and M/s Toyo Engineering
were the Project Management Consultants (PMC) for executing the PTA and PX
respectively.

The Paraxylene plant is designed to process 5,00,000 MTPA of heart-cut Naphtha to

produce about 3,60,000 MTPA of PX. Naphtha is sourced from IndianOil’s Panipat
and Mathura refineries, for which Naphtha splitter units are set up at the respective
refineries. The PTA unit produces 5,53,000 MTPA of Purified Terephthalic Acid from
Paraxylene. Technologically, the plant is one of the most advanced in the country.

Naphtha Cracker:

The Naphtha Cracker and downstream polymer units are being set up at Panipat at
a cost of Rs. 14,400 crore. An MoU has been signed in June 2004 with the
Government of Haryana, who are providing fiscal incentives and concessions for the
project

Planned to be completed by end 2009, this project envisages setting up of a

Naphtha Cracker based on captive utilisation of Naphtha from Panipat, Mathura and
Koyali refineries of IndianOil. The Naphtha Cracker complex envisages other
downstream polymer units utilising intermediates ethylene and propylene to be
generated from the Cracker.

The Naphtha Cracker unit is designed to produce 857,000 tonnes per annum of

35
ethylene and 650,000 tonnes per annum of Propylene, based on which other
downstream polymer units are being commissioned to produce Linear Low Density
Polyethylene (LLDPE), High Density Polyethylene (HDPE), Polypropylene (PP) and
the speciality chemical Mono Ethylene Glycol (MEG). The capacities of the Naphtha
Cracker and polymer units are kept at world scale with the products ranging from
commodity to niche grades

Gas
Drawing on its vast experience and carefully nurtured skill sets, Indian Oil is
focussing on transforming itself by translating global business opportunities into
successful commercial initiatives. Indian Oil has already made successful forays in
diverse areas such as petrochemicals, natural gas, exploration & production, bio-
fuels, etc., and with the passage of time, its capability to successfully establish itself
in new areas of business is slowly but surely strengthening.

Gas market in India is slowly opening up and in the next 5- 10 years’ time, we are
going to witness enhanced availability of Gas not only from imported sources but
also from Indigenous sources.

Natural gas business presents immense opportunities for Indian Oil and has already
started generating significant revenues for the Corporation. The Corporation is in the
process of sourcing more LNG and expanding its customer base. Within the gas
business, city gas distribution is seen as a focus area for rapid growth. Green Gas
Ltd., Indian Oil's joint venture with GAIL (India) Ltd., is operational in Agra and
Lucknow and plans to expand to other cities in western UP. IndianOil is also in the
process of forming more joint ventures for city gas distribution in other parts of the
country.

As a supplier, Indian Oil would be completely responsible for delivery of gas to the
customer’s premises. The transportation services of the company engaged in
transportation of gas would be hired to ensure deliveries. World over this model is in
use wherein through one transportation system, multiple suppliers operate.

IndianOil has inherent strengths and tremendous business capabilities spread over
all parts of the country. Its current business position and relationship with existing
customers can be leveraged significantly to position itself as a gas supplier with a
back up comfort of liquid fuels, which no other company can offer so far. Gas
marketing is going to be a focused activity in future.

E&P

Forays into E & P

In keeping with the dynamic business environment, Indian Oil's business

development initiatives continue to be driven by the emerging opportunities and
guided by its corporate vision of becoming a diversified, transnational, integrated
energy company. Its business strategy focusses primarily on expansion across the
hydrocarbon value chain, both within and outside the country, while simultaneously

36
revisiting its strategic plans and undertaking mid-course corrections, wherever
necessary.

To enhance upstream integration, Indian Oil has been pursuing exploration &
production activities both within and outside the country in collaboration with
consortium partners. Recently, Indian Oil was associated with two successful
discoveries in oil exploration blocks, one each in India and Iran. Commercial
appraisal of these blocks is underway. Indian Oil also farmed into an exploration
block in Gabon along with Oil India Ltd. (OIL) as the operator. In addition, the
IndianOil-OIL combine acquired participating interest in a block in Nigeria. The
Corporation, in consortium with OIL, Kuwait Energy and Medco Energy of Indonesia
also succeeded in acquiring participating interest in two exploration blocks in Yemen,
awarded through international bidding.

At home, IndianOil and its consortium partners were awarded two exploration blocks
in Mumbai offshore in Round-VI of bidding under the New Exploration Licencing
Policy (NELP). With this, IndianOil now has an upstream portfolio consisting of
participatory interest in eight blocks under NELP and two blocks under CBM, in
addition to two farm-in blocks in northeast India and seven blocks overseas.

Oil & gas will continue to be the principal energy source in the growing economy. The
years ahead, therefore, hold great opportunities and challenges. Guided by its
experience and inherent spirit, IndianOil shall overcome all the challenges as it has
been consistently doing in the past, and scale up its operations to capitalise on all
opportunities and realise its corporate vision.

Indian Oil Major Projects

Indian Oil continues to lay emphasis on infrastructure development. Towards this

end, a number of schemes have been initiated with increasing emphasis on project
execution in compressed schedules as per world benchmarking standards. Schemes
for improvement and increased profitability through debottlenecking / modifications /
introduction of value added products are being taken up in addition to grassroots
facilities. Project systems have been streamlined in line with ISO standards.

GRASSROOTS REFINERY PROJECT AT PARADIP (ORISSA)

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Project Cost: Rs. 29,777.00 crore
Expected Commissioning: March-November, 2012
Benefit: The project will help in partially meeting the deficit in distillates viz. LPG,
Naphtha, MS, Jet/Kero, Diesel and other products, in the eastern part of the country.
The complex will generate intermediate petrochemicals feedstock.
Brief Description: A 15 MMTPA refinery is being constructed at Paradip in Orissa.
The refinery will have, apart from a Crude and Vacuum Distillation Unit, a
Hydrocracking Unit, a Delayed Coker Unit and other secondary processing facilities.
This will be the most modern refinery in India with a nil-residue production, and the
products would meet stringent specifications. IndianOil has taken over 3344 acres
of land for the project and necessary infrastructure development jobs prior to setting
up of the main refinery are in progress.

RESIDUE UPGRADATION AND MS/HSD QUALITY IMPROVEMENT PROJECT AT

GUJARAT REFINERY

Project Cost: Rs. 5,882.00 crore

Expected Commissioning: January, 2010
Benefit: The objectives of the project are multifold. It will ensure compliance to
product quality requirement of MS/HSD to EURO-III/IV levels, enable processing of
increased quantity of high sulphur crude, and improvement in distillate yield.
Brief Description: The project envisages setting up of a number of units like VGO-
HDT, ATF-Merox, FCC-Merox, LPG-Merox, ISOM, Coker, DHDT, HGU (PDS) and
SRU.

IMPROVEMENT IN DIESEL QUALITY AND CAPACITY EXPANSION AT HALDIA

REFINERY (WEST BENGAL)

Project Cost: Rs. 2,869.00 crore

Expected Commissioning: January, 2010
Benefit: Improvement in quality of HSD conforming to Euro-II/Euro-IV equivalent
norms. In addition, it will improve the distillate yield and crude processing capacity
of the refinery.
Brief Description: The project comprises installation of facilities for improvement in
Diesel quality and Distillate yield (Hydrocracker) at Haldia, and capacity expansion
of the Refinery from 6 MMTPA to 7.5 MMTPA. This involves Once-through
Hydrocracking Unit (OHCU), Hydrogen Unit, Sulphur Recovery Units, revamp of
Crude Distillation Units, related utilities and offsite facilities.

NAPHTHA CRACKER AND POLYMER COMPLEX AT PANIPAT (HARYANA)

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Project Cost: Rs. 14,439.00 crore
Expected Commissioning: February, 2010
Benefit: This project is the cornerstone for IndianOil's entry into petrochemicals
thereby creating a new business line for growth. For the state of Haryana, this
project shall lay the foundation for creation of a world-class petrochemicals hub,
which will engender significant industrial activity in the coming years.
Brief Description: The project envisages setting up of a Naphtha Cracker based on
captive utilisation of naphtha from Panipat, Mathura and Koyali refineries of
IndianOil. With a capacity of 800,000 MT/year of ethylene production, the Cracker
Complex will have associated units viz. hydrogenation, butadiene extraction,
benzene extraction etc. besides downstream polymer units like Swing Unit
(LLDPE/HDPE), a dedicated HDPE Unit, Polypropylene Unit and MEG Unit.

MS QUALITY UPGRADATION PROJECT AT PANIPAT REFINERY (HARYANA)

Project Cost: Rs. 1,131.00 crore

Expected Commissioning: December, 2009
Benefit: The implementation of this project will improve the quality of MS to conform
to Euro-II/Euro-IV equivalent norms.
Brief Description: The major process units under this project are PENEX
(Isomerisation), Naphtha HTU, Reformate Splitter and FCC Gasoline
Desulpurisation Unit.

FCC GASOLINE DESULPHURISATION UNIT AT MATHURA REFINERY (UTTAR

PRADESH)

Project Cost: Rs. 348.00 crore

Expected Commissioning: January, 2010
Benefit: The implementation of this project will improve the quality of MS to conform
to Euro-IV equivalent norms.
Brief Description: In this project a FCC Gasoline Desulpurisation Unit will be
installed.

MS QUALITY UPGRADATION PROJECT BARAUNI REFINERY (BIHAR)

Project Cost: Rs. 1,492.00 crore

Expected Commissioning: June, 2010
Benefit: The implementation of this project will improve the quality of MS to conform
to Euro-III equivalent norms.
Brief Description: The major process units under this project are Isomerisation,
Naphtha Hydrotreater, Reformate Splitter, FCC Gasoline Desulpurisation Unit and
Hydrogen Generation Unit.

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MS QUALITY UPGRADATION PROJECT AT GUWAHATI REFINERY (ASSAM)

Project Cost: Rs. 372.00 crore

Expected Commissioning: June, 2010
Benefit: The implementation of this project will improve the quality of MS to conform
to Euro-III equivalent norms.
Brief Description: The major process units under this project are Isomerisation,
Light Naphtha Splitter, Naphtha Hydrotreater and Indmax Gasoline Splitter.

MS QUALITY UPGRADATION PROJECT AT DIGBOI REFINERY (ASSAM)

Project Cost: Rs. 356.00 crore

Expected Commissioning: June, 2010
Benefit: The implementation of this project will improve the quality of MS to conform
to Euro-III equivalent norms.
Brief Description: The major process units under this project are Isomerisation,
Naphtha Splitter, Naphtha Hydrotreater and Reformate Splitter.

DADRI-PANIPAT R-LNG SPUR PIPELINE

Project Cost: Rs. 298.00 crore

Expected Commissioning: January, 2010
Benefit: The 132 km long 30 inch diameter spurline carrying regassified LNG (R-
LNG) will stretch from GAIL India’s Dadri terminal in UP to Panipat.
Brief Description: The proposed R-LNG pipeline will provide for an economical
means of feeding natural gas to Panipat refinery.

PANIPAT REFINERY EXPANSION FROM 12 MMTPA TO 15 MMTPA

Project Cost: Rs. 1,007.83 crore

Expected Commissioning: December, 2009 / August, 2010
Benefit: To meet the growing deficit of petroleum products in the high demand
Northwest region of India.
Brief Description: The project consists of capacity revamp of Crude and Vacuum
Distillation Units (CDU / VDU), Once through Hydrocracking Unit (OHCU), Delayed
Coking Unit, and installation of second stage reactors in Diesel Hydrotreating Unit
(DHDT).

CHENNAI - BANGALORE PRODUCT PIPELINE

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Project Cost: Rs. 273.00 crore
Expected Commissioning: December, 2009
Benefit: The pipeline will facilitate effective evacuation of products from CPCL
refinery in Chennai and ensure uninterrupted, regular and economical transportation
of petroleum products to Bangalore-fed areas in a cost-effective manner.
Brief Description: Project consists of laying 14/12-inch diameter 290 km long
product pipeline from CPCL refinery, Chennai to existing TOP at Devanagonthi
(Bangalore).

SUPPLY CHAIN
A supply chain is a network between a company and its suppliers to produce and
distribute a specific product to the final buyer. This network includes different
activities, people, entities, information, and resources. The supply chain also
represents the steps it takes to get the product or service from its original state to the
customer.
Supply chains are developed by companies so they can reduce their costs and
remain competitive in the business landscape.
Supply chain management is a crucial process because an optimized supply chain
results in lower costs and a faster production cycle.

Understanding Supply Chains

A supply chain involves a series of steps involved to get a product or service to the
customer. The steps include moving and transforming raw materials into finished
products, transporting those products, and distributing them to the end user. The
entities involved in the supply chain include producers, vendors, warehouses,
transportation companies, distribution centers, and retailers.
The elements of a supply chain include all the functions that start with receiving an
order to meeting the customer's request. These functions include product
development, marketing, operations, distribution, finance, and customer service.
As mentioned above, supply chain management is a very important part of the
business process. There are many different links in this chain that require a lot of skill
and expertise. When supply chain management is done effectively, it can lower a

41
company's overall costs and boost profitability. If one link breaks down, it affects the
rest of the chain and can be costly to a company.

Origins
Indian Oil owes its origins to the Indian government's conflicts with foreign-owned oil
companies in the period immediately following India's independence in 1947. The
leaders of the newly independent state found that much of the country's oil industry
was effectively in the hands of a private monopoly led by a combination of British-
owned oil companies Burmah and Shell and U.S. companies Standard-Vacuum and
Caltex.

An indigenous Indian industry barely existed. During the 1930s, a small number of
Indian oil traders had managed to trade outside the international cartel. They
imported motor spirit, diesel, and kerosene, mainly from the Soviet Union, at less
than world market prices. Supplies were irregular, and they lacked marketing
networks that could effectively compete with the multinationals.

Burmah-Shell entered into price wars against these independents, causing protests
in the national press, which demanded government-set minimum and maximum
prices for kerosene--a basic cooking and lighting requirement for India's people--and
motor spirit. No action was taken, but some of the independents managed to survive
until World War II, when they were taken over by the colonial government for wartime
purposes.

During the war, the supply of petroleum products in India was regulated by a
committee in London. Within India, a committee under the chairmanship of the
general manager of Burmah-Shell and composed of oil company representatives
pooled the supply and worked out a set price. Prices were regulated by the
government, and the government coordinated the supply of oil in accordance with
defense policy.

Components of the Supply Chain

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Push vs. Pull Supply Chain
A company's supply chain stretches from the factory where its products are made to
the point the products are in customer hands. Supply chain strategy determines
when product should be fabricated, delivered to distribution centers and made
available in the retail channel. Under a pull supply chain, actual customer demand
drives the process, while push strategies are driven by long-term projections of
customer demand.

Push and pull strategies both work within the supply chain. A typical supply chain has
five different steps. Products start out as raw materials. In the second step, the
manufacturer takes raw materials and turns them into products.

The third step occurs when the finished products get shipped to the distribution
facility. In step four, the distribution facility uses the products to stock a retail store or,

43
in the case of an e-commerce business, a fulfillment center. In the final step, the
products get delivered to the hands of the consumer.
Push Supply Chain Strategies:

A push-model supply chain is one where projected demand determines what enters
the process. For example, warm jackets get pushed to clothing retailers as summer
ends and the fall and winter seasons start. Under a push system, companies have
predictability in their supply chains since they know what will come when – long
before it actually arrives. This also allows them to plan production to meet their
needs and gives them time to prepare a place to store the stock they receive.
Pull Supply Chain Strategies:

A pull strategy is related to the just-in-time school of inventory management that

minimizes stock on hand, focusing on last-second deliveries. Under these strategies,
products enter the supply chain when customer demand justifies it. One example of
an industry that operates under this strategy is a direct computer seller that waits
until it receives an order to actually build a custom computer for the consumer.

With a pull strategy, companies avoid the cost of carrying inventory that may not sell.
The risk is that they might not have enough inventory to meet demand if they cannot
ramp up production quickly enough.

The Push vs. Pull Model

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 Supply Chain Management (SCM)
Supply chain management (SCM) is the broad range of activities required to plan,
control and execute a product's flow, from acquiring raw materials and production
through distribution to the final customer, in the most streamlined and cost-effective
way possible.

SCM encompasses the integrated planning and execution of processes required to

optimize the flow of materials, information and financial capital in the areas that
broadly include demand planning, sourcing, production, inventory management and
storage, transportation -- or logistics -- and return for excess or defective products.
Both business strategy and specialized software are used in these endeavors to
create a competitive advantage.

Supply chain management is an expansive, complex undertaking that relies on each

partner -- from suppliers to manufacturers and beyond -- to run well. Because of this,
effective supply chain management also requires change management, collaboration
and risk management to create alignment and communication between all the
entities.

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In addition, supply chain sustainability -- which covers environmental, social and
legal issues, in addition to sustainable procurement -- and the closely related
concept of corporate social responsibility -- which evaluates a company's effect on
the environment and social well-being -- are areas of major concern for today's
companies.

Indian Oil Corporation Limited (IOCL) has implemented Honeywell’s Supply Chain
Management solution to integrate and optimize the supply chain of five separate
refineries. The project has resulted in the following benefits:

• Integrated supply chain planning which optimizes the entire supply chain.
• Optimal distribution planning considering transportation costs, taxes and duties and
transportation constraints.
• Crude selection and allocation which takes into account product demands, refinery
capabilities and effect of crudes already procured,
• Optimal refinery production planning considering crude assays, unit capacities,
product specifications and demands; and feedstock availability.

The Supply Chain Management solution provided by Honeywell consisted of the

following modules:
• Demand planning: for demand forecasting and aggregation of the final demand
numbers
• Integrated planning: for the complete IOCL refining supply chain
• Distribution planning: for generating operational plans for allocation and product
distribution
• Refinery production planning: for generating operational plans for production

After serious consideration and an arduous evaluation process, IOCL selected

Honeywell’s Supply Chain Management solution. At the heart of this solution is
Honeywell’s Refinery and Petrochemical Modeling System (RPMS) known for its
integrated planning features, cost effective implementation, passion and people
commitment and unique investment modeling capabilities. The models developed
with Honeywell’s solution covered the entire supply chain of IOCL from crude
purchases at the refinery gate or ports to product distribution at the terminals. “The
scope of this problem was undocumented and we knew we needed not just a
vendor, but a true partner to invest in and help undertake such a challenging project
– we found that partner in Honeywell,” said Basu.

Honeywell Supply Chain Solution

Honeywell’s Supply Chain solution effectively helps manage business complexity

and optimize the supply chain. With real time knowledge collaboration and visibility
across the enterprise, decisions are made more quickly and disruptions minimized.
Internet-enabled supply chain applications dynamically model the supply chain, and
when combined with advanced execution solutions, substantially improves
profitability through measurable inventory and product cost reductions. These
benefits are realized through faster reaction to market opportunities, improved
customer relations, and true collaboration with suppliers and customers.

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Integrated with Honeywell’s advanced applications and the Experion control
platform, these products offer an integrated suite of advanced forecasting, planning,
and scheduling to manage the supply chain. An integrated framework supports
various modules and state-of-the art tools for a broad range of business decisions.
These enable the business to monitor the condition of the supply chain and provide
immediate feedback and exception notices.

Logistics vs. Supply Chain Management

The terms supply chain management and logistics are often confused or used
synonymously. However, logistics is a component of supply chain management. It
focuses on moving a product or material in the most efficient way so it arrives at the
right place at the right time. It manages activities such as packaging, transportation,
distribution, warehousing and delivery.

In contrast, SCM involves a more expansive range of activities, such as strategic

sourcing of raw materials, procuring the best prices on goods and materials, and
coordinating supply chain visibility efforts across the supply chain network of
partners, to name just a few.

LOGISTICS DRIVERS OF SUPPLY CHAIN OF IOCL:

1. FACILITIES
The Indian oil group of companies owns and operates 10 of India's 22 refineries
with a combined refining capacity of 65.7 million metric tonnes per annum
(MMTPA).It has over 23,900 petrol and diesel stations, including over 6000 Kisan
Seva Kendras (KSKs) in the rural markets.

2. INVENTORY
Indian Oil Corporation encompasses all raw materials, work in progress, and
finished good in large bulk. Main raw material crude Oil is purchased from OPEC
countries to meet the demand.

3. TRANSPORTATION
For Transportation Indian Oil Corporations uses pipeline, ship, rail or road. LNG
is transported in specially-built tanks on double-hulled ships. Coastal cities can
be supplied through sea.

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 4. INFORMATION IOCL
Deployed SAP NetWeaver Process Integration technology and the SAP
NetWeaver technology platform. This ERP Improved data accuracy by 99% and
Minimized inventory levels.

5. PRICING
The company use flexible price for its products. The price is mainly based on
international crude oil price.

Benefits of Supply Chain Management

Supply chain management creates efficiencies, raises profits, lowers costs, boosts
collaboration and more. SCM enables companies to better manage demand, carry
the right amount of inventory, deal with disruptions, keep costs to a minimum and
meet customer demand in the most effective way possible. These SCM benefits are
achieved through the appropriate strategies and software to help manage the
growing complexity of today's supply chains.

Indian Oil experienced major benefits on account of:

• Improved visibility into its supply chain process across the five selected refineries
• Investment analysis for refinery units, pipelines, etc.
• Analysis to formulate strategies to meet future scenarios like change in
specifications
• Faster, more effective decision making on exchange strategies, imports and
exports
• Improved response and execution capability.

Supply Chain Complexity

The most basic version of a supply chain includes a company, its suppliers and the
customers of that company. The chain could look like this: raw material producer,
manufacturer, distributor, retailer and retail customer.

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A more complex, or extended, supply chain will likely include a number of suppliers
and suppliers' suppliers, a number of customers and customers' customers -- or final
customers -- and all the organizations that offer the services required to effectively
get products to customers, including third-party logistics providers, financial
organizations, supply chain software vendors and marketing research providers.
These entities also use services from other providers.

The totality of these organizations, which evokes the metaphor of an interrelated web
rather than a linear chain, gives insight into why supply chain management is so
complex. That complexity also hints at the types of issues that can arise, from
demand management issues, such as a release of a new iPhone that chokes
demand for old iPhone cases; to natural supply chain disruptions, such as the halt of
transportation in the U.S. in 2015 due to extreme winter weather, or California's
drought and its effect on crops; to political upheaval, such as the strikes in India that
throttled movement at its largest container port.

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The role of supply chain management software

Technology is critical in managing today's supply chains, and ERP vendors offer
modules that focus on relevant areas. There are also business software vendors that
focus specifically on SCM. A few important areas to note include:

 Supply chain planning software for activities such as demand management.

 Supply chain execution software for activities such as day-to-day

manufacturing operations.

 Supply chain visibility software for tasks such as spotting and anticipating
risks and proactively managing them.

 Inventory management software for tasks such as tracking and optimizing

inventory levels.

 Logistics management software and transportation management systems for

activities such as managing the transport of goods, especially across global
supply chains.

 Warehouse management systems for activities related to warehouse

operations.

The increasingly global nature of today's supply chains and the rise of e-commerce,
with its focus on nearly instant small deliveries straight to consumers, are posing
challenges, particularly in the area of logistics and demand planning. A number of
strategies such as lean and newer approaches such as demand-driven material
requirements planning may prove helpful.

Technology -- especially big data, predictive analytics, internet of things

(IoT) technology, supply chain analytics, robotics and autonomous vehicles -- is also
being used to help solve modern challenges, including in the areas of supply chain
risk and disruption and supply chain sustainability.

As just two examples, IoT can help with transparency and traceability to help boost
food quality and safety by using sensors to monitor the temperature of perishable
food while it's in transit. And analytics can help determine where to put smart lockers

50
in densely populated areas to cut the number of single-item deliveries and lower
greenhouse gas emissions.

CRUDE OIL
Crude Oil is a liquid found within the earth compromised of hydrocarbons, organic
compounds and small amounts of sediments and metal. Within the industry, people
talk about ‘Crude Oil’ as if it is just one standard liquid form. However, this is far from
the truth.
Crude Oil extracted from the ground in its natural unrefined state varies considerably
in its density and consistency, from a very thin and volatile liquid to an extremely
thick, semi-solid heavy weight oil. Furthermore, the colour of Crude Oil extracted
from the ground can range substantially, from a light golden yellow to a deep dark
black.

Factors of Crude Oil Classification

Viscosity

It defines the ability of oils to flow. Higher viscosity makes oil more difficult to flow.
As such, it takes much energy to pump it from the ground.

Volatility

It defines the speed of oil evaporation. Higher volatility requires additional

measures to monitor the environment during the extraction process to make sure
only the smallest part of oil is lost due to evaporation.

Toxicity

It defines the poisonous and harmful effects of oil on the environment, people and
wildlife during the production and refinement process. In case of oil spills, which
have happened occasionally throughout the history of oil transportation, each oil
type requires different measures to minimise any potential hazard.

4 Major Types of Crude Oil

1. Very light oil

This type tends to be very volatile, evaporating in just a few days, which makes it
less toxic. Very light oil is mainly used in the following crude oil products: gasoline,
jet fuel, petroleum spirit, kerosene, and petroleum ether and petroleum naphtha.

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 2. Light oil
This type is moderately toxic and volatile. It is mainly used for the following crude oil
products: fuel oils (grade 1 and grade 2), diesel fuel oil and domestic fuel oils.

3. Medium oil
The most common type of oil with low volatility and higher viscosity, which makes it
more toxic and potentially more hazardous and challenging during occasional clean-
ups.

4. Heavy fuel oil

The least volatile, the most toxic and viscous type of oil. It is mainly used for the
following crude oil products: the heaviest 3, 4, 5 and 6 fuel oils and heavy marine
fuel.

Demand Forecasting
Demand forecasting is a combination of two words; the first one is Demand and another
forecasting. Demand means outside requirements of a product or service. In general,
forecasting means making an estimation in the present for a future occurring event.
Here we are going to discuss demand forecasting and its usefulness.
It is a technique for estimation of probable demand for a product or services in the
future. It is based on the analysis of past demand for that product or service in the
present market condition. Demand forecasting should be done on a scientific basis and
facts and events related to forecasting should be considered.

Therefore, in simple words, we can say that after gathering information about various
aspect of the market and demand based on the past, an attempt may be made to
estimate future demand. This concept is called forecasting of demand.

For example, suppose we sold 200, 250, 300 units of product X in the month of
January, February, and March respectively. Now we can say that there will be a
demand for 250 units approx. of product X in the month of April, if the market condition
remains the same.

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Usefulness of Demand Forecasting
Demand plays a vital role in the decision making of a business. In competitive market
conditions, there is a need to take correct decision and make planning for future events
related to business like a sale, production, etc. The effectiveness of a decision taken by
business managers depends upon the accuracy of the decision taken by them.

Demand is the most important aspect for business for achieving its objectives. Many
decisions of business depend on demand like production, sales, staff requirement, etc.
Forecasting is the necessity of business at an international level as well as domestic
level.

Demand forecasting reduces risk related to business activities and helps it to take
efficient decisions. For firms having production at the mass level, the importance of
forecasting had increased more. A good forecasting helps a firm in better planning
related to business goals.

There is a huge role of forecasting in functional areas of accounting. Good forecast

helps in appropriate production planning, process selection, capacity planning, facility
layout planning, and inventory management, etc.

Demand forecasting provides reasonable data for the organization’s capital investment
and expansion decision. It also provides a way for the formulation of suitable pricing
and advertisement strategies.

Scope of Demand Forecasting

The scope of demand forecasting depends upon the operated area of the firm, present
as well as what is proposed in the future. Forecasting can be at an international level if
the area of operation is international. If the firm supplies its products and services in the
local market then forecasting will be at local level.

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The scope should be decided considering the time and cost involved in relation to the
benefit of the information acquired through the study of demand. Cost of forecasting
and benefit flows from such forecasting should be in a balanced manner.

Demand Forecasting in Supply Chain Management

Demand Forecasting facilitates critical business activities like budgeting, financial
planning, and sales and marketing plans, raw material planning, production planning,
risk assessment and formulating mitigation plans. Outlined below are the impacts of
Demand Forecasting on Supply Chain Management:

 Improved supplier relations and purchasing terms: Demand Forecasting

drives the raw material planning process which facilities the Purchasing
Managers to release timely purchase plan to suppliers. Visibility and
transparency of raw material demand improve supplier relations and
empowers Purchasing Managers to negotiate favourable terms for their
companies.

 Better capacity utilization and allocation of resources: Based on the

current inventory levels, raw material availability and expected customer
orders, production can be scheduled effectively. This
leads to improved capacity utilization and judicious allocation of
manufacturing resources.

 Optimization of inventory levels: A proper Demand Forecast provides vital

information for driving the desired raw material, WIP and finished goods
inventory levels. This reduces the Bullwhip effect across the Supply
Chain, leading to optimization of inventory levels and reduction in stock-out or
over-stocking situations.

 Improved distribution planning and logistics: Apart from small businesses,

this is particularly evident in businesses dealing with multiple SKUs and wide
distribution networks. Distribution and Logistics Managers are enabled to
balance inventory across the network and negotiate favorable terms with
Transporters.

 Increase in customer service levels: With optimized inventory levels and

improved Distribution Planning and Logistics, customer service metrics like
on-time delivery (OTD), on-time in-full (OTIF), case-fill/fill-rate, etc. are
improved due to right sizing and right positioning of inventory.

 Better product lifecycle management: Medium to long range Demand

Forecasts provide better visibility of new product launches and old product
discontinuations. This drives synchronized raw material, manufacturing and
inventory planning to support new product launches and most importantly,
reducing the risk of obsolescence of discontinued products.

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  Facilitates performance management: Management can set KPIs and
targets for various functions like Sales, Finance, Purchase, Manufacturing,
Logistics, etc. based on the medium to long range plans derived from the
Demand Forecasting process. Organizational efficiency,
effectiveness, and improvement initiatives can be designed for key areas of
the company.

3 Main Roles of Forecasting in Supply Chain Management

1. Pivotal in strategic planning of Business: Forecasting is the underlying
hypothesis for strategic business activities like expansion planning, budgeting,
financial planning, risk assessment, and mitigation. Critical business
assumptions like turnover, profit margins, cash flow, capital expenditure, etc.
are also dependent on Forecasting.

2. Initiating all push–processes of Supply Chain: Forecasting is the starting

point for all push-processes of Supply Chain like raw material planning,
purchasing, inbound logistics, and manufacturing. Better forecasts help
optimize the inventory levels and capacity utilization.

3. Driving all pull–processes of Supply Chain: Forecasting drives all pull-

process of Supply Chain like order management, packaging,
distribution, and outbound logistics. Better forecast improves the distribution
and logistics and increases customer service levels.

Modes of Transportation
While there are various transportation options for oil, the decision of which method to
use usually comes down to cost and location. Short distance transportation is
usually done by feeder or distribution pipelines and, in some cases, trucks. When
land routes are unavailable, tankers are the only option for delivering oil to market.
Short distance transport can be achieved using railway, trucks, or pipelines. Trucks
are less efficient than other methods, but their particular advantage is that they
provide direct travel from the source to the destination. Direct transportation is also
a benefit of pipelines and tankers. In contrast, railway cars must be detached and
processed at stations. Moreover, they may require jumping through multiple routes,
making the process more complex from an administrative standpoint.

In the near future, it can be expected that these transportation methods will continue
to be used, unless a radically new method of transportation is found. Therefore, most
of the technology development in oil transportation methods is aimed at reducing
emissions, increasing efficiency, or preventing spills and leaks.

An important issue that oil transportation and storage methods face are spills and
inadvertent emissions. Spills from tankers can pollute coastal environments, while
spills from rail and pipelines can pollute wildlife habitats or populated areas
depending on the location. Spills or gas leaks from storage tanks have the same
harmful effects.

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I. Highway (truck)

II. Ship

III. Railway

IV. Pipeline

I.Highway (Truck)

While the most limited oil transportation method in terms of storage capacity,
trucks have the greatest flexibility in potential destinations. Trucks are often the last
step in the transport process, delivering oil and refined petroleum products to their
intended storage destinations.

While trains are limited where they can travel, trucks are free to go anywhere the
road will take them. This is one reason why trucks are a popular method to transport
oil and oil products. Another reason trucks are a popular method of transportation is
because the infrastructure is already in place, there is no need to build roads as they
are already constructed. Trucks carry much smaller volumes of oil, so when there is
a crash or a leak, it tends to be less difficult to clean up. Also, truck accidents usually
happen away from bodies of water.

Strengths

 Flexibility to pick up and deliver where and when needed

 Often the best balance between cost/flexibility and delivery reliability/speed
 Can deliver straight to the customer (increasing)
 Can be available 24/7

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 Weaknesses

 Not the fastest

 Not the cheapest

II.Ship

Another good way to move fuel from one location to another is via ship or barge.
There are plenty of barges transporting gas and oil inland along rivers and via
oceans, such as along the Gulf Coast, to Corpus Christi, and to other oil refineries
on the Louisiana and Texas coasts. This coastal area is also referred to as
“refinery row.” Some of the pluses of using ships to transport petroleum include:

 Inexpensive – Moving crude via barge or ship is one of the least costly
methods of transport.
 Flexible Waterways – Boats can move barrels of oil through inland and
coastal waterways. For example, it can be shipped via the Mississippi River, Hudson
River, Atlantic, and/or Pacific Oceans.
 Large Capacities – Tank barges carry huge amounts of oil; a typical tank
barge can hold 30,000 barrels.
 Multiple Barges Available – There are approximately 275 tank barges and
integrated tug-barges available to ship oil.

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 Where oil transport over land is not suitable, oil can be transported by ship. A typical
30,000-barrel tank barge can carry the equivalent of 45 rail tank cars at about one-
third the cost. Compared to a pipeline, barges are cheaper by 20-35%, depending on
the route. Tank barges traditionally carry petrochemicals and natural gas feedstocks
to chemical plants. The drawbacks are typically speed and environmental concerns.

Strengths

 Highly cost effective for bulky items

 Works best for high weight-to-value items
 Most effective when linked into multimodal system

Weaknesses

 Limited locations
 Relatively poor delivery reliability/speed
 Often limited operating hours at docks

III.Railway

Moving crude from its source to the refineries around the nation can also be
efficiently done by rail. Although this was first considered to be a stopgap
technique until pipelines could be built, it has developed into a popular transport
method. Some of the benefits of railway transport include:

 Low Cost Set Up – It takes a short time to recover the capital costs of setting
up railway infrastructures to move gas and oil.
 Short Construction Time – Building new rail infrastructures takes a relatively
short amount of time. Some estimates give lead times of only 12 to 18 months from
startup to fruition.

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 Fleet Resources – Rail operations can easily access a mass amount of fleet
resources, such as rail crews, railway cars, locomotives, and extra tracks.
 Shorter Transit Times – Transporting crude via train has a fairly short transit
time. Shipping fuel from Alberta to the U.S. Gulf Coast only takes one to two weeks.
 Quick Response to Market Fluctuations – Railway carriers are able to
respond rapidly to changes in the marketplace. This allows for flexibility to adapt to
the ebbs and flows in the business of transporting gas and oil.

Oil shipment by train has become a growing phenomenon as new oil reserves are
identified across the globe. The relatively small capital costs and construction period
make rail transport an ideal alternative to pipelines for long distance shipping.
However speed, carbon emissions and accidents are some significant drawbacks to
rail transport.

Strengths

 Highly cost effective for bulky items

 Can be most effective when linked into multimodal system

Weaknesses

 Limited locations, but better than for water.

 Better delivery reliability/speed than water

IV.Pipeline

The most commonly used form of oil transportation is through oil pipelines. Pipelines
are typically used to move crude oil from the wellhead to gathering and processing
facilities and from there to refineries and tanker loading facilities. Pipelines require
significantly less energy to operate than trucks or rail and have a lower carbon
footprint.

Any operation that stores, repackages, stages, sorts, or centralizes goods or

materials

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 Crude oil that is gathered from its source at wellheads can be moved to
processing plants, tankers, and refineries via pipelines. There are several benefits
to the pipeline technique, including:

 Safety – Moving gas and oil through pipelines is a safe way to get the job
done. There are nearly 500,000 miles of pipelines weaving through various states in
America. The pipes are equipped to carry petroleum products, crude oil, and natural
gas. This technique is environmentally friendly and leads to exceedingly low rates of
injuries and fatalities. In fact, it would be easier for a citizen to get struck by lightning
than hurt in a pipeline accident.

 Energy Efficient – The pipeline transportation method uses less energy than
trucks and trains; therefore, this technique is eco-friendly and leaves a low carbon
footprint.

 Convenience – Because booster pumps are positioned along the pipelines,

pressure can be conveniently maintained to keep oil flowing to its destination.

Conclusion, Suggestion & finding

CONCLUSION:

As a business grow larger and as management becomes more remote from the
market place, marketing management has to rely more heavily on marketing
research as a managerial tool in solving any problem in the field of marketing.
Beginning and end of marketing is marketing research.

Marketing research may b defined as the scientific and controlled process of

gathering of non-routine marketing information helping management to solve
marketing problems marketing research concentrates on the study of product,
planning and development, pricing policies, effectiveness of personal selling,
advertising and sales promotion, distribution structure, market competition, buyer
behaviour etc.

SUGGESTION:

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 After the evaluation and findings some important suggestion are revealed to
the company.
 People are bothering about the day to day increament in petrol prices which
should be control.
 IOC must improve its advertisement to the xtrapremium and its features in
detail
 IOC must advertise by products to the illiterate people by attractive facilities
and offers given to illiterate people.

FINDINGS:

 After the evaluation, the information is revealed that the most of the users are
unaware of the product and its feature. Mostly un aware people are from
uneducated or low educated.
 The people who are aware of the product and its feature are mostly students
and educated people. It is to be noted that, the people who are aware of the
product and its feature are mostly satisfied with the performance of the
products.

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 BIBLIOGRAPHY

Website:-
www.google.com

www.wikipedia.org

www.iocl.com

www.blog.arkieva.com

www.steer.com

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