An

Assignment
ON

“Oil and Petroleum Industry Analysis”

A report submitted in partial fulfillment of the

Requirement of MBA program of

ICFAI Business School, Ahmedabad

Submitted to: SUBMITTED BY:

Prof. Swaroop Dutta Hardik Barot

Neha Desai
Foram Thakkar
Ayush Sharma
 Prashant Choksi

Indian Oil Company Limited-

SWOT and PESTEL analysis

Brief Profile of IOCL

IndianOil is India’s flagship national oil company with business interests straddling the entire
hydrocarbon value chain – from refining, pipeline transportation and marketing of petroleum
products to exploration & production of crude oil & gas, marketing of natural gas, and
petrochemicals. It is the leading Indian corporate in the Fortune 'Global 500' listing, ranked at
the125th.

With over 34,000-strong workforce, IndianOil has been helping to meet India’s energy demands
for over half a century. With a corporate vision to be the Energy of India, IndianOil closed the
year 2009-10 with a sales turnover of Rs. 271,074 crore and profits of Rs. 10,221 crore.

At IndianOil, the operations are strategically structured along business verticals - Refineries,
Pipelines, Marketing, R&D Centre and Business Development – E&P, Petrochemicals and
Natural Gas. To achieve the next level of growth, IndianOil is currently forging ahead on a well
laid-out road map through vertical integration— upstream into oil exploration & production
(E&P) and downstream into petrochemicals – and diversification into natural gas marketing and
alternative energy, besides globalisation of its downstream operations. Having set up subsidiaries
in Sri Lanka, Mauritius and the United Arab Emirates (UAE), IndianOil is simultaneously
scouting for new business opportunities in the energy markets of Asia and Africa.

With facilities at multiple locations and ever-expanding market opportunities, IndianOil is poised
to become an integrated energy company with steady forays into Oil Exploration & Production,
Petrochemicals and Renewable Energy.

Reach and Network

IndianOil and its subsidiaries account for over 48% petroleum products market share, 34%
national refining capacity and 71% downstream sector pipelines capacity in India.
With a steady aim of maintaining its position as a market leader and providing best quality
products and services, IndianOil is currently investing Rs. 47,000 crore in a host of projects for
augmentation of refining and pipelines capacities, expansion of marketing infrastructure and
product quality upgradation.
 The IndianOil Group of companies owns and operates
10 of India's 20 refineries with a combined refining
capacity of 62.7 million metric tonnes per annum
(MMTPA, .i.e. 1.25 million barrels per day).
IndianOil’s cross-country network of crude oil and
product pipelines, spanning 10,899 km and the largest
in the country, meets the vital energy needs of the
consumers in an efficient, economical and
environment-friendly manner.

It has a portfolio of powerful and much-loved energy

brands that includes Indane LPGas, SERVO
lubricants, XtraPremium petrol, XtraMile diesel, etc.
Validating the trust of 56.8 million households, Indane
has earned the coveted status of ‘Superbrand’ in the
year 2009.

IndianOil has a keen customer focus and a formidable

network of customer touch-points dotting the
landscape across urban and rural India. It has 18,643
petrol and diesel stations, including 2,947 Kisan Seva
Kendras (KSKs) in the rural markets. With a
countrywide network of 35,600 sales points, backed
for supplies by 167 bulk storage terminals and depots,
98 aviation fuel stations and 88 LPGas bottling plants,
IndianOil services every nook and corner of the
country. Indane is present in almost 2764 markets
through a network of 5095 distributors. About 7,593
bulk consumer pumps are also in operation for the convenience of large consumers, ensuring
products and inventory at their doorstep.

IndianOil’s ISO-9002 certified Aviation Service commands an enviable 63% market share in
aviation fuel business, successfully servicing the demands of domestic and international flag
carriers, private airlines and the Indian Defence Services. The Corporation also enjoys a 65%
share of the bulk consumer, industrial, agricultural and marine sectors.
Redefining the horizon
In Petrochemicals, IndianOil is investing Rs. 20,000
crore (US$ 4 billion) by the year 2011-12. It offers a
full slate of products including Linear Alkyl Benzene
(LAB), Purified Terephthallic Acid (PTA), and an
extensive range of polymers. IndianOil holds a
significant market share of LAB in India and exports
to 19 countries. A state-of-the-art 120,000 tonnes per
annum Styrene Butadiene Rubber (SBR) unit is
underway at Panipat. The SBR unit will further
strengthen IndianOil’s presence in the speciality
petrochemicals sector.
In Exploration & Production, IndianOil’s domestic
portfolio includes ten oil & gas blocks and two Coal
Bed Methane blocks. The overseas portfolio includes
nine blocks spread across Libya, Iran, Gabon, Nigeria,
Timor-Leste and Yemen. Exploration activities are at
various stages of progress. In addition, as part of
consortium, IndianOil has been awarded Project -1 in
the Carabobo heavy oil region of Venezuela. To boost
E&P activities, IndianOil has incorporated Ind-OIL
Overseas Ltd. – a special purpose vehicle for
acquisition of overseas E&P assets – in consortium
with Oil India Ltd.

Natural Gas marketing is another thrust area for IndianOil with special focus on City Gas
Distribution (CGD) business. The Corporation has entered into franchise agreements with
several CGD players to market Compressed Natural Gas through its retail outlets. IndianOil’s
joint venture with GAIL India Ltd. - Green Gas Ltd. – has been authorised to take up city gas
distribution at Agra. A long term gas supply agreement has been signed with NTPC.

Venturing into alternative fuels

IndianOiI has forayed into alternative energy options
such as wind, solar, bio-fuels and nuclear power. A 21
MW wind power project is operational in the Kutch
district of Gujarat and the cumulative power
generation from the 14 wind turbine generators has
crossed 6.6 crore units (KW/Hr) since commissioning
in January 2009. The solar power initiative is being
spearheaded on a pilot basis in Orissa, Karnataka and
the Northeast and an all-India phased roll out is
underway. Solar products such as solar lanterns and
torches are being sold through the Retail Outlets in
rural and urban areas. With a view to investing in the nuclear energy sector in the country,
IndianOil has entered into an agreement with the Nuclear Power Corporation of India Ltd.

IndianOil has the largest captive plantation – over 1,000 hectares – for bio-fuel production in
India which is underway in Chattisgarh and Madhya Pradesh, generating rural employment of
over 1.4 lakh man-days. To straddle the complete bio-fuel value chain, IndianOil has formed a
joint venture with the Chhattisgarh Renewable Development Authority. IndianOil CREDA
Biofuels Ltd. has been formed to carry out farming, cultivating, manufacturing, production and
sale of biomass, bio-fuels and allied products and services in Chattisarh. In Uttar Pradesh,
IndianOil is establishing a model value chain for the production of bio-diesel. A MoU for
collaborating on commercial production of bio-diesel from algae has also been signed with PA
LLC.

IndianOil. The Energy of India

As a leading public sector enterprise of India,
IndianOil has successfully combined its corporate
social responsibility agenda with its business offerings,
meeting the energy needs of millions of people
everyday across the length and breadth of the country,
traversing a diversity of cultures, difficult terrains and
harsh climatic conditions. The Corporation takes pride
in its continuous investments in innovative
technologies and solutions for sustainable energy flow
and economic growth and in developing techno-
economically viable and environment-friendly
products & services for the
Benefits to the customers.
Business in which IOCL operates :

An energy self-sufficient India can alter the economic, political and manufacturing landscape of
the region. Its quest for energy will create new economic and strategic challenges, right from
mobilising capital to engaging in subtle diplomacy.

IndianOil’s own performance in the financial year 2006-07 was a case of 'exceeding
expectations' with both turnover and profits reaching new highs, product sales registering a
quantum jump, and the refineries as well as pipelines network enhancing their capacities beyond
60 MMTPA and registering record throughputs. New projects worth Rs. 10,000 crore were put
on stream during the year. Among new businesses, the petrochemicals and natural gas verticals
and participating interests in a clutch of oil & gas assets in India and abroad has ensured
expansion of the upstream portfolio.

IndianOil has ambitious investment plans of Rs. 43,250 crore in the next five years. By 2011-12,
the IndianOil Group, with 80 MMTPA refining capacity in its fold, would be playing a key role
in realising India’s bid to emerge as an export-oriented hub for finished products. The pipelines
network, which provides strategic logistics advantage to the marketing operations, is also set to
cross the 10,000 km mark in the next two years.

In marketing, IndianOil is set to leverage the combined strength of over 32,000 marketing touch
points, with focus on hitherto untapped rural markets, non-fuel revenues and pure retailing
business. IndianOil aspires to be Asia’s leading commercial R&D organisation in the
downstream hydrocarbon sector by building on its capabilities in developing innovative
technologies, products and processes, and nodal research in alternative fuels.

Beyond core businesses, IndianOil is working to emerge as a major player in the petrochemicals
business by the year 2011-12, with two petrochemical hubs shaping up at Panipat and Paradip. In
natural gas business, it is attempting quantum growth in LNG imports, infrastructure and
marketing, besides city gas distribution. In the high-risk business of oil exploration &
production, IndianOil’s consortium approach with established players is paying off well in terms
of exceptional Government support and successful forays in India and abroad. Its current
interests are focussed on oil equity and sourcing of natural gas, predominantly from African and
CIS countries, by leveraging its downstream capabilities to form joint venture partnerships with
reputed enterprises overseas.

With India’s energy needs projected to grow by 40% in the next five years, the future is indeed
full of promise for IndianOil; a future the 31,700 strong IndianOil team shall build as they fuel
the dreams of over a billion of their countrymen.
Vision and Mission
Mission

• To achieve international standards of excellence in all aspects of energy and diversified

business with focus on customer delight through value of products and services, and cost
reduction.

• To maximize creation of wealth, value and satisfaction for the stakeholders.

• To attain leadership in developing, adopting and assimilating state-of-the-art

technology for competitive advantage.

• To provide technology and services through sustained Research and Development.

• To foster a culture of participation and innovation for employee growth and

contribution.

• To cultivate high standards of business ethics and Total Quality Management for a
strong corporate identity and brand equity.

• To help enrich the quality of life of the community and preserve ecological balance
and heritage through a strong environment conscience.
Products of IOCL :

IndianOil is not only the largest commercial enterprise in the country it is the flagship
corporate of the Indian Nation. Besides having a dominant market share, IndianOil is
widely recognized as India’s dominant energy brand and customers perceive
IndianOil as a reliable symbol for high quality products and services.

Benchmarking Quality, Quantity and Service to world-class standards is a philosophy

that IndianOil adheres to so as to ensure that customers get a truly global experience
in India. Our continued emphasis is on providing fuel management solutions to
customers who can then benefit from our expertise in efficient sourcing and least cost
supplies keeping in mind their usage patterns and inventory management.

IndianOil is a heritage and iconic brand at one level and a contemporary, global
brand at another level. While quality, reliability and service remains the core benefits
to our customers, our stringent checks are built into operating systems, at every level
ensuring the trust of over a billion Indians over the last four decades.

Our Retail Brand template of XtraCare(Urban), Swagat(Highway) and Kisan Seva

Kendras(Rural) are widely recognized as pioneering brands in the petroleum retail
segment. IndianOil’s leadership extends to its energy brands - Indane LPG, SERVO
Lubricants, Autogas LPG, XtraPremium Branded Petrol, XtraMile Branded Diesel,
XtraPower Fleet Card, IndianOil Aviation and XtraRewards cash customer loyalty
programme.
Some of the Core products of IOCL are listed below.

 Indane Gas

 Auto Gas

 Natural Gas

 Petrol/Gasoline

 Diesel/Gas Oil

 ATF/Jet Fuel

 SERVO lubricants and greasess

 Kerosene

 Bulk/Industrial Fuel – Furnace Oil, Light Diesel Oil and LSHS

 Petrochemicals- Lab HMW, Lab LMW, PTA and Polymers

 Special Products- Benzene, CBFS, Food Grade Hexane, Jute Batching Oil, Propylene
  Crude Oil
SWOT Analysis for IOCL
External environment

Opportunity: -
The IOCL has much opportunity in the present market conditions. This is
because the petroleum products are become a need for everyone and still contains a lot of scope
for customization. The various opportunities are listed below.
• Since the company has the maximum number of out lets and also the maximum no. of
refineries in India, it can very easily go for extension at any point of time, and can
introduce any new products, which will get support from its huge market network.

• The company can make the buying process more easy for the customers, by implying
many more schemes in the range of XTRAPOWER AND XTRAREWARD.

• The company can think over the issue to build its own pipelines, so that it will be a
independent player and it will also support its aviation fuel supply.
• Company has a great scope in E&P. It already operates in this business but in a limited
scale.

Threats: -
Since the company is the market leader in the field , so have maximum threats
from the other players and many other issues. The lists of threats are given below.

• The foreign players with more advanced technology are the biggest threat
for the company.
• The crude oil supply is also a big issue in front of the company, because
the company cannot fix its price and so, some time had operate in loss
also. it is the biggest problem because the maximum part of their crude is
been imported.
• In future the market will welcome more private players, which will eat up
its market share.

• If the Govt. Policies allow the private players to set their own price, the the
private player can seriously harm the market share of IOCL.
Internal environment
Strengths

• IOC controls 10 refineries, by virtue of which it has a total share of around 40% of
India’s overall refining capacity. IOC has also acquired equity stakes in CPCL and
BRPL, and in 2001, these refineries became subsidiaries of IOC.

• 58% of IOC’s refining capacity is located in the Northern and Western regions, which
are high demand and high growth areas.

• Although its refineries are located the interior of the country, and not near the major ports
IOC has a very strong distribution network by virtue of having a share of 48% in the
country’s product pipelines. The total capacity of these product pipelines is 49.79 MMT.
• IOC also acquired management control of the marketing company IBP, thereby
strengthening its position in these activities. It also has a dominant share in all segments
in terms marketing infrastructure. Its network includes 19830 retail outlets, 8000 LPG
distributors, and 6492 kerosene/LDO dealers.
• By virtue of entering into extensive joint venture agreements, and of its own initiative as
well, the company has a presence in various other related activities such as petroleum
storage, pipelines, lube additives, exploration, petrochemicals, gas, training and
consultancy, etc.
• The company has already entered overseas markets such as Sri Lanka, Maldives, and
Oman and is presently considering entering Turkey through a JV. The company is in
talks with Caliak of Turkey to set up a 10 million TPA grassroot refinery with an
investment of $2 billion and establish retail business. IOC is also weighing the possibility
of entering Indonesia.
IOC has also started exploring the overseas markets for increasing its scope of operations. Its
interests include downstream activities in Sri Lanka, Maldives, Oman, and Nepal; interest in the
lubes business in Maldives, Dubai, Bangladesh, Sri Lanka, etc; among others.

Weakness:-
The company is the market leader in the industry, but still it had many
weakness.
The list is given below.

• The major weakness for the company is the R&D. The company starts
working on it.

• The petrochemical product development technology is another

weakness for the company.

• The technological drawback, as compared to some major foreign

player is another weakness for the company.
PEST Analysis

Economic environment:
The gradual reduction of tariff protection has ensured that prices of most goods in countries like
India are closer to global levels or even much lower. The lower prices are much more extensive
in the services sector, which accounted for 52.4% of the Indian economy in 2004- 05.The use of
GDP based on purchasing power parity in the calculation of oil intensity is also validated by the
fact that the figures on oil consumption are measured in terms of volumes of input (million tons
of oil equivalent-mtoe) while the GDP estimated on the market exchange rate gives only the
value of output and not the actual volumes. It is only the GDP estimated on a purchasing power
parity basis which gives some indicator so the volume of output which should form the basis of
cross country comparisons of output and estimation of oil intensity therein. However, though the
oil intensity in India is comparatively much lower than in most other developed and developing
countries the negative impact of high oil prices on the economy is accentuated by the distorted
pattern of oil consumption in India.
Social Cultural Environment

Social cultural variation in the Indian context, is very important for any company to work in
it. The India is basically can be divided into four major regions on the basis of language ,
demography and also the income states. These are the south, north, east and west. The IOCL as a
company also operates differently in different regions and also use different languages to attract
people towards them. This is also, a reason for which the company have three refineries in the
south region out of eleven in total. And that also because of the merger with MRPL a local
regional company.

Natural Environment
The company IOCL is very much concern about the environmental polices of it and also very
strictly follow every small norms of it. The mission of the company is very clear; “To develop
techno-economically viable and environment-friendly products”. All because of it that the
company wins SCOPE Meritorious Awards for Environmental Excellence & Sustainable
Development and Good Corporate Governance.

Technological Environment
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. Indian Oil has, till
date, invested close to Rs. 1,000 crore in setting up world-class facilities at its R&D Centre and 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. This the reason , thats why IOCL have
the India's first experimental H-CNG (Hydrogen-Compressed Natural Gas) dispensing unit at the
R&D Centre campus at Faridabad and 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 India Oil’s R&D Centre established that Bio-diesel produced from
Jatropha seeds were at par with that produced from vegetable oils.

Political – Legal Environment

The political and legal environment for the whole oil industry is very essential. In India the entire
oil industry is been governed by OIL Ministry and OIDB a Govt body. This two institutes are
responsible for all the decision related to the price, quality specification etc. Beside this the
international politics also affect this international commodity “Oil” a lot and also its companies.
Any company operated in India had to work according to the norms and on the prices specified
earlier by Govt bodies.