INDUSTRY PROFILE The oil industry of India can be broadly classified into two major streams.

There are companies which deal mainly in the exploration of oil fields and production of petrochemical products. Other companies restrict their operations mainly into refining and marketing of petrochemical products. They get the crude oil from national and international sources. The Indian oil industry is dominated by few players who share most of the market share among themselves.

As we can see, the oil industry is divided in to two streams: Upstream: This stream is dominated by the firms which deal in exploration and production of petrochemical products. The major firms engaged in the exploration and productions of the petrochemical products are:

Oil and Natural Gas Corporation Ltd. Oil India Ltd. Reliance industries Cairn Energy HOEC Premier Oil

These firms are the major players in the exploration and production of the oil and gas products whereas they have a limited share in the marketing and distribution of the oil products. Firm engaged in the exploration of the oil fields do not undertake the refining of the crude oil as their main area of business. They explore and become the provider of the crude oil to the refining units located inside the country and outside as well. Downstream: This stream includes firm which undertake the refining of the crude oil and marketing the final products. They get their raw materials from the firms engaged in the exploration of the crude oil. The firms involved in the refining and marketing of the petrochemical products are listed below: Indian Oil Corporation Ltd. Chennai Petroleum Corporation Ltd. Bongaigaon Refinery and Petrochemicals Ltd. Hindustan Petroleum Corporation Ltd. Mangalore Refinery and Petrochemicals Ltd. Bharat Petroleum Corporation Ltd. Numaligarh Refinery Ltd. Reliance Industry Ltd. Essar Oil 2

Shell

Apart from these two streams there is another field namely gas transportation and distribution. But there are not as may players in the mentioned field. The only company which is worth mentioning is GAIL which takes the business of gas transportation and distribution across the country. DEMAND FOR PETROLEUM PRODUCTS IN INDIA: According to the reports of Consumption and Production from Petroleum and Planning Cell, the production and the consumption of the petroleum products has increased in the last four years. It can be noticed that the consumption rate is higher than the production rate of the petroleum products. The growth rate of production and consumption of petroleum products can be better understood with the help of the following chart:

RECENT DEVELOPMENT IN OIL INDUSTRY Dr. Rangarajan committee in its latest reports has come up with several provision and suggestions for the betterment of the oil industry and provide proper cushion to the public sector in order to combat the threats imposed by the foreign firm and the domestic private organization as well. The various recommendations provided by the committee are highlighted Below :

GOVERNMENT OF INDIA S INITIATIVES FOR THE DOWNSTREAM COMPANIES: The government of India has taken several initiatives in order to boost the performance of the downstream companies. The initiatives are formulated with a view to enable the downstream companies to match the challenge imposed by the multinational firms. The decrease in the custom duty and excise duly are initiated to make the downstream more cost productive and ultimately contributing to their overall profitability. COMPAY PROFILE Indian oil was formed, as joint ventures between Oil Company and government of India but later become fully owned government undertaking. It continues to be canalizing agency for important crude oil and major petroleum products on behalf of oil industry in India.

A company, Indian refineries limited, was set up in the 1958 to refine crude oil. Another company, namely, Indian Oil Company limited was incorporated in the year 1959 to market the products. In 1964 both companies were merged and Indian Oil Corporation limited was born. In 1981 Assam oil company, a private sector oil company was nationalized and merged with I.O.C.L.

Indian Oil Corporation limited is the largest commercial enterprise in India and the only Indian company in Fortune Magazines global 500 listing of worlds largest corporation. Indian oil owns and operates seven of the countrys seventeen refineries. Indian oil started its oil refining operation in 1962 from Guwahati refinery. In its 38 years for refining six refineries have come 6

up, at Barauni (1964), Haldia (1974), Digboi (1981), Mathura (1982) and Panipat (1999). Its 8th refinery with a capacity of 9MMPTA is coming up at Para deep with possession of 33.16 acre of land. Indian oil has the countrys largest network of crude and product pipelines, with a combined length of 6523 km and 43.45MMTPA capacity. With sales of 47.80 million tons in 2000-01, Indian oil holds over 53% of the petroleum products market in India. The extensive network of over 21000 sales points is backed for supplies by 186 bulk storage points and 71 Indane bottling plants, 92 aviation fuel station cater to the aviation industry, defence as will as civil. A wholly owned subsidiary, Indian oil Blending limited, manufactures over 450 grades of the countrys leading Servo brand of lubricants and grease. Indian oils world class research and development centre with ISO-9001 has done pioneering work in lubricant refining process and pipeline transportation. It has developed over 2000 lubricants and grease formulations and obtained approvals of original equipment manufacturers in India. During 2000-01, Indian Oil research and development centre developed 42 new products, 8 global industrial formulations and 5 genuine oil, 11 patents were granted and 15 new were file in India and abroad.

BACKGROUND AND INCEPTION OF THE COMPANY This project report is based on the study done in the IOCL refinery division Barauni. Barauni refinery is the second public sector refinery of India Oil Corporation. It is located near the northern bank of river Ganga flowing at a distance of 8 km in Begusarai district of Bihar really holds a great history. It is spread over 1000 km acres and its 7

township i9s situated 7 km away from the site. The national highway number 31, which runs to Assam passes through this area. With the collaboration of USSR and limited participation of Romania, the idea of setting up a refinery in this area took its original form. The Russians and Romanians set up the plant and staged here on 20 year agreement to impart the technology to the local people. Barauni Refinery was built in collaboration with Russia and Romania. Situated 125 kilometers from Patna, it was built with an initial cost of Rs 49.40 crore. Barauni Refinery was commissioned in 1964 with a refining capacity of 1 Million Metric Tons per Annum (MMTPA) and it was dedicated to the Nation by the then Union Minister for Petroleum, Prof. Humayun Kabir in January 1965. After de-bottlenecking, revamping and expansion project, its capacity today is 6 MMTPA. Matching secondary processing facilities such Resid Fluidised Catalytic Cracker (RFCC), Diesel Hydrotreating (DHDT), Sulphur Recovery Unit (SRU) have been added. Theses state of the art ecofriendly technologies have enabled the refinery to produce environment- friendly green fuels complying with international standards.

NATURE OF THE BUSINESS CARRIED Barauni Refinery was initially designed to process low sulphur crude oil (sweet crude) of Assam. After establishment of other refineries in the Northeast, Assam crude is unavailable for Barauni. Hence, sweet crude is being sourced from African, South East Asian and Middle East countries like Nigeria, Iraq & Malaysia. The crude is brought up to 8

Haldia by Very Large Crude Carriers (VLCCs) from where it is pumped through pipeline to Barauni. With various revamps and expansion project at Barauni Refinery, capability for processing high -sulphur crude has been added high-sulphur crude oil (sour crude) is cheaper than low sulphur crudes thereby increasing not only the capacity but also the profitability of the refinery. The Barauni refinery has to undertake the function as to transport, receive imported as well as indigenous crude, refine and produce saleable petroleum products and hand over the products to marketing division for the purpose of sales at the respective refinery locations or at the marketing terminals after transportation thorough pipeline networks.

VISION, MISSION AND QUALITY POLICY VISION A major diversified, trans-national, integrated energy company, with national leadership and a strong environment conscience, playing a national role in oil security& public distribution

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.

QUALITY POLICY Baruani Refinery has incorporated Total Productive Maintenance. TPM can be considered as the medical science of machines. Total productive maintenance is a maintenance program which involves a newly defined concept for maintaining plants and equipment the goal of the TPM. Program is to markedly increase production while at the 10

same time increase production while at the same time increasing employee morale and job satisfaction. TPM brings maintenance into focus as necessary and vitally important part of the business. It is no longer regarded as a non profit activity. Down time for maintenance is scheduled as a part of the manufacturing day and in some cases as an integral part of the manufacturing process. The goal is to hold emergency and unscheduled maintenance to a minimum.

PRODUCT/ SERVICE PROFILE Liquid petroleum gas Motor spirit(petrol) Super kerosene(sko) Naphtha High speed diesel stock(HSDS) Liquefied dewaxed oil(LDO) stock wax(SW) row petroleum coke(RPC) Calcinaied petroleum coke(CPC) Paraffin wax

AREA OF OPERATION Indian Oil Corporation is a trans-national company with its area of operation across the border. The corporation has a dominant presence in the country which can be rightly understood by the following diagram:

11

As it can be inferred by the above figure that the corporation has a very dominant presence in India with its existing operational units located in Panipat, Mathura, Barauni, Digboi, Guwahati, Jamnagar, Haldia and Paradeep. The Indian Oil Corporation has spread its operation all over the world. It has followed the path of joint ventures in USA, Germany, Malaysia, France etc. The joint venture of Indian Oil Corporation outside India is clearly mentioned below. The following figure also highlights the subsidiary companies of Indian oil corporation ltd.

12

The Indian Oil Corporation continues its path for globalization as it has undertaken several future projects so that it can further increase its spread across the world.

13

Ownership pattern Indian Oil Corporation Ltd. is a public sector company. The company has raised capital with issue of its share. The shares are freely traded in the secondary market.
Shareholding pattern as per clause 35 of the listing agreement for the quarter ending 30th June, 2007 (I )(a) Statement showing Shareholding Pattern

Name of the Company: INDIAN OIL CORPORATION LTD.

Category code

Category of shareholder

Number of shareholders

Total shareholding as a percentage of total number Number of of shares Total shares held in number of dematerialized shares As a As a form percentage percentage of of (A+B)1 (A+B+C)

(A) (1) (a) (b) (c) (d) (e)

Shareholding of Promoter and Promoter Group2 Indian Individuals/ Undivided Family Hindu 958077855 0 0.00 80.35 0.00 80.35

Central Government/ State 1 Government(s) Bodies Corporate Financial Institutions/ Banks Any Other(specify) Sub-Total (A)(1) --1

0 0 958077855

0 0 0

0.00 0.00 80.35

0.00 0.00 80.35

(2) (a) (b) (c) (d)

Foreign Individuals Individuals/ Individuals) (Non-Resident Foreign 0 0 958077855 0 0 0.00 80.35 0.00 80.35

Bodies Corporate Institutions Any Other (specify) Sub-Total (A)(2)

Total Shareholding of Promoter and Promoter 0 Group (A)= (A)(1)+(A)(2) (B) (1) (a) Public shareholding Institutions Mutual Funds/ UTI 50

12013910

12030075

1.01

1.01

14

(b) (c) (d) (e) (f) (g) (h)

Financial Institutions/ Banks Central Government/ Government(s) Venture Capital Funds Insurance Companies Foreign Institutional Investors Foreign Investors Venture Capital State

43 1 -9 73 --176

681020 1350000 0 37889100 24992588 0 0 76944618

676005 0 0 37887975 24992588 0 0 75586643

0.06 0.11 0.00 3.18 2.10 0.00 0.00 6.45

0.06 0.11 0.00 3.18 2.10 0.00 0.00 6.45

Any Other (specify) Sub-Total (B)(1)

B2 (a) (b) (i)

Non-institutions Bodies Corporate Individual Individual shareholders holding nominal share capital up to Rs 89314 1 lakh Individual shareholders holding nominal share capital in excess 25 of Rs. 1 lakh. Any Other (specify) Non-Resident Indians Overseas Corporate Bodies Trusts Clearing Members Custodian of Enemy Property Sub-Total (B)(2) 613 0 23 144 1 91238 200566 0 13083007 253413 19536 157351833 234296451 1192374306 138709 0 11555 253413 0 135037261 210623904 210623904 0.02 0.00 1.10 0.02 0.00 13.20 19.65 100.00 0.02 0.00 1.10 0.02 0.00 13.20 19.65 100.00 33253577 24118849 2.79 2.79 1118 110158296 110144929 9.24 9.24

(ii) (c) (c-i) (c-ii) (c-iii) (c-iv) (c-v)

383438

369806

0.03

0.03

Total Public Shareholding 91414 (B)= (B)(1)+(B)(2) TOTAL (A)+(B) 91415

15

It is evident from the above pie chart that the major part of the organizations stake is with the government. The reason for such shareholding is Governments stated intention to maintain a majority shareholding in IOC due to its strategic importance to Indias energy and socio-economic development. Though there were several proposition formulated about the disinvestment but it was ruled out because the government wanted to keep a control over the prices of the petroleum products as a major proportion of Indian population is still with very limited income and it may affect their lives if there is frequent change in the prices of the petroleum products. Therefore the government commands an absolute control over the organization so as to maintain the prices of the petroleum products prevailing in the country.

Competitors information 16

Indian Oil Corporation enjoyed monopoly in Indian market as the government of India has control over the refining and marketing of petrochemical products. With the recent development the scenario of the Indian oil industry has changed. Reliance industries have emerged as a major competitor of the Indian Oil Corporation. There are other firms also which are trying to increase their market share in this sector.

It can be clearly stated form the diagram that the IOCL is the market leader in petroleum sector as there very few players in the industry and their market share is very less as compared to the IOCL. Infrastructure Facilities

17

Indian Oil Corporation is committed to conducting business with a strong environment conscience for sustainable development, safe workplaces and enrichment of the quality of life of its employees, customers and the community at large. Best procedures and practices of the industry are in place at all operating units and installations of the Corporation to take care of safety, occupational health and environmental hazards. These facilities are periodically reviewed, audited and upgraded for continuous excellence. The environment management systems at the refineries, pipelines and major marketing installations are certified under ISO- 14001 standards.

Achievement/Awards

18

Indian Oil has been ranked at 2nd position amongst the top 50 most valuable brands of India, assessed by global brand valuation firm, London-head quartered Brand Finance. Much of this comes from the sheer scale and strength Indian Oil commands in its sector. It stands tall amongst giants like Tata Consultancy Services, Tata Motors, Wipro Technologies, and state petroleum companies BPCL & HPCL. Indian Oil had also a place of pride in this coveted list of year 200607. Brand Finance studied only listed consumer-facing corporate brands valuing Indian Oil brand at a $4.2 billion. The oil & gas sector made a mark by occupying four slots in the elite club followed by IT and automobile. In setting out to value Indias top value-creating brands, the primary requisite was that the brands should belong to companies that are listed on the Bombay Stock Exchange, Brand Finance using the `Relief from Royalty approach performed the valuation. This approach assumes that a company does not own its brand and calculates how much it would need to pay to license it from a third party. The study also assessed the importance of brands in creating value for businesses. Brands are becoming the most dominant intangible asset. Brand Power Rating (BPR) is a measure of the brands strength in its marketplace, relative to its competitors, and how effectively the company manages to convert this into business results.

INDIAN OIL LATEST RANKINGS 19

Indian Oil gets a top slot in ET500 listing -- March 22, 2007

Indian Oil, India's flagship oil company with net sales worth Rs.1,87,224 crores has maintained its enviable top position by net sales in the ET500 listing released by Economic Times recently. 'BS 1000' List of India's Corporate Giants -- January 1, 2007

Indian Oil has been ranked as India's No 1 Company by Business Standard 1000 listing of country's leading industrial companies. With this ranking, it is slotted as Indias biggest company with consolidated net sales of Rs. 162,418 crore.

'Business India's Super 100 Ranking -- December 1, 2006 20

In this year's study of Business India's Super 100 (sales in excess of Rs 500 crore), Indian Oil has been ranked 4th in Top 10 Performers of 2006.

Indian Oil ranked 2nd amongst Indias Top 50 Most Valuable Brands

Indian Oil has been ranked at 2nd position amongst the top 50 most valuable brands of India, assessed by global brand valuation firm, London-head quartered Brand Finance. Much of this comes from the sheer scale and strength Indian Oil commands in its sector. It stands tall amongst giants like Tata Consultancy Services, Tata Motors, Wipro Technologies, and state petroleum companies BPCL & HPCL. Indian Oil had also a place of pride in this coveted list of year 200607.

Work Flow Model 21

Barauni refinery has to undertake the function as to transport, receive imported as well as indigenous crude, refine and produce saleable petroleum products and hand over the products to marketing division for the purpose of sales at the respective refinery locations or at the marketing terminal after transportation through pipeline networks.

PIPELINE

Processing

ROADWAYS

CRUDE OIL

Finished products

RAILWAYS Marketing division

22

Future growth prospects Indian Oil Corporation has taken several initiative regarding

increasing its capacity in order to increase the production. The company is also looking forward to expand its coverage in marketing and retailing sector. The various initiatives to be taken into the future are highlighted below:

The company is looking forward to increase its production capacity in order to meet the requirements of the country as well as abroad. The company is planning in a major way to increase its pipelines. The various expansion plans are under construction and several are still in the process.

23

The company is also planning and has already taken several innovative steps in order to enhance the profitability of the firm by participating in the retail sector of the petrochemical products which

24

still

has

too

much

strength.

25

Indian Oil Corporation has planned to move forward from just oil refining to the production of petrochemicals. For the same reason they have installed several plants across the country, some of which

26

have fully operational and few under pipeline.

Indian Oil Corporation is looking forward to go beyond refining business. The company is now looking into backward integration and is looking fields for the exploration and production of crude oil so that it can make itself self-reliable which in turn affects its total profitability by reducing cost in acquiring the raw material for the production of the petrochemical products.

27

Indian oil corporation ltd has initiated several arrangements with companies already in the field of sourcing and distribution of gas. The company has been successful in making several talks in its favour. Whereas there are some projects which are still in negotiation stage but it is quite evident that the company is fully dedicated to spread its operation from just oil refining to the marketing as well as distribution of the oil and gas products.

McKinseys 7S Framework The 7S model is better known as McKinseys 7-S. This is because two persons who developed this model, Tom Peters & Robert Waterman, have been consultants to McKinsey & Co, at that time they published their 7-S model in their article Structure in not 28

organization ( 1980 ) & in their book The Art of Japanese Management (1981) In search of Excellence ( 1982). The model starts on the precise that an organization is not just structure, but consist of 7 elements: Strategy, Structure, System, Style, Staff, Skill and Shared values. These 7 elements are distinguished as Hard Ss and Soft Ss. The Hard elements are feasible & easy to identify. They can be found in Strategy, Statements, Corporate plans, Organizational charts, and other documentations. The 4 soft Ss however are hardly feasible. They are difficult to describe since capabilities, values & elements of corporate culture are continuously developing & changing. They are highly determined by the people at work in the organization. Therefore it is much more difficult to plan or to influence the characteristics of the soft elements. Although the soft factors are below the surface, they can have a great impact on the Hard SsStructure, Strategy and System of organization.

Description - The Hard Ss: Strategy: Actions Company plans in response to or anticipation of changes in its external environment. Structure: Basis for specialization & coordination influenced primarily by Strategy & by organization size and diversity 29

Systems: Formal and informal procedures that support the strategy and Structure.

The 7S McKinsey model

The Soft Ss: Style: i. The culture of the organization consists of 2 components:Organization Culture: The dominant values and norms, which develop over time & 30

become

relatively

enduring features of organization life. ii. Management Style : More a matter of what manager does than what they say; how do a companys managers spend time? What are they focusing attention on? Symbolism: mangers. Staff : The people / human resource management processes use to The creation and maintenance (or sometimes deconstruction) of meaning is a fundamental responsibility of

develop mangers socialization processes, ways of shaping basic values of management cadre, ways of introducing young recruits to the Co., ways of helping to manage the career of employees. Skills : The distinctive competencies what the company does : Guiding concepts, fundamental ideas around best, ways of expanding or shifting competencies. Shared values which a business is built must be simple, usually stated at abstract level, have great meaning inside the organization even though outsiders may not see to understand them. The 7-S model is a valuable tool to initiate change processes & to give them direction. A helpful application is to determine the current state of each element and to compare this with the ideal state. Based on this its possible to develop action plan to achieve the intended state.

Application of McKinseys 7S: STRUCTURE The formal structure of Barauni Refinery consist of Executive director(1) General Manager(2) 31

Deputy General Manager(5) Chief Manager (13) Senior Manager(43)

The departments which are directly concerned with the running of the plant and production aspects are directly known as technical departments. There are eight such departments in Barauni refinery: 1. production 2. power and utility 3. maintenance 4. technical services 5. project 6. quality control 7. fire and safety Non technical departments are created with a view to discharge some specialized functions so that the objectives of the organization may be accomplished efficiently. Such departments are ten in number as following: 1. Personnel and Administration 2. Medical 3. Human Resource Development 4. Training 5. Finance 6. Internal Audit 7. Management Information System 8. Vigilance HUMAN RESOURCE DEPARTMENT The human resource department is headed by Mr. N K Das. The human resources department in Barauni refinery can be broadly classified into tow two major heads: General Administration Establishment 32

GENERAL ADMINISTRATION The major task undertaken by this wing of the human resource department is to deal in matters of security, transport, guest house etc. This section takes into account every possible matter regarding the security of the employees. Employees have to travel for the purpose of business and the corporation takes care of every expense in this regard. Any discrepancies occurred during the process is dealt with in human resource department. ESTABLISHMENT This section of the human resource department takes into account the matter regarding the recruitment, establishment of the employees working and the newly appointed employees. In this regard TIME OFFICE plays and important part.

TIME OFFICE Every employee of the Barauni refinery is now allotted an access card which act as his/her signature in the entire premises. The access card contains the information regarding the holder of the card. As soon as the card is used in the factory premised it provides information regarding the presence of the employee in the factory. The 33

attendance maintenance and the working hour records are kept with the help of these access cards and time office plays a vital role in providing the information about employees to the human resource department. Time office also helps in managing the overtime allotted by different production units. At the general meeting conducted for the various departments, units. Time office is vital in the preparation of the salary of every employee of the organization. Every possible data of the performance of the employee is available in time office. It can be said that time office if of extreme importance in Barauni refinery. The record of the employees is used for their salary preparation and it is further used for their pension plans and several other benefits of the employees. The information system used is of great reliability and can be used year after year for the quick retrieval of information and further updating of any changes in the prevailing information of the employees. the time office provides important information regarding the number of overtime allotted by the different production

FINANCE DEPARTMENT The finance department is headed by Mr. S Bhunia. The activities of the finance department includes into looking in to the day to day affair of the company. The finance department has to coordinate with 34

almost every other departments of the company therefore the role of the finance department is quite vital. Several managers are designated with different authorities and responsibilities and hence they have to look upon their respective areas and ensure that no discrepancies take place. Every manager is clearly specified with the extent of authority in order to avoid any overlapping of authority and thus reducing the matters of conflicts. Finance department interact with following department at a regular basis to make sure the proper functioning of the entire company: Maintenance Medical Purchase Insurance TA/LTC/Adv Works Miscellaneous Pay roll Provident fund

Every bill has to be presented before the finance department before getting it sanctioned. The minute details of the every document are analyzed and it is processed further. Finance department play an important role in day to day functioning of the organization and has to coordinate with every other department of the organization. TRAINING CENTRE The training centre of the company is headed by Mr. S K Sarkar. The department is responsible for the training of the newly appointed employees and several trainees.

35

The various training techniques used are: On the job training Off the job training

On the job training includes training the newly appointed on the actual job floor under the supervision of the senior personnel. This type of training technique is used when the job does not involve much of technical skills. Further the job should also be free from the danger of life and property.

Off the job training is undertaken when the job involves technical proficiency or the job is of dangerous nature. The job for this kind of job is done in the classroom and when the employees are trained enough they are kept under supervision on the actual job. Training department is of vital importance as it grooms and nurtures the fresh talent and then helps the organization to make the best use of the talent pool available. Further new employees get a chance to know the organization better and get acquitted with norms of the company before actually start working.

THECHNICAL DEPARTMENT

The

technical

department

comprises

of

three

major

sub

departments: 36

Materials Production Fire and safety

Materials: This department is headed by Mr. N K Sharma. The department generally deals with the purchase of the materials required for the day to day operation. This department takes into account the general requirements and gives it to the finance department for approval. May operation for the production of petrochemical products require special equipment and special clothes and therefore there supply should be adequate in the company. The materials department has to see that the requirements are fulfilled so that the production process is not affected. The purchase department deals with the entire requirement like medical equipments and chemical as well as others also. Storage department deals with the adequate storage of the purchased goods and provide them when they are required.

PRODUCTION DEPARTMENT Production department is the heart of any refining unit. This department is headed by Mr. Sukumar Ray. This department is fragment into several sub units on the basis of their functionality. 37

Production unit is the critical unit of the refinery therefore special consideration is given regarding the maintenance and safety of the production unit. Different production units are headed by different manager and they are responsible for the action taking place in the unit. The different production units are accompanied with control rooms so that in case of any mishaps or accident quick response can be generated and therefore resulting in very minimal loss of life and property. FIRE AND SAFETY In any refining unit the fire and safety controls the highest position. The fire and safety department of Barauni refinery is very prompt and quick and is always ready to deal with any unwanted occurrence that may take place in the company. The fire and safety department is headed by Mr. P K Das. Every level of this department should integrate properly to bring in the best results.

SKILLS Skill required depends of the nature of job. Employee involved in the production need to have the technical skills. They are properly trained in the organization. The recruitment of the employees for the technical is done on the basis of qualification and experience. In 38

department other than technical department the skills required by the all the employees are communication skills, inter-personal skills, managerial skills, problem solving skills and negotiation skills. The Hr department is involved in the training and development of the employees. The HR team assesses these skills of all the individuals and provides the necessary training. The training and development activities are started off after the regional and national induction of all the employees. The steps are taken to impart the necessary skills through on job or off job training programs. On-job training requires the employee to learn as he or she works. Off-job training involves the behavioral and functional workshops. STYLE The organizational style of the management can be described as authoritarian as all the major policies and procedures are decided and deployed by the top level management. The lower level management generally deals with the implementation of the strategies formulated by the senior management. Though there is a significant change can be seen as the management now takes into account the suggestion and recommendation by the lower level executives. But the final authority of making policies rests in the hands of the top level management.

STRATEGY Energy conservation is one of the strategies followed by Barauni refinery and it has taken several initiatives to implement this strategy successfully in the organization. 39

To conserve energy, optimisation of the operation of the process heaters and boilers and maximum possible heat recovery from out going streams have been given utmost emphasis in day-to-day refinery operations. The efficient usage of utilities, optimisation of steam-power balance, and optimization of heat exchanger train have been the prime concern in the Energy Conservation area. As a broad classification the energy conservation activities have been grouped under long term and short term ones. The long-term activities are the high investment projects spread over a long period. The short-term measures consist of continuous efforts for energy optimisation. The specific energy consumption is monitored daily/weekly/monthly for effective priority. Energy Conservation fortnight is celebrated every year from 15th Jan to 31st January. Various completion like essay, slogan, poster on energy saving and cycle rally & in-house seminar is conducted. The importance of energy conservation is emphasized through TPM (Total Productive Maintenance) by achieving zero breakdowns, zero defect culture. Barauni Refinery has started TPM implementation in October2002 and Coker-A unit has been selected for implementation of Pilot model by April2004. TPM was formally kicked off on 30th Aug2004 after successful implementation of Pilot Model at process unit. Refinery wide implementation of TPM is planned to be completed by 2007 end. Right from the beginning Barauni Refinery has an exclusive Energy Conservation Cell for monitoring energy consumption and implementation of ENCON measures. control. The optimisation of process conditions and implementation of energy conservation scheme is given the highest

40

SYSTEMS 41

Among various systems followed in the organization, a study on the payroll system is been studied. The employees are placed in different scale of pay according to their grades. Further they are eligible to different allowances as and when the required. The scales of pay with some typical designations of the employees in refinery division are as following: GRADE A B C D E F G H I Increment: Annual increment- 4% of the basic pay Increment of promotion- 6% of the basic pay Different allowances are provided to the employees on the basis of their basic pay and according to their grades. The different allowances given to the employees are listed below: Dearness allowance City compensatory allowance House rent allowance Shift allowance Special allowance Conveyance reimbursement Leave travel concession Traveling allowance STAFF 42 SCALE OF PAY(Rs) 12000-17500 13750-18700 16000-20800 17500-22300 18500-23900 19000-24900 19500-25600 20500-26500 23750-28550 DESIGNATION Engineer\Officer Sr. Engineer\ Sr. Officer Deputy Manager Manager Senior Manager Chief Manager Dy. General Manager General Manager Executive Director

In Barauni refinery there are nine grades in Officers and eight grades in Non- Officer or workmen cadre. Grade -I is the senior most where as Grade A is the junior most in the officers category whereas the cadre I is the junior most and cadre 8 is the senior most in non-executive category known as staff category. GRADE I H G F E D C B A DESIGNATION Executive Director General Manager Dy. General Manager Chief Manager Senior Manager Manager Dy. Manager Sr. Officer Officer STRENGTH 01 02 05 13 43 42 65 80 139 390 STREGTH 179 239 255 212 316 032 033 043 1309

Total WORKMEN\ NON-EXECUTIVE GRADE 8th

DESIGNATION Office supridendent Sr. assistant Office assistant Sr. typist Technician Operator Yardman Messenger Total

SHARED VALUE

43

In Barauni refinery every employees

is well aware of their

responsibilities toward the environment therefore they take every possible step to protect the environment. They share a common value that is to keep the surrounding environment greener and save it from the various wastes which are produced in the course of refining of crude oil. Barauni Refinery has a full-fledged Environment Protection Cell. The worth noting is that this cell was established 28 years back in 1975. In Indian oil, Environment Protection has always remained a thrust area. The Environment Protection Cell having qualified engineers coordinates all the activities required to achieve continuous improvement in environmental performance related to Environmental Management in the Refinery. The goals and functions of the cell are: To achieve reduction of wastes and releases giving preference first to source reduction, second to recycle / reuse and third to treatment and thereby maintaining effluent and emission standards within the permissible limit and legislative requirements. To obtain legislative sanctions viz. emission and effluent discharge consent, NOC, Environment Clearance for new projects To and to achieve compliance with NOC and EC prevention mechanisms with by application of conditions. establish engineering and operational control. System development environment friendly replacement/improvement within and around the Refinery. Training / awareness programs in the areas of environment protection within and around the Refinery. The Refinery has a beautiful ecological park spread over an area of 75 acres. The park developed with in-house expertise and resources has 44

lush green lawns large variety of trees and shrubs and the wonderful ECO pond where flora & fauna and aquatic life are thriving on treated effluent. The surrounding tranquil environment of the ECO pond of park attracts hundreds of migratory birds every winter. It is a testimony of refineries dedication to fostering environmental excellence and enhancing quality of life in the region. Barauni Refinery had developed Environmental Management System conforming to the International Standards, ISO-14001 and Integrated the same with International Quality Management Standard, ISO9001:2000 and with the Occupational Health Management System conforming to OHSAS-18001:1999. Refinery thus developed an Integrated Management System called SHEQ System. SHEQ Policy, a set of objectives and time bond action plan are set for the continual improvement and customer satisfaction in the area of Safety, Health, and Environment & Quality.

SOME VIEWS OF THE ECOLOGICAL PARK

SWOT ANALYSIS OF BARAUNI REFINERY 45

STRENGTHS: Strong infrastructure provides Barauni refinery an edge over its competitors in implementing reforms as and when needed by the any change in the external environment. Continuous and uninterrupted flow of crude oil enables the refinery to cater to the demand of the markets in that region of the country. Employees are loyal to the organization which results in very low attrition rate and ultimately results in cost minimization. Being a public sector it enjoys the support of the government which may not be available in case of private refining units. WEAKNESSES: Union plays a vital role in deciding the day to day operation of the refinery. Financial rewards are only means for motivating the employees to increase the overall productivity. Far from the source of crude oil, in case of stoppage of crude flow the refining unit may have to face a shut down. Barauni refinery is one of the refineries in Indian Oil Corporation Ltd; therefore the overall profit or loss of the corporation may not give the actual performance of the Barauni refinery. Intervention by the central government in recruitment and other important functions of the refinery may hamper the productivity of the refinery. Inadequate supply of skilled labor in the adjacent area hinders in the smooth functioning of the refining unit as the organization has to look for other areas to compensate the demand of labor not met locally.

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OPPORTUNITIES: Barauni refinery can increase its product line with the help of sound infrastructural facilities. Barauni refinery has a great advantage of being the only refining unit in the states of Bihar and Jharkhand, therefore can take several initiatives to increase its sales. Barauni refinery can make use of its vacant land for the development of infrastructure. Barauni refinery can make an increase in its marketing touch points, hence can come with its own retail outlets and tap the increasing demand of petrol and diesel. THREATS: Aggressive marketing strategies adopted by private players may result in the sales of the products of the Barauni refinery. Emergence of retail outlets by Reliance industries may affect the share of Barauni refinery. Subsidies provided by the central government on the necessity items like petrol and diesel may affect the profit margins of the organization. Administrative price mechanism followed by the government does not allow the organization to react to the changes in the price of crude oil and changes in other factors required in the refining of the crude oil.

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Financial performance: Indian Oil Corporation has come up with very great results with an extraordinary increase in total revenue. The growth of the company can be easily understood when compared to its last financial year results.

Indian Oil Corporation has a maintained its market share and is looking forward to invest in other oil refineries domestically and internationally. The organization has taken several initiatives with respect to forward integration which includes manufacturing of petrochemical products. The organization is also going in to backward integration that includes exploration of crude oil so that the company can make itself self reliable. This year result shows that the company has recorded a growth of 20% in the share holders fund, which is a great return on investment. The shareholders of the company can look for greater returns on their investment as the organization is committed to increase its market share and increase the overall

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profitability of the firm and ultimately providing greater returns to the shareholders.

Learning Experience
Learning is synonymous to experience. This is because every human being learns out of experience and experience is the way of life. In IOC it is observed that consistent growth and excellent inter-

departmental co-ordination has provided a very good foundation for its future growth and long term plans. IOC is situated in a remote area, which is running successfully. This should encourage other organizations to setup their manufacturing facilities in rural areas there by generating more and more rural employment and empowerment. The organization has a good employee and employer relationship which May how best be the Strategy, Systems and Skills used in an organization, it cannot excel or leave a bench marking without UNITY. In IOC it is observed that a good sense of team spirit is created among employees and every team (department) has their own KPI (key performance indicators) targets to be achieved and they are very well motivated to achieve those targets. Scientific Recruitment and Training : The management of IOC develops and trains every employee to bring out his best faculties and to enable him to do a higher, more profitable class of work than he has done in the past. IOC maintains a Professional attitude between the management and employees. Organizational Culture: In IOC it is observed that every employee has a good respect for their positions held in the organization right from the Deputy General 49 will help the company to achieve its long term and short term objectives.

Manager to a shop floor helper i.e., the organization maintains a good Dignity of Labour and every employee believes that they are working with the organization and not for the organization. In IOC it is observed that in all the departments each employee receives orders and instructions from one Superior, but he is also equally answerable to the plant head and the plant head frequently visits various machines / employees to know the progress of the processes / projects. In IOC an employee is assigned with one particular task and until he completes it, no other task is assigned to him. In the sense there is no over lapping of tasks / activities. The company has Display Charts at various places in the shop floor. The Display charts include Continual Improvement charts, Japanese 5S model, and Vision, Mission and Quality policy of the company and so on. The reason for Display charts is that it gives a feel to the employees of various systems being adopted in the company and hence motivates them to perform better. IOC has effectively implemented the Japanese 5S model of maintaining a shop floor .With this system the company is able to maintain a clean and neat shop floor as well as the premises. With 5S system, time and cost are saved to a greater extent as things have a standard place and employees need not move idle in searching of required things. ''5S'' is the beginning of a productive life for everyone in IOC and is fundamental to productivity improvement. A clean, organized and systematic workplace directly impacts Waste and thus impacts Productivity, Quality, Costs and other factors. The Infrastructure facility is so well planned in IOC that employees in various departments can have an access to various facilities like canteen, toilet, parking, etc., in the minimum possible time. This saves time to a greater extent.

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 There is a Time office at the entrance of the company which keeps track of the timing of entry and exit of employees and visitors. Visitors are enquired on the purpose of their visiting and also for the security checks.

BIBLIOGRAPHY
Journals & Articles Of IOC WWW.indianoilcorporation.com tpmclubindia.com

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