‘IndianOil is steadily shaping itself as an integrated energy company’
New Delhi   04-Feb-2011


Mr. B M Bansal

Exclusive interview of Mr. B M Bansal, former Chairman, IndianOil, to Resource Digest

The last year has been period of unprecedented pressures running the largest commercial enterprise in the country. What are your perspectives of the year?

Yes, clearly we have been experiencing one of the most turbulent times in the recent past. We had challenges from almost every front and the fact that we have been able to face several of them shows the kind of mettle that we are made of. The best part is that all our diversification and globalization moves have kicked in at a very crucial time. Whether it is our petrochemicals foray or building a gas business portfolio and even our E&P investments have all touched peaks.

When I took over as Chairman my focus was to get all our non-liquid petroleum business to start contributing and when I look at the number it is indeed satisfying. But there are issues ahead of us and we have put in place strategies that will not only impact the immediate present but also the distant future.

You were the head of IndianOil R&D, can you tell us something about its role in your business?

Innovation and technological enhancements are key to IndianOil's business. The R&D Centre plays a very strategic role in our Corporation. Over the past year, we have developed 181 lubricant formulations and obtained 65 OEM approvals. In fact, our R&D Centre won the prestigious Technology Day Award for the successful development and commercialization of Multifunctional additives for Premium Grade Diesel (SERVO-DMFA) and Lubricity additive for Ultra low sulphur Diesel (SERVO LID).

An unique farmer & eco-Friendly SERVO Agrospray oil developed by us also won the prestigious CSIR award for Science & Technology innovations for Rural Development. I had the privilege of receiving the award from Prime Minister of India who complimented us for this achievement. We also developed long drain gear box oil for Volith gear boxes of DMRC and Bharat Stage IV compliant diesel engine oils. IndianOil is the 1st Indian company to commercially launch indigenously developed food-grade grease with listing of National Sanitary Foundation International, USA.

What has been done to achieve your aspiration of being the Energy of India. Where do you see yourself right now to achieve that vision?

IndianOil is steadily shaping itself as an integrated energy company. We are not simply in the business of oil but in the business of energy. To do justice to this Vision, IndianOil has been steadily exploring various segments in the Energy industry. Presently, our overseas portfolio includes nine blocks spanning Libya, Iran, Nigeria, Timor-Leste, Yemen and Venezuela. IndianOil is associated with two successful discoveries in oil exploration blocks, one each in India and Iran. Commercial appraisal of these blocks is underway.

In addition, the IndianOil-OIL combine has acquired participating interest in a block in Nigeria. The Corporation, in consortium with OIL, Kuwait Energy and Medco Energi of Indonesia has acquired a participating interest in two exploration blocks in Yemen. IndianOil is part of a consortium for the $20 billion CARABOBO-I project in Venezuela.

What about tapping the Gas business and forays into alternate energy?

Gas is proving to be a lucrative sector. IndianOil has participated with Adani Energy Ltd., in two rounds of bidding for development of City Gas Distribution networks in cities of Chandigarh, Ghaziabad and Allahabad. During 2009-10, IndianOil sold 1.683 million tonnes of Natural Gas with a turnover of Rs. 2,660 crore. Dadri-Panipat pipeline was IndianOil's first 'Natural Gas' pipeline. Through a consortium approach we have emerged as successful bidders in several Gas Pipeline projects coming up across the country.

We are exploring proposals to tie-up with TIDCO for setting-up a LNG import and re-gasification terminal at Ennore in Tamil Nadu and participation in city gas distribution business in the region. This will make us the biggest gas supplier in the region.

We have made forays into alternative energy options such as wind, solar, bio-fuels and nuclear power. The solar power initiative is being spearheaded on a pilot basis n Orissa, Karnataka and the Northeast and an all-India phased roll out is underway. The first commercial solar charging station (SCS) was put up at a retail outlet in Orissa. IndianOil is now in the process of implementing this pan India. A wind power project is currently operational in the Kutch district of Gujarat.

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. The project envisages producing 30,000 MTPA of bio-diesel by 2015. Another bio-diesel initiative has been undertaken with Ruchi Soya Industries to undertake projects in Jhansi & Lalitpur districts of UP. It is a unique initiative under the Public-Private-Panchayat partnership to set up a biodiesel value chain with NREGA funds for Jatropha curcas plantation.

The price of Petrol has been deregulated. There were some issues in the media about it? What is the future road map for fuel marketing? What are the challenges in the market place.

The price of crude oil is inching up and nations across the world are already coming to terms with this certainty. On the one hand there is an urgent need to insulate the common man to the vituperative effects of free market pricing, while on the other it is important to retain the strength and vigour of national oil companies that are the assets of the people of India themselves. It is, therefore, important that we accept the need to pay a higher price for a product that we are importing from foreign sources after payment by Oil Marketing Companies.

We have always shown an undying commitment to the Nation. At the same time we operate in a commercially linked and economically evolving world. There is a price that we need to pay for a product that is imported by paying precious foreign exchange. Therefore, periodic revisions in the RSPs of Petrol are unavoidable if we have to continue managing the energy supply chain and ensure the energy security of the country.

And we have always served over a Billion customers with dedication. IndianOil has a portfolio of brands that includes Indane LPGas, SERVO lubricants, XtraPremium petrol, XtraMile diesel, etc. IndianOil has a keen customer focus and a formidable network of customer touch-points dotting the landscape across urban and rural India, backed for supplies by bulk storage terminals and depots, aviation fuel stations and LPGas bottling plants. IndianOil's ISO-9002 certified Aviation Service commands a dominant market share in aviation fuel business, successfully servicing the needs of domestic and international flag carriers, private airlines and the Indian Defence Services.

Customer delight is the key driver of IndianOil's marketing operations. Under the XTRA retail outlet brand, IndianOil offers customers visiting its petrol and diesel stations a number of XTRA offerings, including assured quality and quantity, efficient forecourt service and high levels of housekeeping, choice of regular and branded fuels, 100% electronic dispensing, cashless transactions, loyalty programmes for cash & credit customers, and a number of non-fuel offerings tailor-made to the customer.

What about driving new businesses in the future.

At IndianOil, we are always on a look out for new business opportunities. We have a number of strategic alliances with world class companies in India and across the globe. IndianOil along with other OMCs have joined hands with Mumbai International Airport Pvt. Ltd. (MIAL) for the formation of a new joint venture company for setting-up and operating an integrated fuelling facility.

Avi-Oil India Pvt Ltd, promoted by NYCO SA, France and Balmer Lawrie & Co Ltd works to blend, manufacture and sell synthetic, semi synthetic and mineral based lubricating oils, greases and hydraulic fluids, related products and specialties for Defence and Civil Aviation uses. Green Gas Ltd, a JV with Gail for City Gas Distribution in Lucknow and Agra.

Similarly, Indo Cat Pvt Limited, a JV with Intercat, USA Manufactures & markets FCC catalysts and additives. IOT Infrastructure & Energy Services Ltd, another prestigious joint venture builds and operates terminalling services for petroleum products. It is a JV with Oiltanking GmbH, Germany. IndianOil Petronas Private Ltd is a company that operates imports facilities for LPG at Haldia and to engage in parallel marketing of LPG.

There are other joint ventures companies too like Petronet LNG Limited, Petronet VK Limited with the promoters being Petronet India Limited , Reliance Industries Limited & Essar Oil Limited., and others and IndianOil Skytanking Limited which designs, finances, constructs, operates & maintains aviation fuel facility projects.

Our subsidiaries IndianOil Mauritius Ltd, Lanka IOC and IOC Middle East have done remarkably well and we expect them to expand their operational presence in these foreign markets as well. Recently, IndianOil and Delhi Mumbai Industrial Corridor Development Corporation (DMICDC) signed a Memorandum of Cooperation for meeting the energy requirements of the 'Global Manufacturing and Trading Hub' being developed along the Delhi-Mumbai Industrial corridor, which includes setting-up Gas based power plants (6 x 1000 MW). This is a major project that will change the face of infrastructure in Western and Northern India.

What you are doing to fulfill your corporate social responsibilities (including steps for environment protection)?

We at IndianOil have defined a set of core values for ourselves — Care, Innovation, Passion and Trust - to guide us in all we do. We take pride in being able to claim all our countrymen as our customers. We are aware of the need to work beyond financial considerations and put in that little extra to ensure that we are perceived not just as corporate behemoths that exist for profits, but as wholesome entities created for the good of the society and for improving the quality of life of the communities we serve.

IndianOil has received awards for its environmental initiatives and achievements. Refineries like Bongaigaon have received National Awards for prevention of pollution from Ministry of Environment & Forests for their outstanding contribution towards environmental preservation. Every year, IndianOil sets aside a fixed portion of its profits for spreading smiles in millions of lives across the country through a comprehensive community welfare and development programme. About one-fourth of the community development funds are spent on the welfare of Scheduled Caste and Scheduled Tribe beneficiaries.

As part of its environment-protection initiatives, IndianOil has invested close to Rs. 7,000 crore in state-of-the-art technologies at its refineries for production of green fuels meeting global standards. The Corporation also supports a variety of endeavors in arts, culture, music and dance, apart from organising programmes on its own under the banners of IndianOil Art Exhibition, IndianOil Sangeet Sabha and IndianOil Kavi Sammelan.

What would you like to call as your major achievements, accomplishments, and recognitions apart from topping the Indian list of companies in the Fortune Global 500 listing?

The Fortune Global 500 Listing is definitely a feather in IndianOil's cap. Over the past fifty years, IndianOil has grown strength from strength. Our scale of operations, our financial power and our overall business all have grown tremendously. But our greatest achievement still lies in our ability to service the energy needs of the nation in the most efficient and reliable way possible. It gives us a sense of pride when we see people's lives being made easier with our products and services. The feeling of trust that IndianOil as a brand instills in all its stakeholders is by far our greatest achievement. This achievement itself further motivates us as a company to continue investing our best and delivering better than the best to all our clients.

IndianOil has been recognized as a heavyweight in the Indian industry for its sheer size and scale of operations. As a corporation, we regularly feature in the top in the rankings conducted by various institutions. IndianOil is also India's largest PSU and Highest Revenue Earner in BW Real 500 rankings and has been adjudged on of India's most valuable brands by Economic Times.

Bansal receives the
'India Pride Award' from Finance
Minister Pranab Mukherjee
Recently, the Government of India granted the 'Maharatna' status to IndianOil which was a major achievement indeed. The Maharatna status provides for enhanced autonomy and operational flexibility. We also received the "Best Service Brand" in "India Pride Awards" as well as the Reader's Digest 'Trusted Brand Gold Award' under the Petrol Station category, for the fourth time in a row.

IndianOil has entered into petrochemicals in a big way. You have capacity upgradations in your refineries and pipelines too. Can you share some highlights.

IndianOil's first and India's largest Naphtha Cracker Unit at Panipat Refinery is on stream successfully. IndianOil's world scale polymer units at Panipat, India are exclusively designed to custom produce a wide range of LLDPE, HDPE and Polypropylene (PP) grades for commodity as well as niche application segments. With a polymer capacity of 1.25 million MT, IndianOil is the second largest polymer producer in the Indian subcontinent.

The Panipat complex has a Polypropylene plant with two production lines of 300KTA each based on a Spheripol technology license from M/s. Basell, Italy. The Polypropylene units are designed to produce the entire range of Homopolymers, Block copolymers and Random copolymers. The two separate lines of PP give ample flexibility in producing a comprehensive range of PP grades.

A dedicated HDPE plant with a capacity of 350KTA and based on the Basell (Hostalen) slurry process produces grades using latest catalyst systems. The grades are critically designed for various value added application segments such as Film, Blow moulding & Pressure pipes. A LLDPE/HDPE swing plant of 350 KTA capacity is based on the Sclairtech Solution technology of M/s. Nova Chemicals, Canada. Apart from the general-purpose LLDPE & HDPE grades, the plant is also designed to produce specialty LLDPE grades.

The mega revamp project of our Panipat refinery has been completed, increasing refining capacity from 12 to 15 MMTPA, thus making IndianOil as lead refiner of India. We also commissioned the Chennai-Bangalore, Mathura-Bharatpur 'Product’ pipelines commissioned. Our quality upgradation projects have ensured that we launched BS-IV quality Petrol / Diesel well ahead of the deadline in 13 cities and BS-Ill across India.