Project on Indian Oil

A Project Report On

“THE BRAND EXCELLENCE ON INDIAN OIL CORPORATION” Submitted to Indian Oil Corporation Limited

Submitted by

Mohammed Yasir Ruknuddin REG NO:08b61626 In partial fulfillment of the requirement for the Degree Of

BACHELOR OF BUSINESS ADMINISTRATION At

KARNATAKA UNIVERSITY, DHARWAD

ANJUMAN INSTITUTE OF MANAGEMENT 1

BHATKAL

2009-2010

CERTIFICATE

This is to certify that Mr. MOHAMMED YASIR RUKNUDDIN of B.B.A 2nd year (Reg. No. 08b61626) had successfully undergone the implant training of 30 days in “KAMAKSHI PETROL BUNK” BHATKAL and had submitted this report entitled “THE BRAND EXCELLENCE ON INDIAN OIL CORPORATION” for the year 2009-10 in partial fulfillment of the requirements for the award of Bachelor Degree in Business Administration of Karnataka University Dharwad under the guidance of Prof. SHABNAM

PRINCIPAL (Prof. ZAFARULLAH KOKATNUR)

Prof. SHABNAM (Internal Guide)

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DATE:16/01/2010 PLACE: BHATKAL

DECLARATION

I here by declare that this project report entitled “THE BRAND EXCELLENCE

ON INDIAN OIL CORPORATION” is prepared by me towards the partial fulfillment of the requirement of the Bachelor of Business Administration course of the Karnataka University, Dharwad, under the guidance of Miss Shabnam Savanur I also declare that this project report has not been submitted at any time to any other university.

Name: MOHAMMED YASIR RUKNUDDIN

Reg. No: 08b61626

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Date:16/01/2010 Place: BHATKAL

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.

It gives me immense pleasure, to express my unfeigned and sincere thanks and gratitude to Miss. SHABNAM SAVANUR faculty Anjuman Institute Of Management for her assistance, advice and support throughout the preparation of this report.

I express my sincere thanks to our beloved principal Prof. ZAFRULLAH KOKATNUR, for giving valuable support and encouragement in preparing this report.

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I am also thankful to Mr.NAGESH BHAT for giving me valuable information regarding his concern.

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

TABLE OF CONTENTS 1. Introduction 2. Company Profile •

Petrochemicals

•

Oil Exploration & Production

•

Gas

•

Bio-fuels

•

Wind Energy Business

•

Consultancy

•

Globalization Initiatives

PAGE NO 6 8

3. Objectives & Obligations

12

4. Directors review

23

• • •

Refineries Pipelines Marketing

5

• • • •

Research & development Planning & business development Finance Human resources

5. Awards and recognition

33

6. Management

34

7. Major units

40

8. Major projects

42

9. Business

46

• • • • • • •

Refining Pipelines Marketing R&D Petrochemicals Gas E&P

10. Initiatives •

Integrity pack

•

Environment

•

IndianOil Academic Scholarships

•

IndianOil Sports Scholarship

•

Corporate Social Responsibility

•

Global Compact Initiative

57

11. Recognitions 64 • •

Distinctions Awards & Accreditations

12. Annexure 13.An Introduction to Kamakshi Auto Service

74 80 6

14. Conclusion, Suggestion & finding 15. Bibliography

81 82

INTRODUCTION IOC (Indian Oil Corporation) was formed in 1964 as the result of merger of Indian Oil Company Ltd. (Estd. 1959) and Indian Refineries Ltd. (Estd. 1958). Indian Oil Corporation Ltd. is the highest ranked Indian company in the prestigious Fortune ‘Global 500’. It was ranked at 135th position in 2007. It is also the 20th largest petroleum company in the world. Indian Oil Corporation Ltd. is currently India's largest company by sales with a turnover of Rs. 247,479 crore (US $59.22 billion), and profit of Rs. 6963 crore (US $ 1.67 billion) for fiscal 2007. Indian Oil and its subsidiaries today accounts for 49% petroleum products market share in India.

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Indian Oil group has sold 59.29mn tonnes of Petroleum including 1.74mn tonnes of Natural gas in the domestic market and exported 3.33mn tonnes in the yr 2007-08.

VISION OF IOCL A major diversified, transnational, integrated energy company, with national leadership and a strong environment conscience, playing a national role in oil security & public distribution.

MISSION OF IOCL IOCL has the following 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. 8

•

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.

VALUES OF IOCL Values exist in all organizations and are an integral part of any it. Indian Oil nurtures a set of core values: •

CARE

•

INNOVATION

•

PASSION

•

TRUST

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.

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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. 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 IndianOil's world-class R&D Centre is perhaps Asia's finest. Besides pioneering work in lubricants formulation, refinery processes, 10

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 IndianOil retail outlet in New Delhi this year. The Centre holds 214 active patents, including 113 international patents. IndianOil has joined the league of global technology providers last year with the selection of its in-house developed INDMAX technology (for maximising LPGas 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, IndianOil Technologies Ltd., is engaged in commercialising the innovations and technologies developed by IndianOil's R&D Centre. Customer First At IndianOil, 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 semiurban 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 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. To safeguard the interest of the valuable customers, interventions like retail automation, vehicle tracking and marker systems have been introduced to ensure quality and quantity of petroleum products. Widening Horizons 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, bio fuels, wind power projects, besides globalisation of its downstream operations.

Petrochemicals In petrochemicals, IndianOil is envisaging an investment of Rs. 20,000 crore (US$ 4 11

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 strengthen the Corporation’s presence in the sector.

Oil Exploration & Production In E&P, IndianOil 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, IndianOil 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 deepwater offshore block in Timor-Leste and two onshore blocks in Yemen. In all, IndianOil 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. IndianOil 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 12

In natural gas business, IndianOil sold 1.849 million tonnes of the product in 200809. 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, IndianOil 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, IndianOil formed a joint venture with the Chhattisgarh Renewable Development Authority (CREDA) with an equity holding of 74% and 26% respectively. IndianOil 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. IndianOil 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 IndianOiI 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 13

For over two decades now, IndianOil 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 IndianOil has set up subsidiaries in Sri Lanka, Mauritius and the United Arab Emirates (UAE), and is simultaneously scouting for new business opportunities in the energy markets of Asia and Africa.

Lanka IOC Plc (LIOC) Lanka IOC Ltd. operates about 150 petrol & diesel stations in Sri Lanka, and has a very efficient lube marketing network. Its major facilities include an oil terminal at Trincomalee, Sri Lanka's largest petroleum storage facility and an 18,000 tonnes per annum capacity lubricants blending plant and state-of-the-art fuels and lubricants testing laboratory at Trincomalee. Presently, it holds a market share of about 40%. In a highly competitive bunker market, catering to all types of bunker fuels and lubricants at all ports of Sri Lanka, viz., Colombo, Trincomalee and Galle. It is the major supplier of lubricants and greases to the three arms of the Defence services of Sri Lanka. LIOC's market share in petrol increased stands at 24.8% in 2008 with an overall market share of 16.9%.

IndianOil (Mauritius) Ltd. (IOML) IndianOil (Mauritius) Ltd. has an overall market share of nearly 22% and commands a 35% market share in aviation fuelling business, apart from its bunkering business. It operates a modern petroleum bulk storage terminal at Mer Rouge port, besides 17 filling stations. In addition to the ongoing expansion of retail network, IOML has to its credit the first ISO-9001 product-testing laboratory in Mauritius.

IndianOil Middle-East FZE (IOME) The Corporation's UAE subsidiary, IOC Middle East FZE, which oversees business expansion in the Middle East, is mainly into blending and marketing of SERVO lubricants and marketing of petroleum products in the Middle East, Africa and CIS countries. Finished lubes were exported to Oman , Qatar , Yemen , Bahrain , UAE and Nepal .

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Objectives & Obligations Objectives: •

To serve the national interests in oil and related sectors in accordance and consistent with Government policies.

•

To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil refining, transportation and marketing activities and to provide appropriate assistance to consumers to conserve and use petroleum products efficiently.

•

To enhance the country's self-sufficiency in crude oil refining and build expertise in laying of crude oil and petroleum product pipelines.

•

To further enhance marketing infrastructure and reseller network for providing assured service to customers throughout the country.

•

To create a strong research&development base in refinery processes, product formulations, pipeline transportation and alternative fuels with a view to minimizing/eliminating imports and to have next generation products.

•

To optimise utilisation of refining capacity and maximize distillate yield and gross refining margin.

•

To maximise utilisation of the existing facilities for improving efficiency and increasing productivity.

•

To minimise fuel consumption and hydrocarbon loss in refineries and stock loss in marketing operations to effect energy conservation.

•

To earn a reasonable rate of return on investment.

•

To avail of all viable opportunities, both national and global, arising out of the Government of India’s policy of liberalisation and reforms.

•

To achieve higher growth through mergers, acquisitions, integration and diversification by harnessing new business opportunities in oil exploration&production, petrochemicals, natural gas and downstream opportunities overseas.

•

To inculcate strong ‘core values’ among the employees and continuously update skill sets for full exploitation of the new business opportunities.

•

To develop operational synergies with subsidiaries and joint ventures and continuously engage across the hydrocarbon value chain for the benefit of society at large.

Financial Objectives •

To ensure adequate return on the capital employed and maintain a reasonable annual dividend on equity capital.

•

To ensure maximum economy in expenditure.

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•

To manage and operate all facilities in an efficient manner so as to generate adequate internal resources to meet revenue cost and requirements for project investment, without budgetary support.

•

To develop long-term corporate plans to provide for adequate growth of the Corporation’s business.

•

To reduce the cost of production of petroleum products by means of systematic cost control measures and thereby sustain market leadership through cost competitiveness.

•

To complete all planned projects within the scheduled time and approved cost.

Obligations •

Towards customers and dealers:- To provide prompt, courteous and efficient service and quality products at competitive prices.

•

Towards suppliers:- To ensure prompt dealings with integrity, impartiality and courtesy and help promote ancillary industries.

•

Towards employees:- To develop their capabilities and facilitate their advancement through appropriate training and career planning. To have fair dealings with recognised representatives of employees in pursuance of healthy industrial relations practices and sound personnel policies.

•

Towards community:- To develop techno-economically viable and environmentfriendly products. To maintain the highest standards in respect of safety, environment protection and occupational health at all production units.

•

Towards Defence Services:- To maintain adequate supplies to Defence and other paramilitary services during normal as well as emergency situations.

Group Companies Expanding Horizons IndianOil is currently metamorphosing from a pure sectoral company with dominance in downstream in India to a vertically integrated, transnational energy behemoth. The Corporation is already on the way to becoming a major player in petrochemicals by integrating its core refining business with petrochemical activities, besides making large investments in E&P and import/marketing ventures for oil&gas in India and abroad. With a vision to evolve into a major technology provider through excellence in management of knowledge and innovation, IndianOil has launched IndianOil Technology Ltd. to market the 16

intellectual properties developed by IndianOil's R&D Centre.

Joint Ventures (As on 31.03.2009) Name of JV

Avi-Oil India Limited

IOT Infrastructure & Energy Services Ltd. (Formerly known as Indian Oiltanking Limited)

Date of Promoters & Equity Incorporatio n 04.11.1993 IndianOil & Balmer Lawrie : 25% each Neden BV, the Netherlands: 50%

28.08.1996

IndianOil & Oiltanking GmbH, Germany: 50% each

Area(s) of Operation

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. To build and operate terminalling services for petroleum products.

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IndianOil Petronas Private Limited

03.12.1998

Lubrizol India Private Limited

01.04.2000

Petronet LNG Limited

02.04.1998

Petronet India Limited

26.05.1997

Petronet VK Limited 21.05.1998

Petronet CI Limited

07.12.2000

IndianOil & Petronas, Malaysia: 50% each

To construct and import facilities for LPG import at Haldia and to engage in parallel marketing of LPG. IndianOil & Lubrizol To manufacture and Corporation, USA: 50% each market chemicals for use as additives in fuels, lubricants and greases. IndianOil, BPCL, GAIL India Development of facilities Limited for import and & ONGC: 12.50% each regasification of LNG at Gaz de France International: Dahej and Kochi. 10% Asian Development Bank: 5.2% Public :34.8% IndianOil :18% BPCL & To implement petroleum HPCL:16% each products, pipeline projects Reliance Industries Limited, through Special Purpose IL&FS Trust Company Vehicles. Limited, ICICI Bank Ltd., State Bank of India & Essar Oil Limited:10% each IndianOil & Petronet India To construct and operate a Limited pipeline for transportation : 26% each, of petroleum products Reliance Industries Limited from Vadinar to Kandla. & Essar Oil Limited:13% each, SBI, GIIC, Kandla Port Trust, Infrastructure Leasing & Financial Services Limited: 05% each; Canara Bank: 02% each IndianOil, Petronet India & To construct and operate a Reliance Petroleum Limited pipeline for evacuation of : 26% each petroleum products from Essar Oil Limited & BPCL RPL and EOL refineries : 11% each at Jamnagar as well as 18

Green Gas Ltd.

07.10.2005

Indo Cat Pvt. Limited 01.06.2006

IndianOil Skytanking 21.08.2006 Limited

IndianOil Power 06.10.1999 Consortium Limited

Suntera Nigeria 205 Limited

09.05.2006

IndianOil-CREDA Biofuels Limited

06.02.2009

IndianOil & GAIL India Limited : 25% each, Infrastructure Development Finance Company Limited, IL&FS Investment Mangers Limited : 20% each Others: 10% IndianOil & Intercat Inc., USA: 50% each

from Gujarat Refinery at Koyali to feed the consumption zones at Central India. City Gas Distribution in Lucknow and Agra.

Manufacturing & marketing of FCC catalysts and additives. Design, finance, construct, operate & maintain aviation fuel facility projects.

IndianOil, IOT Infrastructure & Energy Services Ltd. (Formerly IOTL) & Skytanking Holding GmbH, Germany: 33.33% each IndianOil & Marubeni To build and operate its Corporation, Japan: 50% each own power generation plant at Panipat utilizing Petcoke from Panipat Refinery. IndianOil & Oil India: 25% Investments in oil and gas each industry especially in the Suntera Resources Ltd., upstream sector Cyprus: 50% IndianOil: 74%, Chattisgarh Farming, cultivating, Renewal Energy Development manufacturing, production Agency : 26% and selling biomass, biofuels and allied products & services

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50 Golden Years in the Service of the Nation

India’s flagship national oil company and downstream petroleum major, Indian Oil Corporation Ltd. (IndianOil) 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. IndianOil 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, IndianOil 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, IndianOil today accounts for nearly half of Indias 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, IndianOil sold 62.6 million tonnes of petroleum products, including 1.7 million tonnes of natural gas.

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The IndianOil 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-theart facilities to raise product quality to global standards, IndianOil has undertaken 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, IndianOil'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 IndianOil in the areas of petrochemicals, including polymers, and alternative energy sources. Strategic Origins IndianOil was born of the vision of Pandit Jawaharlal Nehru, the first Prime Minister of India, to pursue a policy of self-sufficiency in the petroleum sector as a strategic requirement of a free nation. As part of Panditjis thrust on oil exploration, refining and marketing operations, Indian Refineries Ltd. was established in August 1958 under 100% Government ownership to erect refineries and lay petroleum pipelines. To take care of marketing of petroleum products across the country, Indian Oil Company Ltd., another 100% Government-owned Company, was formed on 30th June 1959. It was entrusted with the task of reaching petroleum products to every nook and corner of the nation, 21

overcoming severe constraints in terms of logistics, terrain and wide seasonal and regional fluctuations in demand. The marketing activities of Indian Oil Company began on 17th August 1960 with the receipt of the first parcel of 11,390 tonnes of imported diesel of Russian origin from MV Uzhgorod docked at Pir Pau Jetty in Mumbai. The Indian petroleum market at that time was ruled by goliaths like Burmah Shell, Esso Eastern Inc., Caltex (India) Ltd., Indo-Burmah Petroleum Co. Ltd and Assam Oil Company Ltd. Indian Oil Companys first and foremost challenge was to assert itself in the face of stiff competition from these well-entrenched transnational oil companies operating in India. In its first year of marketing (1960-61), the Company’s volume sales was a meager 0.038 million tonnes (approximately 5% of industry sale) worth Rs. 0.8 crore. The first activity that Indian Refineries Ltd. undertook was the construction of a refinery at Noonmati near Guwahati in Assam with Rumanian help. The refinery was inaugurated by Pandit Jawaharlal Nehru himself in 1962, and processed Upper Assam crude oil received through an Oil India Ltd. (OIL) pipeline from Nahorkatiya. For product evacuation, the 435-km Guwahati-Siliguri pipeline and the Siliguri terminal were built and commissioned in 1964. Soon after, It was decided to set up two more refineries, one each at Barauni and Koyali for processing newlydiscovered crude oil at Assam and Gujarat respectively. The Barauni Refinery was built with Russian collaboration and went on stream in July 1964. The Koyali Refinery was also set up with technical assistance of Soviet Russia. IndianOil acquired control of the refinery from Oil & Natural Gas Commission on 1st April 1965 and commissioned it in October the same year after formal inauguration by the then President of India, Dr. S Radhakrishnan. Meanwhile, on 1st September 1964, Indian Refineries Ltd. was merged in Indian Oil Company to form a vertically integrated entity straddling both refining and marketing functions, and Indian Oil Company was renamed as Indian Oil Corporation Ltd. (IndianOil). While announcing the historic merger, Prof. Humayun Kabir, the then Union Minister of Petroleum & Chemicals, hoped that IndianOil would soon handle at least half of the trade in petroleum products. He was proved right within five years. By 1969, the Corporation was handling more than 50% of the total petroleum consumption of the nation and reached 64.2% market participation by the year 1974. Battle Spurs 22

As a veteran IOCian put it once, IndianOil has been genetically coded to serve the Defence services. This was proved beyond doubt during the 1965 war, when IndianOilPeople maintained the vital supply of petroleum products to the armed forces with grit and determination. In fact, the Srinagar depot was one of the first bulk storage facilities set up by the Corporation, in 1963. IndianOil’s entry into the aviation fuelling business too began with the Defence Services in October 1964 and then to civil aviation a year later, in November 1965. Another opportunity to show its mettle in times of national emergencies came IndianOil’s way during the 1971 war. In fact, in March 1972, during the war for liberation of Bangladesh, IndianOil even arranged for crude oil supplies to the Chittagong Refinery. After the war, the Corporation for the first time extended reservation in award of retail outlet dealerships to war widows, disabled Defence personnel, freedom fighters, etc., and continues to honour this tradition even now. At the time of Operation Vijay at Kargil in 1999, despite shelling of its depots at Leh and Kargil, IndianOil maintained petroleum supplies in the war zone and stood by the families of the war heroes later. Having proved its mettle in the 1965 war, IndianOil plunged into frenetic activity with new-found confidence setting up refineries, laying pipelines, building storage terminals and aviation fuel stations, entering new businesses like bitumen, marine bunkering, and appointing dealers and distributors across the country. The Haldia Refinery was set up in 1975, Mathura Refinery in 1982 and Panipat Refinery in 1998. The Corporation is setting up another grassroots refinery at Paradip in Orissa, for commissioning by the year 2012. Marketing Innovations Having set up Its first petrol & diesel station (retail outlet) at Kochi in October 1962, IndianOil currently operates the country’s largest network of retail outlets numbering over 18, 278 with focus on customer convenience. It was the first oil marketing company to introduce the concept of Multipurpose Distribution Centres (MPDCs) at its retail outlets located in rural areas way back in 1975. These MPDCs served as one-stop convenience shops, especially for farmers, and were the harbingers of the modern Kisan Seva Kendra (KSK) successfully introduced by IndianOil in 2006. As on date, over 2,550 specially formatted Kisan Seva Kendra outlets set up across the country meet the diverse needs of the rural populace, offering a variety of products and services such as seeds, fertilisers, pesticides, 23

farm equipment, medicines, spare parts for trucks and tractors, tractor engine oils and pumpset oils, besides auto fuels and kerosene. About 600 such Kendra are being added to the Corporation’s marketing network every year. IndianOil has been chosen as the Most Admired Retailer of the Year in the category of Rural Retailing at the India Retail Forum during 2008. As part of customer segmentation, exclusive XTRACARE outlets unveiled in select urban and semi-urban markets offer a range of value-added services to enhance customer delight and loyalty. Large format outlets on highways cater to the needs of motorists, with multiple facilities such as food courts, first aid, rest rooms and dormitories, spare parts shops, etc. SERVOXpress has been launched recently as a one-stop shop for autocare services. To safeguard the interest of the valuable customers, interventions like retail automation, vehicle tracking and marker systems have been introduced to ensure quality and quantity of petroleum products. Over the years, IndianOil has also launched several branded products, customerfocussed speciality products and customer rewards programmes. New generation branded transportation fuels with multifunctional additives are now available in major markets. Initiatives for cashless transactions for customer convenience through co-brand credit cards and fleet cards have met with great success. IndianOil also enjoys a dominant share of the bulk consumer business, including that of railways, state transport undertakings, and industrial, agricultural and marine sectors. Its 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. Kitchen Revolution Indane was the first branded product from IndianOil to hit the market, at Kolkata in October 1965, with product sourced from its Barauni Refinery. Introduction of the clean and efficient LPG as cooking gas ushered in a revolution in millions of households. Encouraged by customer response and to ensure dedicated service, IndianOil undertook massive augmentation of LPG storage and distribution facilities across the country in 1983. The process continues even today with the setting up of 89 Indane bottling plants, mostly in upcountry locations for quicker turnaround of cylinders. Several innovations were introduced in LPG marketing from time to time, like mounded storage and 19-kg cylinders for bulk customers, reticulated supplies 24

for housing complexes and 5-kg cylinders for customers in inaccessible and hilly terrain. The Corporation’s in-house IndMax process is aimed at enhancing LPG yield from crude oil refining. Indane cooking gas today reaches the doorsteps of over 53 million households in nearly 2,700 markets through a network of about 5,000 Indane distributors. This includes customers in Andaman & Nicobar and Lakshadweep islands. Autogas (LPG) dispensing stations are being set up in metros and major cities to cater to the growing vehicle population using LPG as fuel. New Businesses In pursuit of its Corporate Vision and 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, besides globalisation of its downstream operations. In petrochemicals, IndianOil is envisaging Rs. 30,000 crore (US$ 7.4 billion) investment 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 exports. 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, equipped with downstream polymer units is also coming up at Panipat. In E&P, IndianOil has bagged eight oil & gas blocks and two Coal Bed Methane blocks under NELP (New Exploration Licencing Policy) rounds in India, in consortium with other companies. It has also acquired participating interest in two onshore blocks in Assam and Arunachal Pradesh. Overseas ventures of the Corporation include two blocks in Sirte Basin and Areas 95/96 in Ghadames basin of Libya, Farsi Exploration Block in Iran, onshore farm-in arrangements in Gabon, an onland block in Nigeria and two onshore blocks in Yemen. IndianOil 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. In natural gas business, IndianOil is targeting sale of 2 million tonnes 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 25

well as captive power applications. An LNG import terminal is proposed to be set up at Ennore near Chennai. City gas distribution projects are in the pipeline in partnership with other companies. Group Synergy As part of inorganic growth through mergers and acquisitions, the refinery operations and marketing activities of Assam Oil Company were vested in IndianOil in October 1981, and it became the Assam Oil Division of IndianOil. The old units of the vintage Digboi Refinery (the first refinery in Asia) were revamped and by 1996 it was transformed into a modern refinery of IndianOil. In the year 2001, IndianOil acquired the Government stake and management control of stand-alone refiners Chennai Petroleum Corporation Ltd. (CPCL) and Bongaigaon Refinery & Petrochemicals Ltd. (BRPL), substantially enhancing group refining capacity. Subsequently, capacity expansion of CPCL and laying of the 526km Chennai-Trichy-Madurai product pipeline helped further strengthen IndianOil’s marketing in South India. Similarly, strategic turnaround initiatives taken by the IndianOil helped BRPL come out of the red and post profits and merger with the parent company is due soon. IndianOil acquired IBP in the year 2002 and seamlessly merged it with the parent company in 2007, leading to the formation of a larger and more formidable marketing network. IndianOil Technologies Ltd. was launched as a fully-owned R&D subsidiary in the year 2003 to market the Corporation’s intellectual property. IndianOil has set up three overseas subsidiaries in Sri Lanka (2003), Mauritius (2004) and the United Arab Emirates (2006). Lanka IOC Ltd. operates about 150 petrol & diesel stations in the island nation, besides an oil terminal and a lube blending plant at Trincomalee. IndianOil (Mauritius) Ltd. operates a modern petroleum bulk storage terminal at Mer Rouge port, has an overall market share of nearly 20%, and commands a 32% market share in aviation fuelling business in Mauritius. IOC Middle East FZE oversees blending of SERVO lubricants and marketing of petroleum products and lubricants in the Middle East, Africa and CIS countries. In addition, IndianOil has eight active joint ventures in operation with reputed Indian and overseas partners in the areas of aviation refuelling, city gas marketing, LPG and LNG imports and storage, speciality lubricants and additives, terminalling 26

services, etc. Future Plans In spite of deregulation of the oil sector and stiff competition from private players, IndianOil has maintained its position as India's flagship national oil company. IndianOilPeople have been in the forefront in adapting to the changing environment and enhancing the organisation’s capabilities in providing innovative and valueadded offerings to the customers. Against the backdrop of a rapidly changing business environment, IndianOil is focussing on certain key issues for sustained growth in the deregulated market. These are: prudent finance and projects management, optimum capacity utilisation of refineries and pipelines network, competitive business strategies, customerfocussed innovations in product and service offerings, streamlining of business processes, and achieving greater synergy with group companies for enhanced efficiency and effectiveness in the market place. The rising customer aspirations for quality products and services, at par with international standards, have also thrown up myriad opportunities. IndianOil is making the most of them mainly in expanding its existing customer base, customising products for specific market segments, streamlining distribution infrastructure, etc. As part of the Marketing Transformation Programme to move closer to the customers, IndianOil has bifurcated its marketing function vertically into exclusive retail and direct consumer groups, transferred powers from the four regional offices to 16 marketing offices in State capitals, and set up exclusive groups for process & systems optimisation, brand management and bio-fuels. The ambitious Project Manthan IT re-engineering project has enabled the organisation to assimilate IT and web-based business solutions for real time, integrated transactions and IT solutions for supply chain optimisation. India Inspired 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 27

developing techno-economically viable and environment-friendly products & services for the benefit of its consumers.

Directors’ review Refineries The year 2008-09 witnessed hectic project activity. Projects wor th Rs. 30,000 crore – entailing diversification, quality improvement, value addition and capacity enhancement - are fast progressing. Construction of the Rs.14,439 crore Naphtha Cracker is in full swing at Panipat, and its completion in the current year would be a new dawn of oppor tunities for IndianOil in the field of Petrochemicals. Other ongoing projects include Residue Upgradation & MS/HSD Quality Improvement Project at Gujarat Refinery, Improvement in Diesel Quality & Distillates Yield (Hydrocracker) at Haldia Refinery, DHDT at Bongaigaon Refinery and MS Quality Upgradation projects at all our refineries. The 15 MMTPA state-of-the-art grassroots refinery at Paradip has been approved at an estimated cost of Rs. 29,777 crore. This is the biggest-ever investment at a single location by IndianOil and perhaps by any corporate in the country. Conceived to process 100% heavy, high-sulphur cheaper crude for better profitability, the most modern Paradip Refinery would have a complex configuration and play a key role in meeting the growing energy needs of the country. As per the Auto Fuel Policy of the Government of India, petrol and diesel quality for 13 major cities will upgrade from the present BS-III quality to BSIV norms from 1st April 2010. The rest of the country will switch over to BS-III quality fuels from the present BS-II compliant fuels. In order to meet the requirement, fuel quality upgradation projects are in advanced stages of execution. Global warming is increasingly becoming an important issue. IndianOil has adopted the most advanced clean technologies to minimise CO2 emissions by reducing energy consumption, cutting down waste and increasing resource re-use in our refinery operations. We have been actively pursuing Clean Development Mechanism (CDM) projects. In 2008-09, two CDM projects, viz. AVU Energy Optimisation project at Digboi and Flare Gas Recovery Project at Haldia were registered with the United Nations Framework Convention on Climate Change (UNFCCC). These will yield 28,500 CERs. As India's flagship energy corporate, IndianOil has always strived to accomplish the most fulfilling role of fuelling the nation's economic development and helping realise the dreams and aspirations of its citizens. We are committed to continuing our march, whatever be the challenges. And in a year when we commemorate the 50 glorious years of IndianOil, we rededicate ourselves to the service of the nation and envision a future full of hope and promise. Organisational prosperity is nur tured, not inherited. IndianOil has always worked to identify, cultivate and enhance the core competencies that make growth possible. Even in the year which experienced an unexpected economic meltdown, a volatile market and widely fluctuating crude oil prices, IndianOil refineries achieved the highest ever crude oil throughput registering a 28

growth of 3.94% over last year. While the global capacity utilisation remained at 90-92%, IndianOil refineries clocked an overall capacity utilisation of 103%. Innovative ideas of sharing intermediate streams between the Group refineries located far and wide, enabled optimisation and value addition in operations thereby enhancing capacity utilisation and margins. During the year, IndianOil refineries achieved the highest ever combined distillate yield of 75.2% wt. surpassing the previous best of 73.7% wt. in 2007-08. Our determination to improve energy efficiency resulted in reduction of overall specific energy consumption to 64 MBN1 during 2008-09 from the earlier lowest of 67 in 2007-08. With emphasis on widening the crude basket for improved flexibility, security and lower input cost,our refineries processed 11 new grades of imported crude oil during the year. The erstwhile BRPL is now a part of IndianOil's Refineries Division as the eighth refinery consequent upon its merger.

pipelines pipeline section were also carried out based on this outcome.Our initiatives for asset protection by re-organising & re-inventing patrolling of pipelines and maintaining sustained coordination with the law & order authorities resulted in substantial reduction in pilferage attempts on our pipeline network. As a part of our continuous endeavour to serve the consumers better by optimising logistics, we have constructed a 36 km long ATF pipeline to connect IndianOil's Devanagonthi terminal with the new Bengaluru international Airport, and a 95 km long pipeline between the CPCL’s Manali refinery and the Meenambakkam AFS. In an attempt to diversify and tap the growth potential of gas pipelines, IndianOil has commissioned its first 274 km long cross-country LPG pipeline from Panipat to Jalandhar. The pipeline can transport 700,000 tonnes of LPG annually from Kohand to IndianOil's bottling plants at Nabha and Jalandhar. In addition, this pipeline provides improved logistics to meet the LPG requirements of the bottling plants at Una & Baddi in Himachal Pradesh and Jammu & Leh in Jammu & Kashmir. Signalling our foray into building natural gas pipelines, we have commenced work on the 133 km long first natural gas pipeline of IndianOil, to supply regassified LNG for captive use from Dadri terminal of GAIL (India) Ltd. to our Panipat Refinery.During the year, IndianOil 29

commissioned the 330 km long Paradip-Haldia Crude Oil Pipeline (PHCPL) system. Its Single Point Mooring facilities installed 20 km off Paradip coast provide substantial logistical support and cost benefit by offloading crude oil from very large crude carriers. A 265 km long product pipeline connecting our Gujarat Refinery to the marketing terminal at Ratlam was also completed. Other major projects currently under implementation include the 290 km long Chennai-Bangalore Product Pipeline, augmentation of the Mundra-Panipat Pipeline from 6 to 9 MMTPA, a 94 km long branch line on the Koyali-Dahej Pipeline to Hazira, and a 118 km long pipeline from Bijwasan to Panipat to transport Naphtha from Mathura Refinery to Panipat. We have also embarked upon the construction of five additional tanks of 85,000 kl capacity each at Vadinar in addition to setting up blending facilities there. Facilities are also being created to introduce Rajasthan crude oil in our crude oil pipeline system at Radhanpur and Viramgam. In the years to come, distribution infrastructure is poised for tremendous growth in India, providing enormous opportunities for the Pipelines Division. IndianOil will continue to benefit from the competitive advantage offered by its countrywide pipelines network as the safest, most eco-friendly and economical means of transportation of crude oil, petroleum products and natural gas.During the year, IndianOil's underground highways continued to reinforce its competitive edge by ensuring transportation of crude oil & petroleum products in a safe, energyefficient, and cost-effective manner. With a sustained focus on value maximisation, asset growth and capacity enhancement, the countrywide network of pipelines crossed the 10,000 km mark in length and 70 million metric tonnes per annum (MMTPA) in installed capacity during the year 2008-09. Maximising capacity utilisation, the Pipelines Division registered the highest ever throughput of 59.63 million tonnes, which is 4.6% higher than that of the previous year. Asset creation can add value only with sustained high quality maintenance. The Vadinar installation has successfully completed 30 years of operation and has handled 4,000 crude oil tankers safely. The highlights of the year include timely completion of major maintenance of the Single Point Mooring system commissioned in 1978. Adoption of new technologies in pipeline inspection and integrity management helped maintain peak performance of pipelines during the year. Online inspection by intelligent pigging of 803 km long Viramgam-Mathura section of the Salaya-Mathura Pipeline system was completed during the year.Extensive repair and refurbishment of this inspected

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Marketing Behind a billion satiated Indian customers is the relentless efforts of over 34,000 IndianOilPeople. Driving the nation's economic growth engine forward is the uninterrupted supply chain managed by IndianOil. IndianOil, a fine-tuned marketing machine, working to precision round-the-clock, round-theyear, is powered by a passion to serve, even against odds.Whether it is the sub-zero temperatures of LehLadakh region or the scorching deserts in Jaisalmer or the marooned areas of Andaman and Nicobar Islands, IndianOil continues to deliver, to make a difference to the community we serve.The modern business landscape is far more multi-dimensional today, with customers coming of age. Emotional connect with brands no longer comes from 'firepower' traits like Leadership, Value or Quality or even Technology Superiority, but from its 'soft power' of being a social contributor making a lasting difference to the lives of the community they serve. IndianOil has played this role admirably combining its leadership role in the business with a social conscience by rising to the occasion in times of natural calamities like famine, floods, earthquakes and cyclones.'How has this Brand made a difference to me and the Society?' is a question that is not too far away from customers' minds. It’s here that IndianOil enjoys a decided advantage. IndianOil not only straddles the 'mind to heart' space but also reaches out to the collective consciousness of the country,as an entity that has always had the interest of the nation at the very core of its visionary objective.Reaching products to once-inaccessible areas and improving the quality of life of a billion Indians through our products and services is a responsibility that IndianOil has fulfilled time and again.What helps us to be leaders is not just our market share but also our ability to understand the complex psyche of the Indian market. The swathe of marketing initiatives launched by IndianOil over the years, truly showcases our ability to be nimble footed in customising solutions across different demand requirements.A case in point, is our Kisan Seva Kendra model which has been universally acknowledged as one making a huge difference to the country's rural belt.It has been 31

recognised by several forums and has gone on to win awards from the Rural Marketing Association of India and the Asia Retail Congress during the year.Over the last decade, IndianOil has transformed the Indian petroleum retail market by enormously widening the retail basket of products and services.From a simple model retailing Petrol and Diesel, our outlets have metamorphosed into multi-brand, multiproduct and multi-service entities. Today this model has evolved as the industry's benchmark in India. IndianOil outlets have come to be recognised as one-stop stations offering a variety of services from Branded fuels to loyalty cards, from AutoGas to CNG and from Auto Car washes to ATMs. A new High is India's first Hythane(Hydrogen CNG) Retail Outlet in Delhi marking a quantum jump in Technology absorption in fuel retailing.Indane LPG marketing too has undergone a major Transformation with IndianOil's "Indsoft" software providing a state-of-the-art platform to plan, network and manage the vast LPG customer base.Non-fuel revenues will continue to be an area of Focus both today and tomorrow. A concrete roadmap is underway to consolidate this initiative even further.SERVO still rules India as its No.1 lubricant brand.Our globalisation aspirations crossed yet another milestone with the launch of SERVO lubricants in Oman in 2008. SERVO will hit new markets across the globe with its growing popularity and wider acceptance.Touching lives and reaching out to customers is a way of life at IndianOil. A new web-based customer grievance redressal system - eCFS together with an all-India toll free number introduced in 2008 has gone a long way in ensuring speedy solutions to customers' queries and complaints. For us at IndianOil, we see this as an exciting time. Millions of Indians even today have not partaken in the fruits of development. Their aspirations have remained unfulfilled and unrequited. And it will be our endeavour to address every segment of the need and offer customised solutions to them. That's going to be the motivation that will drive us forward into the future. It will be a resolve well worth taking, as we complete ‘50 Golden Years’ this year.

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Research & development Green is the new mantra for sustaining growth in this millennium. IndianOil, since its inception, has been a driver of adopting, developing and commercialising green technologies.In the global recognition of our commitment and success of green technology initiatives, IndianOil was conferred with the prestigious World Petroleum Congress Award-2008 for its path-breaking R&D work in hydro-processing technologies. It made the year 2008-09, a great luminous landmark in the 50 year golden history of IndianOil.Despite the upheavals in the global oil market this year, IndianOil’s R&D Centre continued innovating with greater vigour and achieved significant advances in development, demonstration and licensing of novel refining and lubes technologies.For our scientists, each downturn is an opportunity and each upturn a challenge.IndianOil INDMAX Technology chosen for setting up INDMAX RFCC unit of the 15 million tone refinery at Paradip was reconfigured to make it more flexible. This novel technology has also evinced interest from oil companies abroad.Continuing with our pursuit of developing Green technologies, we rolled out two new technologies, this year, INDAdeptG & INDAdeptD” – Adsorbent based Processes, for deep desulphurisation of gasoline and diesel streams, respectively, meeting EURO-IV norms. Another breakthrough achievement of the year was successful development of ‘IndVi’- a revolutionary high metal tolerant catalyst additive formulation, for FCC and RFCC. This year, the prototype ‘INDIPIG-12’ was successfully field demonstrated for inspection of 500 km pipeline. Development of commercial 12” IPIG was also started. ‘INDIPIG-14’ – the prototype 14” IPIG tool was evaluated in the Delhi- Panipat section of Mathura-Jalandhar Pipeline. To retain lubricant market leadership, IndianOil developed and released 186 product formulations for commercialisation, and received OEM/Customer approvals for 47 formulations. The significant ones among them were M&M, Suzuki, Tata Motors, Volvo, Eicher, Honda Motors, Cummins, SAIL,Indian Railways and Defence. As a step forward,field trial clearance from leading marine engine OEMs such as MAN B&W (Germany) and SEMT Pielstick (France) were obtained for improved grades of SERVO marine oils for DG set applications. During the year, we intensified research to reduce the carbon footprint of our products and operations.The first ever life cycle analysis of bio-diesel from Jatropha was conducted in collaboration with NREL, USA, with encouraging results. We also developed ecofriendly low PAH jute-batching oil. Recognitions for green efforts followed as IndianOil won the Golden Peacock Innovation Award for its eco-friendly agrospray oils, as well as the Petrofed Group Innovation Award for its novel low emission fuel additive.During the year, IndianOil launched several research programmes in frontier technology areas of second-generation bio-fuels, renewable and alternative sources of clean fuels from bio and fossil 33

sources. A MoU was signed with TERI University for advancing research in bio-fuels. Continuing with research in commercialising Hydrogen as fuel, IndianOil commissioned the first commercial HCNG dispensing station at Delhi. Research was initiated on E-10 (10% blend of ethanol with gasoline) in association with the Society of Indian Automobile Manufacturers.Seventeen (17) US/Indian patents were filed and ten (10) patents were granted during the year, taking our active portfolio of IP to 214 patents. During 2008-09, there was 100% increase over the previous year, and we are poised to keep this pace in the years to come.Collaborative R&D is our new fundamental for success. This year, we entered into research agreements with Criterion for novel catalyst development and evaluation; with BARC for tomography studies for Trickle Bed Reactor and acoustic emission testing; with Indian Institute of Science, Bangalore (Nano Tribology), for study of boundary lubrication in engine and metal working tribology; with Sud-Chemie for commercial production of metal passivation additive; with Delhi College of Engineering for development of parallel hybrid electric vehicle; and with EIL for licensing DHDS/DHDT technology, with TERI University, and IIT Madras for talent development. With a sharp focus on emerging as a world-class technology company, IndianOil’s R&D team has rededicated itself to greener innovations, and pledged to ensure continuous value addition to our products and processes, meeting and exceeding the aspirations of our customers.

Planning & business development In the past few years, IndianOil’s business strategy has been to straddle the entire hydrocarbon value chain through integration and diversification initiatives. Despite the turmoil in the global economy in the past fiscal, IndianOil strode ahead as it consolidated its established businesses and entered into new ones. In Exploration & Production (E&P), it was an activitypacked year. IndianOil crossed a major milestone when it was awarded for 34

the first time, two on-land blocks in the Cambay Basin with 100% participating interest and operatorship in the face of stiff competition in the seventh round of the New Exploration Licensing Policy (NELP) of the Government of India. In addition, we also bagged a deepwater block in consortium with ONGC and GSPC under NELP-VII. IndianOil’s upstream footprint expanded overseas when it farmed-in into a deepwater block in offshore Timor-Leste with a 12.5% participating interest. Gas discovered in the Assam-Arunachal Pradesh block during the year 2007-08 was successfully tested, and the commerciality of gas production from the Farsi offshore block (where IndianOil holds a participatory interest of 40%) in Iran was accepted.The petrochemicals business grew from strength to strength. On the domestic front, IndianOil continued to cater to a major chunk of Linear Alkyl Benzene (LAB, used for manufacture of detergents) requirements of the country’s biggest buyers (Unilever and Proctor & Gamble), while the export market widened to twelve countries from nine last year. The petrochemicals business received a boost when IOCLAB qualified Procter & Gamble’s worldwide quality standards. Indeed, this speaks of the world-class quality of our product. The sale of Purified Terephthalic Acid (PTA) grew significantly, exhibiting a year-on-year growth of 8.6%. With the Naphtha Cracker project at Panipat set to be commissioned by the end of the year 2009, preparations for putting in place the necessary structure for polymer marketing reached the final stage during the year. IndianOil marketed 1.85 million tonnes of re-gassified LNG (R-LNG), including 0.18 million tonnes for internal consumption in refineries. Green Gas Ltd. – IndianOil’s joint venture with GAIL (India) Ltd. for undertaking City Gas Distribution (CGD) in Lucknow and Agra – sold 13,208 tonnes and 8,919 tonnes of gas in Lucknow and Agra respectively. In order to rapidly expand the gas business, we have entered into agreements with different companies for gas sourcing, setting up CGD networks, as well as for selling gas through our retail outlets. Under the innovative pilot project ‘LNG at the doorstep’ to reach LNG directly to the consumers for industrial/captive power applications, two customers - H&R Johnson (at Pen, Maharashtra) and Schott Glass (at Jambusar, Gujarat) - were supplied over 15,000 tonnes LNG during the year. To service the requirements of the new customers, IndianOil has signed a contract with Petronet LNG Ltd. to increase the LNG loading capacity in road tankers at Dahej from the existing 15,000 metric tonnes per annum (MTPA) to 20,500 MTPA.Our effor ts to scale up the bio-fuel business touched a major landmark with the formation of a joint venture - IndianOil CREDA Bio-fuels Ltd. – in the state of Chhattisgarh. Mandated to organise 35

commercial captive plantation of energy crops for bio-diesel production, the venture is being keenly watched by national and international agencies due to its novelty and uniqueness of structure & approach. The project envisages production of 30,000 MTPA of bio-diesel by the year 2015 by undertaking plantation on 30,000 hectares of revenue wasteland. A pilot project for plantation of energy crops (Jatropha) in the State of Madhya Pradesh was also started during the year to explore the possibility of setting up a revenue land-based commercial bio-diesel unit and to develop benchmarks for plantation cost and output.IndianOil is endeavouring to widen its portfolio of energy offerings to include alternative energy options. A Renewable Energy Group was formed to sharpen focus on the vertical.As part of our commitment to develop sustainable energy systems, IndianOil forayed into wind energy generation by commissioning the first wind power project of 21 MW capacity near Ambliyara village in Kutch, Gujarat. In order to explore commerciality of solar energy, IndianOil also commissioned two pilot solar charging stations at its Kisan Seva Kendra stations in the state of Uttar Pradesh. Efforts are underway to expand the business portfolio in these areas.During the year, IndianOil published the GRI-G3 (Global Reporting Initiative) guidelines compliant Corporate Sustainability Repor t. This repor t provided description, data and perspective on IndianOil’s performance with respect to the triple bottomline of People-Planet-Profit.

Finance When crude oil price touched an all-time high of $ 147 per barrel in July '08, one prominent question in everyone's mind was when would it breach the $ 150 per barrel level and whether the prediction of analysts of the price touching $ 200 per 36

barrel would come true. The Government of India, which regulates the prices of the four sensitive products constituting about 65% of the total petroleum products consumption, anticipated a whopping Rs. 2,45,000 crore underrecoveries likely to be faced by the Oil Marketing Companies (OMCs) during the year.Measures taken by the Reserve Bank of India (RBI) to contain the high rate of inflation resulted in a steep increase in financing cost from 8% to almost 15%. In a short span of three months - July to Sept. '08 - the borrowings of the three Oil Marketing Companies soared from Rs. 71,000 crore to over Rs.1,10,000 crore. Our borrowings increased from about Rs. 34,500 crore as on 30th June '08 to over Rs. 60,000 crore in Sept. '08. Despite the compensation mechanism put in place by the Government in June '08, IndianOil posted a loss of over Rs. 7,000 crore in the second quarter of 2008-09. During the year, the heat was on as borrowings rose unabated, IndianOil faced a liquidity crunch and profitability took a hit.Meanwhile, the Ministry of Petroleum & Natural Gas, working closely with the Ministry of Finance and RBI, ensured that sufficient funds continued to flow to the oil sector enabling IndianOil to meet its commitment to supply products to consumers.One of the major reasons for the huge increase in our borrowings was the considerable lag in receipt of Special Oil Bonds. Oil bonds worth Rs. 35,895 crore as compensation for sales during Jan. '08 to Sept. '08 were issued in three tranches only in Nov. '08, Dec. '08, and Feb. '09. This coupled with the mechanism of special market operations introduced by the RBI to dispose off oil bonds relatively eased IndianOil's liquidity constraints and the borrowings came down to a level of Rs. 45,000crore as on 31st March '09.Despite severe liquidity constraints during the year, IndianOil balanced the financing requirements of its ongoing projects with the result that the capital expenditure touched a record high of about Rs. 11,000 crore.The oil price crash from a high of $ 147 per barrel to about $ 35 per barrel in the latter part of the year brought great relief to IndianOil in terms of liquidity though not with reference to profitability. Inventory procured during different periods at high prices resulted in significant losses. This coupled with a Government-mandated reduction in product prices and other factors such as lower refining margins,high interest cost and loss on disposal of bonds affected profitability substantially. Without additional support from the Government by way of full compensation of under-recoveries, it would not have been possible for IndianOil to post any profit during the year. Therefore, it was only on account of full compensation of under-recoveries by the Government that IndianOil could record a modest annual profit of Rs. 2,950 crore. This is in contrast to a loss of Rs. 6,632 crore upto Sept. '08 and Rs. 3,673 crore upto Dec. '08.The IndianOil Board has approved the Paradip Refinery project at an estimated cost of Rs. 29,777 crore. With a debt-equity ratio of 60:40, about Rs. 18,000 crore is to be funded by borrowings. Marking it as the single largest syndicated rupee term loan arranged so far for a single project, IndianOil has achieved financial closure for the rupee component of the loan to the extent of Rs. 14,900 crore through a consortium of 19 public sector banks and two financial institutions. The balance loan component is proposed to be met by foreign currency borrowings or by issue of bonds in the domestic market.As for the outlook for 37

the year 2009-10, the oil prices continue to be volatile and are trading in the region of $ 60 per barrel in May '09 as compared to $ 35 per barrel in Mar. '09. Although the refining margins are still thin, there is no cause for major concern. Till May '09, IndianOil's borrowings had come down to about Rs. 32,000 crore with unsold bonds worth Rs. 28,000 crore still on hand. With an appreciating rupee, lower interest rates and under-recoveries on the four sensitive products expected to be manageable, we can hope for a better financial situation in the year 2009-10 both in terms of profitability and liquidity.

Human resources The year 2008-09 witnessed significant human resource interventions, whether it was revisiting the corporate vision, integration of operations,recruitment of manpower at different levels or a revision in employee compensation structure.A fifty-year young corporate, IndianOil has lived up to its entrusted mandate of providing energy security to the country. In the last five decades, while IndianOil evolved from a fledgling company to a confident conglomerate straddling the entire spectrum of the hydrocarbon value chain, the oil & gas industry in India and abroad matured and metamorphosed. We perceived a need to revisit and redefine our corporate vision to uphold and protect IndianOil’s leadership position. The exercise of recreating the Vision was completed during the year with the new vision having been approved by the IndianOil Board. With business interests traversing the core areas of refining & marketing and extending to newer ver ticals such as exploration & production,petrochemicals, natural gas, bio-fuels, etc., there is a mounting need for manpower in IndianOil,especially in the new and emerging areas. During 2008-09, we recruited over 900 engineering & management graduates and CAs, the highest ever in a year, through open and campus recruitment.To immediately bridge the gap between skill requirement and availability in areas such as petrochemicals and bio-fuels, 23 executives were also recruited at the mid-level during the year.This was a year of integration for IndianOil. The marketing operations of Assam Oil Division (AOD) and IndianOil’s Marketing Division were amalgamated. A series of confidence-building measures ensured that the sensitive people-related issues were ironed out to ensure a smooth,organisation-benefitting fusion. The process of integration of IBP, which star ted in the year 2007-08, was also completed during the year. 38

Consequent upon the merger of BRPL with IndianOil effective 25th March 2009, activities are currently underway to ensure its seamless integration as our eighth refinery.As part of IndianOil’s petrochemicals master plan,a Naphtha Cracker complex equipped with downstream polymer units is coming up at Panipat Refinery. In a relatively short span of time since its entry into the new business segment, IndianOil has stabilised the petrochemical production facilities,added new product lines and continues to acquire new customers. Such a scale of investment warranted redefining business strategies and realigning the organisational structure of the petrochemicals group. A reputed management consultant was engaged for this purpose. IndianOil’s commitment to good corporate citizenship got a boost during the year with enhancement of the ceiling on annual expenditure for corporate social responsibility activities from 0.75% of the net profit of the previous year to 2% of the retained profit of the previous year. With more funds at its disposal now, IndianOil will identify and undertake more community welfare projects. In pursuance of the best Corporate Governance practices and to ensure greater transparency in the Corporation’s functioning, a ‘Whistle Blower Policy’ was framed and a procedure formulated to safeguard IndianOilPeople from the fear of victimisation in reporting incidents of malpractices.The Government of India had set up the second Pay Revision Committee for Public Sector Enterprises on 30th November 2006 under the chairmanship of Justice MJ Rao to give recommendations in respect of pay revision for Board & below Board level executives and nonunionised supervisors. Based on the recommendations of the Committee, the Department of Public Enterprises has advised the revision of pay scales w.e.f 1st January 2007 in Central Public Sector Enterprises. The revised scales are currently under implementation at IndianOil.2008-09 marked a steady flow of accolades to IndianOil. The Corporation emerged as the only PSU in the list of the top ’25 Best Employers’ in a nationwide survey conducted by Outlook and Hewitt Associates. IndianOil won the Petroleum Federation of India (Petrofed) Oil & Gas Industry Award for the best Human Resources Management Company of the year 2008.The prestigious ‘BML Munjal Award for Excellence in Learning and Development’ for the year 2008-09 too came our way. This award validates the innovative learning & development measures undertaken by IndianOil and reinforces its reputation of being an ‘academy company.’

awards & recognitions

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1.l IndianOil yet again clinched the top slot among the seven Indian companies featured in the Fortune 'Global 500' listing of the world's largest companies for 2008, improving its ranking to 105. 2.l IndianOil was the only petroleum company among 100 other industrial giants to emerge as 'The Most Trusted Fuel Pump Brand' in ET's Brand Equity annual survey for the year 2008. Among the 'Top 50 Service Brands' of the country, it bagged the 7th position. 3.l IndianOil received the coveted World Petroleum Congress Excellence Award 2008 at Madrid, Spain, in the technical development category for its pathbreaking R&D work in hydro-processing technology for Green Fuels. 4.l IndianOil won the SCOPE Gold Trophy for Environmental Excellence & Sustainable Development and Commendation Certificate for Good Corporate Governance for the year 2007-08. 5.l IndianOil continued to top the annual corporate listings of leading business publications such as the Economic Times, Business India and BusinessWorld in addition to topping the Oil & Gas category in the Financial Express-500 listing. 6.l IndianOil has been ranked as one of Best Employers in a survey conducted by Hewitt Associates in association with Outlook Business magazine. 7.l IndianOil bagged the prestigious BML Munjal Award for Excellence in Learning and Development for the year 2009 and was the only award winner in the public sector category. 8.l In recognition of its operational excellence and business solutions, IndianOil received a string of prestigious awards - SAP ACE AWARD (for Customer Excellence) for the year 2008 from SAP AG for B2B application for oil exchanges between IndianOil and BPCL SAP systems, Economics Times Smart Workplace Award for Corporate Business Technology Centre (that recognises companies using technology to enhance productivity at the work place) and CIO 100 Award for Innovations in Implementing Business Continuity for SAP R/3 Environment (for the third consecutive year). 9.l IndianOil received the 'Oil & Gas Supply Chain Excellence' award at the Second Express, Logistics & Supply Chain Conclave (Asia-Pacific) organised by India Times Mindscape with Business India group. 10.l Indian Express Uptime Champion Award 2008 was conferred on IndianOil's 40

Corporate Business Technology Centre in recognition of its well designed IT infrastructure uptime strategy. 11.l In recognition of its Kisan Seva Kendra initiative in rural markets, IndianOil received the prestigious 'Most Admired Retailer of the Year - Rural Retailing' award at the India Retail Forum held in Mumbai. 12.l For the fourth consecutive year, IndianOil was conferred the Safety Innovation Award instituted by the Safety & Quality Forum of the Institution Of Engineers (India). 13.l Indian Oil has been conferred the 'Business Super brand 2008' status by The Super brands Council of India. 14.l IiPM won the ISTD Training Award 2007-08 for innovative training Practices.

Management Profile of Mr. Sarthak Behuria Chairman, Indian Oil Corporation Limited

Mr. Sarthak Behuria is Chairman, Indian Oil Corporation Limited, India’s largest commercial enterprise with US$61 billion turnover for the year 20072008. He is also Chairman (part-time) of group Companies, Chennai Petroleum Corporation Ltd besides heading IOT infra structure a joint venture for building and operating terminal ling services for petroleum products. 41

Mr. Behuria heads several reputed industry organizations, chief among them being SCOPE (Standing Conference of Public Enterprises) in India. As First Vice-President, he also represents Asia on the board of World LPG as Asso-sarthak Behuriaciation. Mr. Behuria has been conferred the Honorary Fellowship of Energy Institute, UK, which is the highest level of professional recognition reserved for those who have made a notable and distinguished contribution to the energy industry. Mr. Behuria's expertise in India's Oil & Gas sector has been sought at many International forums.Widely travelled, Mr. Behuria has presented several papers in national and international fora. He recently chaired a session on 'Natural Gas as Transportation Fuel' at the 19th World Petroleum Congress organized at Madrid. He was also invited to deliver a special address at the Asia-Pacific Business Forum at UNESCAP held at Bangkok. Representing India at the 3rd OPEC International Seminar and the 95,h session of International Labor Conference, he spoke on behalf of India in matters of policy related to the oil sector. An alumnus of St. Stephen's College, Delhi, and the Indian Institute of Management (MM), Ahmadabad, Mr. Behuria joined Burmah Shell in 1973 before being absorbed in Bharat Petroleum Corporation Ltd. where he rose to the top position of Chairman & Managing Director. He also served the erstwhile Oil Coordination Committee of the Ministry of Petroleum & Natural Gas, Govt, of India. Under Mr. Behuria's stewardship, Indian Oil is transforming into a major, diversified, transnational integrated energy company, and has set its sight to make its presence across the entire hydro-carbon value chain and alternative sources of energy. Besides consolidation in the core areas of refining and marketing, Mr. Behuria is pursuing a string of strategic initiatives across the hydrocarbon value chain for forward integration into petrochemicals and back-wards into exploration & production of oil, and diversification into natural gas business, besides globalization of marketing operations. In recognition of his distinguished career in the oil sector, Mr. Behuria has been named among the top 10 most influential oilmen in India by 'Upstream', the internationally acclaimed oil & gas newspaper. Known to be a strong "people's man", he practices a management style that is both open and transparent. He is also a keen golf and bridge player. Honorary Positions Held Chairman of SCOPE (Standing Conference of Public Enterprises), the apex body of public enterprises in India for the second consecutive term (March 2006 to date).Chairman of Petroleum Federation of India (Petro Fed), representing Indian and international companies and organizations associated with the Indian hydrocarbon sector (August 2003 to date). Chairman of Council of Indian Employers - CIE, an apex body of employers in India. First Vice-President representing Asia on the board of World LP Gas Association (2006 to date). Honors Conferred the Honorary Fellowship of Energy Institute, UK - for distinguished contribution to the energy industry. Named among the top 10 most influential oilmen in India by Upstream, the internationally acclaimed oil & gas journal. Conferred the 'Udyog Ratna' award by the PHDCCI in 2006.Chosen to receive the prestigious "SCOPE Award for Excellence and Outstanding BOARD OF DIRECTORS 42

B M Bansal Director (Planning&Business Development) S V Narasimhan Director (Finance) V C Agrawal Director (Human Resources) & Director-in-charge (IBP Division) G C Daga Director (Marketing) B N Bankapur Director (Refineries) Anand Kumar Director (Research & Development) K K Jha Director (Pipelines) S Sundareshan Additional Secretary Ministry Of Petroleum & Natural Gas P K Sinha Additional Secretary & Financial Advisor Ministry Of Petroleum & Natural Gas Prof.(Mrs.) Indira J. Parikh Former Prof. IIM, Ahmedabad and President, FLAME, Pune Anees Noorani Managing Director, Zodiac Clothing Company Ltd Michael Bastian Former Chairman & Managing Director, Syndicate Bank Dr.(Mrs.) Indu Shahani Principal, HR College of Commerce & Economics, 43

Mumbai and Sheriff of Mumbai Prof. Gautam Barua, Director, Indian Institute of Technology,Guwahati N.K. Poddar Senior Advocate, Kolkata Raju Ranganathan Company Secretary

Principal Executives D K Samantaray Vipin Kumar

Chief Vigilance Officer Advisor (Security)

Executive Directors (Corporate Office) C Dasgupta Gas S S Soni Information Systems V P Sharma Internal Audit V K Sood Corporate Finance S C Jain Finance-Business Development R Narayanan Corporate Affairs A K Guha Business Development (Refinery & Pipelines) K K Gupta IndianOil Institute of Petroleum Management Thomas Antony Human Resources Development A M K Sinha Corporate Planning & Economic Studies N K Khosla Safety, Health & Environment Satish Kumar Human Resources Ms. D Lilly Pricing & Taxation V S Okhde Exploration & Production A P Verghese LNG A S Ujwal International Trade S Ramasamy Information Systems S C Meshram Petrochemicals 44

R S Solanki

CEO, IndianOil Foundation

Executive Directors (Refineries Division Headquarters) P K Goyal Finance A K Malhotra Projects H V Singh Projects-PDRP N K Bansal Shipping N K Khosla Projects - PNCP Sudhir Bhalla Human Resources A Panda Safety & Environment C S Das Maintenance & Inspection Prithviraj Sur Operations U L Dohare Projects Executive Directors (Refineries Division) J P Guharay Mathura Refinery S K Garg Barauni Refinery A K Roy Haldia Refinery G Bhanumurthy Guwahati Refinery R K Ghosh Incharge-Panipat Refinery A S Basu Gujarat Refinery S N Choudhary Projects-PNCP, Panipat A Saran Bongaigaon Refinery Executive Directors (Pipelines Division) T Vasudevan Finance A K Rauniar Human Resources T V Mohan Northern Region Pipelines Anil Tandon Operations S K Sinha Western Region Pipelines

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Executive Directors (Marketing Division Headquarters) Gautam Dutta Finance R K Puri Coordination Gautam Datta Human Resources Amitava Chatterjee Lubes R Sareen Aviation M Nene Supplies Mrinal Roy LPG N Srikumar CC, Branding & Planning S K Gupta Consumer Sales V K Jeychandran Gujarat State Office Satwant Singh Engineering & Projects M Ramana Andhra Pradesh State Office D Sen West Bengal State Office Deepak Pandya Maharashtra State Office E Unnikrishnan Pricing H S Bedi Retail Sales DSL Prasad Tamil Nadu State Office Executive Directors (Assam Oil Division) Mr. Subrato Ghosh Assam Oil Division, Digboi Executive Directors (R&D Centre) Dr R K Malhotra R&D Executive Directors (IBP Division) S K Roy Cryogenics V Ramaswamy Finance

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IndianOil Major Units Registered Office: IndianOil Bhavan, G-9, Ali Yavar Jung Marg, Bandra (East), Mumbai -400 051 Corporate office

Refineries Division Head Office: SCOPE Complex, Core-2 7, Institutional Area, Lodhi Road New Delhi -110003 Barauni Refinery: P.O. Barauni Oil Refinery, Dist. Begusarai -861 114 (Bihar) Gujarat Refinery:P.O. Jawahar Nagar, Dist. Vadodara -391 320(Gujarat) Guwahati Refinery: P.O. Noonmati, Guwahati-781020 (Assam) Haldia Refinery: P.O. Haldia Refinery Dist. Midnapur-721 606(West Bengal)

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Mathura Refinery: P.O. Mathura Refinery, Mathura -281 005(Uttar Pradesh) Panipat Refinery: P.O. Panipat Refinery, Panipat-132140(Haryana) Bongaigaon Refinery: P.O. Dhaligaon, Dist. Chirang, Assam - 783 385

Marketing Division Head Office: G-9, Ali Yavar Jung Marg, Bandra (East), Mumbai -400 051 Northern Region: IndianOil Bhavan, 1, Aurobindo Marg, Yusuf Sarai New Delhi -110016 Eastern Region: IndianOil Bhavan, 2, Gariahat Road, South (Dhakuria) Kolkata -700 068 Western Region: 254-C, Dr. Annie Besant Road, Worli Colony, Mumbai -400 025 Southern Region: IndianOil Bhavan 139, Nungambakkam High Road

R&D Centre: Sector 13 Faridabad -121 007 (Haryana)

Pipelines Division Head Office: A-1 Udyog Marg, Sector-1, Noida-201301 Northern Region: P.O. Panipat Refinery Panipat -132 140 (Haryana)

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Western Region: P.O. Box 1007,Bedipara, Morvi Road,Gauridad, Rajkot-360 003 Southern Region: 139, Nungambakkam High Road Chennai – 600034

Assam Oil Division: P.O. Digboi -768 171 (Assam)

IBP Division 34-A, Nirmal Chandra Street, Kolkata - 700 013

Business Group(Cryogenics) Sewri Terminal II, Sewri (East), Mumbai - 400 015 Business Group(Cryogenics), A-4, MIDC, Ambad, Nasik - 422 010

Group Companies: Chennai Petroleum Corporation Ltd: 536, Anna Salai, Teynampet, Chennai - 600 018 IndianOil Technologies Ltd: SCOPE Complex, Core-2 7, Institutional Area,Lodhi Road,New Delhi-110003 IndianOil (Mauritius) Ltd: Mer Rouge Port Louis Maruritius IOC Middle East FZE: LOB 14209, Jebel Ali Free Zone, P.O.Box: 261338 Lanka IOC PLC: Lanka IOC Head Office Level 20, West Tower, World Trade Center,

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Echelon Square, Colombo - 01, Sri Lanka.

IndianOil Major Projects IndianOil 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)

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.

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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)

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)

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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.

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.

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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

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).

BUSINESS Refining Born from the vision of achieving self-reliance in oil refining and marketing for the nation, IndianOil has 53

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. IndianOil controls 10 of India’s 20 refineries. The group refining capacity is 60.2 million metric tonnes per annum (MMTPA) or 1.2 million barrels per day -the largest share among refining companies in India. It accounts for 33.8% share of national refining capacity. The strength of IndianOil 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 IndianOil 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 grassroot 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 customized operating manuals, which are continually updated. IndianOil refineries have an ambitious growth plan with an outlay of about Rs. 55,000 crore for capacity augmentation, de-bottlenecking, bottom upgradation and quality upgradation. Major projects under implementation include a 15 MMTPA grassroots refinery at Paradip, Orissa, Naphtha Cracker and Polymer Complex at Panipat, Panipat Refinery 54

expansion from 12 MMTPA to 15 MMTPA, among others. In addition, petrol quality upgradation projects are under implementation at Panipat, Mathura, Barauni, Guwahati and Digboi refineries proposed to be completed by the end of 2009. On the environment front, all IndianOil 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. 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.

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Pipelines

Indian Oil Corporation Ltd. operates a network of 10329 km long crude oil and petroleum product pipelines with a capacity of 71.60 million metric tonnes per annum. Cross-country pipelines are globally recognised as the safest, cost-effective, energy-efficient and environmentfriendly mode for transportation of crude oil and petroleum products. During the year 2008-09 IndianOil’s crude oil pipelines registered the throughput of 38.46 million metric tonnes. Corporation’s largest crude oil handling facility at Vadinar marked the berthing of 4000th tanker since inception. The terminal operates two offshore Single Point Mooring (SPM) systems, to feed Koyali, Mathura and Panipat refineries. Raising efficiency and emerging as the least-cost supplier, IndianOil has added the 330-km Paradip-Haldia crude oil pipeline (PHCPL) to its bustling pipeline network during the year. The PHCPL system has a Single Point Mooring installed 20-km off the Paradip coast. With this, it is now able to pump crude oil from Very Large Crude Carriers to the tank-farm set up onshore and onward to Haldia through the pipeline. The Pipeline has replaced the earlier system of receipt of crude oil at Haldia port through smaller tankers. On the west coast, the Mundra-Panipat pipeline is being further augmented to transport an 56

additional 3 Million Metric Tonne Per Annum (MMTPA) of crude oil to Panipat Refinery, under expansion from 12 to 15 MMTPA. Additional requirement of crude oil for Koyali, Mathura and Panipat refineries is planned to be met by de-bottlenecking and augmenting Salaya-Mathura Pipeline system. IndianOil’s product pipelines, connecting its refineries directly to high-consumption centres, achieved a throughput of 20.92 million tonnes during 2008-09. IndianOil has now joined the select group of companies in India which owns and operates LPG pipelines by building its first such cross-country facility linking Panipat with Jalandhar. Apart from providing better logistics, this pipeline can transport 700,000 tonnes of LPG from Kohand near Panipat refinery to IndianOil’s bottling plants at Jalandhar and Nabha in Punjab. The pipeline will also simultaneously to meet the requirement of LPG at Una and Baddi in Himachal Pradesh and at Jammu and Leh in J&K. Two pipelines linking the major airports of India have been commissioned during the year to transport Aviation Turbine Fuel to these airports. The 36 km long pipeline from existing Devangonthi terminal to New Bengaluru International Airport, Devanhalli, Bengaluru was commissioned in October 2008. The 95 km long ATF pipeline from CPCL to Chennai AFS was commissioned in December 2008. In its continuous efforts of expanding the network IndianOil is implementing 290 km long product pipeline from Chennai to Bangalore to facilitate cost effective positioning of products at consumption centre located in and around Bangalore and to strengthen product positioning capabilities of CPCL Refinery. IndianOil is also implementing a 217 km long branch pipeline from Koyali-Sanganer Pipeline at Viramgam to existing scrapper station at Churwa along with use of a 14 km long existing pipeline from Churwa to Kandla.

Marketing Reaching out to a Billion Hearts IndianOil has one of the largest petroleum marketing and distribution networks in Asia, with over 35,000 marketing touch points. Its ubiquitous petrol/diesel 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, IndianOil is truly 'in every heart, in every part'. IndianOil'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

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Several landmark surveys continue to rate IndianOil 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. IndianOil has been adjudged India's No. 1 brand 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. In addition, IndianOil topped The Hindu Businessline's "India's Most Valuable Brands" list. However, the value of the IndianOil 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 & natural gas and downstream marketing operations abroad. IndianOil is a national brand owned by over a billion Indians and that is a priceless value.

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 refinerycum-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 58

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-toliquid, gas-to-liquid, alternative fuels, synthetic lubricants, nano-technology, etc. Through these R&D initiatives, IndianOil will continuously enhance value for all its stakeholders Lubricant Research 59

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 WartsilaSulzur engines. Another accomplishment is the global approval from MAN B&W of Denmark for IndianOil'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 refinerycum-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 60

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-toliquid, gas-to-liquid, alternative fuels, synthetic lubricants, nano-technology, etc. Through these R&D initiatives, IndianOil will continuously enhance value for all its stakeholders. Lubricant Research 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 Wartsila61

Sulzur engines. Another accomplishment is the global approval from MAN B&W of Denmark for IndianOil's marine oils. 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 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. 62

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 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. 63

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 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, IndianOil is focussing on transforming itself by translating global business opportunities into successful commercial initiatives. IndianOil 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 IndianOil 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., IndianOil'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 64

distribution in other parts of the country. As a supplier, IndianOil 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, IndianOil'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 revisiting its strategic plans and undertaking mid-course corrections, wherever necessary. To enhance upstream integration, IndianOil has been pursuing exploration & production activities both within and outside the country in collaboration with consortium partners. Recently, IndianOil was associated with two successful discoveries in oil exploration blocks, one each in India and Iran. Commercial appraisal of these blocks is underway. IndianOil 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 Energi 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

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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.

Initiatives IndianOil adopts Integrity Pact IndianOil has entered into a Memorandum of Understanding (MoU) with Transparency International India (TII) in January 2008, for implementing an Integrity Pact Programme focussed on enhancing transparency in its business transactions, contracts and procurement processes. IndianOil believes in total transparency, integrity and accountability in its functioning. It values its business relationships with its numerous domestic and international contractors and vendors of goods and services and is committed to dealing with them in a fair and transparent manner by maintaining the highest ethical standards in its transactions with them. The MoU was signed by Mr. Sarthak Behuria, Chairman, IndianOil, and Admiral (Retd.) R H Tahiliani, former Chief of Naval Staff and Chairman of TII. Under the MoU, IndianOil is committed to implementing the Integrity Pact in all its major procurement and work contract activities. Four Independent External Monitors nominated by TII in consultation with the Central Vigilance Commission (CVC) shall monitor the activities. The Integrity Pact would strengthen established systems and procedures by creating trust and would have the full support of the Central Vigilance Commission. Transparency International India, launched in 1997, is the Indian Chapter of Berlin-based Transparency International, which has presence in 93 countries. The Integrity Pact Programme was launched in the mid-90s by TI to create 'islands of Integrity' through a voluntary contract between the buyer and the seller to eliminate unfair practices. It establishes mutual contractual rights and obligations and brings transparency and enhances the credibility of the organizations.

Environment IndianOil’s Green Agenda As an active partner of the Global Compact Programme of the United Nations, IndianOil is fully focussed on “sustainable development.” As a dominant player, the Corporation recognises protection of environment as a core commitment of its business. As part of this commitment, all operating units and installations of IndianOil have a comprehensive safety, health & environment management system in place. The facilities are periodically reviewed and upgraded from time to time for better performance. 66

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All IndianOil refineries fully comply with the prescribed environmental standards and incorporate state-of-the-art effluent treatment technologies. Sustained efforts are being made to further improve the standards by introducing new state-of-the-art technologies further improve the existing standards and facilities.

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The environment management systems of all IndianOil refineries, pipeline Installations and major marketing installations/terminals are certified to ISO-14001 standards.

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All IndianOil refineries are accredited for Occupational Health&Safety Assessment Series (OHSAS-18001). All refineries are also rated under International Safety Rating System (ISRS). Panipat and Gujarat Refineries are rated “Level 9” in the scale of 1 to 10.

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All refineries have been provided with full-fledged effluent treatment plants consisting of physical, chemical, biological&tertiary treatment facilities. ‘Oilivorous-S’&‘OilivorousA’ technologies are being used for the treatment of oily sludge and acid tar respectively. The treated effluent is far superior to the stipulated MINAS quality and quantum standards. Treated effluent is being reused to the extent of 65-70% in the refinery units. Panipat Refinery continues to maintain zero discharge since commissioning in 1998.

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IndianOil refineries have adopted various measures for control of gaseous emissions. These include use of low-sulphur fuel oil, desulphurisation of refinery fuel gas, tall stacks for better dispersion of flue gases, advanced process control systems; and energy conservation measures to reduce fuel consumption.

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The sulphur dioxide emissions at IndianOil Refineries are well below the limits prescribed by the Ministry of Environment&Forests and State Pollution Control Boards. Ambient air monitoring stations with automatic continuous monitoring instruments are provided at all the refineries. In particular, Mathura Refinery has set up three ambient air quality-monitoring stations between the refinery and the city of Agra and a fourth one at Bharatpur. Utmost care is taken to minimise the impact of refinery operations on the air quality of the surrounding areas so that the ambient air quality remains within the stipulated limits prescribed for sensitive areas.

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Most IndianOil refineries have commissioned secondary processing units for improving fuel quality and reducing emissions. Some of the recent commissionings include Hydrogen unit and Diesel Hydrotreater unit at Mathura refinery and Motor Spirit Quality projects at Mathura and Haldia refineries. Sulphur recovery units have been installed at all the refineries.

Green Initiatives •

Low Sulphur (0.5%) Diesel was introduced in metros from April 1996.

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Extra-low Sulphur (0.25%) Diesel was introduced in the eco-sensitive Taj Trapezium area from September 1996, in Delhi from October 1997, and across the country from 1st January 2000.

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Diesel with 0.05% sulphur content was introduced in the metros in 2001. 67

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Unleaded Motor Sprit (petrol or Gasoline) was made available all over the country since February 1, 2000.

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Green fuels (petrol and diesel) conforming to Euro-III emission norms have already been introduced in 13 cities/states; the rest of the country is getting BS-II fuels.

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IndianOil is fully geared to meet the target of reaching EURO-III compliant fuels to all parts of the country by the year 2010; major cities will upgrade to Euro-IV compliant fuels by that time.

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IndianOil has invested about Rs. 7,000 crore so far in green fuel projects at its refineries; ongoing projects account for a further Rs. 5,000 crore.

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Motor Spirit Quality Improvement Unit commissioned at Mathura Refinery; similar units are coming up at three more refineries.

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Diesel quality improvement facilities in place at all seven IndianOil refineries, several more green fuel projects are under implementation or on the anvil.

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The R&D Centre of IndianOil is engaged in the formulations of eco-friendly biodegradable lube formulations.

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The Centre has been certified under ISO-14000:1996 for environment management systems.

Details of Indian Oil Corporation Limited Scholarships •

The 450 Scholarships provided by the Indian Oil Corporation Limited are broken under the following heads:

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250 scholarships for 10+/ ITI students on a zonal basis @ Rs. 1000/- per month for two years.

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100 scholarships for Engineering students @ Rs. 2000/- per month for four years.

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40 scholarships for MBBS students @ Rs. 2000/- per month for four years.

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60 scholarships for MBBS students @ Rs. 2000/- per month for two years.

Eligibility criteria for Indian Oil Corporation Limited Scholarships Students pursuing full time courses in the above mentioned streams and studying in Schools / Colleges / Institutions / Universities recognized by MCI /AICTE / State Education Boards / State Govt./ ICSE / CBSE / Central Govt./Association of Indian Universities, are eligible to apply for the Indian Oil Corporation Limited Scholarships. The minimum eligibility criteria for application is listed below: •

For 10+ / ITI scholarships, students securing a minimum of 65% marks in their 10th standard examination or equivalent may apply.

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For Engineering scholarships, students securing a minimum of 65% marks in their 12th standard examination or equivalent and having a confirmed admission into a full time engineering degree course may apply.

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For MBBS scholarships, students securing a minimum of 65% marks in their 12th standard examination or equivalent and having a confirmed admission into an MBBS degree course may apply.

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For MBA scholarships, students securing a minimum of 65% marks in their graduation examination or equivalent and having a confirmed admission into an MBA degree course may apply.

In all cases, the gross joint income of the family of the candidate from all sources should not exceed Rs. 1,00,000/- (Rupees One Lakh only). Reservation and Age Limit for Indian Oil Corporation Limited Scholarships For application to the Indian Oil Corporation Limited Scholarships, the minimum and maximum age limits are 15 years and 30 years respectively. Relaxation in the upper age limit is 3 years for OBC candidates, 5 years for SC/ST candidates and 10 years for physically challenged / physically handicapped candidates. 50% of the scholarships are reserved for SC/ST & OBC candidates. In each category, 25% of scholarships are reserved for girl students and 10% for physically challenged / physically handicapped students. Only those listed in the central government's OBC list will be considered against OBC quota. Application for Indian Oil Corporation Limited Scholarships: Applications for Indian Oil Corporation Limited Scholarships are to be made as per the proforma given by the IOCL. The Scholarship Scheme is formally announced through newspaper advertisements inviting applications on September 1, every year, coinciding with the Indian Oil day. A period of 30 days is given to students for submission of their application forms and relevant documents.

IndianOil Academic Scholarships Indian Oil Corporation Limited - India's largest commercial enterprise and the No.1 Indian Company in Fortune 'Global 500' listing - awards 450 Scholarships for meritorious students all over India, under the IndianOil Scholarships Scheme for each academic year. As part of IndianOil's social responsibility programme, the scheme provides for attractive 69

scholarships to bright students selected on 'merit-cum-means' basis. For each academic year, 450 scholarships covering the first year students of 10+ / ITI, Engineering, MBBS and MBA, have been formally announced through newspaper advertisements inviting applications under the IndianOil Scholarships Scheme As part of the scheme, special encouragement is being given to girl students, physically challenged students, and students from J & K as well as the Northeast States. IndianOil Sports Scholarship Nurturing Sportspersons Through Scholarships The objective of this scheme is to award IndianOil Sports Scholarships to promising young players with a view to encourage talent and create a pool of sportspersons from whom to select sport appointees to the Corporation . Sports scholarships are given to upcoming junior players in the age group of 15-18 years and in the case of potential/talented players below 15 years but above 14 years. In team games, it is given to State level players in the team and in other games based on national ranking in the respective category. The duration of the sports scholarships is for a period of three years subject to performance review every year. The games and categories for IndianOil sports scholarship are as follows: Athletics Badminton Carrom Chess Cricket Golf Hockey Table Tennis Tennis Snooker & Billiards

Boys&Girls Boys&Girls Boys&Girls Boys Boys Boys Boys Boys&Girls Boys Boys

Apart from catching them young, IndianOil pursues a policy of providing employment to national and international sports persons so that they can be assured of their financial safety and concentrate fully for earning glories for the country. 70

Corporate Social Responsibility "CSR: A Cornerstone of our Enduring Success" At IndianOil, corporate social responsibility (CSR) has been the cornerstone of success right from inception in the year 1964. The Corporation’s objectives in this key performance area are enshrined in its Mission statement: "…to help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience."

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. That’s why, we coined the phrase, “IndianOil – India Inspired", in our corporate campaigns. Public corporations like IndianOil are essentially organs of society deploying significant public resources. We, therefore, 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. As a constructive partner in the communities in which it operates, IndianOil has been taking concrete action to realise its social responsibility objectives, thereby building value for its shareholders and customers. The Corporation respects human rights, values its employees, and invests in innovative technologies and solutions for sustainable energy flow and economic growth. In the past four decades, IndianOil has supported innumerable social and community initiatives in India. Touching the lives of millions of people positively by supporting environmental and health-care projects and social, cultural and educational programmes. Besides focussing primarily on the welfare of economically and socially deprived sections of society, IndianOil also aims at developing techno-economically viable and environment-friendly products&services for the benefit of millions of its consumers, while at the same time ensuring the highest standards of safety and environment protection in its operations. Sharing Profits

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 IndianOil has a concerted social responsibility programme to partner communities in health, family welfare, education, environment protection, providing potable water, sanitation, and empowerment of women and other marginalised groups. 71

IndianOil has always been in the forefront in times of national emergencies. IndianOilPeople have time and again rallied to help victims of natural calamities, maintaining uninterrupted supply of petroleum products and contributing to relief and rehabilitation measures in cash and kind.

IndianOil’s community-focussed initiatives include allotment of petrol/diesel station dealerships and LPG distributorships to beneficiaries from among Scheduled Castes, Scheduled Tribes, physically handicapped, ex-servicemen, war widows, etc. The Corporation has also unveiled kisan seva kendras as small-format retail outlets to reach quality products and services to people in the rural areas. IndianOil has also set up the IndianOil Foundation (IOF) as a non-profit trust to protect, preserve and promote national heritage monuments. The Corporation also supports a variety of endeavours 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. 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. To further reduce dependence on precious petroleum products and secure the nation’s energy security, the Corporation is now in the process of commercialising various options in alternative fuels such as ethanol-blended petrol, biodiesel, and Hydrogen and Hydrogen-CNG mixture. With safety, health and environment protection high on its corporate agenda, IndianOil is committed to conducting business with a strong environment conscience, so as to ensure sustainable development, safe work places and enrichment of the quality of life of its employees, customers and the community. IndianOil is also committed to the Global Compact Programme of the United Nations and endeavours to abide by the 10 principles of the programme, some of which are already part of the Corporation’s Vision and Mission statements. It is the firm resolve of IndianOilpeople to move beyond business, touch every heart and fuel a billion dreams

Global Compact Initiative IndianOil’s present business practices and vision for the future are synergized with sustainability. We take pride that our corporate strategy is aligned to national priorities and envision a greater societal role in future to accomplish the cherished goal of a truly developed India, where all sections of citizens live with dignity. 72

The past year was definitely another year of sustained growth in the face of stupendous odds for us at IndianOil. In the backdrop of unprecedented high crude oil prices and liquidity constraints, we managed our operations and financials efficiently. As India's largest petroleum refining and marketing company, we bear the brunt of the burden of oil subsidy on sale of petrol, Diesel, Kerosene for public distribution system and LPG for domestic use, which constitute a major portion of our product offerings. The Government, in turn, has put in place a mechanism to compensate the oil marketing companies for the losses suffered by them. Indian Oil Corporation Limited is committed to the Global Compact Programme of the United Nations and will endeavour to abide by all the ten principles of the programme, some of which are also a part of our Vision and Mission Statements. Therefore, the company continues to pledge support to the programme through its policies, processes, products, services and people. In order to measure and communicate our progress in our journey towards sustainable development, we have decided to publish the third edition of our Sustainability Report for 200708 in accordance with the GRI-G3 guidelines for the first time and have aimed at application level A. We propose to build on this first report in future through a more formal materiality assessment process where decisions on corporate responsibilities and priorities will include inputs from other stakeholders, such as shareholders, employees etc.

(V.C. Agrawal) Director (HR)

Recognitions Distinctions Distinctions IndianOil in top five in Business India’s Super 100 ranking IndianOil tops ET 500 ranking IndianOil in Platts ranking 2009 IndianOil No.1 in BW 500 Ranking

Date 07.12.2009 25.11.2009 19.11.2009 27.10.2009 73

IndianOil leads India Inc. in Fortune's 'Global 500' listing for 2009 IndianOil — the only PSU among India’s 25 best employers IndianOil frontrunner in Oil & Gas category in FE-500listing of India's top corporates IndianOil tops Business Standard’s 'BS 1000' again IndianOil among India's 'Top 10' in Business India's Super 100 Listing Lanka IOC ranked No. 1 Company in Sri Lanka IndianOil tops 'ET 500' rankings once again IndianOil tops Businessworld's ‘BW Real 500’ rankings again IndianOil third most valuable (company) brand in India: ET-brand finance survey IndianOil leads India Inc. in Fortune's 'Global 500' listing for 2008 'The Most Trusted Brand' in ET's Brand Equity annual survey-2008 IndianOil the 'Top Oil & Gas Company' in Financial Express's 'FE 500' listing IndianOil Tops Business Standard's 'BS 1000' listing 'Top Ten' in Business India's Super 100 Listing IndianOil among India's 'Top Valuable Companies in BT 500 Listing' IndianOil ranked 2nd amongst India’s Top 50 Most Valuable Brands IndianOil gets a top slot in ET500 listing IndianOil tops 'BS 1000' companies in Sales again

10.07.2009 16.04.2009 31.03.2009 13.03.2009 19.12.2008 12.12.2008 21.10.2008 20.10.2008 02.09.2008 11.07.2008 12.06.2008 23.05.2008 15.02.2008 13.12.2007 30.11.2007 31.07.2007 22.03.2007 03.01.2007

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Distinctions - Archive Fortune Ranking  As perFortune Global 500 listing of the world's largest Corporations for the year 2006  Ranking improved to 153, based on fiscal 2005 performance, from 170 in 2005, 189 in 2004, 191 in 2003, and 226 in 2002. Forbes Ranking  IndianOil was ranked 311 in The Forbes Global 2000 - a list of world's largest, and most powerful, public companies, April 2006  Ranked 279th, as per Forbes Global 2000 listing of the world's biggest public companies for the year 2004.  Among the 30 Indian companies in the Global 2000, IndianOil is the third biggest company. No. 1 Company in Oil Trading in Asia Pacific Region  IndianOil emerged as the top company in oil trading amongst national oil companies in the Asia Pacific region, as per the annual survey conducted by Applied Trading Systems (ATS), Singapore for the year 2004.  In the latest survey, IOC is placed at the top of the list followed by Petronas of Malaysia, ENOC of United Arab Emirates, KPC of Kuwait and Saudi Petroleum of Saudi Arabia.  The survey covered 80 major petroleum trading companies in the Asia Pacific region. IndianOil among top global stock picks: Deutsche Bank  In a recent oil strategy report, the prestigious Deutsche Bank has chosen IndianOil as one of the top global stock picks in the oil & gas sector.  IndianOil is also the only Asian company to be featured in the list of top global stocks by Deutsche Bank.  In the report titled 'Global Oil 2005: Unforgettable Fire', IndianOil has also been included as one of the top five recommendations of Deutsche Bank for the Indian market for the year 2005.

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 The bank, in a letter addressed to the Chairman, has stated that "The recommendation reflects our positive view of IndianOil owing to its solid fundamentals and also the proactive strategies adopted by the Management to deal with the various challenges facing the oil sector". Platts World Energy Rankings 2005  IndianOil has moved five places up in the Platts 'Top 250 Global Energy Company' rankings - from 26th in 2004 to 21st this year.  Only Indian company to be featured among the top 25 energy companies worldwide and is also among the top three energy companies in Asia in the listing.  Amongst the Marketing & Refining companies of the world, IndianOil is placed at the second position in the sectoral listing.  IndianOil is also the only Public Sector Undertaking among 'India's Top 10 Companies' listed by theFar Eastern Economic Review in 2003. IndianOil retains the #1 spot by sales in ET500 listing IndianOil, India's flagship oil company, has retained its numero uno position by sales in the latest corporate rankings released by the Economic Times. The ET500 report goes on to add, "IndianOil has been the largest Indian company by sales for as long as anyone can remember". Apart from sales, the ET500 ranking lists companies based on market capitalization, net profit, price-earnings ratio and return on net worth, etc. In the above listings, IndianOil is also ranked No. 6 by both market capitalization and net profits respectively. These rankings assume significance considering that India's downstream majors in the petroleum industry have been bearing both subsidy and undercovery burdens owing to a steep rise in global crude oil prices throughout the year 2005, thus affecting both net profit and market capitalization. Ranked as India's most valuable brand  IndianOil and SERVO selected Superbrands (2004-06)  IndianOil topped the list of The Hindu Business Line's "India's Most Valuable Brands 2004" list (Catalyst, January 27th '05).  The report featured the top 500 largest listed companies by market value, that were listed on

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the Bombay Stock Exchange.  The methodology followed values brands in a way that is similar to how analysts value assets.  These valuations have used 'relief from royalty' methodology - an intuitive approach that assumes that a company does not own its brand name, and then calculates how much it would have to pay to license it from a third party. The present value of the streams of royalty (hypothetical) represents the value of the brand. Most trusted petrol pump brand: ET Brand Equity Survey  IndianOil has emerged as the most trusted petrol pump brand in the country in the prestigious Economic Times Brand Equity Survey of India's Most Trusted Brands (ET, Dec. 15, '04).  IndianOil leads the four oil-marketing companies in the new category of petrol pumps introduced in services for the first time this year.  IndianOil is also the only petroleum company among the top 50 in the overall services brand with a ranking of 11, followed by its subsidiary, IBP Co. Ltd, at 51.  IndianOil not only finds a place among the top 150 brands but as the country's top petroretailer, its score on the survey was almost twice that of its nearest competitor.  Survey is the largest of its kind in India, conducted by research agency AC Neilson ORGMarg, the, with a sample of over 7,000 distributed across socio-economic class, age, income and geography. Ranked fourth in TNS Corporate Reputation Study  In a recent TNS India poll on "Corporate Reputation Study" (Business Today, Dec. 19, 2004), IndianOil has been placed in the 4th position, ahead of several other business conglomerates.  IndianOil is the only petroleum company to be featured in the top 25 listing, and with State Bank of India (21st position) being the only other PSU to make it to the listing.  Poll primarily conducted amongst important stakeholders covering financial analysts and stockbrokers, business managers, and prospective employees, besides members of the general public.

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 IndianOil has a score of 80 (out of 100), which indicates a very good corporate equity. Among top ten 'Best Employers in India' for second year  For the second consecutive year, IndianOil retained its ranking as one of the top ten 'Best Employers in India' according to a recent study by Hewitt Associates.  IndianOil, at the 9th position, was also the only oil company to be featured in the Top 10 listing.  This year, 272 companies with a workforce of 700,000 participated in the Hewitt survey, which makes it the highest participation in any geographical location. Data was collected from 75,000 employee responses from across 15 industry groups. No.1 Company in business listings  IndianOil has been ranked India's No. 1 company by The BW Real 500 survey, Businessworld, announced in March 2006.  IndianOil was ranked as numero uno Indian company in a survey titled The Analyst 500, Chartered Financial Analyst, February 2006  IndianOil has emerged as India's biggest company in the Business Standard-1000 listing announced in February 2005.  IndianOil Ranked as India's top corporate in sales in Business Today's annual corporate rankings.  IndianOil also leads corporate India with the highest sales turnover in 2004-05 in Business India's'Super 100' list of top private and public sector companies in the country.

Auto fuels AutoGas

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AutoGas (LPG) is a clean, high octane, abundant and eco-friendly fuel. It is obtained from natural gas through fractionation and from crude oil through refining. It is a mixture of petroleum gases like propane and butane. The higher energy content in this fuel results in a 10% reduction of CO2 emission as compared to MS. AutoGas is a gas at atmospheric pressure and normal temperatures, but it can be liquefied when moderate pressure is applied or when the temperature is sufficiently reduced. This property makes the fuel an ideal energy source for a wide range of applications, as it can be easily condensed, packaged, stored and utilised. When the pressure is released, the liquid makes up about 250 times its volume as gas, so large amounts of energy can be stored and transported compactly. The use of LPG as an automotive fuel has become legal in India with effect from April 24, 2000, albeit within the prescribed safety terms and conditions. Hitherto, the thousands of LPG vehicles running in various cities have been doing so illegally by using domestic LPG cylinders, a very unsafe practice. Using domestic LPG cylinders in automobiles is still illegal. The fuel is marketed by IndianOil under the brand name ‘AutoGas’ IndianOil has setup 232 Auto LPG Dispensing Stations (ALDS) covering 124 cities across India. AutoGas impacts greenhouse emissions less than any other fossil fuel when measured through the total fuel cycle. Conversion of petrol to AutoGas helps substantially reduce air pollution caused by vehicular emissions. The saving on account of conversion to AutoGas in comparison to petrol is about 35-40%. Low filling times and the 35-40% saving is a reason enough for a consumer to convert his vehicle to AutoGas.

XTRAPREMIUM

XTRAPREMIUM Petrol is India’s leading branded petrol boosted with new generation multifunctional additives known as friction busters that prevents combustion chamber deposits. XTRAPREMIUM is custom designed to deliver higher mileage, more power, better pick up, faster acceleration, enhanced engine cleanliness and lower emissions. 79

XTRAPREMIUM is a sought after fuel among discerning customers who own new generation, high-performance cars who have endorsed its unmatched performance. In terms of fuel system cleanliness XTRAPREMIUM is hugely superior to any other alternative fuel in this segment, with the additional benefit of fuel efficiency through the friction modifier. The additive package contains proprietary components including a detergent dispersant, a friction modifier and a corrosion inhibitor, as a perfectly optimized formulation in synthetic carrier oil. The detergent dispersant cleans the fuel system and the friction modifier drastically reduces friction in the non-lubricated engine area contributing to fuel economy.

XTRAMILE IndianOil’s XTRAMILE Super Diesel, the leader in the branded diesel segment is blended with world-class ‘Multi Functional Fuel Additives (MFA). Commercial vehicle owners choose XTRAMILE because they see a clear value benefit in terms of superior mileage, lower maintenance costs and improved engine protection. A growing section of customers who own diesel automobiles, both in the ‘lifestyle’ and ‘passenger’ category, prefer XTRAMILE as a fuel for its added and enhanced performance. XTRAMILE has brought in a huge savings in the high mileage commercial vehicle segment. Transport fleets that operate a large number of trucks crisscrossing the country are using XTRAMILE to not only obtain a higher mileage but also for low maintenance costs.

Petrol/Diesel Stations Petrol/Diesel Stations IndianOil was the pioneer in launching state-of-the-art petrol stations with digital dispensers, modern canopies, standardized signage and efficient lighting systems way back in the mid1990s. The new retail-branding template introduced by IndianOil set in motion a revolution in the petroleum retail business in the country. IndianOil pioneered differentiated offerings to meet the diverse needs of its customers, be it through large format Swagat outlets for the highway traffic, Kisan Seva Kendras for the rural consumer, or even the XTRAcare outlets for the discerning urban customer. 80

XTRAcare IndianOil's XTRAcare E branded full service petrol stations is a result of a series of processes in retail design, product and service upgradation, capability training, automation, loyalty programs, retail site management techniques all benchmarked to global standards. Today XTRAcare petrol stations are synonymous in India with world-class petroleum retailing. Complete vehicle care begins at an IndianOil XTRAcare petrol pump. From branded auto fuels, to speedy windshield wipes to quick oil checks and snappy air service, you will experience the superior services that will leave your vehicle feeling special. IndianOil's XTRAcare pump is a revolutionary initiative in petroleum retailing that combines the best bouquet of quality, quantity and warm service, with a guarantee to make your every visit a truly rejuvenating experience. It is benchmarked to international standards of quality & quantity, housekeeping, maintenance and customer service certified to globally renowned benchmarks certified by the globally renowned agency - M/s Bureau Veritas (BV), amongst others. The maintenance of the equipment at the XTRAcare outlets is undertaken by Original Equipment Manufacturers under a unique 'Equipment Quality Outsourcing' system. While the industry standard is to take samples on a quarterly basis, IndianOil has moved several steps ahead by introducing fortnightly random sampling with specific importance given to RON (Research Octane Number) sampling which is truly the definitive test for quality and quantity. The surveillance audits by BV are being done on a more comprehensive basis. The scale and spread of XTRAcare pumps is also an industry record. With automated facilities, highly trained attendants and forecourt managers attuned to the needs of your car an XTRAcare pumps offers the full range of branded fuels-XTRAPREMIUM Petrol and XTRAMILE Diesel as well as world-class SERVO lubricants and a comprehensive loyalty programme. The non-fuel activities get a major fillip at the IndianOil XTRAcare and a wide range of loyalty programs like XTRAREWARDS, XTRAPOWER and co-branded cards give customers added benefits (available at present at select petrol pumps). The cutting edge technology introduced at XTRAcare pumps includes automatic tank level gauges, temperature sensors, density measurement sensors, back-office server with dispensing unit controls, customer database, etc.

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Another vital differentiator in the IndianOil XTRAcare is the importance given to the frontline customer attendants. They are trained at three levels of competencies--customer service, personal hygiene/grooming and customer complaint redressals. XTRAcare dealers also undergo extensive training on 'Retail Site Business Management' a unique training module incorporating best global practices in retail sales management. Kisan Seva Kendra Kisan Seva Kendra is a unique award-winning retail outlet model pioneered by IndianOil to cater to the needs of the customers' in the rural segment. Today IndianOil's KSKs have emerged as a dominant player in the rural markets, riding on the rapid growth of upcoming second and third tier roads in the rural areas. The KSKs come with a fresh perspective enabling dealers to tap the huge demand driven in by consumers there. In addition, non-fuel retail facilities like convenio stores have been added to the KSKs selling pesticides, vegetables, banking products and stationery items. IndianOil has also tied up with Indo Gulf for fertilizers, National Seeds Corporation for marketing seeds and agricultural inputs as well as alliances with Nabard, Oriental Bank of Commerce and Bank of Baroda for banking products. At some KSKs even internet kiosks, communication facilities, etc. have been installed. Business alliances have been signed to market products from Dabur, Airtel, Tata Chemicals, Godavari Fertilisers, Gokulam Fertilisers, Hindustan Unilever and Godrej Agrovet. Other alliance partners are Emami for personal care products, Money Gram for money transfer, MILMA and OMFED for milk products and Supplyco for convenience stores. Swagat The Swagat retail network are large format sites designed exclusively to cater to travelers on the highways. With spacious parking lots, dhabas, eateries, retail stores and restroom, theSwagat outlets provide customized services to owners of both light motor vehicles as well as heavy motor vehicles.

Loyalty Programs

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IndianOil's loyalty programs are designed exclusively to benefit customers who have been patronizing the brand for over four decades. XTRAPOWER The XTRAPOWER Fleet Card program is a complete smart card-based fleet management solution for fleet operators and Corporates for cashless purchase of fuel & lubes from designated retail outlets of IndianOil through flexible pre-paid and credit facilities. The fleet card program also offers an exciting rewards program and unique benefits like personal accident insurance cover and vehicle tracking facilities. In just under two years of its launch, IndianOil's XTRAPOWER Fleet Card has emerged as the largest fleet card in the country with the widest retail outlet coverage. Any business entity owning or operating a vehicle fleet can become a member of the XTRAPOWER fleet card program at a nominal annual charge. Each fleet owner is issued a Fleet Control Card and vehicle-specific Fleet Cards for every vehicle enrolled under the program. For enhanced security, the fleet card transactions are authorized through unique Personal Identification Number (PIN). Moreover, the card can help track each vehicle's movement across remote corners of the country leading to an improvement in vehicle utilization and route compliance. XTRAPOWER is also backed by IndianOil's vast infrastructure network and web-based support services.

XTRAREWARDS IndianOil XTRAREWARDS is India's first on-line rewards program that seeks to inculcate the habit of redeeming points. The loyalty program rewards customers paying by cash, credit and debit cards. Each transaction is confirmed on-line through a charge slip and customers can earn points on fuel/lube purchases at participating IndianOil Retail Outlets. Additional points can also be earned outside the IndianOil network, covering prominent FMCG, Food, Automobile, Travel, Entertainment, Apparel and Hospitality sectors. XTRAREWARDS is currently active in Mumbai, Ahmadabad, Bangalore, Mysore, Coimbatore and Chennai. It will be shortly available in other markets like Delhi. Apart from redeeming the accumulated points instantly on fuel / SERVO Lubes at participating Retail Outlets, the card holder can also redeem the points to get some exciting gift items from a catalogue. The redemption on gifts can be registered either from the participating Retail Outlets or from the comfortable confines of one's home through the 24x7 IVRS Help Line (022-2880 9030). The program continuously provides the cardholder with privileges, benefits and offers from alliance partners like Domino's Pizza, Subhiksha, Rediff 83

Shopping, Kumaran Silks, Dhabba Express, Chennai Corporate Club and Archana Sweets.

Annexures Questionnaire for Retailers

Personal details Name…………………………………………… Organization…………………………………… Address………………………………………… Date of visit…………………………………….

Instructions: Take your time to fill this questionnaire. Please read carefully, before answering questions. 84

1. How many liters of fuel do you sell in a week through Xtra Power fleet card? (a) 1000-20000 lts (b) 20000-40000 lts. (c) 40000-60000 lts. (d) More than 60000 lts.

Brands

XtraMil e

XtraPremiu m

Super diesel

Petrol

Servo lubricant s

Unleade d petrol

Unleade d diesel

Maximum Minimum 2. What is the average sale of following brands at your outlet in a week?

3. What price do you get the following brands at?

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Brand s

XtraMil e

XtraPremiu m

Super diesel

Petrol

XtraMil e

XtraPremiu m

Super diesel

Petrol

Servo lubricant s

Unleade d petrol

Unleade d diesel

Price

Brand s

Servo lubricant s

Unleade d petrol

Unleade d diesel

Price 4. What is your margin for the following brands?

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6. What is the average sale of fuel/lubricants through Xtra Power Fleet card from your outlet? ………………………………………………………………………

7. Do you tell the customer/fleet owner/driver about the Xtra Power fleet card loyalty program of IOCL? a) YES. b) NO. C) SOMETIMES.

8. Do the staff/attendants know how to operate the machine of Xtra Power fleet card? a) YES b) NO 9. What is the usual mode of payment made by the customer? a) Cash. b) Credit/Debit Cards. c) Xtra power fleet card.

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10. Is the outlet well equipped with machines of Xtra Power fleet card? a) YES. b) NO.

Questionnaire for the Customers

Personal details Name…………………………………………… Address………………………………………… Date of visit…………………………… Customer I.D. ……………………………………….. 88

1. Do you visit the IOCL fuel station regularly? a) YES. b) NO. c) Sometimes. 2. What is the usual mode of payment? a) Cash. b) Credit/Debit Card. c) XTRAPOWER fleet card.

3. Do you know about the XtraPower fleet card? a) YES b) NO.

4. From where did you come to know about the fleet card program? a) Advertisement. b) Newspapers. c) Journal/Magazines. d) IOCL Retail Outlets. e) Others………………. 5. How many vehicles/trucks do you have? 89

……………………. 6. Are you satisfied with the service of fleet card? a) YES. b) NO. c) Partly satisfied. 7. Do you use your fleet card regularly? a) YES. b) NO. c) Sometimes. 8. What improvements do you want in the fleet card loyalty program? a) Better services to the card holders. b) More attractive offers. c) Others…………………………… 9. Do you redeem your Xtra points regularly? a) YES. b) NO. c) Sometimes.

10. Any suggestions about the Xtra Power Fleet Card program? …………………………………………………………….. 90

AN INTRODUCTION TO KAMAKSHI AUTO SERVICE

Corporate history Kamakshi Auto Service was established in 1970 with the name Nayak Oil Company. In 1975 it was purchased by M.P.Bhatt, S.S Shanbhag, K.V.Prabhu and Vinayak Shanbhag as the 91

four partners. Later in september 1980 excluding M.P.Bhat, rest three partners r retired from the partnership and the kamakshi Auto Service becomes the proprietorship concern under the proprietorship of M.P.Bhat.

SALES MS(Petrol)

HSD(Diesel)

Average sales per day

1.7 kl.

Average sales per month

65 kl.

Average sales per day

4.5 kl.

Average sales per month

125 kl.

They are undertaking the sales of indian oil product only.

Milestone

• •

The firm is going to complete successfully thirty five year of its establishment with the name of KAMAKSHI AUTO SERVICE. The firm was awarded with BEST DEALER, for achieving MS(Petrol) growth in the year 2002.

Note: 1KL=1000ltrs CONCLUSION, SUGGESTIONS & FINDING

CONCLUSION: 92

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 nonroutine 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: •

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:

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After the evaluation, the information is revealed that the most of the users are un aware 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.IOCL.COM WWW.GOOGLE.COM

 ANNUAL REPORT OF IOCL.  S.P.GUPTA, STATISTICAL METHODS  C.R.KOTHARI, RESEARCH METHODOLOGY.  MARKETING MANAGEMENT. KOTLER.

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