The bharat petrolium

7/27/2019 The bharat petrolium

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PROJECT REPORT ON

BHARAT PETROLEUM

CORPORATION

LTD

SUBMITTED BY

VIKRANT KIRAN LAD

FOR THE DEGREE OF

THE BACHELOR OF MANAGEMENT STUDIES

UNIVERSITY OF MUMBAI

UNDER THE GUIDENCE OF

PROF. Kalpana Menon

SINHGAD COLLEGE OF COMMERCE

Chandivali, Mumbai-400 072

ACADEMIC YEAR

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2012-13

DECLARATION

I, VIKRANT LAD the student of Sinhgad

College of Commerce & of TYBMS hereby

assure that, I have completed this project on

BPCL CORP lTD in the academic year 2012-

2013, the information submitted is true to the

best of my knowledge & belief.

Date:

Place: Mumbai

VIKRANT KIRAN

LAD

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CERTIFICATE

I, Prof. KALPANA MENON hereby certify that

VIKRANT KIRAN LAD of TYBMS,

Sinhgad College of commerce, Chandivali

Has completed a project titled BPCL CORP

LTDunder my guidance in the year 2012-13.

I further declare that the information presented in this

project is true and original to the best of my

knowledge.

Date:Place: Mumbai

Prof. Ritika

Hemdev

Prof. KALPANA MENON

(Guide) PRINCIPAL

College Seal

ACKNOWLEDGEMENT3


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I acknowledge with deep sense of gratitude theguidance,

Continuous inspiration and support given by my

guide, Prof.

KALPANA MENON my research work. The help

Extended by my guide goes beyond words because of

his

Constant guidance, encouragement and moral

support. He is

A wonderful human being and innovative leader; I

thank my

Honorable guide once again.

I express my special thanks to SINHGAD COLLEGE OF

COMMRECE andUniversity of Mumbai

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OBJECTIVES OF THE STUDY

Through this project my objective has been tounderstand the

Following:

Primary Objectives:

To find out about the current scenario of theradio Bharat Petroleum Corp Ltd.

The reasons for a stunted growth of the

industry

Secondary Objectives:

Realizing the needs and wants of consumers

and fulfilling them

The various steps in Marketing

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THE ORGANIZATION

Bharat Petroleum, a Forbes 2000 company, is one of India's

largest petroleum refining corporations and is owned by the

government of India. Bharat Petroleum's annual sales for the

year 20042005 stood at $12.77 billion and had earned a

profit of $470 million. The company employs more than

12,400 people and has a market value of $2.94 billion.

HISTORY

Bharat Petroleum Corporation (BPCL) traces its history to

1928 when the Burma Shell Oil Storage & Distribution

Company of India was incorporated in England to enter the

petroleum products business in India. The business of theCompany grew substantially given the international backing

of Shell and it achieved the leadership position in India. In

1952, Shell and Burma Oil Company set up Burma Shell

Refineries to set up a refinery in Mumbai. The entire

operations of Burma Shell in India were nationalised in 1976

and the Refinery and Marketing Companies were merged to

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form Bharat Refineries Limited. Later in 1977 it was renamed

as Bharat Petroleum Corporation Limited (BPCL).

Based in Mumbai, BPCL is one of the largest petroleum

refining & distribution corporations. The refinery currently has

a capacity to produce 6.90 million tonnes of crude oil. It

produces a wide range of products from petrochemicals and

solvents to aircraft fuel and lubricants. The products aresegregated into light distillates, middle distillates, heavy

ends, Aromatics (benzene, toluene) & sulphur the production

of light distillates mainly consists of naphtha, LPG, motor

spirit & many more. Middle Distillate products consist of high

speed diesel, superior kerosene oil, aviation turbine fuel etc.

Heavy end products are furnace oil, low sulphur heavy stock& bitumen. It markets its products through an extensive

network of operations involving 347 distributions, 6400 gas

stations and more than 2060 liquefied petroleum gas (LPG)

distributors.

BPCL with a large marketing network that is spread across the

country is India's second largest oil company in terms of

market share and processes about 9 million metric tons of

crude per year. Today the company produces a diverse range

of products, from Petrochemicals and Solvents to aircraft fuel

and speciality lubricants. It manufactures petroleum and

petroleum products, asphalt, bituminous substances, carbon,

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carbon black, hydrocarbons, mineral substances and the

products/by-products derived there from.

It has its own state of the art refinery in Mahul.

The Paid up Capital of BPCL is Rs.300 crores of which

Government of India (GOI) holds 66.2%. And the balance33.8% equity is held by Foreign Institutional Investors,

Financial Institutions, Employees and other Investors.

THE SUBSIDIARIES

Bharat Petroleum has strengthened its refining capacity

with the acquisition of Numaligarh Refinery Limited

(NERO) and Kochi Refineries Limited (KRL).

Bharat Petroleum has also acquired the 55.04% shares

held by Government of India in the Kochi Refineries

Limited (KRL) for a total consideration of Rs.71, 360

million.

JOINT VENTURES

Bharat Shell Limited

Petro net India Limited

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Petro net CI Limited

Petro net CCK Limited

Petro net LNG Limited (PLL)

Indraprastha Gas Limited (IGL)

VI e Trans Private Limited

FORMS OF PRODUCTS

Petrol and Diesel

Liquefied Petroleum Gas (LPG)

Lubricants

Aviation Fuel

Fuels and Solvents

POLICIES OF BPCL:

Make BPCL a great place to work

Effective boundary management

Fulfil social responsibilities

Apply the best technologies

Be an ethical company

Strong and dynamic system

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Sound business performance and operational efficiency

Develop cohesive corporate strategy

To be the best

Make people a source of our improvement

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 maximise creation of wealth, value and satisfaction

for the stakeholders.

To attain leadership in developing, adopting and

assimilating state-of- the-art technology for competitive

advantage.

To provide technology and services through sustained

Research and Development.

To foster a culture of participation and innovation for

employee growth and contribution.

To cultivate high standards of business ethics and Total

Quality Management for a strong corporate identity and

brand equity.

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To help enrich the quality of life of the community and

preserve ecological balance and heritage through a

strong environment conscience.

To get rich, sell to the poor.

-Pradeep Kashyap to Indian CEOs, Jan 2000.

The oil and energy sector in India can be differentiated into

upstream (exploration) and downstream (refining andmarketing).

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Upstream

- Bongaigaon Refinery & Petrochemicals Ltd.

- Chennai Petroleum Corpn. Ltd.

- Kochi Refineries Ltd.

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- Mangalore Refinery & Petrochemicals Ltd.

- Reliance Industries Ltd.

- Aban Loyd Chiles offshore Ltd.

- Asian Oilfield Services Ltd.

- Dolphin offshore Enterprises India Ltd.

-Duke offshore Ltd.

- Frontier Aban Drilling India Ltd.

- Hindustan Oil Exploration Co. Ltd.

-Jindal Drilling & Inds. Ltd.

- Oil & Natural Gas Corp. Ltd.

- Oil India Ltd.

Downstream

- Castrol India Ltd.

- Essar Oil Ltd.

- Hindustan Petroleum Corp. Ltd.

- Indian Oil Corp. Ltd.

- Reliance Industries Ltd13
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EXTERNAL ENVIRONMENT

The Company operates in an oligopoly setup, where it is

behind the top two companies (IOC and HP). The sector was

completely regulated till 1991, and still now there is theGovernment ruled prices of most petroleum products (APM-

Administered Price Mechanism)

At present, there is no restrictions on the production of

products on any company, and companies are allowed

directly procure crude oil from suppliers abroad. Further,

there is a barrier of $50 Million entry fee for setting up a

refinery- incentive for the expansion of existing outlets

India is among top ten oil consumers, but among lowest per

capita consumption.

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Gradually there is an increased competition against Macs and

Indian players with deep pockets, with shift from APM to

MDPM (Elf, Reliance, Essar etc.)

Competition->Price War->Lower Profits

This is accompanied by Technology changes, which can be

signified by:

Fast computers

High-speed data transfer lines

Flexibility of data management software

Enterprise Orientation

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Virtual Markets

INTERNAL ENVIRONMENT

Bharat Petroleum's core values of being 'INCARE',

Viz. Innovative, Caring and Reliable.

The organization ensures that all its processes are inline with

organizational goals. After the exercise to re-look and

redefine organization character in terms of differential and

integrative aspects, it has adopted a strategy of Customer

focus-maximum priority, differentiated servicing based on

customer, Quality of products & services speed up decision-

making process, streamline HR processes to bring in

empowerment with accountability, Export possibilities (30%

of Reliance sales) and projecting an image-Capturing mind

width.

The main goals of the company are centred on-

Customer satisfaction

Improved quality

Continuous improvement of design

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Cost effectiveness

Reliability of service

Employee satisfaction

Bharat Petroleum is divided into a Corporate Centre, Strategic

Business Units (SBUs) and Shared Services and Entities. The

organisational design comprising of five customers facing

SBUs, viz. Aviation, Industrial & Commercial, LPG, Lubricants

and Retail and one asset based SBU, viz. Refinery, is based on

the philosophy of greater customer focus.

BEFORE RESTRUCTURING

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The structure of BPCL according to Duncans

Model

Since the Govt has the entire control over the organization,

the uncertainty in operating environment was low so also the

complexity. As per the Duncans model the task complexity of

this kind of organization was small number of factors and

components. The factors and components are relatively samethen the organization falls under the simple- static. Hence the

functional structure of the organization was more suitable.

Strengths in this kind of structure

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1. Operating in a Stable Environment: It was operating

in the stable environment and used to have the higher

return on the equity.

2. Focused on Specified Targets:The firm tried to focus

on the specific units like the refinery and sales and

marketing area etc.

3. Specialization: There was clear cut change in roles

from the manager operation to the manager finance.

Hence these factors led to specialization in their

respective skills.

4. Decision and Communication Network Excellent:

The finished product was few in numbers and simple

decisions/ communications network was excellent.

Weaknesses in this kind of structure

1. Slow Speed in the Decision Making: The decision

making process was from the top to down and the

managers used to pass the decision making authority to

the higher up in the hierarchy. Thereby the top level

managers had a very tough time in decision making

while the middle level managers used to transmittingthe decisions and making the whole process redundant.

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Thereby the taking the critical decisions used to take

higher time making the slow response time.

2. Bottleneck Situation in Decision Making Process:

In this situation the decisions are taken up the higher

level managers and at the lower level they were not

having enough information to act upon. Hence there

used to the bottleneck in the decision making processes.

IMPLEMENTATION OF ADMINISTRATIVE PRICING

MECHANISM (APM)

Till 31st March 2002 the structure of the organization was

mainly the functional and government has announced the

certain deregulatory measure then different things had to be

changed.

The Government has announced measures for

dismantling of APM effective April 1, 2002, which

include:

Pricing of petroleum would become market determined.

Oil Pool Account, which was the balancing tool usedunder the APM, would be dismantled on April1, 2002.

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Any outstanding balance would be liquidated by issue of

oil bonds to the concerned oil companies.

Private companies would be permitted for retail

distribution of petro-products, subject to specified

guidelines, amongst which the main criterion.

Petroleum Regulatory Board would be set up.

Subsidies on LPG and Kerosene would be reduced to15% and 33% respectively by April 1, 2002. These would

be phased out in the next 3 to 5 years.

AFTER RESTRUCTURING:

To meet the challenges following the complete

deregulation of the oil sector in 2002, BPCL has taken several

initiatives since the mid 1990s. An organizational revamp,

creation of SBUs, renewed marketing focus and enhanced

operational efficiency have been some of the major steps

taken. Several projects have been planned through joint

ventures.

Steps includes following:

New refineries,

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Petroleum pipelines,

Import and distribution of Liquefied Natural Gas (LNG)

Distribution of piped Natural Gas.

Now the environment that it is facing is high in uncertainty,

Complexity and Changes has to be dynamic. In this particular

scenario the structure has to change accordingly. So in this

particular segment there are large number of factors and

components in the environment. The factors and the

components are not similar to each other. These factors and

the component are in a process of continuous changes.

Thereby the managers need a lot of information for decision

making. Hence as per the Duncans Model the information

needed will be high and because of that the structure of the

organization has to be mixed decentralized organization.

Therefore organisation structure of BPCL was revamped and

six new Strategic Business Units (SBU's) have been created.

They are

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Refinery, Retail,

Industrial& Commercial,

Lubricants,

Aviation. LPG.

The new structure is based on:

1) Business Processes.

2) Working Flexibility.

3) More Responsive to External Changes,

4) Has fewer layers,

5) Ensures A Much Higher Customer Focus.

THE INTEGRATING MECHANISM FOR BPCL:

1. The increased level of regulation and co-ordination

across the SBUs to make sure that the regulation

mechanisms are maintained.

2. Customers expectations are increasing everyday with

the rapidly changing the technology and because of that

the flow of information across SBUs has increased by

means of computer services and the centralised R&D

services being shared.

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PRODUCTS AND SERVICES

SPEED FUELS

High Performance Fuels. Bharat Petroleum ushered in the eraof value-added, branded fuels in the country with the launch

of Speed, petrol with world-class multi-functional additives,

which comply with EPA 97 (Environment Protection Agency,

USA) requirements in 2002.

E BIZ-

Online service for Industrial customers.

PURE FOR SURE

The sign of a New Revolution. The 'Pure for Sure' program is a

focused and intense effort towards ensuring Quality and

Quantity, courteous and quick service.

E BHARAT GAS

Online customer Service.

PETRO CARD-

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Rewards & Customer Convenience.

MAK LUBRICANTS-

MAK makes it possible.

SMART FLEET CARD-

It is an electronic purse which enables you to preload cash

into it. It is the most convenient payment mechanism that

minimizes the need for vehicle drivers to handle cash in

transit.

REFINERY SBU:

Bharat Petroleums Mumbai (Mahul) Refinery (BPCR)

(BPCR) is one of the most versatile

Refineries in India and excels in all aspects

like quality, technology, fuel & loss, human

relations, safety, environmental

friendliness and operating cost. Withsuccessful implementation of various

projects and de-bottlenecking, the Refinery

currently processes about 9 Million Metric

Tons of crude oil per annum. BPCR has processed 61 different

types of crude in five decades of its operations, making it one

of the most flexible Refineries in the country.

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RETAIL SBU:

The Retail SBU represents the face of Bharat

Petroleum to the outside world and is

engaged in the retailing of Petrol, Diesel andKerosene, besides various Non-Fuel Products

and value-added services through its robust

network of 4562 retail outlets and 970 Kerosene dealers.

LPG SBU:

Bharatgas (LPG - cooking gas) provides the

lifeline to millions of Indians. Similarly,

hundreds of commercial and industrial

establishments depend on Bharatgas from

Bharat Petroleum to meet their industrial requirements.

LUBRICANT SBU:

Bharat Petroleum offers a full range of

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Transmission oils, Specialty Oils and Greases. The correct

usage of these Lubricants of right quality ensures prolonged

and trouble free vehicle operation, providing maximum

benefits to the users of present day modern vehicles.

AVIATION SBU:

The Aviation Business of Bharat Petroleum

is an integrated business unit engaged in

receiving, storing and delivering Jet fuel into

plane to the Airline Customers and

marketing of Aero shell lubricants to Aircraft

operators.

With nation-wide network of into-planerefuelling facilities for Jet Fuel and with foreign airlines

contributing 61% of the volume, BPCL is known as the

"Fuellers of the leading Airlines of the World". BPCL is

the exclusive authorised distributors of Aero Shell lubricants &

specialties products in India.

INDUSTRIAL & COMMERCIAL SBU:

To cater to Industries needs of fuels and

other Petrochemicals (used as raw

materials for Industries). Bharat

Petroleum's Industrial and Commercial

Business Unit, commonly known as I&C SBU was formed.

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Currently Bharat Petroleum caters to approx. 8000 Industrial

customers spread across all over the country.

MAJOR PLAYERS

Exploration-ONGC, Reliance.

Refining- IOC, BPCL, HPCL, ONGC, Reliance, Essar.

Marketing-IBP, BPCL, HPCL, Reliance, Essar, Assam Oil

BPCL recognizes that all strategic initiatives must

conform to the overall vision of the Corporation and improve

the economic value. The Strategy Development effort at the

corporate level achieves better focus in the neworganizational structure, besides facilitating the SBUs in

developing their respective strategies that lead to an

integrated Corporate Strategy. A Business Planning process

has been put in place that not only provides opportunities for

the SBUs to pursue their visionary goals in consonance with

the Corporate Vision, but also continuously monitors trends

and identifies strategic opportunities for the Corporation.

NEED FOR NEW STRATEGIES

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On comparing the Indian petroleum retail market withforeign markets, we find following problems:

Pricing a Crucial Factor: Price is currently not a

differentiating factor in Indian market because prices are

same for all the companies. However, with private players

coming into the market, this can be a very crucial factor in

future as is in foreign countries.

Adulteration of Quality Fuel: In India currently quality

means only getting fuel free from adulteration, fuel

efficiency and the effect of fuel on the life of vehicle are

still not given much importance.

Importance of Brand Value Missing: Brand value of theproduct is still not established in India, a person buying

petrol or diesel is still not much concerned about whether

he is buying it from HPCL or BPCL.

To tackle these problems:

1. Developing in-depth customer insight is essential

2. Pre-requisite to brand building

3. And acquiring market share

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CURRENT MARKETING STRATEGIES BEING

FOLLOWED BY MAJOR OIL COMPANIES

Quality and performance :

Speed (high performance petrol) and Pure for sure program of

BPCL, Indian Oil Extra Premium etc.

Customer conveniences :

ATMs, Cyber caf, Convenience stores like ConveniO of

Indian Oil and Bazaar of BPCL, Payment by Credit card like

collaboration of HPCL with ICICI bank.

Loyalty rewards:

Offering bonus points for every litre of fuel and giving rewardson the basis of these points Example: Petro card of BPCL

Collaborations with fleet owners for generating higher

volumes

Focusing on highway traffic mainly truck drivers with

facilities like motels, sale of tires, batteries, accessories

and machinery repairs

Using IT in providing efficient online services to

consumers in purchase orders, status of delivery and

customer care Ex. EBIZ and EBHARATGAS of BPCL

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SOME OF THE STRATEGIES ADOPTED BY BPCL

The competition for BPCL has become too galore. Reliance

has begun on its expansion plan aggressively in Western

India. The competition would increase when other private

players like Essar and Shell, with better corporate

management, worldwide experience in the oil business and

massive financial strength enter the Indian oil retailing

market. The current heat of competition is coming from theswanky new outlets set up by Reliance. The outlets are

positioned so as to woo customers by setting higher service

standards, which are difficult to match by BPCL. Hence, BPCL

is facing a brand crisis resulting in a loss of customer base.

In order to regain its market strength, BPCL has taken

a lot of initiatives like:

1.Adopted the Strategy of Offering Laundry

Services: BPCL has adopted the strategy of offering

laundry services through the oil company's petrol retail

outlets. This would pose serious problems to the

neighbourhood dhobiwalas. Taking a cue from the

retailing strategies of oil MNCs in the developed

countries, BPCL had tied up with HLL to offer customers

to its select outlets the facility of laundry service, with

the oil major managing the "front-end" of the operation

and HLL handling the "back-end". Customers could drop

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their laundry at the select petrol outlets when they come

to fill up their vehicles and collect them within 24 or 48

hours.

2. Strategy To Launch Vehicle Care and Internet

Kiosks: Laundry is not the only servicethat BPCL has on its retail radar. The strategy is to

launch vehicle care and Internet kiosks at select outlets.

This would provide vehicle care service, including sale of

vehicle accessories, at about 100 outlets across the

country.

3. Retailing a String of Innovative Services: The oil

major has dramatically altered the lexicon of oil retailing

by introducing of a string of innovative services by tying

up with other retail majors. After introducing the `Pure

for Sure', Petro Card, Smart Fleet and OSTS (One StopTruckers Shop), BPCL had launched its convenience

retailing initiative under the `In&Out' brand.

4. Pure for Sure - The retail outlets covered under this

program display the 'Pure for Sure' sign. At such outlets,

Bharat Petroleum guarantees that the correct quality

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and quantity are dispensed. In order to be able to do so,

strict quality control and tracking measures have been

put in place at every point from the Supply Point (Depot)

to the customer's fuel tank.

5. Ghar - BPCL Ghar is a one-stop truckers shop

proposition with multi-facility retail outlet with all the

comforts to meet the drivers needs and convenience.

These outlets are located on all major highways across

the country. There are dedicated BPCL officers at these

outlets who offer the drivers personalized service all

through the day with a host of facilities; hence the

drivers call it a Home away from home.

6. In & Out Stores It is a chain of convenience stores set

up in the urban markets at strategically located retail

sites with high customer footfalls. In & Out Stores have a

wide range of services viz., ATMs of leading Banks, Music

stores from Planet M and Music World, Beverages fromPepsi, Coffee and snacks from Cafe Coffee Day and

Coffee Day Xpress and a variety of impulse buys

including confectionery, snacks, convenience foods,

toiletries and select range of branded groceries and

other FMCG products through exclusive tie-ups with such

FMCG majors like ITC, Cadbury and Frito-Lay. Market

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time, convenience, and ambience in the shopping

experience of households.

7. PetroCard - In an effort to build lifetime relationships

with its retail customers, Bharat Petroleum, on

September 29, 1999, launched the Petro Bonus Program.

The first of its kind in India. Petro Bonus is a unique

program offering convenience as well as security of

payment for fuel and convenience store purchases at its

In & Out stores through an electronic purse, with the

added opportunity to collect valuable rewards and

exclusive benefits against these purchases.

8. Smart Fleet- Smart Fleet, a unique fleet management

program designed for efficient and cost-conscious fleet

owners was launched on 4th January 2001. This Fleet

Management Program offers the fleet owner an

unbeatable combination of convenience and security

that makes fleet management easier.

9. Speed- With an aim to offer a premium grade fuel from

outlets in addition to the normal fuel, Speed was

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launched in April, 2002.Speed is a blend of petrol and

multi-functional additives. "Speed contains unique

deposit control additives that effectively remove harmful

deposits from all fuel metering systems and components

resulting in enhanced overall engine performance - easy

starting smooth idling, maximum power and

acceleration, reduced emission, and no engine knocking

- improved mileage and reduced maintenance.

BPCL HAVE EXCLUSIVE TIE-UPS WITH FMCG MAJORS

SUCH AS ITC, CADBURY AND FRITO-LAY FOR

PROVIDING THESE SERVICES.

Another strategy adopted by BPCL is the launch of its E-

charge electronic pre-paid service through its In & Out

stores through a tie-up with E-Charge (Tech) Pvt Ltd, a

subsidiary of Mercantile Pacific Group that offers electronic

delivery systems for pre-paid mobile cards.

BPCL, along with Oil and Natural Gas Corporation has

entered in to deep-sea exploration in order to hedge price

risks in a highly volatile market.

"Pure for Sure" campaign was launched for creating

enhanced Customer Satisfaction.

Branded fuel "Speed" (Motor Spirit) and "Hi Speed" (High

Speed Diesel) were introduced to provide wider choice to

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the customers and to create brand image & differentiated

image from other oil marketing companies.

Thrust was laid on penetration into the Consumer business

in the marketing fuels.

Strategic alliances were entered into the marketing of non-

fuel niche products through the Retail network including

car care products, fuel additives and popular consumer

brands.

Re-fuelling and other multiple associated services were

provided to tourists at select locations under the State

Tourism Departments through strategic alliances.

Significant penetration was achieved in the marketing of

industrial containers by the Business Group (Engineering)

and significant cut in operating and material costs through

R & D initiatives was made by the Business Group

(Chemicals), resulting in improvement of financial

performance.

RURAL MARKETING VEHICLE- A STRATEGY OF

BPCL FOR RURAL MARKETING

India is divided into 597 districts, and has 638667

villages, of which 32 percent can be reached through

Pucca roads.

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However, 68 percent of the rural market lies untapped

due to various reasons ranging from inaccessibility to lack

of awareness.

BPCL is trying covering this untapped potential for gaining

more customers.

It moves from village to village and fills cylinders on the

spot for retail customers.

BPCL considered low income of rural population and

therefore introduced smaller size cylinder to reduce both

the initial deposit cost as well as the recurring refill cost.

NEW STRATEGIES WHICH CAN BE INTRODUCED

Co-branding:

Co-branding petrol with a complementary product in that

market is the basic aim.

For ex. XYZ brand collaborates with HERO HONDA a

reputed bike manufacturer and makes promotional

campaigns wherein target audience gets the message

"When you use XYZ brand of petrol with Hero Honda

bikes, you get better mileage and longer Engine Life.

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Similar pattern can be followed in target market

segment of "Passenger cars" with Maruti, Hyundai etc for

building solid Brand image. Initiatives should be taken

for collaborating with different market leaders in

different Regions

e.g. Tata Motors is a major player in North

Ashok Leyland has majority control in South India.

Prepaid Petro card:

This concept is similar to cellular prepaid/post-paid card,

but having a marginal difference.

"The company will provide a Prepaid/post-paid Petrocard

by which one can fill the tank from any of its outlet at a

discounted constant price for a certain time period (say

1 month) prevailing during the time period".

This strategy is a WIN-WIN situation for both Customer

and company- the customer gets a price discount and

becomes insulated from frequent price fluctuations

and supplier gets higher volume.

Investment in Infrastructure:

Investment in infrastructure is an area, which can

determine future success of any company.

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Any company, which invests in pipeline projects now for

transport and distribution, will achieve economies-of-

scale in operation.

Not only will it reduce the companys dependence on

railways for transportation, but it will also cost less (per

barrel transport of fuel cost just 11% of transport

using Railways).

Also, the company can use its capacity by leasing it to

other companies and earn profits.

This will provide the company excess liquidity in

implementing quality initiatives, investment in the

research for non-conventional sources of energy.

Shell has already initiated this project in Europe and is

using its concern for environment in advertising its

Image.

Clubbing Petrol with LPG:

To Target domestic consumers, a bouquet of Petrol and

LPG can be offered to middle income group consumers.

It could be a major initiative for building brand value and

also for brand recall.

Major discount and reward schemes can also be offered

for these customers.

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Collaboration with OEMs/Authorized dealers:

By doing so, automobiles can also be made in offering

free petrol to new customers with an additional offer of

discount for first few months.

This will help in building long-term customer

relationships.

Customer Service:

Though many initiatives have been taken in the past,

Customer service and support is one area that still lags

behind world standards.

COCO (Company Owned Company Operated) Initiatives

could be made as training centres for the workers of

Petrol stations.

The companies should increase their inspection, should

communicate their standards of operations and come up

with rewards for excellence and penalty for poor

performance.

BPCL is trying another strategy - of luring customers by

ensuring that they get pure for sure products, that is if

they buy them from BPCL outlets.

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Its hoardings read: Your search for pure fuel ends at

our petrol pump. BPCL had earlier appointed the

consultancy firm McKinsey to advise it on the strategies

it should employ to ensure customer loyalty.

EVALUATION OF CUSTOMER SERVICE:

The customers according to BPCL are the dealers so BPCL

has a dealer service standard in place.

These are the guidelines which the company official has to

follow while dealing with the dealerships.

Being a PSU the standards are used in Toto.

The standards have to be followed by all the concerned

officials of BPCL.

BPCL has a customer service standard in place which is

guideline for the dealers to follow.

This includes smiling behaviour of the retail outlet staff,

response to customer complaints, etc.

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STRUCTURE OF BPCL

The structure of BPCL can be discussed in two phases that is

before and after the restructuring.

THE STRUCTURE BEFORE RESTRUCTURING

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THE STRUCTURE AFTER RESTRUCTURING

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BEFORE RESTRUCTURING

The structure before the redesign at the corporate level

was functionally oriented.

The functions were refinery, marketing, finance and

personnel.

The marketing function, for example, was divided intosub-functions sales, supply & distribution, lubricants,

aviation, engineering & projects.

All these operations were then divided into four

geographical regions and in each region they were

grouped on a functional basis.

Each division consisted of the staff from sales and

engineering functions for development, up-gradation and

maintenance of retail outlets.

A sales officer was given charge of three or four

revenue districts. In most divisions, one single officer

was responsible for the sale of petrol & diesel through

retail outlets: LPG and kerosene through distributors,

lubricants through retail outlets, distributors and direct

customers and fuels & specialty products to industrial &

commercial customers.

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Although the depots reported to the divisional manager

there was very little coordination at the field level

amongst the sales officers and the operational officers.

The functional structure of the organization consisting of

functions of sales & distribution, information systems,

Marketing and HRM, was dismantled to form the following

SBU structure:

The Refinery SBU

The Retail SBU

The Lubricant SBU

The LPG SBU

The Aviation SBU.

This functional structure made it difficult for senior managers

to focus on developing and implementing strategies forparticular businesses such as Lubricants and LPG. It created a

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bottleneck between the process of strategy formulation and

its implementation.

This created two problems:

First, the strategy formulators were in close touch with

the ground reality.

Second, the implementers of the strategies did not fully

understand the rationale of the strategy and the

execution was not up to the mark.

AFTER RESTRUCTURING

The redesigned organization has four elements

(a) Corporate centre

(b) Strategic business units (SBUs),

(c) Support services and

(d) Lateral linking mechanisms.

Corporate centre has four Directors

(marketing, finance, refineries, and personnel).

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Marketing Director has a team of 8 members who are

responsible for leading and coordinating the brand

building, brand management of the SBUs.

The Finance director has a team of 6 members who are

responsible for leading and coordinating the strategy

development effort at the corporate level.

The directors also facilitate the SBUs in developing their

respective strategies and integrate the same across the

businesses.

In addition, this team assists the top management in

optimally allocating resources while managing the

business portfolio. Support Services include the HRM,

Finance, Information Systems and Engineering &

Projects (Marketing).

People of the embedded units report to the respective

heads of SBUs, for example, embedded HRM in LPG SBUwill report to the head of LPG SBU.

Dedicated teams called Shared Services perform the

support tasks that have enterprise-wide or region-wide

implications and are not business specific.

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This was done to bring down the operating costs of theseservices by pooling some of the activities together

outside the businesses.

Each SBU has a Council, Brand & Strategy has a Council

and there are two governing councils, the Apex Council

and the Executive Council.

Before the redesign, the organization was totally

hierarchical. Today, it is mostly participative and

team based with absolute delegation of authority.

The old commandant rule is gone and it is now more a

team based organization.

There is lot more flexibility; it is like running your

territory as your own business. It means I can do things

differently, take risks, experiment and innovate.

Now if my team performs well I can even think of giving

them a tour abroad. It is the attitude shift that has taken

place and all in a span of three years.

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ROLE OF THE REGIONAL HR MANAGER

Before the redesign, the Regional HR manager was

responsible for all the functions in the region and all the

personnel in the region reported to the Regional

Manager.

The Regional Manager in turn had a very formalrelationship with the Corporate HRM.

Now each SBU has HRM personnel known as embedded

HRM who assists the SBU in HRM related issues like

transfers, organizational learning, performance appraisal

and discipline.

The Embedded HRM has the following functions:

Administering the performance management system

Workforce planning

Design and delivery of functional training

Anchoring organizational learning

Transfers within business units and

Discipline management

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The Shared services entail support tasks that have enterprise-

wide and region-wide implications. They are not confined to

being business specific and are transactional in nature. All

business units and entities share teams performing these

tasks. Pooling some of the activities together outside the

businesses leads to economies of scale. The HRM Services

team is in each region headed by the Head of Regional

Services. He is supported by the HR Manager (Employee

Relations) responsible for recruitment of non-management

staff.

A TYPICAL RETAIL STRUCTURE OF BPCL

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Current Retail Territory TeamEarlier Structure

SalesInstallations

/Depots Engineering

Retailcustomer

Div isional

Manager

Managersales

Manageroperations

Managerengineering

Depots Sales officer Engineering

LPG

customer

Retail

customer

Industrial

customer

Lubricant

customer

DGM

Sales

Territory

Manager

Retailcustomer

A Typical Retail Structure

The structure of BPCL based on the theory of Burns

and Stalker

MECHANISTIC AND ORGANISTIC

ORGANIZATIONS

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BPCL was restructured from a mechanistic to an organistic

organization.

The relative stability of the organization was transformed to

instability in the 1990s during the Gulf War and increased

competition due to liberalization.

The organistic structure has expertise based authority

Creation of self sufficient SBUs

Site procurement teams

Participative, non programmed and judgmental

Decision making

Regional offices given freedom to take independent

decisions

THE STRUCTURE OF BPCL ACCORDING TO

LAWRENCE AND LORSCH

Differentiation and Integration

Uncertain environment prompted differentiated

structure

Differentiation according to products (SBUs)

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Dismantling of central structure and creation of

more regional offices

Interdepartmental committees

Multidivisional task forces-for Integration and

preventing Silo Formation

THE STRUCTURE OF BPCL ACCORDING TO

DUNCANS MODEL

BPCL Uncertai

nty

Complexit

y

Chang

e

Before

restructuring

Low Low Static

After

restructuring

High High Dynami

c

POLICY AND REGULATORY

FRAMEWORK

At the policy front, Government of India is already

finalising the Petroleum Regulatory Board Bill as well as the

Gas Pipeline Policy.

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These policy documents would have profound impact on the

business portfolio of your Company as well as the business

practices to be adopted.

Growing competition in the market, gas to gas competition

and emergence of new markets would require a different

approach to business and overall business strategies. Your

Company has been actively monitoring and watching the

developments in the external environment.

INDUSTRIAL RELATIONS AND EMPLOYEE

WELFARE

Industrial scenario in general during the year 2003-04

remained harmonious and cordial. There was no strike or

lock-out during the year and as such no man-hours were lost.

GAIL continues to focus on various employee welfare

activities like the single window mechanism of Employee

Services Group, whose coverage is gradually being expanded

to more work centres.

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HR INITIATIVES TO MEET FUTURE BUSINESS

CHALLENGES

E-Performance Management System based on KPA/KPIs.

Standard manning as per global benchmarks and

competency mapping

E-opinion poll/survey on HRD issues of concern like

promotion and transfers Implementation of a robust new

suggestion scheme

Introduction and operation of Bill Management

System/Bill Watch system to facilitate vendors to track

their bills

Grievance Handling System

A formal well defined and time-bound grievance

handling system is in place in the Company through

the systems of Transfer Petition Committee,

Grievance Redressal Scheme, Employees' Service Groupand CMD's Open House.

VIGILANCE

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The Vigilance department assists the management to

achieve the highest standards of stewardship of public funds

while carrying out business operations.

Awareness being the first step towards action, BPCL

enthusiastically organizes programmes during Vigilance

Awareness Week from 1st to 6th November at all its locations

throughout the country in which customers, clients, dealers,

distributors, contractors, vendors etc. also participate.

Hoardings at outlets at important locations in Mumbai

and Delhi are put up, displaying slogans emphasizing the

need for awareness among the public to fight corruption.

The Vigilance machinery acts effectively on complaints

and sources information with the purpose of safeguardingstakeholders' interests, while ensuring that the motivated

complaints, if any, were effectively weeded out.

Adequate briefing is provided to Central Vigilance

Commission (CVC) to enable them to reach just conclusions in

the case of matters referred by them.

HR INITIATIVES

As on 1st April 2005, BPC had 12029 employees on its payroll.

BPC has always put people above oil, attributes all its

achievements to its people and believes that human

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resources are the most important resource of the

organization.

In this highly competitive environment, employee

retention has become a major challenge for all

companies. BPC has accepted this challenge and

introduced a variable pay component in its pay

structure, which would differentiate between high

performers and average performers.

This Performance Related Incentive Scheme (PRISM) was

distributed to its employees for the first time in October

2004. BPC has also effectively retained its employeeswith an attrition rate of just 3.33% for the year 2004-05.

TECHNOLOGICAL EDGE

Bharat Petroleum has always

been on the forefront of harnessing

technology initiatives for

maximising efficiency and

achieving greater customer

satisfaction.

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Bharat Petroleum is the first Public Sector Oil Companyto implement Enterprise wide Resource Planning (ERP)

solutions - SAP. The implementation project known as

ENTRANS (Enterprise wide Transformation) has been awarded

the 'SAP Star Implementation Award', with Bharat Petroleum

having the distinction of executing the largest and the most

ambitious SAP project in India.

The challenge of SAP implementation was to ensure that

all the integrated elements (of the complex multi-modular

integrated solutions that impact the entire workflow of the

organisation) work seamlessly across the length and breadth

of the country, including the remote locations. Providing

online connectivity in these remote locations, given the full-fledged IT network infrastructure, was in itself a daunting

task.

BPCL is known to be a technology-savvy company

with an ITdepartment that was formed in 1964. Today,

BPCL has an IT team of more than 200 professionals

comprising of ERP, infrastructure, developers and services IT

professionals which supports over 5,000 desktop users and

3100 SAP users across 350 locations.

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The company was using Intel-based tower servers more

than five years old that occupied significant floor space

in the data centre. Beyond space constraints, it became

a challenge to manage the server sprawl.

Bharat Petroleum is reaping the benefits of the

integrated system in many areas of its operations. The

early gains of implementation are in the areas of

tracking customer-receivables, monitoring credit-

management, inventory management, besides easing

the operations in a large number of areas.

Furthermore, Bharat Petroleum has also set up one of

the biggest 'Centres of Excellence' in Asia to provide

online support to the end users and also work towards

continuous improvement in business processes and

handle product upgrades and new generation products.

With SAP as the IT backbone, Bharat Petroleum plans to

take advantage of the Internet based capabilities along

the entire value chain with a Customer Relationship

Management solution.

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A large data warehouse project has also been

implemented, which facilitates access to real-time

accurate information on key performance indicators at

all Bharat Petroleum locations. This enables the

management to take strategic and business decisions,

thus ensuring value-added services, better customer

satisfaction and enhanced shareholder value.

ORGANIZATIONAL CULTURE OF BPCL

The culture of any organization is the set of shared values

and norms that controls organization members interaction

with each other and with people outside the organization like

supplies, customers and the society at large. The

organizational culture can be used to improve the

organizational effectiveness.

This is because organizational culture controls the way

members make decisions, the way they interpret and manage

the organizations environment, what they do with

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information and how they behave and thus affecting the

competitive position.

The transformation of an organisations culture to its

members depends on the way in which members learn the

organizations values. This influences the motivation level of

the employees and increases organizational effectiveness.

The main way in which the culture can be transferred is by

socialization. This is the process by which members learn

and internalize the values and norms of an organizations

culture.

THE SOURCE OF ORGANIZATIONAL CULTURE

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The organizational culture develops from the interaction of

four factors as shown below-

SOCIAL RESPONSIBILITY- A PART OF

ORGANIZATIONAL CULTURE

A very important consequence of the values and norms of an

organizations culture is the organizations stance with regard

63

Organizatio

nal Culture

Organizational

Ethics

Property

RightsSystem

Characteri

stics of

people

within the

organizati

on

Organiza

tional

Structure


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to social responsibility. The term social responsibility refers to

a managers duty or obligation to make decisions that

nurture, protect, enhance and promote the welfare and well

being of stakeholders and society as a whole. The strength of

an organizations commitment to social responsibility ranges

from low to high and can be classified in to various

approaches-

The Social Responsibility Scale

THE CULTURE FOLLOWED BY BPCL

SERVICE

MAKING PEOPLE A SOURCE OF THE ENVIRONMENT

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HIGHLOW

Defensive Accommodat

Proactiv

Obstructio


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One of the important cultures that BPCL follows is that ofPerformance Culture.

Those who perform would be rewarded higher than the rest.

This type of culture, though difficult to follow in a PSU, yet can

be done by the main corporate vision that BPCL has shapes

its culture to a great extent.

The philosophies that the organization follows

to develop a great culture are-

Making BPCL a great place to work

Effective boundary management

Fulfil Social responsibilities

Apply the best technologies

Be an ethical company

Strong and dynamic system

Sound business performance and operational efficiency

Develop corporate strategy

Establish first class brand and corporate image

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The organizational restructuring gave more freedom to the

people on the field. Territory managers in retail can award

jobs up to Rs. 2 crore or take action against errant dealers

today.

In a Survey conducted by Grow Talent Company in

2004, BPCL featured as the 17th best places to work. A

snapshot of the findings by Grow Talent Company Ltd has

been shown below:

PEOPLE ABOVE OIL CULTURE OF BPCL

Over the years, Bharat Petroleum continues to meet the challenges of the

rapidly changing environment, leading to changes in the marketing of

products and services. In all these changes, only one factor has remained

constant and has been the source of Bharat Petroleum's strength and

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inspiration for any future innovations - Bharat Petroleum's People. The

feeling of ownership has facilitated all employees to understand the

complexity of the market and needs of the customers, and respond to these

needs with innovative initiatives and offerings.

For Bharat Petroleum, commitment of its employees is a critical resource.

Fully realising that only a happy employee will put his best foot forward with

the customers, Bharat Petroleum has taken many steps to make the

organisation a great place to work. In a survey conducted by HewittAssociates for the January 2001 issue of Business Today magazine to identify

the best employers, Bharat Petroleum was ranked among the top ten

employers in India. The objective of the study was to find out which

companies had really charged the emotional and intellectual energy of their

employees

Bharat Petroleum fosters effective value-based HR processes for

development of people and their organisational capabilities with a view to

provide them with a competitive edge and also to realise their personal

vision in tandem with the corporate vision.

The thrust areas include:

Performance Management which links business goals

with individual performance goals.

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Recognising competencies and capabilities of the staff

through Competency Modelling to help identify and

place the right person in the right job.

Identifying competency gaps and bridging such gaps

through appropriate training and developmental

programmes.

Multi-schilling to encourage employees to take up new

initiatives in the areas of Enhanced Fuel Proposition,

Add-on Stores, One Stop Truck Shops, Grocery and Fast

Food Stores.

Achievements By the company and its People:

Bharat Petroleum has been conferred the National HRD Award - 2000

by National HRD Network for making Outstanding Contribution to

HRD.

At the National Petroleum Management Programme (NPMP) on

Excellence in Creativity & Innovation (1999-2000)

Bharat Petroleum employees bagged all the three awards in the

individual category, along with four certificates of recognition in theteam category.

CORPORATE SOCIAL RESPONSIBILITY OF BPCL

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BPCL has a large number of Corporate Social Responsibility

which is a strong indication of its robust culture. Some of its

Corporate Social responsibilities are discussed below-

Sharing wider responsibility

The philosophy that BPCL follows is to give back to thesociety/community our best. It aims to help the people

enrich their lives, be it our employees or their families.

BPCL initially started working in Mahul, the village located in

the neighbourhood of its Mumbai refinery since 1986, for the

sole reason of their upliftment. The habitants of Mahul,

essentially from the fishing community, were rich because

they possessed marine wealth but as far as education, health,

etc was concerned, they needed help. BPCL volunteered and

the initial success brought such gratification that immediately

it adopted another village (this time an interior one) called

Karjat, developments with selfless intentions helped

introspect about the future role BPCL should adopt in its aimto contribute to this effort, then there after there was no

looking back

As a corporate responsibility, 37 villages across India have

been adopted. This includes making substantial investments

for nearly a decade and a half in them to make them fully self

reliant, providing them fresh drinking water, sanitation

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facilities, medical facilities, enhancing their income standards

by imparting vocational training and agricultural innovations.

However, BPCL also firmly believes that the only vehicle for

raising the villagers from their present state is by educating

the young and the old, a focus on providing grants for

opening schools and opening adult literacy camps as well.

Counselling

Initially counselling began in BPCL to overcome the different

problems of employees at work. But now, counselling does

not only aim at solving disputes at work but involves a whole

gamut of issues ranging from employees overall

development to the development of their families.

Thus there is a shift from what used to exist earlier as our

orientation is towards prevention. This helps us to understand

employees better and plan intervention.

Accordingly, plant talks have made a positive effect in the

minds of the employees as they get an idea that the companyis really interested in their issues.

HIV/AIDS Care and Prevention

The comprehensive health policy of the company protects the

employees and their family. Considering the significance of

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interventions in this area, the Social Welfare dept. initiated

plant talks on Family Life Education and Health and Well-

being. Various awareness programs were conducted in the

refinery on HIV/AIDS.

Systems and processes:

An organizations systems and processes are at the core of its

success. Systems and processes help the in the development

of brilliant, performing employees and it is they who develop

great technologies, think up great products and develop them

into great brands.

Employee Involvement:

Today, customer service and corporate communication are nolonger responsibilities of a few people. All employees need to

realise they have an important role to play in serving the

customer.

This requires a thorough re-orientation of employee functions

and attitudes. BPCL is an excellent example of how a

marketing PSU has transformed itself. The transformation was

brought about with the involvement of all employees.

A shared vision ensures that everyone thinks in unison and

employees dont feel alien to a company's vision.

Processes

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BPCL is the first government-owned oil company in India to

achieve a fully automated trading and risk management

system by implementing Triple Point's solution. This solution

manages BPCL's physical and financial trading and movement

of its crude oil and refined products. Triple Point's solution

provides a single, real-time system accessible to all key

business groups involved in the transaction cycle. This allows

executives, traders, marketers, risk managers and physical

operations staff to do their jobs more effectively and

profitably by making smarter, quicker decisions with timely,

accurate and actionable information.

THE BALANCED SCORECARD

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The balanced scorecard is a new approach to strategic

management was developed in the early 1990's by Drs.

Robert Kaplan (Harvard Business School) and David Norton.

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The balanced scorecard approach provides a clear

prescription as to what companies should measure in order to

'balance' the financial perspective. This method of

performance evaluation is followed by BPCL.

The balanced scorecard is a management system (not only a

measurement system) that enables BPCL to clarify its vision

and strategy and translate them into action. It provides

feedback around both the internal business processes andexternal outcomes in order to continuously improve strategic

performance and results. When fully deployed, the balanced

scorecard transforms strategic planning from an academic

exercise into the nerve centre of an enterprise.

The balanced scorecard helps BPCL to retain traditional

financial measures. The balanced scorecard helps to view

BPCL from four perspectives, and to develop metrics, collect

data and analyze it relative to each of these perspectives-

The Learning and Growth Perspective

The Internal Business Process Perspective

The Customer Perspective

The Financial Perspective

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The Learning and Growth Perspective

This perspective includes employee training and corporate

cultural attitudes related to both individual and corporate self-

improvement. In a climate of rapid technological change, it is

necessary that employees remain in a continuous learning

mode.

The Internal Business Process Perspective

This perspective refers to internal business processes. Metrics

based on this perspective allows the managers to know how

well their business is running, and whether its products and

services conform to customer requirements (the mission).These metrics are carefully designed by those who know

these processes most intimately.

In addition to the strategic management process, two kinds of

business processes may be identified:

a) Mission-oriented processes:Mission-oriented processes are the special functions directly

involved in generating business for BPCL, and many unique

problems are encountered in these processes

b) Support processes:

The support processes are more repetitive in nature and

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hence easier to measure and benchmark using generic

metrics.

The Customer Perspective

Recent management philosophy has shown an increasingrealization of the importance of customer focus and customer

satisfaction in any business. These are leading indicators: if

customers are not satisfied, they will eventually find other

suppliers that will meet their needs.

Poor performance from this perspective is thus a leading

indicator of future decline, even though the current financial

picture may look good.

In developing metrics for satisfaction, BPCL customers are

analyzed in terms of kinds of customers and the kinds of

processes for which it is providing a product or service to

those customer groups.

The Financial Perspective

BPCL has a corporate database with the help of which most of

the financial processing can be centralized and automated.

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There is perhaps a need to include additional financial-related

data, such as risk assessment and cost-benefit data, in this

category.

The link among the above 4 perspectives can be

explained in the following way-

Learning and growth within the organization leads to

enrichment and enhancement of the internal businessprocesses which in turn increases the customer confidence

and ultimately has a positive impact on the financials of the

company.

PERFORMANCE RELATED PAY SCHEME

BPCL strongly follows the system of Performance related

pay. The aim of any Performance Related Pay Scheme is

to provide a direct link between pay and output: the

more effectively the worker works, the higher their pay.

This direct relationship means that incentives are

stronger than in other schemes.

Earnings may fluctuate through no fault of the individual.

Supervisors and managers may fail in their

responsibilities towards workers by inconsiderate

allocation of work or using the incentive scheme to

control output.

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Targets may not be accurate enough resulting in the

perception of easy or difficult jobs. Material shortages or

delays can affect production. Individual skills are not

rewarded and indeed the most skilled may be put onto

more difficult and potentially less rewarding work.

In instances where workers regulate their own output to

satisfy their individual needs production can be affected

and forward planning made more difficult.

Team based pay: BPCL follows the system of team

based pay for its sales teams. Team pay is a method of

linking the pay of employees to the level of performance that

they have achieved in a team. By reinforcing group

performance by recognizing team working, the collective

potential of employees can be harnessed. It is claimed that

this should lead to improvement in service delivery areas.

Processes: Few processes that are in place for making

BPCL as a customer oriented organization are as under:

Implementation of SAP ERP package across the organization

is one step towards e-business.

Bharat Petroleum Corporation Refinery uses complex

applications such as Enterprise Resource Planning SAP R/3

and Manufacturing Execution System (MES) from Aspen Tech.

These solutions offer standardized functionality. To add

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reports or applications relevant to the Refinery, the IT team

used a number of development platforms.

When NET was introduced as a development platform in early

2003, it was realized that the component architecture and

flexibility helped reduce the development cycle significantly.

Therefore, BPCL Refinery decided to standardize all future

development on the .NET platform.

In the last 12 months, BPCL Refinery IT team has been able to

link information from various sources such as SAP R/3, MES

and LIMS to create knowledge which is being used by the

management team to monitor and improve the health of the

Refinery.

BHARAT PETROLEUMS PURE FOR SURE

Bharat Petroleums Pure for Sure is an initiative launched

consequent to learnings from experience. Pure for Sure will

be associated with stringent certification of Quality &

Quantity, courteous service/ s as well as efficient fuelling

being offered at these Retail Outlets. M/s. TUV

SUDDEUTSCHLAND INDIA, a reputed quality certification

agency, with headquarters in Germany, is involved in the

certification of the retail outlets and ensures impartial

evaluation and consistency in the delivery of the programme

to the customers.

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This program is being launched in phases.

The first phase of Retail Outlets that have been certified

recently covered the 4 Metros Mumbai, Chennai, Bangalore &

Hyderabad ,etc at 108 sites,.

Another 600-700 sites are to follow, in 2 more phases in

various cities.

During the last 3 years Bharat Petroleum has implemented a

set of Customer Service Standards, which has been well

appreciated by the consumers. The Pure for Sure program is

an even more focussed, and intense effort towards ensuring

Quality and Quantity, courteous and quick service.

The main pillars of this program are:

a) Tamper proof locks: - Supplying product to retail outlets

in modified tank Lorries fitted with tamper proof locks.

b) Comprehensive sealing: - dispensing units are sealed in

a comprehensive manner, which makes meter tampering

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c) Periodic and surprise checks by staff: - Stringent

periodic and surprise checks are carried out to check for

correct delivery and the sealing of the pumps.

d) Testing of product samples: - regular comprehensive

testing of samples for clinical and octane rating is done with

an element of surprise.

e) Certification of Retail Outlets: - periodic audits and re-

certification of retail outlets by a reputed certification agency

called M/s. TUV SUDDEUTSCHLAND, India, headquartered in

Germany.

f) Efficient Fuelling: - In view of the time pressures, brought

about by factors like changing lifestyles, consumers do not

like to wait at the retail outlet for fuel. Consequently, smoothtraffic flow, optimum use of the facilities creates opportunities

for efficient fuelling of vehicles.

g) Dedicated manpower: - Dedicated field staff has been

placed to monitor and sustain the program.

Expectations of the Customers out of this

program:

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Values for money from Pure for Sure outlets, as these

outlets dispense right Quantity of pure fuel.

Better mileage and lower maintenance expenses on

their motor vehicles.

Efficient fuelling and courteous service results in saving

of time.

There is reduction in pollution due to the use of purefuel.

Guaranteed Q&Q

BPCL dealers have responded voluntarily to join the Pure for

Sure program. This has made a joint initiative between the

Company and the dealers possible to provide courteousservice, assured Quality and Quantity and efficient fuelling at

the retail outlet. This program is a continuous effort and

involves systematic certification and therefore, interested

Dealers are able to join the program only in phases.

BRANDED FUEL IN SPEED

BPCL launched branded petrol in speed to gain the customer

orientation & to diversify its business. In consideration with

their strategies they went ahead the competition to introduce

variant of petrol in the market & how they established it was

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covered ion an India today survey. We are putting the same

below:

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INTERNAL AND EXTERNAL FIT AT BPCL

Internal and external fit of an organization ensures that

there is an alignment of processes, systems, culture and

structure with the strategy of the organization along with

the external factors.

It is during the formulation of the strategy that one

should keep in mind the external and internal fit.

Strategy formulation is a reiterative exercise.

At every stage, the strategist has to move back and

forth to ensure the logical consistency across different

strategy elements.

Once a set of logically consistent elements of strategy is

arrived at, commitment of the whole organization is

needed to implement the same. Structure, systems and

processes, and functional strategies, policies and action

plans are put in place that fit with, rather than

contradict, different elements of strategy.

Achieving an internal fit of the organization with

strategy, getting all the resources channelled towards a

given direction and winning the commitment of people

does not happen instantaneously. They take time and

investment. There was a restructuring of recently and let

us analyze the fit in the context of this restructuring.

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Firstly, let us understand what necessitated the restructuring.The restructuring decision was put in place in response to

impending deregulation of the hydrocarbon sector and

making BPCL ready for competition by making it more

customers savvy. The deregulation of the hydrocarbon sector

in India was started in mid-1990s and was scheduled to be

fully deregulated by 2002.

With an annual sales of about US$ 8 billion, BPCL started its

process of organizational restructuring in mid-1998 with the

help of Arthur D. Little, an international management

consultant of repute, which unlike others operating in India,

strongly emphasized innovation, linkage between vision-

mission-goals-values-leadership together with participativemanagement. The changes in environment like liberalization

and globalization necessitates a change in the organizational

restructuring to ensure internal and external fit and hence

sustainable performance. This can be understood from figure

shown below.

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Let us first understand the process of restructuring and along

with that how it ensured internal and external fit.

EXTERNAL FIT:

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The top-management first sought to rethink about the vision,

mission and goal of the company. They formed a Project

Group with over 30 people drawn from all the functions and

regions with a GM as leader. It was called Project CUSECS,

abbreviation for customer satisfaction.

Together with the top management almost 3000 managers

and stakeholders participated in the exercise to re-look and

redefine its own organization character in terms of differential

and integrative aspects.

The consultants compared the vision-mission-goal statement

with the top 30 managers with the 3000 odd stakeholders and

a common vision-mission- goals statement accepted to all

was developed.

From an administered price controlled environment where

there was no competition now the main thrust area was

better customer service, profitability, creation of SBUs and

dividing the organization into regions.

The restructuring of BPCL saw the change of the organization

structure from a functional one to one that of divisional one

with strategic business units. Six internal teams were formed

to report on the structures of the five proposed SBUs -

refinery, industrial/commercial, lubricants, LPG (cooking gas

cylinders) and aviation and for support and management

services.

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This resulted in Change Plan which redefined compared and

assessed the past, current reality and the future scenario. The

Change Plan spoke about the history of the organization, the

shift in the culture that is required for the organization, and

policies of the organization.

It incorporated the changes in the organizational values that

was envisaged by the 3000 odd stakeholders and provided a

guiding map for each of the SBUs, the vision for each of the

SBUs and how the vision can be translated into realty.

The Change Plan spoke about the integrative changes of

culture and climate of the organization. An action plan was

developed to transform the organization harping on customer

satisfaction.

The conservative and bureaucratic style of top-management

was questioned and emphasis was given on organic,

professional and participative management.

It launched innovative products like petro card (to earn petro

miles), ebharatgas (online customer service) etc. Several JVs,

new R&D centres are being developed Co-ordination, liaison

activities and cross functional teams was revamped after the

restructuring. Management councils have been put in place

for coordination between the Board of Directors and

stakeholders. Consistent communication policies have been

formalised to the rest of the organisation in terms of strategy,

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plans, progress, policies, standards, and receiving

suggestions and feedback.

Control systems were overhauled. The company's operating

systems and communication has been integrated through a

centralized computerized system which is connected to the

ERP, SAP. With the overhaul of organizational character

during its organizational restructuring once a conservative

and bureaucratic organization now is more resilient, flexible,

innovative and participative.

INTERNAL FIT:

Human resource policies have been revamped to facilitate the

restructuring process. BPCL was ranked among the top ten

employers in India who had really charged the emotional and

intellectual energy of their employees. BPCL's effective value-

based HR processes for development of people and their

organisational capabilities with a view to provide them with a

competitive edge and also to realise their personal vision in

tandem with the corporate vision.

The thrust areas included:

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Performance Management which links business goals

with individual performance goals.

Recognising competencies and capabilities of the staff

through Competency Modelling to help identify and

place the right person in the right job

Identifying competency gaps and bridging such gaps

through appropriate training and developmental

programmes

Multi-skilling to encourage employees to take up newinitiatives in the areas of Enhanced Fuel Proposition,

Add-on Stores, One Stop Truck Shops, Grocery and Fast

Food Stores.

Bharat Petroleum has been conferred the National HRD Award

- 2000 by National HRD Network for making Outstanding

Contribution to HRD at the National Petroleum Management

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Programme (NPMP) on Excellence in Creativity & Innovation

(1999-2000).

The post-redesign performance of BPCL emphasizes the fact

that internal and external fir ensures sustainable

development and continuous value creation for the

stakeholders. The gross sales have doubled from Rs.4.3

billions in FY97 to Rs.7.2 billions in FY2000. BPCL became a

place proud to be in and a great place to work.

GAPS OBSERVED

1. Slow Decision Making: No empowerment which

works against the culture desired on occasions. The

employee on field is required to take split decisions

however it has been observed that simple decisions

gets delayed waiting for approval from regional office.

This is not only frustrating for the end customer but

for the officer in charge as well.

2. Team Dynamics Missing: After restructuring into

SBUs the employees have become restricted to their

own jobs. The staff is bothered only about own work.

The team dynamics was missing where as it is

required to compete with private oil retailers

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3.Redundancy in manpower: People with work

experience with the company from 0-14 Years were

doing the same job. They complained of similar work

& told us that they feel redundant in the current job.

They feel frustrated about the job against the policy of

BPCL to make it a great place to work.

4. Lack of motivation in field staff: The field staffs

feels that they work the most in the organization

however the maximum incentive goes to people

sitting in regional offices.

5. HR support not visible: HR help is the last that the

employees expect. They feel HRs role is only to

implement guidelines & rules. Though there have

been claims about implementation of Balance scoreCard the professionalism is yet to be seen in the HR

department especially.

6. Sales staff doing clerical work :The sales staff are

preparing reports every day which keeps them in

office rather than on field

7. Non Supporting Attitude: BPCL has started using

the internet in Metros but the structure is not there to

support.

RECOMMENDATIONS FOR IMPROVEMENTS

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Our recommendations are based on the observations that

we made & feedback of the officers/employees we talked

with:

1. Empowerment: Though the unity of command is well

defined as is the reporting relationship but the

employees feel helpless as for every decision they have

to look

The bharat petrolium

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