PROJECT REPORT

On
“AN ANALYSIS OF PERFORMANCE MANAGEMENT ON GAIL
INDIA LTD.”
Submitted to
Jamia Milia Islamia, Delhi
In partial fulfilment of the requirements for the award of the degree of

BACHELOR OF BUSINESS STUTHES (HONOURS)

Paper Code – 405
Submitted by:

ARUNIMA KATARA
ROLL NO: 15BBA1005
ENROLLMENT NO: 15-1110

Under the Supervision of

Mrs. SABIHA KHAN

DEPARTMENT OF COMMERCE AND BUSINESS STUTHES

JAMIA MILIA ISLAMIA
DELHI
(2018)
 An analysis of

PERFORMANCE MANAGEMENT
Of
Gail India Ltd.

Project Report submitted to

Jamia Millia Islamia

In partial fulfilment of the requirements for degree of Bachelor Of Business Stuthes

Paper code -405

2017-18

’Under the supervision of

Mrs. Sabiha khan

Submitted by:

Arunima Katara

Roll no. –15BBA1005

Enrolment No. -151110

 CERTIFICATE

This is to certify that Arunima katara, Enrolment no.- 15-1110 has written this report

on “An analysis of PERFORMANCE MANAGEMENT of Gail India Ltd .” under my

supervision. The report is submitted to the Jamia Milia Islamia, Delhi For award of the

degree of Bachelor of Business Stuthes (BBS),(Paper Code – 6.5),2018.

Date: Mrs. Sabiha khan

(Supervisor)
 DECLARATION

I hereby declare that the project work entitled “An analysis of PERFORMANCE

MANAGEMENT of Gail India Ltd .” submitted to the Jamia Millia Islamia is a record

of an original work done by me under the guidance of Mrs Sabiha khan , and this project work

has not performed the basis for the award of any Degree or diploma/ associate ship/fellowship

and similar project if any.

Arunima Katara

Enrollment No.15-1110

Roll No- 15BBA1005

 ACKNOWLEDGEMENT(edit)

Gaining insights into Gail India Limited has been a learning experience and professional
development , brought to fruition through the efforts of many special people. I am deeply
grateful to the team of Gail India Ltd. whose enthusiasm and energy helped me to
understand this industry so deeply.

I would like to give special thanks to entire team of Gail India Ltd, who inspite of having a
busy schedule provided me with valuable suggestions and information related to the
project.

I express my deepest thanks to Mrs. Sabiha khan , my professor, for her careful and
guidance which was extremely valuable for study both theoretically and practically.

I perceive this opportunity as a big milestone in my career development. I will strive to

use gained skill and knowledge in my future endeavours.

Sincerely,

Arunima Katara
Enrollment No.15-1110
Roll No- 15BBA1005
 EXECUTIVE SUMMARY(change)

The project is vested with the objective to analyse the brand image of Havells India Ltd.

The study starts with the understanding and application of the core concepts of marketing.
The project further dwells into understanding the mechanism of Havells as company.

With the analysis of brand, the project opens up new avenues research , considering those
aspects which are essential for an Electrical and Equipment Industry. In support of that, a
survey research has been conducted to analyse the brand image of the company. The
research done in the project analyses the perception of the market of “Havells India Ltd.”.

Finally, I included my personal findings and inference along with a research based outlook
of the same
 TABLE OF CONTENTS

PAGE NO.

CHAPTER 1 –INTRODUCTION…………………………………..1-16

1.1 Topic of the study- An Overview 2-7

1.2 About the company 8-13

1.3 Relationship between company and topic of the study 14-16

CHAPTER 2- RESEARCH METHODOLOGY………………….17-29

2.1 Literature Review 18-27

2.2 Significance Of The Study 28

2.3 Objectives 29

CHAPTER 3 –DATA PRESENTATION AND ANALYSIS………...30-42

CHAPTER 4- SUMMARY OF FINDINGS AND SUGGESTIONS…43-46

1. Recommendations 44

2. Limitations of the study 45

3. Findings 46

BIBLIOGRAPHY………………………………………………………47

ANNEXURES………………………………………………………..48-50
CHAPTER 1 : INTRODUCTION
1.1 An overview
Organizations are run and steered by people. It is through people that goals are set and
objectives are realized. The performance of an organization is thus dependent upon the
sum total of performance of its members. The success of an organization will therefore
depend on its ability to measure accurately the performance of its members and use it
objectively to optimize them as a vital resource (Biswajeet 2009). In the present highly
competitive environment, organizations have to ensure peak performance of their
employees continuously in order to compete and survive at the market place effectively
(Prasad 2005). Performance of an individual can be defined as the record of outcomes
produced as specified job functions or activities during a specified time period (Bernardin
2007).

UNDERSTANDING PERFORMANCE

The term performance refers to a set of outcome produced during a certain period of
their job time and does not refer to the traits, personal characteristics, or competencies
of the performer. The evaluation of employee‟s performance reveals the contribution of
an individual in the organization‟s objectives. People do not learn unless they are given
feedback on the results of their actions. For corrective actions to take place feedback
must be provided regularly and it should register both successes and failures (Biswajeet
2009).

UNDERSTANDING APPRAISAL

Appraisal is the evaluation of worth, quality or merit, so performance appraisal of

employees means the evaluation of their performance performed during a certain period
of time. In the organizational context, performance appraisal is a systematic evaluation
of personnel by supervisors or others familiar with their performance (L.M. Prasad).

WHAT IS PERFORMANCE APPRAISAL?

Performance appraisal is also described as merit rating in which an individual is rated as

better or worse in comparison to others. This is one of the oldest and most universal
practices of management (Tripathi 2005). This is a process which reveals that how well
employees perform their jobs when the performance compared with the predetermine
set of standards (L Mathis & John H. Jackson). Merit rating is used basically for promotion
of employees. However performance appraisal is more comprehensive term for such
activities, because its use extends beyond ascertaining eligibility for promotion. Such
activities may be training and development, salary increase, transfer, discharge, etc.
besides promotion (Prasad, 2005). According to Beach (1980), “Performance appraisal is
a systematic evaluation of the individual with regard to his or her performance on the job
and his potential for development.” Worldwide, performance appraisals are used in
nearly all organizations. There are different tools and number of goals that performance
appraisals focus to examine individual‟s performance and potential of development. So
at its core, the performance appraisal process allows an organization to measure and
evaluate individually the employee‟s behaviour and accomplishments over a specific
period of time (De Vries et al. 1981). By using a formal system performance appraisals
have many advantages if they are designed and implemented properly. Not only in
reward allocation, promotion/demotions, layoffs/recalls, transfers and selecting training
and development program for employees but it may also assist individual employee‟s
decisions regarding career choices and the subsequent direction of individual time and
effort. Additionally, performance appraisals may increase employee‟s commitment and
satisfaction (Wiese and Buckley, 1998).

Performance appraisal and Performance management

In the late 20th century, a great change in approaches to performance appraisal systems
across the world was seen. There has been a great realization that it is more important to
focus on defining, planning and managing performance than merely appraising
performance (Pareek and Rao, 2006). Performance appraisal is the traditional approach
to evaluating the performance of an employee. As many people think that performance
management (some call it performance development) is a new name given to well-
established term performance appraisal and there is no difference between the two
(Prasad 2005) most of the organizations take performance management synonymously
of performance appraisal. Yet performance management is clearly more than a new
name for performance appraisal (Edmonstone, 1996). The increased competitive nature
of the economy and rapid changes in the external environment has forced many
organizations to shift from reactive performance appraisals to the proactive performance
management to boost productivity and improve organizational performance (Nayab,
May, 2011). Most organizations prefer to call their systems as performance management
system rather than performance appraisal systems. This is most welcome change of the
last fifteen years (Pareek and Rao, 2006). Day to day corporate environment is becoming
more competitive and comprehensive. For survival and competition the market
environment organizations need well competent employees who can face present and
uncertain future challenges. So organizations always try to seek the new ways to improve
employee‟s performance. Traditionally, this objective was attempted to achieve through
employees performance appraisal which was more concerned with telling employees
where they lacked in their performance. Though performance appraisal served the
purpose to some extent, but not considered enough to raise the employee performance
at the most desirable level (Prasad 2005). Snell and Bohlander defines (2007)
performance appraisal as a process, typically performed/delivered by a supervisor to a
subordinate, designed to help employees understand their roles, objectives, expectations
and performance success. Further he explains performance management is the process
of creating a work environment in which people can perform to the best of their abilities.
It is a whole work system that begins when a job is defined. So performance appraisal is a
way, by which senior officers keeps some periodic objective (for specific period) to his
subordinates, clears the expected role and explain his performance success by his actual
performance with pre-determined standard, and performance management is the way to
creating the whole working environment so the people can perform their best. Dessler
(2008) defines performance appraisal means evaluating an employee‟s current and /or
past performance relative to his/her performance standards. He explains performance
appraisal always assumes that the employees understood what his/her performance
standards were, and that the supervisor also provides the employees with the feedback,
development, and incentives required to help the person eliminate performance
deficiencies or to continue to perform above par. This aims at improving employee‟s
performance. Further he explains performance management as an integrated process,
may defined as a process that consolidates goal setting, performance appraisal, and
development into a single, common system, the aim of which is to ensure that the
employee‟s performance is supporting the company‟s strategic aims. Prasad (2005)
defines performance management is the process of planning performance, appraising
performance, giving its feedback, and counselling an employee to improve his
performance. So performance appraisal is considered as the key ingrethent or an
important step of whole performance management system (Prasad 2005, Dessler 2008).
Potgieter (2002) conclude performance appraisal systems were the precursor to today‟s
performance management. From Performance Appraisal To Performance Management
www.iosrjournals.org 4 | P a g e Performance management is a systematic process for
improving organizational performance by developing the performance of individuals and
teams (Armstrong 2006). The overall aim of performance management is to establish a
high performance culture in which individuals and team take responsibility for the
continuous improvement of business processes and for their own skills and contributions
within a framework provided by effective leadership. So the objectives of both
performance appraisal and performance management, to develop the capacity of
employees so that the performance of every individual can be improve is same, so both
systems can be counted as a human resources developing instrument, with differences in
scope. While the interest in measuring performance and linking with rewards remains
the same (Pareek and Rao 2006)

Performance management overtaking Performance appraisal

Maximizing performance is a priority for most organizations today, and performance
management is a part of a link between organizational strategy and results (Bhatia,
2006). As Potgieter (2005) conclude that performance appraisal systems were the
precursor to today‟s performance management. He explains performance appraisal
systems typically based on a review of how a person completed their job for the year,
conducted annually or twice less frequently, for review of salary payment, bonus, or for
promotion, typically paper based where HR is the custodian of the information, or they
are conducted less formally and without any documentation. Further he explains
performance management as a definition which is specific objectives for an employee for
the next performance period (normally the next quarter or half a year), backed up by a
job description which takes into account the normal expectation for that position. If
objectives are met a review made for personal development objective,
remuneration/bonus etc. performance management system is usually fully automated
where the information is accessible to all any time, has features such a Performance
Diary. Here the explanations reveal performance management system trying to meet the
short comings of performance appraisal system. The increasing use of performance
management by employers reflects several things. Dessler (2008) describe three
important points that compel employers to use performance management system than
performance appraisal system. 1. Growing importance of the total quality management
(TQM), the term performance management gained its popularity in early 1980‟s when
total quality management programs received utmost importance for achievement of
supervisor standards and quality performance. Tools such as job design, leadership
development, training and reward system received an equal impetus along with the
traditional performance appraisal process in the new comprehensive and a much wider
framework. Performance management is an ongoing communication process which is
carried between the supervisors and the employees throughout the year. 2. Performance
management as a process explicitly recognizes that in today‟s globally competitive
industrial environment, every employee‟s efforts must focus like a laser on helping the
company to achieve its strategic goals. In that regard, adopting an integrated,
performance management approach to guiding development, and appraising employees
also aids the employer‟s continues important efforts. 3. Various stuthes reflect the fact
that traditional performance appraisal are often not just useless but counterproductive
(Lee and Son, 1998; Antonioni, 1994). One of the important reasons of most of the
organizations shifting from performance appraisal to performance management is the
short coming of performance appraisal system, even though the main objectives of
performance appraisal and performance management is to improve the performance of
employees. The main objective of a performance appraisal is to improve the employee
performance by identifying the strengths and weakness of an employee to guide for
formulation of suitable training and development program (Tripati 2005). The other hand
the main objective of performance management system is to achieve the capacity of the
employees to the full potential in favour of both the employee and the organization, by
defining the expectations in terms of roles, responsibilities and accountabilities, required
competencies and the expected behaviours. In comparison of performance appraisal and
performance management, performance appraisal sets job standards and evaluates past
performance based on such set standards, it mainly used as a tool for employee
evaluation in which the managers were impelled to make subjective judgment about the
performance and behaviour of the employees against the predetermined job standards.
Whereas performance management aims at managing performance real-time to ensure
performance reaches the desired levels. It is a continuous and on-going proactive
mechanism to manage the performance of an employee achieves the set targets on a
real-time basis, without reviews or corrective actions at some point in the future. It is line
activity and remains ingrained in the employee‟s day to day work.

1.Focus- Performance appraisal were mostly narrowly focused for measuring the degree
of accomplishment of on individual where supervisors had a major role to play in judging
the past performance of an employee without soliciting active involvement of the
employee. Performance management focused on front end planning instead of looking
backward, the focus is on ongoing dialogue instead of ratings.

2. Alignment Very often, the annual appraisal is performance on the employee

anniversary which does not coincide with any particular performance period. This makes
it near impossible to align the employee objectives with the organizations strategic goals
as they are released or modified. If appraisals are conducted annually on the anniversary
date, it is only possible to align at best only 50% of staff with future objectives. As
expectations are modified when a performance management system is introduced, most
organizations switch to defined performance periods this means that the performance
reviews are conducted quarterly or half yearly and enable management to direct effort
to those objectives that need to be performance according to the strategic or operating
plan.

3. Approach Performance Appraisal considered as a retrospective journey in the

individual‟s previous working year, where managers, where managers, very often
perfunctorily, “judge” the performance of staff, the supervisor acts as a judge. Whereas
performance management aims of the relationship based on it being to coach and to
contribute to the development and growth of individual, a supervisor assumes the role of
a coach or mentor. PM is inspired to the concept of “management by agreement or
contract”, PA is instead based on the concert of “management by command”
(Armstrong, 2006).
ABOUT THE COMPANY

GAIL India Limited is a premier flagship integrated Energy Company of India and is placed in
coveted 'Navratna' category of Indian public sector companies. The Navratna Companies are the
brightest face of Indian public sector. It is a group of the most profitable and efficient central
public sector undertakings having more financial and administrative autonomy. Erstwhile it was
known as Gas Authority of India Limited. As per the guidelines, set up under the Industrial Policy
Resolutions in the initial years of national planning, the Government of India focused upon
setting some major industries for national development and self sufficiency. Oil and Gas sector
were also the major thrust areas and the government decided to follow a two point strategy for
the effective regulation of oil and gas. It was: (i) Exploration and production of the gas, for which
Oil and Natural Gas (Commission (ONGC) was set up;) (ii)The refining of the oil, for which the
government established oil refining companies like Indian Oil Corporation (IOC), Hindustan 149
Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL). Over
the years of exploration and refining processes these companies felt that a huge amount of
natural gas was extracted and wasted. There was surely a need for company which could take the
responsibility in the form of production, transportation, marketing and distribution of natural
gas. With such objectives regarding the optimum use of natural gas, the Government of India set
up a company named Gas Authority of India Limited on August 16, 1984 to create gas sector
infrastructure for sustained developed market in the country. Its objectives were: 1 a)
Augmentation and setting up of necessary plants and infrastructure facilities for utilization of
natural gas obtained from the country or sea or from other countries b) To transport, treat,
fractionate, purify and market natural gas fraction. c) To formulate plans for proper utilization of
natural gas fraction in close coordination with the government and concerned industries
including industrial users. Annual Report-Winning Momentum, 2006-07, GAIL India Limited
Publication, New Delhi, 2007 150 . d) To plan, design and instruct pipelines; systems and related
facilities for collection; treatment; fraction and marketing of natural gas fractions. e) To promote
research and development in natural gas transmission, treatment and processing. Also to
develop more efficient uses of natural gas. These were the initial objectives of the company at
the time of its commissioning i.e. on August 16, 1984. Later on the Company began to grow as a
major dominant force in the market of natural gas. It started showing huge profits and its
expansion and business diversification plans started taking shape with the hard work of its
exceptionally talented human resources. It entered the areas of Gas processing, Petrochemicals,
Liquefied Petroleum Gas (LPG) transmission, TeleCommunication (GAILTEL), Power, Liquefied
Natural Gas (LNG) regasification, Citi Gas Distribution, Exploration and Production (E &P). 2 The
company did not remain only a gas company or a regulatory authority, but very soon it reached
to new milestones with its strategic . Thus incorporating the new found energy to corporate
identity, the Company was renamed GAIL (India) Limited on November 22, 2002.3

Vision and mission

Mission
To accelerate and optimize the effective and economic use of Natural Gas and its fractions for
the benefit of the national economy.

Vision
To be the leading company in Natural Gas and Beyond, with Global Focus, Committed to
Custother Care, Value Creation for all Stakeholders and Environmental Responsibility.

Key Elements of GAIL's Mission & Vision

Ethics
We are transparent, fair and consistent in dealing with all people. We insist on honesty,
integrity and trustworthiness in all our activities.

Custother
We strive relentlessly to exceed the expectations of our custothers, both internal and external.
Our custothers prefer us.

People
We believe our success is driven by the commitment and excellence of our people. We attract
and retain result-oriented people who are proud their work and are satisfied with nothing less
than the very best in everything they do. We encourage individual initiative by creating
opportunities for our people to learn and grow. We respect the individual rights and dignity of
all people.

Shareholders
We meet the objectives of our shareholders by providing them superior returns and value
through their investments in us.

Milestones
A look at the milestones in over five decades of QRG journey to excellence, maps its
emergence as a major industrial force in the country and abroad

1994 Mahanagar Gas Limited

incorporated.

1996 Listing at NSE, BSE, DSE.

1997 Navratna Status acquired.

1998 Indraprastha Gas Limited in

corporate.

1998-99 LPG plant at Usar and Lakwa in

corporate.

1999 Petrochemical Plant at Pata (U.P)

commissioned

2000 2 Blocks awarded under NELP-1

2001 Jamnagar -Loni LPG pipeline
commissioned.

2001 LPG plant at Gandhar

commissioned

2002 Renamed GAIL (India) Limited.

2003 Discovery in A1 block in Myanmar,

Discovery of oil and gas in Combay
block.

2004 Dahej- Vijaipur pipeline

commissioned.
2007 MoPNG authorization for 5 new
pipelines received.

2008 Dahej- Panvel- Dabhol pipeline

commissioned.

2009 Celebrated silver jubilee by

completing 25 glorious years.

2010 Ranked number 1 company in gas

utilities in Asia and number 2 in the
world by Platts.

2011 Acquired its first shale gas assets in

usa

2012 GAIL signs GSPA for purchase of gas

Turkmenitan

2016 Varanasi city gas project commissioned

Physical Growth and Strength of GAIL (India) Limited

GAIL (India) Limited was born on August 16, 1984 as Gas Authority of India Limited
(GAIL) to work as a Company to work in natural gas sector in India with an equity of Rs
1000 Crore by the Government of India. Later on it aimed for business beyond natural gas
and diversified into a number of energy areas. A company of Rs 1000 crore in 1984 has
the turnover of Rs 32, 459 crore in 2010-11. In a journey of around twenty five years its
high turnover speaks in high volumes about its growth . This turnover could have been
much more if it had not to bear the burden of oil subsithes. The company was renamed as
GAIL (India) Limited in 2002 so as to acquire a new corporate identity as a major energy
company. Today the GAIL Group Companies account for.
 About ¾thof natural gas transmitted in India through pipelines.
 More than ½of the natural gas sold in India.
 Almost ¼th (24 %) of polyethylene produced in the country.
 LPG produced for every 10th cylinder in the country.
 Pipeline transmission of around ¼th of the country's total LPG.
 Gas Supply for about ½ of the India fertilizer produced.
 Gas Supply for about ½ of country's gas based power generation.
 Operating more than 2/3rd of country's CNG stations.
 More than ½ of country's piped natural gas supply.
Corporate review
Present Business Segments and Portfolio of GAIL (India) Limited GAIL (India) Limited
started its business in natural gas areas in 1984. Later on it progressed as a leading
integrated energy company having its presence in a number of energy areas. Today this
company has following business segments. a) Natural Gas Marketing b) Natural Gas
Transmission c) Natural Gas Pipeline Projects d) Petrochemicals e) LPG and other Liquid
Hydro Carbons Production f) Exploration and Production (E &P) 168 g) Coal Bed
Methane h) Telecommunications i) Wind Energy The present business portfolio of the
Company includes :22  7850 Km of Natural Gas high pressure trunk pipeline with a
capacity of approximately 150 MMSCMD of natural gas across the Country.  7 LPG Gas
Processing Units to produce 1.4 MMTPA of LPG and other Liquid Hydrocarbons.  North
India's only gas bas integrated Petrochemical complex at Pata (U.P) with a Capacity of
producing 4,10,000 TPA of polymers  1900 Km of LPG Transmission pipeline network
with a capacity to transport 3.8MMTPA of LPG.  27 Oil and Gas Exploration blocks and
1 Coal Bed Methane Block.  13,000 Km of OFC network offering highly dependable
bandwidth for telecom service providers
Relationship between the topic of the study and company

SCOPE OF PERFORMANCE APPRAISAL

•To help each employee understand more about their role and
become clear abouttheir functions;
•to be instrumental in helping employees to better understand
their strengths andweaknesses with respect to their role and
functions in the organization;
•to help in identifying the developmental nee of employees, given
ds

their role andfunction;

•to in crease mu tuality b etween e mp lo yees and their sup
erviso rs so th at everyemployee feels happy to work with
their supervisor and thereby contributes their maximum to the
organization;
•to act as a mechanism for increasing communication between
employees and their su perv iso rs.
In this way, each e mp lo yee g ets to kno w th e exp ectatio
n s of th eir superior, and each superior also gets to know the
difficulties of their subordinates andcan try to solve them. Together,
they can thus better accomplish their tasks;
•to provide an opportunity to each employee for self-
reflection and individualgoal-setting, so that individually
planned and monitored development takes place;
•to help employees internalize the culture, norms and values
of the organization,thus developing an identity and commitment
throughout the organization;
•to help prepare employees for higher responsibilities in the future
by continuouslyreinforcing the development of the behavior
and qualities required for higher-level positions in the
organization;
•to be instrumental in creating a positive and healthy climate
in the organizationthat drives employees to give their best while
enjoying doing so; and
•to assist
in a v ariety of p erso nnel d ecisions b y p eriod ically gen
erating data regarding each employee.
CHAPTER 2 – RESEARCH METHODOLOGY
LITERATURE REVIEW

Most of the literature was gained through the exhaustive research of the internet study

along with the references from the company catalogues and manuals. After going through

numerous information related to the Gas Industry along with extensive research on the

topic , the key information were selected. The searches for the literature included the key

words like “Gail”, “Gas Industry”, “Performance management”, etc.

OVERVIEW OF INDUSTRY
The Indian oil and gas sector is one of the six core industries in India and has a very

significant forward linkages with the entire economy. India has been growing at a decent

rare annually and is committed to accelerate the growth momentum in the years to
come. This would translate into India's energy needs growing many times in the years to
come. Hence, there is an emphasized need for wider and more intensive exploration for
new finds, more efficient and effective recovery, a more rational and optimally balanced
global price regime - as against the ratger wide upward fluctuations of recent times, and
a spirit Of equitable benefit in global energy cooperation.

The Indian Oil and gas sector is of strategic importance and plays a predominantly pivotal
role in influencing decisions in all other spheres of the economy. . annual growth has
been commendable and will accelerate in future consequently encouraging all round
growth and development. This has necessitated the need for a wider intensified search
for new fields, evolving better methods of extraction, refining and distribution, the
Constitution Of a national price mechanism - keeping in mind alarming price fluctuation
in the recent past and evolving a spirit of equitable global cooperation.

OIL AND GAS SECTOR : AN OVERVIEW

EXPLORATION AND PRODUCTION (E&P)

The growing demand for crude Oil and gas in the country and policy initiative Of
Government Of India towards increased activity, has given a great importance to the
Indian industry raising hopes of increased exploration.

Oil and Natural Gas Corporation Limited (ONGC) and Oil India Ltd. (OIL), the two Natural
Oil Companies (NOCs) and private and joint-venture companies are engaged in the
exploration and production (E&P) of oil and natural gas in the country. During the year
2008-09, crude oil production has been 33.51 million metric tonnes (MMT) with natural
gas at 32.85 billion cubic metre (BCM).Natural gas in 2009-10 is targeted to be about
52.116 BCM.

Imports and exports of petroleum and crude oil products

During the financial year 2008-09, imports of crude Oil has been 128.16 MM T valued at
USS 73.97 billion. Imports of crude oil during 2007-08 was 121.67 MMT valued at USS
58.98 billion. This marked an increase of 3.33 per cent during 2008-09 in quantity terms
and increased by 23.37 per cent in value terms. During the financial year 2008-09,
exports of petroleum products in quantity terns is 36.93 MM T valued at USS 25.41
billion marking an increase Of 6.02 per cent in value compared to 2007-08.

New Exploration Licensing Policy (NELP)

New Exploration Licensing Policy (NELP) provides an international class fiscal and
framework for and Production of Hydrocarbons. In the first seven rounds of NELP
spanning 2000-2009, Production Sharing Contacts (PSCs) 203 exploration blocks have
been signed. Under NELP, 70 oil and gas discoveries have been made by private/joint
venture (JV) companies in 20 blocks With a view to accelerate further the pace of
exploration, the eighth round 01 NELP was launched in April 2009.1n the eighth round of
NELP, 70 exploration blocks comprising of 24 deep-water blocks, 28 shallow water blocks
and 18 on land blocks will be offered.

NATURAL GAS

Natural Gas has emerged as one of the most preferred fuel due to its environmentally
benign nature, greater efficiency and cost. At present the main producers of natural gas
are Oil and Natural Gas Corporation Limited (ONGC). Oil India Limited (OIL) and Joint
Ventures of Panna Mukta & Tapri, and Ravva. Out of the total production of around 96
MMSCMD, after internal consumption, LPG extraction and unavoidable flaring, around
73 MMSCMD is available for sale to various consumers. In addition, around 7 MMTPA of
re-gasified LNG (about 23 MMSCMD) is also being supplied to domestic consumers.

Gas produced by ONGC and OIL from the existing nominated blocks is sold at
administered prices fixed by the Government. As against a total allocation of 150
MMSCMD Of gas, actual supply APM is presently around 33 MM SCMD.

Public Sector Undertakings

Oil & Natural Gas Commission (then Commission) was established on 14th August 1956
as a statutory body under Oil & Natural Gas Commission Act (The ONGC Act), for
development of resources and sale of petroleum products ONGC was converted into a
Public Limited under the Companies Act, 1936 named as "Oil and Natural Gas
Corporation Limited" with effect from February 1, 1994 .
• Oil India limited

Oil India Limited (OIL), a Government Of India Enterprise, under the administrative set up
of Ministry of petroleum Natural Gas, is engaged in the business of production and
transportation of crude Oil and natural gas. The capital of the company is 300.00 and the
paid up capital of the company is Rs. 214.00 crore.

OIL produces crude Oil and natural gas from its oilfields in Assam Arunachal Pradesh,
non-associated gas from its fields in western Rajasthan and processes LPG from the
natural gas in Assam. The Company presently has operational areas in Assam, Arunachal
Pradesh, Mizoram, Orissa Uttar Pradesh, Uttarakhand and Rajasthan in the country

OIL is operating in 19 nominated ML and 19 nominated PEL ‘s . The Company has

acquired participating interest in a total Of 21 NELP blocks up to due end Of NELP-VI
bidding round with the right of Operatorship in respect of 12 blocks The Company also
holds Participating Interests (Pjs) in another four pre-NELP JV blocks in India and
Production Sharing Interest (PSI) in Mie Joint Venture Contract with Other partners in
Arunachal Pradesh. OIL is presently active overseas in seven countries viz. Libya, Gabon,
Iran, Nigeria, Yemen, Sudan and Bangladesh, pursuing various upstream E&P activities. In
addition, the Company is continuously scouting for suitable E&P opportunities in other
countries like Syria, Indonesia, Oman, Russia. etc„ either alone or with suitable partners.

• GAIL(India)-Limned

GAIL (India) Limited, India's principal Gas Transmission and Marketing Company was
created in 1984 with the objective of accelerating and optimizing the effective and
economic use of natural gas and its fractions to the benefit of national economy. In line
with core objective of its incorporation, GAIL has, over the years, developed natural gas
infrastructure for sustained development of gas marker in the GAIL, in last two decades
Of its existence, has created a sizeable natural gas market in the presently markets
around 25 BCM of Natural Gas. GAIL handles around 28 BCM of Natural Gas through its
Transmission Network. Currently, GAIL's market share in gas Transmission and Marketing
is 79% and 70% respectively.

Refining capacity

During the year 2008-09, domestic refinery production was 160.77 MM T. By the end of
XI plan, refinery capacity is expected to reach 240.96 MMT per annum. The country is
net exporter of petroleum products, and products like naphtha, petrol, diesel and
Aviation Turbine Fuel (ATF) etc. were also exported during the year.
 At present, there are 20 refineries operating in the country, out of which 17 are in the
public sector and 3 in the private sector. Out Of 17 public sector refineries, 8 are owned
by Indian Oil Corporation Limited (IOCL), 2 each by Chennai petroleum Limitesd ( a
subsidiary of IOCL) ,Bharat petroleum Corporation Limited (BPCL) Oil and Natural Gas
Corporation Limited, Hindustan petroleum corporation limited (HPCL)and one by
Numaligarh Refinery Limited (a subsidiary Of BPCL). The private sector refineries belong
to Reliance Industries Limited and Essar Oil Limited.

Chennai Petroleum Corporation Limited

Chennai Petroleum Corporation Limited (CPCL) formerly known as Madras Refineries

Limited was formed as a joint venture in 1965 between Government of India (GOI,
AMOCO India Inc., U.S.A. and National Indian Oil company (NIOC) having a shareholding
in the ratio 74%: and 13% respectively. In 1985, AMOCO disinvested in favour of GOI and
the shareholding percentage Of GOI and NIOC stood revised at 84.62 and 15.38
respectively. Later . GOI disinvested 1692% of the paid up capital of Unit Trust of India,
Mutual Funds Insurance Companies and Banks 19du May 1992, thereby reducing its
holding to 67.7% A public issue Of CPCL was also made 1994. As a part of the
restructuring steps taken up by the Government of India, Indian Oil Corporation Limited
(IOCL) acquired equity from GOI in 2000-01. Currently, IOCL holds 31.88% while Naftiran
Inter-trade Company Limited (an affiliate of NIOC) continued its holding. CPCL has two
refineries, with a combined refining capacity of 10.5 million metric tonnes per annum
(MMTPA). The Manali Refinery in Chennai has a capacity of 9.5 MMTPA and is one of the
most complex refineries in India with Fuel, Lube, Wax and Petrochemical feedstock's
facilities. -The second refinery at Cauvery Basin, Nagapattinam was set up initially with a
capacity of 0.3 MMTPA in 1993 and later its capacity was to 1.0 MM TPA in 2002.

Bongaigaon Refinery and Petrochemicals.

The Bongaigaon Refinery & Petrochemicals Ltd. (BRPL) now IOCL, Bongaigaon
Refinery (BGR) is a petroleum refinery company in India. It was incorporated on February 20,
1974 by the government of India.The company began with initial funds of Rs. 50 crore (Rs.
500 million), which was increased to Rs. 200 crore by December 1983. The total paid capital
of the company was Rs. 199.82 crore as of 31 March 2005.The Government of India held the
entire paid-up capital of the Company until 1990-91, but sold 25.54% of its shareholding to
the public during 1991-92 to 1993-94. The remaining equity of 74.46% was divested in favor
of the Indian Oil Corporation Ltd. on 29 March 2001. As a result, BRPL became a subsidiary
company of the Indian Oil Corporation Ltd., a Government owned corporation. In March 25,
2009 BRPL merged with Indian Oil Corporation Limited (IOCL) to become its eight largest
refinery and came to be known as Bongaigaon Refinery (BGR).

NUMALIGARH REFINERY

Numaligarh Refinery, popularly known as "Assam Accord Refinery had been set up as a
Grass-root refinery at Numaligarh in the District of Golaghat (Assam) fulfilment of the
commitment made by Government of India in me historic "Assam Accord", signed on15th
august, 1985 for providing the required thrust towards industrial and economic
development of Assam. Both the Refinery and its adjacent Marketing Terminal were
completed within the approved project cost of Rs.2724 Commissioning process of
Numaligarh Refinery was completed in June 2000 and commercial production
commenced from 1st October, 2000.

Mangalore R & petrochemicals Limited (MRPI,)

Mangalore Refinery and Petrochemicals Limited (MRPLL first joint venture company for
setting up a crude petroleum Refinery in India was formed in 1987 jointly by Hindustan

Petroleum Corporation Limited along with Indian Rayon and Industries Limited and its
associate (AV. Birla Group) The refinery project was commissioned in March, 1996 with
an actual capacity of 369 MMTPA. The expansion project of MRPL, having capacity of
9.69 MMTPA, was commissioned in April, 2001. The refinery is located at Mangalore on
the western coast of India, primarily conceived to maximize middle distillates, such as
kerosene and diesel The refinery is designed to light to heavy and sour to sweet crude.
The performance Of MRPL started degenerating after dismantling Of APM for refineries
in April. 1998 and Company came very close to becoming a sick company by 2002-03.
With the approval Of the Government, ONGC acquired the entire stake Of Aditya Birla
Group in MRPL tor Rs.59.43 crore and also infused additional equity capital ot Rs.GOO

crtre in March, 2003 as Of the awoved debt restucturing plan. Widt dlis, ONGC

acquired 51% stake in the equity Of MRPL. Thus, MRPL became a Govanme•t

within the meaning and scope of Section 617 of due Companies Acc 1956

also a subsidiary company Of ONGC In June July 2003. ONGC acquired 3380 crore

equity shares held by banks and financial institutions issued against part conversicm Of

their loans in terms Of debt restrucmring plan. increasing its stake in MRPL to 71.62%
MRPL is the first refinery in India to produce Euro-Ill High speed Thesel (HSD) and

Euro-Ill Motor Spirit (Petrol).

The Directorate General Of (DGH) was established under the

adminisrarive conrol of Ministry of Petroleum & Namral Gas by Govemmenr of India

Resolution in 1993. Objectives of DGH are to sound of oil and

natural gas resources having a balanced regard fix environment. safety, technological and

economic aspects Of due pea-oleum activity. DGH has been entrusted wid. certain

responsibilities concerning the Sharing Contracts f'r discovered fields and

expl«ation blocks, promotion of investment and monitoring of E&P activities mcluding

review of reservoir performance of major fields. In addition, DGH is also engaged in

opening up of new,'unexplored areas for future exploration and development of

hydrocarbon energy

• EngineersJndia_Limimd1EIL)

Engineers India Limited (EIL) was established in 1965 to provide engineering and related

technical services for petroleum refineries and oåer related projects. Over me years, ir

has diversified into and excelled in vanous fields. EIL has emerged as Asia's leading

design. engineering and turnkey contracting company in petroleum Refining.

Pea•ochemicals, a•emicals & Fertilizers, Pipelines. Offshore Oil & Gas, Oil &

Gas, Terminals & Storages, Mining & Metallurgy and Infraso•ucture Engineers India is

an ISO 9001: 2000 accredited Company.

Balmer Lawrie & co. Ltd. (BL) was established in 1867 as a Parmership Firm and was

incorporated as Private Limited Company in 1924. It Was subsequently converted into a

public Limited Company in the year 1936 with its Registered Office at Kolkata. Biecco

Lawrie Limited (BLL), a Government Of India Enterprise, unda• the adminisu-ative

42

performance Appraisal

conn-ol Of Ministry Of petrolm•m & Natural Gas (MOP&NG), was in 1919

and became a Government Company in 1972. This is a medium sized Engineering Unit

wid. diversified activities having two factories located at Kolkata.

The Oil Industry (Development) Act, 1974 was enacted following successive and steep

increase in the international of crude oil and petroleum p•oducts smce early 1973,

when dre need Ot progressive self-reliance in petroleum and petrolenm based undusrial

raw m aterials assumed great importance.

• Oil Industry Safety Directorate (OISD)

The Oil Industry Safety Directorate (OISD) assists Safety Council under Ministry of

pea•oleum & Natural Gas (MOP&NG) headed by Secretary, P&NG as Chau-man and

includes Additional Joint Secretaries, Advisi*-s in MOP&NG. alief Executives Of all

Public Sector Undertakings (PSUs) under the Ministry, Chef Controller of Explosives

(CCE), Advisor (Fire) Of the Govt. Of India, DGMS and the Director General Of Facttry

Advice Service & Labour Institute etc. as members.

• Centre for High Technoloav (CHT)

Centre for High Technolo-ky (CHT) was in 1987 as a specialized agercy Of

the oil industry to assess futuristic requirements, acquire, develop and adopt
technologies

in the field of refinery processes, petroleum additives, storage and handling of

crude Oil, products and gas.

• P.R'tQleum.JndiA.Inrt1M!isoL.LP.IIL
Petroleum India International (Pll) is a consortium of Public Sector Companies in the

petroleum, Petrochemicals and engineering sector. The member companies include

Indian Oil Corporation Ltd.. Bharat Petroleum Corporation Ltd.. B(mgaigaon Refinery &

petrochemicals Ltd., Chennai petroleum Ltd., Engineers India Ltd.,

Hindustan Pen-oleum Corporation Ltd, Oil India Ltd and Indial Pen-ochemicals

43

performance Appraisal

pea-oleum planning & Analysis Cell cpp A C)

The peroleum planning & Analysis Cell (PPAC) was created W.e.f. 1st April 2002 after

dismantling of the Administered pricing Mechanism (APM) in due petroleum secur and

abolition of the erstwhile Oil Coordination Committee (OCC). Governing Body

under the chairmanship of Secretary (PNG) and senior officials of MOPNG and Chief

Executives of major oil and gas PStJs as members provides necessary *Ipervisim,

guidelines in the functioning of PPAC.

Investment Opportunities

Petroleum products are the single largest merchandise export from India.

Improved Oil Recovery (IOR) Enhanced Oil Recovery (EOR) techniques

Crude Oil production from the deepwater block D6 in KG Basin

Use Of improved technology

Extended Oil field acquisition activities

Capacity utilization Of refineries

Foreign company collaboration

End-user market and development

Setting up oil & gas courses at universities and raining instimtes

Opportunities world-class service p-oviders

Initiatives

The Auto Fuel Policy aims to comprehensively and holistically adfress the issues Of

vehicular emissions, vehicular technologies, and auto fuel quality in a cost-efficient

manner while ensuring the security of fuel supply. The policy objectives ue:

(i) Ensure sustainable, safe, affordable and unintenupted supplies Of auto fuels Of right

quality to support social and developmelt. One Of the key factors meeting

dais policy objective is to diversity the and reduce dependence any single

source Of supply.

44

performance Appraisal

(ii) Over the years, infrastrucmre for the Of crude and crude dl•eir

processing and production, and storage and ranvtati(Ni has been created in the

counry. Considerable investm ent has been made in developing this infrastructure and tie

logistics for the distribution of petroleum products in the country. The Auto Fuel Policy

is committed to an optimal utilization of such an infrastructure.

(iii) Assess d-.e future mends in emission and air quality requirem ents from the pont

of public health, and establiNume1t of a causist81t framework widlin which diff«ent

policy options to reduce emissions can be assessed. It is, therefore required that

environmental objectives for air quality be determined, emission reduction targets be

input data on costs and benefits be collected and cost effective meag.res to

reduce emissions be identified Élstitutional arrangeme•ts to be in place

to where such activities can be handled effectively.

(iv) Adopt such vehicular emission standards that they togeåer with other will

be able to make a decisive impact on air quality, without placing undue burden the

people.

(v) Vehicular emission standards and auto fuel quality should Offer choice to the citizens

and equally a choice to automobile manufactures in matters Of technolqv selection.

Principles Of widening dre choice and promoting competition amcmgst automobile

technologies, within the limits diat are imposed by the availability of auto fuels and

security of their supplies.

(Vi) As elsewhere in the world. the Governmnit decide mission

standards and the corresponding fuel specifications without specifying vehicle

technology and the type of fuel

(vii) The requirement 01 investments to reach vehicular technolocv and fuel quality of

Euro Ill equivalent levels throughout the counuy is estimated in the range of Rs. 50,000 -

60,000 crore. Therefore, to achieve the air quality targets by gradually improving

emission standards and a phased up gradation Of fuel quality and vehictllr technology,

taking note of the financial, technical and institutional consideraticms as also dle

absorptive capacity is required.

performance Appraisal

The Eresent policy on FDI in the petroleum & Natural Gas sector vide press Note NO 5

(2008) permits EDI up to 100% under the automatic route in all activities other than

refining and including market study and formulation, investment/financing, setting up

infrastructure for marketing in Peroleum and Natural Gas Sector subject to sectoral
In Refining, FDI up to 49% in case of Public Sect« Undertakings, without ürvolving

divestment or dilution of domestic equity in existing public Sector undo—takings through

Foreign Investment Promotion Board (FIPB) and FDI up to 100% is permitted case of

private Companies under Autom atic route subject to sect-wal policy.

Key players : Indian Oil , Reliance, Bhnt pen-oleum, HP, ONGC , BP. BG , Gaz

de France, Chevron

The present policy FDI in the peroleum & natural gas sector vide Iress note no 5

(2008) permits FDI up to 100% under the automatic route in all activities other than

refining, investment/financing, ser-ring up infrasmtcmre for marketing in petroleum

natural gas sector subject to sectoral policy including market study and formulation.