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Managing Organizations:

Bharat Petroleum
Corporation Limited
Group 7
Aroop Sanyal 1501074
Harmeet Singh
1501080
Prem Prakash 1501092
Sushant Anand 1501110
Vigneshwar P 1501114

Introduction
Background

Bharat Petroleum Corporation Limited (BPCL), a Government company, was established as


Burma Shell Refineries Limited.

24th January 1976, the Burmah Shell Group of Companies was taken over by the
Government of India to form Bharat Refineries Limited. On 1st August 1977, it was
renamed Bharat Petroleum Corporation Limited

BPCL is an integrated refining and marketing company with a refining capacity of 30.5
million tonnes

It is a Fortune 500 Company occupying the 289th position in the listing of fortune 500
companies, with and equity base of Rs.300 crores

Is a part of the prestigious Navratna companies in the Indian PSU sector and the second
largest player in the Oil refinery domain after IOCL

Evolution

The capacity was first expanded from 2.5 million tonnes per annum (MMTPA) to 3.3 MMTPA in
September 1973

The production of liquefied petroleum gas (LPG) and aviation Turbine Fuel (ATF) commenced
after the expansion

BPCL in the early 2000s, through its wholly-owned subsidiary, Bharat Petro Resources Ltd
(BPRL), has forayed into upstream exploration and production
Shareholding

As of June
2014

BPCL: Major approved investments as on March 31,


2014
Rs. Billion

Cost
(Rs.
Billion
)

Completio
n date

%compl
etion

Promoters Individuals and


Corporate Bodies

54.9

Mutual Funds/UTI

8.4

Financial Institutions/Banks/Insurance
companies

6.6

Kochi expansion to 15.5 mtpa


from 9.5 9.5mtpa

165

May - 16

47.4

14.2

Mar 15

77.6

Foreign Institutional Investors

12.2

Bodies Corporate

5.0

Replacement of old CDU/VDU


with state of the art
technology CDU/VDU at
Mumbai refinery

Public

12.8

Laying a 210 kms pipeline


from Kota to Jobner for
transport of MS/SKO from

2.8

Mar 15

74.5

Identification of Products, Markets, Location and Functions


Products

Markets

Locations

Functions

Auto Fuels

Retail auto
fuels

MARKETS

Refining

Industrial Fuels

Industrial &
Commercial
Consumers

Northern India

Supply and
Distribution

Aviation Turbine Fuel

LPG

Eastern India

Marketing
Engineering &
Projects

Lubricants

Lubricants

Western India

Finance

LPG

Aviation

Southern India

Information Systems

Convenience Goods

Human Resource

Products:

Liquefied Petroleum Gas: Environmental friendly fuel used widely in households for
cooking. LPG is meant for households and marketed my PSU Oil companies in cylinder of 14.2
kg and 5 kg.

Service:

Release of new LPG connections and facilities for booking refill

Transferring or terminating the LPG connection

Change in customer detail and safe custody of the cylinder to the customer

Auto LPG: LPG is also identified as an auto fuel in 2002 after amendment of relevant acts by
the Central and State governments. It serves as an economical fuel variant and less
pollutant

Retails auto fuel: The most common point of contact of customers with the Oil Industry is
the Petrol Pump. Petrol Pumps are referred to as Retail Outlets (ROs)

Lubricants: Lubricants essentially are liquids, semi liquids or solid substance to reduce
friction among the mover parts. Typically lubricants comprise of 90-95% of base oils and
balance performance enhancement additives based on the application

Aviation Turbine Fuel

Organizational Environment
Specific Environment:
Customers: End Users , Aviation companies.
Distributors: Petrol bunks, Gas Stations.
Suppliers: Other Refining Companies.
Competitors: IOCL,HPCL,ONGC,CPCL.
Government: petroleum product administration through Oil Co-ordination
Committee(OCC)
General Environment:
Technological Forces: Implemented ERP - SAP . Need to look into its inventory
management and easy operations in a large number of areas. Increases skilled
manpower.
Economic Forces: Subsidies and importing the fuel from Middle East(OPEC).
Political Forces:
International Forces: International trading of oil. Impact of the international commodity

Environmental Dynamism

Enhance the appetite: The degree to which forces in the specific and general
environments change over time

Stable Environment

Unstable Environment

Setting up the crude oil


storage at Vizag/Mangalore
Expansion of Kochi Refinery
Bina Refinery for crude oil
processing.

Rupee value against Dollar


Payment issues with Middle
East Countries

Implications of Technology &


Innovations

Crude Oil
Purchase & Storage

Refining

Transportati
on

Retailing/
Consumers

Long-linked technology Sequential task interdependence


Type of coordination: Planning and Scheduling
1. Technology upgrades on Storage & Refining
processes
2. E-technology
3. Transportation
4. Communications
5. Retailing/Consumer services

Technology upgrades on Storage & Refining


Upgrades to Mumbai refinery which resulted it to process more than 70 grades of crude
Storage upgrades to all refineries to meet demand
MES : Manufacturing Execution System

E-technology

SAP Early adapters of ERP

SCADA - Supervisory Control And Data Acquisition

Effectively monitors pipelines of >1900 KMs spread across India

ASTRONOVA Apron Fuel Management System for Aviation Gasoline

Smart cards, Fleet cards

Transportation
Live GPS tracking for vehicles
SmartFleet services
Reverse Logistics

Communications

Retailing/Consumer services
ValueFirst Mobile platform for dealers
Transparency portal For customers
In&Out stores

Image source: BPCL Website

Innovations
Oil Explorations across the globe
In-house Research & Development department

Pure for Sure Petrol

Enhanced Speed, Hi-speed Diesel variants

MAK Lubricant technology

Development studies on Ethanol with Brazil government

Bio-fuels

BMCG (Bharat Metal Cutting Gas)

Metal cutting gas for industries such as Railways, BHEL etc

Developed in-house

Became Industry standard almost immediately

Numerous advantage over Acetylene Cutting (CA) which was used till then

Development of the work force


Total Employees: 13214
Effective Talent management & engagement
programs
Project Caliber
Project Ascend
Project Beyond Tomorrow
Events: Mercurix, Socratix

Effective employee feedback systemMY VOICE/MERI VAANI

Organisational Culture and Brand

People oriented organizational


culture

Employee values

Customers and stakeholders

Employee benefits

Collaborative spirit

Frequent trainings and technological


updates

Open communication channels

Standardised incentives
based on rank ( prescribed by
central government and
petroleum ministry of India)

Medical coverage

Holiday allowance, etc.

Brand and
corporate culture

Trust

People

Easy adaptation to changing environment


through dedicated guidance

Transparency in all operations

Collaboration

Well defined communicational protocols

Innovation

Caring

Reliable

Exclusive initiatives as part of


culture building

Project Entrans
SAP platform for better value added service and ease of employee
incentives

Project Caliber
360 degree feedback system for employee grievances
Improved leadership initiatives among employees with learning inputs

Project Beyond tomorrow


Value addition and culture development
Talent and behaviour enhancing among employees

Project Cusecs
Customer focused initiatives ( Eg. Pure for sure)

Results and Impact on Culture

Harmonious work environment

Enhanced collaborative effort with team based ideology

Technically sound and competitive employee profile

Customer oriented approach

Transparent Business to business transactions

Progressive employee productivity

Organizational Structure
CMD

Director
Refineries

I/C Refinery

I/C Refinery

Company
Secretary

Corporate
Affairs

Audit

Coordination

Director
Personnel

Functional Structure:

Director
Marketing

Personnel &
Admin

Aviation

H.R.

Corporate S&D

Director Finance

Corporate LPG

EDP
E & P Marketing

Corporate
Planning

JV Refineries

Corporate
Communication

Corporate
Finance

Corporate Sales

Corporate
Lubes

Special Projects
Regional GMs

Support departments:
corporate affairs, audit, coordination.
Director Refinery: refinery,
corporate planning, joint
venture refineries and special
projects.
Director Finance: Corporate
finance and EDP.
Director Marketing: retail,
industry, lubricants, LPG and
aviation segments.
Director Personnel: H.R. and
Admin.

Regional Structure
Director
Marketing

General
Manager
East

General
Manager
West

Divisional
Manager
PTN

Divisional
Manager
BBSR

Divisional
Manager
KCL

Manager Sales

Manager
Engineering

Manager
Operations

Sales Officer
LPG

Area Sales
Officer
BBSR
Area Sales
Officer
SBP
Area Sales
Officer
BAM

Operations
Officers

General
Manager
North
Divisional
Manager
RNC

General
Manager
South

4 regions , 22
divisions
Divisional Manager :
sales, operations,
engineering.
Different customer
segments like retail,
L.P.G, industrial.
What if a customer
order Lubes?

Employee
Strategy
BPCL 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 aim to realise their personal vision in tandem with the
organization`s vision. The thrust areas include:
Performance Management- Links organization `s goals with individual
performance goals
Competency Modelling- Recognize competencies and capabilities of
employees to bridge gaps through appropriate training and developmental
programmes
Multi-skilling- Encourage employees to take up initiatives in new
technological and managerial areas like Enhanced Fuel Proposition, Add-on
Stores, One Stop Truck Shops, Customer relationship management solutions,
Tracking Customer Receivables , Monitoring Cretit management, Inventory
Management etc.

Expansion Strategy
Upstream operations: Exploration and production business
Midstream operations: Transportation
Downstream operations: refining, marketing and petrochemicals
Organization

Turnover - 2014
(cr)

CAGR Revenue
(last 5 year)

CAGR Profit ( last


5 years)

IOCL

4,73,210

15.9%

-2%

BPCL

2,60,060

16.39%

19.09%

HPCL

2,23,271

17.34%

-6%

BPCL wanted to double volumes and increase profitability fourfold over a five-year period
which is unrealistic in India.
They have ventured into Exploration and Production, to attain margins as high as $30-40 a
barrel
This led to the creation of Bharat Petro Resources Ltd (BPRL)

Incidences of Expansion Strategy

Signed Exploration and Production Sharing Agreement with Oman .

Acquired 20% stake in exploration block in Australia

Acquired 50% stake in Brazil's Encana Brazil Petroleo along with Videocon

Increase its refining capacity at its Kochi refinery from the current 9.5 MTPA to 15.5 MTPA by
2016-17.

Various exploration activities through its wholly owned subsidiary Bharat Petro Resources
Limited in in Australia, Indonesia, Mozambique, UK, Brazil etc.

BPCL in October 2000 acquired 61.65% stake in 3 million metric Tonne Numaligarh Refinery.

Expansion of Numaligarh Refinery Limitedfrom 3 Million Metric Tonne Per Annum (MMTPA)
to 9 MMTPA

Commissioned in May 2011, Bina Refinery came up with a Joint Venture with Oman Oil
Company with 50% stake of each.

Retail Segment Strategy

Launched Speed `93, its own brand of petrol

Central UP Gas- Joint Venture with GAIL for implementation of city gas projects in Delhi
and Kanpur

Formed Joint Venture with GAIL to market CNG in Karnataka and Kerala.

Joint Venture with GAIL in co-operation with transmission and distribution of natural gas ,
LPG pipelines and city gas.

Signed MoU with PunjabEnergyDevelopmentAgency(PEDA) to setup 1 M/W Solar


Photovoltaic Power Plants at Lalru in Punjab, India.

Modernize its existing facilities to produce auto-fuels conforming to Euro-IV/ V


specifications

Lay a 210 km long cross-country pipeline from Kota to Jobner

In the News hour:

Implications of recent news


Two Major Developments 1. BPCL is aiming rapid expansion, both domestic and internationally.
2. BPCL is looking to actively expand its market share in the Retail segment

Problems with the current structure in accomplishing the above goals Old structure was designed majorly for the Mumbai refinery. This is no longer a viable option
with the scale BPCL is currently operation and aims to operate in future as a result of rapid
expansion.
Active expansion in Retail segment required good reach to customers to understand their
needs and reduced hierarchy to communicate the same to higher management so that policy
formulation could be accelerated.
1. The director marketing, regional manager, divisional manager etc handles different classes of
customers, spread over various segments hence in the existing structure deep focus on retail
customers could not be achieved.
2. Marketing activities spread to different functions, levels of hierarchy and involve many
individuals. Thus there is a need to reduce the same.
3. There is a need to improve the overall customer out reach.

Proposed Organization
Structure

1.
.
.
.

2.
.
.

Hybrid structure :
Divisional structure and
Marketing function directly
reporting to the CMD.
Divisional structureCaters rapid expansion by
saving efforts on
integration aspect.
Better control in lieu of
rapid expansion.
Better accountability of
Profits achieved which is
required in environment of
increasing tie-ups and joint
ventures.
Direct reporting of
Marketing to CMD
Customer needs are well
communicated to the
higher management.
Strategy of the organization
is well communicated to
lower staff and sales force.

Porters Competitive Strategy: Cost Leadership


Commo
dity Ma
rket:
standa
rdized
produc
ts
Low sc
op
differen e of
tiation
Examp
wheat, le: Gold,
sugar,
petrol
Similar
pro
LPG, Av ducts for
iation f
uel,
lubes
Diferen
t

iation

Focus o
fe
manag fficiency to
e lower
costs
Examp
le: Ada
pt
techno
logy lik ing
e SAP
Focus o
n E&P i
n
foreign
shores
future
crude s for
upply
Can he
lp BPCL
g
ahead
of IOCL row to
in futur
e
Cost Le
adershi
p

Organizational Structures: A
Comparison
Old Structure:
Functional
Structure
More of
Horizontal
Integration
Standardized

New Structure:
More Hybrid
Structure
Vertical Integration
Mutual Adjustment

Functional structure limited to similar products and single refinery


Products manufactured from few locations with a select user base
Less accountability due to staggered distribution of authority
Communications problems creating gaps for strategy implementers
Standardized as production was more operational based instead of market oriented

More differentiated products under hybrid structure


Products manufactured across different locations due to new refineries, targeting
newer market segments
More control over internal efficiencies through separate profit centers per
refinery
Communication problems can be reduced given the marketing team reporting
directly to the CMD
More customer centric as major decisions are made on the basis of customer
requirements of the select regional marketing manager

Technology: Routine vs Complex

SAP implementation aids areas of


tracking customer-receivables,
monitoring credit-management, inventory
management, besides easing the
operations in a large number of areas

BPCL as seen above follows an


Organizational level technology
integrator whilst primarily focusing on
Mass Production involving a high level
of standardization. The Production
technology implemented would be of
continuous-process technology

It will follow the Routine manufacturing


model in the Charles Perrow theory

Centralization vs
Decentralization

Strategy implementers model similar to


ASB of General Motors

Marketing, Industrial fuels, LPG,


lubricants, refining & logistics - major
areas of critical analysis
Team of CMD chairman, ED marketing and
ED of the respective refineries make up
the strategy formulators
The team works on the strategy and
vision for their own units with a highly
centralized model within each unit

Integration: The Top Management


Consists of CMD, directors of marketing, refinery, finance and HR
Set business goals and targets complying to govt. standards and regulations with ethical,
legal and economic treatment of employees
Enhance market share and net worth while providing customer with value added products
Risk evaluation and management of R&D and other innovations
Co-ordinate with the units to share information who have authority over the top level
management
Decision making
Collaborative efforts of all units with executive directors of all refineries
Decisions made are communicated to general managers of each department
From there the model becomes decentralized
The GMs have freedom of decision making and have a wide span of control over a flat
structure
The GMs orchestrate the middle level management from there on

The Middle Management


The process:
Decentralized operations with managers and shop floor
technicians with daily target specifications
Managers/Asst. managers/Sr. engineers are given authority over day
to day operations with a span of control varying with scale of daily
job
Manager takes responsibility for daily benchmark with target in focus
(daily job allotting can be done as the manager wants)
Sr. manager and chief manager receive weekly or bi-weekly reviews
from managers
General managers preside over meetings(monthly) with Sr.
managers
Follows a tall structure in the lower management(as we go down
from Sr. manager level) with considerable centralization

Formation of Task Force

Task force formed during shutdown procedure (complete shutdown and restart of all
plants and operations-done once in 2 years)- Headed by the director of projects

Follows a highly centralized model during this period, Consisting of deputy general
managers of all major core departments along with select personnel downwards in the
structure, headed by the director of operations

The Gen managers takes all operations with a wide span of control

All members, even bottom level workers are under the direct authority of Gen.
managers, with a responsibility to report all events directly. Managers are required to
make decisions based on orders of general managers only

Day to day benchmark is set directly by the general managers up to the bottom level
workers

Decisions and authority of each general manager is highly dependant on type of


operation

In case of conflicts between gen managers, the directors decision is final

This type of task force model is for highly critical operations, high risk and safety
centred operations only

Conclusion:

Reduce the gap between the strategy makers and the


business implementers

Proposed structure is cost intensive due to a high


requirement of skilled workforce but stands to reap rewards
in the run long

Can be a great opportunity to win. Given the increasing


profit margins BPCL stands to become the biggest player in
the Oil refinery industry

Entry of private players can be threat. The new structure


would be better prepared to tackle the customer needs and
build a stronger brand image.

References:

Chemtech Foundation: http://www.chemtech-online.com /O&G/rk_dec-jan12.html

Challenge into an opportunity:


http://
articles.economictimes.indiatimes.com/2009-11-23/news/27635692_1_bpcl-chairman-ashok-sinha-oil-p
rices

Bharat Petroleum: https://en.wikipedia.org/wiki/Bharat_Petroleum.

BPCL plans expansion at Bina refinery:


http://
economictimes.indiatimes.com/industry/energy/oil-gas/bpcl-plans-rs-23000-crore-capacity-expansionat-bina-refinery/articleshow/45889631.cms?intenttarget=no
.

Bharat Petroleum retail operations:


http://www.financialexpress.com/article/industry/companies/whats-in-store-bharat-petroleums-nonfuel-retail-operations/85247/

Bina refinery capacity expansion:


http://www.livemint.com/Companies/TA2DM0IcODdpdqQovg9l5I/Bina-refinerys-race-to-profit-speedsup-capacity-expansion.html.

BPCL - Player profile: Crisil Research


https
://www.crisilresearch.com/CuttingEdge/industryasync.jspx?serviceId=29&State=null#storyId#103

Thank You!