Report on

2009

Analysis of the third party audits of Retail Outlets & suggestions to implement their recommendations/suggestions

A REPORT
ON

STUDY TPC
IN THE CITY OF

OF

Submitted by:

AUDITS FOR RETAIL Chetna Tyagi OUTLETS

Amity Business School

LUCKNOW

Amity University

Submitted by: Chetna tyagi

Noida

Amity business school Amity university

26/06/09

A REPORT ON

Analysis of the third party audits of Retail Outlets & suggestions to implement their recommendations/suggestions

Submitted in partial fulfillment of the requirements for the degree of MBA Submitted by Chetna Tyagi

Submitted to: Mr. Dhiraj Malik Jonardan Koner

Industry Guide

Dr.
Faculty Guide

Acknowledgement
I would like to extend my sincere gratitude towards Mr. Vigyan Kumar (Senior Divisional Manager, Retail Sales) for providing me an opportunity to learn and complete my summer internship project in this respected organization. I would also like to extend sincere gratitude towards Mr. Dhiraj Malik (Dy. Manager, Retail Sales) for his guidance and continuous support during the complete duration of the project. He consistently encouraged me during the project and provided valuable guidance to proceed with the project. I also take this opportunity to thank Dr. Jonardan Koner, my faculty guide, for the invaluable inputs in development of the project, and in terms of the methodology and formulating analysis. My sincere thanks and appreciation for all the officers in the Retail Dept. of the divisional office of Indian Oil, dealers and the pump attendants for their immense support, resources and inputs, which helped in the timely completion of the project. Their inputs have been of immense value addition to the project.

Table of Contents

1. Abstract

..5
2. Introduction

6
2.1 Introduction

7
2.2 Methodology

..8
2.3 IndustryProfile

..

..12
2.4 Retail

outlet........................................... ..24
2.5 Thirdpartycertification..

.29

3. Findings

.31
4. Recommendations

and

conclusions..37
5. References

and

annexures.. .41

Abstract
This project has been undertaken taken to do a detailed analysis of the Third Party Audits done for retail outlets of Indian Oil Corporation Limited in the city region of Lucknow and to provide
5

suggestions to implement the recommendations in the best possible way so as to make the initiative more efficient and effective.

The company started the Third Party audits for its own retail outlets in order to provide better

services to their customers at the retail outlets. In the third party certification process, some third parties are engaged to carry on audits for the retail outlets of the company to check the services and standards of the outlets. These reports are then forwarded to the management of the company so that necessary actions could be taken, where ever required, to inprove the performance of the various outlets. Third Parties are engaged in order to ensure unbiased audits to have a true picture of the standards and services provided by Ros.

The project tries to find out the attitude of the dealers of the Retail outlets towards this initiative of the company. It also aims to find their motivation level and their satisfaction from the company and how this affects the sales of the retail outlet.

The findings from the study would help the company with insights into areas that need to be improved. Finally, recommendations would be given to the company for further improving its Retail outlet proposition in the city of Lucknow.

Introduction

Introduction
The purpose of the study is to provide qualitative inputs to the organization about strengthening their Retail outlet proposition in the city of Lucknow. The project aims to provide suggestions for the better use of TPC audits for the improvement of retail outlets of Indian oil.

Objective

The purpose of the study is to give the company a detailed report various trends of performances of retail outlets of city region of Lucknow as shown in TPC audits and to provide suggestions and recommendations for making the system of TPC more useful and beneficial.

Scope
The report would be useful to the company to:

Find the various trends of performances of retail outlets of city region of Lucknow as

shown in TPC audits.

Find the dealers perception towards the initiative of TPC and check their satisfaction level

from the company.

Analyze the TPC audits minutly and give an overview of the flaws present in the system

and suggestions to overcome them. .Summarize the findings and give recommendations to the company to improve the proposition of retail outlets.

Methodology

The project was completed in three phases:

The first phase involved literature review. The oil industry was studied in general. Later it

involved getting acquainted with the company literature. The source of data about IOCL was its website, internet, articles and companys unpublished resources.

Second phase involved the survey and observation study. The Retail Outlets (ROs) in the

city were visited..

Finally the third phase involved analyzing the results and coming up with the findings and

recommendations. The report is thereafter concluded.

Research design
The research is exploratory in nature with the following characteristics: To provide insights and understandings on an aspect.
10

Sample is small Research method is flexible Followed by conclusive research

Data collection
The research involved both primary and secondary data collection. Primary Data is collected through survey of dealers. The dealers of the ROs were surveyed by telephonic interview. The dealers that were surveyed were: 1. Agarwal Bros 2. Agarwal Enterprises 3. Om service Station 4. Surat Ganj filling Station 5. Swastik Traders 6. Geeta Petroleum 7. Vinayak service station 8. Maa Saraswati Service Station
11

9. Goel automobiles 10. Anurag Roadlines

Secondary Data is collected through internet, magazines, newspaper and

unpublished sources at the company. Scaling Techniques

We have used one of the itemized rating scales. In these type of scales categories are ordered in terms of scale position and the respondents are required to select the specified category. We have used Likert scale for our research. This scale is widely used rating scale that requires the respondents to indicate a degree of agreement or disagreement with each of series of statement about the stimulus object. In general this type of scale has five responses categories ranging from strongly disagree to strongly agree, where 1 representing the strongly disagree and5 represents strongly agree. The respondents had a choice of giving the same rating to more than one parameter. This scale has several advantages like Easy to construct and administer, Respondent readily understand how to use the scale, Suitable for all (i.e. - mail, telephone, personal Interviews)

Questionnaire development and pre-testing

A properly designed questionnaire can tap the necessary information from the respondents. In framing a questionnaire the researcher must ensure that the questions are designed to draw information that will fulfill research objective. Also the researcher must make sure of the target population for the same. A questionnaire can contain both open and close ended questions.
Close ended questions give respondents a finite set of specified responses to choose from. Our

questionnaire contains structured questions i.e. which have a specified number of responses .We used Likert rating scale for responses that requires the respondent to indicate a degree of agreement or disagreement with each of series of statement about the stimulus objects. We used a rating scale of 1 to 5 in which 1stands for strongly disagree and 5 stands for strongly agree. There were also
questions which elicited qualitative responses. The questions wording were kept simple and

easy to understand.
Pre-testing refers to testing the questionnaire on a small sample of respondents selected on a convenient basis that is not too divergent from the actual respondent. It 12

includes testing all aspects of questionnaire starting from the question content to question sequence. Pre- testing enables the researcher to revise the questionnaire by identifying the flaws and eliminating any ambiguous questions. We will go for pretesting on 30 respondents. Sampling Technique Sampling is done to select a target audience for the purpose of determining the characteristic of the whole population. There are two basic approaches to sampling, i.e. - probability and non-probability. In our research we have used non-probability sampling which involves the selection of units based on factors other than random chances. Cluster sampling, Convenience sampling quota sampling, judgment sampling and snowball sampling are few examples of non-probability sampling. Sample Size Dealers Surveyed: 10

INDIAN OIL: COMPANY PROFILE

13

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

DISTINCTIONS: Indian Oil Corporation Ltd. Is Indias largest commercial enterprise, with a sales turnover of Rs. 2,47,479 crore (US $ 61.70 billion) and profits of Rs. 6,963 crore (US $ 1.74 billion) for the year 2007-08. Indian Oil is also the highest ranked Indian company in the prestigious Fortune Global 500 listing, having moved up 19 places to the 116th position in 2008. It is also the 18th largest petroleum company in the world.

Indias Downstream Major:

Beginning in 1959 as Indian Oil Company Ltd., Indian oil Corporation Ltd. Was formed in 1964 with the merger of Indian Refineries Ltd. (established 1958). Indian Oil and its subsidiaries account for 49% petroleum products market share, 40.4% refining capacity and 69% downstream sector pipelines capacity in India. For the year 2007-08, the Indian Oil group sold 59.29 million tonnes of petroleum 14

products, including 1.74 million tonnes of natural gas, and exported 3.33 million tonnes of petroleum products. The Indian Oil group of company owns and operates 10 of Indias 19 refineries with a combined refining capacity of 60.2 million metric tonnes per annum (MMTPA, i.e. 1.2 million barrels per day). These include two refineries of subsidiary Chennai Petroleum Corparation Ltd. (CPCL). The corporations cross country network of crude oil and product pipelines, spanning about 9,300 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and environment-friendly manner. Indian Oil is investing Rs. 43,393 crore (US $10.8 billion) during the period 2007-12 in augmentation of refining and pipeline capacities, expansion of marketing infrastructure and product quality upgradation as well as in integration and diversification projects.

Network beyond Compare:

As the flagship national company in the downsream sector, Indian Oil reaches precious petroleum products to millions of people everyday through a country wide network of about 34,000 sales points. They are backed for supplies by 166 bulk storage terminals and depots, 101 aviation fuel stations and 89 Indane (LPGas) bottling plants. About 7,100 bulk consumer pumps are also in operation for the convenience of large consumers, ensuring products and inventory at their doorstep.

15

IndianOil operates the largest and the widest network of petrol & diesel stations in the country, numbering over 17,600. It reaches Indane cooking gas to the doorsteps of over 50 million households in nearly 2,700 markets through a network of about 5,000 Indane distributors

IndianOil's ISO-9002 certified Aviation Service commands over 62% market share in aviation fuel business, meeting the fuel needs of domestic and international flag carriers, private airlines and the Indian Defence Services. The Corporation also enjoys a dominant share of the bulk consumer business, including that of railways, state transport undertakings, and industrial, agricultural and marine sectors.

Technology Solutions
IndianOil's world-class R&D Centre is perhaps Asia's finest. Besides pioneering work in lubricants formulation, refinery processes, pipeline transportation and alternative fuels, the Centre is also the nodal agency of the Indian hydrocarbon sector for ushering in Hydrogen fuel economy in the country. It is in the process of setting up a commercial Hydrogen-CNG station at an IndianOil retail outlet in New Delhi this year. It has commissioned a bio-gas plant and bio-mass gasifier plant during the year 2007-08 for conducting research into energy-efficient bio-gas business. IndianOil joined the league of global technology providers last year with the 16

selection of its in-house developed INDMAX technology (for maximising LPGas yield) for the 4 MMTPA Fluidised Catalytic Cracking (FCC) unit at the Corporation's upcoming 15 MMTPA refinery-cum-petrochemicals complex at Paradip in Orissa, as well as for the FCC unit coming up at BRPL. A wholly-owned subsidiary, IndianOil Technologies Ltd., is engaged in commercialising the innovations and technologies developed by IndianOil's R&D Centre.

Customer First
At IndianOil, customers always get the first priority. New initiatives are launched round-the-year for the convenience of the various customer segments. Exclusive XTRACARE petrol & diesel stations unveiled in select urban and semiurban markets offer a range of value-added services to enhance customer delight and loyalty. Large format Swagat brand outlets cater to highway motorists, with multiple facilities such as food courts, first aid, rest rooms and dormitories, spare parts shops, etc. Specially formatted Kisan Seva Kendra outlets meet the diverse needs of the rural populace, offering a variety of products and services such as seeds, fertilisers, pesticides, farm equipment, medicines, spare parts for trucks and tractors, tractor engine oils and pump set oils, besides auto fuels and kerosene. SERVOXpress has been launched recently as a one-stop shop for auto care services. To safeguard the interest of the valuable customers, interventions like retail automation, vehicle tracking and marker systems have been introduced to ensure quality and quantity of petroleum products.

Synergy through Subsidiaries

A wholly-owned subsidiary, IndianOil Technologies Ltd., is engaged in commercialising the innovations and technologies developed by IndianOil's R&D 17

Centre, across the globe. The year 2007 saw the seamless merger of the marketing subsidiary, IBP Co Ltd with IndianOil leading to the formation of a larger and more formidable marketing network for IndianOil. Merger of Bongaigaon Refinery & Petrochemicals Ltd. with the parent company is in process.

Widening Horizons

To achieve the next level of growth, IndianOil is currently forging ahead on a well laid-out road map through vertical integration upstream into oil exploration & production (E&P) and downstream into petrochemicals and diversification into natural gas marketing, besides globalisation of its downstream operations. In petrochemicals, IndianOil is envisaging Rs. 30,000 crore (US$ 7.4 billion) investment by the year 2011-12. Through the worlds largest single-train Linear Alkyl Benzene (LAB) plant with an annual capacity of 1,20,000 tonnes set up at its Gujarat Refinery, the Corporation has already captured a significant market share of LAB in India, besides exporting the product to Indonesia, Turkey, Thailand, Vietnam, Norway and Oman. A world-scale Paraxylene/Purified Terephthalic Acid plant (annual capacities: PX - 3,63,000 tonnes, PTA 5,53,000 tonnes) for polyester intermediates is already in operation at Panipat, while a Naphtha Cracker with a capacity of 800,000 tonnes of ethylene per annum, equipped with downstream polymer units is also coming up at Panipat. A refinery-cumpetrochemicals complex at Paradip, to be completed by the year 2011-12, will strengthen the Corporations presence in the sector. In E&P, IndianOil has bagged eight oil & gas blocks and two Coal Bed Methane blocks under NELP (New Exploration Licencing Policy) rounds in India, in consortium with other companies. It has also acquired participating interest in two onshore blocks in Assam and Arunachal Pradesh. Overseas ventures of the

18

Corporation include two blocks in Sirte Basin and Areas 95/96 in Ghadames basin of Libya, Farsi Exploration Block in Iran, onshore farm-in arrangements in Gabon, an onland block in Nigeria and two onshore blocks in Yemen. IndianOil has incorporated Ind-OIL Overseas Ltd. a special purpose vehicle for acquisition of overseas E&P assets in Port Louis, Mauritius, in consortium with Oil India Ltd. (OIL). In natural gas business, IndianOil is targeting sale of 2 million tonnes in 2008-09. A technology innovation has been initiated to reach LNG (Liquefied Natural Gas) directly to the doorstep of bulk consumers in cryogenic containers for industrial as well as captive power applications. An LNG import terminal is proposed to be set up at Ennore near Chennai. City gas distribution projects are in the pipeline in partnership with other companies. For over a decade now, IndianOil has been providing technical and manpower secondment services to overseas companies. Consultancy services for reduction of Fluidised Catalytic Cracker (FCC) shutdown time were also provided during the year 2007-08. The Corporations wholly-owned subsidiary, IndianOil Technologies Ltd., is engaged in commercialising the innovations and technologies developed by IndianOil's R&D Centre. IndianOil has set up subsidiaries in Sri Lanka, Mauritius and the United Arab Emirates (UAE), and is simultaneously scouting for new opportunities in the energy markets of Asia and Africa. Lanka IOC Ltd. operates about 150 petrol & diesel stations in Sri Lanka, and has a very efficient lube marketing network. Its oil terminal at Trincomalee is also Sri Lanka's largest petroleum storage facility. Lanka IOC commissioned an 18,000 tonnes per annum capacity lubricants blending plant and a state-of-the-art fuels and lubricants testing laboratory at Trincomalee during 2007-08 besides commencing bunkering business.

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IndianOil (Mauritius) Ltd. has an overall market share of nearly 20% and commands a 32% market share in aviation fuelling business, apart from its bunkering business. It operates a modern petroleum bulk storage terminal at Mer Rouge port, besides 13 petrol & diesel stations. In addition to the ongoing expansion of retail network, IOML has commissioned the first ISO-9001 producttesting laboratory in Mauritius. The Corporation's UAE subsidiary, IOC Middle East FZE, which oversees business expansion in the Middle East, has commenced blending SERVO lubricants and marketing petroleum products and lubricants in the Middle East, Africa and CIS countries.

IndianOil. India Inspired

As a leading public sector enterprise of India, IndianOil has successfully combined its corporate social responsibility agenda with its business offerings, meeting the energy needs of millions of people everyday across the length and breadth of the country, traversing a diversity of cultures, difficult terrains and harsh climatic conditions. The Corporation takes pride in its continuous investments in innovative technologies and solutions for sustainable energy flow and economic growth and in developing techno-economically viable and environment-friendly products & services for the benefit of its consumers.

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Performance during financial year 2007-2008

IndianOil's Gross Turnover (inclusive of excise duty) for the year 2007-08 reached a new high of Rs. 2,47,479 crore, up by 12.1 % as compared to Rs. 2,20,779 crore in the previous year. The Profit After Tax was Rs. 6,963 crore. The Corporation sold 59.29 million tonnes of petroleum products during the year 2007-08, as compared to 54.84 million tonnes during the previous year. This includes sale of natural gas, which has gone up to 1.74 million tonnes in 2007-08 as compared to 1.48 million tonnes in the previous year. In addition, product exports rose to 3.33 million tonnes from 3.13 million tonnes in the previous year. The Corporations seven refineries surpassed 100% capacity utilisation and clocked the highest ever throughput of 47.4 million tonnes. Its pipelines network too registered the highest ever operational throughput of 57.12 million tonnes of crude oil and petroleum products. Among new businesses, Natural Gas Marketing and Petrochemicals together generated revenues of over Rs 4,600 crore during the year 2007-2008.

21

Marketing

IndianOil has one of the largest petroleum marketing and distribution networks in Asia, with over 35,000 marketing touch points. Its ubiquitous petrol/diesel stations are located across different terrains and regions of the Indian sub-continent. From the icy heights of the Himalayas to the sun-soaked shores of Kerala, from Kutch on India's western tip to Kohima in the verdant North East, IndianOil is truly 'in every heart, in every part'. IndianOil's vast marketing infrastructure of petrol/diesel stations, Indane (LPG) distributorships, SERVO lubricants & greases outlets and large volume consumer pumps are backed by bulk storage terminals and installations, inland depots, aviation fuel stations, LPG bottling plants and lube blending plants amongst others. The countrywide marketing operations are coordinated by 16 State Offices and over 100 decentralised administrative offices. Several landmark surveys continue to rate IndianOil as the dominant energy brand in the country and an enduring symbol for high quality petroleum products and services. The heritage and iconic association that the brand invokes has been built over four decades of commitment to uninterrupted supply line of petroleum products to every part of the country, and unique products that cater not only to the functional requirements but also the aspirational needs of millions of customers. IndianOil has been adjudged India's No. 1 brand by UK-based Brand Finance, an independent consultancy that deals with valuation of brands. It was also listed as India's 'Most Trusted Brand' in the 'Gasoline' category in a Readers' Digest - AC Nielsen survey. In addition, IndianOil topped The Hindu Businessline's "India's Most Valuable Brands" list. However, the value of the IndianOil brand is not just limited to its commercial role as an energy provider but straddles the entire value chain of gamut of exploration & production, refining, transportation & marketing, petrochemicals & natural gas and downstream marketing operations abroad. 22

IndianOil is a national brand owned by over a billion Indians and that is a priceless value.

IndianOil provides a wide range of marketing services and consultancy in fuel handling, distribution, storage and fuel/lube technical services. With a formidable bank of technical and engineering talent, IndianOil is fully equipped to handle small to large-scale infrastructural projects in the petroleum downstream sector anywhere in the country. Our project teams have independently or jointly as a consortium, have set up depots, terminals, pipelines, aviation fuel stations, filling plants, LPG bottling plants, amongst others. IndianOil's fuel management system to bulk customers offer customized solutions that deliver least cost supplies keeping in mind usage patterns and inventory levels. A wide network of lubricant and fuel testing laboratories are available at major installations which is further backed by sector-wise expertise in the core sectors of power, steel, fertiliser, gas plants, textile mills, etc. Cutting edge systems and processes are designed around one simple belief-to provide valuable customers with an unbeatable edge in their business. IndianOil's supply and distribution network is strategically located across the country linked through a customized supply chain system backed by front offices located in conceivably every single town of consequence.

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Marketing Performance

Indian Oils Marketing group maintained its dominance in the market place during the year 2007-08. Growth in domestic sales from 53.36 million tonnes in the previous year to 57.55 tonnes for the year 2007-08 ensured a 2.3% growth in market share. Market leadership was maintained in the direct consumer business with further strenghthing of long standing business ties with core sector customers like defence services, railways, state transport undertakings, etc. through innovative initiatives.

Reatil sales in MS (petrol) and HSD (diesel) registered a robust growth of 12.2% and 12.7% respectively, with expansion of the network to 17,642 petrol/diesel stations (retail outlets). This includes commissioning of 727 special format kisan seva kendra (KSK) outlets in rural markets during the year, taking their total to 2,050.

The Corporations branded fiels, XTRAPREMIUM petrol and XTRAMILE diesel, maintained their leadership status, with a market share of 48% and 58.7% respectively among branded fuels in the market.

XTRAPREMIUM petrol and XTRAMILE diesel are now available from 7,071 and 10,477 retail outlets of Indian Oil respectively.

24

Use of XTRAPOWER fleet card by fleet owners went by 26%, with transactions of Rs 9,800 crore, while the XTRAREWARDS loyalty card programme, for rewarding retail customers with free fuel and gifts from alliance partners, crossed the one lakh mark during the year. More Indian outlets were upgraded to XTRACARE standards during the year, taking their total to nearly 2,000.

The process of Third Party Certification was also extended to more outlets and now covers about 6,500 outlets. About 1,000 outlets were fully automated during the year.

Indian Oil enrolled over 37 lakh new LPG customers during the year 2007-08, raising the total number of indane households to 504 lakhs. Non domestic packed LPG sales recorded a 41% growth while bulk LPG sales registered a 38% growth over the previous year.

SERVO lubricants achieved over 4.5% growth in domestic market while exports grew by 56% during the year with tapping of new markets in Indonesia, Vietnam, Nigeria and Oman and appointment of new distributors in Bahrain and Quatar.

Indian Oil continued to be the leader in aviation fuelling business with a 62.6% market share. It met the full requirements of aviation fuels of Army, Navy and over 88% of the Air Force during the year. Marine sales grew by 12%.

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RETAIL OUTLET
A retail outlet is called by several names like filling station, fuelling station, gas station, service station or petrol station. In India, it is commonly called as Petrol Pump. It is a facility which sells fuel and lubricants for motor vehicles. The most common fuel sold are petrol and diesel fuel.

THE STANDARD LAYOUT DESIGN OF RETAIL OUTLET

A. The standard layout design of retail outlet consists mainly of a FUELLING AREA
encompassing Retail Outlet Sales Building (with or without convenio, ATM, Communication Centre, Lube godown, toilet etc.), canopy including under canopy lighting (must for XTRACARE Ros, optional for others), the Drive way, Pump islands, Dispensing Units, Undergroung Storage Tanks, Hoarding, Buffer strip consisting of the main signage, yard lights and a driway at approach to the main road. There is a provision for housing an Air Compressor anda DG set, either along with sales building or elsewhere, separately, within the RO premises.

B. The Non- Fuelling Area, wherever applicable, could consist of a Dhaba,

Restaurant, Service Station, Dormitory and a Parking area, demonstration area along with Common Toilet cum bathing facilities etc. 26

C.

The standard layout indicates the provision of undergrounds tanks and their connection with various dispensing units via undergroung pipelines.

D.

The wiring diagram (if available) gives complete flow of wiring for the dispensing units and the cabelling for yard lighting, main signage, hoardings, air compressor, DG set and the sales building, under canopy lighting if available along with a control panel for the same.

FEW TERMS USED FREQUENTLY AT THE RETAIL OUTLETS ARE DESCRIBED BELOW:

Fuel Dispenser:

A fuel dispenser is a machine at a retail outlet that is used to

pump gasoline, diesel, CNG, CGH2, HCNG, LPG, LH2, ethanol fuels, biofuels like bio diesel, keroscene or other types of fuel into vehicles.

Canopy:

Canopy is an important asset at RO as it provides shelter and protection

to the workers and machines from intense sun and ultra voilet rays. It is the roof of RO and generally covers the area where fuel dispensing machines are installed.

Air Filling Machines:

Its generally provided by the company for providing

better service to customers by helping them in varios vehicle related problems. For instance: repairing of punctures, checking the air status in the tyres of vehicles. Generally this facility is provided for free by the company to the customers.

27

Underground Tanks: Acquiring the tank is the second most essential step in
opening a petrol pump retail outlet as tanks are used to store the petrol bought by the petrol pump dealer from the company. It is kept undergrounded as is provided by the company. Different capacity tanks are installed for different products like normal petrol, extra premium, diesel etc.

Equipments:

Following equipments are used daily at the retail outlets:

HYDROMETER It is used to check the density of the oil which has arrived from the oil company to ensure the purity and quality of oil deliverd. The oil has standard density demanded by the dealer. As the densities of diesel and petrol are different, hence separate hydrometers are used for both. Hydrometer for measuring diesels density is heavier than petrols hydrometer as density of diesel is greater than that of petrol. If we dip diesels hydrometer in petrol tank, it will sink. Generally the value ranges from 700-750 for petrol and 800-850 for diesel. THERMOMETER

It is used to measure the temperature of the delivered fuel by the company again to ensure the quality and purity of product. Same thermometer is used for both products i.e. petrol and diesel.

The oil demanded by the dealer has standard combination values of density and temperature. The values of the delivered fuel are measured and are cross checked with the standard values given in a hand book provided by the company. Nominal 28

differences are granted but if there is a major difference in the observed values and the measured values i.e. if there is any anomoly than the company is consulted by the dealer and necessary actiona are taken.

This instrument is to be bought by the dealer himself and is to be caliberated to the standard values by sending it to the laboratory owned and managed by IOC. After caliberating these equipments, the company gives a certificate assuring these equipments to be ready to use.

THIRD PARTY CERTIFICATION (TPC)

The third party certification is an initiative towards better customer centric services at the Retail Outlets (ROs). TPC is done by an independent body or company who sends its auditor for third party inspection at the retail outlet. The third party audit report of the retail outlet usually consists of around 15 pages where auditing is done on the basis of five parameters. These parameters are as under:

1. 2. 3. 4. 5.

Indian Oils Quality and Quality Assurance Index Indian Oils Housekeeping Efficiency Index Indian Oils R O Preventive Maintainance Index Indian Oils Dispencing Unit Preventive Maintainence Index Indian Oils Customer service Index

On the basis of auditing these parameters or indices, the auditor gives either certification or decertification to the retail outlet. 29

NEED FOR THIRD PARTY CERTIFICATION

Mr. Murli Deora, Union Minister for Petroleum and Natural gas suggested the third party certification for more and more retail outlets in order to ensure quality of fuel supplied by these outlet and prevent adulteration of petroleum products.

Public sector oil companies have been encouraging retail outlets to go for TPC

TPC was suggested by Mckensey as a tool to assess the quality of products and services provided by the company,so that the company can improve itself. Since self assessment is sometimes bias so this assessment is preffered to be done by the third party.

EXISTING METHODOLOGY OF THIRD PARTY CERTIFICATION

The TPC report is based on five parameters as mentoined before. On the basis of these audit reports a retail outlet is either certified or not certified. If a retail outlet is not certified for 3 continous audits then under MDG (Marketing Discipline Guidelines) a fine may be imposed on the retail outlet. Also these reports are first been send to the senoir manager of marketing division who is supposed to examine the reports for necessary action. Also letters are issued to the dealers whose performances are degrading continously to keep them under pressure to perform well.

30

Findings
31

Dealers Survey
A survey was done to find out the awareness in the RO dealers about TPC. Also it aimed to find the dealers perception in general towards the companys attitude towards its customers. The questionnaire sought to find the following things:

The awareness level of the dealer towards the TPC process. The motivation level of the dealer for delivering an enhanced customer experience. The attitude of the dealer towards the pump attendants. The perception of the dealer regarding better customer service. The perception of the dealer towards the companys initiative TPC. The satisfaction level of the dealer from Indian Oil and any expectations from the company.

32

Certain questions on the questionnaire involved close ended rating method. This was done so as the responses could be analyzed using statistical tools. However, certain questions do involve qualitative responses. These are analyzed through graphs using the Graphs feature of MS Excel. Questions eliciting qualitative responses are graphically explained below:

Few ROs also provide certain extra services to the customers apart from the mandatory services that are mentioned in the company policy. These services are that of free lube change, bonnet services, offering sweets to kids and maintaining a record of birthdays and anniversaries of loyal customers and wishing them on such occasions. Graphically it can be presented as:

33

The pump attendants are the most crucial elements in the chain of delivering improved

services to the customer. The customer interacts with the pump attendants and not with any official of the company. The attitude of pump attendants is very important for the company as it has a major role to play in the formation of the image of the company in the customers mind. However, the problem lies in the fact that the pump attendants belonging to a lower class of workers do not have much motivation to perform well. Thus this is addressed as a difficulty by certain dealers. Though it is difficult it is not considered to be an impossible task and has been addressed by the company. Graphically, it can be represented as:

34

Indian Oil has been providing training to its pump attendants for improved performance. Of

all the dealers surveyed 86% of them think that the training given to the pump attendants is appropriate.

35

Some other problems that came into light are: 1. Some of the dealers were not satisfied with the behaviour of the TPC auditors which imposes a negative impact on the motivation of dealers. 2. Most of the dealers were just worried about certification of their RO. If their RO is certified they donot give a second look to the TPC audit report of their RO and thus no improvements are seen in most of the Ros. (Refer to the TPC audit reports of RO of lucknow city).
3. When the dealers were asked about TPC almost all of them said that they are aware

of the TPC audit but no dealer was aware of the performance of their retail outlet in last audit.

36

Analysis of the TPC audit Reports

A minute and deep study of the TPC audit report of all the 63 ROs show the following findings.

In the certication audit C1 based on cumulative scores of suvilliance audits S1 S9,12 RO are not certified out of total 63 RO of lucknow city region.

certified RO non certified RO

If we take a look of the house keeping index of three consecutive audits done by phistream, we would come to know that most of the RO have shown a decrease in their house keeping index. This can be shown in the form of charts as below.

37

Recommendatio ns And Conclusions

38

RECOMMENDATIONS 1. The company should take steps to make the TPC audits more effective by providing Benchmarks for the performances of the retail oulets. The system of certification and non certification should be abolished in order to improve upon the standards of RO.

2. Secondly the dealers also need to be given training. Their motivation level plays a key role

in the sales of their RO. Maintaining highest level of Q&Q and customer service is very important in retaining the customers. These factors are directly controllable by the dealer. Hence the dealers should be motivated enough to keep a tight check on these activities.

3.

The company should also tightly monitor this by performing random checks and also penalizing the dealers for any sort of slack in the services.

4. Despite the Third Party Certification system being in place the ratings given by it often

does not present a true picture of the actual performance. Hence the efficiency of the agency doing the certification should be properly looked into. In addition, random checks, to give the ratings, should be performed by the company officials also in order to cross verify the ratings given by the third party.
5. The best way to improve upon the quality of services provided at the RO is to motivate the

dealers which could be done by making them aware about the process, technical trems used in the audits and motivating them to provide better services by providing incentives or rewards. 6. There is no definite system of examining the TPC audit reports in the company. I recommend that a complete system should be there to study the report by the management
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of the company and held a meeting of the companys management and RO dealers to discuss the loopholes in the performances and to take immidiate actions where ever required.

CONCLUSIONS The study shows that Indian Oil fairs considerably well in the implementation of its policies. However there are certain levels where the policies are not been implemented in best possible way. For instance, in the area of behavior of the pump attendants, company expects them to greet the customers when they enter and be courteous to them. However in practicality this often acts against the intended purpose of the company .customers often tend to take it as a negative sign and start doubting regarding the Q&Q of the fuel. The mindset of the Indian consumers is not yet accustomed to trust or appreciate such behavior. A change has to be brought about in the mindset of the consumer which would require time and cost. Cost would be incurred in terms of training the pump attendants to match the level of companys expectation. If an RO lacks in housekeeping, availability of manpower and Q&Q then this is mainly due to lack of interest of the dealer. In such cases the company should try to understand the dealers perception and his expectations from the company. A training program can be devised for the dealers as well to raise their motivation level. The company can convey its expectation to dealers in a manner in which it should try to align its goals with that of the dealer. The brand Tracer has been able to increase the satisfaction and loyalty of customers towards the Indian Oil petrol pumps. Customers are able to associate factors like cleanliness, behavior of pump attendants, Q&Q etc. with the Indian Oil petrol pumps. Also, customer satisfaction is a subjective thing and is not always in line with the apparent services provided at the petrol pump. Customers often tend to patronize certain ROs and tend to develop a bonding with the dealer and the staff there. In such cases their satisfaction level remains high irrespective of the housekeeping and service level of the RO.

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References and Annexure

41

References

Questionnaire development and pre-testing, Malhotra N, chapter 10, p 278- 306 Sampling Techniques, Malhotra N, chapter 11, p 312- 335 Data Analysis, Malhotra N, chapter 10, p 278- 306 Factor Analysis, Malhotra N, chapter 20, p 584- 604 cmie oil and gas industry Annual Reports of IOCL Magazines Articles/Journals www.IOCL.com www.iocltech.com www.BP.com www.shell-me.com/english/apr2001/views.htm http://www.researchandmarkets.com/reportinfo.asp?report_id=3668 http://www.researchandmarkets.com/reportinfo.asp?report_id=35067 http://www.marketresearch.com/product/display.asp?productid=1378147&g=1 http://www.energy-business-review.com/research.asp?guid=rben0188&startpoint http://www.bharatpetroleum.com/images/corporate/BPCLAnnRep_06.pdf

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Annexure 1
Dealer Questionnaire This questionnaire has been designed to study the awareness of dealers
1. Are you aware of the TPC process? a. Yes b.

No

2. How much time you spend at the Retail Outlet? _______

3. What is the general time of your availability? ___________ 4. How frequently you perform the checks? _________ 5. Who fills the daily register? a. Manager b. Dealer

c. Register is not filled daily

6. If the manager fills it then how frequently you review it? __________ 7. Apart from the compulsory services do you offer any extra services to your customers? a. Yes b. No
8. If yes, please mention them___________________

9. Do you offer any extra reward or incentive to your pump attendant apart from the salary? a. Yes b. No
10. If yes, please mention them_________________ 43

11. Do you remember the details of your previous audits. a. Yes b. No 12. Do you think IOCL should take more such initiatives in future or improve upon the existing ones? a. Yes b. No

13.There is no need to offer any special services as customer comes anyways, oil being a necessary good. a. Strongly agree b. Agree c. Neither agree nor disagree d. Disagree e. Strongly disagree

14.It is difficult to make all pump attendants understand the benefits of improved customer service a. Strongly agree b. Agree c. Neither agree nor disagree d. Disagree e. Strongly disagree 15.It is difficult to make pump attendants deliver improved services all the time a. Strongly agree b. Agree c. Neither agree nor disagree d. Disagree e. Strongly disagree 16.Customers pay little heed to any extra services as they are mostly in a hurry to leave the petrol pump and are indifferent to such services a. Strongly agree b. Agree c. Neither agree nor disagree d. Disagree e. Strongly disagree 17.Improved customer services has no correlation with sales a. Strongly agree b. Agree c. Neither agree nor disagree d. Disagree e. Strongly disagree

Name of the RO: Name of the Dealer:

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Size: Location: Contact no.:

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Annexure 2
Compiled TPC audit report for March 2008 to March 2009

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