The Telegraph
Since 1st March, 1999
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McKinsey footprints for Indian Oil’s future

Mumbai, Dec. 24: Indian Oil Corporation (IOC) has enlisted McKinsey to draw up a comprehensive restructuring plan aimed at transforming it from a lumbering behemoth to a nimble-footed corporate organisation.

The six-month exercise, which could lead to a sweeping revamp, will throw up ways in which the petroleum major can respond swiftly to customers and cope with the rigours of a fast-changing business milieu.

The effort could not have come sooner: competition is staring IOC in the face as retail marketing of petro products turns into a different ball-game with the entry of private players like Reliance Industries, Oil and Natural Gas Corporation, Essar group and others.

Officials emphasised that the revamp plan being chalked out by the Fortune 500 company will not be division-specific. Instead, it will cover the whole organisation in one of the largest such initiatives in India Inc.

As things stand, McKinsey is unlikely to recommend any new lines of business, but sources within IOC say it would look at the entire range of options available to infuse more responsiveness and bring about greater speed in the way the PSU deals with changing market situations. The whole gamut of business, people, process and structures are up for review.

“The existing structure of IOC has worked well and the company is in a dominant position in many categories. But, we cannot be complacent. When the going gets tough, the tough have to get going,” sources said.

Officials did not reveal details, but there are enough indications that the retail strategy is being looked at afresh to make it more consumer-centric. The outcome could be IOC outlets with a new look and features that help them serve customers in an area better.

Indian Oil has been giving its pumps a face-lift in the past few years, something other public sector oil majors have also been doing. It is now planning to sell value-added items in its outlets, which may include car batteries and other services. Early this year, the company launched its next-generation fuels — a superior quality of petrol under the IOC Premium brand-name and special diesel with the Super Diesel label.

According to sources within IOC, the focus will not be limited to retail outlets — its mainstay — but run right down to refining, product pipelines and lubricants. Indian Oil is the largest commercial enterprise in the country in terms of turnover. With a payroll of 32,000, it had more than 33 per cent of refining capacity on April 1, 2002. The figure goes up to 41 per cent if the capacity of recently acquired subsidiaries is added. It has 6,523 kilometres of pipelines criss-crossing the nation.

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