Indian Oil Corporation Limited is also commonly known as Indian Oil. It is a state-owned gas and oil company. It is the biggest commercial oil company of India and in 2016, it was ranked 1st in Fortune India 500 list. It has 33,000 plus workforce and has extensive distribution & marketing and refining capabilities.
The company has an ever-expanding network of 47,800 customer touch points. Indian Oil has played a significant role in the socio-economic development of India and has consistently provided energy access to millions of people of the country. The company is recognized as one of the country’s most valuable company with a turnover of Rs. 5, 06,428 crores and a net profit of Rs. 21,346 crore in 2017-2018.
Strengths In The SWOT Analysis of IOCL
1) Strong brand name
IndianOil has a brand of LPG cooking gas called Indane which serves 12 crore households with a strong distribution network of 10,000 distributors. It is a market leader in the lubricant business with the brand Servo. The company’s 107 aviation fuel systems fuel 1,750 flights a day. The company has been recognized as one of India’s top brands by UK-based Brand Finance. Reader’s Digest-AC Nielsen Survey voted the company as India’s “Most Trusted Brands” in the “Gasoline” category. The company has lived up to the vision of the brand by promising to foster customer relationship, innovating, harnessing technology and caring for environment and community.
2) Research and Development
The company claims to have Asia’s finest and world-class R&D center. It has done groundbreaking research in areas of lubricant, pipeline, refinery, alternative fuels, Engine testing, and environmental sciences. The company has 554 patents in India and Foreign countries. The R&D center is on a sprawling 65-acre campus in Faridabad, India. The center has been successful in creating economical, socially and environmentally responsible technology solutions. The center focuses on cutting-edge research in the area of nanotechnology, coal gasification, and Polymers and Petrochemicals.
3) Strong Pipelines
The company has 13,400 km of cross-country pipelines which transports crude oil, refined petroleum products, and natural gas. The company has recently commissioned 543 km of new pipeline sections. The company owns and operates two Single-Point mooring (SPM) terminals that are at the high seas of Vadinnar and three other SPM at Paradip that are used of anchoring pipeline systems to transfer crude oil from ocean tankers to the tank farms that are located onshore. The company operates crude oil tank-farms that are of huge capabilities that ensures smooth onward transport to refineries through the pipelines.
4) Focus on Sustainability
The company has always believed in sustainability and is one of the early investors of renewable energy sources and has built a 200-MW portfolio of solar and wind power capacity which is expanded rapidly. IOCL is investing and exploring several waste-to-energy options under the government’s Swachh Bharat Abhiyan. IOCL is also the industry leader in converting the retail network to run on solar energy and has more than one-third of its fuel stations operating on solar power. The company has most of its focus on making its operations greener and aims to reduce water and carbon footprint by 20% and 18% respectively.Weakness In The SWOT Analysis of IOCL
The main competitors of IOCL are Reliance Industries, ONGC, Hindustan Petroleum, and Bharat Petroleum. Tata Petrodyne is doing extremely well in the market is has amassed a turnover of $35 billion dollars. Bharat petroleum which is another main competitor of IOCL has been investing in various R&D activities. It also has major refineries in Mumbai and Cochin and was ranked in the Fortune 500 companies. IOCL needs to make strategic decisions and investments to stay ahead of the competitors and prevent loss of market share.
IOCL has incurred huge losses due to government’s handling of fuel pricing policy because at most of the time the center fails to keeps its promises to maintain the fuel at artificially low prices. The company keeps going through the cycle of borrowing more and spending more just to ensure uninterrupted fuel supply to the customers but the rising interest cost shaves their profit which affects their ability to push the new project to modernize.
Opportunities In The SWOT Analysis of IOCL
1) Industry Growth
The core business of IOCL has been transportation and distribution, refining etc. of the petroleum products which is in line with India’s growing need for fuel. The company over the years has expanded its operations across the hydrocarbon value chain into oil and gas exploration besides diversification into natural and alternative energy sources.
2) Market Expansion
IOCL has continuously been expanding its operations abroad via its overseas establishment in UAE, Singapore, Mauritius, and the USA. In the year 2017-18, the company also set up offices in Bangladesh and Myanmar. The company has also diversified its business through joint ventures with reputed partners from abroad and India as well. Ratnagiri Refinery and Petrochemicals Ltd. Was established by the joint venture with BPCL and HPCL. The company is doing extremely good in the overseas market and has been able to create huge opportunities for the business.
3) Increasing natural gas market
The natural gas is emerging as the greener choice against the fuel and with the government of India’s push on the gas-based economy and initiatives are being taken by the government to use it across sectors. IOCL sources liquefied natural gas (LNG) from international suppliers and have a long-term contract with them. IOCL currently supplies LNG to 58 institutional customers from power, fertilizer, steel and industrial sectors.
Threats In The SWOT Analysis of IOCL
1) Government Regulation
The Government’s decision to offer relief from the increasing fuel prices to the people led to huge losses to the company. The net profit of companies like IOCL BPCL (Bharat Petroleum Corp. Ltd)and HPCL (Hindustan Petroleum Corp. Ltd) was expected to hit Rs. 9000 crore loss. Certain decisions of the government to cut petrol and diesel prices hugely affects the profit of the company.
2) Macroeconomic Condition
The company faces various problems related to increasing oil prices, foreign currency fluctuation and increasing air pollution concerns. The company’s vision and its main strategy are to tackle the challenges and opportunities presented by the environmental conditions along with the integration and diversification of the operations across its global business. In such volatile conditions, the company’s strive for cost optimization across the supply chain is a huge task.