Organization study on MRPL

(MANGALORE REFINERY AND PETROCHEMICALS LIMITED)

Submitted by-

Flavia Tellis Deepika

Company profile:

Mangalore refinery and petrochemicals ltd.,(MRPL) an ONGC group company, and a “Mini Ratna I” nestles in the lush green glades of Dakshina Kannada district in Mangalore on the west coast of south India.

MRPL originally started as a joint venture company by HPCL and the Aditya Birla Group. The company turned around and has not looked back since notching up a benchmark in the Indian oil industry in production, turnover, capacity utilization, safety performance, energy consumption, environment and quality management process.

MRPL, a grass root project costing around 6000 crore was initially set up in June 1991 as a joint venture company by HPCL a public sector company and Indian rayon and industries ltd and its associate companies(Aditya Birla Group). MRPL is located in 1800 hectares in Katipalla in Mangalore.

MRPL has become the subsidiary of ONGC from March 2003, ONGC taking a maximum stake of 71.83% in MRPL buying the shares from Aditya Birla Group for 10.4 billion. MRPL is the first joint venture refinery and the fifth oil refinery in Southern India and has a refinery capacity in of 9.69 million metric tonnes(MMT) per annum. The company is planning to have a marketing network all over India and is currently gearing up for competition posed by the competitive market.

MRPL is designed to process 30-40 degree Active pharmaceutical ingredient crude to produce various essential petroleum products of high quality namely: LPG(cooking gas), Naphtha(downstream industries), lead free motor spirit(petrol), kerosene, aviation turbine fuel(A 77), diesel, fuel oil, bitumen and sulphur. As a result of de-control of certain petroleum products such as bitumen, fuel-oil and naphtha etc by the government of India, MRPL has been permitted to carry out direct marketing. Marketing of bitumen was started by MRPL late in the year 2000 and in the first three months itself MRPL could supply over 4000 tons of bitumen to various customers in Andhra Pradesh, Goa, Karnataka, Kerala, Maharashtra etc including direct supplies to PWD authorities.

MRPL has been established to carry out the objectives specified in the memorandum and articles of association of the company. The main activities of MRPL is refining of crude oil, and then producing and marketing value added petroleum and petrochemical product. It is a continuous process plant which was set up in 1993 to meet the growing needs of south India. MRPL has many units such as crude and vacuum distillation unit, hydrocracker unit, tiebreaker, plant forming unit, hydrogen unit, bitumen power plant, sulphur recovery unit etc. In MRPL, products are produced on a large scale.

Infrastructural facilities:

• Two oil jetties to receive crude oil and dispatch petroleum products by ocean tankers.

• Total of 79 no’s, of storage tanks including 4 no’s of LPG Horton spheres.

• Waterline, 43km long from Nethravati River. A dam has been constructed across the river.

• Well-equipped laboratory with sophisticated analytical instruments.

• State-of-the art distributed digital control system for entire refinery operation.

• Tele-communication facilities between the port and the refinery.

Area of Operation:

MRPL is a globally operating company and MRPL exports its products to different foreign countries by inviting tenders. The company operates from its corporate office in Mumbai. Its liaison office is located in Bangalore and Delhi. The registered office is at Mangalore. The area of operation of MRPL is said to be extensive, it exports its products to some of the African countries, Malaysia, Singapore and Mauritius. It imports some of its technologies and machineries from countries like Holland, Germany, USA etc.

MRPL exports products like naphtha, motor spirit(petrol), aviation turbine fuel, high speed diesel and fuel oil. In terms of global exposure, MRPL outsources crude oil from different suppliers resulting in the creation of products that are global in nature.

Ownership Pattern:

MRPL an oil refinery company was set up in 1988 as a joint venture between HPCL which acted as a representative of the government of India and the Aditya Birla group. In 2003, ONGC acquired the share holding to the tune of 72% thereby making MRPL an ONGC subsidy. HPCL also has an equity stake of around 16.97% in the company.

In the general body meeting held on 28th march 2003, the shareholders of MRPL approved the process of ONGC’s takeover of the refinery, the majority of shares tuning upto 71.83% and exclusive management control.

MRPL now is a public sector company since 30th march 2003 according to the companies’ act 1956. From March 31st 2003, MRPL is known as the subsidiary of ONGC the share holding pattern is as shown in the table below.

Product profile:

MRPL produces various products which are classified into four types

• Light distillates

• Middle distillates

• Heavy distillates

• By-product

Light distillates:

• Liquefied Petroleum Gas

It is used as an effective and pollution free fuel for domestic purposes and commercial purposes. It can also be called as the darling of housewives for its cleanliness and effective use.

• Naphtha

It is typically used for refinery processes to produce or to improve gasoline. It can also be used to produce petrochemicals. It is also used in fertilizer and petrochemical industries.

• Motor Spirit

More commonly called petrol. It is the fuel for two wheelers and cars. MRPL is the only company to produce unleaded petrol from day one of production. It is also the first refinery in India to release EURO III MS.

Middle distillates:

• Kerosene

It is used by people in the villages as a source of electricity and is also used as a fuel.

• Aviation Turbine Fuel

It is used as a fuel in domestic and defence aircrafts. It has to undergo stringent laboratory tests before being dispatched.

• High Speed Diesel

It is used in all heavy vehicles, trucks, tankers, railways etc. MRPL has achieved less than 0.25% of sulphur levels in diesel as prescribed by the Ministry of Petroleum. MRPL is the first refinery in India to produce EURO III HSD.

Heavy Distillates:

• Fuel oil

It is used in furnaces and boilers.

• Bitumen

MRPL produces different grades of bitumen used in laying roads, highways and airport runways.

By-product:

• Sulphur

This is directly dispatched from the sulphur recovery units by trucks. Sulphur is a by product and is used in chemicals, drugs and fertilizer units. It is extracted to control pollution.

Before the products are dispatched, they are subjected to blending, sampling, testing and certification to meet the specifications. These products(except sulphur and bitumen) are sold to M/S HPCL, who as per the agreement are the sole distributors. Sulphur, bitumen and naphtha are directly marketed by MRPL.

Vision:

“The vision of the company is to be a world class refining and petrochemicals company, with a strong emphasis on productivity, customer satisfaction, safety, health and environment management, corporate social responsibility and care for employees”.

Mission:

“The mission of the company is to sustain leadership in energy conservation, efficiency, productivity and innovation. Capitalize on emerging opportunities in the domestic and international market and strive to meet customer’s requirements to their satisfaction. It also

maintains global standards in health, safety, environmental norms with a strong commitment towards community welfare. It gives continuous focus on employee welfare and employee relations”.

Quality policy:

QMS is diligently followed throughout the refinery (wherever applicable)

• Having definite quality objectives, continual improvement projects, conducting regular corrective actions and preventing action sessions have helped to achieve improvements in the system.

• Internal audits for individual departments, management review meetings, awareness programmes for employees, collection and review of customer feedback and customer meet programmes are the other steps to confirm to standards.

• Satisfying internal customers, external customers, business associates and society through excellence in quality products and process.

• Commitment towards safe working condition and eco friendly environment.

• Committed towards maintaining satisfied, motivated and committed employees.

Environmental policy:

• Achieve and sustain excellence in petroleum refining by producing quality products in an eco friendly and safe environment by adopting sound/efficient technologies.

• Continuous strive for prevention of pollution through efficient use of resources such as raw materials, water and energy.

• Continual improvement of environmental performance by minimizing air emissions, odour and effluent generation and better management of solid and hazardous wastes.

• Comply with all statutory, regulatory and other applicable requirements.

• Promote environmental responsibility and propagate the policy among all employees, concerned contractors and suppliers. Policy is also available to the public.

• Sustain and promote green belt.

Future growth and prospects:

MRPL has an excellent operational performance in the last four years after being taken over by ONGC. The future growth and prospects of the company is as follows:

• Implementation of the ISOM project for the up gradation of facilities to produce motor spirit (petrol) of EURO 3 quality and mixed xylene are progressing on schedule and are expected to be commissioned in the 3rd quarter of the current financial year.

• The implementation of the refining up gradation and expansion project will enhance the refining capacity to 15 MMTPA; presently rated capacity is 9.69 MMTPA and enables production of new value added petroleum. This will also improve the refining margins due to improved distillate yield in linen of low value black oil pool. Engineers India Limited has been appointed as the project management consultant for implementation of this project. This project is expected to be completed by June 2010.

• MRPL also has excellent prospects in the field of marketing in the years to come through, because of high quality and value added products and value added services to the customers.

SWOT analysis:

Strengths:

• High levels of automation.

• Close to the seaport and the airport, hence the transportation cost is reduced.

• Only refinery in Karnataka and can be considered as one the leading ones in south India.

• Low levels of attrition.

• Fuel which conforms to the EURO 3 and EURO 4 norms in being exported from India only by MRPL.

Weaknesses:

• Since MRPL is part of a public sector it cannot produce value added products in excess.

• PSU(public sector unit) bureaucracy causing delay in decision making.

• Government interference causing delays in acquisition of funds.

• Geographical location causes a hindrance in acquiring skilled labour since the people living in the surrounding areas prefer to move to other cities in search of work.

• Since MRPL is a public sector company, they do not market their products aggressively and hence have a poor marketing infrastructure.

Opportunities:

• The III phase in MRPL has been conceptualised and is due for construction within the next few years; this phase once ready will produce products like propylene and will be the only plant in India to do so.

• Scope for diversification is high because of the good design which allows for more value added products to be produced.

• The upcoming SEZ around Mangalore city is an advantage o the MRPL.

• MRPL has taken steps to help in developing the community by taking over parks, developing the area around the refinery and so on, thus improving its social image.

Threats:

• Since MRPL is a public sector organization, it cannot purchase crude from certain private companies because of the government ruling.

• The rising crude prices also threaten the company’s profits as the output cost also rises, affecting the sales.

• MRPL faces stiff competition from other refineries.

• The fluctuations in the prices of fuel in the world market.

• The water scarcity during summer is also a threat because of high cooling needs of the plant.

• The lack of rail road at MRPL is also a major threat because the time taken to transport the refined fuel is much higher by pipeline.

Product promotional measures(marketing):

There are two types of customers at MRPL

• Direct customers

• Retail customers

Bitumen, furnace oil, high speed diesel motor spirit(petrol) and sulphur are the main products which are directly marketed to the customers. Direct customers are provided with

certain services(core services) to make them satisfied with the products supplied here services include:

• Delivery of goods on time to the customers.

• Maintaining the quality of the product.

• Providing information to the customer on demand, account statement and reports etc.

Diesel and petrol are sold to the customers through retail outlets and thus include retail customers. Under this type of marketing, customers are retained by using various promotional activities in order to compete in the market. MRPL has its own retail outlet near the refinery(OVAL petrol pump).

Promotional activities introduced to attract the new customers and to satisfy the existing customers at the petrol pump includes:

• Free air checking.

• Loyalty card program.

• Cleaning car windscreen.

• Providing basic necessities within the petrol pump such as toilets, drinking water, shopping outlets etc.

Customers for various products are approached through mails, letters, posts, faxes, telephones etc. All the details about the company, product specification, prices of the various products, mode of payment, terms and conditions of sales etc are mentioned in the various modes of communication to the customers. Customers are approached on a frequent basis until they place an order for either of the products with the company.

Performance Appraisal System:

Performance appraisal system identifies potentiality of the employees and motivates them. Employees here at MRPL feel that performance appraisal system improves their strength and enhances their skills.

It is also found that performance appraisal system had a favourable relationship with the productive capacity , total quality and utilization of resources of the company.

Performance appraisal takes place once a year in MRPL. Performance of employees is evaluated on a regular basis and not formally or informally.

Performance appraisal was introduced in MRPL by the end of the year 1996. Given below are the features of the performance appraisal system:

• Source of appraisal is the traditional superior appraisal system. The reporting officer is the immediate supervisor and the reviewing officer is the boss of the immediate supervisor.

• Key performance areas are not usually fixed in advance. They are identified at the end of the year. The identification is through discussions between the appraiser and the appraise.

• The appraise is assessed against managerial traits. The traits are common to all grades of employees. Weight age is given to performance against key performance areas as well as the management traits while assessing the performance of the appraise.

• Performance is also rated; here a behaviourally anchored rating scale is used . The rating scale is a 5 point rating scale.

• The reward in the existing system is in terms of promotion to the next grade and annual increments. There are no financial schemes like performance related pay in the system. Performance appraisal is the major factor governing the promotion and annual increment decisions in addition to the experience in the relevant scale and qualification.

• Performance review is done on an annual basis. It’s done at the end of the performance appraisal period.

• The system has self appraisal where the appraise assess his performance against the key performance areas(KPA). However appraise is not allowed to rate his performance.

• Training needs are identified in the system for both on the job and behavioural training. The training needs for every individual are fed in the human resource information system. The training needs are then compiled and a training calendar is drawn. On the basis of this calendar, the training programmes are identified.

Career planning and promotion policy of employees:

It is the policy of the company to ensure that employees are happy, adequately rewarded for their efforts both by the way of monetary compensation and career opportunities.

It is the policy of the company to provide employees opportunities for growth within the company in an equitable manner based on their performance and suitability for higher positions and to ensure that employees are provided with opportunities for equipping themselves for higher responsibilities and through training and development.

Criteria for promotion:

Performance : 60 points

Service in the grade : 20 points

Qualification : 10 points

Suitability : 10 points

Performance weightage:

A(excellent) : 60 points

B(very good) : 45 points

C(good) : 30 points

D(satisfactory) : 20 points

E(poor) : 0 points

Criteria for promotion(for grade M1A to M8):

Qualification- Number of years of service in the grade to be eligible for promotion to the next higher grade.

Grades M8 M7 M6 M5 M4 M3 M2 M1A

Qualification Number of years

BE/MBA/CA/ICWA/ AMIE/eq

3 3 3 3 3 3 2 2

Msc/eq 4 4 4 3 3 3 2 2

Graduate/eq 4 4 4 3 3 3 2 2Dip engg 4 4 4 3 3 3 2 2ITI 6 7 7 - - - - -Others 7 7 - - - - - -

Note:

• The numericals in the above table indicate the minimum years of service in the grade as eligibility.

• CA’s, MBA’s from IIM’s only, IIT graduates and experienced system officers in M8 grade would upon completion of 2 years in M8 grade, be promoted to M7 grade without DPC provided that such employees secure a minimum of 45 points on an average in the performance ranking.

Training measures at MRPL:

MRPL has its own training centre situated in the company premises. It is well equipped with the different audio and videos, OHP and digital light projector for any presentations. Many steps are taken in MRPL to impart necessary skills to the employees both on the job and off the job trainings.

Initial orientation:

All newly joined employees are inducted into the refinery by an orientation programme for a week. Some of the initial training programme or activities are on the mission of MRPL, HRD policy, promotion policy, welfare measures, finance functions, purchase functions, materials inventory issues, overview of refinery etc.

Behaviour development:

This type of training is given to the employees to develop their personality and behaviour in the organization. It helps in the personal growth of the employees and in turn improves the organization climate.

Skill development:

The training is imparted to employees who need to develop their skills in areas which affect their day to day job directly. This helps employees to adapt themselves to new technologies, reduce wastage, improve quality and increases productivity.

Simulator training:

The training simulator is intended as a tool to provide an easy to use and repeatable training method for any process unit. Simulators are useful because they provide many

benefits to the process industries. These benefits include a greater degree of operation skills to face emergencies, reduced down time during actual operation.

A safe environment for the operators to make and learn from their mistakes and reduced training cost. Operator skills are improved because a simulator system can familiarize an operator with equipment usage and efficient operations which can only be gained at much slower rate on the actual unit. Simulator training cost through training time. Computer simulator engages the student personally and demands more of his attention. This interactive type of training has been widely tested and utilised in many industries and academic environments. Virtually every study on the subject reports reduced training time.

Simulator system overview:

The training simulator system is capable of continuous simulation of the dynamic, real time operations of the actual process unit. This is accomplished with frequent calculations of important refinery parameters such as temperatures, pressure and flow rates. The system accurately models the behaviour of plant equipment(pumps, compressors, exchangers, control valves etc) and intends appropriate instrumentation, alarms and equipments are simulated. Operation and certain operations are simulated. UOP is a vendor who provides these simulator machines.

The models run on a real time clock although certain unit operations may run on a different time scale to teach specific concepts. The models are accurate enough such that even an experienced operator will not notice any significant difference compared to the operations of the actual unit. Exact modelling of rapid transmit phenomena may not be possible, but the general response will be realistic. The degree of realism provided by the system required by the student to control the simulated equipment and instrumentation using the same action required to operate the actual process unit.

Software description:

UOP has supplied with two complete sets of UOP software in floppy disc and security plugs.

UOP( simulators supplied by UOP Inter Americana, in corporate).

The UOP software includes UOP’s proprietary simulation systems and also simulation models of the below:

• UOP naphtha hydro treating/ plat forming process units.

• UOP CCR, plat forming regeneration section(generic).

• UniCracking process unit.

• VisBreaking process unit.

• Hydrogen plant.

• Crude and vacuum unit.

The standard DCS simulation software is included with each unit.

First Aid Training:

Hazards and mishaps in a refinery are common. Therefore employees need to be aware of some first aid techniques. First-aid training is imparted leading to a certificate on successful completion of the course from, St John hospital, Delhi. Some of the first aid training given at MRPL are

• Treatment of electric shock

• Fractures

• Fire burns

• Treatment to stop bleeding profusely

• Artificial respiration

Fire training:

A briefing about the fire fighting devices such as fire extinguishers, breathing, and apparatus set etc. Live fire fighting mock drills are carried out twice in a month so as to keep the employee ready whenever need arises.

Weekly learning hour:

Every Friday afternoon, a one hour learning programme is conducted. In these classes, G.M(general manager)/ senior engineer throw light on various areas prevailing currently such as TPM, future prospects of MRPL, ISO awareness, water, bearings and various general topics related to the refinery. The main aim of this exercise is to expose employees to the latest developments that have taken place.

Labour Union in MRPL:

In MRPL the labour union is named as ”MRPL Employees Union(regd)”.

Office bearers:

There are seven executive members in the union.

• President

• Vice-President (2 nos)

• General Secretary

• Joint Secretary (2 nos)

• Treasurer

The elections are conducted by the management to select the office bearers of the union, voluntarily employees can contest the union elections.

Term :

Term of the office bearers is 2 years from the elections. Once in every 2 years elections are held.

Union fund:

Every member of the union is contributing Rs 25/- per month to the union fund. These funds are used for the manintainence of the union office to help the employees etc.

Union meetings:

Union meetings are conducted once every month involving only the office bearers. The opinion of the members is considered before the meetings. 3 management representatives should attend this meeting compulsorily.

Major issues discussed in the meetings are

• Salary restructure or wage settlement.

• Union office bearers working hours.

• Promotion policy

• Usage of union funds

• Safety award for accident free days. The purpose of this safety award is to promote safety consciousness among employees and it is a motivation to all the employees. It increases the productivity and avoids accidents and hence guides employees to follow safety measures.

• Accumulation of earned leave, closed/restricted holidays.

• Performance related incentives.

• Productivity linked incentives and ex-grata.

• Housing loan scheme, it shall be considered after 5 years instead of 7 years.

• Working hour’s reduction, demand of 5 days duty for general shift employees and 2 days off., for shift employees days duty and 2 days off.

Manpower planning:

Outsourced from a consultant, where the inputs are provided by MRPL and accordingly the consultant firm draws out the manpower plans. Inputs like job description, job hours etc. Thus here in MRPL, the consulting firm draws out the plans based on the inputs provided by MRPL.

Consulting firm hired by MRPL is ASCI, Hyderabad.

Manpower planning is done when a new project starts or based on the requirements of the existing project. It is also done for future expansion plans of the company. Presently study is going on for future expansion. After the study for future expansion is completed and once the numbers are provided by the consulting firm, recruitment process is started by MRPL. Promotion also depends on manpower planning.

HRD measures (including welfare measures):

Time office guidelines:

The refinery works round the clock. Employees are attending duties in rotational shifts as under

General shift: 9.00 to 5.15 pm(with 45 minutes lunch break from 1.15pm to 2.00pm)

A shift : 6.00 am to 2.00 pm

B shift : 2.00 pm to 10.00 pm

C shift : 10.00 pm to 6.00 am

Attendance of the employees to be marked by punching at nominated places . punching IN while attending their duties and punching out while going out. Any discrepancy is to be regularized by the concerned departmental head. Late attendance attracts salary deduction.

Vehicle purchase/loan scheme:

The objective of the scheme is to provide a car/two wheeler to all confirmed employees of the company as per the eligibility criteria.

As per the policy of the company, the car/two wheeler will be initially owned by the company and will subsequently allowed to be purchased by the employee after the specified period at its book value.

Housing loan scheme:

The objective of this scheme is to grant housing loans to the employees for construction/purchase of their own house. This financial assistance will be by the way of a long term loan. The grant of the housing loan is at the discretion of the company and subject to the availability of the overall limits in that behalf. The company reserves the right to temporarily suspend the scheme and/or modify the rules at any time without assigning any reason whatsoever. Such facilities shall not be granted as a matter of right.

Furniture purchase scheme:

• The objective of the scheme is to provide furniture/household items to the employees in different grades. The furniture/household company will be initially owned by the company and will subsequently transferred to the employee after a specific period at a depreciated value.

• The grant of the furniture purchase scheme is under the discretion of the company and subject to the availability of funds under the overall limits in that behalf. The company reserves the right to either temporarily suspend the scheme or modify the rules at any time without assigning any reason whatsoever. These facilities shall not be granted as a matter of right.

• The facilities provided under these rules are provided as a privilege and do not impose any obligation or liability on the company and shall not be deemed to be under any contract or condition of service between the company and any of its employees except when a loan is actually granted by the company.

• The employee availing the furniture purchase facility should decide in advance the items to be purchased and once e the loan is approved, change in items; specifications and make will not be allowed.

• Employees will be allowed to buy the articles under the scheme from the local station only. Out station purchase will not be allowed.

Welfare measures:

• Wearing safety helmet and safety shoes within the refinery limits is a pre requisite to go to work. The company provides this.

• To meet the heavy rains that are usually there for four months a year, rainy wear such as rain coats and gumboots are provided to employees as per eligibility.

• Accident insurance cover, round the clock underwrites any losses that may be incurred due to any employment injury or otherwise of all the employees.

• Hospital insurance cover not only underwrites the medical expenses due to hospitalization of the employees but also dependent of the employee.

• Employee benefit fund extends financial support when chronic or prolonged illness strikes an employee. the company contributes a matching contribution as that of the members every month apart from the initial one time grant of Rs. 1 lakh.

• Scholarship to legitimate children of the employees. All eligible children of employees are qualified for monthly scholarship based on the course pursued, if they score first class/distinction in 10th or 12th, graduation; for further studies.

• Infrastructural facilities apart from providing a congenial work environment, employees are provided with sophisticated and modern tools to discharge their responsibilities.

Significant factors for success:

• MRPL has highly skilled and energetic workforce.

• In order to conserve water , MRPL is recycling about 70% of treated waste water to cooling water

• Situated close to a seaport.

• Green belt is maintained in and around MRPL.

• Pollution free environment, continual improvement of environmental performance by minimizing air emissions better management of solid and hazardous wastes.

System of accounting followed:

Basic documents required:

Pumping records and Dip memos from oil movement and storage department having details such as gauge levels in centimetres, temperatures, density, water cut, base sludge and waste, rundowns, internal transfers etc.

Basic documents maintained:

• Dip stock statement showing closing stock of crude during the day (tank wise).

• Crude feed certificate showing crude fed to units during the day (tank wise).

• Crude intake certificate showing crude received from the vessel.

• Crude summary showing month wise crude received in MT of usage quantity and actual receipt quantity (date wise and grade wise).

• Average stock of crude held during the month.

• Crude held in transit worksheet.

Basic records maintained:

• Captive consumption records.

• Stop feed certificates.

• Random details.

• Internal transfer details.

• Certified stock of all finished product tanks based on Dip memos given by OM&S department.

• Actual stock of the entire finished product tanks as per pumping records.

• Intermediate stock of all the tanks.

• Uncertified finished product stocks.

• Average stock of crude, finished products, intermediate products.

• Dispatch register.

• RG-1 register.

• Production report.

RG-1 register:

This is a daily stock reconciliation. It shows the opening stock, all the product movements from the unit to the tank, any receipts from tank to tank, dispatches, any losses or gains and the closing stock. It is updated daily. This is maintained product wise and tank wise.

MRPL considers the stock, production and dispatches only to the extent or certified dip levels by oil movement and storage department. This register is updated daily and should be certified signatory under central excise.

Production report:

a) Production report for certified stock:

Inventories (crude and products) for the purpose should be based on the finalised gauges. In case any receipt or delivery is running/ unfinalised on the cut off date, such receipt or delivery will be excluded and the inventory as at the beginning of that transaction only is adopted. For certified production report the inventories (both opening and closing) are based on the confirmed Dip memos given by OM&S department. OM&S will give Dip memo only if it is certified by the lab.

The certified production reports are adopted for RG-1, claims with oil co-ordination committee, government agencies, annual accounts, banks and insurance purposes.

b) Production report for uncertified stock:

Inventories (crude and products) for the purpose is taken based on the closing Dip memos given in the pumping records. In case of any receipt or delivery is running/unfinalised on the cut off date, such receipt or delivery will be considered as at the certified production report is adopted for ‘financial’ (internal MIS) only.

Sales accounting:

MRPL started marketing furnace oil, bitumen and sulphur from 2000.

Indigenous marketing process starts with the receipt of sale order from the marketing department of finance. The payments for the sale are received through draft/cash/CAPS/challan. After the receipt of sales tax forms by the finance department, the materials department will load the trucks and through the system, they inform the marketing section about the product, quantity loaded. Using the data marketing section raises the invoice. They issue credit notes for discount. Discount may be in the form of cash or goods.

Exports:

For MRPL, basically the oil market is in Singapore, Mauritius, and Sri Lanka. Exports start with floating of tender and acceptance by the buyers. Award of tender to the successful bidder. Successful bidder will be the one who asks for the lowest

discounts or the highest premium. After that, all the necessary documents will be received. Payment for the sales will be received as per the terms.

For export, the company has to follow certain statutory procedures, which are as follows,

• Before arrival of the vessel, inform the customs and the excise departments.

• Steamer agent will inform the MRPL about the exact date of the arrival of the vessel.

• On receipt of the intimation from the steamer agent, MRPL has to file a form AREI(provisional) in ix copies and MOT(merchant over time) application with the excise department. AREI forms are prepared in order to inform that MRPL is involved in the export.

• Similarly shipping bill has to be filed with the customs department along with the provisional invoice, packing list, self declaration form(SDF) and declaration under DEEC. After these procedure are completed, customs officer will give the go ahead for loading the vessel. This permission given by the customs officer is called Let Export Order(LEO).

• After finishing up the loading, shipping bill will be amended with the final quantity. AREI form should be filed with the excise department along with the final quantity. Excise and customs officers should sign this AREI form.

• One surveyor will be appointed by mutual consent of MRPL and the buyer for the certification of the oil loaded to the ship.

After finishing of all the statutory procedures, all the documents must be produced to the bank along with the shipping bill in order to process the payments. Also, proof of export must be obtained from the central excise department.

System followed for the purchase or raw materials:

Crude oil is the basic raw material of the company. Supply of the crude oil will be arranged by the government of India to the refinery. The raw material sources for the company is mainly from the BOMBAY HIGH, gulf countries, Latin American countries and African countries. The raw material is brought to the port through bulk oil containers. The cargo is unloaded at the port, and then is directly pumped to the storage tanks of the company through a direct pipeline, which is approximately 16km in length. The raw material so stored is again pumped to different units of the refinery as per production schedule. The finished products are also pumped to the respective storage tanks.

Planning department in MRPL plans for the purchase of crude required in the next month. This requirement of the company is informed to the crude purchase cell in Mumbai. Mumbai’s crude purchase cell has contracts with IOCL and CTGT. Crude purchase cell will enter into an agreement with the supplier for supply and it will issue the purchase order to them.

Payments to the suppliers are made on the basis of quantity in bill of lading. Suppliers will usually give 30 days’ credit to the company. the date is from the date of bill of lading.

During purchase of crude the company has to incur some expenses such as

• Cost of crude

• Freight

• Charges to NMPT(new Mangalore port trust)

• Customs duty

• Load port survey fees

• Clearing and forwarding agents charges

• LC charges

Functions of various departments and their managers:

Administration department: Administration department is concerned with the general management of the company. It mainly deals with the administrative working of the company.

Deputy general manager(administration):

• Responsible for all administrative activities and official language cell.

• Responsible for identifying quality objectives/environmental objectives their review for performance as appropriate, taking up with the management for resource allocation, conducting periodical CAPA meetings to ensure that EMS/QMS is implemented effectively in the department.

Information systems department: This department deals with the software aspects of the company. Personnel from this department handle servers of the company,

eradicate any issues concerned with the company software, manintainence of the company websites, maintaining internet security protocols etc.

Deputy general manager(information systems department):

• Overall in charge of the department

• Co-ordinations with the external agencies whenever required for the smooth functioning of the department

• To ensure all the employees in the department are provided with safe and conducive work environment and ensure internal customer satisfaction.

Materials department: This department is mainly concerned with procurement of materials and services for the refinery except crude oil. Materials may range from, refining equipment, construction materials, raw materials for the refinery, preparing budgets for the procurement of these materials etc.

Group general manager(Materials and IS):

• Procurement of all materials and services except crude oil for MRPL and materials for identified projects.

• Ensure smooth and effective functioning of materials department in close co-ordination with all the other departments.

• Planning and budgeting.

• Development of systems, implementation of procedures, continuous improvement and maintain ISO standards.

• Effective inventory control measures.

• Co-ordination with internal and external auditors.

• Indentifying skill enhancement areas and impart training.

• Review of customers feedback-internal.

HRD(human resource development): This department is mainly concerned with activities such as recruitment, training, promotion, annual appraisal, job rotation, employee welfare policies etc.

Group general manager(HR):

• To ensure all human resource development activities such as recruitment training, promotion & appraisal.

• To ensure all welfare activities of the employees.

• To formulate and ensure implementation of personnel policies.

• To deal with government authorities and ensure statutory compliance.

Marketing department: this department deals with the marketing aspects of the refinery. It involves product promotional measures, attracting clients to do business with the company by effective marketing strategies and handling existing customers.

General manager(marketing):

• In charge of day to day direct and retail sales activities pertaining to Mangalore zonal office sales areas.

• Also responsible for enrolling new customers.

• Handling customer complaints and co-ordination with the supply location.

Documentation and engineering department: This department is overall responsible for proper functioning of the inspection, design and construction, and engineering documentation centre of technical services.

Deputy general manager(documentation and engineering):

• Ensure safe and reliable plant is continuously available for operation through appropriate engineering and inspection techniques.

• Avoid reoccurrence of failures through detailed analysis of root cause and recommendations for corrective measures.

• Assist in improvements in safe and optimum operation through international standards of design, engineering and inspection.

• Keep a control on budget by proper cost estimation and regular monitoring.

• Ensure fast and easy retrieval of documents through appropriate documentation and retrieval system.

• Maximise effectiveness of each division through proper training and improved skills.

Finance department: This department is mainly concerned with maintenance of production records, payment related activities, treasury functions and bank

reconciliations, coordinating budgeting preparation and monitoring, insurance claims and settlement etc.

General manager(finance):

• Responsible for formulation of policies concerning financial functions of the organization.

• Responsible for the finance, accounting operations and working capital management.

• Responsible for statutory compliance under central excise under custom related matters.

Organization structure and design:

The way in which the organization’s units relate to each other: centralised, functional divisions (top-down), a network, a holding etc. The board of directors frames the organization structure at MRPL. The MRPL has a formal organization structure that is flexible to changing conditions. It is also revised from time to time to increase the growth opportunities. The structure shows delegation of authority and responsibility which is used to co-ordinate activities of various departments.

MRPL organization chart

Advantages of the organization structure:1. Hierarchy is maintained throughout and hence there is smooth working throughout the

organization.2. Constant interaction between the management and the employees gives room for

enhanced management-employee relations.

Disadvantages of the organization structure:1. Different departments are located at different places within the refinery, hence there is

no constant interaction between them.

Scope for MBA’s in the organization:MBA’s are generally recruited to handle the marketing and the hr departments.

recruitment happens from NIT, IIM and other top colleges in India.

MBA in finance are rarely recruited for the finance department since professionals with ICWA and CA are given preference, the reason being their expertise in the finance field.