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1

DECEMBER - 2009

“HAL’S SHORT TERM GOALS ARE TO STABILIZE

HAWK, SU-30MKI AND ALH” PRODUCTION OF

T HE E NTERPRISE M IGHT

OF

I NDIA

PUBLIC SECTOR ENTERPRISES HAVE STRONG PROSPECTS FOR GROWTH, THROUGH HARNESSING NEW BUSINESS OPPORTUNITIES, WHILE EXPANDING THE SCOPE OF CURRENT BUSINESS. DUN & BRADSTREET, THE WORLD’S LEADING SOURCE OF GLOBAL BUSINESS INFORMATION, KNOWLEDGE AND INSIGHT, HAD PUBLISHED THEIR REPORT ON ‘INDIA’S TOP PSUS 2009’, IN AN EFFORT TO RECOGNISE THE STRATEGIC IMPORTANCE OF THIS SECTOR.

-Ashok Nayak, Chairman, Hindustan Aeronautics Limited

PAGE NO:18

PAGE NO:4

“LOOKING BEYOND

“UCO BANK’S TARGET IS

“SBI IS AIMING TO BECOME

HYDROCARBONS FOR

TO ACHIEVE A TOTAL

ONE OF THE TOP BANKS

GREEN AND SUSTAINABLE

RS 2,02,000 CRORES BY MARCH, 2010”

IN SOME COUNTRIES

- S K Goel, CMD, UCO Bank

- O P Bhatt, Chairman & Managing director, State Bank of India

ENERGY SOLUTIONS IS PRIORITY FOR

ONGC”

- R S Sharma, CMD, ONGC

PAGE NO:24

BUSINESS OF

PAGE NO:28

OF THE WORLD”

PAGE NO:32

REGD.NO.MH/MR/SOUTH-156/2007/09 LICENSED TO POST WITHOUT PREPAYMENT SOUTH-29/2007-09 POSTED AT IND.EXP.PSO REGD.WITH RNI UNDER NO.15993/05. Chairman of the Board : Viveck Goenka, Vice President & Head- B P D : Sandeep Khosla, General Manager : Biju Mathews, Chief Managers : Anthony Daniel, Y. S. Venkat Swamy, Managers : L. Francis Farias, A.K. Shukla, Dy. Manager : Vijay Kulkarni, Editorial: Chief of Bureau : Vyas Sivanand, Reporters : Amal Tewari, Amguth Raju, Design & Layout : N. Prasad, Production & Circulation : M.E.A. Mujahid Support & Co-ordination : M. Narender, B. Naresh, IT Support : M. Hemant Kumar, R. Suman Kumar

2

DECEMBER - 2009

“PFC IS A LISTED COMPANY

“CORPORATION BANK’S

“COAL INDIA IS THE LARGEST

WITH A CURRENT MARKET

TOTAL BUSINESS IS TARGETED

COAL PRODUCING COMPANY IN

CAP OF MORE THAN

THE COUNTRY AND IN THE

RS.30,000 CRORES”

RS 1,50,000 CRORE BY MARCH, 2010”

- Satnam Singh, Chairman and Managing Director, PFC

- J M Garg, Chairman & Managing Director, Corporation Bank.

- Partha S Bhattacharya, Chairman and Managing Director, CIL

PAGE NO:38

PAGE NO:42

PAGE NO:46

“LIC HAS TAKEN LIFE

“AAI HAS METICULOUSLY FOLLOWED THE MAXIM WHEN THE GOING GETS TOUGH, THE TOUGH GET GOING”

“INDIANOIL HAD A SALES TURNOVER OF RS. 285,337 CRORE, THE HIGHEST–EVER FOR AN INDIAN COMPANY”

- V. P Agrawal, Chairman, AAI

- Sarthak Behuria, Chairman, IOCL

PAGE NO:54

PAGE NO:58

INSURANCE FROM THE CLASSES TO THE MASSES” - T.S. Vijayan, Chairman, LIC.

PAGE NO:50

TO REACH

WORLD AS WELL”

Copyright : The Indian Express Limited. All rights reserved. Reproduction in any manner, electronic or otherwise, in whole or in part, without prior written permission, is prohibited. Articles by contributors are solely the author's views. They do not reflect the publication's views. All correspondence should be sent to : The Indian Express Limited, Business Publications Division, 6-3-885/7/B, Ground Floor, V.V. Mansion, Somajiguda, Hyderabad-82 Tel: 23418672, 23418673/674, 679 to 680, 66631457 Tele Fax : 23418675 / 681 E-mail : bpd.hyd@expressindia.com Website : www.expressindia.com

3

DECEMBER - 2009

4

DECEMBER - 2009

THE

PUBLIC SECTOR HAS ALWAYS BEEN A STRATEGIC

while the effective tax rate has declined by over 350 basis

PARTNER IN THE PROCESS OF INDIA’S ECONOMIC

points for private sector companies to 22.9% during the

GROWTH AND DEVELOPMENT. IN AN ENVIRONMENT OF

same period.

ECONOMIC REFORMS AND LIBERALISATION, THE INDIAN

In

2008, the public sector companies paid over 33.5% of

PUBLIC SECTOR HAS PROVED COMPETITIVE AND HAS

their Net Profits as dividends, whereas their private sector

MADE RAPID GAINS IN PROFITABILITY AND PRODUCTIVITY.

counterparts paid 20.6% of their profits as dividends.

PUBLIC

SECTOR ENTERPRISES HAVE STRONG PROS-

PECTS FOR GROWTH, THROUGH HARNESSING NEW

The

cash ratio for the listed public sector enterprises rose

sharply from 24% in 2004 to around 42% in 2008,

BUSINESS OPPORTUNITIES, WHILE EXPANDING THE

whereas for the private sector companies, the ratio improved

SCOPE OF CURRENT BUSINESS.

DUN & BRADSTREET,

from 19.18% in 2004 to 21% in the year 2008. However,

THE WORLD’S LEADING SOURCE OF GLOBAL BUSINESS

2008 marks a decline from the peak levels of around 30%

INFORMATION, KNOWLEDGE AND INSIGHT, HAD PUB-

seen in 2005, 2006 and 2007.

‘INDIA’S TOP PSUS 2009’, IN AN EFFORT TO RECOGNISE THE STRATEGIC IMPORA R EPORT BY : TANCE OF THIS SECTOR. LISHED THEIR REPORT ON

The

PSUs that are part of this comparison study are less

leveraged than their private sector peers. With much less debt than their peers, their financial position is stronger. “The public sector in India has immense potential and prospects for growth and profitability in the future and will continue to play an important role in the economy. D&B will endeavor to keep track of various developments in the CPSUs

T

he published report of D&B has profiled 121 lead ing central public sector undertakings (CPSUs), which are under the ambit of the Central Govern-

ment and represent major industry groups. The aggregate Total Income of these 121 companies stood at Rs 14,675.41 bn, which represented a y-o-y growth of 16.8%, and is approximately 31.1% of the country’s Gross Domestic Product at current prices for FY08. The aggregate Net Profit reported by the profiled 121 CPSUs in FY08 sums up to Rs 1,221.36 bn. Further, the y-o-y growth in aggregate Net Profit (PAT) for all 121 companies stood at around 10%. Together, these companies reported an aggregate Net Worth of Rs 7,690.84 bn for FY08, a Net Profit Margin of 8.3% and a Return on Net Worth of 15.9%. In the edition, D&B have also conducted a comparable study of listed PSUs, excluding banks, vis-a-vis the listed private sector companies with total income in excess of Rs 10 bn. The comparison threw up some interesting findings: The

lication emerge as an important and reliable source of reference,” says Kaushal Sampat, Chief Operating Officer, Dun & Bradstreet India.

Over view The government-owned corporations play a pivotal role in the economic development of emerging economies because their participation is higher in the industrial and commercial activities of these economies. Resource constraints and limited scope of the private sector in the early stages of development and planning have set the stage for predominance of the public enterprises in these economies. Thus, public sectors in the leading developing countries of the world (including the countries in the BRIC region) play a very important role. Investments in public sector enterprises have also been greater and have continued to accelerate growth in core sectors of a developing economy (such as railways, telecommu-

study revealed that total sales of 31 government owned

nications, nuclear power, defence etc). Many a times, public

companies is just a little below the total sales of the 216

enterprises were created to operate in areas of national and

private sector companies. This suggests that in terms of

international trade, consultancy, inland, and overseas com-

revenues, the 31 PSUs are more or less equal to the 216

munication and construction services; as a result, overall profits

private sector companies put together.

of the public sector have not been restricted to certain sec-

The

5

and will develop database and information to make this pub-

31 PSUs contributed a substantially larger sum to the

tors. In other words, the public sector is a heterogeneous

exchequer through direct taxes and dividends than the pri-

combination of basic infrastructure industries, industries en-

vate sector companies. The effective tax rate for the PSUs

gaged in providing trade services, consumer goods industries,

has grown from 28.9% in 2004 to over 31.4% in 2008;

et al.

DECEMBER - 2009

Rapid industrialisation and infrastructure creation for eco-

investments over the past five decades. Enterprises that came

nomic development were the basic rationale behind setting

into existence under this regime expanded their production

up public enterprises. Governed by this rationale, the public

successfully, explored newer areas of technology and build

enterprises were set up by the government to ensure easy

reserves of technological competence in number of areas.

availability of important articles of mass consumption, and to

Moreover, after the initial investments by the government in

promote even distribution of income while keeping tabs on

important infrastructure areas, public enterprises expanded

prices of vital products. Protection of workers’ interests was

to all areas of the economy, which included non-infrastruc-

also one of the objectives as large number of enterprises was

ture areas and non-core areas.

created from sick private sector enterprises (PSE) that were

The

Industrial Resolution Policy 1956 also classified indus-

taken over. Promoting and ensuring that regions were devel-

tries into three categories with respect to the role played by

oped in a balanced manner and earning foreign exchange by

the State; the first category (Schedule A) included indus-

promoting import substitutions were some additional reasons

tries whose future development would be the exclusive re-

for encouraging public enterprises.

sponsibility of the State; the second (Schedule B) category

In India and China, PSEs were key catalysts in capital for-

included enterprises whose initiative of development would

mation in the early stages of industrial develop-

principally be driven by the State, but private participa-

ment. PSEs hold sizeable share in eco-

tion would be allowed to supplement the ef-

nomic activity of a number of de-

forts of the State, and the third category

veloped and developing econo-

included the remaining industries,

mies - France, Japan, Ger-

which would be left to the private

many, Italy, Australia,

sector. In 1969, the government

South Korea, China,

nationalised 14 major banks.

Malaysia, Philippines,

 The

Industrial Licensing

Indonesia, Sri Lanka,

Policy 1970 placed certain

and India.

restrictions on undertakings

Policies governing

the

belonging to large industrial

Indian

houses defined on the basis

public sector  The

of assets exceeding Rs 350 mn. In 1973, the definition

Indian govern-

of large industrial houses was

ment passed the In-

adopted in conformity with that

dustrial Policy Resolu-

of the Monopolies and Restrictive

tion 1948 that outlined

Trade Practices Act (MRTPA) 1969 and

the importance of the economy and its con-

included companies whose assets ex-

tinuous growth in pro-

ceeded Rs 200 mn. This move intended to pro-

duction and equitable distribution. In this process, the policy envisaged active engagement of the State in develop-

The

Industrial Policy 1977 provided greater interaction be-

ment of industries. The resolution stipulated that in addition

tween agriculture and industrial sectors. The Industrial Policy

to arms and ammunition, atomic energy and railway trans-

Statement of July 1980 spelt out major policy initiatives

port, which continued to be government monopoly, the State

such as XVIII optimum utilisation of installed capacity, cor-

would exclusively be responsible for establishment of new

rection of regional imbalances, high employment genera-

enterprises in six basic industries - except the industries

tion, promotion of economic federalism, and more impor-

where in the national interest, private sector participation

tantly, focused on reviving efficiency of public sector enter-

and cooperation could be allowed.

prises through a time-bound programme of corrective ac-

The

public sector in India assumed a strategic role in the

Indian economy after the introduction of the Industrial Policy Resolution 1956. The public sector was built over massive

6

vide the government more effective control on concentration of economic power.

tion on a unit-by-unit basis. The

next major policy initiated by the government was the

announcement of the Statement on Industrial Policy in July

DECEMBER - 2009







1991. This statement consisted of the following strategic

post-reform competitive performance of state-owned enterprises

decisions:

in India has drawn certain interesting results. The sample

The entire portfolio of investments made in the public

included 25 state-owned enterprises and 582 private compa-

sector was to be reviewed with an aim to focus on sectors

nies operating in the manufacturing sector. The comparisons

of strategic importance, sectors that were technologically

were drawn over the period 1992-2005.

advanced and essential infrastructure sectors.



Reservations were retained for the public sector to a cer-

more than that of their state counterparts. The ROA of state

tain extent, albeit, without any restraint on area of exclusiv-

enterprises started becoming negative after 1995 and re-

ity to be opened up selectively to the private sector.

mained negative till 2005.

The public sector was allowed entry into areas in which





that of private companies during this period.

Sick public enterprises that are unlikely to be turned around were referred to the Board for Industrial and Financial Re-



private companies followed by expenses on salary during

created for the same purpose.

the above period. On the other hand, for state-owned enterprises, marketing costs were the highest costs during the

Interest of workers likely to be affected by rehabilitation

earlier years and these costs declined during the latter part of the period.

nisms created for this purpose alone. Greater thrust was laid on performance improvement through MoUs signed between the government and enterprises. 

Indirect taxes were the single-largest business costs for

construction (BIFR) and other such institutions that were

packages were kept in mind through social security mecha

Efficiency of state enterprises calculated as value of output over production costs, although positive, remained below

no reservations were made for it. 

Return on assets (ROA) of private sector firms remained

The boards of these enterprises were given wider powers.



The performance of all companies deteriorated over time with respect to efficiency, ROA, and return on sales. However, they performed their best on all three measures during 1993-1996, with their performance worsening during 1997-2000 and 2001-2005. Central PSEs (CPSEs) on the

The above statement of Industrial Policy brought in funda-

whole registered a strong performance during the Tenth 5-

mental changes in the MRTP Act as well. From 17 industries

year plan (2002-2007). The numbers of profit-making

exclusively reserved for the State in 1956, the statement in

CPSEs went up while the number of loss-making ones re-

1991 revised the priority of the public sector to four major

duced. Granting complete autonomy to CPSEs remains an

areas - essential infrastructure goods and services, explora-

unfinished agenda before the government.

tion and exploitation of oil and mineral resources, technology development and building of manufacturing capabilities in

BRPSE revives CPSEs

areas that are crucial for long-term development of the economy

The Board for Reconstruction of Public Sector Enterprises

and where private sector investment is inadequate, and manu-

(BRPSE) was constituted to address problems relating to

facturing products where strategic considerations predomi-

strengthening, modernising, reviving, and restructuring PSEs.

nate, such as defence equipment.

A company is referred to the BRPSE if it is considered sick

At the commencement of the First 5-year plan (April 1951),

and has accumulated losses in any financial XX year up to

there were five public sector enterprises with an investment

50% or more of its average net worth during the four years

of Rs 290 mn that rose to 246 with an investment of Rs

immediately preceding such financial year /or a company that

1,354 bn by the end of the Eighth 5-year plan (April 1992)

is a sick company as per the meaning of Sick Industrial Com-

period.

panies (Special Provisions) Act, 1985.

Post-reform performance of state-owned enterprises in India

The BRPSE has made recommendations in 47 cases including two for closure till Oct 31, 2007. The proposals for

In the background of economic reforms and a competitive

revival of 26 CPSEs and closure of two have been approved.

business environment, the Indian public sector has been re-

The total assistance approved by the government up to Dec

cording sustained growth in business along with a significant

2007 in this regard is Rs 82.8 bn including Rs 19.5 bn cash

improvement in performance.

assistance and Rs 63.3 bn non-cash assistance.

A study conducted by the World Bank in 2005 to assess the

Public investment declines in subsequent 5-year plans

7

DECEMBER - 2009

The administrative machinery through which public sector

pattern in certain cases. The government policy relating to

plans are implemented has been continuously changing over

pay scales and pay pattern is that all employees of the CPSEs

the years. Performance-related incentives, establishment of

should be on IDA pattern and related scales of pay.

special purpose societies and agencies, and establishment of

Gross emoluments of CPSE employees increased from Rs

companies mandated to perform special functions, are all el-

4,150 mn in FY72 to an impressive Rs 123.11 bn in FY92,

ements of the plan implementation machinery that did not

and further rose to Rs 525.8 bn in FY07. Per capita emolu-

exist earlier. At the same time, some organisations that were

ments of such employees grew at a CAGR of 12% between

earlier part of the public sector may have moved out of the

FY72 and FY92. Again between FY93 and FY07, such emolu-

public sector on account of privatisation as in the case with a

ments registered a CAGR of 13.3%. A rise in the emoluments

few enterprises, both at the Centre and in the states.

indicates the massive increase in employment and income

The share of public investment in the country’s total investments declined over successive Plan periods - from almost 35% in the Eighth Plan to 29% in the Ninth Plan, to 22% in the 10th Plan. As per the Planning Commission, the share is

generated by CPSEs over three decades. Capital expenditure increases in public sector The importance of the public sector is reflective of the capi-

expected to stabilise in the 11th Plan at the 10th Plan level; however, these rates of investments require to be supported by a buoyant domestic savings rate of around 35%. The 11th plan also envisages a dominant role of public policy across various sectors. These sectors include agriculture and rural development; education and skill development; health and nutrition; infrastructure development and the energy sector. Public sector enterprises at the Central government level have been allocated resources worth Rs 21,565.7 bn while state governments and Union territories have been allocated Rs 14,881.5 bn of resources for the 11th Plan period. Per capita emoluments skyrocket in 3 decades The Department of Public Enterprises (DPE) advises the tal expenditure expended for various growth and developmental activities. In India, the public sector has witnessed a healthy and robust increase in capital expenditure across various sectors, primarily energy. Sectors that saw substantial expenditure included agriculture and allied service; rural development and special area programmes; irrigation and flood control; energy; industry and minerals; transport; education, including medical education and health. Planned outlay in the public sector almost doubled from Rs 2,102,030 mn in FY03 to Rs 4,412,850 mn in FY07. Investment in infrastructure in the public sector, at both the Centre and state levels, was 4.2% of the country’s GDP. As per Planning Commission estimates, the same is expected to be 6.4% of the GDP by FY12. administrative ministries/departments and CPSEs in matters relating to the wage policy and revision in pay scales of executives. CPSEs follow the Industrial Dearness Allowance (IDA) pattern pay scales with the Central Dearness Allowance (CDA)

8

Public sector savings surge Public sector savings, which consist of savings of government departments/enterprises (both Centre and state) contributed substantially to the country’s overall savings. In FY07, total Gross Domestic Savings (GDS) of the country stood at DECEMBER - 2009

agreed upon between the government and the CPSE. The performance of CPSEs, who have signed the respective MoUs, is evaluated at the end of the year based on achievements of the mutually-agreed targets. During FY07, 94 CPSEs signed MoUs with the government, while 19 could not submit MoU performance evaluation reports for the above period. Additionally, 143 CPSEs signed MoUs with the government for FY08. Based on the performance, the companies are graded on a five-point scale, namely excellent, very good, good, fair and poor. The performance evaluation is broken into financial and non-financial parameters and both carry equal weights. Nonfinancial parameters are further sub-divided into dynamic parameters, enterprise-specific parameters and sector-specific parameters. The financial parameters generally relate to profit, size and productivity, the dynamic parameters refer to project implementation, investment in R&D and extent of globalisation. 34.8% of GDP up from 23.6% in FY03. While, PSU savings

Similarly, while the sector-specific parameters refer to macro-

to the GDP rose up to 4% from 3.3% during the same period.

economic factors like change in demand and supply, price

However, if government administrative departments are con-

fluctuations, variation in interest rates, etc, which are beyond

sidered, public sector saving indicators reported a negative

the control of the management, the enterprise-specific pa-

figure till FY03. Furthermore, post FY03, these indicators

rameters relate to issues such as safety and pollution, etc.

turned positive largely due to several policy initiatives under-

The number of CPSEs that were awarded excellent ratings

taken by the government to improve the performance of PSUs.

reduced from 54 in FY04 to 45 in FY07. The organisations

MoU rating for CPSEs dwindle The MoU, which is a negotiated document between the government and the enterprise that specifies objectives of the agreement and obligations of both parties, was designed to

that were awarded poor ratings increased from two in FY03 to 94 in FY07. Key highlights of the public sector in India In

FY07, the public sector, comprising administrative de-

grant greater autonomy to CPSEs. Under the MoU system,

partments, departmental enterprises and non-departmental

performance evaluations are based on the annual targets

enterprises, constituted 21.4% of the GDP and 22.3% of the gross domestic capital formation. In domestic savings,

9

DECEMBER - 2009

on the other hand, the public sector had a share of 9.3%. The

share of the public sector in India’s GDS was 3.2% in

FY00 and 9.3% in FY07. The

Gross Savings Rate of the public sector was 3.2% in

FY07. CPSEs

account for more than 1/3rd of total revenue receipts

of the Central government. The

net worth of all enterprises stood at Rs 4,530 bn (FY07)

CPSEs The

dise exports and export earnings grew by 33% during FY04-

compliance of the listing guidelines, named a few leading public sector enterprises for not fulfilling requirements about the number of independent directors. Growing competition from the private sector within India and outside will pose new challenges, as existence of a levelplaying-field will decrease the public sector’s opportunities for special privileges and concessions that some of them enjoy.

Insights Dun & Bradstreet (India) attempts to highlight key trends in the Indian public sector undertakings (PSU) and provides in-

FY06. reported a 53% growth in turnover during FY04 and

profits rose from Rs 695 bn in FY06 to Rs 816 bn in

FY07. Number

from a detailed analysis of data gathered through secondary sources. The first section is an analysis of the financial and operational performance of the 121 central public sector un-

of loss-making institutions decreased from 89 in

FY04 to 59 in FY07. Internal

sights into their performance in two sections through this study. In each section, the study presents the insights derived

FY07. Net

ties Exchange Board of India, for instance, in its review of

paid a dividend of Rs 268 bn in FY07.

public sector accounted for 11% of the total merchan-

CPSEs

that are required as per listing agreement norms. The Securi-

resource generation of CPSEs grew by 21.7% in

FY07. Issues and challenges being faced by CPSEs

dertakings forming part of the publication. The second section presents a comparable matrix between the private companies and the government-owned companies listed on the NSE. In an attempt to highlight the industry trend, information

Public sector enterprises in India have responded admirably

was gathered from annual reports, regulatory filings, and data

with post-economic reforms and liberalisation. Not only did

with industry association, regulatory bodies, government

they expand production and profit levels but also became an

websites and various other secondary sources. The informa-

important choice of investment for global and domestic inves-

tion thus gathered for analysis was used to understand changing

tors. Market capitalisation of the public sector enterprises in

dynamics of PSUs as compared to private companies.

India constitutes a major portion of the total market capitalisation and several PSEs attract huge investor interest. These enter-

Section A

prises are growing in size and stature, competing with the

This section comments on the performance of PSUs that

major competitors in domestic and international markets, by

have long formed the backbone of the Indian economy. The

focusing on business growth and diversification as also profit-

publication features 121 PSUs that fall under the purview of

ability and productivity.

the Central government and are also known as Central Public

In future, the CPSEs will garner enough opportunities and

Sector Undertakings (CPSUs).

will enhance their scope of strategy, apart from building their

The PSUs that are featured in this publication have contrib-

competitiveness through strong and proactive leadership, ef-

uted largely to India’s growth story in recent times. The key

fective management, and efficient processes that govern busi-

highlights of the performance of these CPSUs in FY08 are as

ness planning and development, and management of re-

follows:

sources.

The

In recent years, the implications of corporate governance seem to have increased to significant proportions. Corporate governance includes policies and procedures adopted by a

total income of the profiled CPSUs was Rs 14,675.41

bn during FY08, which was equivalent to 31.1% of India’s GDP at current market prices. The

aggregate net profit margin (NPM) of the profiled PSUs

corporate entity in achieving its objectives with relation to its

was 8.3% in FY08. Within this, the manufacturing PSUs

stakeholders, both internal and external. In the Indian context

and the service PSUs had an NPM of 9.1% and 7.8%,

also, corporate governance is a major challenge for CPSEs,

respectively.

especially in terms of the number of independent directors

10

DECEMBER - 2009

The

manufacturing PSUs had the highest return on net worth

(RONW) of 19.3% among all profiled companies while those from the service sector had a RONW of 12.0%. PSUs

from the Western region ranked the highest in terms

of total income with a 57% share. In

terms of net profit, the Northern region contributed al-

most 50% of the entire profits of 121 companies profiled in this publication. The Western region followed the Northern region with a 27% share. The

average total income per employee of the profiled com-

panies was Rs 7.30 mn whereas the net profit per employee was Rs 0.6 mn. Review of the performance of 121 CPSUs

Oil and gas generation sector records highest total income share, albeit, with low margins The oil and gas generation sector had the highest share in both total income (42.82%) and net profit (28.94%) of the 121 CPSUs. There was a significant gap between the sector’s share in total income and net profit on account of its very low NPM of 6%. The iron and steel sector had a bigger share in the net profit pie (13.59%) than in the total income pie (4.98%) and enjoyed a healthy NPM of 23%.

Manufacturing PSUs register higher RONW The manufacturing PSUs recorded a higher RONW (19.3%) as compared with the services PSUs (12.0%). The 121 profiled CPSUs collectively registered a RONW of 15.8%. The profiled PSUs registered a combined net worth of Rs 7,690.82 bn.

Banking & financial services sector has highest repre-

sentation but lower share in total income The banking and financial services sector had the maximum representation of companies (31%). In spite of this, the share of oil and gas generating companies in the total income of all the 121 companies was more than twice the share of banking and financial services companies.

Navratnas’ total income equal to 15% of GDP The 18 Navratnas as identified by the Department of Public Enterprises had a total income of Rs 6,871.62 bn in FY08, which is equivalent to 15% of India’s GDP at current market prices. The share of these Navratnas in the combined total income of 121 CPSUs was an impressive 47% during FY08. Their com-

11

DECEMBER - 2009

KEY FINANCIALS

IN

FY08: INDUSTRY AGGREGATES

Sector

Total Income

TABLE 1

Profit after Tax

Net Worth

Rupees in Million

Net Profit Margin

Return net Worth

In Percentage

Banking & Financial Services

2,716,052.17

323,227.94

2,235,378.81

Oil & Gas Operations

n.a.

14

6,284,717.78

353,468.98

1,710,946.38

6

21

Iron Steel & Metals

731,510.24

166,030.39

650,434.50

23

26

Power

607,445.73

135,261.63

1,183,040.59

22

11

Trading

592,847.19

8,451.72

39,832.41

1

21

Coal

319,110.38

80,646.45

324,514.28

25

25

Heavy Engineering

272,922.09

33,540.10

142,776.3

12

23

2,285,139.27

39,550.45

183,890.07

2

22

437,982.07

32,062.74

997,048.53

7

3

90,636.25

16,306.46

90,885.06

18

18

337,042.96

32,812.01

132,100.18

10

25

14,675,406.13

1,221,358.87

7,690,847.11

8.32

16

Insurance Telecommunication Transportation Others Total

on

Source: D&B Research (n.a. – Not Applicable)

PERFORMANCE OF NAVRATNAS Company

TABLE 2 Total Income

Total Income

Net Profit

Net Profit

Net Worth

Net Worth

(Rs Mn)

y-o-y-growth

(Rs Mn)

y-o-y-growth

(Rs Mn)

y-o-y-growth

% Bharat Electronics Limited Bharat Heavy Electricals Ltd Bharat Petroleum Coal India Ltd GAIL (India) Ltd Hindustan Aeronautics Ltd

41,376.91

1

% 7,450.94

4

% 31,463.73

23

207,494.00

15

28,602.60

18

107,309.90

22

1,119,421.76

14

14,551.87

(24)

116,278.21

14

34,774.45

(1)

24,538.58

(13)

124,234.21

4

185,645.50

12

26,232.10

10

129,395.10

14

103,379.61

16

16,318.80

42

29,984.40

59

Hindustan Petroleum

1,059,017.30

18

11,565.30

(26)

105,116.00

10

Indian Oil Corporation Ltd

2,309,539.60

13

70,015.00

25

407,484.00

18

Mahanagar Telephone Nigam

53,299.33

(5)

2,293.38

49

112,989.94

4

National Aluminium Company

55,435.70

(13)

16,569.10

(31)

88,741.40

15

NMDC Ltd

63,818.40

41

32,507.60

40

82,643.30

43

NTPC Ltd

399,359.00

13

76,893.00

12

526,.83.00

8

Oil & Natural Gas Corporation

648,459.50

7

167,017.57

5

698,333.66

14

Power Finance Corporation

50,400.40

28

12,015.50

22

93.298.00

9

Power Grid Corporation

50,815.30

24

16,305.30

34

133,857.80

25

Rural Electrification

35,376.61

24

8,607.13

31

53,676.92

34

Shipping Corporation

40,616.80

(3)

7,912.20

(20)

65,319.10

10

413,394.80

17

75,354.90

21

227,794.80

34

6,871,624.97

13

614,750.86

9

3,125,021.49

11

Steel Authority of India Ltd Total Source: D&B Research

12

DECEMBER - 2009

bined net worth was 41% of the total net worth of all profiled

study that the sales of PSUs has outperformed the private

CPSUs.

sector in four out of the past five years.

Section B This section presents a comparable matrix between the pri-

On further scrutiny of the toplines of the selected companies, a few private sector companies were found to have earned incomes from discontinued operations. However, no such in-

vate companies and the government-owned companies listed on the NSE (excluding financial companies). In this endeavour, D&B India firstly selected the top 31 government-owned listed companies (29 central government companies and 2 state government companies) in terms of total turnover. Subsequently, it identified private companies who had a total turnover of over Rs 10 bn. (The benchmark was taken as Rs 10 bn to ensure fair assessment because out of the 31 PSUs identified for the study, the 31st company had a total turnover of about Rs 10 bn). The private companies thus selected were screened further and those companies whose comparable 12 month data for any of the previous five years were not available were excluded. The players in the IT and ITeS industry were also excluded because PSUs have a negligible presence in this industry. Finally, D&B India arrived at 216 private sector companies. A comparison of PSUs vis-à-vis their private sector peers

come was recorded by the PSUs. One reason for this could

suggests that PSUs had a significant role to play in India’s

be the social commitments of PSUs, which do not allow them

growth story in the last five years. They managed to achieve

to conduct unviable business units. Instead, the PSUs offset

similar growth rates as their private peers. It’s noteworthy that

losses arising from such units with profits earned from differ-

because of the government’s role, PSUs have proved to be a

ent business units.

little more risk averse and hence financially-sound. It is ex-

PSUs bring home huge monetary gains despite the social obligations

pected that the measured approach that the public enterprises have taken over the last few years will hold them in good stead in the current financial downturn. The following study compares the financial parameters such as sales growth, tax payout ratio, dividend payout ratio et al of PSUs and private companies.

Sales

Apart from fulfilling their social commitments, public sector enterprises are contributing a huge sum to the exchequer through direct taxes and dividends. The effective tax rate for the PSUs grew from 28.9% in 2004 to over 31.4% in 2008 while the effective tax rate declined by over 350 basis points

INCOME

FROM

The total sales of the 31 government-owned companies

DISCONTINUED OPERATIONS (DO) 2005

2006

2007

2008

DO

DO

DO

DO

were just marginally lower than the total sales of the 216 private sector companies. Though the private sector has grown

Private Sector

9.00

7.41

6.75

11.86

at a slightly faster rate than the PSUs, the businesses of PSUs

Public Sector

0

0

0

0

have not lagged far behind in the last five years. Another noteworthy observation is that in spite of a huge base in terms of turnover, sales growth of PSUs has remained robust throughout the last five years. Even though PSUs are losing their monopoly and India is taking further strides in liberalising its economy, PSUs are managing to grow at a healthy pace. Infact it is evident in the

13

(Amount in Rs bn) Source: D&B Research and CMIE for private sector companies to 22.9% for the same period. PSUs not only take the lead while contributing to the government’s kitty through direct taxes but also lead when it comes to rewarding their shareholders with dividends. In 2008, DECEMBER - 2009

the public sector companies paid over 33.5% of their net

total sales even though the ratio of exports to sales of PSUs

profit as dividends to equity shareholders, whereas their pri-

has been increasing slowly and steadily in the last three years.

vate sector peers paid only 20.6% of their profits as dividends.

Cash Ratio

Over the last five years, the dividend payout ratio has consis-

The cash ratio (cash and bank balance/current liabilities) is

tently declined for the private sector companies, whereas it

an indicator of the extent to which a company can pay its current liabilities with cash in hand without relying on the sale of inventory and receipt of accounts receivables. The cash ratio for the listed public sector enterprises rose sharply from 24% in 2004 to around 42% in 2008. Meanwhile, their private sector peers’ cash ratio initially improved from 19.18% in 2004 to 30.0% levels during 2005, 2006, and

has remained more or less the same for the governmentowned companies. As the government owns a majority stake in the publicly-listed PSUs, a huge share of the dividends goes to the government’s kitty. Thus, the PSUs make a much higher contribution to the exchequer through both taxes and dividends.

Export to Sales

2007, and later on declined sharply to 21% in 2008. This

Predictably, the PSUs earn most of their revenues from the

measure of liquidity suggests that the public sector enterprises

domestic market. Exports constitute a miniscule portion of

are better off in tackling their current liabilities (42%) with the most liquid asset — cash.

14

DECEMBER - 2009

A look at the table below shows

companies

that while the cash and

are lesser le-

bank balances

veraged than

for

the

their

l i s t e d

private

sector peers be-

PSUs have con-

cause their debt

sistently grown stron-

levels are lower;

ger and stronger on the one

hence, the PSUs

hand, on the other hand, pri-

are in a stronger fi-

vate sector peers’ cash bal-

nancial position to

ance declined by 7.5%

weather the eco-

in 2008 as compared

nomic downturn.

with 2007. If the

expres-

sion Cash is the

king holds

true then the

PSUs are defi-

nitely better prepared for tough times like these.

Even though raising

money in the present

market conditions is be-

coming a difficult task,

the PSUs are enjoying a

low debt and huge cash

reserve position. In the

past few years, many pri-

Debt Equity Ratio

vate sector companies

wanted growth at all costs,

The debt-equity ratio (debt/equity), which signifies a

whereas PSUs used

their strong earnings to

company’s financial leverage, has always remained on the

strengthen their bal-

higher side for private sector companies. The public sector

culated

expan-

(For the analysis, the finan-

Cash and Bank Balance 2004

2005

ance sheets and make calsions. cial data of PSUs range from

2006

2007

2008

March 2004 to March 2008.

Private Sector 189.87 390.82 468.60 598.48 556.53

Also, as different private companies follow different financial

Public Sector 297.79 458.90 498.80 756.46 953.49

year ending, their financial data ranges from December 2003 to September 2008).

(Amount in Rs bn) Source: D&B Research and CMIE

A COMPARISON OF PSUS VIS-À-VIS THEIR PRIVATE SECTOR PEERS SUGGESTS THAT

PSUS HAD A SIGNIFICANT ROLE TO PLAY IN INDIA’S GROWTH STORY IN THE LAST FIVE YEARS. THEY MANAGED TO ACHIEVE SIMILAR GROWTH RATES AS THEIR PRIVATE PEERS. IT’S NOTEWORTHY THAT BECAUSE OF THE GOVERNMENT’S ROLE,

PSUS HAVE PROVED

TO BE A LITTLE MORE RISK AVERSE AND HENCE FINANCIALLY-SOUND. IT IS EXPECTED THAT THE MEASURED APPROACH THAT THE PUBLIC ENTERPRISES HAVE TAKEN OVER THE LAST FEW YEARS WILL HOLD THEM IN GOOD STEAD IN THE CURRENT FINANCIAL DOWNTURN.

15

DECEMBER - 2009

16

DECEMBER - 2009

Partners in Growth PUBLIC SECTOR ENTERPRISES

IN INDIA HAVE ALWAYS

BEEN CONSIDERED A WHITE ELEPHANT IN THE PAST. IT IS BEEN SINCE THE GLOBALISATION PHENOMENON THAT MOST OF THEM HAVE COME TO CONTEMPORARY ACTION. INDIA HAS SEEN MARKEDLY AMAZING NUM-

PSES GOING SICK. PLENTY OF EMPLOYABLE WORKERS GOING UNEMPLOYED. BUT WITH THE KIND BERS OF

OF DEVELOPMENT SEEN BY THE COUNTRY IN THE LAST FEW YEARS,

PSUS HAVE MATURED. THEY HAVE

SHOWN HOW A MAMMOTH ORGANISATION CAN CARVE A NICHE FOR ITSELF AND COME OUT WITH COLOUR UNSEEN, IN TERMS OF REVENUE, NATIONAL DEVELOPMENT AS WELL AS SOCIAL WELL-BEING.

WE PRESENT

PSUS WHICH HAD THE SPIRIT TO TAKE ON TOUGH TIMES AND WIN.

FEW

17

DECEMBER - 2009

“HAL’s short term goals are to stabilize production of Hawk, SU-30MKI and ALH” THE HISTORY AND GROWTH OF THE HINDUSTAN AERONAUTICS LIMITED (HAL) IS SYNONYMOUS WITH THE GROWTH OF AERONAUTICAL INDUSTRY IN INDIA OVER THE PAST 70 YEARS. HAL HAS BEEN STRIVING TO ACHIEVE SELF RELIANCE IN PRODUCTION AND MAINTENANCE OF AIRCRAFT/HELICOPTERS AND THEIR ENGINES & SYSTEMS. BEGINNING AS AN AIRCRAFT INDUSTRY PRODUCING AIRCRAFT FROM FULLY FURNISHED KITS, THE COMPANY HAS GROWN INTO AN AIRCRAFT INDUSTRY DESIGNING AIRCRAFT/HELICOPTERS TO MEET THE SPECIFIC NEEDS OF THE INDIAN ARMED FORCES.

18

DECEMBER - 2009

T

he Company which had its ori

design and production of Fixed Wing air-

student pilots of IAF, Navy and Army have

gin as the Hindustan Aircraft

craft, helicopters, engines and accesso-

been trained on this aircraft.

Private Limited was incorpo-

ries. HAL manufactured products ac-

In pursuance of the national objective

rated on 23 Dec 1940 at Bangalore by

count for around 75% of the fighters,

of attaining self reliance in the design

Walchand Hirachand a farsighted vision-

100% Trainer and 60% helicopters cur-

and production of combat aircraft, HAL

ary in association with the Government

rently being operated by the Indian De-

was entrusted the task of developing a

of Mysore with an Authorised Capital of

fence Forces.

fighter aircraft. Design work on the first

Growth & Consolidation

indigenous fighter aircraft commenced in

Rs.4 Crores and with the aim of manufacturing aircraft in India. In collabora-

June 1957. Dr. Kurt Tank, a renowned

tion with the Inter Continental Aircraft

Early Years: 1940s

Company of USA, Hindustan Aircraft Pri-

The initial orders booked by Hindustan

the head of the design team at HAL. The

vate Limited commenced its business of

Aircraft Company were for manufacture

first flight of the prototype of the HF-24

manufacturing of Harlow Trainer, Curtiss

of Harlow PC-5A trainers, Curtiss 75A-

(Marut) took place on 24 June 1961.

Hawk Fighter and Vultee Bomber Aircraft.

5P Hawk fighters and Vultee V-12-D at-

During the period 1965 to 1977, 147

However, the aircraf t manufacture

tack bombers.

aircraft were produced by HAL for IAF.

programmes were abandoned a year later

1940s, the services of the Company were

in favour of Overhaul & repair of aircraft

mainly utilized for the Second World War

to support the Second World War effort.

efforts of the Allies. By, mid-1943, the

After the close of Second World War, in

assembly programme was abandoned

December 1945, Hindustan Aircraft Pri-

with only 5 Hawks and three Vultee air-

vate Limited was placed under the ad-

craft having been delivered to take up

ministrative control of the Ministry of In-

the overhaul and repair of military air-

dustry & Supply. In Januar y 1951,

craft of the Allies. USAAF was given com-

Hindustan Aircraft Private Limited was

plete control of the factory during the war

placed under the Administrative control

and was managed by it till the end of the

of Ministry of Defence.

War.

However, during the

After the War, the Company took

In August 1963, Aeronautics India Lim-

up the task of overhaul and refurbishing

ited (AIL) was incorporated as a Com-

of Douglas DC-3 aircraft (Dakota) and

pany wholly owned by the Government

Liberators. Subsequently, HAL was

of India with facilities at Nasik, Koraput

recognised as Authorised Douglas Ser-

and Hyderabad to undertake the manu-

vice centre in India.

German aircraft designer was involved as

In December 1959, HAL was given a Go-Ahead for the design and development of a basic jet trainer to meet the needs of the Indian Air Force. The HJT-16 (Kiran), the trainer aircraft with twin side-by-side seats and a single turbojet engine was designed and productionised by HAL. The aircraft was subsequently named Kiran and three variants (Kiran Mk.I, Kiran Mk.IA and Kiran Mk.II) were produced for IAF and Indian Navy.

These aircraft

produced between late 1960s and 1980s are still in service providing the basic aircraft training to the pilots of the Armed Forces. Pushpak (Club trainer), Krishak (Air

facture of the MiG-21 aircraft under li-

During this period, the first licence

cence from Russia. In June 1964, the

build aircraft programme commenced at

Aircraft Manufacturing Depot which was

HAL with manufacture of Percival P.40

set up in 1960 as an Air Force unit to

Prentice trainer aircraft. The first HAL as-

produce the Airframe for the HS-748

sembled Prentice flew on 30 Apr 1948

transport aircraft was transferred to AIL.

and a total of 65 Prentice aircraft were

Many Major Licence production

The two companies i.e. Hindustan Air-

delivered to IAF during 1948 and 1949.

programmes were launched during late

Observation post aircraft) and Basant (Agricultural aircraft) were also indigenously developed and produced for different customers during this period.

1950s and 1960s. Government of India

craft Private Limited and Aeronautics In-

1950s and 1960s

dia Limited were merged on 1st Oct 1964

Indigenous design of aircraft was iden-

to form “Hindustan Aeronautics Limited

tified as a key factor to the growth of the

(HAL)” with its principal business being

Company from its early years. HAL

design, development, manufacture, re-

launched the design of the HT-2 trainer

pair and overhaul of aircraft, helicopter,

aircraft in 1948. The first flight of indig-

engines and related systems like avion-

enously designed and developed HT-2

Gnat aircraft was taken up for produc-

ics, instruments and accessories.

prototype took place on 5 Aug 1951. The

tion at HAL with the signing of licence

aircraft entered IAF’s service as an el-

agreement with M/s Folland, UK in Sep

ementary trainer in 1955. Thousands of

1956. The first aircraft assembled from

Presently, there are 19 production divisions and 10 R&D centres engaged in

19

entered into a licence agreement with de Havilland Company of England for manufacture of Vampire F.B.52 jet fighter. The aircraft became the first jet fighter aircraft to be manufactured by HAL.

DECEMBER - 2009

kits was delivered in 1959 and produc-

turing Depot was merged with Aeronau-

nology demonstrator was flight tested suc-

tion from raw material extended from

tics India Ltd in June 1964. The division

cessfully (HTT-34).

1962 to 1973 achieving a peak produc-

has produced HS-748 aircraft in a vari-

The concept of an independent facility

tion rate of 4 aircraft per month during

ety of roles and models for Indian Air

for the Design and Manufacture of air-

1965-66.

Force, Indian Airlines and other civil cus-

craft accessories took shape as result of

tomers.

the recommendations of Aeronautical

Engine Division was established in the year 1957 in Bangalore to manufacture

A Licence Agreement between HAL

Committee and an Accessories Division

Orpheus Turbo Jet engines for HF-24 air-

and M/s. Sud Aviation, France (now

at Lucknow was established in the year

craft under licence from Rolls Royce, UK.

Eurocopter) was signed in June 1962

1970. The division commenced its op-

In 1959 another, licence agreement was

for manufacture of Chetak (Alouette III)

erations with manufacture of Hydro-Me-

signed with Rolls Royce to manufacture

helicopters. Facilities were established in

chanical accessories under licence from

Dart engines to power HS-748 transport

Bangalore for helicopter manufacture and

M/s Dowty, Dunlop etc., required for HF-

aircraft and overhaul Avon engines fitted

this was bifurcated as a separate Heli-

24, Ajeet and Kiran aircraft.

on Canberra and Hunter aircraft.

copter Division in 1970. The Artouste-

In September 1970, a licence agree-

In August 1962, an Agreement be-

IIIB engines for the helicopter also were

ment for manufacture of Cheetah heli-

tween India & USSR was signed for

manufactured under licence at the En-

copter (Lama SA-315) was signed with

manufacture of MiG-21 aircraft, includ-

gine Division, Bangalore.

M/s. SNIAS, France (now Eurocopter).

ing its engines and avionics under licence

1970s and 1980s

Cheetah helicopters produced at HAL

in India.

New divisions at Nasik for

In the 1970s, development of Ajeet was

were delivered to IAF and Army, are still

Airframe, at Koraput for engines and at

completed based on the Gnat aircraft plat-

in operation and are best suited for high

Hyderabad for Avionics were formed in

form. Ajeets were produced for IAF dur-

altitude operations.

1964 for taking up production of MiG-

ing 1977 – 1988. The development of

Manufacture of Jaguar, deep penetra-

21 series aircraft. Avionics Division,

trainer version was taken up in 1976 and

tion strike aircraft, was launched under

Hyderabad was set up to manufacture

the first prototype flew in 1982.

licence from British Aerospace with sign-

radars, communication systems and other

HPT-32 is a piston engine trainer de-

ing of the Licence agreement in 1979.

airborne avionic and ground based sys-

signed and produced by HAL for the ba-

A separate Avionics Division was formed

sic flying training of pilots. De-

at Korwa, UP in 1982 for manufacture

tems.

velopment and production

of Display, Attack, Ranging and Inertial

Kanpur commenced its opera-

of this aircraft was com-

Navigation (DARIN) system of Jaguar air-

tions in 1960 in the name of

pleted successfully for IAF

craft.

Aircraft Manufacturing Depot

during 1975 – 1994.

Transport Aircraft Division,

The first licence built aircraft was

delivered to IAF in 1982.

(AMD) under the functional

This aircraft is powered

Manufacture of MiG-27M ground at-

control of Maintenance Com-

by single piston engine

tack fighter was taken up at HAL under

mand of Indian Air Force for

imported from Lycoming,

a licence agreement signed in 1982 with

the licence manufacture of

USA. HAL undertook the de-

Russia. MiG-27M aircraft were produced

HS-748 Transport Air-

velopment of a modified ver-

during 1984 to 1997.

craft. The Aircraft Manufac-

sion of HPT-32 with a turbo-prop engine and the tech-

A Licence Agreement with M/s Dornier GMBH, Germany was signed in Nov 1983 for manufacture of DO-228 aircraft at Transport Aircraft Division, Kanpur. The production line is still active at the Division. Through Licence productions, the Company has absorbed several critical production technologies required for the

Ashok Nayak, Chairman, Hindustan Aeronautics Limited

20

aircraft industry during the 1960s through 1980s. Taking up licence production has DECEMBER - 2009

Light Utility Helicopter (LUH). Development program for LUH, a 3 ton helicopter for replacing the Cheetah/Chetak was launched in Feb 2009. HAL is also involved in the development of Light Combat Aircraft (LCA) along with Aeronautical Development Agency (ADA). HAL is providing design, development and production support in Production of Prototype vehicles and limited series production aircraft, Ground and Flight testing to achieve certification of the aircraft. A Licence Agreement for production of SU-30MKI aircraft was signed with Russians in Dec 2000. Licence production of SU-30MKI aircraft is progressing at HAL under licence and the first aircraft was delivered in 2005.

increased the self-reliance in providing

1990s and 2000s

life cycle support for maintenance and

HAL’s mission is to become a global

Production of Hawk Advanced Jet

operation of these aircraft and helicop-

player and to achieve self reliance in

Trainer is taken up and the current order

ters. Engines, Accessories and Avionics

aerospace design and manufacture. Three

is expected to be completed during 2008

have also been manufactured for these

of the current major projects – the Ad-

- 2011. Hawk aircraft is being produced

aircraft/helicopters at HAL with dedicated

vanced Light Helicopter (ALH), the In-

under licence from British Aerospace, UK

Engine and Accessories Divisions set up

termediate Jet Trainer (IJT) and the Light

for which a licence Agreement was signed

for the purpose.

Combat Helicopter (LCH) will help in pro-

in Mar 2004.

In 1974, Foundry and Forge Division was established at Bangalore by merg-

moting HAL as a design house for modern products.

In order to capture the growing market in the industrial gas turbine engines,

ALH is in production since 2001 and

a new Division called the Industrial &

The activi-

both the military version and the civil

Marine Gas Turbine Division, was formed

ties of the division include development

version have been certified. Production

in 1998. Currently this Division is un-

and manufacture of Aluminum and Mag-

of ALH with new glass cockpit, higher

dertaking manufacture of LM-2500 en-

nesium base alloys and indigenous de-

powered engine (Shakti) and weaponised

gine, Repair and Overhaul work related

velopment of castings and forgings in fer-

versions will continue in the coming years

with Industrial Avon Engines and Allison

rous and non ferrous alloys, Rolled rings,

mainly for the IAF & Army.

501K and 571K series. Production of

ing the departments of forges and foundry under the Aircraft Division.

Brake pads and Rubber products for criti-

Intermediate Jet Trainer is a basic jet

cal applications for the Aeronautics,

trainer being designed by HAL to replace

Space and other industries.

the Kiran aircraft with IAF and Navy. Two

A separate Aerospace Division was es-

prototypes are undergoing flight evalua-

tablished in 1988 at Bangalore. This Di-

tion and the certification is expected to

vision is dedicated to manufacture large

be achieved in 2010.

industrial gas turbines for power generation purpose is being explored.

Achievements Development of the Advanced Light Helicopter (ALH) and the Intermediate Jet Trainer are the two significant achieve-

light alloy structures for the space of In-

Development of Light Combat Helicop-

dian Space Research Organisation. Struc-

ments which have resulted in self reli-

ter launched in 2006 is expected to en-

tures for the PSLV, GSLV, INSAT and IRS

ance in the area of light helicopters and

ter service in 2011-12. The capabilities

are produced in this Division. The PSLV

trainers for India.

developed in light helicopter category in-

which launched the Chandrayaan-I also

volving Cheetah, Chetak, ALH & LCH will

had structures made in HAL.

be put to use in the development of the

21

A batch of new Jaguar aircraft was produced for the IAF integrating new avi-

DECEMBER - 2009

onics to upgrade its performance. The

Plant & machinery and other infrastruc-

abroad with long lead times coupled with

upgrades on Jaguar Navwass aircraft and

ture are built up to meet the needs of the

irritants like unjustified price escalations,

MiG-27M aircraft were carried out indig-

specific new projects that are launched.

export restrictions, obsolescence needs to be tackled with great care. Within In-

Categor y

Division

dia, the sub-contractors are yet to develop from aero-structure/sub-assembly suppli-

Airframe

Aircraft Division, Bangalore

(Aircraft and Helicopters)

Helicopter Division, Bangalore

Aerospace

Aircraft Division, Nasik

aerospace grade raw material is being

Transport Aircraft Division, Kanpur

supplied to private industries by HAL,” said

Aerospace Division, Bangalore

Nayak.

Barrackpore Division, West Bengal

Future Plans

Overhaul Division, Bangalore

“The major short term goals are to stabilize the production of Hawk, SU-30MKI

Helicopter MRO, Bangalore

and ALH to meet the planned acquisi-

Foundry & Forge Division, Bangalore

tion rate by IAF. Production of Light Combat Aircraft (LCA) to the series production standard is expected to commence

Airport Service Centre, Bangalore

from 2011. In the medium term, pro-

Engine Division, Bangalore

duction of Light Combat Helicopter, In-

IMGT Division, Bangalore

termediate Jet Trainer will be the focus.

Engine Division, Koraput

The development and flight tests on the

Sukhoi Engine Division, Koraput Accessories / Avionics

sourcing of raw materials. Most of the

Overhaul Division, Nasik

Composite Manufacturing Division, B’lore

Engines

ers to total solution providers including

Accessories Division, Lucknow Avionics Division, Hyderabad Avionics Division, Korwa

LCA trainer variant in coordination with ADA is another major milestone to be achieved,” said Nayak. The medium term goal also envisages establishing the production facilities for the recently launched Light Utility Heli-

enously further extending their opera-

In addition to setting up infrastructure for

copter. A system to liquidate offset oppor-

tional life.

new projects, upgrading and recondition-

tunities arising in 3 to 4 years is required

Cheetah helicopter was upgraded with

ing of various existing machinery and

to be put in place. HAL is planning to set

a new modern engine improving its per-

equipment are carried out every year to

up dedicated aero-structure and aero-

formance and as an economic alterna-

improve productivity and reliability. In the

component fabrication facilities for ex-

tive to the older Cheetah.

light of new projects like MMRCA, Fifth

ports. A clear picture is expected to ema-

Generation Fighter, Multi-role Transport,

nate after the completion of the selection

Multi-role Helicopters, there is a need

process of the MMRCA. Subsequent to

HAL has facilities for complete manu-

for expansion of facilities at HAL. Forma-

the selection of the aircraft, facilities will

facture of a modern aircraft from raw

tion of new production divisions will be

be planned for the licence production of

materials covering conventional, special

taken up after a clear picture emerges

MMRCA.

purpose machines, CNC machines, as-

on further orders for the on-going pro-

sembly infrastructure, ground test facili-

grams like SU-30MKI, Hawk and ALH,”

ties, flight testing establishment, etc. HAL

said Ashok Nayak, Chairman, HAL.

has 19 production divisions and 10 R&D

Challenges

Infrastructure

centers. “Plan for upgrading technology and modernization at the Divisions of HAL

“Supply chain, both from abroad and

is a continuous process based on the Pro-

within India, is the major challenge HAL

duction requirements of various projects.

is trying to overcome. Supplies from

22

R&D In line with its mission to achieve self reliance, HAL has established 10 R&D centers. HAL has designed & developed 11 fixed wing aircraft and an Advanced Light Helicopter. Mid life upgrades and product DECEMBER - 2009

improvement initiatives have been suc-

Programmable Logic Arrays and RF/Mi-

& Display Management, System Integra-

cessfully undertaken by HAL in several

crowave components.

Aircraft Commu-

tion, Weapon Integration, Development

aircraft and helicopters built under li-

nication system (INCOM), IFF, Radio Al-

of Mission and Combat avionics systems

cense. HAL established capabilities to

timeter, On-board computers, etc., have

which include Mission Computer, Data

provide solutions for design needs of air-

been developed for different aircraft plat-

Transfer System, etc.

craft & helicopters in airframes, airframe

forms. Precision Approach Radar was

systems, avionics, mission & combat sys-

developed for airfield operations.

tems using advanced design tools.

The major focus areas now would be to increase self reliance in the new ac-

During the process of upgrade of Jag-

quisitions planned through Fifth Genera-

Sufficient self reliance has been

uar, Sea Harrier & other projects, HAL

tion Fighter Aircraft, Multi-role Transport

achieved in the design and development

has developed the core competencies in

Aircraft, Multi-role Helicopter programs.

R & D Centres

Activity

Aircraft R&D Centre

Design and Development of Fixed Wing aircraft (LCA, IJT, Multi-role Transport Aircraft, Fifth Generation Fighter Aircraft, UAVs)

Rotary Wing Aircraft R&D Centre

Design and Development of Rotary Wing aircraft (ALH, Light Combat Helicopter, Light Utility Helicopter, Multi-role Helicopter, Naval Rotary UAV)

Mission & Combat Systems R&D Centre

Mission systems, Aircraft upgrades and technology development

Engine Test Bed R&D Centre

Small Engines & Test Bed design

Strategic Electronics R&D Centre

Avionic equipment (Communication, Navigation, Radar, etc)

Transport Aircraft R&D Centre

Development & Modification / upgrades of Transport Aircraft

Aircraft Upgrades R&D Centre

Aircraft/System Upgrade Work on Russian Aircraft

Aerospace Systems & Equipment R&D Centre

Development of Mechanical, Hydraulic and Electrical accessories.

Gas Turbine R&D Centre

Design Improvement of Russian Engines

Central Materials & Processes Laboratory

Development of Materials, Castings, Forgings & New Processes

& NDT Centre of light helicopter category. The ALH, LCH

Avionics System Architecture Design and

HAL would be participating as a co-de-

and LUH programs would meet all the

Development, Software Design and De-

velopment partner in these programs with

needs of the Armed Forces in this cat-

velopment for aircraft system, Algorithms

foreign OEMs.

egory of helicopters.

Development in the areas of navigation,

HAL’s Design & Development Centre

weapon guidance and displays, Sensor

at Lucknow has successfully developed flight critical systems such as Hydraulic pumps, Brake Units, and Environmental Control Systems. The Strategic Electronics Research &

Financials Financial Performance of HAL for last FOUR years is given below: Rs. Crs

Development Centre at Hyderabad has

2005-6

2006-7

2007-8

2008-9

several products to its credit and has its

Sales

5341.50

7783.61

8625.33

10373.38

core competencies identified in the ar-

PBTax

1126.29

1743.60

2164.23

2334.86

eas of Communication, Navigation, Iden-

Value of Prod.

5916.62

9201.88

8791.52

11810.85

Exports

186.19

270.51

341.09

436.58

Dividend

228.62

285.42

382.57

407.12

tification, Radar and Utility ment System Design with

ManageEmbedded

Processors and Micro Controllers, Digital Signal Processing, Hybrid Micro Electronics, Field Programmable Gate Arrays &

23

(including Tax) The paid up equity capital is Rs.120.50 Cr (fully owned by Govt of India)

DECEMBER - 2009

“Looking beyond hydrocarbons for green and sustainable energy solutions is priority for ONGC” OIL AND NATURAL GAS CORPORATION LIMITED (ONGC), INCORPORATED ON JUNE 23, 1993, IS A PUBLIC SECTOR PETROLEUM COMPANY RANKED 152 IN FORTUNE GLOBAL 500 AND CONTRIBUTES 77% OF INDIA’S CRUDE OIL PRODUCTION AND 81% OF INDIA’S NATURAL GAS PRODUCTION. IT IS THE HIGHEST PROFIT MAKING CORPORATION IN INDIA.

24

DECEMBER - 2009

P

ost independence, the Govern

footprint across 16 countries having 40

through ONGC’s share in domestic fields

ment of India took a bold ini

projects. Since its first hydrocarbon rev-

under joint ventures,” said Sharma.

tiative towards exploration and

enue from overseas in 2002-03 from

During the year, ONGC, along with

production of oil and gas resources, be-

Vietnam, its production has now risen to

share from overseas assets of OVL and

sides other energy resources in the coun-

just a shade below 9 MMT of O+OEG in

domestic joint ventures, registered 61.23

try. It was a must to support the concep-

2008-09. It is now the second highest

MMT of O+OEG production, which

tualized industrial revolution. ONGC was

oil and gas producer of the country, after

though marginally lower (1%) than last

set up in 1955 under visionary leader-

its parent company, and has truly become

year’s peak production (61.85 MMT),

ship of Pandit Nehru and the then En-

the growth vehicle of ONGC.

was still the second highest-ever produc-

Financials

tion. During the year 2008-09, OVL ac-

ergy Minister Keshav Dev Malviya. It became an independent entity as

quired seven E&P projects in five coun-

“During the last financial year, ONGC

tries; two being producing properties, and

“Thanks to the endeavours of the com-

again set many a milestones. ONGC

registered highest-ever ultimate reserves

pany, India has established itself in the

accreted 284.81 million metric tonnes

(3P) accretion of 135.08 MMT. In the

oil & gas map of the world. Early suc-

(MMT) of in-place volume of hydrocar-

last fiscal, OVL’s share in equity oil and

cesses in Assam and Gujarat were fol-

bons which is the highest in the last two

gas has been 8.78 MMT of O+OEG.

lowed by the landmark discovery of

decades and 56 percent more than the

Bombay High (now known as Mumbai

previous year (182.23 MTOE), with 28

High) in 1973. Discovery of Mumbai

discoveries (Oil:17; Gas:11) spread across

High and subsequent discoveries of huge

the Indian sedimentary basins. ONGC,

oil fields in the Western offshore lead India

along with the group companies, accreted

to reach 70% oil sufficiency in the mid

206.80 MTOE of Ulti-

80s. Till date, ONGC has established 6.6

mate reserves (3P)

billion tonnes of In-place hydrocarbon

during the year,

reserves with more than 350 discoveries

68.90 MTOE

of oil and gas; 6 out of the 7 producing

of

basins owe their discovery to ONGC,” R

were in do-

S Sharma, CMD, ONGC.

mestic

a Commission on 14 August, 1956.

ONGC was restructured as a Public Limited Company under the Company’s Act, 1956 in February 1994. Later in 1997, ONGC was given the Navratna status. In Mar’03, ONGC took over MRPL from the A V Birla Group, thus integrating itself with the downstream sector. It has expanded its downward integration journey by foraying into value multiplier

which

blocks

previous year. Net Profit at Rs. 16,126 Crore however has been 3% lower than the previous year, mainly on account of sharing huge burden of under recoveries of the Oil Marketing Companies (OMCs), to the extent of Rs. 28,225 Crore. ONGC spent a Capex of Rs. 21,820 Crore; more than i.e., E&P. OVL invested

highest in last 18 years); 135.08 in

overseas fields

of Rs. 63,949 Crore; 6% more than the

94% on the core activity

( t h e

MTOE

On financial parameters, the Company also achieved highest-ever Sales Revenue

(the

highest ever); and the rest

projects in power, petrochem, etc.

Rs. 16,105 Crore towards overseas projects during FY’09.

Achievements ”I believe, the highest-ever of reserve accretion is the biggest achievement for ONGC during the last financial

Meanwhile, its 100% owned subsid-

y e a r

iary, ONGC Videsh Ltd. (OVL), started

which

asserting after 2002-03 and scripted many a success stories bagging several overseas oil and gas properties. OVL has made large investments in Vietnam, Sakhalin, Sudan etc. and has recently acquired the Imperial Energy. It has now

25

R S Sharma, CMD, ONGC

DECEMBER - 2009

is the outcome of our intensified explor-

recovery factor of fifteen major fields from

range of variations is really substantial. It

atory efforts. For any E&P company, Re-

28% in 2000-01 to 33% in 2008-09,”

has currently come down to around USD

serve Replacement Ratio (RRR; a ration

said Sharma. With a vision to emerge as

75/bbl after attaining a record high of

of reserve accretion to production) is the

‘Energy Company’, ONGC has been ag-

USD 147/bbl in July last year and then

key benchmark of its performance and

gressively exploring new sources of en-

collapsing to the USD 33 per bbl in

indicator of its business sustainability.

ergy, like Coal Bed Methane (CBM),

Dec’08. However, costs of equipment and

Since last five years we maintained RRR

Underground Coal Gasification (UCG),

services have not come down to that ex-

of more than one; last year being 1.44,

Shale Gas, etc. Meaningful leads have

tent. While ONGC has not been able to

which is a significant achievement for

been established in Coal Bed Methane

get significant price advantage on account

any global E&P company,” said Sharma.

(CBM) exploration and the pilot project

of increase in crude oil prices due to

at Parbatpur, Jharkhand is expected to

sharing of subsidy, ONGC has to procure

Future Plans

commence production soon. “Looking

the services at market rates. While total

Sustaining energy supplies remains

beyond hydrocarbons for green and sus-

increase in cost of equipment and ser-

the first priority for ONGC and that will

tainable energy solutions are yet another

vices is borne by ONGC, only meager part

come about not only from the existing

priority for ONGC. ONGC Energy Centre

of the increase in crude price accrues to

assets, but primarily from exploiting all

has taken up a number of research

ONGC-affecting the profitability and in

the difficult plays like in deepwater, ul-

projects in the area of new and alternate

turn its capacity for future challenging

tra-deepwater etc. ONGC is also pursu-

energy. After commissioning of a 50 MW

E&P projects. Minority investors, which

ing expeditious development of discover-

Wind Power Plant in Gujarat, ONGC is

include Foreign Institutional Investors,

ies.

now planning to set up a Photo Voltaic

have been expressing serious concerns

“The second priority would be to arrest

Solar farm of 10 MW. ONGC is also pur-

on the subsidy sharing mechanism and

the decline in the matured fields which

suing Uranium exploration in association

ONGC’s increasing contribution to meet

have entered into natural decline phase.

with Uranium Corporation of India Lim-

the under-recoveries of OMCs. ONGC

ONGC has systematically been implement-

ited (UCIL),” said Sharma.

would like to have a transparent mecha-

ing Improved Oil Recovery (IOR) and Enhanced Oil Recovery (EOR) projects

Challenges

in 15 major fields since 2001. The IOR/

Says Sharma, “International prices of

EOR schemes have helped in improving

crude oil have turned volatile and the

26

nism of sharing of under-recovery.”

DECEMBER - 2009

27

DECEMBER - 2009

“UCO Bank’s target is to achieve a total business of Rs 2,02,000 crores by March, 2010” UCO BANK, WITH YEARS OF DEDICATED SERVICE TO THE NATION THROUGH ACTIVE FINANCIAL PARTICIPATION IN ALL SEGMENTS OF THE

- AGRICULTURE, INDUSTRY, TRADE & COMMERCE, SERVICE SECTOR, INFRASTRUCTURE SECTOR ETC., IS KEEPING PACE WITH THE CHANGING ENVIRONMENT. WITH A COUNTRYWIDE NETWORK OF 2075

ECONOMY

SERVICE UNITS WHICH INCLUDES SPECIALISED AND COMPUTERISED BRANCHES IN INDIA AND OVERSEAS,

UCO BANK HAS MARCHED INTO THE 21ST CENTURY MATCHED WITH DYNAMISM AND GROWTH.

28

DECEMBER - 2009

W

ith 2/3rd of its branch net

Mobile Banking for its customers.

work in rural and semi-

Two important milestones in the busi-

urban areas across the

ness growth of the Bank were surpass-

country, UCO Bank, which was estab-

ing of Rs. 1,50,000 crore of business by

lished way back in 1943 has been con-

31st March, 2009 and Rs. 1,00,000

tributing substantially to the economic

crore of business by 31st March, 2007.

growth of the Nation. Added to this, the

In the year 2007-08, the Bank has be-

total Priority Sector advances of the Bank

come BASEL- II compliant Bank.

as of September, 2009

stood at

Rs.25058 crores with agricultural advances at Rs.10971 crores and advances to the weaker sections at Rs.6069 crores and MSME at Rs.11931 crores.

Major Strides Like in the past, the bank was always in the forefront to introduce new functionalities. During the year 2006-07, the Bank took major strides to improve its customer service by making use of state-of-the-art technology. In this direction, a significant landmark was reached on 26th June, 2006 when the bank migrated to Core Banking solution at its first branch at Jayanagar, Bangalore. During

“In the year 2007-08 and 2008-09, the Bank took several steps to re-orient itself to the changing banking emerging

B ANK ’ S I NITIAL P UBLIC I SSUE

situations and introduced technology-ori-

2003-04

ented new CBS products and other innovative deposit products such as, UCO

H OLDING

Magic and UCO Premium Plus. The Bank

OF

BANCON

2005-06

also moved ahead with creation of Centralized Processing Cells for retail and

R EPRESENTATI VE O FFICE

other business products to have quick

AT

M A L AY S I A

decisions in clearance of applications. In the year 2008-09, the Bank also intro-

2005-06

duced on-line e-banking Education loans

B A N C A SSURA N CE

and mobile banking,” said S K Goel, CMD, UCO Bank.

2005-06 T HE B ANK

the year 2008-09, the Bank introduced

BASEL- II

BECAME

B ANK

COMPLIANT

2007-08 THE

B ANK

TOOK SE VERAL STEPS TO

RE - ORIENT ITSELF TO THE CHANGING BANKING

EMERGING

SITUATIONS

AND INTRODUCED TECHNOLOGY ORIENTED NE W

CBS

PRODUCTS

AND OTHER INNOVATI VE DEPOSIT PRODUCTS SUCH AS , AND

UCO M AGIC

UCO P REMIUM P LUS .

2007-08 T HE B ANK

AND

2008-09

AL SO INTRODUCED ON -

LINE E - BANKING

E DUCATION

LOANS

2008-09 O PENING

OF

O FFICE

R EPRESENTATIVE IN

C HINA

2007-08

29

DECEMBER - 2009

Achievements

The Bank has also introduced on-line internet and mobile banking during the

achieving all its business targets as laid

DURING THE YEAR 200809, THE BANK STRENGTH-

down in the Statement of Intent on An-

ENED ITS TECHNOLOGY BASE

the Pilot Project for Cheque Truncation

nual Goals for the year 2008-09. The

BY

MARCHING FORWARD

Solution in the National Capital of Delhi.

year 2009 has been the ‘Year of Cus-

WITH OPENING OF NEW

tomer’. “The Bank has seen to it that cus-

BRANCHES UNDER

The Bank had the distinct privilege of

tomer satisfaction level reaches its highest peak focusing on sharp increase in its customer base. Several new initiatives were taken in improving the customer service of the Bank by way of interaction with the customers, focus on quality of customer service, sensitisation of staff on customer service, strengthening the

The Bank has joined the National Fi-

CORE BANKING SOLUTION (CBS) COVERING AROUND 90% OF ITS BUSINESS UNDER CBS. BY THE END OF MARCH, 2009 THE BANK HAD 1036 BRANCHES UNDER CBS. IN ADDITION, THE BANK HAD 414 ATMS.

redressal machinery, conducting sur-

nancial Switch during the year 200809. In the year 2008-09, the Bank had the distinction of achieving the total Priority Sector advances to its Net Adjusted Bank Credit Ratio of 50.69% as on 31.03.2009 as against the National Parameter of 40%. During the year 2008-09, the Bank adopted one more village in West Midnapore District of West Bengal. In

veys on customer satisfaction, offering services for speedy

year. The Bank has also participated in

all, the Bank had 6 villages adopted as

clearance of credit

During the year 2008-09, the Bank

proposals, etc. During the year, the Bank

has opened 108 branches with 54

also launched two new deposits prod-

branches being opened in Rural and

ucts, namely,

Cheques

Semi-urban areas. Of the 108 branches,

In the year 2009-10, the main focus

(UCO Magic Cheque) and UCO Premium

the Bank had opened 14 Specialised

of the Bank is to aim at uniform seg-

Plus which offers free remittance facility

branches which included 5 Assets Man-

mented growth, reduction in fresh gen-

by way of DD/TT/RTGS and Pay Orders

agement branches, 4 Mid Corporate

eration of NPAs, increase in its low cost

etc.,” said Goel.

branches and 5 Service branches.

deposits throughout the year, technology

Pre-funded

of March, 2009.

Future Plans

In addition to the deposit products,

During the year 2008-09, the Bank

initiatives to cover all branches, build-

the Bank has launched a new scheme

strengthened its technology base by

ing asset quality and finally improving

marching forward with opening of

profitability. The Bank has targeted a to-

new branches under Core Bank-

tal business of Rs.2,02,000 crores by

titled UCO Mahajan Rin Mukti Yojana with the objective to free the indebted farmers from the clutches of money-lend-

ing Solution (CBS)

covering

March, 2010. “In the next couple of years, in terms

around 90% of its business

ers. The Bank also launched

under CBS. By the end of

of

another scheme for rehabili-

March, 2009 the Bank had

etc., the Bank is focussed in its approach

tating the manual scaven-

1036 branches under CBS. In

to build up customer commitment with

addition, the Bank had

aiming at major thrust areas such as

gers.

414 ATMs.

growth, business and thrust areas

financing the Mid Corporate and Retail sectors, besides its commitment to National Goals by way of financing under Priority Sector advances. The Bank will also extend its network of branches by way of opening more branches in Rural and Semi-urban areas as well as in under-banked areas,” said Goel.

S K Goel, CMD, UCO Bank

30

DECEMBER - 2009

31

DECEMBER - 2009

“SBI is aiming to become one of the top banks in some countries of the world” WITH 136 OFFICES (BRANCHES, SUBSIDIARIES AND JVS /EXCHANGE COMPANIES) IN 32 COUNTRIES, INCREASED FROM 92 AS ON 31ST MARCH 2009 AND OPENING OF TEN NEW OFFICES ALONG WITH ACQUISITION OF MAJORITY STAKE IN NEPAL SBI BANK WITH 36 OFFICES IN JUNE 2009, THE EVOLUTION OF STATE BANK OF INDIA IS INDEED A STUDY IN ITSELF.

32

DECEMBER - 2009

S

BI’s growth can be traced back

is going from strength to strength. It pres-

cedures, efficient and experienced man-

to the first decade of the 19th

ently has 136 foreign offices in 32 coun-

agement, skilled and dedicated workforce,

century. It began with the es-

tries across the globe. With its various

adherence to business ethics of trust and

tablishment of the Bank of Calcutta in

non banking subsidiaries and joint ven-

transparency, good corporate governance,

Calcutta, in 1806. Three years later, it

tures, SBI is present in every area of the

use of modern techniques of banking

received the Royal charter and was re-

financial spectrum and provides a whole

and good internal controls were the ma-

designed and renamed as the Bank of

range of financial services to its custom-

jor attributes of the Bank,” said Bhatt.

Bengal. Subsequently, the Bank of

ers under one roof.

Revolutionary programmes

Bombay and the Bank of Madras were

“The bank is entering into many new

created by Royal Charters in the years

businesses with strategic tie ups – Pen-

Right in 1937 itself, the head cashiers

1840 and 1843 respectively. These three

sion Funds, General Insurance, Custo-

of Imperial bank were empowered to pay

banks dominated the modern banking

dial Services, Private Equity, Mobile

across the counter cheques up to Rs.

scenario in India, until when they were

Banking, Point of Sale Merchant Acqui-

500, even before entering in the ledger.

amalgamated to form the Imperial Bank

sition, Advisory Services, structured prod-

Thus, the beginning of Teller system was

of India in 1921. Based on the recom-

ucts etc – each one of these initiatives

introduced to serve customers even then

mendations of The All India Rural Credit

having a huge potential for growth,” O P

in the history of the Bank.

Survey Committee, the State Bank of In-

Bhatt, Chairman & Managing director,

dia (SBI) was established on 1st July 1955

State Bank of India.

by an Act of Parliament of India. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).

In 1971, the then Chairman, R. K. Talwar reorganised the Bank based on

The Bank is forging ahead with cut-

market segmentation, which was the first

ting edge technology and innovative new

in the history of modern banking in In-

banking models, to expand its Rural Banking base, looking

dia. The redesign was to help the bank in better identifying characteristic

at the vast untapped po-

needs of different customer

tential in the hinterland

groups and providing appropri-

The State Bank of India was thus born

and proposes to cover

ate services to meet these needs

with a new sense of social purpose aided

100,000 villages by

by introducing, where neces-

by the 480 offices comprising branches,

March 2010. It is the only

sub offices and three Local Head Offices

Indian bank to feature in the

inherited from the Imperial Bank. The

Fortune 500 list.

concept of banking as mere repositories of the community’s savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking sub serving the growing and diversified financial needs of planned economic development.

“Unwavering

sary, new schemes and facilities. The Bank has always been a pioneer in addressing the

Cus-

tomer centric focus,

im-

maculate systems and pro-

Over the years, the State bank together with its Associates not only extended its financial presence in all sectors, but also kept pace with technological developments and all the while keeping the focus on the customer. Today SBI Group, with a network of 16869 branches, including 4700 branches of its associates, under a single Core Banking technology platform, more than 17000 ATMs and other electronic channels such as Internet banking, debit cards, mobile banking, etc.

33

O P Bhatt, Chairman & Managing director, State Bank of India

DECEMBER - 2009

needs of Small Scale and Small Busi-

enhanced the anywhere banking into

ness units and the introduction of Entre-

‘anytime banking’ too.

Diversification “We have created SBI capital markets

preneurship Development programme and

The linking of our overseas branches

Limited in 1986 and SBI Mutual Fund

also doing the equity funding assistance

with the local network made our over-

in 1987 as separate independent

for deserving technical entrepreneurs is

seas customers across the globe also to

organisations with their own executive

notewor thy.

make remittances to any part of the coun-

managements so as to keep our focus

try in a fast manner,” said Bhatt.

on the banking needs of our customers

The

onset

of

the

disintermediation process in the 1980s saw the creation of SBI Capital markets Ltd (by the then Chairman D. N. Ghosh), a merchant banking and leasing subsidiary to meet the emerging demand for broad based financial services form the corporate sector. The other major programme is branch computerisation. The decision taken by 1987 and initially restricted to fewer branches eventually was extended to all the branches and by the end of 2004 all the branches of SBI group was computerised. “The networking of all the branches across the entire nation under a single banking solution known as the Core Banking Solution (CBS) made the concept of the branch banking redundant and made ‘anywhere banking’ a reality. Creation of the largest ATM network and

In the recent period the Home Loan

undisturbed in SBI. This also enabled us

product of SBI with its competitive pric-

to commence these activities with mod-

ing was a trendsetter in the Banking In-

ern technology, recruitment of high skilled

dustry and it also acted as one of the

and specialised people from the market

stimulus to the economy.

and without any of the accumulated prob-

“We are now the number one in Home

lems of the past. The foray into capital

Loan providers in the industry. We have

markets and mutual funds etc enables

created new business groups and sub

us as a Banking conglomerate to meet

groups such as rural banking, Gold bank-

the entire life cycle requirements of our

ing cell etc to serve the customers’ spe-

retail and corporate customers and so stay

cific needs. In the area of financial in-

engaged with them across their require-

clusion, we propose to cover more than

ment spectrum. It ensures that we are

100000 villages by March 2010. The

recognized by our customers as a long

offering of no frills account to rural cus-

term credible player which is key to the

tomers and opening of many more rural

sustainability of any financial conglom-

branches is seen by us as one of the

erate,” said Bhatt.

great opportunities for the future apart from financial inclusion,” said Bhatt.

In addition to the capital market related activities, through SBI Capital Markets, SBI has over time diversified into a

the Introduction of the Internet Banking

34

DECEMBER - 2009

global leader in the loan syndication

went up by Rs. 2, 06, 308 crores from

14.25% under Basel II norms,” said

market towards meeting the funding

the March 2007 levels, registering a

Bhatt.

needs of India’s infrastructure and capi-

CAGR of 26.60% in the said period. Our

tal intensive sectors. In the area of Mu-

market share also went up by 83 bps

tual Funds, SBI Mutual Fund was the

from 15.49 % in 2007 to 16.03% in

SBI’s international offices are spread

first mutual fund in India set up after UTI

March 2009. During the FY 2009 alone,

across all over the globe in all time zones

(which had been set up under UTI Act of

we have grown by 38.08% in Deposits

with the largest presence in Asia followed

1964). Several new and innovative

(against the Other Scheduled Commer-

by America, Europe, Africa and Austra-

schemes, some of which have no rivals

cial Banks’ Growth -17.19%) and in

lia. Along with its subsidiaries, SBI is in

in terms of pedigree and track record,

advances by 29.89% (OSCB Growth rate

the process of opening more than 30 of-

have since been launched. SBI has tied

of 26.32%),” said Bhatt.

fices in the next 12 months in countries

International Presence

up with Société Générale Asset Manage-

In terms of profitability, the absolute

like USA, Canada, Singapore, Bahrain,

ment (SGAM), a leading European Mu-

growth in Operating Profit and Net profit

Qatar, Saudi Arabia, South Africa, UK,

tual Fund, to leverage its further strengths.

during the last two year period is Rs.

Nepal, Bangladesh, Maldives, Mauritius,

Apart from being a major Asset manager,

7915.29 crores and Rs. 4579.93 crores

Indonesia, Brazil etc.

SBI has also launched a product known

respectively over the March 2007 levels,

Its strategy is to meet the increasing

as “Chota SIP” which will enable inves-

representing a CAGR of 33.85% and

needs of Indian corporates internation-

tors to invest as little as Rs. 100/- every

41.72% respectively. “We have more

ally and grow with them. “We are aim-

month and get the benefit of Capital ap-

than doubled our Net Profits in the two

ing to become one of the top banks in

preciation through equity markets, with

year period of FY 2007-09 from Rs.

some Countries of the world. Besides,

the objective of financial inclusion.

4541.31 crores to Rs. 9121.24 crores.

we have identified territories like USA,

“Our efforts to achieve a seamless in-

During the two year period ending 31st

Canada, UK, Singapore, GCC, South Af-

teraction between various arms of the SBI

March 2009, our Return on Assets went

rica, Sri Lanka, Nepal, Maldives, and

Group and to better serve the clients’ dy-

up by 20 bps to 1.04% and our Cost to

Indonesia for comprehensive retail roll out

namic requirements, have been the driver

Income ratio declined by 756 bps to

in the next 12 months,” said Bhatt.

for all our other diversifications, be they

46.62%. While there has been a decline

in mutual funds, insurance, credit cards,

in our Gross NPA levels to 2.84% in FY

private equity, etc.,” said Bhatt.

2009 from FY 2007 level of 2.92%, there

The Subsidiary Banks, which were

is a marginal increase in Net NPA level

state associated banks of the erstwhile

to 1.76% in FY 2009, compared to

princely states, were the creation of the

SBI has 13290 ATMS (17437 for the

1.56% in FY 2007. The ROE is stable at

State Bank of India (Subsidiary Banks)

Group) and 12169 Branches (16869 for

15.73% despite the accretion in capital

Act passed in 1959. In fact one of the

the Group) as at the end of November

by way of rights issue. The Capital ad-

significant recommendations of the All

2009. “We plan to have 25000 ATMs by

equacy ratio as on 31st March 2009 is

India Rural Credit Survey Committee re-

Current presence

the end of current financial year. Around 1000 branches are to be opened in FY10. Out of these two-thirds are to be opened in the rural and semi-urban areas,” said Bhatt.

Financials The deposits of the Bank have increased by Rs. 3,06,552 crores as on 31st March 2009 from the March 2007 levels, representing a CAGR of 30.53%. “Our market share in deposits in the same two-year period has gone up from 14.81% to 17.72 %. Our Advances level

35

SBI’S

INTERNATIONAL OFFICES

ARE SPREAD ACROSS ALL OVER THE GLOBE IN ALL TIME ZONES WITH THE LARGEST PRESENCE IN

ASIA FOLLOWED BY AMERICA, EUROPE, AFRICA AND AUSTRALIA. ALONG WITH ITS SUBSIDIARIES, SBI IS IN THE PROCESS OF OPENING MORE THAN 30 OFFICES IN THE NEXT 12 MONTHS IN COUNTRIES LIKE USA, UK, CANADA, SAUDI ARABIA, SOUTH AFRICA, ETC.

Subsidiaries

port of 1954 was that State Bank of India should be established by statutory amalgamation of the Imperial Bank of India and 10 major State associated banks, of which 7 (including State Bank of Saurashtra) became the Subsidiary Banks of the State Bank of India. “The Subsidiary Banks have grown considerably over a period of time, some of them more than others but now a stage has come where we need to reorganize the Group through amalgamations within the Group. The technology platform is the same across the main bank DECEMBER - 2009

and all the Subsidiary banks. Similarly,

Channel Integration / White labelled

Investment, Credit, Risk policies as also

“WITHIN THE COUNTRY, WE ARE

HR policies are broadly uniform across

NOT LOOKING AT ANY OPTIONS

the Group. It is in this context that we

OF BUYING ANY BANK BUT ONLY

pertise (Risk Management Solutions /

have said that consolidation within SBI

ORGANIC GROWTH.

Education in Banking Sector / Man-

Group needs to be looked at differently

MARY OBJECTIVE WOULD BE TO

agement consulting for the Banking

and is not comparable with mergers of

MONITOR AND INCREASE OUR

Sector).

say 2 banks with divergent culture/busi-

LEADERSHIP POSITION IN

ness profiles. In addition, it is also felt

EXISTING BUSINESSES.

that country like ours should have some big banks to enable to service the funding and other needs of large Indian Corporates, who are expanding both in

OUR PRI-

WE

HAVE

ALSO IDENTIFIED PAYMENTS AS ONE OF THE GROWTH AREAS FOR THE

BANK.”

The bank has initiated the process of subsidiary bank i.e. State Bank of Saurashtra with itself in Aug 2008. In the current year, the acquisition of State Bank of Indore has been taken up and is currently under process. While the consolidation of Subsidiary banks with SBI is desired over a medium term, meanwhile this would not come in the way of their growth/expansion plans.

Future Growth “Within the country, we are not look-

♦ Business created out of Domain Ex-

Challenges The Bank has faced many challenges since its days as Imperial Bank. However, the Bank has been able to meet them and emerge stronger with its con-

India and internationally,” said Bhatt. consolidation by merging the smallest

payment services)

tinued focus on the customer. rural and semi urban areas have an increasing need for financial products and services and this presents an opportunity and keeping this view we are scaling up our presence in these areas,” said Bhatt.

Future banking spectrum SBI is looking at various areas simultaneously. Some of the major areas and the activities therein are: Private Banking ♦ Private wealth Management ♦ Tax advisory

The toughest challenge was perhaps in the early 90s, where the economic reforms and liberalisation embarked on by India in the nineties opened up several sectors to competition. Starting with the advantage of strong capitalisation, modern technology and outfits without any accumulated problems of the past, private sector banks began to post serious competition for PSUs like us. SBI met these challenges by the following measures: ♦ Restructuring of the organisation to

♦ Alternative Investments

create specific business groups – Cor-

but only organic growth. Our primary

♦ Customised products

porate Banking and national banking

objective would be to monitor and increase

Corporate Banking

with sub groups

our leadership position in existing busi-

Specialised corporate banking solutions

♦ Aggressive IT policy to meet the com-

nesses. We have also identified payments

to meet their various requirements, both

petition and to improve efficiency in

as one of the growth areas for the Bank.

new and enhancements.

internal operations and to meet the ex-

The total market in payment area is esti-

Asset management

ing at any options of buying any bank

mated to be approx. Rs. 1, 80,000 crores (revenues) by 2015. We are in the process of creating appropriate administrative, marketing structures in the Bank

♦ Portfolio Management ♦ Management of private pools of funds through setting up AMCs

pectations of the customers. Several initiatives

like

full

branch

computerisation, ATMs etc were taken ♦ A massive Business Processing Reengineering project was undertaken

for sharper focus on payments. The re-

♦ Managing third party asset pools

under which Strategic Business Units

quired technology infrastructure to

♦ Setting up sector focussed private eq-

were set up, administrative structure

handle the large volume of transactions

uity funds.

was de-centralised and non-customer

is also being created,” said Bhatt.

Technology Banking

facing back-office activities were

Increasing fee income, cutting transaction costs with the use of technology, increasing and strengthening alternative channels are other areas of focus for the bank. “We are also of the view that our

36

♦ Card processing (POS network / Acquiring Process) ♦ Mobile Banking (Mobile wallet) ♦ Payment Systems (Payment HUB /

centralised by setting up 500 Centralised Processing Centres. ♦ Along with these measures, in order to create a new sustainable state of organisational health and business perDECEMBER - 2009

formance, a Total Transformation

Corporate Education, and IIM,

in every aspect of the banking such as

exercise was carried out from 2006

Ahmedabad,” said Bhatt.

the services provided to its constituents,

onwards. The business groups were critically looked at and wherever war-

Future challenges

better house keeping, better management of assets & liabilities, risk management,

ranted, the same were modified or /

With the growth of the Indian economy

marketing etc and more and more tech-

and new business groups were cre-

in the coming years, the growing inte-

nology would be used in giving multi-

ated. Agriculture and Rural business

gration of economies and the markets

tude of financial products to the custom-

opportunities were focussed. Several

around the world leading to both widen-

ers. Managing the technology, its

new departments, marketing outfits etc

ing of the market and the increased com-

upgradation and integration and its asso-

were created. The Core banking Solu-

petition, there will be increased need for

ciated risks management would be an-

tion was tuned up and all glitches were

more financial products and services both

other critical area. The composition of

removed. One of the major challenges

in numbers and sophistication. “The com-

skills required to perform in the new en-

was to reorient the mindset to the cur-

plexity of the operations and the products

vironment would undergo many changes

rent imperatives of the business. “In

and services with extensive and inte-

and management of human resources

this connection, we have rolled out one

grated use of technology is likely to in-

in the areas of skill up gradation, recruit-

of the largest ever ‘Change Manage-

crease further. This would be adding

ing skilled and specialized people from

ment / Internal Communication

depth and dimension to the banking risks.

the market and integrating them with the

programme’, named ‘Parivartan’

As the risks are correlated, exposure to

existing work force and culture would be

(meaning ‘Transformation’) during

one risk may lead to another risk, there-

a challenging area in the days to come.

2007-08 and 2008-09 across the

fore management of risks in a proactive,

“With the growth of the international

Bank. We are following up this with

efficient & integrated manner will be the

business spread over many countries and

the launch of ‘Citizen SBI’, a long term

strength and as well a challenge in the

different regulatory environment, consoli-

HR Intervention, which envisages

future,” said Bhatt.

dation of the same would assume greater

enlightment of one’s inner self and

Internet, wireless technology and glo-

importance. Stronger and stricter regu-

thereby finding joy in doing the duties

bal straight-through processing have cre-

latory environment and the additional

and responsibilities in the Bank. A lead-

ated a paradigm shift in the banking in-

capital requirements are some more as-

ership pipeline initiative was also

dustry. Technology is now fully integrated

pects of the future,” said Bhatt.

launched in consultation with Duke

37

DECEMBER - 2009

“PFC is a listed company with a current market cap of more than Rs.30,000 crores��� POWER FINANCE CORPORATION LIMITED (PFC) IS A LEADING POWER SECTOR PUBLIC FINANCIAL INSTITUTION AND A NON-BANKING FINANCIAL COMPANY, PROVIDING FUND AND NON FUND BASED SUPPORT FOR THE DEVELOPMENT OF THE INDIAN POWER SECTOR. PFC WAS INCORPORATED ON JULY 16, 1986, UNDER THE COMPANIES ACT, 1956, AS PART OF GOVERNMENT OF INDIA’S INITIATIVE TO ENHANCE FUNDING OF POWER PROJECTS IN INDIA. OCCUPYING A KEY POSITION IN THE GOVERNMENT OF INDIA’S PLAN FOR THE POWER SECTOR, PFC HAS BEEN PERFORMING A MAJOR ROLE IN CHANNELISING INVESTMENT INTO THE POWER SECTOR AND IS FUNCTIONING AS A DEDICATED AGENCY FOR ITS DEVELOPMENT.

38

DECEMBER - 2009

P

FC is a Schedule-A, Navratna

pany – Power Enabler Award 2008” in-

Projects’ (UMPPPs) has identified 14

CPSE in the Financial Services

stituted by “KPMG-Infrastructure Today”

UMPPs out of which four projects of

Sector, under the administra-

on 10th December, 2008. On behalf of

4000 MW each at Mundra in Gujarat

tive control of the Ministry of Power, with

Power Finance Corporation, Satnam

State, Sasan in Madhya Pradesh,

89.78% shareholding of the Government

Singh received this prestigious award

Krishnapatnam in Andhra Pradesh and

of India. The Authorized capital and Paid-

from Dr. Montek Singh Ahluwalia, Dy.

Tilaiya in Jharkhand State have already

up capital are Rs.2000 crore and

Chairman, Planning Commission, Govt.

been awarded to the successful bid-

Rs.1147.77 crore respectively. “PFC is a

of India.

ders. RFQs are likely to be issued in

listed company with a current market cap

“Inspite of the overall downward trend

FY10 for three UMPPs located at

of more than Rs.30,000 crores and hav-

in the global and Indian economy due

Cheyyur in Tamil Nadu, Bedabahal in

ing a total asset size of more than

global financial crisis, PFC had shown a

Orissa and Surguja in Chhattisgarh.

Rs.74,000 crores as of 30th Sept, 2009.

growth of 50% in its disbursements dur-

♦ Established a Consortium Lending

Our profit stood at Rs.1,970 crores for

ing half-year ended September, 2008

Group (CLG) to give fillip to Consor-

FY09 and profit for the Half year of FY

against 15% registered last year

tium Lending Operations through the

10 stood at Rs. 1,193 crores,” said

i.e.FY08,” said Singh.

Power Lenders’ Club (PLC) which has

Satnam Singh, Chairman and Managing Director, PFC. During the last 23 years of existence,

21 members including LIC, HUDCO

The business performance of PFC

and 18 Indian Banks.

thereafter is reflected in the Performance

♦ PFC has created a new business by

Highlights FY 09 Vs 08 as below:

PFC has extended financial assistance in terms of loan sanctions of Rs. 2,60,585

(Rs. in crores)

Crores and loan disbursement of Rs.

Parameter

2008-09

Growth at a glance

Disbursements 16211

21054

Up 30 %

Gross Income

5040

6584

Up 31 %

of various schemes such as AG&SP,

Net Profit (PAT) 1207

1970

Up 63 %

DRUM, APDRP, UMPPs and recently R-

Net Worth

10790

Up 24 %

APDRP. PFC has also offered consultancy

Resource Mob. 15972

21483

Up 35 %

Loan Assets

64429

Up 25 %

99.92%

Up 0.81%

121,982 Crores. It has also facilitated reforms / development of power sector through the process of implementation

services related to power sector covering 36 clients in over 21 States. “PFC’s priorities include not only accelerating the pace of existing business of funding generation, transmission and distribution projects, but also to exploit the new opportunities available in the sector. With this philosophy, PFC has around half-a-dozen strategic business units, focusing on different business segments – conventional lending to generation, transmission and distribution projects; consortium lending to generation, transmission and distribution projects; lending to power equipment manufacturers and fuel producers and suppliers; renewable energy and CDM, and equity funding,” said Singh.

Performance PFC received the “Most Admired Com-

39

2007-08

8688

51568

Recovery Rate 99.11%

Recent Developments In the last one year PFC has taken up several initiatives as listed below: ♦ PFC as a nodal agency, designated by Govt. of India, has started implementing Restructured-APDRP (R-APDRP)

creating Equity Investment Group (EIG) for equity investment in Power Sector. The group will also handle the recently launched new financial product of PFC Loan towards Promoters’ Equity against security of commercial projects.

with focus on establishment of base

♦ Facilitation Group has been established

line data and fixation of accountability,

to explore the opportunities of expand-

and reduction of AT&C losses through

ing PFC’s business in the areas of de-

strengthening & up-gradation of Sub-

velopment of fuel supply sources (coal,

transmission and Distribution network

Gas etc.) & its distribution (rail net-

and adoption of Information Technol-

work, pipelines, ports, jetties etc.),

ogy during XI Plan. The programme

Equipment Manufacturing for power

involves a total outlay of Rs. 51,577

sector, Nuclear power projects and

crore.

power projects in Bhutan, Nepal etc.

♦ PFC, the Nodal Agency for facilitating

♦PFC launched a wholly-owned

development of ‘Ultra Mega Power

Consultancy subsidiary namely, “PFC

DECEMBER - 2009

Consulting Ltd.” (PFCCL) to provide

“Transmission Scheme for Enabling

NHPC and TCS jointly promoted ‘Na-

consultancy services to the Power Sec-

Import of NER / ER Surplus Power by

tional Power Exchange Ltd.’, in which

tor. PFCCL commenced its business on

NR”, comprising of Bongaigaon-

PFC shall hold 16.66% of the share

25 April 2008 with a mission “to be-

Siliguri, 400 kv D/C quad moose &

capital.

come the leading End to End consult-

Purnea-Biharsharif, 400 kv D/C quad

♦ PFC entered into an MoU with Gujarat

ing solution in Power Sector for its sus-

moose transmission lines of approxi-

Energy Development Agency for devel-

tainable development”.

mately 500 km.

opment of business in Renewable En-

The services offered by PFCCL are

Further, Ministry of Power has ap-

ergy Generation Projects in the State.

broadly classified as under:

pointed PFC Consulting Ltd. as the bid

♦ PFC is the Nodal Agency for assisting

♦ Reform, Restructuring and Regulatory

process coordinator for the following two

State Power Utilities in preparation of

Independent Transmission Projects:-

CDM Projects for R&M of old thermal

♦ System Strengthening Common for

and Hydro generation plants.

th

aspects in Power Sector ♦ Procurement of Power by Distribution Licensees ♦ Govt. of India initiatives like UMPPs, ITPs ♦ Coal Block JVs and selection of devel-

Western Region & Northern Region ♦ System Strengthening for Western ♦ Power Exchange India Ltd. (PXIL) was promoted by PFC along with

Projects

NSE & NCDEX. In ad-

EPC Contractor ♦ Capacity Building and Human Resource Development ♦ Renewable and Non Conventional

company in terms of products, services and finances based on MoU signed with

Region

opers for blocks and linked Power ♦ Project Advisory including Selection of

“Regarding achieving targets of the

Government of India (GoI) on year to year

dition to equity

basis, PFC so far has got excellent rating from GoI consistently except FY2004-05. PFC has also re-

stake PFC has also

ceived

become

the

professional

MoU excel-

Clearing Mem-

l e n c e

ber (PCM) to

award

Energy Schemes

PXIL and is pro-

f r o m

PFCCL’s operations are spread

viding credit facil-

over:

ity for trade of

♦ Consulting Assignments from State

power to utilities /

Prime Minister recently for its

Power Utilities, Licensees / IPPs, State

companies

who

performance during

Govt., PSUs & SERC’s

agree to avail PCM

FY07 and FY08,” said

service from PFC.

Singh.

♦ Ultra Mega Power Projects (UMPPs) ♦ Independent Transmission Projects

♦ PFC, NTPC,

(ITPs) - Out of 64 assignments worth of about Rs.120 Crore (apart from UMPPs and ITPs), 47 assignments have already been completed and 17 assignments are in various stages of implementation. ♦ PFC, the nodal agency nominated by Ministry of Power, Government of India, through its wholly owned SPV – “East-North Inter Connection Company Limited” has successfully completed the bid process for selection of a Transmission Service Provider, the First Independent Transmission Project i.e.

40

Satnam Singh, Chairman and Managing Director, PFC

DECEMBER - 2009

41

DECEMBER - 2009

“Corporation Bank’s total business is targeted to reach Rs 1,50,000 crore by March, 2010” CORPORATION BANK’S PURSUIT OF VARIOUS NATIONAL PRIORITIES HAS MADE IT ONE OF THE FRONT-RUNNERS IN NATION BUILDING. OVER THE YEARS, THE BANK HAS BEEN ABLE TO PARTICIPATE IN NATION BUILDING BY EMPOWERING THE RURAL AND URBAN POPULATION ALIKE AND HAS TAKEN SEVERAL INITIATIVES FOR THE WELFARE OF THE SOCIETY AT LARGE.

42

DECEMBER - 2009

S

panning over 100 years ser

where normal banking facilities are not

vice, Corporation Bank has

available to the rural folk,” said J M Garg,

grown in size and stature with

Chairman & Managing Director, Corpo-

2118 service outlets (1080 branches & 1038 ATMs) spread across the length and breadth of the country. The Bank has also

ration Bank.

Major Achievements

recently marked its international presence

Corporation bank has done exceedingly

by opening Representative Offices in

well in the last financial year ending

Dubai and Hong Kong.

March 2009. The bank has doubled its

The bank has set high standards in

size in the last 3 years and its total busi-

several thrust areas, including farming

ness reached Rs.1,22,496 crore by

sector, MSMEs, infrastructure sector, edu-

Mar ’09;

cation, professionals, traders and general

Rs.1,33,456 crore by Sep’09 with a de-

public at large. It is to the Bank’s credit

posit of Rs.80,888 crore and advances

that its societal commitments have in no

level of Rs.52,568 crore. As on March

way come in the way of maintaining pru-

2009, the gross profit of the bank reached

dent operational standards.

Rs.1,796.62 crore with a growth of

“Corporation Bank’s commitment as a responsible bank is well reflected in its rural uplift programmes and its priority sector operations. Corporation Bank was

it

fur ther

improved

to

43.60%. The Bank has also posted its

C ORPORATION B ANK

WA S ESTAB -

LISHED WITH AN INITIAL CAPITAL OF JUST

R S .5000/1906

T HE

FIRST BRANCH OF THE

WAS OPENED IN

B ANK

K UNDAPUR

highest ever net profit of Rs.892.77 crore

1923

for the financial year 2008-09 compared to Rs.734.99 crore in the previous year.

the first Public Sector Bank, which in-

“The Bank has also improved its deliv-

troduced the branchless banking concept

ery channels to reach over 2000 service

in the remote corners of the country

outlets (branches & ATMs). The Bank has

T HE B ANK

WAS INCLUDED IN THE

R ESERVE

SECOND SCHEDULE OF

B ANK

OF

I NDIA A CT , 1934 1937

T HE B ANK ’ S

NAME CHANGED FROM

C ANARA B ANKING C ORPORATION (U DIPI ) L TD .,

TO

“C ANARA

B ANKING C ORPORATION L TD . 1939 T HE B ANK

CELEBRATED ITS

G OLDEN

JUBILEE 1956 T HE B ANK

WAS NATIONALIZED AND

ITS NAME CHANGED TO TION

C ORPORA -

B ANK

1980 B ANK

CROSSED

R S .1000

CRORE -

DEPOSIT MARK

1985

43

DECEMBER - 2009

THE

BANK HAS DOUBLED ITS SIZE

IN THE LAST

3 YEARS AND ITS

TOTAL BUSINESS REACHED

RS.1,22,496 CRORE BY MAR’09; IT FURTHER IMPROVED TO RS.1,33,456 CRORE BY SEP’09 WITH A DEPOSIT OF RS.80,888 CRORE AND ADVANCES LEVEL OF RS.52,568 CRORE. AS ON MARCH 2009, THE GROSS PROFIT OF THE BANK

RS.1,796.62 CRORE WITH A GROWTH OF 43.60%. THE BANK HAS ALSO POSTED ITS REACHED

normal banking facilities are not available to the rural folk,” said Garg.

Future Plans The bank has already doubled in size in less than 3 years and it plans to continue at the same brisk pace in the coming years. “The bank’s total business has reached Rs. 1,33,456 crore as on September 2009 and is targeted to reach Rs.1,50,000 crore by March 2010. The bank plans to be among the larger midsized banks during the next five years. Customer centric and IT oriented products/services are areas, where the Bank

HIGHEST EVER NET PROFIT OF

is focusing on the most. Besides, we shall

RS.892.77 CRORE FOR THE FINANCIAL YEAR 2008-09.

continue to focus on the highly potent

T HE B ANK

BECAME THE

P UBLIC S ECTOR B ANK

S ECOND IN THE

COUNTRY TO ENTER CAPITAL MARKE T , THE

IPO

OF WHICH WA S

OVER - SUBSCRIBED BY

retail, rural, MSMEs and infrastructure

13

TIMES .

1997

sectors for enlarging our business portfoalso forayed into international markets by

lio,” said Garg.

opening Representative offices in Dubai & Hong Kong. Moreover, with advanced use of technology like net banking, SMS

T HE B ANK

HA S MANY

TO ITS CREDIT MENT

“ FIRSTS ”

- C ASH M ANAGE -

S ERVICES , G OLD B ANKING ,

M -C OMMERCE ,

“O NLINE ” E DUCATIONAL

banking, paper less fund transfer & In-

APPROVAL S

come Tax payment through ATMs,

LOANS ,

Credit, Debit & travel card services

ANCE AND MORE RECENTLY , ITS

etc., the Bank has witnessed un-

PIONEERING EFFORTS TO TAKE THE

precedented changes, all of which have resulted in heightened customer convenience. The Bank has also initiated the branchless banking concept through smart cards & other hand-held devices in the remote and far-flung corners of the country where

FOR

100% CBS C OMPLI -

TECHNOLOGY TO THE RURAL MA SSES IN REMOTEST VILL AGES THROUGH LOW - COST BRANCHLESS

- B USINESS C ORRE -

BANKING

SPONDENT MODEL

-

B ANK ’ S

SYMBOLISE

ALL OF WHICH UNSWERVING

COMMITMENT TO ITS CUSTOMERS TO

PROV IDE

CON VENIENCE

B A NK IN G .

T HE B ANK

MARKED ITS INTERNA -

TIONAL PRESENCE BY OPENING

R EPRESENTATIVE O FFICE

AT

D UBAI

2008 HONGKONG 2009 J M Garg, Chairman & Managing Director, Corporation Bank.

44

DECEMBER - 2009

45

DECEMBER - 2009

“Coal India is the largest coal producing company in the country and in the world as well” THE INCEPTION OF COAL INDIA LIMITED (CIL) IN 1975 WAS THAT OF A BORN-SICK MINING INFANT AND YET ITS COMMENDABLE PERFORMANCE, IN ITS INITIAL YEARS AGAINST DIFFICULT ODDS, IS IN ITSELF A SUCCESS STORY. DURING THE INITIAL YEARS THE INVESTMENT WAS NOT FORTHCOMING DUE TO INADEQUATE RETURN AND RETURNS WERE INADEQUATE DUE TO NON-REMUNERATIVE PRICE OF COAL.

FINANCIAL VIABILITY WAS A

SECONDARY CONSIDERATION IN PROJECT FORMULATION AND APPROVALS.

ALL THESE FACTORS CUMULATIVELY MADE CIL A WEAKLING. HOWEVER, AGAINST ALL THESE ODDS CIL GREW AT 5.3% COMMENSURATE TO GDP, FOR THE 16 YEARS SINCE NATIONALIZATION.

46

DECEMBER - 2009

T

he last two decades have wit

enabling the country to achieve the de-

74% of Indian coal market share CIL plays

nessed a complete transforma

sired rate of GDP growth and also in

a key role in “India Growth Story” and

tion of Coal India Limited. Till

making the end users of coal competi-

makes India incorporated globally com-

1991 Coal India incurred substantial

tive globally as CIL supplies coal at a deep

petitive. Coal India is in a league of its

losses for historical reasons. It was wholly

discount to global prices at the same time

own and has an unmatched strategic

dependent on budgetary support from the

insulating the end users from volatility of

relevance in India’s energy canvas. Any

Government for financing investment and

international prices of coal.

competition to CIL comes only from

growth. The aggregate losses incurred

“Coal India is the largest coal produc-

Singareni Collieries Company Ltd. (SCCL)

till March 1991 were around Rs.2500

ing company in the country and in the

(also a government company) in the do-

crores equivalent to 40% of the paid up

world as well. Even by your own reckon-

mestic sector and from the overseas mar-

equity. Besides, it had staggering over-

ing if Coal India produces 85% of coal it

ket in the form of imports from China,

due arrears of debt service payment to

has to be the largest coal producer. In-

Australia, South Africa, Indonesia etc.,”

Government exceeding Rs.2200 crores.

dian energy sector is predominantly coal

said Partha S Bhattacharya, Chairman

Since 1991-92 the Government phased

driven with coal meeting 55% of the

and Managing Director, CIL.

out budgetary support progressively. The

country’s primary commercial energy re-

company management initiated a series

quirements. Against this backdrop pro-

Recent achievements

of measures to become financially self-

ducing 82% of country’s overall coal

Coal India has identified 134 coal

reliant. Since 1991-92 the company was

output, Coal India alone meets 42% of

projects for an ultimate capacity of 308.94

placed on a consistent up trend in profit.

country’s primary commercial energy re-

Million Tonnes per Year (Mty) to be taken

It practiced default free debt service pay-

quirement, compared to 39% contributed

up during XI Plan period with an invest-

ment to Government. The overdue li-

by oil and gas sectors combined to-

abilities were restructured in 1996. This

gether. CIL supplies this 42% of

enabled the company to access a time

prime commercial energy at

ment of Rs 26,006.68 Crores. Of these 134 projects, 34

are

ground

under(UG)

slice of investment of US $ 1.06 billion

a deep discount (50% to

from the World Bank and Japanese Bank

60%) to international price

projects and

for International Co-operation in 1998.

even after global economic

100 opencast

As a consequence 24, high yielding fi-

meltdown, on a like to like

(OC) with in-

nancially viable opencast projects were

basis i.e. after adjusting for

vestments of

implemented with world class equipment.

quality variations. So CIL

Rs 4665.47

The capital restructuring coupled with

insulates Indian coal con-

Crores and Rs

implementation of these projects enabled

sumers against price volatil-

21,341.21

Coal India to emerge as a highly profit-

ity. Further CIL Virtually em-

Crores respec-

able tax and dividend paying PSE in the

powers the Power Utilities of

tively. While

country. The Balance Sheet improved

the country by feeding coal

considerably and the company became

to 76 out of 78 Ther-

virtually debt free by the terminal year of

mal Power Sta-

10th Plan i.e. 2006-07. The need for

tions. Com-

faster augmentation of coal production

manding

coupled with the financial consolidation achieved by the company led the Government to consider higher empowerment. The company along with 5 of its subsidiaries became Mini Ratna in 2007 and in less than 2 years was upgraded with a Navratna status in October 2008. Over this period the role of the company has assumed critical significance both in

47

Partha S Bhattacharya, Chairman and Managing Director, CIL

DECEMBER - 2009

the capacity of UG projects is about 23.39

♦ CIL entered into JV with ONGC for ex-

tion plant. The two companies will form

Mty the same in case of OC projects is

traction of Coal Bed Methane (CBM)

a joint Working Group to evaluate de-

285.55 Mty.

in two blocks (Jharia & Raniganj) and

tailed feasibility report prepared by GAIL

Underground Coal gasification (UCG)

to evaluate the viability of the project

project in one block.

in terms of techno-economic feasibil-

About 100 projects (of the 134) are likely to contribute to the tune of 123.21

ity for the project.

MTs during the terminal year of XI Plan.

♦ ‘India CMM/CBM Clearing House’ - a

UG projects are expected to chip in about

joint effort of Govt. of India & US Govt.

♦ Recently Bharat Coking Coal Limited

5.78 MTs, with OC projects shouldering

- established at Central Mine Planning

(BCCL) the Dhanbad based subsidiary

117.43 MTs.

and Design Institute Limited (CMPDIL)

of Coal India Limited (CIL) entered into

CIL has conceived many long term

Ranchi – a mine design and consulta-

an equipment and service agreement

collaborative partnerships to enhance its

tion arm of Coal India Limited (CIL).

with Chinese based Zhengzhou Coal

strategic advantages. CIL has initiated

The clearing house would provide

Mining Machinery (Group) Company

actions for launching Joint Venture Com-

thrust to development of Coal Bed Meth-

Limited (ZMJ) for development of Pow-

panies (JVC) and entering into strategic

ane/Coal Mine Methane in India as part

ered Support Longwall at Moonidih Un-

alliances (SA) with different organisations

of CIL’s commitment to make use of

derground project of BCCL. This would

in the areas of power generation, min-

coal in an environment friendly man-

ensure production of 3.5 million tonne

ing activities overseas and non-conven-

ner as well as pursuing clean coal tech-

of coking coal in 5 years.

tional energy sources such as under

nologies in right stride.

“Our country is not endowed with large

ground coal gasification, coal liquefac-

♦ Coal India Limited and GAIL (India)

reserves of coking coal, essential for steel

tion and commercial extraction of coal-

Limited have entered into a Memoran-

making. So, import of this variety of coal

bed methane.

dum of Understanding (MoU) for jointly

is necessary to meet the domestic de-

♦ An MoU has been signed with NTPC

setting up of a surface coal gasifica-

mand. We have formed International Coal

to form a JV company to undertake coal

tion project for production of synthesis

Ventures (ICVL) with four other PSUs

mining and power generation as inte-

gas, to be used as feedstock, for fertil-

SAIL, RINL, NTPC and NMDC to acquire

grated operations. The equity partici-

izer production. The project would

predominantly coking coal mines in

pation of CIL and NTPC in this com-

entail an investment of around Rs.2400

Mozambique, Canada and Australia. To

pany is proposed to be 50:50.

crore for setting up the coal gasifica-

supplement scarcely available indigenous

48

DECEMBER - 2009

coking coal and low ash high calorific

cial basis such as extraction of methane

thermal coal from abroad, ‘Coal Videsh’

gas from coal beds – Coal Bed Methane

a Department of Coal India was formed

(CBM); coal mines – Coal Mine Meth-

to take up equity stakes in working mines

ane (CMM); abandoned mines (AMM)

or green field projects on production shar-

and ventilation air method (VAM) has

ing basis,” said Bhattacharya.

been the recent forays of Coal India. Re-

blocks, covering around 224 Sq.Kms, are

“With limited scope of product differ-

likely to have both coking and non-cok-

entiation, competitiveness of generic

ing coal, which can be used in the do-

products like coal primarily center around

mestic power and steel plants. The over-

quality and price. To make the product

RECENTLY, COAL INDIA HAS BEEN ALLOCATED BLOCKS A-1 AND A-2 COAL FIELDS AT MOATIZE (IN TETE PROVINCE) OF MOZAMBIQUE. THE BLOCKS, COVERING AROUND 224 SQ.KMS, ARE LIKELY TO HAVE BOTH COKING AND NON-COKING COAL, WHICH CAN BE USED IN

seas mine acquisitions will help add

globally competitive qualitatively, bring-

THE DOMESTIC POWER AND

value to supplies in overcoming shortage

ing international standard consistency in

STEEL PLANTS.

of coking coal.

quality, is one of the thrust areas of CIL.

MINE ACQUISITIONS WILL HELP

Participation of organizations with requi-

ADD VALUE TO SUPPLIES IN

site core competence in coal washing

OVERCOMING SHORTAGE OF

Coal India is one of the top profit mak-

practices is sought for creating coal

COKING COAL.

ing, tax and dividend paying State Owned

beneficiation facilities on Build-Operate-

Enterprises of India. Financially strong,

Maintain (BOM) basis by global bidding.

Coal India is practically a debt free com-

In the first phase CIL has identified to set

pany. Coal India during 2008-09 Grossed

up 19 Washeries by 2011-12 having a

Sales of Rs.45,797 Crores and the Net

total washing capacity of 105.6 MTY pri-

Worth of the company stands at Rs,

marily for non-coking coal,” said

19,165 Crores. Pre-tax profit during

Bhattacharya.

Recently, Coal India has been allocated

covery of energy from coal through gas-

Blocks A-1 and A-2 coal fields at Moatize

ification, both underground and surface

(in Tete Province) of Mozambique. The

is also being plotted out.

Financials

THE

OVERSEAS

2008-09 was Rs.14,093 Crores which tapered down to Rs.5,744 Crores after accounting for increase in pay and wage revision of staggering Rs.8,349 Crores retrospectively from July ’06 for workmen and January ’07 for officers. “Compounded Annualized Growth Rate (CAGR) of Net Sales and Net Worth over previous five years is 12.11% and 17.54% respectively. CIL has a cash and Bank Balance of Rs.29,695 Crores and Capital Assets (Gross block) of Rs. 33,256 Crores. CRISIL, an Indian affiliate of ‘Standards and Poor’ (S&P) has affirmed its long term rating of AAA, and short term rating of P1+ for CIL, the highest rating awarded

by

the

agency,”

said

Bhattacharya.

Forays Exploring the opportunities for infusion of Clean Coal Technologies in a commer-

49

DECEMBER - 2009

“LIC has taken life insurance from the classes to the masses” THE LIFE INSURANCE CORPORATION (LIC) EMBARKED UPON ITS JOURNEY OF “SERVICE TO THE NATION” ON THE 1ST OF SEPTEMBER, 1956. THE OBJECTIVE WAS TO SPREAD INSURANCE TO THE MASSES, MOBILIZE PEOPLE’S SAVINGS AND INCULCATE A HABIT OF THRIFT AMONG THE PEOPLE AND HELP THEM PROVIDE FOR THE RAINY DAY. SINCE THEN, THE MOMENTOUS JOURNEY CONTINUES IN THE TRUE SPIRIT OF SERVING THE PEOPLE AND THE NATION AS A WHOLE.

50

DECEMBER - 2009

F

rom a humble beginning with

to reach all insurable people and be the

by its primary purpose to secure and el-

a Life fund of Rs.380.61 crores

trusted custodians of the funds thus

evate the standard of life. Depending on

in September 1956, LIC’s cor-

raised, in a manner that meets the aspi-

the need of the customer, LIC has been

pus has grown to Rs.8,07,317 crores as

rations of millions of people across the

coming out with new products.

on 31st March 2009. LIC has indeed

country. A vow captured by the motto,

“L.I.C. of India has more than 50 dif-

come a long way over this journey of five

“Yogakshemam Vahamyaham”, meaning

ferent plans catering to the different needs

decades. Moving briskly along the new

“ Your Welfare is our responsibility”.

of different segments of the society. We

growth trajectory, surpassing its own past

Across over five decades of its existence,

also have 13 Pension and Group

growth records has indeed been the main

LIC has gone about delivering on this

Schemes. Whatever be the need, we have

stay of LIC’s success story. Since incep-

promise in the way it knows best - stand-

a suitable policy to match that need. LIC

Details

1961

1971

1981

1991

1996

2008-09

14.70

16.88

27.14

116.97

131.16

358.91

608.97

1303.92

3744.99

33089.22

55716.73

3,90,053.58

23.07

49.60

148.79

1291.67

2379.02

35,321.21

No. of policies sold (in lacs) Sum Assured (in crores) First year premium in crores tion, Corporation has crossed many a

ing tall amidst adversity, not merely sur-

has taken life insurance from the classes

milestone and has set unprecedented

viving the acid test of time, but emerging

to the masses. As a part of extending fi-

performance records in various aspects

stronger because of it. Along the way it

nancial security further to poor and less

of Insurance business.

registered phenomenal growth and

privileged sections of society, Micro In-

When the Corporation took over on the

channelised it towards boosting the

surance plan was first introduced by LIC.

appointed day (September 1, 1956), it

country’s economy and aiding its vital so-

These plans offer insurance at cheap and

had assets under management amount-

cial causes,” said T.S. Vijayan, Chairman,

affordable rates for the financially weaker

ing to Rs. 348.68 Crores, which have

LIC.

sections of society. Two such plans are

now risen to a stupendous figure of Rs.

LIC has been a financial backbone of

8,73,551.35 Crores. At the end of De-

the economy and has played a vital role

cember of 1957, the total new business

in spearheading the financial and infra-

underwritten by LIC was 7,94,585 poli-

structure develop- ment of In-

cies and sum assured was Rs. 281.90

dia. It has

• Jeevan Madhur

Crores. This has grown to 3.58 Crore

abided

This plan was launched on 28/09/

Policies and sum assured of Rs. 3,90,053 Crores during the fiscal 2008-09. In the rough weathers of recession too, LIC stood rock solid and emerged a winner. As at end of H1 of 2009-10, LIC commands a market share of 66% in terms of first year premium. All this has been possible due to the trust of the nation and this is what inspires LIC to set new benchmarks in the service of the nation. “We began with a solemn vow; a vow

51

Jeevan Madhur and Jeevan Mangal,” said Vijayan.

Plans

2006. More than 29 lakh policies have been sold till date and the number continues to grow by the day. • Jeevan Mangal This plan has been launched on 03/09/2009. More than 1,00,000 policies were sold on the day of launch itself. There are two main schemes under which LIC provides insurance cover to below poverty line persons at a low premium- Janashree Bima Yojana and Aam Admi Bima Yojana.

DECEMBER - 2009

Insurance is an intangible product at

Nischay,” said Vijayan.

“L.I.C. OF INDIA HAS MORE THAN 50 DIFFERENT PLANS

the time of sale. It assumes tangible form

CATERING TO THE DIFFERENT

performance for the last 53 years has

NEEDS OF DIFFERENT SEGMENTS

helped LIC to win the trust of its custom-

years:

ers. Even today after 53 years LIC con-

♦ LIC Pension Fund Ltd. for managing

tinues to deliver the brand promise. “Our

pension funds of state government em-

claims performance is world class. Dur-

ployees.

OF THE SOCIETY.

WE ALSO HAVE 13 PENSION AND GROUP SCHEMES. WHATEVER BE THE NEED, WE HAVE A SUITABLE POLICY TO MATCH THAT NEED. LIC HAS TAKEN LIFE INSURANCE

at the time of claim. Its consistent claims

ing the fiscal 2008-09, the Corporation settled over 149 lakh claims for an amount of Rs.37, 893 crores in indi-

FROM THE CLASSES TO THE

vidual life business. Out of total Maturity

MASSES.

Claims settled, over 97% were settled on

AS A PART OF EXTENDING FINANCIAL SECURITY FURTHER TO POOR AND LESS PRIVILEGED SECTIONS OF SOCIETY, MICRO INSURANCE PLAN WAS FIRST INTRODUCED BY LIC. THESE PLANS OFFER INSURANCE AT CHEAP AND AFFORDABLE RATES FOR THE FINANCIALLY

or before the date of maturity and over 93% of the total Non Early Death Claims were settled within 20 days of intimation. Outstanding claims ratio under Death was 2.21% and that under maturity as low as 0.26%,” said Vijayan.

Customer Base LIC had a strong customer base of

WEAKER SECTIONS OF SOCIETY.

25.78 crores policy holders as at 31/03/

TWO SUCH PLANS ARE JEEVAN MADHUR AND JEEVAN MANGAL”

2009 and is adding more day by day.

Products Even in times of a turbulent economy,

Janashree Bima Yojana provides

LIC introduced a new product Jeevan

insurance cover to people of specified 45

Astha which became a smash hit

occupations who live below poverty line

in the market. “Under

or marginally above poverty line and are

this product alone we

aged between 18 and 59.

could garner a pre-

Recent achievements Geographical Expansion LIC of India, with its Central Office at Mumbai has 8 Zonal Offices, 109 Divi-

mium income of more

than

Rs.10,000 crores in just 45 days. Recently, we have in-

sional Offices and 2048 Branches (net-

troduced a joint-life

worked with Wide Area Network) spread

ULIP plan, Jeevan

across the length and breadth of the

Saathi Plus, and a plan

country. With a vision of providing ac-

for our existing policy

cess to its policyholders, the concept of

holders,

Satellite Office was introduced as a part

Jeevan

viz.,

Diversification Diversification during the last three

♦ LIC Card Services Ltd. was launched on 30th March, 2009 in association with Corporation Bank and VISA International. ♦ LIC HFL Financial Ser vices LTD. launched on 31/10/2007, a subsidiary of the LIC HFL, which offers complete financial solution to the customer.

Future plans “We would like to further cement our position in the life insurance industry in India. For that, we have to continue our efforts to bring in new products and services,” said Vijayan. Some of the new initiatives in distribution include selecting Senior agents as Chief Life Insurance Advisors (CLIA). This initiative received an excellent response from eligible CLIAs and about 20,000 active CLIAs brought over Rs.1100 crore premium and 11 lakh policies. LIC appointed 317 Senior Business Associates for premium collection as well as for carrying out market/customer oriented functions through online portal from their offices. This channel has received an excellent re-

of its strategic business expansion plans. LIC has opened more than 807 Satellite Offices across the country. LIC’s reach in geographical terms has helped it penetrate the market better.

Claims settlements

52

T.S. Vijayan, Chairman, LIC.

DECEMBER - 2009

sponse and in future more services may

Current year’s Gross Investment shows a

of -14.67% of the private sector at the

be offered through this channel.

positive variation of 30.75%.

end of H1. LIC’s market share in terms of first year premium income is 66% at

LIC has started a new distribution chan-

“As there will be more flow of funds in

nel “Direct Marketing” in this year, which

the second half of the financial year, the

the end of H1.

will explore the new age marketing

tempo of investment will also go up sub-

through digital campaigning and online

stantially in the remaining days of the

Challenge

marketing generating business leads.

year. During the balance period in the

“The main challenges faced by LIC to-

Initially operations were started at six cen-

current fiscal, LIC plans to invest

day are those of competition both in terms

ters. This channel is also gaining wide

Rs.28,000 crore more in equity and

of the fast changing economic scenario

popularity and may be extended to fur-

Rs.20,000 crore more in Corporate Debt,”

and in terms of the competitors not just

ther centres.

said Vijayan.

in the insurance industry, but also from various other channels of investments.

Investments in the current year

Market share

However, we have always realigned our

The current fiscal began with a posi-

business strategies and are always ready

LIC’s Gross Investment in the current

tive note for LIC with 60.79% market

to take on a new challenge,” said Vijayan.

financial year stood at Rs.1,03,101 crore

share. During the current fiscal, it regis-

Collaborations

Asset Class

Amount (Rs. in Crore)

In the Bank Assurance and Alternate channel vertical, LIC has tie-ups with

Central and State Govt. securities

56,756

Equity

22,076

Corporate Debt

19,111

Insurance policies, allowing the Corpo-

Infrastructure

4,361

ration the benefit of low-cost distribution

Banks, Corporate Agents and referral Agencies thereby allowing them to sell

and easy accessibility of their customer as on 16.10.2009 as against Rs.78,851

tered a growth 35.21% in the first year

crore in the corresponding period last year.

premium income as against de-growth

base. “The alternate channel of distribution has come to play a significant role in achieving the objective of expanding the life insurance market by generating volumes of First Premium Income with reduction in cost through Bank assurance, Corporate Agents and Brokers. With the modest beginning of 1455 no. of policies and Rs.2.21 crore of FPI in the year 2001-02, this channel achieved a mark of Rs.1076.59 crore FPI and 862333 No. of Policies in the year 2008-09. We have at present tie up with 34 Banks on Corporate Agency model and 57 Banks on Referral Model.

Last year, we had a

growth rate of more than 32% and we look forward to a significant contribution during the current year,” said Vijayan.

53

DECEMBER - 2009

“AAI has meticulously followed the maxim When the going gets tough, the tough get going” AIRPORTS AUTHORITY OF INDIA (AAI) MANAGES 124 AIRPORTS, WHICH INCLUDE 12 INTERNATIONAL AIRPORTS, 81 DOMESTIC AIRPORTS AND 23 CIVIL ENCLAVES AT DEFENCE AIRFIELDS AND 8 CUSTOM AIRPORTS. AAI ALSO PROVIDES AIR TRAFFIC MANAGEMENT SERVICES OVER ENTIRE INDIAN AIR SPACE AND ADJOINING OCEANIC AREAS WITH GROUND INSTALLATIONS AT ALL AIRPORTS AND 25 OTHER LOCATIONS TO ENSURE SAFETY OF AIRCRAFT OPERATIONS.

54

DECEMBER - 2009

A

AI is the pride of the country,

the unprecedented phenomenal growth

♦ 81 Domestic airports.

for it is one of the main cata

witnessed by aviation industry has started

• In addition CNS ATM Services are be-

lysts contributing towards its

to bear results from the beginning of this

ing provided at Delhi, Mumbai, Ban-

economic growth. To substantiate the

year, which is evident from the unparal-

galore, Hyderabad and Cochin.

statement it would but be prudent to lay

leled number of inaugurations done in

due emphasis on the fact, that the list of

the first quarter of this year.

“The other constituent of Airport Infrastructure is ATM / CNS. ATM can easily

the key industries responsible include

“As Delhi and Mumbai were heaved

be said to be the life line of aviation for

Airports and Aviation sector. Airport infra-

away from the ambit of AAI, we per force

the simple fact that it contributes im-

structure has positive correlation with

had to shift our focus on developing sec-

mensely towards flight safety,” said

growth and development in the economy

ond line airports across the country & in

Agarwal. To ensure proper & flawless co-

of a nation, particularly in the emerging

remote corners. Accordingly, plans were

ordination, AAI has planned for the fol-

markets. Growth in infrastructure is fur-

drawn up for new terminals at 35 air-

lowing:

ther correlated with business opportuni-

ports, and runway / apron expansion at

ties. This economic correlation is not only

23 airports. As on date the works are in

♦ Automation system at all Towers and

dependent on exports and investment lev-

progress as per plans. The unprecedented

els rather more dependent on domestic

growth witnessed in the past decade de-

private consumptions,” said V. P Agrawal,

manded substantial augmentation in the

Chairman, AAI.

infrastructure sector. In 2002-03 we had

Approach control units serving the airports. ♦ System to be interfaced with main system at central ACC.

AAI had inherited war torn airfields,

around 55 active airports as compared to

♦ Co-ordination and other ATC related

which post partition came under the ambit

more than 90 as on date. In terms of

functions through automated system.

of DGCA. In fact some cosmetic changes

investment, in the Tenth Plan it was

♦ Flight data processing and Air situa-

were made at few airports based on the

around Rs 40 billion and in the Eleventh

tion awareness display based on ac-

requirements as an outcome of changed

Plan it is Rs 400 billion, a four fold in-

tive FPL with electronic strip displays –

scenario. The state & condition of AAI

crease,” said Agrawal.

essential features of the system.

airports as on date would clearly reveal

AAI manages 124 airports including

♦ ATC Procedures

that AAI has taken long strides & at the

civil enclaves:-

same time does realize that it has many

♦ 12 International airports.

to be implemented both in route and

♦ 08 Custom airports.

terminal approach areas.

a more miles to cover. The venture of modernizing / up gradation of airports that AAI had embarked upon, as the result of

♦ 23 Civil enclaves.

• RNAV/RNP procedures based on PBN,

• Procedure design to take into consideration environment impact and noise abatement • Reduced separation both in route and approach areas-in a progressive manner to enhance capacity • ATC procedures based on GAGAN and GBAS also will be implemented. Space Based Augmentation System (Project GAGAN) ♦ GPS aided GEO Augmented Navigation (GAGAN) ♦ GAGAN overlay covers from Africa to Australia. ♦ Potential for extension of GAGAN services to neighboring countries. ♦ Technology Demonstration successfully carried out and system likely to be fully

55

DECEMBER - 2009

eration, modern aircraft has necessitated the need for quick and rapid upgrading of facilities, procedures and infrastructure. The International Civil Aviation Organisation (ICAO) mandate for the implementation of PBN procedures both, in enroute and terminal area, has come as a boon towards optimizing airspace utility and efficient management of terminal airspace at the two busiest airports in India – Mumbai and Delhi – which have been the focus of traffic growth.

Benefits PBN procedures exploit onboard navigation capabilities, coupled with operature point to destination with reference

tional procedures to benefit aircraft and

♦ GAGAN would provide precision ap-

to various ground-based nav-aids. The

airspace users through:

proach and landing guidance up to

flight paths therefore are not only fixed

♦ Improved airspace utilization through

Category I to aircraft hitherto not avail-

but operationally inflexible. In PBN, the

able due to terrain conditions preclud-

aircraft derives position information from

ing provision of ILS

a navigation satellite like GPS/GNSS and

operational by 2010.

uses an advanced on-board navigation

Technology

system and a flight management com-

“Aviation industry being technically ori-

puter to fly an efficient and flexible tra-

ented demands of its players to keep pace

jectory to the destination. Thus, PBN pro-

with the ever changing technology, so

cedures take advantage of enhanced air-

as to not only enable them to provide

borne capabilities and satellite technol-

seamless transition of passengers through

ogy for efficient aircraft operations. Area

enhanced airspace capacity; ♦ Improved management of air traffic leading to enhanced air safety; ♦ Enhanced safety to de-conflicting arrival and departure routes with predictable flight paths; ♦ Repeatability of flight path, resulting in minimized tactical radar vectoring, thereby enhancing operational effi-

the airports but also to make airports user friendly thus, inducing confidence amongst air travelers. It also enhances

The Financial Profile of Airports Authority of India – Last 3 years: Particulars

2006-07

2007-08

2008-09

ground and in the air. It assists in de-

Revenue Earnings(Rs. in crores)

3726.23

4289.21

4185.95

signing & developing seamless air routes

Capital Expenditure(Rs. In crores)

2196.90

2549.84

3070.23

taking advantage of Satellite Based Tech-

Profit before tax(Rs. In crores)

1529.33

1739.37

1115.73

859.85

1081.87

687.21

level of safety and security both on the

nology. So devised air routes are bound

Profit after tax(Rs. In crores)

to reduce fuel consumption of aircrafts, thereby enhancing capacity & eliminat-

Navigation (RNAV) and Required Navi-

ing delays, need of modern day aviation,”

gation Performance (RNP) are the two

said Agrawal.

constituents of Performance Based Navi-

Per formance

Based

Navigation

gation.

ciency of the controllers and pilots; ♦ Significant reduction in controller-pilot communication; ♦ Reduced fuel burn due to shortened

(PBN) - A New Initiative with a

Why?

Global Approach

The consistent high growth rate of civil

flight legs as compared to conventional

In conventional navigation, the aircraft

aviation in India in the recent past, as

Standard Instrument Departures (SID),

utilizes ground-based nav-aids for posi-

well as the burgeoning flight sizes of the

leading to significant environmental

tion determination and flies from depar-

airlines with the induction of new gen-

benefits in terms of reduced emissions;

56

DECEMBER - 2009

♦ Reduced reliance on ground-based

♦ Dibrugarh ♦ Srinagar ♦ Calicut

of 24.4 percent for domestic traffic over

navigation infrastructure, since navi-

♦ Kullu ♦ Surat ♦ Rajahmundry

the past five years. It is estimated that

gation guidance is obtained from navi-

♦ Vijayawada ♦ Hubli ♦ Belgaum

there will be further combined growth of

gation satellites.

♦ Cooch Behar ♦ Mysore ♦ Akola

around 17.13 percent a year (20 per-

PBN has been implemented at

♦ Gondia ♦ Jodhpur ♦ Cuddapah

cent domestic and 10 percent interna-

Mumbai and Delhi, as they are the two

♦ Shillong ♦ Tezu ♦ Jaisalmer

tional) until 2012, following which the

major airports handling the bulk of the

♦ Poundicherry ♦ Leh ♦ Pant Nagar

growth rate is expected to decline to

arrival and departure traffic in India.

♦ Jorhat ♦ Bhavnagar

11.10 percent per year (12 percent do-

Completed – 12

mestic and 8 percent international) until

Financials

Work in progress - 11

Despite AAI having experienced the tremors of the ‘Global Economic Meltdown’ the company has meticulously followed the maxim “When the going gets tough, the tough get going”. Religiously following the dictum AAI was not only able to continue with its execution plans but was also able to achieve & maintain its track record of ensuring ‘Profit after Tax’. The profit for AAI during year 2008 – 09 (RE) has been Rs. 687.21. However, the Revenue Turnover of AAI as on 1st November, 2009 was Rs. 2286.53 crores.

Significant projects AAI has identified 35 Metro Airports & 23 other airports.

Status 35 Metro Airports ♦ Ahmedabad,

Amritsar,

Agatti,

Aurangabad, Agartala, Agra, ♦ Baroda, Bhopal, Bhubaneshwar, Chandigarh, Coimbatore,

major projects at Kolkata and Chennai airports.

Kolkata Airport Modernisation Project - Cost Rs. 1942 crores AAI has taken on the modernization,

♦ Imphal, Indore,Jaipur, Jammu, Khajuraho, Madurai, Mangalore ♦ Lucknow, Nagpur, Patna, Portblair, Pune, Rajkot, Ranchi, Raipur,

agreements / undertakings with the following:♦ Mumbai International Airport

months from the date of award of con-

♦ Delhi International Airport

tract and will result in an additional pas-

♦ Hyderabad International Airport

senger handling capacity of 20 million

♦ Bangalore International Airport

ppa. Kolkata Airport had international traf-

♦ NFTI-Gondia

fic of 1.01 million and domestic traffic of 6.45 million in 2007-08. It has wit-

♦ JV with MADC for Nagpur Airport

nessed a growth of 6.4 percent in do-

♦ MOU with ISRO for GAGAN Project

mestic traffic over the past five years. It is

♦ Tripartite JV Agreement with GMADA

estimated that combined growth for the

( Greater Mohali Area Development Au-

airport will be around 19 percent per

thority) & HUDA (Haryana Urban Devel-

annum up to 2012, establishing at 14.5

opment Authority)in r/o Chandigarh In-

percent in 2016.

ternational Airport.

At present both the terminals are over capacity. The existing domestic terminal building will continue to be used with treatment. Based on projections Kolkata

Trivandrum,

Udaipur,

lion ppa in 2016.

Chennai Airport Modernization - Cost Rs. 1808 crores Chennai Airport has separate international and domestic terminal buildings with capacities of three million ppa and six million ppa respectively. In 2007-08

Completed – 09

international traffic was 3.41 million and

Work In progress 26 Other 23 Airports Under Devel-

57

AAI. Accordingly, it has entered into

which is to be completed within 30

Visakhapatnam, Varanasi

opment.

Irrespective of the ownership of the airport per se, the ATC is managed by

Airport is expected to handle 24.65 mil-

Guwahati,

Trichy,

identified for development, we have two

Partnerships

appropriate modifications and façade

♦ Dehradun, Dimapur, Goa (Dabolim),

In addition to the above 58 airports

2017.

domestic was 7.25 million. The airport has seen annual growth of 10.7 percent for international traffic and

V. P Agrawal, Chairman, AAI

DECEMBER - 2009

IndianOil had a sales turnover of Rs. 285,337 crore, the highest–ever for an Indian company INDIANOIL, INDIA’S

FLAGSHIP NATIONAL OIL COMPANY AND DOWNSTREAM PETROLEUM MAJOR

2009. ESTABLISHED AS AN OIL MARKETING 30TH JUNE 1959, INDIAN OIL COMPANY LTD. WAS RENAMED INDIAN OIL CORPORATION LTD. ON 1ST SEPTEMBER 1964 FOLLOWING THE MERGER OF INDIAN REFINERIES LTD. (ESTABLISHED IN AUGUST 1958) WITH IT. THE INTEGRATED REFINING & MARKETING ENTITY HAS SINCE GROWN INTO THE COUNTRY’S LARGEST COMMERCIAL ENTERPRISE AND INDIA’S NO.1 COMPANY IN THE PRESTIGIOUS FORTUNE ‘GLOBAL 500’ LISTING OF THE WORLD’S LARGEST CORPORATES, CURRENTLY AT THE 105TH POSITION. CELEBRATED ITS GOLDEN JUBILEE MILESTONE IN ENTITY ON

58

DECEMBER - 2009

I

n 1950, the immediate business

the subsequent year, 1966-67, the Board

agenda of independent India was

of IndianOil declared its maiden dividend

to build refineries and pipelines

of 6% amounting to Rs 4 crore. In less

around oil assets and build marketing in-

than a decade of its existence, IndianOil

frastructure across the vast Indian hin-

made a mark as a profitable petroleum

terland. While Indian Refineries Ltd. took

company operating in the entire down-

up the task of setting up and operating

stream chain of refining, pipeline opera-

petroleum refineries and pipelines, Indian

tions and marketing.

Oil Company was set up for marketing and distribution across India. The efforts

1970s

needed to be multi-pronged. On the one

By 1971, IndianOil had a dominant

hand, the industry required huge capital

share of the Indian petroleum business.

and high technology while on the other

Perhaps one of the earliest truly Indian

hand, it needed highly skilled people to

lubricant brands, SERVO, was launched

execute high-end projects and manage

on August 15th, 1972. The setting up of

infrastructure safely and efficiently.

the R&D Centre in Faridabad in March,

With the launch of a number of initia-

1972, helped bolster the SERVO brand.

tives, Indian Oil Company soon became

As a flagship public sector unit with a

the prime driver of India’s indigenisation

sincere social responsibility agenda,

dream to reach vital petroleum products

IndianOil began allotting retail dealerships

across the nation. The first and foremost

/distributorships to war widows, freedom

challenge was to assert itself in the face

fighters, disabled defence personnel, etc.

of stiff competition from well-entrenched

soon after the Indo-Pak war in 1971. In

transnational oil companies operating in

1976, IndianOil first commissioned the

India.

world’s highest altitude retail outlet –

So began a new era in competition

Ladakh Filling Station – at Leh in Ladakh,

perpetuated by IndianOil’s entry into the

which even today operates round the year

market.

through sub-zero temperatures. As a first

By March 1964, the company had 7 main port installations, 3 major inland installations and 91 upcountry depots. By 1966, IndianOil had already commissioned three refineries – at Guwahati, Barauni and Koyali, all located in strategic spots close to known oil assets and potential markets. During the period 1964-67, over 2390 km of pipelines were constructed, both for crude oil and product transportation.

experience in rural marketing in the country, IndianOil set up 132 multipurpose distribution centers in rural areas. With its all-India infrastructure increasing at an exponential pace, IndianOil’s market share crossed a record 64% in 1974.

1980s IndianOil had by now established a clear and dominant leadership in aviation fuel business, LPG, lubricants, pe-

Indane LPG has brought in a revolu-

troleum retail and the large volume con-

tion in the Indian kitchens. Its use made

sumer business of state transport under-

a huge impact on deforestation measures

takings, core industries and railways. In

and the health of housewives using

the 1980s, IndianOil supplied aviation

smoke-filled kitchen chullahs. The com-

1990s In a revolutionary overhaul, in 1994, IndianOil launched an integrated, retail branded programme that not only changed the face of petroleum retailing in the country but also set the benchmark in the oil & gas sector. Flagship petrol stations were upgraded by adding multi-product dispensing units that ensured speedier service, colour coded canopies, Convenio stores for shopping, modern & distinctly visible signages, ATMs, quick lube change centers, auto car washes, smooth concrete driveways and other associated facilities. Later, IndianOil was also the earliest to sense the changing trends of highway traffic in the country that meant petrol stations on Indian highways were not merely fuel supply outlets, but stopovers that required multiple facilities. IndianOil launched large format, multifaceted Jubilee Retail Outlets for the first time in 1998 with state-of-the-art facilities for refueling, convenience stores, parking lots, cafeteria for motorists, dhabas for truckers, dormitories, bank extension counters, post offices, pharmacies, first aid facilities and much more. With the commissioning of the lifeline of the North-Western region, KandlaBhatinda product pipeline in Feb 96, IndianOil had the longest pipeline of its kind. While the Haldia-Barauni crude oil pipeline was completed on 1st Jan 1998 and with the new pipeline commissioned on 16th Feb’1999 for transportation of imported crude oil from Haldia port to Barauni for meeting the requirement of augmented capacity of Barauni Refinery and the branchline from HaldiaMourigram-Rajbandh commissioned in Sept’1999.

turbine fuel, Indane cylinders, lubricants

At the time of Operation Vijay at Kargil

pany crossed the Rs 1 crore profit mark

etc. to the Antarctica Expedition of In-

in 1999, despite shelling of its depots at

and commissioned its 100 th depot at

dian scientists.

Leh and Kargil, IndianOil maintained

Jalgaon in Maharashtra in 1965-66. In

59

petroleum supplies in the war zone and

DECEMBER - 2009

stood by the families of the war heroes later.

2000s The beginning of the new millennium in 2000 saw IndianOil cross Rs One lakh crore in sales turnover and enter exploration & production (E&P). As a part of its inorganic growth plans, IndianOil was also poised to take over a majority stake in CPCL and BRPL in 2001 and IBP in 2002. The launch of 5% ethanol blends in Gasoline in 2001 – pilot projects undertaken in Miraj, Hazarwadi, Manmad and Panewadi in Maharashtra — was a IndianOil takes pride that its corporate strategy is fully aligned to national priorities. IOCL has envisioned a greater role in the coming years to accomplish the cherished goal of a truly developed India, where all sections of citizens live with dignity.

nami, earthquake, cyclones etc. Besides contributions to the Prime Minister’s/ Chief Minister’s Relief Fund, IndianOil employees have also risen to the occasion in the past by collecting clothes, food, etc. other than the actual relief work in the af-

IndianOil’s commitment to inclusive

fected areas. IndianOil and its employ-

growth is reflected in its efforts to reach

ees have also contributed generously

precious fuels to every nook and cor-

for any national causes in the benefit

ner of the nation; as well as items of

of the nation.

daily use to the rural hinterland. It has been supporting development initiatives across the country, especially in and around its major installations - in fostering education, provision of health care and basic amenities like potable water to the poorer sections of the rural populace, and empowerment of women.

Even in the field of art and culture, every year, round the year, IndianOil is involved in its own humble way in endeavours to redefine and rejuvenate the glorious heritage in the fine arts, music and dance. IOCL has organised the prestigious Akhil Bharatiya Kavi Sammelan at New Delhi every year, IndianOil Art Exhibition at Mumbai and

landmark because it was IndianOil R&D which had first conducted trials with ethanol blended fuels way back in 1980. IndianOil was also the first to launch branded fuels on 25th Aug’ 2002. Retail marketing gained momentum with launching of Premium Petrol and Superior Diesel at Delhi and Mumbai. In 2003-4, the globalisation efforts received greater impetus with the launch of Lanka IOC in Sri Lanka and IndianOil became the first Indian Petroleum Company to begin downstream marketing operations in overseas market. IndianOil began marketing regassified LNG and the world’s largest single train kerosene-toLAB (Linear Alkyl Benzene) plant commissioned at Koyali, signalling IndianOil’s entry into petrochemicals. Swagat, a retail brand template for the highways was launched in October 2004

Deserving students from poor and

musical concerts under the banner

needy families are extended a helping

of IndianOil Sangeet Sabha from time

hand through the IndianOil Scholar-

to time round the year in metros and

ship Scheme. The Corporation also

other cities. With the objective of pro-

offers sports scholarships for upcom-

tecting, preserving and promoting this

ing junior players, besides providing

glorious past, IndianOil has created a

employment to national and interna-

non-profit trust, the IndianOil Foun-

tional level sportspersons. IndianOil

dation, in collaboration with the Ar-

In 2005, IndianOil breached the Rs

has always responded proactively to

chaeological Survey of India (ASI) and

150,000 crore mark in sales turnover

provide aid and relief to the victims of

the National Culture Fund of the Min-

(Rs. 150, 677 crore for fiscal 2004) and

any natural calamities like floods, tsu-

istry of Culture, Government of India.

the first pipeline footprint in south-

and XTRACARE the urban retail brand was launched in Mumbai on December 2004. Today, its XtraPremium petrol and XtraMile diesel are leaders in the branded fuel segment. To tap the rural market, IndianOil launched Kisan Seva Kendras.

Chennai-Trichy-Madurai product pipeline.

60

DECEMBER - 2009

Growth “From a fledgling company with a net

fineries to handle a wider array of crudes,

and by 1996 it was transformed into a

including high-sulphur types.

modern refinery of IndianOil.

worth of just Rs. 45.18 crore and sales

As a pioneer in laying of cross-country

In the year 2001, IndianOil acquired

of 1.38 million tonnes valued at Rs. 78

crude oil and product pipelines, the Cor-

the Government stake and management

crore in the year 1965, IndianOil had a

poration crossed 10,000 km in pipeline

control of stand-alone refiners Chennai

sales turnover of Rs. 285,337 crore, the

length and about 70 MMTPA in through-

Petroleum Corporation Ltd. (CPCL) and

highest–ever for an Indian company, and

put capacity with the commissioning of

Bongaigaon Refinery & Petrochemicals

a net profit of Rs. 2,950 crore for the

the 330-km Paradip-Haldia crude oil pipe-

Ltd. (BRPL), substantially enhancing

year 2008-09. IndianOil today accounts

line recently. Plans are under execution

group refining capacity. BRPL merged

for nearly half of India’s petroleum con-

to add about 4,000 km more by the year

with IndianOil on 25 th March, 2009.

sumption, reaching precious petroleum

2012. In-house capabilities have enabled

IndianOil acquired IBP in the year 2002

products to millions of people everyday

the Corporation to undertake all pipeline

and seamlessly merged it with the par-

through a countrywide network of around

projects on its own and even offer turn-

ent company in 2007, leading to the for-

35,000 sales points. They are backed for

key expertise in techno-economic feasi-

mation of a larger and more formidable

supplies by 167 bulk storage terminals

bility studies, design and detailed engi-

marketing network. IndianOil Technolo-

and depots, 101 aviation fuel stations and

neering, project execution, operations,

gies Ltd. was launched as a fully-owned

89 Indane LPG bottling plants. For the

maintenance and consultancy services.

R&D subsidiary in the year 2003 to mar-

year 2008-09, IndianOil sold 62.6 mil-

Set up in 1972, IndianOil’s R&D Cen-

ket the Corporation’s intellectual property.

lion tonnes of petroleum products, includ-

tre has blossomed into a world-class in-

IndianOil has set up three overseas sub-

ing 1.7 million tonnes of natural gas,”

stitution and Asia’s finest. It has over 214

sidiaries – in Mauritius (2001), Sri Lanka

said Sarthak Behuria, Chairman, IOCL.

active patents to its credit, including 113

(2003) and the United Arab Emirates

The IndianOil Group of companies

international patents. Its current R&D

(2006). Lanka IOC Ltd. operates about

owns and operates 10 of India’s 20 re-

focus is on the future business needs of

150 petrol & diesel stations in the island

fineries with a combined capacity of over

IndianOil in the areas of petrochemicals,

nation, besides an oil terminal and a lube

60 MMTPA, accounting for 34% of na-

including polymers, and alternative en-

blending plant at Trincomalee. IndianOil

tional refining capacity, after excluding

ergy sources.

(Mauritius) Ltd. operates a modern pe-

EOU refineries. Projects under execution

As part of inorganic growth through

troleum bulk storage terminal at Mer

will take the capacity further to 80 MMTPA

mergers and acquisitions, the refinery

Rouge port. IOC Middle East FZE over-

by the year 2011-12. Besides setting up

operations and marketing activities of

sees blending of SERVO lubricants and

state-of-the-art facilities to raise product

Assam Oil Company were vested in

marketing of petroleum products and lu-

quality to global standards, IndianOil has

IndianOil in October 1981, and it became

bricants in the Middle East, Africa and

undertaken chartering of ships for crude

the Assam Oil Division of IndianOil. The

CIS countries.

oil imports on its own and is expanding

old units of the vintage Digboi Refinery

In addition, IndianOil has eight active

its basket of crudes and upgrading its re-

(the first refinery in Asia) were revamped

joint ventures in operation with reputed Indian and overseas partners in the areas of aviation refuelling, city gas marketing, LPG and LNG imports and storage, speciality lubricants and additives, terminalling services, etc.

New Frontiers “In pursuit of its Corporate Vision and 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

61

DECEMBER - 2009

into petrochemicals - and diversification

tions. An LNG import terminal is proposed

over 66 million tonnes of petroleum prod-

into natural gas marketing, besides

to be set up at Ennore near Chennai.

ucts, the corporation expanded its foot-

globalisation of its downstream operations.

City gas distribution projects are in the

print in exploration and production, pet-

In petrochemicals, IndianOil is envisag-

pipeline in partnership with other com-

rochemicals, natural gas and bio-fuels.

ing Rs. 30,000 crore (US$ 7.4 billion)

panies.

Profitability

investment by the year 2011-12. Through

In line with the new vision of the com-

During the year 2008-09, the world

the world’s largest single-train Linear Alkyl

pany, IOC is entering into the field of

faced wide spread economic depression

Benzene (LAB) plant with an annual ca-

nuclear power generation in tie-up with

and liquidity crunch. However, despite

pacity of 1, 20,000 tonnes set up at its

the Nuclear Power Corporation of India

huge inventory losses due to wide fluc-

Gujarat Refinery; the Corporation has al-

(NPCIL).

tuations in crude oil prices, high financ-

ready captured a significant market share of LAB in India, besides exports. A world-

ing costs incurred due to unprecedented

Financials

borrowing levels with high interest costs,

scale Paraxylene/Purified Terephthalic

The Corporation has been recording

loss on disposal of Govt. of India Special

Acid plant (annual capacities: PX -

profits and declaring dividend to its share

Oil Bonds given as compensation for

3,63,000 tonnes, PTA – 5,53,000

holders consistently. The turnover of the

under recoveries and depreciation of ru-

tonnes) for polyester intermediates is al-

Corporation

from

pee against dollar from Rs. 40.11 in

ready in operation at Panipat, while a

Rs.150729 crore in 2004-05 to

March’08 to Rs. 50.72 in March’09,

Naphtha Cracker with a capacity of

Rs.285337 crore in 2008-09 register-

IndianOil was able to record a moderate

800,000 tonnes of ethylene per annum,

ing an increase of nearly 90% over the

profit of Rs.2950 crore in financial year

equipped with downstream polymer units

last 4 years. The average rate of divi-

2008-09. Despite severe liquidity con-

is also coming up at Panipat,” said

dend declared over the past 5 years is a

straints in 2008-09 because of the glo-

Behuria.

handsome 118%. The Investment in

bal recession and increased interest costs,

Fixed Assets has also increased from

IndianOil balanced its financing require-

In E&P, IndianOil has eight oil & gas

has

increased

blocks and two Coal Bed Methane blocks

Rs.39869 crore as on 31st March

under NELP (New Exploration Licenc-

2005 to Rs.62345 crore as on

ing Policy) rounds in India, in consor-

31st March 2009.

tium with other companies. It has also

During 2008-09, in

ments with the result that capital expenditure touched a record high of about Rs.11000 crore

acquired participating interest in two on-

addition to register-

for 2008-09.

shore blocks in Assam and Arunachal

ing the highest

The estimated

Pradesh. Overseas ventures of the Cor-

ever

capital expen-

poration include two blocks in Sirte Ba-

throughput

refining of

diture

for

2009-10 is

sin and Areas 95/96 in Ghadames basin

51.4

of Libya, Farsi Exploration Block in Iran,

tonnes, surpass-

also expected

onshore farm-in arrangements in Gabon,

ing 100% refin-

at a handsome

an onland block in Nigeria and two on-

ery

million

capacity

figure of nearly

shore blocks in Yemen. IndianOil has in-

utilisation & clock-

Rs.13500

corporated Ind-OIL Overseas Ltd. – a spe-

ing the highest

crore.

cial purpose vehicle for acquisition of

ever

overseas E&P assets – in Port Louis,

throughput and

Mauritius, in consortium with OIL.

selling

crude

oil

In natural gas business, IndianOil has ambitious plans for the current financial year. 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 applica-

62

Sarthak Behuria, Chairman, IOCL

DECEMBER - 2009

BANK OF BARODA

BoB’s corporate brand identity is a signal that it recognizes and prepares for new business paradigms in a globalized world. With a strong presence in Gujarat and Maharashtra, Bank of Baroda (BoB) has a robust network of 3029 branches across India. Today, the Bank is the third-largest bank in India, with assets of Rs.2.3 trillion and a share of around 4.7 percent in deposits and 4.8 percent in advances, of scheduled commercial banks in the country.

B

ank of Baroda, starting from

approach and attitude. In order to im-

46.3% partly reflecting an impact of

a small building in Baroda in

prove the credit flows under the Retail

25.0% depreciation of rupee against the

1908, has been through a

Business, the Bank took many initiatives

US dollar on rupee balance sheet. The

long and eventful journey of almost a

introducing new products both on assets

overseas business contributed 22.5% to

century serving the financial sector span-

and liability sides during 2008-09 such

the Bank’s Global Business and 21.2%

ning across 25 countries around the

as Loan for Earnest Money Deposit,

to its Gross Profit during 2008-09.

globe. Today the bank has its new hi-rise

Baroda Additional Assured Advance to

and hi-tech Baroda Corporate Centre in

NRIs, Baroda Bachat Mitra etc. Besides,

Mumbai .

various products were modified to make

Current activities and New Initiatives

them more market oriented. In order to mobilize fresh retail business, the Bank, adopting an aggressive

The value proposition of the Bank to

market strategy, launched Retail Loan

its customers lies in its impregnable foun-

Festival Campaigns offering various con-

dation and inner strength as a financial

cessions during the campaign period.

service provider by leveraging its tech-

MoUs were signed with a number of car

nology and brand. During the year 2008-

manufacturing companies and tie-up ar-

09, the Bank’s focus was mainly on evolv-

rangements made for providing Life In-

ing effective strategies to optimize human

surance Cover to Education Loan and

resource management in a highly moti-

Home Loan customers sanctioned un-

vational work environment, drawing maxi-

der special packages. The level of Bank’s

mum mileage out of the available Infor-

Net Profit at Rs 2,227.20 crore for the

mation Technology infrastructure and

year 2008-09 reflected a robust year-on-

imbibing a full-fledged marketing culture

year growth of 55.2%. During 2008-09,

to promote a sense of professionalism in

the Bank’s overseas business grew by

63

Future Plans Revolutionary and discontinuous changes in the operating environment are a stark reminder that business success is ‘impermanent’. The emergence of IT as a major driver for change, has accentuated the need to initiate a major transformation program. The conversion to an IT savvy, market driven bank will be a prerequisite to survival and growth. A major and strategic step in hi-tech, was the establishment of the Integrated Treasury branch, as a forerunner to fullfledged global treasury operations. Towards creating a future Bank of Baroda, it has adopted a revolutionary new business strategy that will be enabled by a revolutionary new IT strategy.

DECEMBER - 2009

Allahabad Bank has projected a business level of Rs.1,75,000 crores at March-end 2010 Allahabad Bank got an entirely new identity when it was nationalized in 1969 along with 13 other banks in India. Today it is one of the leading banks in India with a whopping business of over Rs.1, 00,000 crores. Being one of the oldest joint stock banks, Allahabad bank has grown into one of the premier nationalised banks in India.

A

llahabad Bank was incorpo

vice

rated by a group of Europeans

Branches and Service Branches in many

at Allahabad on April 24,

major cities of India.

1865. It was the time Indian economy

Latest Activities

had started shifting towards organised

Branches,

Trading

Finance

ducive for pulling through rough weather, if any, in future. Uncertainties, volatility and major bank failures dominated global economic scenario during 2008-09, resulting in steep

trade and business affairs. After some

In order to ease the difficulties being

fall in global real GDP and affecting sus-

years in 1920, P&O Bank brought

faced by the housing & MSME Sectors

tained growth of emerging market econo-

Allahabad Bank and its headquarters to

due to the current global conditions,

mies. Albeit strong financial sector and

Kolkata. Since 2006, Allahabad Bank has

Allahabad Bank has offered a bouquet of

resilience of the economy, the global

adopted CBS (Core Banking Service) and

relief measures to new housing loan &

slowdown affected Indian external sec-

has developed 24 hours connectivity with

MSME borrowers in line with the special

tor, specifically exports and impacted in-

its 2165 branches across the length and

package announced by Reserve Bank of

dustrial slow down due to reduction in

breath of the country. In 143 years of its

India and Indian Banks’ Association. The

consumption demand.

existence, the bank has come a long way

Bank has decided to reduce interest rates

by developing a wide grip over all the

for fresh Housing Loans up to Rs.20.00

corners of India. At present Allahabad

lakhs for a maximum tenure of 20 years

Spurred by an over 200% growth in

Bank has 44 Zonal Offices, 6 Staff Train-

to be availed from the Bank.Apart from

non-interest income, Allahabad Bank

ing Colleges and 3 Staff Training centers

MSME Cell functioning at Head Office,

reported an eight-fold jump in net profit

for imparting training centers in India.

the Bank has also set up Regional MSME

at Rs 333.6 crore for the quarter ended

Care Centres at Ludhiana, New Delhi,

September 2009 (second quarter) from

Kanpur, Kolkata, Ranchi & Bhopal to fa-

a modest Rs 41.7 crore in the earlier

cilitate MSME Sectors for quick redressal

corresponding period. Non-interest in-

of their grievances. The Bank has not

come shot up to Rs 404.8 crore (Rs

only struck a good balance between both

131.2 crore), while interest income

the important parameters during 2008-

climbed a modest 10.9% to Rs 2,046.7

09 but also added values and strength-

crore (Rs 1,846 crore) during the sec-

ened the balance sheet of the Bank, con-

ond quarter.

Apart from general branches, the bank has also come up with specialised branches like Industrial Finance Branches, International Branches, Finance Branches, Recovery Branches, NRI Branches, Specialised Personal Banking Branches, Specialised Savings Bank Branches, Quick Collection Ser-

64

Financials

DECEMBER - 2009

65

DECEMBER - 2009

“Net worth of Bank of India surpassed Rs.12, 000 crore at the end of September, 2009” BANK OF INDIA (BOI) HAD PIONEERED THE INTRODUCTION OF THE HEALTH CODE SYSTEM IN 1982, FOR EVALUATING/ RATING ITS CREDIT PORTFOLIO. BOI WAS THE FIRST INDIAN BANK TO OPEN A BRANCH OUTSIDE THE COUNTRY, AT LONDON, IN 1946. IT IS ALSO CREDITED AS THE FIRST TO OPEN A BRANCH IN EUROPE, PARIS IN 1974.

66

DECEMBER - 2009

W

ith innovative cluster re

mestic deposits on outstanding basis.

and empowerment of rural populace. The

lated schemes, Bank of

Savings Bank deposits grew by 14.26per-

Bank has focussed attention for improve-

India is ushering the cor-

cent and Current deposits down by

ment of flow of credit to agriculture sec-

porate segment with adequate financial

3.21percent resulting in growth of Low

tor. It provided relief measures to eligible

support

beneficial

Cost deposits by 9.88percent. The share

farmers and improved their accessibility

programmes. The bank is aggressively

of low cost deposits comprising savings

to formal credit. The Bank is relentlessly

moving on a drive to create a synergy

and current deposits to total deposits is

extending support to promote employment

between the MSME and corporate seg-

31.47percent. The Bank has a well di-

opportunities and poverty alleviation,

ments and continue its focus on lending

versified deposit base with 12.24percent

upliftment of poor and minority commu-

to these segments while expanding its

of domestic deposits coming from rural

nities as well as empowerment of

clusters in a planned manner.

areas, 12.96 percent from semi urban,

women. During the year under review,

Bank of India has several firsts to its

20 percent from urban and 54.80per-

Priority Sector advances increased from

credit. The Bank has been the first among

cent from metro areas. The bank’s total

Rs. 32827 crore to Rs. 41472 crore

the nationalized banks to establish a fully

clientele base of 30 million consisted of

(26.33percent growth). Priority Sector

computerized branch and ATM facility at

27.2 million depositors and 2.8 million

advances accounted for 46.97 percent

the Mahalaxmi Branch at Mumbai way

borrowers as at the end of March, 2009.

of Adjusted Net Bank Credit (ANBC) as

back in 1989. It pioneered the introduc-

Bank’s gross advances increased by

against stipulated benchmark of 40per-

tion of the Health Code System in 1982,

Rs.29,940 crore to Rs.144,732 crore

cent. Total agricultural advances consti-

for evaluating/ rating its credit portfolio.

during the year recording a growth of

tuted 18.40 percent as against stipulated

Bank of India was the first Indian Bank

26.08percent. The gross domestic ad-

benchmark of 18 percent of ANBC. Di-

to open a branch outside the country, at

vances at Rs.115,354 crore witnessed a

rect Agricultural advances were 13.69

London, in 1946, and also the first to

growth of Rs.23,966 crore or 26.22per-

percent as against statutory requirement

open a branch in Europe, Paris in 1974.

cent as against previous year’s growth of

of 13.50 percent of ANBC. The advances

The Bank has sizable presence abroad,

30.91percent. The domestic credit growth

to weaker sections constitute 11.75 per-

with a network of 23 branches (includ-

was contributed by all Strategic Business

cent as against stipulated level of 10 per-

ing three representative offices) at key

Units (SBUs). The position of outstand-

cent of ANBC.

banking and financial centers viz. Lon-

ing domestic gross credit was for Corpo-

don, New York, Paris, Tokyo, Hong-Kong,

rate Rs.56,228 crore (48.74percent),

History

and Singapore.

SMEs Rs.25,441 crore (22.05percent),

Bank of India was founded on 7th

“Today the Bank has a total of 3097

Agriculture Rs.16,284 crore (14.12per-

September, 1906 by a group of eminent

branches all over the countr y. All

cent) and Retail Rs.17,401 crore

businessmen from Mumbai. The Bank

branches are functioning on CBS plat-

(15.08percent). Under Large Corporate

was under private ownership and con-

form, spanning over 1920 cities & towns.

segment, bank added 174 accounts. 14

trol till July 1969 when it was

Net worth of the Bank has surpassed

Corporate Banking Branches and 7 do-

nationalised along with 13 other banks.

Rs.12051 crores at the end of Septem-

mestic overseas branches continue to

Beginning with one office in Mumbai,

ber, 2009” said B.A. Prabhakar, Direc-

cater exclusively to the specialized credit

with a paid-up capital of Rs.50 lakh and

tor, BOI.

requirement of the corporate borrowers /

50 employees, the Bank has made a

exporters.

rapid growth over the years and blos-

Bank’s

through

deposits

its

increased

by

Rs.39,696 crore to Rs.189,708 crore

During the year, the Bank sanctioned

somed into a mighty institution with a

during the year recording a growth of

Fund Based limit of Rs.9521 crore and

strong national presence and sizable in-

26.46 percent. The domestic deposits

Non Fund Based limit of Rs.3563 crore

ternational operations. In business vol-

stood at Rs.159,487 crore witnessing an

to infrastructure covering power genera-

ume, the Bank occupies a premier posi-

increase of Rs.34,071 crore or 27.17per-

tion, telecommunications, ports, roads,

tion among the nationalised banks.

cent as against previous year’s growth of

construction contractors etc.

Out of 3097 branches spread across

32.37percent. Non-Resident Deposits of

Keeping in tune with the tradition, the

all parts of the country 139 are catego-

the Bank increased during the year from

bank is in the forefront in pursuing the

rized as specialized branches. These

Rs.10,909 crore to Rs.11,056 crore and

national policies for rural development

branches are controlled through 48 Zonal

constituted 6.96percent of aggregate do-

67

DECEMBER - 2009

ventured into other business activities such as Bancassurance, undertaking Government business, pension payments, etc. RRBs made progress in the field of Information Technology thereby achieving 95 percent computerization. As per recommendations of Working Group on Technology Development in RRBs set up by Reserve Bank of India, the RRBs will start migration to CBS during the year 2009-10. Bank of India had covered all its branches under core banking solutions in June 2009. At present, 95 per cent of its 3,049 branches were already covered under core banking. As of now the bank Offices. There are 28 branches/ offices

London, in 1946, and also the first to

(including three representative offices)

open a branch in Europe, Paris in 1974.

abroad.

The Bank has sizable presence abroad,

The Bank came out with its maiden public issue in 1997 and follow on Qualified Institutions Placement in February 2008. Total number of shareholders as on March 31st 2009 was 2,35589. While firmly adhering to a policy of prudence and caution, the Bank has been in the forefront of introducing various innovative services and systems. Business has been conducted with the successful blend of traditional values and ethics and the most modern infrastruc-

with a network of 28 branches (including five representative offices) at key banking and financial centers viz. London, New York, Paris, Tokyo, Hong-Kong and Singapore. The international business accounts for around 17.82percent of Bank’s total business.

has over 500 ATMs and is planning to open another 500 ATM in the next few months a head. The bank has 28 branches abroad, including five representative offices. It had license to open branches in Doha, Karachi, Madagascar, China, New Zealand, Vietnam, Egypt, etc. During the year 2009 several industrial units had benefited from the special loan restructuring programme of the

Current activities

Bank. The bank had special branches

The Bank has sponsored 5 Regional

for micro, small and medium enterprises

Rural Banks (after consolidation from

in 60 clusters and had started SME help

original 16 RRBs) operating in five States.

centers in 48 zones.

These RRBs are operating in 45 districts

Bank of India had recently introduced

with a network of 1011 branches. All

a new scheme for the home loan seek-

the five RRBs have registered profit dur-

ers. The scheme is called as Star Home

ing the year ended 31.03.2009. The

Loan Scheme which is a Special Pack-

aggregate Deposits and Advances of RRBs

age for the new entrants. This package

stood at Rs.7619 crore and Rs.3654

is applicable to only new loans sanctioned

The Bank’s association with the capi-

crore respectively. These RRBs have

upto Rs.20.00 lakhs between the period

tal market goes back to 1921 when it

played a significant role in achieving fi-

15th December 2008 to 30th June 2009

entered into an agreement with the

nancial inclusion in their respective area

now it is extended upto 31st December

Bombay Stock Exchange (BSE) to man-

of operation by way of opening No Frill

2009 (first disbursement). The interest

age the BSE Clearing House. It is an

accounts, issuance of Kisan Credit Cards

rates for the loans upto 5 lakhs is set at

association that has blossomed into a joint

& other card products, forming of Farm-

8.50 percent per annum and for the

venture with BSE, called the BOI

ers Clubs and Joint Liability Groups, fi-

loans from above 5 lakh upto 20 lakhs

Shareholding Ltd. to extend depository

nancing for Nirmal Gram Yojna, etc. The

the rate is 9.25 percent per annum. The

services to the stock broking community.

RRBs have successfully implemented

loan amount is payable upto a maximum

Bank of India was the first Indian Bank

Agriculture Debt Waiver / Debt Relief

of 20 years.

to open a branch outside the country, at

Scheme, 2008. The RRBs have already

ture. The Bank is also a Founder Member of SWIFT in India. It pioneered the introduction of the Health Code System in 1982, for evaluating/ rating its credit portfolio.

68

DECEMBER - 2009

The Bank has also introduced another

for the period. The operating Profit of the

new scheme called Star autofin scheme.

bank for the period is set at Rs. 1206

This scheme offers loans from the bank

Crore. The Net Interest Income rose by

with reduced rates and with a provision

3.37 percent to Rs. 1409 Crores form

of 50 percent concession in the process-

Rs. 1363 Crores YoY. The Net interest

ing charges. This offer is also valid up to

Margins are set at 2.57 percent. Non

31st December 2009. The interest rates

Interest Income rose by 4 percent from

are also very nominal. For loans up 10

Rs.650 Crores YoY to Rs.676 Crore. The

lakhs an interest of 8.50 percent is

Gross NPA ratio of the bank is at 2.61

charged per annum, while it is charged

percent. Net NPA ratio of the bank is set

9.50 percent for a loan amount above

at 1.08 percent. The provision coverage

Rs10 lakhs. The amount can be repaid

stands at 59.06 percent. The cost to In-

with in 3 years period.

come Ratio is at 42.16 percent and the

The Bank has revised interest rates with

Return on Assets is at 0.55 percent. The

effect from 27th November 2009 on Do-

total Income for the Quarter rose to Rs.

mestic Rupee Term Deposits of less than

5165 Crores from Rs. 4612 Crores in

Rs. 15 lakhs and Rs. 15 lakhs & above

September 2008, showing a growth of

but less than Rs. 1 Crore applicable for

11.99 percent.

fresh deposits and on renewals of maturing deposits only.

The Bank has made adequate provision for terminal benefits, in line with As

The Bank is very active in meeting the

15 requirements.Rs.105.75 Crores esti-

importers and exporter clients’ financial

mated and provided during the quarter.

requirements in domestic currency and

CASA amounted to Rs.52766 Crores con-

also in foreign currency. Our 189

stituting 32 percent of total deposits as

branches across the country are autho-

against 31 percent in March 2009. Earn-

rized to handle foreign exchange busi-

ings per share are at Rs. 6.16. The Book

ness and cater to the credit/ foreign ex-

value per share rose from Rs. 189.24 in

change needs of importers & exporters.

September 2008 to Rs.229.15 during

The Bank’s export credit reached

2009.

Future Plans The future trajectory of the global crisis is not yet clear. The year 2009-10 will be more challenging especially for the banks to ensure healthy flow of credit to the productive sectors of the economy. Some of the key issues that would have to be addressed are lower economic growth, drop in exports, incomplete projects, volatile currency movements, etc. Inflation rate moving towards negative may push the economy from disinflation to deflation. Sustained drop in prices may affect both economic output and employment negatively. Banks have to look more to retail base for increasing resources as corporate sectors would struggle with their diminishing cash flow and liquidity condition. Growth of quality assets, which are normally low yielding, would be tied up unless commensurate cost-effective CASA deposits are mobilized. Fee income will play a major role in the revenue topography of the bank as the Net Interest Margin obtaining till now may not be available any more. Maintenance of assets quality would require more vigorous exercise as mid-corporate,

Rs.6176 Crore as on 31st March, 2009 and the share of export credit to net adjusted bank credit stood at 6.98 percent.

Financials The Capital Adequacy Ratio of BOI rose to 13.52 percent in September 2009 from 12.26 percent as per Basel II. Similarly the Deposits grew by 20.99 percent on YoY basis to Rs.1,98,715 Crore for the same period. The Advances of the Bank rose by 16.18 percent to reach Rs.1, 50,238 crores. For the quarter ended as on 30th September the business Mix of the bank reached Rs.348953 Crores which is a robust rise of 18.87 percent. The Net profits of the bank rose to Rs.323 Crores

69

DECEMBER - 2009

SMEs and export oriented units are likely

mission to provide superior, proactive

tute was started at Bhopal followed by

to be under stress.

banking services to niche markets glo-

another sub-centre at Shivaji University,

Bank of India has adopted a medium

bally, while providing cost-effective, re-

Kolhapur. As per the advise of Ministry of

term Human Resources Development

sponsive services to others in the role as

Rural Development, GoI, Bank has

policy named ‘VISION 2013’ under which

a development bank, and in so doing,

opened seven RUDSETI type training

700 officers & 500 clerical staff mem-

meet the requirements of its stakehold-

centres upto March 2009.

bers have been identified. For clerical staff

ers.

Bank has assisted to form 3500 Farm-

a special motivational programme called

The vision of the Bank is to bring its

ers’ Club, which are a forum for trans-

Marching Ahead Programme (MAP) is

services to the fore of corporate, medium

mitting the latest knowledge on agricul-

being organised at the Bank’s Manage-

businesses and upmarket retail custom-

ture technique, adoption of appropriate

ment Development Institute, CBD

ers and to provide cost effective develop-

technology for value addition and enjoy

Belapur. Officers identified under VISION

mental banking for small business, mass

the benefits of correct market price for

2013 are being given special training in

market and rural markets in the country.

input and output.

CSR

Achievements and Awards

their area of interest by specialised agencies like CRISIL, FEDAI etc. Four such programmes were conducted at MDI/STC

As a part of social commitment, the

Bank of India for the fourth time in a

Noida covering 90 officers identified un-

Bank started credit counselling service

row has again been adjudged the Best

der VISION 2013.

centres under the aegis of the trust -

Public Sector Bank and the Overall Best

Under Prime Minister’s new 15-point

Abhay at four centers, namely Mumbai,

Bank in the country. The most recent

programme, Bank of India has prepared

Chennai, Wardha and Gumla. All the four

award came from the Dun & Bradstreet

a roadmap for the welfare of minority

centers have so far handled more than

based on a study of the financials and

communities for next 3 years to ensure

3500 cases. These centers have also

performance of all Banks in the country.

that the priority sector lending to minor-

organized seminars to educate people in

This award comes close on the heels of

ity communities is raised to 15 percent

respect of financial planning and judi-

winning the same title in the recently

by the end of 2009-10. The outstanding

cious use of credit cards.

concluded ‘BT-KPMG Study’ ‘The Busi-

position as on 31 March 2009 was

The Star Swarozgar Prashikshan

ness world Banking Survey’ and the ‘3rd

Rs.4818 crore which is 11.62 percent

Sansthan (SSPS) is a Bank sponsor ini-

NDTV Profit Business Leadership Award

of target under priority sector.

tiative for imparting training, counselling

2008’. Additionally, -Bank of India has

and consultancy guidance to educate

been acknowledged as one of the Top

unemployed youth, farmer and women

500 Global Financial Institutions.

entrepreneurs. First such training insti-

♦ BOI has been rated by Economic Times

Mission and Vision Bank of India is moving a head with a

/The Nielsen company survey as “The Most Trusted Brands” (MTB) for the year 2009. ♦ Under PSU Banking Category, the bank has been rated 2nd Next only to SBI. The bank has also been ranked 8th under the category of Top Service Brands in the country. ♦ In the MTB, Bank of India ranked 92nd - 54 rankings ahead of last year rankings (146th Rank during 2008). ♦ Bank of India received the NDTV Profit Business Leadership Awards 2009. ♦ Bank of India adjudged the “Best Bank” in public sector bank category.

70

DECEMBER - 2009

71

DECEMBER - 2009

BEL is programmed to meet the specialized electronic needs of the Indian defense services BHARAT ELECTRONICS LIMITED (BEL) BECAME THE FIRST DEFENSE PSU TO GET OPERATIONAL MINI RATNA CATEGORY I STATUS AND WAS CONFERRED WITH NAVRATNA STATUS IN JUNE 2007 FOR ITS CONSISTENT PERFORMANCE. DURING 2008-09, BEL RECORDED A TURNOVER OF RS.4624 CRORE.

72

DECEMBER - 2009

T

his modern world has brought

Circuits and Hybrid Micro Circuits were

greater focus to Naval projects. The first

every sector is touch with elec

set up. 1972 saw BEL manufacturing

Central Research Laboratory was estab-

tronics. In fact, the world is in-

TV Transmitters for Doordarshan. The fol-

lished at Bangalore in 1988 to focus on

creasingly becoming electronic dependent

lowing year, manufacture of Frigate Ra-

futuristic R&D.

and the mode is getting amplified with

dars for the Navy began.

1989 saw the manufacture of Telecom

deep intensity. Bharat Electronics Lim-

Under the government’s policy of de-

Switching and Transmission Systems as

ited (BEL), based at Bangalore, under the

centralization and due to strategic rea-

also the setting up of the Mass Manufac-

ministry of defense too had started its jour-

sons, BEL ventured to set up new Units

turing Facility in Bangalore and the manu-

ney in 1954 and touched upon its hand

at various places.

facture of the first batch of 75,000 Elec-

to explore extensively to develop defense electronics in the country.

The second Unit of BEL was set up at

tronic Voting Machines.

Ghaziabad in 1974 to manufacture Ra-

The agreement for setting up BEL’s first

Bharat Electronics Limited (BEL) is

dars and Tropo communication equipment

Joint Venture Company, BE DELFT, with

programmed to meet the specialized elec-

for the Indian Air Force. The third Unit

M/s Delft of Holland was signed in 1990.

tronic needs of the Indian defense ser-

was established at Pune in 1979 to manu-

Recently this became a subsidiary of BEL

vices. Over the years, it has grown into a

facture Image Converter and Image In-

with the exit of the foreign partner and

multi-product, multi-technology, multi-

tensifier Tubes.

has been renamed BEL Optronic Devices

unit company serving the needs of customers in diverse fields in India and abroad. Today BEL is counted among the elite group of public sector undertakings and had been conferred the Navratna status by the Government of India for its consistent performance in the field of defense

In 1980, BEL’s first overseas office was set up at New York for procurement of components and materials.

Limited. The second Central Research Laboratory was established at Ghaziabad in

In 1981, a manufacturing facility for

1992. The first disinvestment (20%) and

Magnesium Manganese Dioxide batter-

listing of the Company’s shares in Ban-

ies was set up at the Pune Unit. The

galore and Mumbai Stock Exchanges took

Space Electronic Division was set up at

place the same year.

Bangalore to support the satellite

BEL Units obtained ISO 9000 certifi-

programme in 1982. The same year saw

cation in 1993-94. The second disinvest-

BEL achieve a turnover of Rs.100 crores.

ment (4.14%) took place in 1994. In

In 1983, an ailing Andhra Scientific

1996, BEL achieved Rs.1,000 crores

Company (ASCO) was taken over by BEL

turnover. In 1997, GE BEL, the Joint

as the fourth manufacturing Unit at

Venture Company with M/s GE, USA, was

Starting with the manufacture of a few

Machilipatnam. In 1985, the fifth Unit

formed. In 1998, BEL set up its second

communication equipments in 1956,

was set up in Chennai for supply of Tank

overseas office at Singapore to source

BEL went on to produce Receiving Valves

Electronics, with proximity to HVF, Avadi.

components from South East Asia.

in 1961, Germanium Semiconductors in

The sixth Unit was set up at Panchkula

The year 2000 saw the Bangalore Unit,

1962 and Radio Transmitters for AIR in

the same year to manufacture Military

which had grown very large, being reor-

1964.

Communication equipment. 1985 also

ganized into Strategic Business Units

saw BEL manufacturing on a large scale

(SBUs). There are seven SBUs in Ban-

Low Power TV Transmitters and TVROs

galore Unit. The same year, BEL shares

for the expansion of Doordarshan’s cov-

were listed in the National Stock Ex-

erage. 1986 witnessed the setting up of

change.

electronics. The growth and diversification of BEL over the years mirrors the advances in the electronics technology, with which BEL has kept pace.

History

In 1966, BEL set up a Radar manufacturing facility for the Army and in-house R&D, which has been nurtured over the years. Manufacture of Transmitting Tubes, Silicon Devices and Integrated Circuits started in 1967. The PCB manufacturing facility was established in 1968. In 1970, manufacture of Black & White TV Picture Tube, X-ray Tube and Microwave Tubes started. The following year, facilities for manufacture of Integrated

73

the seventh Unit at Kotdwara to manu-

In 2002, BEL became the first defense

facture Switching Equipment, the eighth

PSU to get operational Mini Ratna Cat-

Unit to manufacture TV Glass Shell at

egory I status. In June 2007, BEL was

Taloja (Navi Mumbai) and the ninth Unit

conferred the prestigious Navratna sta-

at Hyderabad to manufacture Electronic

tus based on its consistent performance.

Warfare Equipment.

During 2008-09, BEL recorded a turn-

In 1987, a separate Naval Equipment

over of Rs. 4624 crores.

Division was set up at Bangalore to give

DECEMBER - 2009

Current Activities BEL is being credited for the design and manufacture of Electronic Baton for the common wealth games to be held at Delhi. The concept design of Baton for CWG 2010 Delhi is created by M/s Foley Design and supported by M/s TITAN Industries. The role of Bharat Electronics Limited (BEL) is to design, develop and manufacture all the electronic hardware and develop the related firmware & application software for the Baton System.

These alliances are for addressing vari-

BEL-Hyderabad has demonstrated its

ous emerging markets. BEL has also

prowess as a production agency for mas-

proactively taken initiatives to dialogue

sive programmes such as the indig-

with reputed foreign / Indian players for

enously developed Ground Mobile Inte-

exploring joint ventures in the areas of

grated EW Samyukta System for the Army

RF & Microwave subsystems, Missile

and ship-borne Ellora systems for the

electronics, civilian Radars, Solar PV

Navy, which is being installed on all major

Cells, identified among others. Another

warships. The Unit has also manufac-

means adopted by BEL for diversification

tured a range of Surveillance, Radio Di-

is by marketing available products or new

rection-Finding and Electronic Counter

products developed into non-defence and

Measure Systems for the paramilitary

newer areas of defence.

forces. During 2007-08, the Unit crossed

The technology architecture of the Ba-

BEL and the Indian Institute of Sci-

Rs.600 crore turnover and contributed

ton is conceptualized at Central Research

ence (IISc), Bangalore, have signed a

to 15 per cent of the Company’s annual

Laboratory (CRL)- BEL, Bangalore and

Memorandum of Understanding (MoU)

turnover.

the entire design and development of the

for instituting a Chair Professorship for

BEL has developed VHF Radios STARS

system is done in house at CRL-BEL

Radar Studies at IISc. BEL has contrib-

V Mk II (5 Watt & 25 Watt) for the Indian

Bangalore.

uted Rs.1 crore as corpus fund for set-

Army. These radios innovatively combine

ting up the Chair.

transmission security (TRANSEC) through

BEL is accelerating its efforts to enter into new business areas, either through

Apart from internal efforts, the Com-

anti-jamming features of frequency hop-

Organic growth in existing / new areas

pany has appointed a global consulting

ping and high grade communication se-

or Inorganic growth through Joint Ven-

firm to help identify future market oppor-

curity (COMSEC). They are designed to

tures and few other methods. BEL has

tunities for enhanced growth. The new

consume less power and are packaged

entered into strategic alliances with In-

areas identified for further exploration are

to be light-weight. These features enable

dian and foreign players for IFF for air-

Homeland Security, Infrastructure – Rail-

STARS V Mk II radios to benchmark with

borne Radars, V / UHF receivers for scan

way, e-Governance, Energy Efficiency

other world-class radios. As these radios

DF systems (EW application), airborne

Solutions and Nuclear Power Instrumen-

are designed in-house, the security al-

ESM / ELINT systems, modeling simula-

tation. BEL has initiated dialogue with

gorithms can be managed / modified as

tion analysis & experimentation lab (for

prospective partners for possible coopera-

required by the customer. They are de-

systems on aircraft) etc. to ensure busi-

tion to address the business opportuni-

signed to inter-operate with existing legacy

ness in a competitive market scenario.

ties in these areas.

radio sets available with the Army.

Financials As on September 31st quarter ended 2009, the gross sales of BEL rose to Rs.13078.66 lakhs with a total income of Rs.130824.29 lakhs for the period. The Net profit was set at Rs.23735.11 lakhs with a paid up equity share capital of Rs. 8000 lakhs for the period. BEL had achieved a record turnover of Rs.46,240.9 million during the year 2008-09 as against Rs.41,025.4 million in 2007-08, registering a growth of 12.71% over the previous year. Value of Production during 2008-09 was Rs.52, 736.8 million as against Rs. 41,113.7 million in 2007-08, higher by 28.27%

74

DECEMBER - 2009

over previous year. The Profit After Tax

tronics Limited too has emerged as a pro-

♦ BEL’s Ghaziabad Unit has been se-

for 2008-09 was Rs.7,457.6 million as

fessional and it is moving ahead with a

lected for the Raksha Mantri’s Award

against Rs.8,267.4 million last year.

vision to be a world class enterprise in

for Import Substitution under the Group

Supplies to the Defence Sector consti-

professional electronics.

/ Individual category for successfully de-

tuted 85% of the sales, balance 15% being supplies to the civilian sector. All

CSR

veloping indigenous radar, which resulted in savings in the form of foreign

the nine manufacturing Units of the Com-

BEL is committed to contribute for the

exchange. Rohini, the 3-Dimensional

pany have performed well and earned

socio-economic development of its stake-

Central Acquisition Radar developed by

profits.

holders and the business decisions of the

Electronics and Radar Development Es-

Company will be in line with its obliga-

tablishment (LRDE) and concurrently

tions of CSR. BEL’s sustained initiatives

engineered and productionised by BEL

The Indian market scenario for Defence

are aimed at earning the goodwill of the

- with contribution from private sector

and Civilian electronics products / sys-

community and enhancing the image of

organisations - ensures that our armed

tems is rapidly changing with the open-

the Company. Pursuing this objective, the

forces are able to neutralise any air

ing of the Defence Electronics market to

Company has prepared a policy on Cor-

route aggression along the entire bor-

private participation and the competition

porate Social Responsibility, which iden-

der as well as in the hinterlands.

is likely to intensify. In this scenario, BEL

tifies Health Care, Education, Rural De-

♦ The Military Communication SBU of

is taking proactive steps to protect and

velopment, Environmental Protection

BEL-Bangalore has been awarded the

further consolidate its leadership position

etc., for providing benefits to Stakehold-

Raksha Mantri’s Award for Design Ef-

in the Indian Defence Market while at

ers. During the year 2008-09, the Com-

fort in recognition of it bringing out a

the same time accelerate the efforts to

pany had approved CSR programmes with

state-of-the-art frequency hopping VHF

get into new business areas.

a total financial commitment of Rs. 18

radio comparable with the best in the

million.

world.

Future Plans

Focus on Defence products will continue and the Company will pursue new orders for products and systems in its core

Achievements

segments of Radars, Sonars, Communi-

Export is a thrust area for BEL. Exports

cations, Electronic Warfare, Net Centric

turnover registered an increase of

Warfare Systems, and Tank Electronics

15.17% from US $ 15.43 million in

etc. BEL has strategies in place to scale

2007-08 to US $ 17.77 million in 2008-

up its performance to international level

09. Company has been making efforts

with enhanced focus on business devel-

for continuous growth in this area. Dur-

opment & marketing and products / sys-

ing the financial year, newer markets

THE INDIAN MARKET SCENARIO FOR DEFENCE AND CIVILIAN ELECTRONICS PRODUCTS /

tems development with acquisition of req-

have been approached for business de-

SYSTEMS IS RAPIDLY CHANGING

uisite technologies at a competitive price,

velopment and orders worth US $ 23.29

WITH THE OPENING OF THE

quality and delivery. BEL will be capital-

million have been obtained. BEL’s rela-

DEFENCE ELECTRONICS

ising on existing Core Competencies to

tionship with Global players like Boeing,

MARKET TO PRIVATE PARTICIPA-

diversify into newer green field areas like

Lockheed Martin and Thales is expected

TION AND THE COMPETITION IS

energy sector (wind, solar, nuclear), in-

to yield good business in the coming

LIKELY TO INTENSIFY. IN THIS

frastructure – Railways / Ports, e-Gover-

years.

SCENARIO,

nance etc., for enhanced growth in the coming years matching the growth of the electronic industry sector in India.

Awards ♦ BEL’s Hyderabad Unit has been con-

BEL IS

TAKING

PROACTIVE STEPS TO PROTECT AND FURTHER CONSOLIDATE ITS LEADERSHIP POSITION IN THE

ferred the ‘Best Performing Division’

INDIAN DEFENCE MARKET

award in the category of Division / Fac-

WHILE AT THE SAME TIME

Pure professionals are counted in this

tory award for 2007-08. Systems worth

ACCELERATE THE EFFORTS TO

world as it holds the base for longer sus-

more than Rs.3,000 crores have been

GET INTO NEW BUSINESS AREAS.

tenance. As Electronic world is facing

supplied to the defence services and

intense competition today, Bharat Elec-

security agencies.

Mission and Vision

75

DECEMBER - 2009

“As a responsible services provider the company believes in inclusive growth of the economy” BHARAT SANCHAR NIGAM LIMITED (BSNL), A FAR DISTINCT TELECOM GIANT IN INDIA THAT ENJOYED MONOPOLY FOR DECADES STILL RULES THE ROOTS EVEN IN THE MIDST OF VIGOROUS COMPETITION. TODAY, BSNL HAS ABOUT 47.3 MILLION LINE BASIC TELEPHONE CAPACITY, 4 MILLION WLL CAPACITY, 49.76 MILLION GSM CAPACITY, MORE THAN 37382 FIXED EXCHANGES, 46565 BTS, 3895 NODE B ( 3G BTS), 287 SATELLITE STATIONS, 480196 RKM OF OFC CABLE, 63730 RKM OF MICROWAVE NETWORK CONNECTING 602 DISTRICTS, 7330 CITIES/TOWNS AND 5.5 LAKHS VILLAGES.

76

DECEMBER - 2009

T

elecom landscape in India has

vices with ICT applications in villages and

BSNL had expanded its customer base

changed completely since lib

winning customer’s confidence. Today,

from present 47 millions lines to 125

eralization and monopolies in

it has about 47.3 million line basic tele-

million lines by December 2007 and in-

Telecom sector have been replaced with

phone capacity, 4 million WLL capacity,

frastructure investment plan to the tune

competitive regime (Oligopolies). It is a

49.76 Million GSM Capacity, more than

of Rs. 733 crores (US$ 16.67 million)

well-known fact that BSNL was carved

37382 fixed exchanges, 46565 BTS,

in the next three years.

out of erstwhile DOT to provide a level

3895 Node B ( 3G BTS), 287 Satellite

playing field to private Telecos. Since then

Stations, 480196 Rkm of OFC Cable,

many new business firms have entered

63730 Rkm of Microwave Network con-

In 1880, two Telephone Companies

in the arena and today there is merciless

necting 602 Districts, 7330 cities/towns

viz., The Oriental Telephone Company

cutthroat competition in this sector. Even

and 5.5 Lakhs villages.

Limited

History

and

the

Anglo-Indian

though competition is bonanza for sub-

BSNL is the only service provider,

Telephone Company Limited approached

scribers but for corporates it is the ques-

making focused efforts and planned ini-

the Government of India for permission

tion of survivability.

tiatives to bridge the Rural-Urban Digital

to establish Telephone Exchanges in In-

With a never-ending aspiration, BSNL

Divide ICT sector. In fact there is no

dia. The permission was however refused

is poised to lead the Telecom world as a

telecom operator in the country to beat

on the grounds that the establishment of

Service Provider in India with global

its reach with its wide network giving

Telegraphs was a Government monopoly

presence. It is leveraging every opportu-

services in every nook & cranny of coun-

and that the Government itself would

nity to create a customer focused organi-

try and operates across India except Delhi

undertake the work in the event of suffi-

zation with excellence in sales, market-

& Mumbai. Whether it is inaccessible

cient demand. By 1881, Government of

ing and customer care. BSNL has held

areas of Siachen glacier, or the North-

India changed their earlier decision and

the telecom monopoly in the country

eastern regions Arunachal and Nagaland,

licence was granted to the original Ori-

before India opened itself to the global

BSNL serves its customers with its wide

ental Telephone Company Limited of En-

markets. But with the arrival of new and

bouquet of telecom services.

gland for opening Telephone Exchanges at Calcutta, Bombay, Madras, Karachi

competing telecom entrants, BSNL’s

BSNL is numero uno operator of India

monopoly ended. But over time, BSNL

in all services in its license area. The

streamlined its products and now holds

company offers wide ranging & most

28th January, 1882, is a Red Letter

the monopoly of the land line network. It

transparent tariff schemes designed to

Day in the history of Telephone in India.

has a well structured underground or land

suite every customer.

On this day Major E. Baring, Member of

network in the rural areas which is an added advantage for the company.

Amassing a huge customer bank, BSNL cellular service, CellOne, has more

Grown as the world’s seventh largest

than 52.09 million cellular customers,

Telecommunications Company, Bharat

garnering 16.96 percent of all mobile

Sanchar Nigam Limited was formed in

users in its area of operation as its sub-

October, 2000. Today it has evolved in to

scribers. In basic services, BSNL is miles

a robust telecom firm giving comprehen-

ahead of its rivals, with 35.1 million Basic

sive range of telecom services in India

Phone subscribers i.e. 85 per cent share

which include Wireline, CDMA mobile,

of the subscriber base and 92 percent

GSM Mobile, Internet, Broadband, Car-

share in revenue terms.

rier service, MPLS-VPN, VSAT, VoIP ser-

BSNL is also leading in WLL and

vices, IN Services etc. Presently it is one

Internet customers. It has more than 2.5

of the largest & leading public sector units

million WLL subscribers and 2.5 million

in India.

Internet Customers who access Internet

BSNL has installed Quality Telecom

through various modes viz. Dial-up,

Network in the country and is now fo-

Leased Line, DIAS, and Account Less

cusing on improving it, expanding the

Internet (CLI). BSNL has been adjudged

network, introducing new telecom ser-

as the Number one ISP in the country.

77

and Ahmedabad.

the Governor General’s Council declared open the Telephone Exchange in Calcutta, Madras and Bombay. The exchange at Calcutta named “Central Exchange” was opened at third floor of the building at 7, Council House Street. On 30th June 1882, the Central Telephone Exchange had 93 subscribers. On 1899, The Central Telephone Exchange was shifted to 1, Council House Street. The management of the Oriental Telephone Company was subsequently taken over by Bengal Telephone Company Limited. The telephone system in the city remained under management of Private Company till 1941 when all the shares of the private company were purchased by a Public Enterprise. The

DECEMBER - 2009

Tariff Voucher with ‘one second pulse’ has been introduced for Saral Anant and pre-paid General Plan. Under this plan Local call to any network will be charged one paise per second and STD at two paise per second. MRP of this STV (Special Tariff Voucher) is Rs.45/-. MRP of India Golden 50 Special Tariff Voucher has also been revised to just Rs. 99/and a new STV India Golden 50 Plus with MRP Rs.49/- has been introduced,” said Goyal. Various other cost effective and attractive STV options are available to suit the customer requirements. Other attractive offers include local calls to own network capital expenditure involved in this deal

work in the country to become fully digi-

was Rs.117 lakhs only. From 1st April

tal on same date the next year (2000).

1943, the control of the Telephone system in Calcutta, Madras and Bombay

Current Activities

for as low as 10 paise per minute and STD call at 50 paise during night from 11 p.m to 7 a.m. Two new tariff plans have been introduced for 2G prepaid mobile customers (excluding Anant cus-

was taken over directly by the Indian

“Today BSNL has about 87 million val-

Posts and Telegraphs Department. In

ued customers in its account. Atmosphere

1985, Indian P & T was bifurcated and

in the country is upbeat as more and

the control of Telephone has been trans-

more telecom players are coming forward

ferred to Department of Telecom. On 1st

with their attractive offerings. BSNL too

GPRS Pack of unlimited free usages

October 2002, the telephone system of

has made efforts to cheer the customers

in home LSA is available only for Rs.230.

Calcutta came under BSNL along with

with new offers and services. As a part of

Promotional tariff is available for unlim-

all other circles except the city of Delhi

that, Special Diwali package on ‘BSNL

ited data download for 2G data card for

and Mumbai which are under Mahanagar

Live’ WAP portal has been created for

90 days from September 2009 under

Telephone Nigam Limited (MTNL).

2.5G / 3G subscribers with price points

which fixed monthly charge for post paid

Calcutta Telephone District (CTD) is the

for Wall Paper, Video Content & Audio

category has been reduced from Rs. 900/

largest metro district of BSNL. Calcutta

Songs. The offer was valid up to 20th

- to Rs. 649/-. For pre-paid customers,

Telephones is having a service area of

October 2009,” said Kuldeep Goyal,

price of re-charge vouchers has been

1900 sq. k.m. covering the city of Kolkata

Chairman & Managing Director, BSNL.

reduced from Rs. 850/30 days to Rs. 649/

and adjoining areas from five districts of

On the 20th of March, 2009, BSNL

West Bengal viz. Howrah, Hooghly,

advertised the launch of Blackberry ser-

High speed Broadband up to 24 mbps

Nadia, North 24 Parganas and South 24

vices across its Telecom circles in India.

is now available for both Home and Busi-

Parganas.

The corporation has also launched 3G

ness categories. New Broadband Combo

At the time of Independence there were

services in select cities across the coun-

Plans for Limited /Unlimited usages have

20,000 phone connections in Kolkata.

try. The 3G service of BSNL is now avail-

been introduced last month. BSNL has

The figure rose to 5,00,000 by March

able in 202 Cities in North & East Zones.

also unveiled cost-effective broadband

18, 1997 and crossed 1 million by Feb-

The company is gradually expanding and

internet access plans (DataOne) targeted

ruary 27, 2000.

improving 3G coverage to reach to every

at homes and small businesses. At present

citizen of the country.

BSNL enjoys around 60 percent of mar-

CTD is the first metro network in the country to become fully electronic on 31st

“The company has revised its various

March 1999 and is the first metro net-

tariff plans for 2G Services. New Special

78

tomers) under category Balance Based Tariff (BBT) and Usages Based Bonus (UBB).

30 days.

ket share of ISP services. Catering to the needs of customers in the rural areas, BSNL, in association with

DECEMBER - 2009

other departments of Government of In-

was set at Rs.57,485 lakhs. The com-

dia is making efforts to make information

pany gained Rs.1.15 as earnings per

accessible to rural folks. “National Broad-

share for the financial year.

CSR BSNL, being the biggest public sector telecommunication company has certain

band Penetration Programme has been

BSNL ended financial year 2008-09

additional responsibilities such as reach-

developed to bridge the rural-urban digi-

with a revenue of Rs.333.59 billion,

ing out to rural masses, covering every

tal divide. The programme aims to break-

down around 12% from the previous

nook and cranny of India, exhibiting a

through affordability barriers. BSNL has

year’s Rs.380.53 billion. Despite the fall

greater sense of Corporate Social Respon-

partnered with HCL Info systems Limited

in

sibility (CSR).

to make available PCs at a nominal pay-

run telecom service provider earned a

ment of Rs.2250/- and Rs.300/- per

net profit of Rs.49 billion in fiscal 2009,

month towards the cost of the Personal

up 38.58% from the previous year’s

Computers. BSNL is also looking forward

Rs.30.09 billion.

revenues,

the

government-

to extend Broadband connectivity at subsidized rate of Rs. 99/- and Rs. 150/- per

Future Plans

month. As a responsible services provider

BSNL has plans to spend Rs349.31

the company believes in inclusive growth

crore in 2009-10 to expand its CDMA-

of the economy which can be acceler-

based wireless services. “In BSNL, 19.21

ated by reaching to rural masses. BSNL

lakh lines of CDMA based equipments

has been providing connections in both

are under various stages of supply and

urban and rural areas,” said Goyal.

installations for the year 2009-10” said

Backbone infrastructure is being cre-

Gurudas Kamat, State Minister for Com-

ated by the company to provide broad-

munication and Information Technology.

band connectivity to Village Panchayats,

BSNL is planning to increase its cus-

Post Offices, Schools and Universities and

tomer base to 108 million customers by

Common Service Centers with the sup-

2010. With frantic activity in the com-

port of Department of Information Tech-

munication sector in India, the target

nology in the rural areas. “As a Public

appears achievable.

Sector institution, it is BSNL’s endeavor to empower the common man of the country with rich technological advancements,” said Goyal.

Financials The Company has a net worth of Rs.88,634 crores (US$ 17.40 billion), authorized equity capital of Rs.10,000 crores (US $ 1.96 billion), Paid up Equity Share Capital of Rs.5,000 crores (US $ 0.98 billion) and Revenues is Rs.35,812 crores (US $ 7.03 billion) in 2008-09.

BSNL is a pioneer of rural telephony in India. It has recently bagged 80 percent of US$ 580 million (INR 2,500 crores) Rural Telephony project of Government of India.

Vision and Mission BSNL, the fourth largest telecom service provider in India is moving a head to become the leading Telecom Service Provider with global presence. As customers are the key players of its business, BSNL is visioned to create a customer centric organization with excellence ser-

As on 31st March 2009, BSNL

vices in sales, marketing and customer

showed a turnover performance of

care. The Company is also leveraging

Rs.3,026,857 lakhs with a total expen-

technology to provide affordable and in-

diture of Rs.3,435,421 lakhs. The com-

novative products/services across customer

pany showed Rs.127,163 lakhs as Profit

segments in the country.

Before Tax while the PAT (Profit After Tax)

79

Faced with stiff competition BSNL has been losing customers to competitors. To win them back a number measures have been taken up. Some of these include frequent downward tariff revisions, combined offers of mobile and landline, schemes suiting various sections of the society such as students, government servants etc. BSNL is planning to offer special concessions or discounts to senior citizens. After all they form nearly 8.5 per cent of the total population. This may be given to seniors living alone as identified by voter lists or government ID cards. A certain number of calls may be free or at reduced rates.

BSNL HAS PLANS TO SPEND RS349.31 CRORE IN 200910 TO EXPAND ITS CDMABASED WIRELESS SERVICES. “IN BSNL, 19.21 LAKH LINES OF CDMA BASED EQUIPMENTS ARE UNDER VARIOUS STAGES OF SUPPLY AND INSTALLATIONS

2009-10” SAID GURUDAS KAMAT, STATE MINISTER FOR COMMUNICATION AND INFORMATION TECHNOLOGY. BSNL IS

FOR THE YEAR

PLANNING TO INCREASE ITS

108 CUSTOMERS BY 2010.

CUSTOMER BASE TO MILLION

WITH

FRANTIC ACTIVITY IN THE

COMMUNICATION SECTOR IN

INDIA,

THE TARGET APPEARS

ACHIEVABLE.

DECEMBER - 2009

BPCL has established proven quality control system in accordance with worldwide standards KEEPING IN VIEW THE VISION OF LATE PANDIT JAWAHAR LAL NEHRU OF SETTING UP PUBLIC ENTERPRISES IN VILLAGES FOR THE DEVELOPMENT & UPLIFT OF SOCIALLY BACKWARD AREAS, THE THEN CONGRESS GOVERNMENT TOOK THE TASK OF ESTABLISHING INDUSTRIES IN NAINI OUTSKIRTS OF ALLAHABAD. BHARAT PUMPS & COMPRESSORS LIMITED (BPCL) WAS ONE OF THE INDUSTRIES, A PUBLIC SECTOR UNDERTAKING UNDER THE CONTROL OF MINISTRY OF HEAVY INDUSTRIES & PUBLIC ENTERPRISES, GOVT. OF INDIA, WHICH WAS SET UP IN THE YEAR 1970 AT NAINI, ALLAHABAD AS AN IMPORT SUBSTITUTION UNIT FOR MANUFACTURE OF SOPHISTICATED PROCESS PUMPS AND COMPRESSORS FOR CORE SECTOR INDUSTRIES WHICH WERE HITHERTO BEING IMPORTED.

80

DECEMBER - 2009

B

PCL was incorporated in the

special efforts and corporate strategies put

06 to Rs.3050 lakhs in 2007-08. BPCL

year 1970 with an objective

in place during the last quarter of 2005-

was accredited with API-7K monogram.

to do reaserch, design manu-

06 yielded the much awaited turn around

“BPC achieved the turnover of 236.36

facture and supply capital goods in fluid

of the Company which was on the verge

crores in 2008-09 @ net profit of Rs

handling field including provision of

of being closed on account of losses since

26.86 crores. The company has entered

servicves connected there-with to cater

its inception in 1970 for about 35 years

into export market by obtaining the break-

oil exploration and exploitation in varied

as the Company had an accumulated loss.

through order from M/s Lavan Refinery,

sectors ranging from rifineries, petro

“The turn around in less than a year

Iran for supply of 6 Nos. Compressors

chemicals to fertilisers and power sec-

from a near closure/winding up situation

tors.

has been made possible through dedi-

worth Rs 48.00 crores,” said Jain.

Core Sectors

Later on, the company took up manu-

cated and sustained pursuits of revival

facture of High Pressure Industrial and

strategies and following the fundamental

CNG Gas Cylinders as part of diversifica-

concepts of excellence and with empha-

tion efforts for the first time in India &

sis on participative management,” said

♦ Petroleum & gas

manufacturing of gas cylinders started

Jain.

♦ Chemicals & fertilizers

in 1976. BPC has this unique distinc-

BPCL achieved a net profit of Rs.1.84

tion of manufacturing all these products

crores during Financial Year 2005-06

under one roof.

after accounting for Government interest

History

amounting to Rs.13.50 crores as against a loss of Rs.10.86 crores during previ-

BPCL was a sick company having sufaggregating to Rs.175.29 crores. The net worth of the company, as on 31st March 2005, was negative at Rs.121.61 crores and manpower of 1244 employees. “At that time the employees also lost all zeal to work required for productive results as the Company could not generate enough production & obtain orders to maintain even a working business cycle. Bharat Pumps & Compressors Ltd., as such was on verge of closure with

This remarkable feat of turnaround is

♦ Steel BPCL’s major clients are ONGC, BHEL, IGC IRAN, etc.

achieved without considering the ben-

provided by the Government of India.

efits of financial restructuring.

However a revival package was approved

“As of now the company has comfort-

by the Government of India in the year

able order book position and has been

2006-07 providing for financial support

making profit since last four consecutive

as loan from ONGC, Technological sup-

years and has also bagged export order

port from EIL & Management support from

from Iran. The company has not looked

BHEL in addition to waiver of loan and

back and is maintaining steady growth,”

interest on government dues,” said Jain.

said Jain.

Products

ing orders in competitive biddings,” said

achieved historic performance with sales

Abhay Kumar Jain, CMD, BPCL.

growth of 207% over 2005-06 & achieving profits for three consecutive years from a level of profit of Rs.184 lakhs in 2005-

Past Per formance Parameters

♦ Process downstream industries

“No direct financial assistance has been

During the year 2007-08, BPCL

The moment of Pride and Recogni-

♦ Power (including nuclear power)

more of significance since it has been

minimal production and failure in secur-

tion came for BPCL in 2005-06. The

Sectors mainly-

CPCL, BORL, IOCL, BPCL, HPCL, KRL,

ous year 2004-05.

fered losses consistently since inception

The company caters the need of Core

Heavy Duty Reciprocating Pumps, Compressors , High Pressure Industrial Gas Cylinders, CNG on board Cylinders & CNG Cascades are the main products of BPCL.

[Rs. In lakhs] 2003-04

2004-05

2005-06

% change over year 2004-05

Value of Production

4750

7000

10318

47.4%

Value Added

2421

3483

4959

42.37%

(2494)

(1086)

184

Turnaround

(11340)

(12161)

(11715)

4% Improvement

1257

1244

1233

Reduction of 11 employees

Net Profit/(Loss) Net worth No. of employees

81

DECEMBER - 2009

All these products meet the specifications of international codes such as API

Per formance 2008-09 Parameters

2008-09 (Value in Rs Lacs)

on the basis of proven and updated de-

Value of Production

239.9

signs.

Value Added

9761.3

Net Profit/(Loss) Before Tax

2688.2

Net worth

9860.8

No. of employees

1062

and are fully guaranteed for performance

Gas Cylinders are manufactured as per specifications of international standards, such as, DOT, BS, BIS, ISO, etc. and have usage approval from recognised national/international agencies. “Our hi-tech products are functioning

Quarterly Results (1st Quarter)

to the total satisfaction of the customers

Parameters

2009-10(Value in Rs Lacs)

with least maintenance cost and opti-

Value of Production

4770

mum energy conservation. BPCL has es-

Sales

4663

Net Profit/Loss Before Tax

571

and continuously implementing latest

Order Book Position

28430

standards,� said Jain.

No. of employees

1057

tablished proven quality control system in accordance with worldwide standards

Certification Quarterly Results (2nd The company is accredited with inte-

Quarter)

Parameters

2008-09(Value in Rs Lacs)

having ISO 9001-2008, ISO 14001 :

Value of Production

11033

2004 and OHSAS 18001 - 2007 .

Sales

10767

Net Profit/Loss Before Tax

1638

Order Book Position

24163

No. of employees

1074

grated Management System Certification

Company is also accredited with API 7K license of manufacturing Slush Pump Components.

82

DECEMBER - 2009

83

DECEMBER - 2009

“BHEL had booked around Rs. 8,000 crores worth orders in the second quarter alone” BHARAT HEAVY ELECTRICALS LIMITED (BHEL) HAS BEEN CONTRIBUTING IMMENSELY FOR THE CORE DEVELOPMENT OF THE POWER SECTOR IN

INDIA. OF

LATE IT HAS DEVELOPED INDIGENOUSLY, DISC INSULATORS

FOR APPLICATION IN AND IS DEVELOPING

± 800 KV HVDC AND 1200 KV AC SYSTEMS 1200 KV TRANSFORMERS AND CAPACITIVE

VOLTAGE TRANSFORMERS

TO MEET THE FUTURE TRANSMISSION SYSTEM

REQUIREMENTS IN THE COUNTRY.

84

DECEMBER - 2009

B

HEL forms the core of power

journey towards Total Quality Manage-

generation in India. Today it

ment.

Valued at Rs.270 Million, the order entails installation of an indigenously-

has grown as the largest en-

Besides these manufacturing units

developed Phase Shifting Transformer, to

gineering and manufacturing enterprise

there are four power sectors which un-

be installed at APGENCO’s Kothagudem

in the country in energy-related and in-

dertake EPC contract from various cus-

Thermal Power Station (KTPS) Stage-VI.

frastructure sector which includes power,

tomers. The Research and Development

In addition, BHEL has developed in-

Railways, Telecom, Transmission and

arm of BHEL is situated in Hyderabad

digenously, disc insulators for application

Distribution, Oil and Gas sectors and

and two repair shops are at HERP (Heavy

in ± 800 kV HVDC and 1200 kV AC

many more. It is the 12th largest power

Equipment Repair Plant), Varanasi and

systems and is developing 1200 kV Trans-

equipment manufacturer in the world.

EMRP (Electric machines repair plant)

formers and Capacitive Voltage Trans-

BHEL was established more than 50

Mumbai.

formers to meet the future transmission

years ago, ushering in the indigenous Heavy Electrical Equipment industry in India. The company has been earning profits continuously since 1971-72 and paying dividends since 1976-77. About 73% of the total power generated in India is produced by equipment manufactured by BHEL.

The company has supplied over one

system requirements in the country.

million Valves to Power Plants and other

BHEL is the largest manufacturer of

Industries. BHEL’s operations are

transformers in India, having supplied

organised around business sectors;

more than 4,000 transformers, aggregat-

namely power – Transmission & Renew-

ing to over 3,00,000 MVA in cumulative

able Energy; Industry- Transportation &

capacity for transmission and distribution

Telecommunication; and overseas busi-

networks, which are the mainstay of the

ness. This enables BHEL to have a strong

Indian Grid. These have been supplied

BHEL manufactures over 180 prod-

customer orientation, to be sensitive to

to all major utilities in the country in-

ucts under 30 major product groups and

his needs and respond quickly to the

cluding SEBs, NTPC, PowerGrid etc. On

caters to core sectors of the Indian

changes in the market.

the export front, the company has sup-

Economy viz., Power Generation & Transmission, Industry, Transportation, Tele-

plied transformers to more than 20 coun-

Current Activities

tries around the world including Libya,

communication, Renewable Energy, etc.

BHEL achieved a major milestone with

The wide network of BHEL’s 14 manu-

the dispatch of the first consignment of

facturing divisions, four Power Sector

supercritical boiler components for the

regional centers, over 100 project sites,

2x800

at

eight service centers and 18 regional

der of Rs.5600 crores from JP power and

Krishnapatnam in Nellore District of

offices, enables the Company to promptly

is seeking to increase its earning sub-

Andhra Pradesh. These are the first 800

serve its customers and provide them with

stantially in the near future.

MW supercritical boilers being set up by

suitable products, systems and services

BHEL against Rs.25,000 Million order

— efficiently and at competitive prices.

placed on the company by Andhra

The high level of quality & reliability of

Pradesh Power Development Company

its products is due to the emphasis on

Limited (APPDCL), a joint venture of

design, engineering and manufacturing

APGenco and ILFS for setting up the

to international standards by acquiring

2x800 MW Steam Generator (SG) pack-

and adapting some of the best technolo-

age at Krishnapatnam.

gies from leading companies in the world, together with technologies developed in its own R&D centers.

MW

power

project

Another significant breakthrough was with the first commercial order for India’s first indigenously developed Phase Shift-

BHEL has acquired certifications to

ing Transformer. Reposing faith in BHEL’s

Quality Management Systems (ISO

capability to successfully introduce new

9001), Environmental Management Sys-

technology products, Andhra Pradesh

tems (ISO 14001) and Occupational

Power Generation Corporation Limited

Health & Safety Management Systems

(APGENCO) has placed an order on BHEL

(OHSAS 18001) and is also well on its

for the country’s first Phase Shifting Transformer (PST).

85

Oman, Malaysia, Saudi Arabia and Zambia. Recently, BHEL bagged the largest or-

The order from JP Power is also crucial to BHEL as it comes in the higher supercritical equipment category. Such equipment is typically above the 600 MW category, where realizations are higher than in the sub-critical category. It also brings with it the possibility of another order for phase II of the same project. BHEL has also secured a major order for setting up the upcoming 1,980 MW Prayagraj Thermal Power Project (TPP) with Supercritical parameters in Uttar Pradesh, involving three units of 660 MW each. Valued at Rs.56,000 Million, the order for the Greenfield power project, located at Bara in Allahabad district of Uttar

DECEMBER - 2009

to be self-reliant in the field of supercritical thermal power plants. BHEL has committed to meet the country’s power forecast for the 11th Plan and beyond. For this, it has already enhanced its manufacturing capacity to 10,000 MW per annum and is further augmenting it to 15,000 MW per annum which is proceeding apace and plans are afoot to hike it further to 20,000 MW by 2011-12. By end FY10, BHEL’s order book will be around 4.5 to 5 times its projected FY10 revenues of around Rs.33,000 crore. Besides being significantly better than its closest comparable peer, Larsen Pradesh, has been placed on BHEL by

second quarter have been Rs. 20,425

& Toubro Ltd, the robust order book as-

Prayagraj Power Generation Company

crores aggregating to about 8,024 mega

sures a top line growth of 23-25% every

Limited (PPGCL), a company owned by

watts. BHEL had booked around Rs.

year until 2012.

Jaiprakash Associates Limited (JAL), and

8,000 crores worth orders in the second

According to analysts, until a few years

reflects the customer’s confidence in the

quarter alone,” said B. P. Rao, CMD –

back BHEL’s revenue growth was con-

company’s technological excellence and

BHEL.

strained by a lack of capacity. However,

BHEL had projected its financial turn-

it will add around 20GW of capacity by

over for the year 2009-10 as Rs.310,000

December 2011, most of which will come

BHEL at present is executing more than

million in the gross sales turnover with a

into operation by FY10 itself.

30 projects in the country. Some of the

gross margin of Rs.64,270 Million. The

Achievements and Awards

important ones are, Indira Gandhi Super

PBDIT to total employment was accounted

Thermal Power Project 3x500 MW,

to be Rs.1.384 Million. The Gross Mar-

Kutch Lignite Power Station, NTPC Barh

gin to gross bloc was expected to be

Stage-1 (ESP) & stage 2 - 2x 660 MW

93.75 percent. Gross profit to capital

North Chennai Power Project, Parbati

employed at the year end was recorded

Hydro Project stage 2 and stage 3 4x200

as 50.11 percent. The net profit to net

MW each and many more.

worth at the year end was expected at

♦ Installed equipment for over 90,000

24.70 percent. The added value to Gross

MW of power generation — for Utili-

sale was estimated to be 16.91 percent

ties, Captive and Industrial users.

capability in executing projects of this magnitude.

Meanwhile, during the first half of FY10, BHEL’s revenues grew by around 26% to around Rs.12,400 crore. Net profit grew by nearly 33% to around Rs.1330 crore. A major part of the improvement in its operating profit margin during the period came from the drop in raw material costs.

Financials “BHEL has continued its trend of good performance in the second quarter of 2009-10. The orders booked upto the

86

Over the years BHEL has been contributing incredible achievements for the nation’s power sector. Some of the significant and notable among these achievements includes:

for the year 2009-10. Further, a stretch

♦ Supplied over 2,25,000 MVA trans-

Turnover target of Rs. 320,000 Million

former capacity and other equipment

has been fixed under ‘Excellent’ rating.

operating in Transmission & Distribu-

Future plans BHEL has upgraded its technology

tion network up to 400 kV (AC & DC). ♦ Supplied over 25,000 Motors with Drive Control System to Power projects,

base from sub-critical sets to supercritical

Petrochemicals, Refineries, Steel, Alu-

sets of 660/800MW and above. The com-

minum, Fertilizer, Cement plants, etc.

pany has ongoing collaboration agreements with Alstom, France and Siemens, Germany, with a technology transfer arrangement. This will enable the country

♦ Supplied Traction electrics and AC/DC locos to power over 12,000 kms Railway network.

DECEMBER - 2009

87

DECEMBER - 2009

GAIL has reached new milestones with its strategic diversification into Petrochemicals, Telecom and Liquid Hydrocarbons GAIL

HAS MADE SIGNIFICANT CONTRIBUTIONS TO THE NATION’S ECONOMY BY SUPPLYING NATURAL

11,000 MW OF POWER IN THE 11.5 MILLION TONNES OF UREA AND MORE THAN 1 MILLION TONNS OF LPG PER ANNUM. OVER 5.75 LAKH VEHICLES AND 7 LAKH HOUSEHOLDS IN THE COUNTRY TODAY ARE RUNNING ON COMPRESSED NATURAL GAS (CNG) SUPPLIED BY GAIL. THE COMPANY ALSO PRODUCED 700,000 TONNES OF PETROCHEMICALS USED IN PLASTIC INDUSTRY. GAS THROUGH ITS PIPELINE NETWORK FOR GENERATION OF OVER COUNTRY. IT PRODUCED OVER

88

DECEMBER - 2009

T

he setting up of GAIL (India) in

and Maharashtra government supplies gas

August 1984 heralded a new

to domestic, commercial and small in-

era of natural gas in the coun-

dustrial consumers in Mumbai. It also

try and now the Company has completed

supplies CNG to the transport sector.

25 years of service to the nation. As

The company has about 68,616 do-

reorganisation to the company’s exem-

mestic users of Piped Natural Gas (PNG)

plary service and high quality delivery,

and over1,00,000 registrations. It has 24

GAIL has been categorized as one of the

CNG stations catering to about 25,000

‘Navratnas’ of the country. The erstwhile

CNG consumers in the transport sector.

Gas Authority of India Ltd., GAIL is now

The company has 374 commercial and

one of India‘s leading public sector en-

31 industrial users in Mumbai.

M ECHANICAL

COMPLE TION OF

terprises and is the largest gas transmis-

GAIL’s operations through its business

sion and marketing company in the coun-

segments include gas transmission, pet-

try. It was established as a wholly owned

rochemicals, liquid hydrocarbons, LNG,

P OLYE THYLENE ) P L AN T

company of the Government of India with

LPG transmission & marketing, GAILTEL

CAPACITY OF

100 per cent equity held by the govern-

– the service arm of GAIL, is engaged in

ment.

providing GAILTEL services to mission

GAIL is ranked among the top ten com-

critical in-house SCADA and ERP ser-

panies in country. The various activities

vices apart from commercially leasing

of the company range from gas market-

services to GAILTEL Operators and ISP’s

ing and distribution through trunk and

across India, and Coal Bed Methane

regional systems, to retailing of natural

(CBM).

HDPE (H IGH D ENSITY

NE W

THE

WITH A

100,000 TPA

P ETROCHEMICAL C OMPLE X

C OMMISSIONING

OF

D AHA J -

P ANVEL P IPELINE B RAHMAPUTRA C RACKER

and marketing of liquefied petroleum gas

GAIL Global (Singapore) Private Ltd. Its

(LPG), liquid hydrocarbons and petro-

joint ventures include Brahmaputra

chemicals. The equity pattern in the com-

Cracker and Polymer Limited, Petronet

pany has also changed as the govern-

LNG Limited (PLL), Indraprastha Gas Lim-

ment now holds about 67 per cent of the

ited (IGL), Bhagyanagar Gas Limited

equity in the company. GAIL owns and

(BGL) and Tripura Natural Gas Company

operates over 4,400 km of pipeline and

Limited (TNGCL). Other prominent JVs

has about 95 per cent market share in

GAIL’ S V IJAIPUR -K OTA

of GAIL include Mahanagar Gas Limited

the natural gas business in India.

CO MMI S S I O N E D

(MGL), Central U.P Gas Limited (CUGL), Gas

Limited

(GGL)

and

duction in India is gas-based, out of

Maharashtra Natural Gas Limited

which GAIL contributes more than 90

(MNGL). The Company’s projects in the

per cent, thus making a significant con-

pipeline include Thulendi-Phulpur pipe-

tribution to India‘s agriculture sector. GAIL

line project, Jagoti-Pithampur pipeline

has now introduced the concept of LPG

project, Kelaras-Malanpur pipeline project

pipelines in India and is currently oper-

and Dahej-Uran pipeline.

ating the world’s longest LPG pipeline from Gujarat to Loni near New Delhi,

History

which is 1,250 kms long, costing

GAIL (India) was formed in August

Rs.12.5 billion. GAIL has six LPG plants,

1984 as India’s principal gas transmis-

four gas processing plants producing over

sion and marketing to create gas sector

1 million tons of LPG and other liquid

infrastructure for the sustained develop-

hydrocarbons per annum. GAIL‘s joint

ment of Natural Gas sector in the coun-

venture, Mahanagar Gas with British Gas

try. Among its major projects, the 2800-

89

AND

P OLYMER L IMITED - J OINT V EN -

The Company’s overseas subsidiary is

Green

AT

PATA.

gas and processing gas, for production

More than half of the total Urea pro-

AT

TURE

C OMPANY

GAIL, FORMED

LED BY

FOR IMPLEMENTING

A SSAM G A S C RACKER P ROJECT GAIL

ACQUIRES STAKE IN

M YANMAR

A7

BLOCK PIPELINE

GAIL’ S K AIL ARA S -M AL ANPUR COMMISSIONED

PIPELINE

GAIL

CONSORTIUM WINS

BLOCKS IN

III RD

3 CBM

ROUND OF

BIDDING

GAIL HPCL J OINT V ENTURE A VAN TIK A G A S L IMITED

INCORPO -

R AT E D

GAIL ONGC

INK

G AS S UPPLY

A GR EEMEN T 2006-07

DECEMBER - 2009

GAIL, O ILE X A USTRALIA , V IDEOCON , HPCL C ONSORTIUM

AND

BPCL

AWARDED

B LOCK

N O . 56 GAIL believes that corporate respon-

out at the Work Centre itself, and are

sibilities go beyond the financial, to

allocated 75% of the overall CSR bud-

non-financial areas such as commu-

get. The company’s social welfare

nity development and nation building.

programmes come under the Special

Conducting business responsibly is

Component Plan (SCP) and Tribal Sub

central to its philosophy. Community

Plan (TCP) of the Government of In-

improvement, undertaken in consul-

dia.

tation with local groups (Gram Panchayats, Revenue Offices, Collectors, State or District authorities, school teachers and principals), is an integral part of all its corporate activities. As a national company, the company has given CSR its due importance with the creation of a portfolio dedicated to funding and helping various social causes and working towards strengthening the relationship between the Government and citizens. GAIL also supports solutions for rural development and for reducing socio-economic disparities. The company has committed 1% of its net Profit After Tax (PAT) of the previous financial year to CSR programmes. These are spread across three levels National, Zonal and Work Centre. While the National and Zonal programmes are executed by the Corporate or Zonal Offices, the Work Centre programmes are carried

90

GAIL is one of the few companies which has fulfilled the reservation target for employment to Scheduled Castes / Scheduled Tribes and physically challenged persons. The major areas that the company works in deal

2005-06 I NCORPORATION

power India’s physically challenged. GAIL evaluates its performance by the triple bottom line - social, envi-

A CQUISITION STAKE IN

sustainable development even as the company continues to grow and reward investors.

operating our core businesses in a socially responsible way, complemented by investment in communities, so as to produce an overall positive impact on society”.

SIGNED FOR

A

9%

EQUITY

C HINA G AS H OLDINGS

STAKE IN

L TD .,

EQUITY

N AT G A S , E GYPT .

ACQUISITION OF

J OINT V ENTURE

GAS PROJECTS IN

42

FOR CITY

CITIES OF

CHINA. T RIPURA N ATURAL G AS C O . L TD .,

A

J OINT V ENTURE

FOR CITY

T RIPURA ,

GAS PROJECT IN

I N CO R P O R AT ED .

UP C ENTRAL G AS L TD ., V ENTURE WITH

A

J OINT

FOR CITY GAS PROJECT

BPCL

IN

K ANPUR ,

I N CO R P O R AT ED .

At GAIL, Corporate Social Responsibility is “Continuing commitment for

15%

OF

A GREEMENT

ronmental, and financial success. Thus, it catalyses initiatives aimed at

GAIL

OF

G LOBAL S INGAPORE P TE . L TD .

with raising awareness levels and enacting efficient measures to help em-

O MAN

IN

D E - BOTTLENECKING S WING U NIT MT

TO

OF

LLDPE

150000

FROM

210000 MT

AT

GAIL

P ATA 2004-05

DECEMBER - 2009

km Hazira-Vijaipur-Jagdishpur (HVJ)

tion centers in India with major gas fields,

for supplying Piped Natural Gas (PNG)

pipeline was the prominent one and it

LNG terminals and other cross border gas

to households and commercial users, and

became operational in 1991.

sourcing points. GAIL is also expanding

Compressed Natural Gas (CNG) to the

its business to become a player in the

transport sector

During 1991-93, three LPG plants were constructed and some regional pipelines acquired, enabling GAIL to begin its regional gas distribution in various parts of India. GAIL began its city gas distribution in Delhi in 1997 by setting up nine CNG stations, catering to the city’s vast public transport fleet. In 1999, GAIL set up northern India’s only petrochemical plant at Pata. GAIL became the first Infrastructure Provider Category II Licensee and signed the country’s first Service Level Agreement for leasing bandwidth in the Delhi-Vijaipur sector in 2001, through its telecom business GAILTEL. In 2001, GAIL commissioned worlds longest and India’s first Cross Country LPG Transmission Pipeline from Jamnagar to Loni. GAIL today has reached new milestones with its strategic diversification into Petrochemicals, Telecom and Liquid Hydrocarbons besides gas infrastructure. The company has also extended its presence in Power, Liquefied Natural Gas re-gasification, City Gas Distribution and Exploration & Production through equity and

International Market.

Current Activities

GAIL is participating stake in the Dahej LNG Terminal and the upcoming Kochi LNG Terminal in Kerala. The company

Today, GAIL’s Business Portfolio in-

has been entrusted with the responsibil-

cludes, 6,700 km of Natural Gas high

ity of reviving the LNG terminal at Dabhol

pressure trunk pipeline with a capacity

as well as sourcing LNG.

to carry 148 MMSCMD of natural gas across the country. It owns 7 LPG Gas Processing Units to produce 1.2 MMTPA of LPG and other liquid hydrocarbons. GAIL is North India’s only gas based integrated Petrochemical complex at Pata with a capacity of producing 4,10,000 TPA of Polymers. The company maintains 1,922 km of LPG Transmission pipeline network with a capacity to transport 3.8 MMTPA of LPG. Gas Authority of India owns 27 oil and gas Exploration blocks and 3 Coal Bed Methane Blocks.

GAIL has also established its strong presence in the CNG and City Gas sectors in Egypt through equity participation in three Egyptian companies: Fayum Gas Company SAE, Shell CNG SAE and National Gas Company SAE. In another significant move, GAIL had gained important stake in China Gas Holding to explore opportunities in the CNG sector in mainland China.

Financials Revenues of GAIL (India) increased by

As a part of its telecommunication net-

26.1 percent y-o-y to Rs. 6233.9 crores

work GAIL has 13,000 km of OFC net-

in Q4 09. Strong growth in revenues is

work offering highly dependable band-

attributable to strong performance across

width for telecom service providers. The

segments. Revenue from Natural Gas

company has formed Joint venture with

Trading segment increased by 40.2 per-

various other companies in Delhi,

cent y-o-y to Rs. 4742.9 crores. Natu-

Mumbai, Hyderabad, Kanpur, Agra,

ral Gas Transmission services segment

Lucknow, Bhopal, Agartala and Pune,

registered growth in revenue of 17.1 per-

joint ventures participations. Incorporating the new-found energy into its corporate identity, Gas Authority of India was renamed GAIL (India) Limited on November 22, 2002. Presently the company is deeply involved in integrating all aspects of the Natural Gas value chain (including Exploration & Production, Processing, Transmission, Distribution and Marketing) and its related services. In a rapidly changing scenario, the company is spearheading the move to a new era of clean fuel industrialization, creating a quadrilateral of green energy corridors that connect major consump-

91

DECEMBER - 2009

troleum and Natural Gas. As against an excellent MoU target of Gas Transmission of around 81.5 MMSCMD of natural gas from domestic sources and through LNG route, the Company achieved natural gas transmission of 83.29 MMSCMD. Further, GAIL achieved natural gas sales of 79.06 MMSDMC against MoU target of around 70 MMSCMD. GAIL produced 420 TMT of polymers and 1,401 TMT of LPG and other liquid hydrocarbons against MoU ‘Excellent’ production target of 390 TMT of Polymers (HDPE & LLDPE) and 1,260 TMT of Liquid Hydrocarbons. The subsidy sharing in domestic LPG cent y-o-y to Rs. 651.1 crores. However,

Future Plans

revenue from LPG & Liquid Hydrocarbon segment declined by 3.0 percent y-o-y to Rs. 767.1 crores. In FY 2009 revenues increased by 31.3 percent y-o-y to Rs. 24857.5 crores. Growth in revenues is attributable to decent performance across segments. Revenue from Natural Gas Trading segment registered growth of 43.9 percent to Rs. 18665.0 crores. Revenue from LPG & Liquid Hydrocarbon segment increased by 12.2 percent y-o-y to Rs. 2964.1 crores, whereas revenue from Natural Gas Transmission services segment witnessed growth of 10.4 percent y-o-y to Rs. 2482.4 crores. Operating profit declined by 6.9percent y-o-y to Rs. 1087.1 crores in Q4 09. Decline in operating profit is attributable to increase in purchase cost. Purchase cost as a percentage of revenue increased from 58.5 percent to 64.8 percent as a percentage of revenue in 4Q 09. On a full year basis, operating profit witnessed a growth of 3.8 percent to Rs. 4596.7 crores. Interest expense increased by 56.5 percent to Rs. 30.6 crores. Whereas Depreciation expense declined by 1.0 percent Rs. 140.9 crores in the quarter of 2009.

92

and PDS kerosene was Rs. 1,781 crore in FY 2009 (against Rs. 1,314 crore in

GAIL plans to invest Rs. 5,558 crore

FY 2008). Without the subsidy element,

during FY 2009-10. Of these, Rs. 4,020

the PBT would have increased by 16

crore will be invested in pipeline projects,

percent to Rs. 5,985 crore and PAT would

Rs. 650 crore will be invested in E&P

have increased by 14 percent to Rs.

projects, Rs. 285 crore will be invested

3,991 crore. During FY 2009, natural

in Petrochemicals, Rs. 130 crore will be

gas sales have increased by 14 percent

invested in business development, Rs.

to 79.06 MMSCMD from 69.10

250 crore for equity investment in city

MMSCMD in the previous year. The Gas

gas projects, Rs. 200 crore in RGPPL

transmission has increased to 83.29

and rest in telecom.

MMSCMD from 82.10 MMSCMD in the

GAIL has set a target of transmitting

previous year.

94.8 MMSCMD of natural gas from do-

In FY 2009, total Liquid Hydrocarbon

mestic sources and through LNG route

production including LPG was 1.401

during FY 2009-10 under the Annual

million MT as compared to previous year’s

Memorandum of Understanding signed

production of 1.347 million MT. Produc-

with Ministry of Petroleum and Natural

tion of LPG was 1.088 million MT dur-

Gas for performance targets for the Fi-

ing the year against a production of 1.043

nancial Year 2009-10. During the FY

million MT in the last fiscal. The Pro-

2009-10, to achieve the Excellence in

pane production was 1,52,671 MT in

performance, the Company has also tar-

FY 2009 against the previous year’s pro-

geted for Gas Marketing target of around

duction of 155,873 MT. The Pentane

83.2 MMSCMD. The MoU also provides

production was 58,932 MT during FY

for an ‘Excellent’ production target of 400

2009 as against 73,505 MT produced

TMT of Polymers (HDPE & LLDPE) and

in FY 2008. LPG transmission through

1,260 TMT of Liquid Hydrocarbons.

pipelines was 2.744 million MT in FY

Achievements

2009 as against 2.754 million MT in FY 2008. In FY 2009, the production of

GAIL continued its excellent physical

polymers has increased by 9 percent to

performance as per its Annual Perfor-

4.20 lakh MT as against 3.86 lakh MT

mance MoU signed with Ministry of Pe-

in the previous year. DECEMBER - 2009

“We are expecting the steel demand to double with in next 5 to 7 years period” to the domestic demand. Moreover, In-

path of growth at the rate of over 10 per-

dia has deposits of rich mineral resources

cent annum. This trend is likely to con-

such as iron ore, manganese, chromium

tinue, for a long time, keeping in tune

etc., which have further supports the

with the economic progress of the coun-

growth of steel industry in India. The

try. We are expecting the steel demand

growth opportunity of steel in the coun-

in the country to double with in next 5 to

try has already brought in a large num-

7 years period. World Steel Association

ber of steel investors intending to set up

has also made the long term forecast that

their production plants, in various parts

Indian steel demand will be in the range

of the country, particularly in mineral rich

A SAI PRATHAP, MINISTER OF STATE FOR STEEL, SPEAKS ON THE STEEL MINISTRY’S ACHIEVEMENTS IN

of 180-200 million tonnes by the year

states.

2020.

highly resource intensive—in terms of

RECENT TIMES AND THE MOVES

Policy (Production, Consumption,

capital, land, raw materials, energy and

PLANNED FOR THE NEAR FUTURE.

Exports,

water. A number of issues need to be

Road Ahead for the Steel Sector

effectively coordinated for setting up of

in India.

Large scale integrated steel plants are

What are the initiatives of the

major steel units, which involves the

Ministry of Steel in the recent

concerned State Government and vari-

times to boost steel production

ous Ministers of Central Government. We

in the country?

are well aware of the problems and re-

Current Steel production capacity in the country is 65 million tonnes. During the

lated issues and are being coordinated on case by case basis.

Highlights

of

National

Investments)

and

Steel the

National Steel Policy was formulated in the year 2005, where a projection of 110 million tonnes was made for the year 2020, assuming the growth in steel demand at 6.9 percent. This projection appears to have been surpassed and to-

year 2008-09 nearly 5 million tonnes of

Apart from discussions on the matters

new capacity has been added. The steel

day we have already achieved a capacity

pertaining to steel investments, the gov-

production in the country was 56.42

of 65 million tonnes and our demand is

ernment also takes appropriate fiscal and

million tonnes in the year 2008-09 of

growing at nearly 10 percent average

administrative measures to boost steel

which 52.05 million tonnes were catered

rate. During the year 2007-08, steel de-

production, maintain a healthy market

to the domestic consumption. Since steel

mand in the country was also growing at

and see that there is an overall develop-

is a commodity, where a series of value

nearly 13 percent rate.

ment of the steel sectors in the country.

additions take place at different stages of value chain, a part of the steel requirement of the country is fulfilled through imports, which was at 5.72 million tonnes in 2008-09. Similarly, a part of steel is exported out of country to the rich markets abroad. The export figure for the last financial year is 3.66 million tonnes. Steel consumption in the country has been increasing steadily at average annual growth rate of nearly 10 percent over the past few years to meet this requirement; we have to simultaneously increase our production capacity to cater

93

As on today we have Memorandum of

Could you kindly elaborate on

understanding (MoUs) for setting up 276

the Sector Structure, the Market

million tonnes in the country at an esti-

Size which Ministry of Steel is

mated cost of Rs.11 lakh crores. This

looking at in the next couple of

huge investment will require a lot of co-

the years?

ordinated and focused effect on the part

Steel sector, by its very nature, is highly

of the Central and State Governments in

dynamic and operates in a flexible mar-

order to make this a success. It also in-

ket condition. This is a world wide phe-

volves resolving critical issues such as

nomenon. Since, steel is a freely trad-

transfer of land, allotment of raw mate-

able commodity; its market is greatly in-

rial resources and creating infrastructure

fluenced by the international market con-

for transportation etc. however, I am sure

ditions. Therefore, it would be very diffi-

that, we will be able to sort out all the

cult to make forecast on the sectoral

loose ends and build a stout steel sector

structure. Indian steel demand is on a

for the country over a period of time.

DECEMBER - 2009

IDBI Bank has adopted a strategy of developing a larger client base in the mid-corporate, SME and retail sectors THE INDUSTRIAL DEVELOPMENT BANK OF INDIA LIMITED COMMONLY KNOWN BY ITS ACRONYM IDBI IS ONE OF INDIA’S LEADING PUBLIC SECTOR BANKS AND 4TH LARGEST BANK IN OVERALL RATINGS. RBI CATEGORIZED IDBI AS “OTHER PUBLIC SECTOR BANK”. IT WAS ESTABLISHED IN 1964 BY AN ACT OF PARLIAMENT TO PROVIDE CREDIT AND OTHER FACILITIES FOR THE DEVELOPMENT OF THE FLEDGLING INDIAN INDUSTRY. IT IS CURRENTLY THE TENTH LARGEST DEVELOPMENT BANK IN THE WORLD IN TERMS OF REACH WITH 975 ATMS, 568 BRANCHES AND 352 CENTERS.

94

DECEMBER - 2009

T

he foundation of the bank was

at that time, had 230 branches spread

allowed mobile based transaction. In or-

laid down under an Act of Par

over 47 districts, in 9 states). In the fi-

der to reap the benefits of the opportuni-

liament, in July 1964. The

nancial year of 2008, IDBI Bank had a

ties arising out of the mobile technology

main aim behind the setting up of IDBI

net income of Rs.9415.9 crores and to-

revolution IDBI has launched “Mobile

was to provide credit and other facilities

tal assets of Rs.120,601 crores.

Payment Solutions”, which is a secure

for the Indian industry, which was still in

The Strategic initiatives implemented

and convenient payment option by use

the initial stages of growth and develop-

by IDBI bank during the year, as on 31st

of mobile phones. The product includes

ment. In February 1976, the ownership

March 2009, benefited the Bank im-

payments for the purchase of goods and

of IDBI was transferred to Government of

mensely. It has been reflecting in the

services from mobile phone and fund

India.

improved performance in various key

transfers subject to prescribed limits.

After the transfer of its ownership, IDBI

business areas. The Bank attained new

The Bank has launched ‘IDBI Sulabh

became the main institution, through

heights

of

Vyapar Loan’ that aims to provide hassle

which the institutes engaged in financ-

Rs.2,15,829 crore at end-March 2009,

free finance to Small Business Enter-

ing, promoting and developing industry

comprising Rs.1,12,401 crore of depos-

prises including Small Retail Traders. An

were to be coordinated. In January 1992,

its and Rs.1,03,428 crore of advances.

individual or a firm (partnership or pro-

IDBI accessed domestic retail debt mar-

Total assets reached Rs.1,72, 402 crore,

prietorship) engaged primarily in buying

ket for the first time, with innovative Deep

registering a growth of 31.9% during the

and selling mercantile goods is eligible

Discount Bonds, and registered path-

financial year.

for this mode of finance. The scope of

breaking success. The following year, it set up the IDBI Capital Market Services

with

total

business

Business Strategy

the product was further enlarged to cover wider customer segment, such as travel,

Ltd., as its wholly-owned subsidiary, to

The Bank has adopted a strategy of

tourism, hotels, restaurant, health and

offer a broad range of financial services,

developing a larger client base in the mid-

education, etc. The Bank also floated a

including Bond Trading, Equity Broking,

corporate, SME and retail sectors, while

loan scheme in the SME domain for Pro-

Client Asset Management and Depository

nurturing the deep relationships that al-

fessional and Self Employed engaged in

Services.

ready exist in the large corporate sector.

the business covered under service sec-

The strategy aims to develop a more re-

tor. The Bank has obtained mandate for

tail base in both assets and liabilities lead-

collecting sales tax in Maharashtra. With

ing to a more diversified balance sheet

regard to tax collection IDBI is one among

as well as improvement and sustainability

the top banks in the country.

In September 1994, in response to RBI’s policy of opening up domestic banking sector to private participation, IDBI set up IDBI Bank Ltd., in association with SIDBI. In July 1995, public issue of the bank was taken out, after which the Government’s shareholding came down (though it still retains majority of the shareholding in the bank). In September 2003, IDBI took over Tata Home Finance Ltd, renamed ‘IDBI Home finance Limited’, thus diversifying its business domain and entering the arena of retail finance sector. The year 2005 witnessed the merger of IDBI Bank with the Industrial Development Bank of India Ltd. The new entity continued to its development finance role, while providing an array of wholesale and retail banking products (and does so till date). The following year, IDBI Bank acquired United Western Bank (which,

95

in the Net Interest Income. The strategy

The Bank has successfully imple-

also focuses on leveraging the Bank’s

mented the Agriculture Debt Waiver and

experience in project / infrastructure fi-

Debt Relief Scheme (ADWDRS)-2008

nancing to become a larger player in in-

announced by Central Government. Dur-

vestment banking, yielding higher fee-

ing the financial year 2008-09, the Bank

based income. The Bank has also

has opened a Currency Chest at Chennai

adopted aggressive strategies for gaining

taking the total number to four. The fifth

higher market share in transaction bank-

Currency Chest at Panchkula is expected

ing activities for boosting non-fund based

to become operational by the end of first

income. The customer-centric business

quarter of current fiscal. The Bank has

model adopted by the Bank would in-

also obtained ‘In-Principle’ approval from

creasingly play a supportive role towards

the RBI for establishment of Currency

effective implementation of business strat-

Chests at Hyderabad, Ahmedabad and

egies.

Pune. In order to improve its performance

New Business Initiatives

in strategic lines a Performance Accel-

In line with gaining popularity of mobile phones and improvement in their security features, the banking regulator

eration Programme (PAP) “Project Lakshya” was implemented focusing renewed thrust on boosting current account and fee-based income. The project DECEMBER - 2009

has made significant contribution and has

crore towards taxation; Profit After Tax

duced several measures like “Virtual key

imparted lot of dynamism in the operat-

(PAT) amounted to Rs.858.5 crore.

board”, “SMS Alerts” for all transactions

ing domain. The project was executed through boot camps in different centers and periodic reviews through tele-

Tech Savvy The year 2008-09 witnessed a num-

above a specified limit, mandatory input of 16-digit Debit card number for initiating third party transactions etc.

ber of improvements in the systems and

The Bank developed and implemented

processes. Major focus of Information

Applications Supported by Blocked

Technology was on improvement of ex-

Amount (ASBA), which helps the cus-

Performance highlights of the Bank

isting systems so as to enhance the value

tomers to apply in the public issues with-

during the financial year April 2008-

proposition for the Bank’s customers.

out making upfront payment through ru-

March 2009 showed the gross income

With twin objectives of providing state of

dimentary methods like cheque or DD.

of the Bank amounted to Rs.13,021.6

the art technology and staying ahead in

The customer continues to earn interest

crore. The amount contributed by inter-

technology services offered to the cus-

till the shares are allotted. To make pay-

est income is set at Rs.11,631.7 crore

tomers, the Bank’s IT Infrastructure set-

ment of tax convenient and transparent

and through other income is of

up & management, Data center & disas-

the Bank implemented Sales Tax (ST) Col-

Rs.1,389.9 crore. Total expenditure of

ter recovery center, IT Security & Net-

lection Module, which takes care of end-

the Bank, during the year, excluding pro-

work set-up and management, Advisory

to-end processing of Maharashtra Sales

visions and contingencies, stood at

services & Call center services are being

Tax Collection. This facility is also avail-

Rs.11, 643.7 crore, consisting Rs.10,

managed by the Bank’s wholly owned

able in Gujarat, Delhi and Uttarakhand.

305.8 crore of interest expenses and

subsidiary IDBI Intech Limited.

conferencing.

Financials

IDBI also undertook a number of ini-

Rs.1, 337.9 crore of operational ex-

During the year, the Bank has under-

penses. With the provision of Rs.373.3

tiatives to improve the efficiency of the

taken many initiatives, which contributed

crore towards bad & doubtful debts and

systems. In order to focus and highlight

significantly to the growth of the Bank as

investments, Rs.19 crore towards incre-

the management’s attention on the prof-

also customer satisfaction. In order to reap

mental prudential provisions for standard

itability of the various services and the

the benefits of the opportunities arising

assets, and Rs.127.1 crore towards tax,

functional units, the Bank developed and

out of the mobile technology revolution

total provisions during the period

implemented Transfer Pricing System,

IDBI launched “Mobile Payment Solu-

amounted to Rs.519.4 crore.

which aids the management in analyz-

tions”, which is a secure and convenient

ing performance and profitability of vari-

IDBI’s working during the year resulted

payment option by use of mobile phones.

ous units, products, services, accounts

in a Profit Before Tax (PBT) of Rs.985.6

In order to make internet banking trans-

and Customer segment.

crore considering a provision of Rs.127.1

actions more secured the Bank intro-

The Bank implemented an enhancement in the Government Business Module, which takes care of Direct and Indirect Tax payments. This enables the Bank to garner business of tax collection from non-agency banks’ clients. IDBI bank has also launched various initiatives with an eye on the future requirement. Of these, the implementation of Oracle GL will make preparation of consolidated accounts very simple and will also provide quick and easy access to important information. In order to ensure secure access to Internet banking applications two-factor authentication is being provided to customers. This will reduce the risk of the phishing attacks. It would be implemented during the first quarter of the year 2009-10.

96

DECEMBER - 2009

97

DECEMBER - 2009

“The State-of-the-art technology of Nalco revolutionized aluminium making in the Country” THE DISCOVERY OF OVER 1000 MILLION TONNES OF BAUXITE RESERVE IN THE EASTERN GHATS IN 1975 PUSHED INDIA UP TO THE 5TH POSITION IN THE WORLD BAUXITE RESOURCES GRAPH, WITH A TOTAL ESTIMATED RESERVE OF ABOUT 3000 MILLION TONNES. THIS LED TO THE SETTING UP OF INDIA’S LARGEST ALUMINA – ALUMINIUM INTEGRATED COMPLEX IN ORISSA TO ACHIEVE SELF-SUFFICIENCY IN THIS STRATEGIC METAL. THUS A GIANT COMPANY WAS BORN ON JANUARY 7, 1981, WITH TECHNICAL COLLABORATION OF ALUMINIUM PECHINEY OF FRANCE (NOW RIO TINTO – ALCAN). THE FOUNDATION STONE OF THIS AMBITIOUS PROJECT WAS LAID BY SMT. INDIRA GANDHI, THE THEN PRIME MINISTER OF INDIA, AT DAMANJODI – IN ONE OF THE MOST REMOTE AND BACKWARD REGIONS OF THE COUNTRY. 98

DECEMBER - 2009

T

he advent of Nalco marked a turning point in the history of

♦ To intensify R&D for Technology development.

tive mines and business driven by the quality of products and services.

aluminium industry in India.

A broad roadmap of business strate-

♦ To develop long-term relations with

The Country witnessed a quantum jump

gies up to the year 2020 has been

domestic and foreign clients and Joint

of about 40% in aluminium capacity. The

chalked out, which lays special empha-

Venture partners.

State-of-the-art technology of Nalco revo-

sis on sectoral diversification.

lutionized aluminium making in the Country. Nalco has subsequently completed two major expansion projects at an investment of Rs. 8000 crore to double its aluminium annual capacity from 2.30 lakh tonnes to 4.60 lakh tones. Nalco is also the first public sector in the Country to venture into international market in a big way. In fact, exports account for almost 50% of the Company’s sales turn-

The broad canvas includes forays into

technical base. Apart from investments

other metals like copper, gold, zinc,

in volume growth, the company shall

nickel etc and in energy sector.

substantially finance R&D and mod-

The company has thus embarked upon

ernization of facilities, laboratories,

ambitious path to transform into a true

achieving improvements in the quality

multinational.

of products and satisfying customer de-

Objectives & Goals ♦ To achieve annual turnover of over Rs.25,000 Crores by 2020.

over. Today Nalco, besides being a

♦ To achieve annual production of 1.7

Navratna Company also enjoys LME reg-

million tonnes Aluminium and 4 mil-

istration, Premier Trading House Status

lion tonnes Alumina by 2020.

for International standard quality and ship-

♦ Transform from being only an “alu-

ment facilities,” said A K Srivastava, CMD,

minium producer” to become a metal

NALCO.

producer and energy provider.

Vision and Objectives Understanding the importance of the growing competition and changing market dynamics, Nalco has adopted new vision and mission statements.

Vision To be a reputed global company in the metals and energy sectors.

♦ To develop a powerful scientific and

mands. ♦ To adopt main strategic priorities aimed at end user orientation.

Major Events / Significant Turning Points ♦ In a strategic move the Company acquired and merged the 50,000 TPA Rolled Product Unit (RPU) in the year 2000 at an investment of Rs. 398

♦ To venture into new fields of activity

crores,with the existing near-by Smelter

beyond Aluminium by setting up at least

Plant at Angul in which the Company

2 nos. diversified projects by 2016.

had 26% share earlier. The RPU facili-

♦ To target at least one 1000 MW IPP by

tates as a downstream product develop-

2016.

ment unit for the enterprise.

♦ To maximize value and long term re-

♦ The 1st Phase Capacity Expansion of

turn to share holders through a strat-

existing operation units viz. Mines,

egy of new investments, cost competi-

Refinery, Smelter and Captive Power

Mission ♦ To achieve sustainable growth in business through diversification, innovation and global competitive edge. ♦ To continuously develop human resources, create safe working conditions, improve productivity and quality, and reduce cost and waste. ♦ To satisfy the customers and shareholders, employees, and all other stakeholders. ♦ To be a good corporate citizen, protecting and enhancing the environment as well as discharging social responsibility in order to ensure sustainable growth.

99

DECEMBER - 2009

customers for supply of metal during 2008-09 as against 151 customers during 2007-08. Initiatives were taken for market penetration through development of new Original Equipment Manufacturer customers, such as various state road transport undertakings, BHEL etc. for sale of rolled products. Nalco has been putting thrust on sale of value added products. The sale of billets, wire rods and rolled products in 2008-09 has been the highest ever surpassing the previous best. Nalco is implementing e-tendering procedure for export of Primary metal. Plant of the Company was completed

paid the euro-dollar loan of US$

“Even though India’s per capita con-

in the year 2004 at an investment of

254.93 million (Rs. 805.20 Crores)

sumption of aluminium is one of the low-

approximately Rs. 3600 crores.

in financial year 1994-95, to save on

est in the world, the country had been

interest burden.

importing 50,000 to 60,000 tonnes per

♦ Immediately thereafter, the Company went ahead with 2nd Phase Expan-

♦ In order to increase the market cap

annum at a cost of high foreign exchange

sion of existing Units at an outlay of

and enhancing share price, the share

outflow. With the emergence of NALCO,

Rs. 4400 crores which is nearing

capital was halved to Rs 644.31 crore

there has been a quantum jump in pro-

completion.

from Rs 1288.62 crore in March,

duction of aluminium in the country.

1999.

From a level of 3.5 lakh tonnes in 1988,

♦ De-bottlenecking of Mines & Refinery at an outlay of Rs.409 crore has started since August, 2008. ♦ 3rd Phase Brownfield Expansion of the Company has been initiated with the DPR study for Captive Power Plant and lab

analysis

with

technology

upgradation study for Alumina Refinery. ♦ Various activities have been started for further investment proposal of approximately Rs. 40,000 crores for various Greenfield projects in Coal, Mines, thermal power plant and smelter in Indonesia and gas based power plant with smelter in Iran. Besides, the company is also pursuing for Mines and Refinery based on allotted Bauxite deposits of Gudem & KR Konda in Andhra Pradesh and Smelter and Power Plant in Western Orissa. ♦ In a strategic move the company pre-

100

♦ The Company has entered into a stra-

India’s metal production has increased

tegic alliance agreement with Rio-

to 15 lakh tonnes in 2009, eliminating

Tinto-Alcan, a global leader in mining

perennial shortage in the domestic mar-

and alumina/ aluminium business for

ket, and at the same time creating sub-

sharing information and selecting co-

stantial surplus for export,” said B.K.

operative business opportunities.

Handique, Union Minister for Mines.

♦ Recently, the company has inked an

NALCO is the first and largest integrated

agreement, with Rak Minerals and

alumina-aluminium project of the coun-

Metals Investments (RMMI), UAE for

try. The initial capacities of this multi-

its Rs 14,000 crore Indonesian project.

unit, multi-locational complex were:

The agreement is expected to synergise the construction of ports and rail corridor by RMMI and the construction of Smelter and Power plants by NALCO in Indonesia. RMMI will have 24 per cent stake in Nalco’s proposed Aluminium project.

Marketing

♦ 2.4 million tonne Bauxite Mines in Panchpatmali, Koraput ♦ 800,000 tonne Alumina Refinery in Damanjodi, Koraput ♦ 230,000 tonne Aluminium Smelter in Angul ♦ 720 MW Captive Power Plant in Angul

In pursuance of its strategy to

♦ Dedicated Port Facilities to handle

proactively increase the customer base,

425,000 tonnes of alumina export in

Nalco signed MoU with 181 domestic

Vizag

DECEMBER - 2009

“The task of implementing the sprawl-

2nd phase expansion. Similarly the CPP

♦ Foreign investment approval was

ing NALCO projects was enormous. Given

production capacity was raised to

accorded by Govt. of Indonesia in Sept’08

the time frame for construction and com-

1080MW in Aug’09 from 960 MW with

for setting up smelter and power plant in

missioning the units, with their multi-

start of commercial production of power

South Sumatra.

locations and multi-disciplines like min-

from one expansion unit of 120MW,” said

ing, chemical engineering, metallurgy

Srivastava.

Mineral and Metal (RMMI) of U.A.E. in

Other Ongoing Projects

Dec’08 to be minority partner (24per cent

and power generation, it required a high degree of planning and systematic monitoring. At the time of the formulation of

UTKAL – E (Project cost Rs.215 crore)

the Project, some of the best brains from

♦ The Company has been allotted a 70

within the Aluminium industry were given

mln TPA capacity coal block in Talcher

♦ MoU signed with Ras Al Khaimah

stake) in Smelter and Power Project. Coal Mine in Indonesia MoU signed in June’08 with SUGICO

NALCO HAS SUBSEQUENTLY COMPLETED TWO MAJOR EXPANSION RS. 8000 CRORE TO DOUBLE ITS ALUMINIUM ANNUAL CAPACITY FROM 2.30 LAKH TONNES TO 4.60 LAKH TONES. NALCO IS ALSO THE FIRST PUBLIC SECTOR IN THE COUNTRY TO VENTURE INTO INTERNATIONAL MARKET IN A BIG WAY. IN FACT, EXPORTS ACCOUNT FOR ALMOST 50% OF THE COMPANY’S SALES TURNOVER.

PROJECTS AT AN INVESTMENT OF

- A K SRIVASTAVA, CMD, NALCO

the task to prepare a blue print for the

coal fields by Min of Coal, GoI. For En-

growth of Aluminium industry. The project

vironmental Clearance, a presentation

was to primarily meet the domestic needs

was made before MoEF, New Delhi on

of Aluminium for 4-5 decades,” said

27.11.2008.

Handique.

♦ Other activities like, Mining Lease, land

Nalco signed an MoU with Nuclear

acquisition, rehabilitation and resettle-

Power Corporation of India Limited

ment, forest clearance etc are in full

(NPCIL) on 26th Nov’09 for setting up Nuclear Power Plants in India in JV. An

swing.

investment of Rs 8000 crore envisaged for a Nuclear Power Plant of capacity

Growth Projects (Abroad)

2nd Phase Expansion

South Sumatra for consideration as an independent coal asset. Smelter and Power Plant in Iran ♦ MOU signed with Kerman Development Organisation (KDO) for setting up of 0.31

million tpy Smelter Plant and

Power Plant in Iran in joint venture with ALPHA Co, a KDO group company.

Business Development

1,000MW

Group, a private coal mine owner in

Smelter and Power Plant in Indonesia

Growth Projects (India) Smelter

and

Power

Plant

at

Brajarajnagar Govt. of Orissa approved NALCO’s pro-

The 2nd phase expansion work with a

♦ Feasibility study report for setting up

posal for setting up of a 0.5 million tpy

0.5 million MT Smelter and 1250 MW

Smelter Plant and 1250 MW Captive

project cost of Rs 4402 crore is at the

Power Plant in South Sumatra province

Power Plant in Nov-08 subject to fulfill-

final stage and all set for completion. The

of Indonesia, received in Oct’08. Con-

ment of certain conditions.

Commissioning activities of various units

sultant has suggested two alternative lo-

has already started.

cations in South Sumatra.

“The production capacity of Aluminium

Mines and Refinery in Andhra Pradesh

Smelter was augmented to 4.60 lakh MT

♦ MoU signed in Sept’08 with PT

Govt of AP has accorded the mining

Nusantara Alam Pasifik, a private coal

from 3.45 lakh MT with successful start

lease approval in July’09 for GUDEM &

mine owner in South Sumatra, for sup-

up of all 240 pots by 17th Dec’09, under

KR Konda bauxite deposit having apprx

ply of coal to the proposed power plant.

101

DECEMBER - 2009

deposit of 80 mln MT for construction of Refinery by Nalco

Product

Unit

Upstream & downstream projects Fly ash Utilisation Project Utilisation of fly ash by establishment

Cumulative 2008-09 Ta r g e t

Actual

PRODUCTION Bauxite

MT

4,900,000

4,700,027

ment was pursued. Two proposals viz.

Alumina hydrate

MT

1,590,000

1,576,500

Shree Cement and Emami Cement are

Aluminium Cast Metal

MT

355,000

361,262

Net Power Generation

MU

5,640

5,541

Alumina /Hydrate Sale

MT

865,000

888,581

Aluminium Export

MT

102,000

82,314

Domestic Metal Sale

MT

250,000

271,274

Metal Sale

MT

352,000

353,589

Total sale

MT

352,000

353,889

of either JV or long term supply agree-

under active consideration. Aluminium Wagon-BEML NALCO signed MOU with BEML for supply of metal to BEML for development of one prototype BOBRNAL wagon which is getting ready for test by Indian Railways at BEML works, Bangalore. Aluminium Park An MOU was signed with IDCO on 19th Sept’09 for setting up an Aluminium

SALES

Park at Angul at a project cost of Rs 73

FINANCE

crore.

Gross Sales Turnover

Rs.5,531.06 cr

Export Earning

Rs.2,071.11 cr

Other miscellaneous projects Wind Farm Project Power Energy Consultants, Delhi ap-

Net Profit after Tax

Rs. 1,272.27 cr

pointed for preparation of Detailed Feasibility Report (DFR) and draft report sub-

Product

Unit

mitted in Feb-09.

Cumulative 2009-10 up to Nov 09 (Provisional)

Clean Development Mechanism

Actual

Four projects in NALCO have been identified under Clean Development

PRODUCTION

Mechanism for taking opportunities of

Bauxite

MT

2,939,251

Alumina hydrate

MT

1,048,900

Aluminium Cast Metal

MT

280,307

Net Power Generation

MU

4,066

Carbon Credit. Strategic Alliance Strategic Alliance Agreement signed with Rio Tinto Alcan (RTA) in Dec-08 to identify and explore areas of mutual interest and potential collaboration with

SALES

respect to potential projects in Alumina/

Alumina /Hydrate Sale

MT

457,470

Aluminium sector.

Aluminium Export

MT

90,510

Domestic Metal Sale

MT

177,922

Metal Sale

MT

268,432

IPP MOU has been signed with Industrial Finance Corporation of India (IFCI) for independent power project in JV.

Internal metal

Financials

consumption

MT

47

Total sale

MT

268,479

The net profit and turnover for the fi-

102

DECEMBER - 2009

nancial year 2008-09 was Rs.1272

Through globalization, diversification

crore and Rs.5631 crore respectively.

and capacity addition the Company has

Nalco products are sold in over 30

Nalco reported 103.4% capacity utiliza-

set an annual turnover target of

countries world wide – including Rus-

tion of its smelter with production of

Rs.25,000 crore by the year 2020. Di-

sia, China, Japan, South Korea, Taiwan,

361,262 tonnes cast metal in 2008-09.

versification to energy sector is a key area

Vietnam, Indonesia, Singapore, Malay-

Similarly alumina refinery exceeded the

which the Company is actively pursuing.

sia, Thailand, Bangladesh, Sri Lanka,

Overseas business, market share in India and Exports

Iran, UAE, Bahrain, Egypt, Romania etc.

capacity with production of 15.76 lakh tonnes of alumina hydrate. Besides, Nalco achieved highest ever domestic metal sale of 2.71 lakh tonnes

Presently, the exports made by Nalco are generally on forward delivery contract

Recognized as a Premier Trading House

“EVEN

tional market,” said Handique.

basis.

THOUGH INDIA’S PER CAPITA CONSUMPTION OF ALUMINIUM IS

ONE OF THE LOWEST IN THE WORLD, THE COUNTRY HAD BEEN IMPORTING

50,000

TO

60,000

TONNES PER ANNUM AT A COST OF HIGH

FOREIGN EXCHANGE OUTFLOW.

WITH

THE EMERGENCE OF

NALCO,

THERE HAS BEEN A QUANTUM JUMP IN PRODUCTION OF ALUMINIUM IN THE COUNTRY.

FROM A LEVEL OF 3.5 LAKH TONNES IN 1988, INDIA’S METAL PRODUCTION HAS INCREASED TO 15 LAKH TONNES IN 2009, ELIMINATING PERENNIAL SHORTAGE IN THE DOMESTIC MARKET, AND AT THE SAME TIME CREATING SUBSTANTIAL SURPLUS FOR EXPORT, - B.K. HANDIQUE, UNION MINISTER FOR MINES

in 2008-09. Despite sluggish market

and an ISO-9001, ISO-14001 & OHSAS

conditions Nalco was able to export

18001 Company, Nalco is the first com-

82,314 tonnes of aluminium. Nalco

pany to venture into the international

achieved export earnings of Rs.2,071

market in a big way.

crore in 2008-09.

Future Plans

“Exports are at the centre of NALCO’s commercial operation, which account for almost 50% of the Company’s sales turn-

Significant Achievements “The last few years have been significant for Nalco in terms of achievements. Many landmark events were witnessed by the company including major recognitions and accolades. In a true sense the Company is all set be in ‘Global cat-

Nalco to maintain its leadership posi-

over. The Project itself has been designed

tion in the industry is undertaking vari-

to sell almost half of its alumina produc-

ous activities/ investment proposal of ap-

tion in international market. NALCO

proximately Rs. 40,000 crores in vari-

metal has since received London Metal

ous Greenfield projects in Coal, Mines,

Exchange rating for high purity. Its alu-

thermal, nuclear and gas based power

mina also enjoys premium in world mar-

♦ Nalco has been accorded the Navratna

plants, and smelters in India and abroad.

ket on account of excellent quality and

status, according to Office Memoran-

Besides, Nalco has also entered into a

international standard bulk shipment fa-

dum No. 26(3)/2005-GM-GL-91 dated

strategic alliance with Rio-Tinto-Alcan, a

cilities of the Company at Visakhapatnam.

28th April, 2008 of Department of

global leader in mining and alumina/ alu-

Because of the consistent export perfor-

Public Enterprises, Govt. of India.

minium business for JV projects in metal

mance, the Govt. of India had accorded

♦ Nalco received status of Premier Trad-

& power sector abroad or in the country.

‘Super Star Trading House’ to NALCO.

ing House as per Foreign Trade Policy

Today the company enjoys the status of

2009-10 by Ministry of Commerce,

‘Premier Trading House’. Since 50% of

Govt. of India for the period 2009-14.

NALCO’s production is earmarked for

♦ Nalco bagged the prestigious All India

overseas market, the Company will con-

Export Award of EEPC (Engineering

tinue to be a major player in the interna-

Export Promotion Council) being ad-

These activities are in line with the Company’s revised vision ‘ To be a reputed global Company in metals and energy sectors’.

103

egory’ in energy and metal sectors,” said Srivastava. Following are some of the achievements of the company:

DECEMBER - 2009

judged as the ‘Star Performer’ in large

Salient Features

Angul has been set up to supplement the

enterprise category, for its outstanding

♦ As the Company is committed to

district hospital. The company has con-

export performance during previous

social sector development, 1% of the net

tributed Rs.51.65 lakh for the develop-

year. The award was received from

profit is earmarked annually for social

ment of the district hospital.

Hon’ble Union Minister of External Af-

sector activities of the Company.

fairs, Govt of India, at a function held

Education

♦ The Company also provides additional

To promote education, Nalco has set

funds from time to time with special ap-

up four schools, two each at Damanjodi

♦ Nalco has bagged the prestigious

proval of the Board for local area devel-

and Angul. Nalco has contributed Rs.907

“Niryat Shree” award for excellence in

opment works based on requirement of

lakh in Damanjodi sector and Rs.610.69

export for the 2005-06, instituted by

public representatives and local authori-

lakh in Angul sector for renovation and

FIEO. The award was received by Nalco

ties.

construction of schools and colleges in

in Kolkata on August 08.

from the Hon’ble Union Minister of Tex-

♦ Peripheral Development Committee

the peripheral villages. The company has

tiles, in the presence of Hon’ble Presi-

has been set up at Units consisting of

successfully completed construction of

dent of India, on 16.12.08 in New

Government Authorities, local Member of

197 schools on behalf of Govt of Orissa

Delhi.

Parliament, Member of State Legislative

and Prime Minister’s Office at several

♦ Nalco’s HRD department received the

Assembly and Senior Officials of the Com-

super cyclone affected villages at a cost

“Certificate of Merit” for best HR prac-

pany to identify projects of social devel-

of Rs.768 lakh.

tices at All India level competition

opment and ensure its proper implemen-

Agriculture

organised by National Institute of Per-

tation and monitoring.

sonnel Management among the ten best private and public sector organisation in the country on 22nd January 2009.

tions to upgrade agricultural techniques

The Company undertook one of the

and practices used by the local tribals in

major rehabilitation drives for 600 fami-

association with Orissa University of Ag-

lies of 14 villages who were displaced by

riculture and Technology.

♦ The Company adopted SA 8000 (In-

Mines and Alumina project in Damanjodi

ternational standard on Corporate So-

sector. Most of them have been settled in

cial Responsibility) and implemented

newly developed rehabilitation colonies.

at Captive Power Plant as well as Cor-

These colonies, built at a cost of Rs.3.5

porate Office

crore, have been provided with basic

♦ Ministry of Environment & Forests

amenities like roads, drinking water and

(MOEF) has accorded environmental

electricity. A primary school has also been

clearance to Nalco for the expansion

constructed by Nalco to provide free edu-

of bauxite mining at Panchpatmali

cation to the tribal children.

Mines at Damanjodi in Koraput district of Orissa. Nalco had sought clearance for enhancing production of Bauxite from 63 lakh tonnes to 68.25 lakh tonnes per annum to meet the additional requirement of Alumina Refin-

Nalco has made significant contribu-

Rehabilitation

Drinking Water Drinking water facilities for peripheral villages have been given top priority.

Rural Roads Since Nalco plants were set up in remote areas, it was essential to connect people and places. The company has constructed many roads, culverts and approach roads to several villages in its areas of operations. Employment Nalco has undertaken various activities to generate employment. The Company has provided direct employment to 596 displaced persons in Damanjodi sec-

Health Care

tor and 1528 affected persons in Angul

Nalco’s philosophy of social care ac-

sector.

cords top priority to community health,

Nalco’s commitment towards a better

leading to setting up of well-equipped

quality of life is visible in the Company’s

hospitals both at Damanjodi and Angul.

beautification drive which has led it to

Alongwith its business activities, the

At these hospitals, quality medical facili-

creation of parks and gardens at

company is also laying special emphasis

ties are extended to employees and local

Damanjodi, Angul and Bhubaneswar.

on its Corporate Social Responsibility

people. Nalco also runs occupational

(CSR). The company is taking various

health centers in Damanjodi and Angul

steps in developing its surrounding areas

where employees’ health standards are

to improve the standard of living of the

monitored regularly. Another hospital in

ery.

CSR

From sleepy villages, Nalco has turned Damanjodi and Angul into places that are vibrant with life.

people in this part of the country.

104

DECEMBER - 2009

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Pride of India