Presentation On IOC

1. Presentation On IOC

2. Agenda 1. OIL INDUSTRY OVERVIEW 2. IOC - OVERVIEW 3. IOC – KEY CREDIT STRENGTHS 4. STRATEGIC INITIATIVES 5. STRONG FINANCIAL POSITION

3. Agenda 1. OIL INDUSTRY OVERVIEW 2. IOC - OVERVIEW 3. IOC – KEY CREDIT STRENGTHS 4. STRATEGIC INITIATIVES 5. STRONG FINANCIAL POSITION

4. Regulatory Environment

5. De-regulation History • Import of Gasoline, HSD and ATF allowed to companies having marketing rights • Phased reduction in subsidies for LPG and Kerosene • FDI in Marketing, E&P and Pipelines increased to 100% subject to certain approvals • Marketing rights granted to private sector entities for marketing of transportation fuels through their own retail network • ATF pricing decontrolled w.e.f April 1, 2001 • Oil Co-ordination Committee dismantled w.e.f. April 1, 2002 • Dues of Oil companies under Oil Pool Accounts settled on provisional basis • Majority of products made freely tradable • Pricing of all products except LPG and Kerosene decontrolled • Pipeline transportation tariff decontrolled w.e.f. April 1, 2002 • FDI in refining sector raised from 49% to 100% • Stand-alone refining companies aligned with existing integrated refining and marketing companies • DE-REGULATION OF REFINERIES • Refining sector removed from APM regime • All products except Gasoline, Gas oil, ATF, LPG and Kerosene decontrolled • Private companies allowed to import crude oil

6. Regulatory Overview Ground Realties Government Policy • Market Determined Pricing Mechanism (MPDM) for most of the products w.e.f. April 1, 2002 except for LPG and Kerosene • Refineries de-regulated w.e.f. April 1, 1998 • Oil Industry Pool Accounts dismantled w.e.f. April 1, 2002 • Pipeline Transportation tariff decontrolled and based on commercial terms • Private sector entities allowed marketing rights for transportation fuels subject to such entities investing Rs. 20 billion • Despite MDPM, prices still determined by Ministry of Oil & Natural Gas • Subsidies on LPG and Kerosene shared by downstream companies (IOC, BPCL, HPCL), upstream companies (ONGC, GAIL) and fiscal budget • Subsidies on LPG and Kerosene slated to be completely phased out by March 2007 • Marketing service obligations for rural and far flung areas for all the players • Petroleum Regulatory Board to be set up by the Government Deregulation has brought forth balance between reasonable earnings for the industry and protection of consumer interest

7. GOI’s Initiatives For Downstream Companies Reducing under-recoveries on Petroleum Products • Sharing of subsidy burden from LPG and SKO by upstream oil companies - presently 1/3rd of the subsidy burden is borne by upstream companies. • Band Price Mechanism • Rationalization of Excise & Custom Duties * Special additional excise duty of Rs. 6 / litre plus additional excise duty of Rs. 2 / ltr # Additional excise duty of Rs. 2 / ltr

8. Government’s Plan for the Sector The Synergy for Energy Committee • Advisory Committee on Synergy in Energy constituted by Govt. to identify the most appropriate structure of oil PSUs to secure Energy Security, Accelerated Growth, Sustained Development and Social Objectives. • The Committee has deliberated with PSUs, Experts, Ministry etc. and the final report of the Committee is awaited. Key Objectives of the Plan • To create strong and effective public sector • To devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment IOC’s Views • Integrated Business Model to achieve synergy should be followed and restructuring should be done in such a way that competitive environment is created in the market place. IOC is likely to have a significant influence on the final structure of the Plan

9. Post De-regulation Industry Dynamics

10. Industry Structure Oil & Natural Gas Corporation Ltd. UPSTREAM (Exploration & Production) Oil India Ltd. Indian Oil Corporation Ltd. DOWNSTREAM (Refining & Marketing) IBP Ltd. (Pure Marketing) Chennai Petroleum Corporation Ltd. (Pure Refining) Bongaigaon Refinery & Petrochemicals Ltd. Hindustan Petroleum Corporation Ltd. Mangalore Refinery & Petrochemicals Ltd.* Bharat Petroleum Corporation Ltd. Kochi Refinery Ltd. (Pure Refinery) Numaligarh Refinery Ltd. (Pure Refinery) Reliance Industries Ltd. (Pvt. Sector Refining) (Gas Transport & Distribution) Gas Authority of India Ltd. * Subsidiary of ONGC

11. Industry Dynamics* Refining Capacity 2.6 MBPD Market Size 2.3 MBPD Product Pipelines 1.31 MBPD Crude Pipelines 0.6 MBPD IOC is the only downstream company that owns crude pipelines Share includes subsidiary companies * As on 31st March’05 - Provisional

12. Petroleum Products – Historical Demand Growth • Consumption and Production grew at a CAGR of 2.92% and 5.07% respectively over the last 5 years • Demand expected to grow at a CAGR of 3.7% during X plan period (2002-03 to 2006-07) Source: PPAC, FY 05 figures Provisional

13. Domestic Crude Availability* The gap being met through imports *Including condensate ** Refining capacities as on 1st April FY 05 Figures Provisional

14. Agenda 1. OIL INDUSTRY OVERVIEW 2. IOC - OVERVIEW 3. IOC – KEY CREDIT STRENGTHS 4. STRATEGIC INITIATIVES 5. STRONG FINANCIAL POSITION

15. Corporate History Indian Refineries Ltd. 1958 Indian Oil Company 1959 Merger Indian Oil Corporation Limited 1964 • Assam Oil Company taken over in 1981 • Navratna Board constituted in 1999

16. Corporate Structure BOARD OF DIRECTORS CORPORATE DIVISIONS • Finance including International Trade / Information Systems & Optimization • Human Resource/ Communications / Coordination • Planning & Business Development • Refineries including AOD • Pipelines • Marketing • R&D

17. Our Boardroom Chairman Part Time Non-Executive Directors Whole Time Functional Directors • 3 Part Time Non-Executive Government Directors • 5 Part Time Non-Executive Directors • 1 Part Time Non-Executive Nominee Director - ONGC • Director - Finance • Director - Human Resources • Director - Pipelines • Director - Planning & BD • Director - Refineries • Director - Marketing • Director - R&D

18. Facilities

19. (‘000 BPD) • FY’04 FY’05 Growth • Refining Thru’put 753 733 (2.73)% • Product Sales Volume* 992 1,023 3.13% • Pipeline Thru’put 922 878 (4.74)% • Fortune “Global Rank” improved to 189 in the current year from 191 in the previous year. • Consistently “AAA” rated by ICRA since the beginning Overview * Including exports

20. Refineries - Overview Key Facts • Owns 7 refineries with 827 TBPD cap. – 32.5%REFINING SHARE • 67% capacity catering to northern/western region - HIGH DEMAND & GROWTH AREAS • All refineries linked by crude pipelines - LOW TRANSPORTATION COST • All refineries linked by product pipelines- MOST COST EFFECTIVE EVACUATION SYSTEM • Potential for brownfield expansions in least time Bhatinda Digboi Panipat Bongaigaon Mathura Numaligarh Barauni Guwahati Bina Koyali Haldia Jamnagar Mumbai Paradeep IOC’s Refineries Existing Under Construction / Proposed Subsidiary Companies Vizag Other Companies’ Refineries Existing Under Construction/Proposed Chennai Mangalore Cuddalore Narimanam Cochin As on 1 April’05

21. Key Refineries in High Demand Regions About 67% of IOC’s refining capacity is located in close proximity to the high demand northern and western regions Northern Region Eastern Region MBPD Bhatinda MBPD Panipat Mathura Kandla Western Region Southern Region Koyali Salaya MBPD MBPD Source: Company estimates FY04, and X Plan sub group report

22. Highlights - Refineries Average Refinery Capacity utilization declined marginally Distillate yield • Strategic inland refineries locations with most effective supply and evacuation system through pipelines • All refineries meet product specification requirement in line with environmental regulations

23. Performance - Refineries • Highest ever GRM • Refining margins in tandem with international margins • Refineries accounts for about 78% of IOC’s earnings during FY 05 • Margin enhancement opportunities thru’ stream sharing & improving crude/supply logistics

24. Pipelines - Overview Key Facts • 7,730 kms. of crude / product pipelines with a capacity of 1186TBPD • Owns approx. 63% of total throughput capacity (downstream) • Low cost crude transportation to all refineries • Low cost evacuation system linked to all refineries • Two SBM near Vadinar Jalandhar Bhatinda Saharanpur Meerut Nahorkatiya Panipat Delhi Tinsukia Bongaigaon Mathura Siliguri Jodhpur Lucknow Tundla Digboi Chaksu Barauni Guwahati Kanpur Kot Sidhpur Ahmedabad Kandla Vadinar Koyali BudgeBudge Salaya Navgam Haldia Manmad IOC’s Pipelines Vizag Mumbai Product Proposed Product Crude Oil Proposed Crude Vijayawada Chennai Other Companies’ Pipelines Product Proposed Product Crude Oil Karur Madurai Kochi As at 1 April, 2005

25. Highlights - Pipelines Capacity utilization declined marginally • Capacity utilization lower due to Mathura Refinery Shutdown • Total capacity of pipelines increased from 1155 TBPD to 1186 TBPD during FY 05.

26. Pipelines - Significant Upside Significant increase in pipelines earnings due to recovery of tariff based on rail freight (1) Source: Company estimates (2) USD = Rs.43.75

27. Marketing Overview IOC IBP Others TOTAL IOC %* • LPG bottling capacity (TBPD) 117 0 119 236 50 • Lube Blending Capacity (TBPD) 11 1 23 35 35 • Depots/Terminals (Nos.) 162 16 220 398 45 • LPG Bottling Plants(Nos.) 87 0 82 169 52 • Aviation fuel stations (Nos.) 94 0 29 123 76 • Retail Outlets 9,138 2,765 11,032 22,935 52 IOC has a dominant share in marketing infrastructure with over 50% share in all segments As of 31 March 2004 * IOC % includes IBP

28. Marketing - Control Retail Outlet Sites IOC is focused on strengthening its position and control in the retail segment IOC Retail Outlets % of Retail Outlet sites owned / taken over long lease 3272 retail outlets of IBP – 44% company owned

29. Marketing – Segment-wise Market Share IOC (including IBP) has a market share of over 62% in direct sales and over 51% in retail segment *Among PSUs As at 31 March 2005

30. Research and Development Centre • IOC’s world class R&D centre has won recognition for its pioneering work in the following: • Lubricants formulations • Refinery processes • Pipeline transportation • Bio-fuels • R&D has developed over 21,000 formulations of SERVO brand lubricants and greases • The centre has over 100 national and international patents to its credit • Development & marketing of alternative fuels: Ethanol Blended & Bio-Diesel • Licensing & marketing of process innovations and refining technologies by Indian Oil Technologies Ltd. a wholly owned subsidiary

31. Environmental Issues

32. Proactively Addressing Environmental Issues IOC has proactive plans to meet the prospective Euro / Bharat norms Road Map to Vehicular Emission Norms Euro II Euro III Euro IV Metros Introduced April 2005 April 2010 Mega Cities* April 2003 April 2005 April 2010 Entire Country April 2005 April 2010 IOC Investment Plans** USD/million HSD Quality Improvement 509 MS Quality Improvement 333 TOTAL INVESTMENT FOR EUROIII COMPLIANCE 842 IOC shall be able to meet the environmental regulations well in time *Bangalore, Hyderabad, Pune, Ahmedabad, Surat, Kanpur, Agra ** Approved cost

33. Proactively Addressing Environmental Issues (Cont’d) All IOC Refineries will be supplying BS-II and Euro-III grades of MS and HSD w.e.f. April 01, 2005 COUNTRY STATUS

34. Corporate Governance

35. Strong Corporate Governance IOC being one of the “Navratna” strives to attain the highest levels in Corporate Governance and Transparency • The “Navratna” status gives IOC’s management significant independence in conducing day-to-day operations • Fully complies with the stipulations laid down on Corporate Governance in the Listing Agreement • The Board consists of optimum combination of Executive and non-Executive Directors • Presently, out of 17 directors, 9 are non-executive, independent directors • Remuneration for whole-time directors is decided by the Government of India • Fully independent and active Audit Committee • Audit Committee consists of three non-executive independent directors

36. Agenda 1. OIL INDUSTRY OVERVIEW 2. IOC - OVERVIEW 3. IOC – KEY CREDIT STRENGTHS 4. STRATEGIC INITIATIVES 5. STRONG FINANCIAL POSITION

37. Key Credit Strengths • Integrated Player • India’s #1 Downstream Company • Key Inherent Corporate Strengths • Strong support from the Government of India (”GOI”) • Dominant Credit in India

38. Integrated Operations REFINING • Controls 10 Refineries with a capacity of 1088 TBPD PIPELINES • 4,917 km of product (capacity of 29.85 mmtp) • 2,813 km of crude oil (capacity of 28.5 mmtp) • All refineries linked to pipelines MARKETING • Leading marketer in India • Market share of 56% among PSU sales (including IBP) • Controls over 50% of marketing infrastructure Being an integrated player, IOC is insulated to some extent from oil price fluctuations.

39. India’s #1 Downstream Company (USD/million) FY’04 FY’05 Rank Turnover 29,795 34440 1 Net Profit 1,603 1118 1 Net Worth 5,274 5939 1 Total Assets* 12,306 14643 1 Market Capitalization 13,260 11693 1 • India’s ‘No. 1 Corporate’ in annual listing of both Business World & Business India, for 2004 • India’s largest downstream oil company • 19th largest oil company in the world- Fortune Global 500 * Excluding depreciation & misc. expenditure

40. Key Inherent Corporate Strengths • Growing economy to drive demand of petroleum products • Strategically located inland refineries near high demand centres • Dominant market share • Unparalleled infrastructure in all segments • Backed by world class R&D facilities • Strong export potential to neighboring countries • Focused strategy and management commitment to effectively manage change and enhance profitability and shareholder’s value

41. Strong Support from GOI It is Government’s stated objective to maintain a majority shareholding in this company of strategic importance for the country • The Government of India is the majority shareholder with 82% of shares directly held IOC functions under the administrative control of the Ministry of Petroleum & Natural Gas • IOC, with 42% market share in refining and 48% share in marketing, almost acts like a arm to implement GOI’s Oil policy As at March 31, 2005 * Including employees

42. Dominant Credit in India Strong reputation in the domestic / overseas markets • IOC is able to raise resources at the finest rates in overseas and domestic market • IOC is rated ‘AAA’ by the local rating agency • IOC has been able to access domestic and international markets for increased amounts without any adverse impact on rates or liquidity Strong Support of Relationship Banks • IOC enjoys strong financial support from relationship banks • IOC has long standing relationships with State Bank of India, Punjab National Bank, other Indian public sector banks as well as Foreign banks / Institutions • SBI has a committed credit facility of about $1700 million for IOC

43. Agenda 1. OIL INDUSTRY OVERVIEW 2. IOC - OVERVIEW 3. IOC – KEY CREDIT STRENGTHS 4. STRATEGIC INITIATIVES 5. STRONG FINANCIAL POSITION

44. Competitive Landscape

45. Dominance in Refining Capacity *IOC includes its subsidiaries CPCL and BRPL ** BPCL includes its subsidiaries KRL and NRL Note: Information as of March 31, 2005

46. Comparable Operating Margins Note: Three Years (2002, 2003 and 2004) Average Operating Profit Margins Average Operating Profit Margins of RIL includes operating margins from Petrochemical Business also. Source: Citigroup Research

47. Retail Segment Heating Up • Four existing oil companies issued licenses in March 2002 by the Petroleum Ministry to set up over 9,159 petrol stations • New entrants include two private players (Reliance Industries and Essar Oil) and two state owned companies (ONGC and Numaligarh Refinery, subsidiary of BPCL) • Shell has also been issued a license in May 2003 to set up 2,000 petrol stations • Till date only Reliance has set up ~300 outlets • ONGC focusing on its E&P business and is downplaying retail plans • Despite increasing competition, IOC is well positioned – • Lowest cost producer in the country due to its large crude and product pipeline network and in a position to defend its share even in shrinking margin scenario • Marketing strategy for key customers comprising i) dedicated support & customised pricing policy ii) service as fuel manager iii) customised product specifications, and iv) move to long-term contracts

48. Well Positioned in Pipelines • With its 7,730 km pipeline, IOC has a 100% share in Crude pipelines in India and a 47% share of throughput in transporting Petroleum products • IOC has a monopoly over product pipelines in Northern India and it will be exorbitantly expensive (approx. US$1.50bn) to replicate IOC’s network of Pipelines • Pipeline transportation charge has been linked to 75% of railway freight and is expected to go up to 100% of railway freight over the next 2-3 years • The de-regulation of pipeline transportation charge offers dual advantage - • IOC enjoys significant cost advantages due to its ownership of pipelines • Enhanced pipeline margins from allowing other companies to use its pipelines

49. The Path to Growth

50. Diversification - Initiatives