byco report

December 15, 2010

NOTE OF ACKNOWLEDGEMENT

Dear Reader:

I would like to thank Almighty ALLAH, for finally making my efforts worthwhile. I would like to

thank then Ms Umme Hina Faiz, Course Instructor, Business Communication, for her amiable

support and guidance in completing this course and report. It is due to her that we had the

opportunity of learning Foundations of Business Communication and enhance related aspects

to it. This will help us in enhancing our communication skills in the practical scenario.

Sincerely,

Syed Asif Ali Kazmi

Business Communication

December 15, 2010

Ms Umme Hina Faiz

Course Instructor


NOTE OF TRANSMITTAL

Dear Madam,

A brief report on “BYCO” is hereby submitted as a Project Report for the course of Business

Communication.

The Project Report is an effort to reflect all the elements being illustrated and conceptualized by you

during your instructions for this project.

During the course, our class was strongly motivated and enthusiastically supported by you.

Your insightful guidance throughout the course has been vital for the improvement and worthiness for

our efforts not only as enhanced professional but more importantly as an improved citizen of the society

and last but not the least an enhanced Patriotic of this motherland and this thanksgiving is not aimed at

any persuasion for good grades, but it is really meant to show our gratitude for all your sincerity with

your profession and your students.

We really thank you for all what you have been and we really look forward to your guidance in the times

to come.

Sincerely,

Syed Asif Ali Kazmi


Table of contents:

Acknowledgement Page 1

Letter of Transmittal Page 2

Table of Contents

BYCO At a Glance Page 4

Brief History / Introduction Page 5

Mission Statement / Vision Page 7

Environment Health Safety & Security Policy Page 8

Human Resource Development Page 9

Products

Furnace Oil Page 10

High Speed Diesel Page 11

Motor Gasoline Page 12

Liquefied Petroleum Gas Page 13

Future Outlook Page 14

Oil Refining Business Page 15

Petroleum Marketing Business Page 15

Conclusion of the Visit Page 16

Business Communication Page 3

BYCO At a GlanceName Byco Petroleum Pakistan Limited

Formerly Bosicor Pakistan Limited Established January 1995 Registered Office The Harbour Front, 9th Floor Dolmen City

HC-3, Block 4, Marine Drive, CliftonKarachi – 75600, Pakistan.UAN: (92 21) 111 222 081 Fax: (92 21) 111 888 081

Plant AddressMouza Kund Plant, Sub Tehsil Gadani, Near Hub Power Company Ltd. Power plant (HUBCO), District Lasbela, Baluchistan.

Line of Business Oil Refining, i.e. producing & supplying petroleum

products such as Liquefied Petroleum Gas (LPG), Naphtha, High Octane Blending Component (HOBC), Motor Spirits, Kerosene, Aviation Fuels 1 & 4, High Speed Diesel & Furnace Oil.

Crude Refining Capacity 35,000 barrels per day

1.738 million metric tons per annum Authorized Capital Pak Rs. 5,000,000,000 Issued, Subscribed & Paid up Capital Pak Rs. 3,921,043,960


Brief History / Introduction:

Byco Petroleum Pakistan Limited (BPPL), previously known as Bosicor Pakistan Limited (BPL) formed in 1995 started off as a Business to Business (B2B) market producing petrochemicals, oil refining and supplying oil to PSO. BPPL was incorporated in Pakistan as a public limited company on January 09, 1995 and was granted the certificate of commencement of business on March 13, 1995. The shares of the company are listed on the Karachi, Lahore and Islamabad Stock Exchanges. The Company is engaged in the business of refining crude oil into various saleable components including High Speed Diesel (HSD), Liquefied Petroleum Gas (LPG), Motor Spirits (MS), High Octane Blending Components (HOBC), Kerosene (K-Oil), Jet Fuels, Furnace Oil and Naphtha. Refining capacity was enhanced by 5,000 bbl/day during turnaround in June 2010, hence making the total refining capacity to 1.738 (million metric tons per annum) or 35,000 (barrels per day).

Then about three years ago a major shift occurred. We all witnessed some heavy campaigning and promotion done by Byco. This change came about with a change in strategic goals. The goal was now to make Byco one of the top OMCs in Pakistan. Earlier oil marketing was a very small part of the business and now the major focus was on it. The management identified that this change was important as it already had a surplus production and a refining capacity of 30000 barrels The implementation of goals by all departments is primarily more evident with the hard work of the marketing department. The value proposition of Byco became differentiation. The change came about by first changing its name from Bosicor to Byco. The head of brand and advertising explained that this was important to give a more modern and unique impression. Byco was also an easier word in terms of pronunciation. The reason behind aggressive campaigning was o familiarize customers with the name and establish Byco as an OMC implying the Production concept Byco used. They are focusing to develop a network more accessible and visible to consumers. By focusing on differentiation, Byco aims to transform the look of the service stations, introduce multi-product dispensers, convenience stores and specialized lubricant brands.

What Byco is doing is that its changing from a B2B market to a B2C market (Business to Consumer) by opening up its own service station and competing with other OMCs.it has become more consumer centric now. It now has 138 service stations across Pakistan. The increase in service stations improves the competitive position of Byco from being a Nicher to a Follower. It has gone from being the 10th largest to the 6th largest. Its strategic goal is to move up to the 3rd or 4th place by 2011, improving their position further by becoming a follower. Immense competition is seen from PSO- the leader, Shell, Chevron and Total. However, drawing consumers towards itself is not seen as a major problem by Byco as brand loyalty is not a


problem in the case of petroleum as petroleum is a generic product requiring Habitual Buying Behaviour. Once people would use it they would realize its the same as other OMCs. Therefore, Byco is confident of achieving success with a change in strategy to expand and differentiate.

Byco and its associated entities have interests in the oil refining, petroleum marketing and chemical manufacturing in Pakistan:

1. Byco Petroleum Pakistan Limited (BPPL) Oil Refining & Petroleum Marketing2. Byco Oil Pakistan Limited (BOPL) Oil Refining & Chemical Manufacturing

Oil Refinery is located at District Hub, Lasbela, Baluchistan. The Company started its commercial production from July 1, 2004 and ramped up the capacity to 30,000 bpd from February 2008 after debottlenecking of the whole plant and its corporate office at Harbour Front, Clifton, Karachi.


Mission StatementOur Mission is to proactively invest to develop infrastructure in order to become a single source

chain for meeting the Economy’s Chemicals, Energy, Petroleum and Petrochemical requirements, thereby provide the best possible returns to our stakeholders

Vision Statement

Our Vision is to develop our Company on ethical and professional basis in order to steadily grow and become a valued contributor to the Economy and a respected Corporate Entity.


Environment Health Safety & Security Policy

Byco remains on ethical and professional basis and is a responsible corporate entity with respect to Environment Health & Safety.

Management BeliefManagement Leadership, Participation and Accountability: Our leaders, from top management to frontline supervisors, are responsible and accountable for Environment, Health and Safety, its compliance and for managing such risks of their areas. Their active participation includes collaborating across organizational lines to integrate risk management practices into our routine business processes.

Management Role

Worker Protection and Wellbeing: To enable all employees to accept individual responsibility for EHS, implement best practices, and work in partnership to create an ethos of continuous improvement by providing appropriate training & information.

Contractor Safety: To work with and demand compliance from our contractors for adhering to our EHS Policies and Procedures, thereby ensuring high standards for protection of our environment, workers and assets.

Employee Responsibilities

Environmental Protection: Adopt best in class practices that protect the environment, including reducing the quantity of emissions, developing opportunities for recycling, pollution prevention, and efficient use recyclable materials.

Emergency Vigilance: Anticipate emergency situations and be ready to respond appropriately to eliminate harm to the environment, people and property.

Continual Improvement: Strive to constantly improve our EHS performance and management processes by measures, including the following:

o Benchmarking industry best practices to identify improvement opportunities; and

o Conducting reviews and auditing our EHS management system and operations to monitor progress and compliance.

o Incorporating newer generation technology and advance management systems.

o Learning from events - accidents, close calls and identified substandard conditions.


Human Resource Development

Our Staff are the most valuable asset.

In order to hire competent & quality resources, a pre-employment IQ test is mandatory which screens participants after assessing them on three dimensions: Intelligence, Comprehension & Analytical abilities.

The Company pays special attention on the training and development of its Employees. All new employees go through a detailed Orientation Training Program. Existing Employees are provided refresher training courses on a regular basis. Theoretical and practical training to fresh engineering graduates is also imparted through Graduate Trainee Engineer program. This familiarizes graduates to the industry practices.

The Company focuses on environment, health, safety and security while striving to achieve operational excellence to energize economic growth.

Products


FURNACE OIL

Furnace Oil ("FO") is a major source of fuel for power and industrial sectors with power sector accounting for 72% of total consumption in FY 05.

Cement (5%) and other industries (23%) account for the remaining 28%. FO is a deficit product and about 31% of domestic consumption was met through imports during FY 05.

FO was deregulated in July 2000 leading to stiff competition amount MOCs and oil traders actively engaged in the marketing and import of FO.

FO sales experienced a decline of 15% in FY 03 and further 44% in FY 04 mainly due to increase in availability of gas and water for the power sector and conversion of cement plants to coal and gas fired systems.

FO sales bounced back in FY 05 with a growth rate of 23% due to shortage of water and disruption of gas supplies

Demand Production

Sectoral Consumption of FO (000 Tons)

1230

2493

1544

6113

1272

3319

7000

1265

5398

6000

5000

4000

3000

2000

1000

0

FY 02 FY 03

FY 04

FY 05

Others Power Sector


HIGH SPEED DIESEL:

High Speed Diesel (“HSD") in terms of volume is the most consumed POL product in Pakistan. HSD is a deficit product and about 55% of domestic consumption was met through imports during FY 05

Transport & agriculture sectors are the main consumers accounting for 90% of total consumption.

The demand of HSD grew at a CAGR of 3.6% during FY 05

During the last two years the growth in HSD consumption has been contributed primarily by a significant increase in freight movement and growth in agriculture sector

HSD is a partially deregulated product; OMCs are authorized to fix and notify HSD prices individually on cost competition basis and as per parameters set by GOP but OMC margin is capped at 3.5% and dealer margin at 4%

HSD Demand & Supply (000 Tons)

7334

3050

8000 6964

2517

7734

3454

7000 7014

2721

6000 5000

4000 3000 2000 1000

0

FY 02 FY 03

FY 04

FY 05

Demand Production


MOTOR GASOLINE:

Pakistan has been able to meet local requirement of Motor Gasoline ("Mogas") through local production since PARCO came online in 2001

Local refineries produced 1.33 million tons of Mogas during FY 05

Transport sector is the main consumer accounting for 98% of total consumption

The demand for Mogas grew at a CAGR of 6.8% during FY 02-FY 05

Mogas consumption increased to 1,332 tons in FY 05 from 1,265 tons in FY 04 due to the growth in the number of cars and motorcycles. However, there has been a decline in Mogas consumption of 11% during 1H FY 06 when compared to same period last year due to availability of cheaper fuels such as CNG and continuous increase in oil prices

Mogas is a regulated product and OMC margin is fixed at 3.5% and dealer margin at 4%

Sectoral Consumption of Mogas (000 Tons)

1268

31

1500

1102

19

1332

42

1104

38

100

0

500

0

FY 02 FY 03

FY 04

FY 05

Transport & Agriculture Others


LIQUEFIED PETROLEUM GAS:

Mainly used by domestic and commercial consumers

Consumption in the country has increased by a CAGR of 10.3% over the last 6 years due to increasing prices of kerosene and other alternatives

LPG Demand & Supply (000 Tons)

415

380

500

357

348

452

412

450

400

350

373

355

300

250

200

150

100

50

0

FY 02 FY 03

FY 04

FY 05

Demand Production


FUTURE OUTLOOK OF PETROLEUM PRODUCTS

Diesel SK/J-I Gasoline Furnace Oil LPG Pet Coke


14000

13800

1700

2300

5100

760

1000

900

300

500

1500

210

1000

1200

0

1000

0

8000

4800

140

0

1800

3600

550

0

6000

4014

1180

1673

3158

4000

0

2000 40

2

0%

Supply Yr-05 Estd. Supply FY-12 Demand FY-12 Available Domestic Market

Oil Refining Business

At present, the Company receives limited quantity of local crude oil and blends it with imported crude oil while retaining product quality and yields. This has not only reduced the Refinery’s exposure on foreign currency rate fluctuations but also reduces the demand for foreign exchange. The Company is seeking to increase its allocation of local crude oil and condensate. Good Maintenance and Operations ensured 100% availability of the crude oil processing capacity at the Oil Refining Business (ORB). Other improvements included lower fuel and water usage, increased LPG recovery and further enhancement in the recovery of High Speed Diesel. The Company is completing studies to increase the processing capacity above 35,000 bpd, to implement as the trading scenario changes for the better.

Petroleum Marketing Business

Byco Petroleum Pakistan Limited, the only refinery in Pakistan which has acquired marketing license from the start of its operation. During the year 2007, the Company has launched its fuel marketing activities managed by the Petroleum Marketing Business (PMB) formerly known as Oil Marketing Unit. The business has been re-launched with a new vision and has developed progressively during this period and is now growing aggressively, so far approximately (till date 15th December, 2010) 180 retail outlets have been set-up, primarily focusing on retail segment and PMB is now expanding the canvas by targeting to become a dominant player in the industrial, international and retail segments. Going forward, PMB will be increasing its product portfolio by adding LPG and lubricants as well.

Plans are also underway to make LPG available at the Filling Stations, as well as to market LPG cylinders with the Company’s Brand through a distribution network and launch branded lubricants for the automotive and industrial sectors which will be available at the Filling Stations as well as in the commercial markets.


PMB is focusing and planning to cater to the international opportunities available in the region where it can provide petroleum and lubricant products.

With ever-increasing competition in the market today, availability of product is a major challenge for all Oil Marketing Companies (OMCs). Byco has a distinctive advantage through its Refinery, to meet the product requirement in the south of the Country.

However, while we develop infrastructure that will assist in the delivery of product to the consumers at their doorstep, to cater to the fast growing requirements of the business in other parts of the Country, arrangements are being put in place to acquire products through other sources, like the White Oil Pipeline, as well as purchases from other refineries and oil marketing companies.

Conclusion of the Visit dated 11 December, 2010.

A Brief Overview of the Report

BYCO commenced the sale of petroleum products with the establishment of its first retail outlet in July 2007 and reached 100 retail outlets in the last fiscal year achieving the milestone in less than 3 years. Now with 180 retail outlets in our portfolio, it expect to continue adding Outlets, which will enable to consolidate market position and have representation within major geographical areas of the country spread from Karachi to Kashmir.

BYCO is the only OMC to be growing at a staggering rate of 208% as compared to other competitors; with a growth of 390% in retail sales and turnover growing by 303% in the last fiscal year. Though in its infancy stages, the Marketing Business already has attained 5th ranking amongst the industry players in a very short span of time. With a cumulative market share of 2.1% in liquid fuels, the Petroleum Marketing has grown exponentially in terms of market share as compared to previous fiscal year. Following a multipronged strategy entailing rapid expansion in our key segments of Retail, Consumer and International Sales, your Company is making its mark in the industry. Apart from retail sales your Company's ever increasing and diversified consumer portfolio is also on a fast track growth. Although it has not been long, the marketing business has developed a strong customer base and is expanding every day by acquiring major customers in bunkering and marine business, industrial consumer business, captive power projects, cement, and consumer goods companies. Furthermore we have carved a niche for ourself in the international market by supplying specialized diesel (Ultra Winterized Diesel) and fuel oil (RMG 380) products in growing foreign markets and bunkering businesses. The Company has had the privilege to be the first to introduce these products in Pakistan. Supply chain mechanism has been strengthened with availability of storages at Keamari, Machike, Ghatti, Chaklala, Shikarpur, Tarujabba


and Mehmoodkot in order to meet marketing requirements at various geographical locations. Moreover with entry into the White Oil Pipeline the Company is supplying the refinery's product across the length and breadth of the country more efficiently. For the first time in the oil industry's history in the country, our petroleum marketing business has entered into an agreement for managing inventory for fuel oil at the customer's doorstep. Moreover your Company has recently accomplished the milestone of importing its first consignment of Diesel and Furnace Oil during the last financial year.

BYCO also endeavors to be a major part of the industry and is involved in molding its business activities to the changing requirements of its customers and providing them with the best possible experience. An essential step in this regard was the launch of the new

An unparalleled brand architecture exercise by international brand consultants has created a position for Byco over and above its competition. This is the first time such an exercise has been undertaken in the country's oil Industry. Through this exercise we aim to strengthen our corporate image by infusing brandstrategy elements and aspects such as positioning and brand persona that allow us to not only compete locally but also at a global level with international giants. As a result of the new identity, our existing stations will be transformed into state-of-the-art, modern retail outlets across Pakistan providing customers with Branchingout Growth 19 Improvement through the addition of quality human resource.

Social Corporate Responsibility

Timely and generous response to Flood victims of Baluchistan in particular and to other parts of the Country in general.

Evacuation of local residents during Cyclone PHET,which hit parts of Baluchistan. Pirkhus Road repair to facilitate daily commutation of residents of Moza Kund and adjoining

areas. Industrial Visits of upcoming graduates from well reputed Universities. Supply of Drinking Water to Local Residents. Medical Relief Camps. Arrangements of Sports and recreational activities for local residents. Environment, Health, Safety and Security (EHSS); During the period under review, significant achievements were made by your Company in EHHS.

A few major achievements have been listed below: 3 million safe man-hours achieved without a Lost Time Injury (LTI). Total Recordable Incident Rate TRIR of 0.347 achieved against 0.8 target, the achieved TRIR is a

113.25% improvement compared to the set target of 0.8. The Refinery achieved the milestone of Integrated Management System (IMS) Certification. IMS

includes certification of ISO 9001-2008, ISO 14001- 2004 and OHSAS 18001-2007 standards. 280 Standard Operating Procedures prepared and implemented through Integrated

Management System.


An outsourced training program in five areas include Incident Reporting, IMS Awareness, OHS Risk Assessment, EMS Risk Assessment and Internal Auditing arranged by EHS Department for Management and staff through Integrated Management system.


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