ERP Implementation at BPCL

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"It's true that 9 out of 10 ERP implementations in India failed."

- Girish Menon, Vice-President, Global Marketing and Planning, Ramco Systems, in October 2001.

ERP Implementation at BPCL: The BPCL-ERP Story

In November 2001, Bharat Petroleum Corporation Limited (BPCL), a leading player in the Indian petroleum industry, successfully implemented an Enterprise Resource Planning (ERP). Implementation began in April 2000 after the company decided to integrate all its activities through the ERP package SAP R/31. The company hoped to speed up its decision-making and respond faster to customer needs through ERP. The intention was to show the differentiation in service, retain customers and help increase the business of its Industrial & Commercial (I&C) customers2. BPCL also wanted to increase its retail thrust by exploiting IT initiatives to the maximum. The noteworthy aspect was that the company was one of the very few Indian companies to have successfully implemented ERP. With the successful implementation, BPCL customers could access information and do business online, which enabled BPCL to increase its share of I&C customers from 14.9% in 2000 to 15.8% in 2001. After the ERP implementation, BPCL's revenues grew by 2.28% in 2000-01, even as the revenues of the petroleum industry declined by 3.4%.

Background Note

BPCL In 1951, the Government of India entered into an agreement with UK-based Burmah Oil Company and Shell Petroleum Co. (Burmah-Shell) for establishing an oil refinery in Bombay. In 1952, this agreement led to the incorporation of Burmah Shell Oil Refineries Ltd. In January 1955, the refinery at Bombay went on stream, and in 1962, the refinery started processing crude oil from Ankleshwar in Gujarat.

In December 1975, following the passing of 'The Burmah-Shell (Acquisition of Undertaking in India) Bill,' the Government of India signed an agreement with Burmah-Shell. Subsequently, the government took over the operations of the company and changed its name to Bharat Refineries. Initially, the company sold only kerosene, but later it set up service stations to sell petrol as well. Bharat Refineries became the first Indian company to introduce LPG for domestic cooking purposes. In January 1976, the government acquired 100% shares in the company, and in August, 1977, the company's name was changed to Bharat Petroleum Corporation Ltd. (BPCL).

The economic reforms of 1991 paved the way for major changes in BPCL. The company entered into marketing contracts with Indo-Burmah Petroleum (IBP), Madras Refineries Ltd. (MRL) and Cochin Refineries Ltd. (CRL). In 1992, the government disinvested 30% of its stake in BPCL in favor of financial institutions and mutual funds. The Rs³ 10 share created a record on the bourses when it opened at Rs 1,275, the highest ever opening among public sector companies. In 1993, BPCL tied up with its erstwhile partner Shell, to form Bharat Shell Ltd. (BSL), in which the latter had a 51% stake. In 1994, BSL launched lubricants under the Shell brand. These were marketed by BPCL as well as by BSL. By the late 1990s, BPCL had emerged as India's second largest oil company in terms of marketshare. In April 1994, 3.8% of BPCL's equity was disinvested in favor of its employees.

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1] SAP R/3 is a popular ERP software from the Germany based company Systems Applications & Products in data processing (SAP).
2] Industrial & Commercial customers consist of major industries and other commercial players who buy industrial fuels like Naphtha and furnace oil. Huge quantities are involved in this segment and it is very price sensitive.
3] In September 2002, Rs 48 equaled 1 US $.