IOC losing market share to HPCL, BPCL
New Delhi   12-May-2011

Flagship refiner-marketer IndianOil has lost a substantial share of the fuel retail market to the other two state-run players who are stepping on gas with increased focus on quality of fuels and service.

According to oil ministry data, IndianOil's share in total petrol and diesel sales in the country declined to nearly 53% in 2010-11 from around 54% in 2009-10. This translates into loss of sale of half a million tonne and an equivalent gain for rivals Bharat Petroleum and Hindustan Petroleum. Many attribute the loss in market share to the leadership flux the company went through for almost 11 months before R S Butola was appointed as the full-time chairman on February 28.

The decline in market share is alarming since it comes in a regulated market scenario that is almost completely dominated by only three state-run companies. It also indicates the big challenge IndianOil would face when the gap between prices offered by state-run retailers and private players narrows or disappears once the government affects an upward revision.

Mukesh Ambani's Reliance Industries Ltd, for example, had captured almost 18% of the market for diesel, which sells more than petrol, by mid-2006 before it was forced to shut down its pumps as it could not match the subsidised price of its state-run competitors.

For IOC, one saving grace was the low-cost Kisan Seva Kendras that cater to rural markets. Sales from such outlets contributed almost 8% to the firm's overall petrol sales and nearly 7% to diesel volumes. IndianOil's share in diesel sales declined 0.9% to 47.1% in 2010-11, 0.7% lower than 2009-10. It lost petrol market share by 0.3% to 44.7%. In direct sales to bulk customers, however, it continued to have a commanding 77.5% market share. In terms of volume, IndianOil Corporation sold 31.58 million tonne of diesel in 2010-11. Some 22.91 million tonne of this was through petrol pumps and 8.67 million tonne through direct sales. In 2010-11, the industry sold 59.86 million tonne of diesel. It sold a total of 6.34 million tonne of petrol out of the total industry sales of 14.19 million tonne in 2010-11.

IndianOil added 900 retail outlets, including 575 Kisan Seva Kendras, in 2010-11. Bharat Petroleum added 600 and Hindustan Petroleum 1,086 petrol pumps.