IOC sees PSU rivals whittle away retail fuel market share
New Delhi   12-May-2011

In an alarming development, state-owned IndianOil (IOC) has lost a sizeable share of the market for diesel and petrol sales to its public sector rivals.

The private sector does not have much of a share in the market for the two oil products.

IOC saw its share of total diesel sales in the country drop to 52.8 pc in 2010-11 from 53.6 pc in the previous year, according to industry data.

Though the drop in market share was 0.8 pc, in absolute numbers, IOC has lost 0.5 million tonnes of diesel volumes to public sector rivals Bharat Petroleum and Hindustan Petroleum.

Among the public sector firms, IOC saw a decline of 0.9 pc in diesel market share.

The petrol and diesel retail market is dominated by public sector firms and private competition is almost negligible.

The drop in market share in a regulated environment is an alarming situation for IOC, as it will face further erosion once the government deregulates petrol and diesel pricing completely, giving scope for private firms like Reliance Industries to come up in big way. Reliance had captured almost 18 pc of the diesel market by mid-2006 before it was forced out of market as it was unable to match the subsidised price of its public sector competition.

IOC, according to the data, lost market share in retail sales from petrol pumps as well.

It had a market share of 47.1 pc in retail diesel sales in 2010-11, 0.7 pc lower than 2009-10. In direct sales to bulk customers, it continued to have a commanding 77.5 pc market share.

IOC sold 31.58 million tonnes of diesel in 2010-11 – 22.91 million tonnes through petrol pumps and 8.67 million tonnes through direct sales. In 2010-11, the industry sold 59.86 million tonnes of diesel. The company also lost 0.3 pc of the market for petrol, with its share slipping to 44.7 pc, the data showed. It sold a total of 6.34 million tonnes of petrol out of total industry sales of 14.19 million tonnes in 2010-11.

According to the data, the low-cost Kisan Seva Kendras that cater to rural markets have been a saving grace for IOC, with sales from these contributing 7.9 pc to the firm's overall petrol sales and 6.8 pc to diesel sales.

IOC added 900 retail outlets, including 575 Kisan Seva Kendras, in 2010-11. Bharat Petroleum added 600 and Hindustan Petroleum 1,086 petrol pumps. IOC sold 66.83 million tonne of all petroleum products put together in 2010-11 to corner 49.6 pc of the market, the data showed.