Lanka IOC back in black
New Delhi   08-Jun-2011

A combination of diversification into niche markets and right pricing of petrol and diesel has ensured that Lanka IOC, a subsidiary of IndianOil, is back to making profits in the financial year 2010-11. Lanka IOC last made profits in 2007-08.

It closed 2010-11 with record profit of LKR 876 million (INR 1=2.5 LKR) on a turnover of LKR 51.74 billion. Last financial year, Lanka IOC had made a loss of LKR 422 million. Nearly 40 per cent of the profits came from businesses other than the sale of petrol and diesel — lubricants, bitumen and bunkering. To cater to the niche premium segment and to improve margins, Lanka IOC introduced premium petrol (priced LKR 5 more than regular petrol) and diesel (priced LKR 1.3 over regular) and has carved a share of the market. The 95 Octane brand was shifted to the premium category after suitable additions to the product.

“After the huge knocks we took from 2007-08, we made a conscious decision to concentrate on fields related to the core petroleum business, so that the dependence on profits on sale of petrol and diesel is reduced,” Lanka IOC Managing Director K. R. Suresh Kumar told this correspondent.

Lanka IOC has now about a fourth of the market share in the retail petrol and diesel vending sector in Sri Lanka. It now has about 150 retail outlets across the country, barring the North.

The company plans to expand the number of retail outlets to about 200 in the next three to four years.