IndianOil to invest 2,000 cr to build up its retail-marketing network
Mumbai   24-Apr-2008
Undeterred by a whopping Rs 43,000 crore gross under-realizations last fiscal, which is expected to go up further this year too, IndianOil on Wednesday said that it would invest Rs 2,000 crore to ramp up its retail-marketing network. "We are really in a financial constraint (owing to the increasing gross under-realization), but that does not deter us to invest us to stay committed to customers," IndianOil's Director (Marketing), G C Daga said here. Incurring a daily loss of Rs 238 crore on account of subsidized sales of petroleum products, the oil marketing company may have to divest some cross-subsidy equity that it holds in other oil PSUs apart from selling of bonds to fund the Rs 2,000 crore investments, Daga said. IndianOil's gross under-realization was Rs 30,035 crore in the fiscal ended March 31, 2007 from Rs 23, 880 crore in 2005-06. The account is expected to be fatter this year as crude oil prices are on the rise and there is no sign of cooling down. The crude oil price is now hovering around $118 per barrel. During the year 2007-08, IndianOil sold 58.3 million tones of petroleum products, registering a growth of 8.7 per cent in volumes as compared to the previous year. Its market share also increased by 1.1 per cent to touch 48.9 per cent in the domestic oil industry. IndianOil, Daga said, would spend Rs 790 crore for retail network expansion & upgrading, Rs 600 crore in LPG business including network expansion for auto gas, Rs 400 crore towards bulk storage & additional tankage for petroleum products, Rs 90 crore in aviation business and Rs 50 crore for augmenting bulk storage facilities among others. During the fiscal ended March 31, 2007, IndianOil had spent Rs 1,500 on ramping up various marketing-related activities. Daga said IndianOil would thrust on creating low-cost Kisan Seva Kendras (KSKs) and would set up 800 such KSKs in the current fiscal from 2,100 now. Last fiscal, it added 1,200 KSKs. KSKs had contributed to 4.5 per cent of its total diesel sales and 2.7 per cent of petrol sales during the year.