IndianOil, IBP retail merger nearing completion
New Delhi   27-Jul-2007
IndianOil will complete the merger of IBP's petroleum retail business with itself beginning August 1. With this, the IBP division will be left with only explosive and cryogenic vessel manufacturing business. IOC is also planning an immediate investment of Rs 150-200 crore in automating IBP outlets. Post merger, IndianOil will control over 16,455 outlets in the country. This will include over 3,500 IBP outlets which IOC plans Rs 200-cr investment for automating outlets will henceforth display both the brands of IndianOil and IBP. According to sources, the merger has also offered the opportunity of widening IndianOil sales network. While the 30 IBP divisional offices across the country are already closed down, IOC is opening 16 additional divisional offices in new locations over and above the existing 49. "The merger has given us an opportunity to extend our network as well as further decentralisation of operations," an IndianOil official said. "For example in West Bengal our operations will henceforth be divided in four divisions, up from the existing three divisions," he added. Interestingly, while the stage is already set for redeployment of field staff of IBP, IndianOil is facing problems in redeploying the senior and mid-level management of IBP. "Unlike IndianOil which has an integrated chain of operations, IBP was engaged only in retailing the refined products. Accordingly, the merger leaves little option for IndianOil in absorbing the IBP employees in areas other than marketing. The problem is further compounded by the fact that IBP was comparatively top-heavy organization," a source said. IndianOil currently has 30,000 employees of which about 14,000 are in petroleum products marketing. IBP has 2,000 employees. The salaries and wages of employees of IBP are already matched with IndianOil . Meanwhile, IndianOil is drawing up plans for automation and facelift of IBP outlets to match its standards. "IBP outlets did not receive much investment during last few years due to issues ranging from financial constraints and uncertainties prevailing during the period. Our immediate task is to upgrade the outlets," a senior IndianOil official said. While detailed cost estimates are yet to be drawn, the sources feel that the company may have to pump in Rs ISO-200 crore for the automation of about 1,000 existing IBP outlets selling over 2000 kl a day.