IndianOil in talks with ITC for merchandise supplies
New Delhi   03-Jun-2008
IndianOil is in initial phase of discussions with FMCG and hospitality sector major ITC Ltd for merchandise supplies from the latter’s Choupal Sagar stores for its 2,050 kisan seva kendra (KSK) outlets across the country, an industry source said. IndianOil’s KSK is a chain of one-strop rural retail outlets that offer fuel and other non-fuel value-added services like grocery, personal care, tools, auto spares, seeds, pesticides, fertilizers etc in the rural Markets. “Talks, at present are at nascent stage and is likely to materialise over the next three to four months time,” the source added. According to the source if the deal materialises, IndianOil would be able to offer a wider variety of merchandise and brands at a competitive price. An ITC official confirmed the development. “We are in discussions but nothing has been finalised as of now,” the official said. According to an industry analyst, ITC Ltd would also benefit from such agreement as there would be more business for the FMCG major as they will have more retailers attached to them. The company is also open to forging agreements with other players. “This model is at a very preliminary stage and everything depends on how it works out and how commercially viable it is for both the parties,” the source added. ITC LTD, which at present operates 24 Choupal Sagar outlets across the country, plans to open 100 smaller e-Choupals called Choupal Sagar over the next two years. The company plans to pump in Rs 6 crore in each outlet, the official said. Homegrown FMCG major Dabur entered into an agreement with IndianOil last year to service rural market demand for consumer goods through the latter’s chain of KSK. Under the agreement, KSK outlets across the country stocked and sold Dabur’s range of healthcare, oral care, personal wash, skin care and home care products. The agreement was signed initially for a period of five years. ITC Ltd had set up new small format stores in rural areas on the lines of its existing hypermarket chain, Choupal Sagar, as a step to expand its retail operations. The idea is to penetrate lower income level rural areas through the smaller Choupal Sagar stores, spread over about 1 acre. IndianOil is also talking with ‘Metro’, which would be a back-end supplier to KSK outlets.