IndianOil to prune retail plans this fiscal
New Delhi   02-Feb-2009
IndianOil, the country's largest oil-marketing company, has turned extremely cautious over setting up more petrol pumps and is likely to further prune its plans for the current financial year. A senior IndianOil official said, "The mad rush for setting up retail filling outlets is over in the country and IndianOil plans to concentrate on streamlining its existing network of over 15,000 outlets nationwide." "IndianOil had plans to set up 200-250 petrol pumps during the current financial year but is reviewing some of the sites to see whether it is really worthwhile to go ahead with them," he added. Some of the proposed pumps that may be dropped are located on the highways. He said IndianOil had set up close to 1,000 filling stations in 2007-08 but this was part of the rapid expansion phase as fierce competition had broken out with private sector companies such as Reliance and Essar had entered the marketing segment. IndianOil does not want its retail- marketing network to become unwieldy and the focus is on optimising the operations of the existing petrol pumps to increase the market share through greater efficiency. "The company is expanding its XTRA care E-branded full service petrol stations in the metros as a result of a series of processes in retail design, product and service upgradation, automation and loyalty programmes," the official said. The company has also gone in for "swagat" outlets, which are large format sites, designed exclusively to cater to travelers on the highways. These petrol pumps aim to attract customers through spacious parking lots, dhabas, eateries, retail stores and restrooms. IndianOil is reported to have drawn a lesson from the operations of Reliance Industries, which had gained a significant market share despite a relatively smaller number of petrol pumps. The private sector company had focused on logging high sales per pump. IndianOil officials point out that this was due to the fact that the sites for these filling stations had been carefully selected. However, since the public sector companies are government-owned they also have to set up filling stations in remote regions the IndianOil depot at Leb, for instance; so that essential petroleum products are made available to the public. However, with international oil prices skyrocketing this year and the public sector companies continuing to sell petrol and diesel at subsidised prices, Reliance had to close down its retail operations. Essar also could not continue in business. With international oil prices having settled down at lower levels the private sector companies see an opportunity again but government regulation of prices of the public sector companies continues to pose a problem, as they cannot match these prices.