IndianOil eyes Rs 2,000 cr from non-fuel retail
New Delhi   19-Sep-2007
Oil behemoth IndianOil is eyeing an annual turnover of Rs 2,000 crore from non-fuel retail in five years. The company's non-fuel retail turnover is currently a mere Rs 4 crore, out of its total sales of Rs 2 lakh crore. As a part of its strategy to push the non-fuel retail business, the company will tie up with major retailers and set up convenience stores, super markets and other formats, depending on the real estate it has at its outlets. It will follow a revenue sharing model. IndianOil has 16,754 fuel outlets in the country. It plans to have 600 stores in five years. "We are seriously looking at the non-fuel business in a big way. We plan to unlock the real estate stock in our outlets and develop them as profitable business ventures. Besides, this will also give opportunities for the retailers to tap the market further," said A M K Sinha, executive director, retail sales, IndianOil . The company is talking to some of the leading retailers in the country and the tie-ups will be in place by January 2008, Sinha said."We plan to launch pilot stores at 100 petrol pumps in north India, including Delhi, Rajasthan and Uttar Pradesh. Based on the results, we would extend it to other regions," he said. In urban areas, the stores will come in two sizes, 300 to 700 sq feet and 700 to 1,000 sq feet. They will be between 1,000 sq feet and 1,500 sq feet on highways. At the pilot stage itself, the company was expecting to generate 500 new jobs in its outlets, he said. Sinha said the company was planning to set up 2,500-3,000 new Kisan Seva Kendras (KSKs), its low-cost petrol pumps that sell agri inputs, equipment and daily essentials in rural areas, by the end of 2010. It currently has 108 KSKs. According to industry watchers, oil-marketing companies are globally getting into non-fuel ventures because of higher margins and. the trend is catching up in India as well. " Margins in food and groceries or any other forms of retailing are higher than in fuel retailing, which is why companies are getting into this. They also have prime real estate in major cities. They want to unlock this value and tap the potential of organised retail in India," said Astitava Sen, vice president, retail and consumer goods, Technopak.