IndianOil nets Rs 111-cr savings IBP merger
New Delhi   06-Dec-2007
The merger of IBP brings home an annual savings of Rs 111 crore in operations cost of the merged petroleum retailing business of IndianOil , beginning this year. However, beginning August 2007, IndianOil brought the entire petroleum retail business under its marketing division. IBP division is managing only the explosives and cryogenics business. The restructuring was studded by wide-scale change in marketing network and logistics. Since IndianOil has adequate storage logistics in place to supply to the nooks and corner of the country, all six depots of IBP were closed. This apart, IBP had a marketing and administrative network of 30 divisional offices, four regional offices, one LPG office in Delhi, registered office in Kolkata and corporate head office in Mumbai to manage over 3,000 outlets. The entire network was closed. On the other hand to manage a combined network of 16,455 retail outlets across the country, IndianOil had increased its divisional office network by 16 from 49 to 65. The existing regional offices of IndianOil were found adequate to manage the merged business operations. "Overall we have estimated an annual savings of approximately Rs 111 crore by restructuring the operations. The bulk of the savings Rs. 66.4 crore will be attributed by closure of four regional offices of IBP. An annual saving of Rs 24 crore through closure followed this of IBP corporate office. The net savings on divisional network is Rs 13.8 crore, a company official said. The phase-out of IBP lube brands has led to further reduction in cost of operations. IBP's lube blending facility in Kolkata is now used for manufacturing of IndianOil brands. Meanwhile, a project has been initiated to give a facelift to IBP outlets by increasing the scope of automation and customer comfort IBP outlets did not receive much investment during the last few years. IndianOil will spend approximately Rs 150-200 crore to upgrade 1,000 such outlets in the first phase.