State-run IndianOil (IOC) and Bharat Petroleum Corporation Ltd (BPCL) are planning to bid for Shell India's retail outlets.
Shell India, the domestic arm of Royal Dutch Shell Plc, had offered for sale 20 of its 80 operational retail outlets and around 20 sites acquired earlier for setting up such outlets. The only foreign petro retailer in the country, it has approached oil marketing companies, public and private, regarding this.
It is proceeding with these plans despite the recent deregulation of petrol prices. However, it plans to expand in other domestic markets.
IOC Chairman and Managing Director B M Bansal said his company would like to take over outlets that had good location and sale volume. "Shell approached IndianOil and we have given bids for some of the outlets," he said.
IOC is the biggest fuel retailer. Bansal said it took Rs 15-20 lakh to set up a low-cost rural outlet, while one in urban areas could cost anywhere between Rs 1 crore and Rs 4 crore.
"Putting up retail outlets in urban areas is difficult because land is a big constraint. Taking over an established retail outlet makes business sense," he added.
An executive from BPCL said the company was in discussions with Shell.
Post the deregulation of petrol prices last month, private retailers - Essar Oil and Reliance Industries are the others - were said to be ramping up their roll out of petrol pumps. A Shell official had welcomed the decision, terming it positive for the company in the retailing business.
Last year, Shell - present across Bangalore, Hyderabad and Chennai and parts of Gujarat and Maharashtra - shut some outlets, owing to mounting losses in fuel retailing. The Shell properties on offer include a combination of vacant lands and petrol stations across various cities. "We are, however, constantly reviewing our retail strategy and would continue to build a desired network of retail chains. While we are selling in some areas, we are also acquiring in other regions to scale up," Deepak Mukarji, group communications head for Shell India, had told Business Standard earlier.
A senior executive in a private retailing company said the valuation was too high for them. "We did the due diligence and found some fuel retail outlets and some prospective sites between 1.5 and 2 acres too expensive for us," he said.
Hindustan Petroleum Corporation does not find the Shell offer attractive. A senior executive told Business Standard it did not find Shell's offer attractive, as the valuations of the retail outlets and assets attached to these facilities were relatively high.