Financial Daily from THE HINDU group of publications
Saturday, Jun 15, 2002
IBP planning 300 new retail outlets
MUMBAI, June 14
IBP Co Ltd, backed by product supply assurance from its parent, the Indian Oil Corporation (IOC), proposes to set up 300 new retail outlets in the current fiscal, a senior company official has said.
IBP currently has more than 1,500 retail outlets. This retail expansion will cost the company anywhere between Rs 1 crore and Rs 3 crore per outlet.
The oil marketing company also plans to convert its dealer-owned retail outlets into company-owned ones "at strategic locations''.
"We do not have to worry about product supply any more thanks to Indian Oil. So we can flex our muscles in the retail business by setting up outlets where it makes commercial sense instead of focussing on areas where supply will be easier," Mr R.S. Guha, Director (Marketing), told Business Line.
The company has a stronger retail presence in the north and north-eastern parts of the country, with more than 50 per cent of its retail outlets situated in these regions.
"We will focus on setting up retail outlets in urban and semi-urban areas alike and across all states. But the aim would be to set up outlets along highways, especially the Golden Quadrilateral, where we can sell higher diesel volumes," Mr Guha said.
Each outlet involves an investment ranging from Rs 1 crore to Rs 3 crore. IBP is targeting sales volumes as high as 300 kl per outlet per month.
IBP Ltd, which holds roughly eight per cent retail market share, does not own a refinery and had to outsource products from other public sector oil companies. But after entering the IOC stable, it is now able to look to its parent company for uninterrupted product supplies.
The company owns and operates around 75 to 76 outlets, including jubilee outlets along highways. These outlets are set up on three-acre plots and provide customers with amenities ranging from refreshments to a children's playground. Of the remaining outlets, about 45 per cent are company-owned-dealer-operated while the rest is controlled by dealers, Mr Guha said.
IBP has set aside Rs 140 crore towards `retail capital budget' for the year. This includes revamping of outlets and putting up hoardings and signages across all retail outlets in the country.
The company has also set targets for its LPG business. "We plan to increase our customer base to more than 2.5 lakh in the coming one to one-and-a-half years from the present 1.8 lakh," Mr Guha said. By this year-end, IBP plans to increase its LPG agencies to 82 from the present 59.
"We are also looking at buying out dealer-owned outlets at strategic locations provided it is profitable to the dealers and the company," he said.
IBP has already announced its plans to enter the consumer products business for supplying naphtha, furnace oil, LSHS, etc., to industrial customers.
"We are looking at non-IOC customers who feel neglected," Mr Guha said. He said the company planned to supply these products to smaller consumers whose needs ranged from 20kl to 100 kl per month.
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