The Hindu Business Line : Pvt petrol retail outlets score over PSUs in sales

Retail woes
Reliance retail outlets have clocked sales per month of about 410 kilolitres per petrol pump, whereas the corresponding figure for PSU outlets is 140 kilolitres.
Govt feels state-owned companies may have to review their retail plans.
The four PSUs - IBP, Indian Oil Corp, Hindustan Petroleum, and Bharat Petroleum - are chalking out ambitious retail plans to counter threat from private sector.

New Delhi , April 9

Competition is hotting up for state-owned oil marketing companies (OMCs) with the private sector retail petrol outlets clocking much higher monthly sales on an average vis-à-vis the public sector ones.

Owing to this, there is a thinking within the Government that state-owned companies may have to take a closer look at their retail plans, particularly the practice of going in for a cluster approach where a number of PSU outlets are located in close proximity and thus cutting into each others' sales.

According to estimates, while Reliance Industries Ltd's retail outlets have notched sales per month of about 410 kilolitres per petrol pump, the average sale (petrol and diesel) of the state-owned companies are said be about 140 kilolitres .

Concerned over the declining sales at petrol pumps of the OMCs across the country, the Ministry of Petroleum and Natural Gas is planning to ask companies to go slow on their expansion plans for retail outlets. An official told Business Line that these companies — IBP, Indian Oil Corp (IndianOil ), Hindustan Petroleum, and Bharat Petroleum — need to take a relook at their retail plans, but admitted that no formal communication has been sent as yet.

However, the companies should themselves see the trend and review their plans, the official added.

A Parliamentary Consultative Committee has also expressed concern, he said, adding that the Committee has been critical of the retail performance of the state-owned companies compared to the private retailer RIL. Reacting to this, OMCs sources said measures were being taken to avoid such situations. The four oil companies, which are taking a hit on their bottomline for selling petroleum products below the cost price, are chalking out ambitious plans on the retail front.

The companies have made aggressive plans to ramp up their retail networks.

IndianOil (including IBP) the most dominant player in the market with 50 per cent share of outlets, plans to put up 2,000 more petrol pumps, including 1,000 in rural areas.

This would take their total to almost 17,000, up from 15,000 at present.

IndianOil is also rolling out several new initiatives to increase its per tonne throughput. These include upgrading of outlets, expanding the reach of branded fuels to more areas and creating more synergy between IndianOil and IBP in the market place.

The OMCs say that it is not fair to compare sales with RIL, which has around 1,200 outlets.

"It is like the aviation sector where private players have eaten into the business of Indian Airlines, the domestic carrier, but that does not mean it should divert business," the sources pointed out.