The Hindu Business Line : IOC nets Rs 111-cr savings through IBP merger

Kolkata, Dec. 5 The merger of IBP brings home an annual savings of Rs 111 crore in operations cost of the merged petroleum retailing business of IOC, beginning this year.

IBP Ltd was merged with IndianOil with effect from May 2 this year. Initially, a separate division (IBP division) was curved out to carry out the businesses (including petroleum retailing, explosives and cryogenic vessel manufacturing) of the erstwhile IBP Ltd.

However, beginning August 2007, IOC 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 IOC 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, IOC had increased its divisional office network by 16 from 49 to 65. The existing regional offices of IOC 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. This was followed by an annual saving of Rs 24 crore through closure 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 IOC 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. IOC will spend approximately Rs 150-200 crore to upgrade 1,000 such outlets in the first phase.

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