The Hindu Business Line : IndianOil plans to tap non-fuel retail biz

IndianOil is planning to tap non-fuel retail opportunities. As a pilot project, the PSU refiner is planning a rollout of non-fuel business — under an umbrella brand — in 100 petrol pumps in north India in 2008. The first prototype store is expected to be launched in March 2008.

Depending upon the experience of the pilot project, the company has planned 2,000 such stores at an investment of Rs 200 crore in the next five years.

“Though IndianOil has existing non-fuel businesses in the form of ATMs, eateries or other products in 400 petrol pumps in the country, this is the first time the company is adopting an organised approach towards the business,” Director (Marketing), Mr G.C. Daga, told Business Line.

The company is also considering creating a special team of around 120-125 employees to look after this new initiative.

The pilot project — taken up as per the recommendations of consultant Technopak — targets setting up 80 stores either in food and beverage category or food and groceries category in the urban areas of North India, including Delhi, Punjab, Haryana, Uttar Pradesh, Rajasthan and others.

Rate of return

According to sources, the average store size for food and beverage category will be 300–700 sq. ft. The food and groceries stores will be in the range of 700-1,000 sq ft. The stores will be built and designed by IndianOil at an average capex of Rs 15-20 lakh per store.

This apart, the company will also set up 20 FMCG and agro-product stores in the rural fuel outlets branded as Kisan Seva Kendras in the North.

The company is expecting a 15 per cent average rate of return against an investment of approximately Rs 20 crore. The returns will include 12 per cent return on capex and up to five per cent through profit sharing or rentals with the partners in non-fuel retail business.

“The detailed business model is yet to emerge. We are now busy in selecting the sites, merchandise, alliance partners, store designs and others.

“The pilot project will be commissioned by mid-2008. This is a new initiative for IOC and based on the pilot project we will modify our future programmes,” an IOC official said.

IOC, currently, has alliances with Akbar Alis and Café Coffee Day, and Nirulas for food and beverages segment. In the food and groceries segment, the company will focus on dairy products, processed food, personal care, music and entertainment and car care.

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