Ready compensate for losses

Our Bureau

Ahmedabad, July 19

Essar Oil Ltd (EOL) has appealed to its franchisees to open their retail outlets (ROs).

The company has assured the petrol pumps that the special commission up to end of June this year would be payable on the basis prevailing up to June 30, 2006.

According to franchisee sources, the company, in its July 13 letter, said that products would be made available to ROs at the prices fixed by the company from time to time based on market prices. It has informed that the up-and-coming ROs must be completed in all respects as per the company guidelines by September 30 or it would stop payments to them. At present, about 350 of the existing 517 ROs are closed while another 400-odd are ready to be opened, the sources said.

Reiterating that the company would continue to pay lease-rental for the RO land as usual, EOL said, additionally, the ROs would be paid ad-hoc compensation at the rate of 12.5 per cent per annum on the total investment made on the RO as per franchisee agreement and value of the land as per lease-deed. However, the commission earned by any franchisee on the product lifted will be deducted from the ad-hoc compensation.

(This article was published in the Business Line print edition dated July 20, 2006)
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