New Delhi: Essar Oil, India’s second largest private oil firm, plans to more than triple its petrol pumps to 5,000 by the end of next year, Chairman Prashant Ruia said. Essar currently has 1,550 petrol pumps, the highest owned by any private company, and another 1,600 are in various stages of implementation.
“Going forward, our expanding retail network will be a great value creator… Our network is expected to reach 5,000 operational outlets by the end of next year,” he said in the company’s annual report. The gradual increase of Rs 0.50 per litre per month in diesel prices initiated by the previous UPA government in January 2013 and reduction in crude oil prices during the NDA regime in 2014-15 led to full de-regulation of diesel prices.
“These factors enabled (Essar Oil) to enter the market, hitherto unavailable to private players due to the subsidy regime,” he said. Essar Oil Ltd and Reliance Industries Ltd, the only other private refiner in India, had together captured about 17 per cent of domestic retail market for diesel and 10 per cent of petrol by 2006 before heavily subsidised sales by state-run firms drove them out of business.
While RIL had shut down all of its 1,432 petrol pumps around March 2008, Essar continued to operate its near equal number of outputs on limited scale, mostly selling petrol. Petrol price was deregulated or linked to market price in June 2010.
“Essar Oil’s retail business has begun to contribute to the bottom line and promises to be a major value creator in the future. “We are approaching this business with a new customer-oriented mindset and have lined up exciting offerings for consumers and dealer-partners, both of whom are sure to find value in associating with us,” Ruia said.
Essar Oil Managing Director and CEO Lalit Kumar Gupta said during 2014-15, retail sales contributed 4 per cent to company’s revenues, against 2 per cent in the previous year. “We are now looking at opening retail network in formats like Company Owned Company Operated (COCO), Company Owned Dealer Operated (CODO), in addition to the existing Dealer Owned Dealer Operated (DODO),” he said.
Essar Oil said its sales from retail operations have grown 175 per cent from 214,000 tons in 2013-14 to 590,000 tons in 2014-15. “This growth was also due to the opportunity presented to the private players in the retail segment by linking the price of diesel to the market, with the rates reflecting price changes in the global markets,” it said.
To capture higher petrol sales volumes, it is now planning to enter into mini-metro’s and Tier II cities. 30 of its petrol pumps also offer Compressed Natural Gas (CNG) besides petrol and diesel, while 6 others also sell Auto Liquid Petroleum Gas (ALPG).