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IndianOil bets big on non-fuel business

IndianOil bets big on non-fuel business

Author | Source: Business Line | Thursday, Jul 20,2006 5:30 AM

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IndianOil bets big on non-fuel business

To convert `star distributors' into `one-stop shop' for kitchen requirements

Novel retailing

* The company has already enlisted 544 distributors.

* Is in the process of roping in companies manufacturing kitchen items

* The scheme offers an opportunity to review the business acumen of distributors

Next time you contact your Indane distributor, chances are that you may be pleasantly surprised by his change in attitude and promptness. For, he will take LPG as a cue to canvass for a host of co-branded kitchenware, kitchen accessories, appliances and foodstuff being offered by IOC through select LPG distributor network, designated as `star distributors'.

Perturbed by huge losses incurred in the domestic LPG business, IndianOil has embarked upon a project to sell co-branded non-fuel items through LPG distributors in metro cities or major urban areas.

The company has already enlisted 544 distributors for such retailing.

The idea is to convert these distributors into a "one-stop shop" for meeting the entire kitchen requirement. The target audience is the fairer sex.

"Since LPG distributors have direct contact with customers, stress will be laid on direct marketing methods," an IOC official told Business Line.

IOC controls 48 per cent of the domestic LPG market in the country through over 4,800 distributors.

The company lost over Rs 700 crore in LPG business during 2005-06 due to high international prices vis-à-vis cap on retail price.

While a modest beginning has already been made in non-fuel retailing by signing up eight hose manufacturers and five high-efficiency gas stove manufacturers, IOC is in the process of roping in a host of companies manufacturing water purifier, pressure cooker, electric chimneys, cotton aprons, gas leakage detection alarm, atta, rice, ready-to-cook food items, micro-waves, non-stick cook-wear and so on.

Negotiations are also on to rope in financial services agencies to offer loans on purchases.

While expecting a profit of Rs 10-15 crore on a turnover of at least Rs 100 crore in 2006-06, IOC expects turnover to grow manifold with increase in offerings, especially high-value products such as microwaves or chimneys.

"We have test-launched the non-fuel business through LPG network in October 2005 with gas hoses and have already recorded a turnover of over Rs 40 crore on the same," the official said.

Incidentally, the scheme has also offered IOC an opportunity to review the business acumen of its distributors, many of whom allegedly consider their distributorship as an assured means of success.

"The star-distributorship programme was aimed at identifying the best retailers," the official said.

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