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IOC to offer more than jus' fuel

24-January-2004
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IOC to offer more than jus' fuel

Indian Oil Corporation is tying up with large retailers to offer more than just fuel to its customers. Together with major brands, such as FoodWorld and Hindustan Lever, Indian Oil is expanding retail sales of `non-fuel' products in its gas stations.

Its growth plans centre on giving `extra' — Extra Mileage-Extra Savings is a catch phrase at its outlets. Now the oil company is going the extra mile to offer its customers `non-fuel services', says its Executive Director (Retail), Marketing Division, Mr T.L. Jain.

It makes sound business sense because growth in the number of fuel pumps is outstripping increase in demand for fuel. Petrol sales are increasing by about 10 per cent while diesel sales are decelerating.

Between April and November last year, oil companies set up more than 1,400 outlets countrywide and the amount of fuel vended every month by each pump dropped by 11 per cent to 200 kilolitres. This drop is bound to continue, and Mr Jain hopes it will stabilise around 150 kilolitres - "anything less would be unviable."

Apart from the existing players, the entry of private companies into fuel sales is going to rev up the competition. So, to sell petrol and diesel, companies need to attract people to their outlets by offering more products and services.

So what do the oil companies do? Petrol and diesel are the bread and butter of their business. So, they start selling jam also.

Through an agreement with the retail chain, FoodWorld, the oil company will offer space in select petrol bunks for the retailer to set up shops. Over the next six months they will test the water in two locations in Chennai and if the going is good, they will expand the business. The agreement provides for FoodWorld to set up shop in any of a select list of Indian Oil's petrol outlets, according to Mr Jain.

IOC is also talking to Sangam, the urban distribution arm for Hindustan Lever products, to procure and supply products to its convenience stores in the petrol bunks. Through these agreements the company will set up convenience stores either through the FoodWorld chain, Sangam and run the businesses on its own.

It also provides ATM facilities, has pharmacies and restaurant and boarding facilities at outlets located along the highways. "A large basket of extras," says Mr Jain.

Apart from competition, other factors affect fuel sales, particularly sales of diesel, says Mr Jain. During the recent elections in four States, diesel sales went up by 10 per cent. The oil companies are certainly looking forward to the parliamentary elections.

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