Essar Oil is giving a facelift to its fuel retail operations, enhancing additional facilities through tie-ups at 1,250 outlets.
The Ruias-controlled company, which anticipates movement on a market-linked fuel price mechanism, has classified its outlets under three categories — rural, state and national highways, and city — and is in talks with food chains and LPG suppliers.
The company has already tied up with Tata group firm Rallis, National Seeds Corporation and Amul for strengthening the added facilities at rural outlets.
Rallis has started sale of pesticides and chemicals at Essar’s 60 outlets in rural areas, while NSC sells varieties of seeds. In the fuel outlets at tier-II cities, Amul is selling its dairy products, said S Thangapandian, chief executive officer, marketing.
For LPG supply, the company is in talks with parallel marketers such as SHV of the Netherlands, ELF of France and Mumbai-based Aegis. It will start selling LPG through 10 outlets in this financial
year. Each facility will cost Rs 55-60 lakh. The company expects 40 kl of LPG sale every month.
Essar has 700 fuel outlets at highways and around 250 in rural areas. The remaining outlets are located mainly in tier-II and tier-III cities. About 15 per cent of the company’s revenue is from fuel retail operations. At the highway outlets, the company is contemplating multiple options to attract consumers.
Setting up dhabas for food, cleaner toilets and other refreshment facilities are part of a major plan. In the cities, it is looking to set up food courts and shopping facilities. The company has already tied with State Bank of India (SBI) for opening ATMs.
Earlier, it had joined hands with Total of France and Castrol for lubricants’ sale.
“Essar plans to increase the number of outlets to 1,500 by March 2010, as we intend to increase market share and sales volume. Each outlet costs Rs 35 lakh for the company. At the current crude oil price of $65, we are just break-even, without any profit and loss. But we expect that the government will implement market-linked fuel pricing mechanism for a level playing field with the public sector companies which sell petrol and diesel at a subsidised price,” said Thangapandian.
Source: Business Standard