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Petroleum retail sector chalks out counter-strategy

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To mitigate losses of over Rs 300 crore per day on the sales of automobile fuels, petroleum retail players in India are planning to open more outlets throughout the country.

Big public sector players like Indian Oil, Bharat Petroleum and Hindustan Petroleum have planned to open over 3,000 outlets all over the country this year. Analysts say that these oil retailers are also looking at revenues from non-fuel retailing, such as FMCG products and grocery sales at their outlets.

An IOC official in a statement said, “Revenues from non-fuel retailing are good, hence we are planning to cash in on that.” The company currently earns about Rs 200 crore from its non-fuel retail, and hopes to take that up to Rs 3,000 crore per annum in the next few years.

According to media reports, Indian Oil Corp. is losing Rs 1.7 billion ($43.1 million) a day from selling cheap fuels.

IOC’s director of finance SV Narasimhan in a statement informed that the firm’s current revenue loss on the sale of petrol was Rs 9.20 per litre, while it was losing Rs 10.9 on a litre of diesel. The firm was suffering a revenue loss of Rs 331 per cylinder of cooking gas.

According to sources in the industry, over 1,600 outlets have already been commissioned in the current year.

Industry experts opine that the marketing businesses of oil retailers are suffering losses as they are forced to sell petrol, diesel, LPG and kerosene at subsidised prices, and the demand for these products is growing at a healthy rate of about 8 per cent per year.

A BPCL official stated, “The sales per outlet have come down to a large extent. But we have to open outlets as we have to stop the competition from coming in.” He further informed that BPCL plans to open 200 outlets in the next quarter. It currently has around 8,015 outlets.

A senior oil ministry official said yesterday that a modest hike in retail prices of key fuels was likely in the first week of February.

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