New Delhi: Indian Oil Corp (IOC) has put brakes on its plans to set up petrol stations even as it follows the footsteps of Reliance and Bharti for a full- fledged foray into retail.
“In past three years, IOC and other public sector oil marketing firms had set up large number of petrol pumps, the growth being 85%. But with the companies making losses on fuel sale and private competition also decelerating, we have also decided to limit setting up of new petrol pumps,” said IOC Executive Director (Retail) A.M.K Sinha.
IOC plans to set up about 550 petrol pumps this year, down from 1,200 commissioned last year. But it will continue expansion into rural areas with low-cost Kisan Seva Kendra, which besides selling fuel also sell fertiliser and seeds to farmers.
About 1,000 Kisan Seva Kendras are planned this year.
The company, which owns over 16,300 petrol pumps of a total 33,000-plus outlets in the country, makes losses on petrol and diesel sales as the government has not allowed oil PSUs to raise retail prices in line with rise in cost.
Sinha said IOC, which has convenience stores at many of its filling stations, has hired Technopak for a feasibility study on setting up retail stores at selected pumps.
“We plan to launch pilot stores at 100 petrol pumps in north India and based on the results would extent it to other regions,” he said adding 300-700 sq meter retail stores would be set up in urban locations and 700-1,500 sq meter on the highways.
IOC is in talks with leading merchandisers, fastfood chains and FMCG companies for the retail format.
“The pilot stores would be launched by March 2008,” he said.
The Fortune 500 company is keen on leveraging its brand in organised retail. Some consumer durable companies are interested in tie-ups with IOC to market their products through its petrol pumps.
“We will be branding our retail foray. Right now we haven’t decided on a name but we will do so soon,” Sinha said.
Technopak had identified 2,000 petrol pumps that had retail potential but IOC decided to launch pilot project with just 100.
Sinha did not elaborate on the format of the retail stores.