New Delhi: Hindustan Petroleum Corporation Ltd (HPCL), one of the leading petroleum products retailers in the country, will invest around Rs 1,140 crore to finance 3,000 retail outlets by 2012. Of these, 2,100, or 70%, will be located in rural areas.
With the new outlets, the total number of the company’s retail outlets in the country will go up by 27% to 11,000. At present, HPCL has 8,000 retail outlets spread across the country, of which 800 are in the rural areas. HPCL sells 9 million tonnes of fuel through its outlets.
The company has set a target of opening 500 outlets every year over the next five years. “We are planning to concentrate on rural outlets as rural areas offer good return on investments,” HPCL chairman and managing director MB Lal said. HPCL already operates low-cost retail outlets, also known as “Hamara Pumps”, in rural areas.
The company’s focus on rural areas is aimed at cornering the growing market for diesel.
Through tie-ups with other firms, it will utilise these rural outlets to provide agricultural services to the local population. Industry analysts say the intention behind partnering with non-petroleum retail companies is to attract vehicle owners.
The minimum service obligation (MSO) requires oil marketing companies to set up at least 11% of their retail outlets in rural areas.
“Apart from concentrating on rural areas and highways, we will slow down a bit on expansion in other areas. Consolidating on the existing outlets will be another focus area,” Lal added
HPCL, which has a tie-up with Godrej Aadhaar, the agricultural services arm of Godrej Agrovet Ltd, plans to set up small format stores at its rural retail outlets to sell agro-products like seeds and fertilizers. It has tied up with Tractor and Farm Equipment Ltd for tractor sales and service and Hindustan Insecticides, Rashtriya Chemical Fertilisers and Maharashtra State Seeds Corporation for insecticides, fertiliser and seed sales, respectively.
HPCL also has got together with Mahindra & Mahindra Financial Services for helping farmers to arrange finance for purchase of fertilizers, seeds, farm equipment and household items in addition to providing credit for fuels.
Currently, these tie-ups are running on a pilot basis and the company claims that it has received a tremendous response. Analysts say the companies that have tied up with HPCL stand to gain more from the deals as the outlets will give them a rural presence.