IOC focuses on rural and semi-urban India

IOC eyes rural market to expand its retail network

FORESEEING increased competition from private fuel retailers after the deregulation of petrol prices, Indian Oil Corporation (IOC) plans to adopt a vertical growth plan to expand its retail network. This will be part of its plan to maintain market leadership position in fuel retailing segment. IOC will now focus more on rural and semi-urban India. It plans to add 700 to 800 new fuel outlets to its existing network of nearly 19,000 stations in a year's time from now. "We are not looking at numbers (of retail stations) any more. We are focusing on volume growth," a senior IOC official said at the company's Mumbai marketing office. IOC plans to take `rural path' as adopted by players in telecommunication, consumer durables and automobile segments, among others. "Private players will come out with their outlets mostly on highways and urban areas. We already have a large network inside the cities. So, we will focus on `Kisan Seva Kendra' kind of outlets," the official explained. "In effect, we will set up low-cost rural fuel retailing infrastructure and a viable format is being worked out," he said.

IOC sold 8,507 thousand million tonnes (TMT) of diesel through its retail outlets in 2009-10, while petrol sales stood at 5,647 TMT.
Asked how much sales growth the company expects after setting up the new outlets, the official said, "It's a little early to figure that out.
We will know the targets once the positioning of retail stations is determined." Kisan Seva Kendra (KSK) is a retail outlet mod el pioneered by IOC to cater to the needs of customers in the rural segment. At present, IOC operates over 2,700 KSK outlets. KSK comes with non-fuel retail facilities such as convenience stores, which sell pesticides, vegetables, banking products and stationery items. IOC has tied up with Indo-Gulf for fertilizers, National Seeds Corporation for marketing seeds and agricultural inputs apart from having alliances with Nabard, Oriental Bank of Commerce and Bank of Baroda for banking products. In addition, some KSKs have installed internet kiosks and communication facilities. "Setting up of single KSK outlet may cost anything between Rs 8 lakh and Rs 10 lakh because of low land and real estate cost. However, an outlet in a metro or a tier-I city may cost up to Rs 1 crore or more," the official said.
Last month, the government freed petrol prices from its control. The government will also make diesel prices market determined in the due course.
Siddhartha P Saikia / Financial Chronicle