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Govt unhappy with IOC's non-fuel retailing foray

Richa Mishra
Raghuvir Srinivasan

`Address the problem of falling throughput in retail outlets'

Petro priorities
Oil companies have more important problems to concentrate on such as adulteration and retail automation.
Government against indiscriminate expansion of retail outlets in cities.
New outlets can come up only along the Golden Quadrilateral and in rural areas.

New Delhi , Aug. 18

Indian Oil Corporation's plan to enter non-fuel retailing in a big way appears to be headed for trouble with the Government. Even as the company is preparing the blueprint for the proposed foray, a senior official in the Petroleum Ministry has indicated that the Government may not approve the company's plans.

"We have some concerns and are not happy with the idea. Oil companies have more important problems to concentrate on such as adulteration and retail automation," said Mr M.S. Srinivasan, Secretary, Ministry of Petroleum and Natural Gas, when asked about Indian Oil's plans to enter non-fuel retailing. Indian Oil will have to seek the Government's approval once it firms up its plans on the retail foray.

Speaking to Business Line, Mr Srinivasan said: "We would like them to concentrate on their existing business and address the problem of falling throughput in their retail outlets."

Mr Srinivasan cited indiscriminate expansion of retail outlets by the marketing companies as the prime problem for falling throughput and adulteration. "Only automation can address the problem of adulteration and Indian Oil should focus on it," he said. He pointed out how the Government had stopped the marketing companies from their indiscriminate expansion of retail outlets in cities. Consequently, they can now open new outlets only along the Golden Quadrilateral and in rural areas.

Spelling out the reasoning behind the move to enter non-fuel retailing, Mr Sarthak Behuria, Chairman and Managing Director, Indian Oil, earlier in the day told Business Line: "We are already into retailing; we have a strong network and sites that lend themselves to Convenios and the company sees an opportunity." Indian Oil's board had on July 31 approved in-principle a foray into the non-fuel retailing business. Mr Behuria said that there were three possible business models available to it — non-fuel retailing at its retail fuel outlets, selling fuel and lubricants at malls by installing dispensers and getting into retailing business in full flow as any other retailer.

The company is now planning to appoint a consultant who will study the retail sector and suggest the best business model for Indian Oil to adopt. Indian Oil is already into non-fuel retailing in a small way through its Convenio stores located at its filling stations but it has not focussed on it as an organised business proposition till now.

Related Stories:
IOC eyeing rural areas to expand retail business
Oil firms keen to tap rural market

More Stories on : Petroleum | Diversification

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