indian retailing sector
TRANSCRIPT
A presentation on
Petro Retailing
PETRO RETAILING
THE PETROLEUM RETAILING INDUSTRY IN ASIA AND MIDDILE EAST FACES SIGNIFICANCE CHALLENGES .
WITH LOW PRODUCT DIFFERENTIATION, LACK OF CUSTOMER LOYALTY .COUPLED WITH INTENCE COMPETITION ,DUE TO DEREGULATION ,AS IN INDIA ,THE VARIOUS PLAYERS WILL TRY TO GAIN SHARE FORM EACH OTHER .
THIS WILL EXERT DOWNWARD PRESSURE ON MARGINS AND FORCE PLAYERS TO ADOPT NEW AND INNOVATION STRATEGIES
1882:Petro Retailing started in India with the supply of kerosene by
standard oil company.
1947:STANVAC (ESSO), Burmah Shell, Caltex & Indo Burma Petroleum Co.
were marketing petroleum products in the country at the time of independence.
1959:GOI setup the Indian Oil company(IOC), a govt company, for
marketing of petroleum products.
1970-78: Nationalization of MNCs
IBP, ESSO, Caltex & Burmah Shell were nationalized.The ESSO group operating in India became HPCL into which Caltex
was merged in it. Burmah Shell became Bharat Refineries Ltd.(BPCL)
Pricing of Petroleum Products
After the oil crises GOI appointed the oil price committee(OPC) under the chairmanship of S.Krishnaswami to look into the pricing of petroleum products.
The committee phasing out of the ‘import parity’ pricing & replacing it with Administered Pricing Mechanism (APM) for petroleum products.
Introduction of Loyality Programmes:
The NOC’s have introduced two types of loyality programs
1. For customer visiting petrol pumps2. For Fleet Owners
APM Came into existence in 1977.Further amended in 1986 APM insulated the exploration &
production companies, refineries & marketing companies from international price fluctuations.
APM broke down due to insufficient recovery under all the heads of pool accounts.
DISTRIBUTION OF PETROLEUM PRODUCTS GOI controlled the opening of new
retail outlets. Every year oil marketing companies
submitted a marketing plan This marketing plan was
subsequently to be approved by GOI. Also Dealer Selection Boards
selected the dealers for retail outlets.
1993The lubricants market was decontrolled of pricing &
marketing restriction with effect from NOV 1993.Major policy initiatives taken included : Decansalation of base oil Pricing Quantative Restriction Reduction in duties
1997In Nov 1997, the govt. announced a phased
dismantling of APM with full dismantling by April 2002.
1998-2002 (Phased Dismantling of Administered Pricing Mechanism)
1998 : Kerosene & domestic LPG were decontrolled.
2001 : ATF was decontrolled
2002 : Dismantling of APM
In year 2002
The petro retail business was deregulated in 2002 & the changes mentioned below were
Selection & Augmentation of Retail Dealerships Of Existing Player.
Marketing Rights to New Entrants. Investment Criteria Other Conditions
Retail Outlet Approval For New Players:Name of Company Number Of Retail Outlets
Oil &Natural Gas Corporation Ltd.
Numaligarh Refineries Ltd.
Reliance Industries Ltd.
Essar Oil Ltd. Manglore Refineries &
Petrochemicals Ltd. Shell India Pvt. Ltd.
1100
510
5849
1700
500
20000
2010: Fuel Price Changes
Effective June 26,2010
The Empowered Group of Ministers (EGoM)
decision to deregulated petrol & raise prices of diesel, kerosene & LPG is a step towards
recommendations mapped out by the Kirti Parikh Committee.E
KEY POINTS
Petrol prices deregulated; Diesel; LPG; kerosene
Shift to market driven prices While diesel would also be
deregulated over time, prices have been raised by 5%(Rs2/ltr)
Prices of cooking fuels
Post Deregulation Scenario• Entry of New Players• Retail Network Expansion• Perceptible Drop in the Average
Throughput per RO
RETAIL NETWORK EXPANSION
IOCL
BPCL
HPCL
RIL
EOL
NRL
SHELL
020
0040
0060
0080
00
1000
0
1200
0
1400
0
1600
0
1800
0
20072003
Throughput v/s financial year
1 2 3 4 50
20
40
60
80
100
120
140
160
180
200
throughput
throughput
Throughput per retail outlet
PRESENT STATUS
1. Subsidizing of fuel retail prices: GOI has been subsidizing the price of retail MS/HSD in
order to protect the Indian consumer from the volatility of international crude prices.
2 Continued Dominance of NOC’s: As result of indirect control of GOI over retail fuel
prices,the Petro Retail market continues to be dominated even after deregulation by the NOC’s
3 Evolution from commodity marketing to differentiation through brands:
Subsequent to deregulation all petro retailers have launched brand fuels.
Company wise retail outlets as on FY08-09
IOC BPCL HPCL RIL ESSAR0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Series1
Evolution from commodity marketing to differentiation through brands
COMPANY MS HSD
IOCL XTRAPREMIUM XTRAMILE
BPC SPEED 93, SPEED 97 HI SPEED DIESEL
HPC POWER TURBOJET
Continued......
4 Assured Quality & Quantity (Q & Q) of Products:
Some of the major efforts undertaken to assure Q & Q include
Retail Automation Market System Trucks fitted with tamper proof locks Delivery Vehicle
Customer Centric Forecourt Services• Courteous services • Efficient Fueling• Value Added Services
Introduction to loyalty programmes
Loyalty Programmes for Consumers:
Loyalty Programmes for Fleet operators:
EXTRA REWARDS
Rewards cash paying customers.
Co-BRANDED CARDS
• Maruti Auto Card• Indian Oil Citybank
Premium ATM/Debit Card
Launched for fleet owners & corporates.
Offers cashless purchase of fuel & lubricants
Provide flexible prepaid &
credit facilities It also covers vehicle
tracking & personal accident insurance covers.
IOC
BPC
Loyality Program for Consumers:
Loyality Program for Fleet operators:
PETROBONUS
Offers convinience & security for payments of fuel .
Also provides opportunity to collect valueable rewards & exclusive benefits.
SMARTFLEET
Offer s cashless transaction,
Vechile tracking,credit option & cash management system.
HPC
Loyality Programs for Consumers:
Club HP Smart 1 Card It is an electronic
card cum loyalty card . HPCL-ICICI Bank Co-
Branded Debit Card Entitles the
customers a waiver of surcharge for the fuel transactions.
HP Drive Track- It is an prepaid debit card with electronic payments.
It ensures effective management & control of fleet, remote loading of funds,vehicle tracking.
REFERENCES
www.infraline.com www.google.com www.wikipedia.com www.mopng.org
THANK YOU…