RIL, Essar bank to boost retail fuel business; govt cos unfazed
While RIL has about 300 outlets operational, Essar Oil runs about 1,500. Both the private oil companies plan to open another 1,400 outlets each, and are keen on enhancing quality, focusing on service and efficiency.business Updated: Jun 16, 2015 02:19 IST
Private oil majors Reliance Industries Ltd (RIL) and Essar Oil Ltd, who plan to re-enter and ramp up their presence in the fuel retail space, say they are betting on technology to get an edge in the market that is currently dominated by the state-owned companies.
India, at present has over 51,000 fuel pumps, most of which belong to Indian Oil (IOCL), Bharat Petroleum and Hindustan Petroleum.
RIL, which has about 300 functioning outlets and plans to reopen about 1,400 more, said that its key differentiator would be Trans-Connect, a real-time fuel management programme — a system that may probably make the supply chain of fuel more efficient.
Essar Oil which operates about 1,500 outlets and plans to open another 1,400, says it will focus on service, quality and quantity assurance, multi-fuel options and non-fuel retail, to try and garner at least a tenth of the market.
The three government-owned incumbents, however, appear unfazed by the impending competition.
KV Rao, director finance at HP says he does not think that automation would be a differentiating factor as was the case between 2002 and 2008 when RIL, Essar Oil and Shell India entered the retail market.
Both IOCL and HP have publicly said that they would consider “localised” differential pricing as a way of retaining market share, a move that could impact margins. “Differential pricing could work in the form of sops,” a senior IOCL official said. For instance, one may get a discount on a certain minimum amount of fuel purchased at designated pumps.