IOC, IBP on retail expansion spree

Indian Oil Corporation and its group company IBP Ltd plans to focus on branded outlets in retailing of petroleum products.

The under recoveries during the first six months of the current year due to non-revision of retail prices notwithstanding, the companies are continuing focus on retailing.

IOC director (marketing) and IBP managing director NG Kannan said a stand alone marketing company such as IBP faced losses due to non-revision of price during the first half but it was only "a temporary phase". IBP recorded Rs 69 crore (Rs 690 million) losses during April-September 2004.

IBP's seventy per cent sale comes from diesel where the government does not plan to bring import parity immediately. The government on November 4 decided to bring diesel at 50 per cent parity though at the current level, officials say, the parity is 100 per cent.

The continuing retail expansion is aimed at creating captive consumers before the private sector players gain ground in product retailing.

On why was IBP continuing with setting up of retail outlets when there were losses, Kannan said IBP would merge with IOC by the end of financial year but the IBP brand would be retained. IOC wants to use the brand's strength in the southern and eastern region to its advantage.

Kannan said 2,800 outlets out of 10,000 from IOC stable and 250 out of 3,000 IBP outlets would be branded. IOC has set aside a budget of Rs 1,550 crore (Rs 15.50 billion) for retail development during the current year.

This year's retail plan includes adding 115 Swagat outlets, high brand highway outlets, by March 2005. These outlets will offer 28 services including medical help, rest rooms and authorised service stations.

IOC will also be dissuading cash transactions for high value sales and will therefore be promoting extra power cards especially among truck drivers.

Besides, 30 Tata authorised service centres for trucks would be set up and 120 outlets would have Maruti and Hyundai service centres.