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Project Report

Project Report

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Published by sandy
this is a report giving the little bit information regarding indian petroleum sector.
jai mata di
jai bharat
this is a report giving the little bit information regarding indian petroleum sector.
jai mata di
jai bharat

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Published by: sandy on Jul 15, 2008
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03/13/2013

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CHAPTER-1(INTRODUCTION OF PETROLEUMRETAIL INDUSTRY)
 
Indian retail business is the fastest growing business in India. It accounts for over 13% of country’s G.D.P.and around 10% of the country’s employment. Indian petroleum retailsector is fastest growing sector with a contribution of over 13% in country’s G.D.P.
. Thepetroleum retailing industry in India faces significant challenges in the deregulatedenvironment coupled with intense competition, a downward pressure is exerted onmargins forcing players to adopt new and innovative strategies.India has deregulated the pricing mechanism for retail petroleum in 2002, enabling newplayers to enter into the market.The entry of new players like Reliance has increase the no.of petrol stations from existing15000 to more than 30000 in the past five years.This will also reduce the average throughput per station, and total fuel volumes perplayer. With a market determined pricing mechanism, prices will have to be lowered,thus reducing margins from fuel products. With limited growth in the number of vehicles, the retail fuel volumes will remain stagnant, thus offering little scope forfurther improving the overall revenues and margins.
Petroleum retailing is a retailing in which differentiation is possible both in service and product.
India has close to 13 million retail outlets-the highest in the world while theretail industry is close to Rs.9 lakh crore, growing at 20 percent but organized retail isonly 2.5 percent of the pie, through growing at a healty rate of 35 percent. thedownstream petroleum retailing can be termed as one of the largest segment of theIndian retail industry.The petro-retail sector can be termed as one of the most organized sector of the retailindustry. Now, it is not all about offering fuel only at the petrol stations. The new look petrol pumps, apart from dispensing fuels, now offer the best of retail chainsproviding a value added service to busy consumers. This trend is in circulation in theinternational markets and the big petrol station convenience stores earn more than30 to 40 per cent of their profits from the non-fuel activities. The range of valueadded services is all beneath one roof. The new-look petrol pumps are now the moreadvanced multi-purpose dispenser petrol-pumps. The petrol pumps arecomputerized, thus reducing waiting time which not only ensures accuracy, but alsosaves a lot of time for customers and avoids misconception and arguments.
But the history of petro retailing is not of same kind. In order to study the history of  petro-retailing era can be classified into two era’s.● Pro APM( Administrative Pricing Mehanisem) era● Post APM era
Indian Petro-Retail Sector- Pro APM Era
The development of petrol-retail sector in India has witnessed three distinct phases:a) Period of dominance of multinational companiesb) Advent of public sector, its growth in co-existence with these transnational
 
companies.c) Marketing by the wholly government-owned companies and the fulfillment of socio-economic objectives.At the time of independence, the marketing & retailing of petroleum products was inthe hands of private companies like Caltex, Esso, Shell etc. Later the governmentgradually exercised control through public sector companies.The second phase started with actions taken in pursuance of the Industrial PolicyResolution, 1956 to promote growth of the vital petroleum sector under the statecontrol. Eventually, IOC was formed in 1959, IBP was acquired in 1970, HPC came intoexistence in 1974 and BPC in 1976.In the third phase, the experience gained by the government during the second phaseand the socio-economic factors encouraged it to go ahead for acquiring the assets of all multinational companies operating in the country. In 1981, the entire oil industrywas truly in the government fold.A new era of planned development in consonance with national priorities under theoverall direction of the government thus began in the oil sector. From the state of cut-throat competition in marketing and distribution, the PSUs had to quickly adapt to thechanged scenario. The assets of oil companies in terms of infrastructure facilities werenow the national assets. The important area of concern was their optimum utalisation.
Administrative Pricing Mechanisem in Petro Retailing:
Up to 1939, there were no controls whatsoever on the pricing of petroleum products.Between 1939 and 1948, the oil companies themselves maintained pool accounts formajor products without any intervention by the government. In 1948, an attempt wasmade to regulate prices through Valued Stock account procedure. Under thisprocedure realization of oil companies was restricted to the import parity price of finished goods (with Ras Tanura as the basing point), plus excise duties/ local taxes/ dealer margins and agreed marketing margins of each of the refineries. Any excessrealization was surrendered to the Government.In 1976, the Oil Pricing Committee (OPC) recommended the discontinuance of theimport parity principle on the ground that about 90% of the total demand of POLproducts was met by indigenous production and no major shortfall was anticipated.The OPC therefore suggested that the domestic cost of production should be thedetermining factor for pricing of petroleum products. The present day APM wasevolved on the recommendation of the OPC and came into existence on December 16,1977.One of the important drawbacks of the import parity pricing was that the indigenouscost of production was totally overlooked while determining producer prices. This

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