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Petrol pumps in India have come a long way from being dusty, poorly lit places manned by shabbily clothed and indifferent personnel, to the shopping malls of the early 21st century. Bharat Petroleum Corporation Ltd. (BPCL), a leading player in the Indian petroleum industry, received wide acclaim for having brought about this change in the Indian fuel retailing business. In the mid 1990s, the oil industry felt the need to establish strong brand identities; until then, the industry seemed to have adopted an indifferent approach towards customer service. With the deregulation of the oil industry due in April, 2002, Indian players realized that they needed to become more customer focussed.1 BPCL's pioneering efforts in creating brand awareness for its products were thus a welcome change. Till the mid 1990s, a typical petrol pump owner seldom interacted with the oil company whose franchise he held. However, with the new found retail focus of the late 1990s, companies started taking immense interest in the retail outlets. BPCL's first foray into petrol pump retailing was through Bharat Shell Ltd. (Shell), its joint venture with Shell Overseas Investments of Netherlands. Shell launched the first convenience store (C-Store)2 stocking over 1,000 different items. The store, offering eatables, soft drinks, stationery, newspapers, magazines, frozen foods, light bulbs audio cassettes and CDs, came as a pleasant surprise for Indian consumers. By mid 2001, petrol pumps at almost all major locations in the metros had set up retail outlets. However, BPCL was reported to be much better positioned than its competitors, Indian Oil Corporation (IOC) and Hindustan Petroleum (HP) to meet the MNC onslaught after deregulation. BPCL was also reported to be fine-tuning its marketing and retailing strategy.
BPCL's history dates back to 1951, when the Government of India entered into an agreement with the UK based Burmah Oil Company and Shell Petroleum Co. (Burmah-Shell) for establishing an oil refinery in Bombay. In 1952, this agreement led to the incorporation of Burmah Shell Oil Refineries Ltd. In January 1955, the refinery at Bombay went on stream, and in 1962, the refinery started processing crude oil from Ankleshwar in Gujarat. In December 1975, following the passing of 'The Burmah-Shell (Acquisition of Undertaking in India) Bill,' the Government of India signed an agreement with Burmah-Shell. Subsequently, the government took over the operations of the company and changed its name to Bharat Refineries. Initially, the company
with the latter having a 51% stake. 3. to form Bharat Shell Ltd. In 1999. Madras Refineries Ltd. the government disinvested 30% of its stake in BPCL in favor of financial institutions and mutual funds.8% of BPCL's equity was disinvested in favor of its employees.Phase . These were marketed by BPCL as well as BSL.. To make up for its limited refining capacity.sold only kerosene. with the average sales per outlet being 223 kl per month.5 mtpa) to BPCL. The Government identified BPCL as one of the nine 'Navratnas'.5 m mtpa Manali refinery. In January 1976. was relatively low. Bharat Refineries became the first Indian company to introduce LPG for domestic cooking purposes. By the late 1990s. In 1998-99. the most profitable product. BPCL also acquired IBP's 19% stake in Numaligarh Refineries (NRL) (capacity 3 mtpa) in West Bengal. In 1993. BPCL tied up with its erstwhile partner Shell. the highest ever opening among public sector companies. BPCL acquired a 32% stake in Indo British Petroleum (IBP). the company's name was changed to Bharat Petroleum Corporation Ltd. The Retail Initiatives . In 1999-00 its market share was 32% in petrol and 27% in diesel.275. Next >> The Background Contd. were expected to address the limited refining capacity problem in the future. The company entered into marketing contracts with IndoBurmah Petroleum (IBP). BPCL's Mumbai refinery consistently operated at over 120% of its 6. BSL launched lubricants under the Shell brand.3 This move gave BPCL greater freedom to develop employee policies. It also enabled the company to take decisions regarding capital project expenditures without government interference. Also. However. the government transferred its entire shareholding in Kochi Refineries (KRL) (capacity 7. BPCL's nation-wide retail network comprised 4. BPCL had emerged as India's second largest oil company in terms of market share. the Government decided to further divest 26% of its stake in BPCL. The Rs 10 share created a record on the bourses when it opened at Rs 1. In April 1994. (MRL) and Cochin Refineries Ltd. By mid-2001. 60% of which were company-owned or leased . partly because of its dependence on other oil companies for the base oil needed to make lubricants. (BPCL). its share in lubricants.9 million metric tonnes per annum (mtpa) installed capacity. and in August. the Government acquired 100% shares in the company. (BSL). BCPL formed a strategic alliance with Chennai Petroleum Corp (which was later taken over by IOC) to sell the products produced in the latter's 6. (CRL). and its proximity to the Bombay High oil field enabled it to meet most of its crude demand domestically (only 15% was imported).500 outlets. Retail sales accounted for around 60% of the company's sales volume. 1977. The company was particularly strong in the western and southern regions. These acquisitions. In 1994. but later it set up service stations to sell petrol as well. and the 9 mtpa refinery being set up at Bina in Madhya Pradesh.the highest percentage among the oil PSUs.. In 1992. It had the ability to process a wide variety of crude. The economic reforms of 1991 paved the way for major changes in BPCL.
the transaction fee (below 1%) offered to them was considered to be very low. The Retail Initiatives .. The survey also indicated that customers would like to be able to purchase soft drinks at these outlets. The card was launched in select cities to enable customers to purchase fuel on credit from any of its outlets in those cities. Also. Also. 1995. BPCL also signed an agreement with the soft drinks major Pepsi Co. nonfuel business accounted for a substantial portion of petrol pump margins. (Globally.. It was only in marketing was that companies could get the maximum margins. BPCL took the help of consultants Arthur D. As far as refining was concerned. The survey revealed the need for a good and accurate air gauge and the facility to pay by credit cards..where the cheque for each dealer was prepared immediately for delivery the next morning.I The petroleum business can broadly be divided into three parts: the production of crude. BPCL gave the cardholders pre-embossed slips so that the pump attendant did not have to run the card and slips through the embossing machine. BPCL took special attention to avoid the problems an average petrol pump owner associated with the usage of such 'petrocards. we needed to change . This facility was particularly useful for fleet operators and truckers who would otherwise have to carry huge amounts of cash on their long-haul routes. In response to the above findings. it was a high-risk.) As part of the nationalization drive in the late 1970s. kerosene etc.Phase I Contd. diesel.' e. long-gestation business. and retailing. and depositing them at the BoB cards office . Though margins were usually high in crude production. U Sundararajan. In 1992. Little to make itself more 'market savvy.g. "If our staff had to be geared to satisfy the customers. the refining the crude into saleable products like petrol. said. there was excess capacity worldwide and margins were rather low. This acquisition gave BPCL a strong marketing network and choice locations in cities. BPCL tied up with Apollo Tyres and installed 'accurate' tyre gauges (provided by the tyre company) at most of its outlets. The vehicle owners could even authorize their drivers to purchase fuel using this card. and hence the rush to renovate the retail outlets. BPCL took over Shell's marketing network. and made the entire range of Pepsi soft drinks available at its outlets. During 1998-2000.' BPCL CEO. add-on services were expected to help the oil companies increase the extent of nonfuel businesses around their outlets. BPCL was the first oil company in India to issue a co-branded credit card in a tie up with Bob Card Limited in August. BPCL began its customer service improvement efforts with a market survey for identifying the needs of its customers at retail outlets. the long time taken by oil companies to collect the card slips and reimburse petrol pump owners. The company made arrangements to collect the charge slips of the day the same evening.
human resources. The company closely monitored the performance of these retail outfits and through customer feedback.. Earlier..a story of care & commitment. This classification helped the managers focus on specific customers and cut bureaucratic layers. In the early 1990s. McDonald's paid a fixed rent. Under the new regime. BPCL realized that a lot of the products . For instance. BPCL then started modernizing individual petrol pumps throughout the country and launched the 'Bazaar' range of stores on the lines of Shell's 'C' stores. usually on their way back from work. commercial users. Within a short period. The five advertisement press campaign carried the baseline: 'Each pump has a story to tell . BPCL also set up cross-business councils that functioned across the six SBUs in areas like strategy. 180 seat outlet was set up at a cost of Rs 40 million. BPCL realized that it needed to further modify and improve the 'Bazaar' stores. BPCL identified 1. while earlier a sales officer typically serviced customers from 30 retail outlets. The Retail Initiatives . and brand building. 2000. 12 LPG distributors. resulting in closer interaction with the customers.000 sq. the company decided to keep the stores open till at least 11 pm.ft. In October. BPCL released an advertising campaign as well." The company was split into six strategic business units (SBUs) and efforts were taken to reduce bureaucracy and increase interaction between senior managers and the customers. The team had the authority to talk to the owners of the sites and take decisions on their own. and refinery. LPG. lubricants. besides a percentage of its sales to BPCL. speeding up decision-making. the sites were acquired. The company then appointed a 'site procurement team' to acquire these outlets.234 new outlets that would be strategically critical after deregulation of the industry. 1999. now he talked to customers from a specific SBU.Phase II Contd. BPCL pioneered another revolutionary concept by launching a McDonald's fast food outlet at a petrol pump near Mathura (UP) on the Delhi-Agra highway. Now. four territory managers in the state managed the smaller geographical areas. The most important change on the marketing front was the renewed focus on retail outlets. for using the facility. even sales officers were authorized to take such decisions. besides the residents of surrounding areas. The 4.our organizational structure. Based on its findings and the recommendations of consultants Dhar & Hoon. based on smaller geographical areas. The six SBUs thus identified were retail outlets. To complement the launch of the first few 'Bazaar' outlets. So.. six kerosene dealers. For instance. aviation. The 22 divisional offices were replaced by 61 branches in smaller territories.Phase II By July. This restructuring gave special emphasis to marketing: BPCL initiated a series of steps for taking the company closer to its customers.' The Retail Initiatives . The outlet was expected to pull in foreign and domestic tourists headed to and from Agra. and 10 bulk customers. only General Managers had the right to decide on discounts offered to BPCL customers. 35 of BPCL's retail outlets across the country had the 'Bazaar' stores running successfully. earlier a division office at Jaipur looked after the entire state of Rajasthan. BPCL's research on these outlets across the country revealed that most of the customers arrived between 8 pm to 11 pm.
Agra and Meerut. Standard Chartered Bank and Kotak Securities. The 'In & Out' stores remained open till around midnight and reopened around 4 am. A company source said. it was not always easy getting them to their houses when the customers were home to receive the goods. Thus. photography. or even over the Internet. Qwiky's. music. "For couples who are both out of the house on work. While products could be sent to the customer's geographical area easily. The products were delivered to a BPCL outlet so that people could come and collect them. The company was expecting daily revenues of Rs 25. One of BPCL's innovative plans concerned the distribution of LPG cylinders. These companies were all given counters within the stores for selling their services. Sony. Udaipur.000-9. Pepsi. ticketing. to have the cylinder delivered at a particular time. ATMs.000 per 'In & Out' store.00. With an investment of around Rs 6. As a result. financial services. BPCL proposed to use the solution developed by a US based company Peapod. Delhi. The company was closely watching the traffic at each outlet and was planning to extend the working hours if needed. where arrangements were made with the local dealer. The 'In & Out' outlets offered Internet browsing facility. BPCL's rivals.000 from the smaller ones. 2001. UTI Bank. IOC and HPCL. In January.000-10. After the metros." This prompted the company to implement a Fixed Time delivery system. the petrol pump acted as a convenient channel between the companies and the customers. ITC.being stocked..IOC's . BPCL tied up with various companies from a number of different industries: fast food.00. Jaipur. Essar. Jammu. Tata Internet Service Ltd. Kwality Walls. Canon. Mumbai. rather than in the course of the delivery man's rounds. Kolkata and Chennai. The company planned to convert the complete 'Bazaar' network into this new and larger concept in a phased manner. Ludhiana. launched the 'In & Out' stores at around 40 outlets in Bangalore. The companies involved were McDonald's. BPCL planned to launch these stores in north Indian cities like Chandigarh.000 from the bigger stores and Rs 8. the company reduced the range of products being carried and focussed on impulse products like chocolates and essentials like milk. document centers.000-30. DHL. BPCL also proposed to use the Internet facility to deliver products to consumers in a timely and cost-effective way. e-commerce portals. greeting cards. like soft toys were not really selling. The customers could even call the outlet when they were home for the goods to be delivered. Kodak. Skypak. and courier services. along with assistants to guide the customers with their online shopping. ISPs. BPCL further upgraded the 'Bazaar' stores and. Amritsar. had also begun refurbishing their petrol pumps . which used the local petrol pump as a delivery point. Lucknow. HMV. To offer enhanced services to its customers. a month later. getting the gas cylinder delivered is a big problem. BPCL expected the convenience stores to break even by February 2002. A BPCL spokesperson said that the stores intended to offer all the 'top of the impulse' items to customers. Around 600 outlets were targeted in the first phase of expansion.
was the customer.stores called 'Convenio' were running very successfully across the country. The one who gained the most from this new found retail focus of the oil companies. .
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