You are on page 1of 64

DISSERTATION PROJECT REPORT

ON
A STUDY OF IMPORTANT ISSUES IN
ALLIED PETRO RETAILING
IN INDIA: Evaluation Of In And Out Store At Selected BPCL
Petrol Pumps

Submitted in partial fulfillment of the


Requirement of the Degree of
BACHELOR OF BUSINESS ADMINISTRATION
IN
PETRO MARKETING
& MBA(Oil & Gas)

UNDER THE GUIDANCE OF:


Dr. Suresh Malodia
COMS faculty
College of Management
University of Petroleum & Energy Studies
Dehradun
BY :

TARUN GUPTA
R250207046
College of Management
University of Petroleum & Energy Studies
Dehradun
CERTIFICATE

This is to certify that the work contained in this report titled


“A STUDY OF IMPORTANT ISSUES IN ALLIED PETRO
RETAILING IN INDIA: Evaluation of In and Out Store at
Selected BPCL Petrol Pumps ” has been carried out by TARUN
GUPTA under my supervision and has not been submitted
elsewhere for a degree.

Dr. Suresh Malodia

(Project Mentor)
ACKNOWLEDGEMENT

At the very outset, we would like to thank Dr. G.C. Tewari ,


The Dean of COM,UPES, Dr. Suresh Malodia, my Mentor, and Mr.
Ash Narayan Shah, the Course Coordinator of Integrated BBA &
MBA(Oil & Gas) 07-11, for giving me the opportunity to undergo
this project and helping me in all respect in bringing out this
report. I am grateful to my mentor, who despite many pressures
on his time, readily agreed to my requests.
Lastly I would like to express my heartfelt thanks to all the
staff members of UPES who gave me unending support right
from the initial stage of this project.

TARUN GUPTA
R250207046
INTEGRATED(BBA+MBA)
VIth SEM
COMS

Page | 3
CONTENTS

Chapter 1- Research Objectives


…………………………………………………………….1

Chapter 2- Overview of Petro Retailing in


India………………………………………3
2.1 Indian Petroleum
Sector……………………………………………..............4
2.2
Marketing…………………………………………………………………..............9
2.3 Current Profile of Marketing &
Distribution…………………………….10
2.4 Recent trends in Petro Product
consumption………………………….10
2.5 Key Success Factors and
Outlook…………………………………………….11
2.6
Pricing…………………………………………………………………………………….1
2

Page | 4
2.7 Rising Petroleum Pricing and Subsidies
Burden……………………….13
2.8 Dismantling of APM & Experience
Thereafter…………………………14
2.9 Company wise retail
outlets……………………………………………………16
2.10 Entry of New
Entrants…………………………………………………………..17

Chapter 3: Research Design, Methodology and


Plan………………………………..19
3.1 Research
Design……………………………………………………………………….20
3.2 Data
Source……………………………………………………………………………..20
3.3 Sampling
Plan…………………………………………………………………………..21
3.4 Strategy
Plan…………………………………………………………………………….21

Chapter 4: Findings and


Analysis………………………………………………………………22
4.1 Allied Petro
Retailing………………………………………………………………..23

Page | 5
4.2 Allied Petro Retailing by different companies in
India……………… 25
4.3 Importance of Allied Petro
Retailing………………………………………… 26
4.4 Allied Retailing Concept of
BPCL………………………………………………. 32
4.5 Allied Retailing Concept of
HPCL………………………………………………..36
4.6 Selling of consumer durables, FMCG products via LPG
products…39

Chapter 5: Analysis
…………………………………………………………………………........41
Chapter 6: Conclusion……………………………………………………………….
…….…..48
REFERENCES
………………………………………………………………………………………….…51
ANNEXURE……………………………………………………………………
………….….52

Page | 6
CHAPTER 1 – OBJECTIVES

Page | 7
1.1 Objectives

• To understand the various challenges faced by OMC in the


application of the concept of Allied Petro Retailing.

• To identify the various segments of the consumers.

• To identify various strategies of Allied Petro Retailing.

• To list the different practices carried out by OMCs in order to


promote co-marketing.

• To understand the basic idea behind the practice of creation of a


different brand identity by different OMCs in respect to
application of the Allied Petro Retailing concept.

Page | 8
CHAPTER 2 – OVERVIEW OF PETRO
RETAILING IN INDIA

Page | 9
2.1 Indian Petroleum Sector

To understand the Indian Petroleum Retail Sector we should have a look on


Keynote Management of the retail end is a key determining factor in the
success of otherwise of any business. To gain a sustainable advantage, a
retailer needs to understand and satisfy both the apparent and the latent needs
of the customer. This principle holds true in petroleum retailing too. All our
efforts in exploration and production, refining, distribution and marketing and
finally culminate at retail point after moving through a long complicated supply
chain. The downstream business is extremely intricate and of sustainable
strategic importance to the national economy. Oil products, especially
transportation fuels, would continue to play a key role in the national economic
growth. This is what makes the retail business exciting and challenging. It
demands continuous efforts at improvement of product and services, higher
customer satisfaction, and offers endless opportunities to innovate.

The business environment in India has undergone a significant change in the


past few years, and nowhere is it as pronounced as in the petroleum sector.
Increase in refining capacity has transformed India from a net importer to a net
exporter of petroleum products. Petroleum marketing has been decontrolled
leading to entry of new domestic and international players into the market.
Government have provided operational freedom to the government oil
companies in a host of areas including determining their own market share,
freedom to prepare and implement their market plans , selection of dealers etc.
We are also moving towards a market determined pricing regime in letter and
spirit. This liberalized scenario is making the sector intensely competitive, and
the oil companies, especially those in the public sector would need to adopt a
more customer focused approach to the retail end of their business.

Besides providing the policy framework for a liberal, decontrolled petroleum


sector, the Government is conscious of the need to encourage a disciplined and
responsible market. The Petroleum and Natural Gas Regulatory Board Bill is a
step in this direction. This Bill seeks to set up a regulatory board to regulate
refining, distribution and marketing of products with a view to protect the
interests of the consumers and promote fair competition among the entities,

Page | 10
ministry of Petroleum & Natural Gas has also issued various control orders and
directions to check adulteration.

Some of the major challenges that need to be immediately and purposefully


addressed can be summarized as under:

a) Quality
b) Quantity
c) Price
d) Value added services
e) Building brand identity
f) Generating higher volumes
g) Reaching the subserviced areas

Above all, the oil companies can build a sustainable competitive advantage only
if they are driven by a customer centric approach and seek to continuously
improve. While we see modernized, well illuminated petrol pumps coming along
the highways and major urban centers, these innovations by themselves may
be only cosmetic. The boom in consumerism has given rise to a mature and
demanding customer. Our companies too need to mature fast. Let us now take
the challenges mentioned above, individually.
The customer, for whatever reasons, has little faith in the quality of product
dispensed through our petrol pumps. While his demands are high, his
expectations remain low. Bereft of choice, he is satisfied as long as he gets an
unadulterated product. Our oil companies interpret quality to mean “no
adulteration”. But as the market evolves and competition grows, quality will be
interpreted as the impact of the fuel on the efficiency and performance of the
automobile’s engine. Similarly, we are satisfied with an assurance of dispensing
the right quantity to the customer and publicize it as a unique selling
proposition. The recent initiatives such as “Pure for Sure”, “Q&Q check” and
Page | 11
“Pure Bhi Poora Bhi” need to graduate beyond the promise of unadulterated
fuel dispensed in right amount. Such narrow and limited perception of a quality
product and service may not hold good in future when real competition sets in.
Quantity and Quality would be the bare minimum a customer would demand.
The Government also proposes to hold the oil companies accountable for the
high quality of product dispensed through their network. Retail sales of diesel
account for 80 % of total sales and in petrol this percentage is 98 %. The image
of a company is mainly reflected through retail outlets.

Price of petrol and diesel has so far not been a differentiating factor in the retail
business. Even after the dismantling of the Administered Mechanism, the price
of products remains the same throughout the length and breadth of the
country. We all know that the cost of the product is a very important factor in
consumer choice.

With the entry of couple of private players, though still in a small way, a sort of
price war has already started in a few locations. If anything, this price war is
going to become a reality in times to come when the new entrants go in for a
rapid expansion in an aggressive manner of their retail network.

They have already speeded up their efforts at commissioning new retail outlets
in the past few months. For the Government oil companies, it is imperative to
undertake a concerted exercise at cutting down their costs and improving
efficiency to effectively counter this challenge. Leveraging information
technology for supply chain management, and monitoring the quality and
quantity of product can go a long way to improve efficiency and cut down the
costs.

One of the more visible transformations in the retail business of auto fuels is
the recognition by the oil companies that non fuel activities could be an
important source of revenue at their retail outlets. So we have convenience
stores, fast food centers and other such amenities finding a place at petrol
stations. This is a very welcome change. However, the possibilities are
immense and efforts in this direction too slow and limited. Why don’t we view
the retail outlet not merely as a point for selling petrol and diesel, but also as a
prime commercial real estate in our control? Further, this is a location that is
Page | 12
easily accessible to both the motorist and pedestrian. The retail outlets have
potential to become a one stop shop for meeting innumerable needs of the
customers on one hand, and increasing the revenues of the outlet on the other.
A statutory framework has also been provided in respect of petrol pumps to be
located on national highways. The guidelines issued by the Ministry of Road
Transport and Highways stipulate that the petrol stations should be a composite
rest area for the highway users and provide all the products and services that a
highway user may require under one roof. But a statutory framework can only
be lay down the minimum requirements; it is for the business entities to explore
the other possibilities that are on offer. These could range from convenient
stores, restaurants, cyber cafés etc. for the car users to dhabas, dormitories,
laundry services etc for the truckers. These are mere illustrations.

The product that goes in the fuel tank of the automobile is the same,
irrespective of the company that owns the petrol stations. So how does one
build a unique brand identity, which goes beyond a single petrol station giving
value added non fuel services? A small step in his direction has been taken with
the introduction of premium fuels. The integrity of these fuels needs to be
established and preserved, and their share in the total sale needs to be
increased. The sale of premium fuels in our country is 1 to 3% only, whereas in
countries like USA it is as high as 35 to 50 %. Maybe, we could also experiment
with an intermediate grade of fuel between the regular and premium brands.
This would provide greater choice to the customers, and could be an effective
strategy to command customer loyalty.

These initiatives have to be blended with a strong concern for the environment
as also energy security. Greater investment in the available alternative fuels
such as CNG, Ethanol blended petrol and auto LPG is a desirable course of
action to pursue, both for addressing social concerns and expanding the reach
of the oil companies.

We also need to keep pace with the advanced world in our efforts to discover
other alternative sources such as Bio- diesel, hydrogen etc. We expect a more
proactive approach from our companies in this direction.

Page | 13
A good petrol pump that aims to provide comfortable and convenient service to
the customers requires as high an investment as Rs. 50 to 75 lakhs. Depending
upon the location and the number and quality of services, the investment levels
could go up to Rs. 1.5 crores. However, the per pump throughput has been
declining and hovers around 160 – 180 KL/month. The profitability, may even
the sustainability, of the retail business at such high investment and low
volumes needs to be addressed. Paradoxically, even in such a scenario, the oil
companies have launched a very ambitious, and at times reckless, programme
of network expansion. Obviously the assessment of the market growth made by
the oil companies indicates high potential in future. However, my view is that
companies should target to generate higher volumes per retail outlet rather
than concentrating only on increasing the numbers.

This would give them better returns on their investments. And simultaneously,
a different business and investment model is required to be developed for low
volume petrol stations located in rural areas. My understanding is that the rural
agricultural market has a large untapped potential for diesel sales, and the oil
companies should make efforts to develop these markets. It is not a correct
position that social obligations of the PSUs adversely affect their commercial
interests. If non essential consumer goods like soft drinks and cosmetics can
penetrate the far flung rural markets, why can’t the essential mass
consumption petroleum products?

This brings me to another neglected area of LPG and kerosene marketing. Since
both are subsidized products, there is a visible reluctance to expand in these
areas. The reach of LPG is restricted to urban or urbanized rural segments. As
LPG has emerged as a major environment friendly cooking fuel, it is expected
that our oil companies, as responsible corporate entities would try to expand its
reach. Similarly, the poor man’s fuel, kerosene demands serious attention.
While petrol pump dealerships are mushrooming, nearly 25000, we have only
6000 kerosene dealers in the entire country. Half the department blocks in the
country still do not have a kerosene storage facility or a dealership. And further,
the oil companies have transferred the responsibility of distribution to the State
Government. This aberration needs to be addressed fore with.

Page | 14
The hydrocarbon sector is also witnessing the emergence of the Natural Gas
market in India. It has now moved from a more or less localized controlled
business to a market determined activity. Natural Gas is becoming the
preferred fuel in several industries.

The Government has initiated many steps to increase its availability and subject
the Gas market to competitive forces.

Some of these important initiatives are increasing domestic gas production,


import of LNG, transnational gas pipelines, a Gas pipeline policy and Regulatory
framework for Gas marketing and transportation. With the onset of competition,
this sector would also throw up the challenge of providing efficient and quality
service to the consumers. It is she who will define quality, be it product or a
service. And oil companies can afford to neglect the customer at only their own
peril.

Page | 15
2.2 Marketing

On the marketing side, initiatives have been taken by the Government of India
to improve the marketing margins of the Oil Marketing Companies (OMCs)
which earlier operated under a cost plus assured return basis. All products have
been decontrolled w.e.f. 1st April 2002 with subsidies on LPG and SKO
continuing on a specified flat rate basis and are to be borne by the
Consolidated Fund of India. These will be phased out in the next 3-5 years. Post
APM, oil companies nearly doubled their combined net profit to Rs 232.54 billion
in 2002-03, the first year the petroleum sector was deregulated. The
dismantling of APM had led to a rise in the margins of the marketing
companies, while upstream companies, like ONGC, are now being paid
international prices for their crude production. However, LPG & SKO are
contributing negatively to the earning is the market companies since the retail
prices are fixed and the subsidies are far lower than the actual outgo of the oil
companies.

Some of the other initiatives taken up by the GoI include :

• Oil companies allowed selecting their own distributors/ dealers.


• Deregulation of Import / Export of all petroleum products.
• Awarding of marketing rights for transportation fuels to investors in exploration
and refining.
• Introduction of petrol blended with 5% ethanol in the country.

Page | 16
2.3Current Profile of Marketing & Distribution

• Transportation fuels comprise 47% of the total demand of petroleum products.


• At present marketed by Indian Oil, Bharat Petroleum, Hindustan Petroleum, IBP,
Reliance Petroleum, Essar oil limited, Shell, ONGC.
• Parallel marketing of SKO & LPG allowed.
• Despite low prices of SKO/LPG due to heavy subsidy, reasonable market
penetration by parallel marketers, 7% in LPG and 10% in SKO
• Free import and marketing of all other products allowed
• Level playing field for all players available
• Marketing of lubricants deregulated
• Regulatory body to monitor marketing of petroleum products to be in place
• Estimated investments in marketing sector up to 2025 : US$ 27.55 billion

The use of LPG as a transportation fuel has been in principle accorded and CNG is
being currently used as an auto fuel in some Indian cities.

2.4 Recent Trends in Petro Product Consumption

The domestic market for petroleum products was depressed during July –
September 2003. The overall consumption growth was a negative 2.2% against
1.6% during the corresponding period of the previous year. Diesel (which
accounts for the largest share of refined product consumption at about 40%)
Page | 17
consumption witnessed a decline of 4.1%. Diesel consumption growth was
under pressure despite a positive growth in the GDP. The possible reasons for
this unexpected trend were: rise in CNG consumption in the transportation
sector, substitution of diesel with natural gas in industries and, the possibility of
kerosene adulteration in diesel. A study by the petroleum Ministry Government
showed that the slide was “locational” and not “sector-specific”. Accordingly,
the Government on November 28, 2003 decided to ban import of kerosene by
private companies in a move to curb adulteration of diesel. Under the new
dispensation, kerosene can be imported only through state trading companies –
IOC, BPCL, HPC and IBP Ltd. Naphtha and Kerosene consumption growth have
also shown decline at -10.5% and 3.3% respectively. Products witnessing
positive demand growth include LPG (10.2%), ATF (6.0%) and MS (2.6%).

2.5 Key Success Factors and Outlook

While the Indian Downstream Refining & Marketing sector has been theoretically
decontrolled, there are still some areas where actual decontrol has not yet
happened. For example, retail prices of automotive fuel arc still fixed by the oil
companies in consultation with the government and price competition has not
happened. Similarly, for LPG and SKO, the retail prices have been kept unchanged
for quite some time and the subsidies have now been slashed by l/3rd.
Accordingly, during 2003-2004, the oil companies have accounted for subsidy
receipt on LPG and SKO @ 2/3rd of the amount claimed during 2002-2003, as per
the government directives. This has curtailed profitability growth. However in
2003-04, the other two major Oil PSUs (i.e. ONGC and GAIL) were asked to share
the subsidy burden of LPG and SKO. ONGC is reported to have been hit by a
subsidy burden of Rs 260 crore due to this.

Page | 18
While it has been so for the PSU players, the Government has decided to provide
private companies subsidy on LPG equivalent to that given to state retailing firms.
Also, the Government is planning to allow sale of surplus domestic LPG by private
sector 'parallel marketing' companies.

The downstream refining and marketing sector otherwise offers immense


growth opportunities for the different players. In the refining segment, while the
surplus situation in most products may not initiate interest in greenfield projects,
the current duty structure protects the Indian refining margins. Accordingly, new
entrants may show positive interest in taking the existing refining assets of the
oil companies - whenever they are offered for privatisation. These refining
assets may in turn mitigate the product sourcing risk &r the market operations -
where the bulk of the profit margins in the downstream segment lie. Accordingly
the marketing segment is expected to see ongoing initiatives by the oil
companies. These initiatives are expected to be centered around the interests of
the consumers and may involve steps such as improving product range,
refurbishing the retail outlets, selling non-fuel items, providing value added
services, etc.

Page | 19
2.6 Pricing

By a gazette notification in November 1997, Government set a


timetable for a phased transition from an administered price regime
to a market-determined system with continued subsidization of PDS
kerosene and LPG, but on a gradually reducing scale. Subsidies on
kerosene and LPG for household use were to be phased down over
time to smaller price subsidies of 33.3 per cent and 15 per cent,
respectively, by end-March 2002. As part of the energy sector
reforms, the prices of many petroleum products, for example,
naphtha, furnace oil, low-sulphur heavy stock (LSHS), light diesel oil
(LDO) and bitumen, have been liberalized since April, 1998. One
important achievement was the linking of high speed diesel prices
to international prices and an elimination of subsidy since
September 1997 for some time. However, LPG and kerosene,
consumed mainly by the domestic sector, continue to be heavily
subsidized. The phased reduction in subsidies has fallen behind
schedule. In March 2002, Government decided that the subsidy on
domestic LPG and PDS kerosene would be provided on a specified
flat-rate basis from the Consolidated Fund from April 1, 2002. In this
situation, Government reimburses the firms for the cost of the
subsidy, which is carried as a line item in the budget and called the
petroleum subsidy.

Page | 20
2.7 Rising petroleum prices and subsidy burden

The unprecedented and steep rise in the international prices of crude


and petroleum products has led to an increase in the explicit subsidy
bill in the Central Government's budget from Rs.5, 225 crores in
2002-03 to Rs. 6,573 crores m 2003-04. Moreover, there were reports
of under recoveries by public sector oil marketing companies
leading to demand for greater subsidies. Retail selling prices of
motor spirit and high speed diesel for the consumers are calculated
by taking into account:

(i) Basic price at refinery level on import parity basis,


(ii) Freight up to depots,
(iii) Marketing cost and margin,
(iv) State-specific irrecoverable levies,
(v) Excise duty
(vi) Delivery charges from depot to retail pump outlet
(vii) Sales tax and other local levies, and
(viii) Dealers' commission.
The basic selling prices of motor spirit and high speed diesel are
uniform at all refinery locations throughout the country. As per the
existing arrangement between the oil marketing companies and
refineries, the element at (i) is revised on a fortnightly basis in line
with movements in international prices. The marketing costs and
Page | 21
margins, dealers' commission and delivery charges within free
delivery zones are also uniform. The prices at various locations vary
depending upon the distance from the refinery, rate of sales tax and
other local levies. Although the oil marketing companies were
granted freedom to fix retail selling prices of motor spirit and high
speed diesel on a fortnightly basis, in practice, this arrangement has
not appeared to have worked in quite a transparent manner. For
example, there was no revision of motor spirit and high speed diesel
prices between January 1, 2004 and June 16, 2004, while the prices
of crude and petroleum products in international markets increased
rapidly. In order to mitigate the hardship of oil companies,
Government worked out a new methodology with effect from August
1 2004 allowing the oil marketing company's limited freedom to revise
the prices of motor spirit and high speed diesel within a price band.
Oil companies are permitted to adjust prices on their own within a
band of ± 10 per cent of the mean of rolling average import-parity
price including cost of freight of the previous 12 months and last
quarter. When prices move beyond this band, the oil marketing
companies have to approach the government to modulate the excise
duty rates.

2.8 Dismantling of APM, De-regulation of Petrol and Diesel in


2002 and Experience thereafter:

Scheme of Presentation

• Examine the post de-regulated business environment with respect


to Petrol and Diesel with particular reference to pricing.
• Current Pricing Mechanism for Petrol and Diesel

Page | 22
The Experience on de-regulation of Petrol and Diesel

• APM was dismantled in April, 2002.


• Pricing of Petrol and Diesel de-regulated.
• Industry proposed Import Parity Pricing.
• Inland prices would have included freight from ports.
• Pricing implemented based on freight-equalization.
• Prices in coastal markets higher than DPP.
• Inland prices lower.
• Refineries compensation synchronized with international
prices, every fortnight
• Consumer prices lagged behind in Fiscal 2002
• EXIM amendment in 2003.
• Private refineries and new entrants allowed marketing rights
of automobile fuels.
• Offer lower prices in coastal markets.
• Flexibility was only in consumer pricing
• Proposal for implementation of IPP.

Current Pricing Mechanism for Petrol and Diesel

• Vulnerabilities in international prices of crude and finished


petroleum products.
• Need to modulate impact on domestic consumer.
• Autonomous adjustment of Retail Selling Prices by Oil Marketing
Page | 23
Companies within a reasonable price band.
• Average C&F Price computed considering:
1) Rolling Average of C&F prices during previous quarter
2) Rolling Average of C&F prices during previous year
• Price Brand applying +/- 10% based on Average C&F as
above

Composition of Retail Selling Prices beyond C&F prices

1) Landed cost
a) C&F
b) Insurance
c) Customs Duty applicable for product
d) Bank Charges, Ocean Loss, Wharf ages

2) Ex Storage Point Price


a) Landed cost
b) Weighted average freight equalization factor
c) Stock loss and return on working capital
d) Marketing cost
e) Marketing margins

3) Retail selling prices


a) Freight from refinery to inland storage points
b) Excise Duty
c) Sales Tax
d) Dealer Commission

Issues related to Pricing Mechanism based on Price Brand

• Prices based on previous fortnight could be higher than upper


ceiling on sustained basis.
• Results in Under Realization for OMCs
• Options are :
Page | 24
 Modulation in Excise Duty Rates.
 Flexibility within Price Brand.
 Review of gross margins.

2.9 Company wise Retail Outlets in India as on 1st January of


each year.
Yea Retail B/Sh ESSO/HP CALTEX/H IOC AOC/AO IBP Total
r outlets ell CL PCL D
BPCL (VMU)
197 Nos. 3577 1922 1392 265 123 233 990
0 5 8
% 36.1 19.4 14.0 26.8 1.3 2.4 100
197 Nos. 3173 1867 1206 354 163 525 104
5 6 80
% 30.3 17.8 11.5 33.8 1.6 5 100
198 Nos. 3296 3198 423 173 975 228
0 1 73
% 27.8 26.9 35.6 1.5 8.2 100
198 Nos. 3442 3451 470 202 106 128
5 7 2 64
% 26.7 26.8 36.6 1.6 8.3 100
9
199 Nos. 3847 3829 545 268 122 142
0 2 8 64
% 26.3 26.2 37.3 1.8 8.4 100
199 Nos. 3907 3910 554 276 125 148
1 2 8 93
% 26.2 26.3 37.2 1.9 8.4 100
199 Nos. 3976 3946 560 281 128 150
2 2 7 92
% 26.3 26.2 37.1 1.9 8.5 100
199 Nos. 4146 4094 588 283 136 157
5 9 4 76
% 26.3 26 37.3 1.8 8.6 100
199 Nos. 4240 4199 614 291 140 162
6 0 3 73
% 26.1 25.8 37.7 1.8 8.6 100
199 Nos. 4332 4297 637 303 142 167
7 5 6 15
% 25.9 25.6 38.1 1.8 8.5 100
199 Nos. 4410 4315 644 311 144 168
8 4 0 93
% 25.9 25.5 38.1 1.8 8.5 100

Page | 25
199 Nos. 4449 4345 653 311 144 170
9 2 2 40
% 25.5 25.5 38.3 1.8 8.5 100
200 Nos. 4555 4480 677 312 146 174
0 0 1 72
% 25.3 25.6 38.7 1.8 8.4 100
200 Nos. 4610 4536 713 315 147 180
1 4 5 15
% 25.3 25.2 39.6 1.7 8.2 100
200 Nos. 4610 4642 743 318 155 185
2 3 1 54
% 24.8 25.0 40.1 1.7 8.4 100
200 Nos. 4772 4799 763 323 180 193
3 5 8 37
% 24.7 24.8 39.5 1.7 9.3 100

2.10 Entry of New players in Indian Petroleum Retail Sector

Almost three years back Government of India has laid down the
guidelines for granting the authorization to market transportation
fuels to the new entrants vide its Resolution on Dec, 2009. After the
publication of these guidelines, the Government has received the
applications from two Public Sector Oil Companies i.e. Indian Oil
corporation Limited (IOCL) , Bharat Petroleum Corporation limited
(BPCL) and Hindustan Petroleum corporation limited(HPCL) and two
private oil companies i.e. Reliance Industries Ltd. (RIL) and Essar Oil
Limited (EOL). These applications have been examined by the
Government and found them eligible for granting the authorization to
market transportation fields as they have already invested Rs. 15000
crores in the eligible activities. These companies will set up 51250
retail outlets as per the following details:

Page | 26
Name of the company Number of retail outlets to be setup
In remote/low service areas

IOCL 19830

BPCL 21000

HPCL 8500

EOL 1420

RIL 500

TOTAL 51250

M/s RIL and EOl have given the plan to set up Retail Outlets in most
of the states of the country whereas NRL will set up retail outlets
primarily in North Eastern states. ONGC will set up retail outlets
primarily in Andhra Pradesh, Gujarat and Maharashtra.
The oil marketing PSUs are in a process of setting up 2900 new
retail outlets. There will be an addition of 62% to the strength of
retail outlets in the country with the grants of marketing rights to
the four companies today.

CHAPTER 3 – RESEARCH
DESIGN, METHODOLOGY AND
PLAN
Page | 27
3.1 Research Design

The formidable problem that follows the task of defining the


research problem is the preparation of the design of the research
project, popularly known as "research design".
Different research designs can be conveniently described if we
categorize them as:

• Research design in case of exploratory research studies.


• Research design in case of descriptive and diagnostic
research studies.
• Research design in case of hypothesis testing research
studies.

Exploratory research studies are also termed as formulate research


studies. The major emphasis in such studies is on the discovery of
ideas and insights. Descriptive research studies are those studies
that are used to describe the characteristics of a particular
individual or group, whereas diagnostic research studies determine
the frequency with which something occurs.
Hypothesis testing research studies (generally known as
experimental studies) are those where the researcher tests the
hypothesis of causal relationships between variables.
In our case the research has been designed keeping in mind the
exploratory or formulate research studies.

3.2 Data Source

Primary source:-
• Primary data is not used for this study.

Secondary source:-
• Magazine, Newspaper and Internet websites.
Page | 28
3.3 Sampling Plan:-

• Sampling is not required for this study.

Collection of Information
Since this study is a qualitative study and based on secondary
source of information, data has been collected from secondary
source such as magazine, Newspaper, Internet websites and books.

Analyzing the Data


After the completion of data collection, the data was then
assimilated into a word documents. Inferences were drawn
thereafter.

Presenting the Findings


The inferences were then summarized along with the insights during
data collection Recommendations have been given on the basis of
the above steps.

Decision Making
The recommendations drawn after the findings could be best
worked out by way of analysis.

Page | 29
3.4 Strategy Plan

Steps involved:

• Data collection
• Sampling
• Analyzing the data
• Presenting the findings
• Conclusion
• References

CHAPTER 4 –FINDINGS AND


ANALYSIS

Page | 30
4.1 Allied Petro Retailing

Introduction:-

Under the allied retailing concept main product is the anchor while
some other products are retailed as add-ons. A wonder example is a
multiplex mall where the main product is entertainment at multiplex
but a shopping mall or food plaza adds to the customer's
convenience. Most of the car dealer sales customized accessories as
linked retailing.

The origin of this form of retailing can be traced to the cinema hall
or colleges of earlier days where a canteen was setup for sales for
food stuff to customers who actually came for a movie or studies
respectively.

The concept of Allied Petro-Retailing at petrol stations is not new. It


began in the 1980s when British Petroleum launched its first
convenience store. In India, where consumer interface was
recognized as a key factor, the concept was taken up in the late
1990s by Indian Oil Corporation, which started its multi-purpose
distribution centers at petrol pumps in semi-urban and rural areas.
The concept has been in vogue ever since. But recently it shot into
limelight with oil companies trying to milk this revenue stream for
more moolah.

The same concept of allied retailing, petroleum retailing companies


have been successfully trying it for long time. Major categories
under this "allied retailing" are convenience store (urban or rural),
food services, and ancillary services. For example retail outlet may
have an ATM as an ancillary service. A customer who actually comes
to the site for a transaction at ATM may buy fuel to avoid another

Page | 31
trip to petrol pump. A truck driver may prefer to stop at a specified
pump just because it has a dhaba of his choice.

Apart from being used as a basis for differentiation, non-fuel


products and services can contribute significantly to revenue and
profit enhancement. Non-fuel revenues of petroleum retailers
contribute as much as 38.6% in the U.S. and 28% in France, and
their significantly higher profitability makes them particularly
attractive; average profit contribution of non-fuel products and
services is 65.8% in the U.S. and 40% in France. There are a number
of products and services petroleum retail stations can offer, but they
can all be broadly grouped into three categories convenience stores,
food service outlets and ancillary services.

To develop a strong brand and product proposition, a key imperative


is to understand your target consumers psyche, behavior and
needs. Segmentation is a powerful tool to help marketers identify
the most profitable consumer segments and to develop an offer
which fulfils their needs better than competition. Psychographic
segmentation is more often used today than traditional
demographic measures, as it captures better the key behavior and
underlying attitudinal drivers. Many successful global petroleum
brands have used detailed psychographic segmentation as the
foundation of building strong brands.

4.2 Allied Petro-Retailing by different companies in India

Page | 32
Presently three downstream marketing company and two private oil
companies are engaged in allied petro-retailing in India. These are
following:

• Bharat Petroleum Corporation Ltd.


• Hindustan Petroleum Corporation Ltd.
• Indian Oil Corporation Ltd.
• Reliance Industries Ltd.
• Essar Oil Ltd.
• Shell India Ltd.
• Oil and Natural Gas Corporation.

These are the companies which presently involve in Allied Petro-


Retailing, but still major players are Indian Oil Corporation Limited,
Bharat Petroleum Corporation Ltd., and Hindustan Petroleum
Corporation Ltd. And Reliance, Essar Oil Ltd., Shell, Oil and Natural
Gas Corporation are new entrants and they are in nascent stage of
Allied Petro-Retailing. They are having very few number of retail
outlets where Allied Petro-Retailing facilities is available.
Page | 33
Name of the Companies and their C-store.
S.No. Name of company Name of C-store
1 HPCL Club HP
2 BPCL In &Out
3 IOCL Swagat
4 Reliance A1 Plaza

4.3 Importance of allied Petro-Retailing

The business environment in India has undergone a significant


change in the past few years. Per pump throughput has been
declining and hovers around 160- 180 kilo liters per month. The
profitability has decreased marginally due to intense competition. In
Page | 34
that case Oil Company has to reinvent them and capture the biggest
market share and look after the other way of revenue generation.
This is where Allied Petro-retailing comes into Picture. Allied Petro-
retailing has following importance.

It helps in sweating of these assets:-

Sweating of these assets is required to generate maximum revenue


out of each asset For example the land at a retail outlet is normally
giving revenue only on account of fuel sales. Suppose a 1500 sq
meter retail outlet generates sales revenue of 15 lacs per month.
This works out to a simple Rs 1,000 revenue per sq mt. Assuming a
4 % margin on fuels it yields a meager Rs 40 per sq. mt Obviously in
an those areas where land cost is high it will not be a feasible rate of
revenue. To maximize per sq mt. (or per sq feet) revenue, company
may like to take some initiatives. This business process of
maximizing revenue from a given set of assets is called sweating of
assets.
Sweating of various assets can be done through different means.
Some of these are detailed next.
Fixed Assets: Revenues can be increased by adding to the product
line. This would mean additional revenue coming from new products
- like food store, convenience retailing, and other non-fuel retailing.

Non-fuel Biz to Pump Growth:-


The face of petro-retailing in India is gradually changing. With the
entry of private sector players like the Reliance group and Essar Oil,
even public sector players are realizing the need for differentiating
factors to bring in the additional revenues. Industry experts say that
companies must realize that non-fuel business should be given a
critical push to keep gas stations viable in the long run.

Page | 35
There is no money on pumping gas because of political issues and
regulator, requirements in most countries. The top line is controlled.
Unless 20 per cent is generated from non-fuel, margin expectations
cannot be met, said Cedar Consulting regional director (Asia/Middle
East) Sanjiv Anand. Cedar has wide experience in working out retail
strategies for leading oil companies in Dubai and Emirates.
So how are Indian companies like Hindustan Petroleum Corporation
(HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation
(IOC) going about in this changed scenario? HPCL head (allied business)
PT Suresh said that non-fuel business constitutes 25 to 30 per cent of the
total return from petrol pumps in Mumbai. But the figures for other cities
are dismal, with hardly a five per cent return from the non-fuel business
in the smaller cities.
Merchandising along with auto care, constitutes a major portion of the
non-fuel revenue mix. In a study conducted by Cedar, for a leading oil
company in the Middle-East it was found that retail merchandising
accounted for 78 per cent of total non-fuel revenue, with car wash
accounting for 8 per cent
It is important to get the composition of retail merchandising, sold
through Convenience
Stores (C-Stores) at gas stations, right In UK, tobacco accounts for a
bulk 37 per cent in
a typical C-Store sale, while fresh food and drinks constitute the highest
in the Middle-
East

Value Added Products & Service To Customer:


By Allied Petro-Retailing oil companies are not only able to increased
their revenue but also to provide the value added product and service
to customers which results in increased customer loyalty and
increase in customer footfall.

It helps in Differentiation of retail outlet:

Page | 36
Allied Petro-Retailing is also used as differentiation tool by oil
companies. For example BPCL is making difference by providing
product and services through IN & OUT STORE.

Key issues pertaining to application of Allied Petro retailing


in India:

Along with the pluses, come the negative aspects of any concept.
The companies that follow a lot of logical constraints while bringing
Allied Petro retailing to life at their retail outlets. The advantages
and the importance of the concept have been discussed above now;
we shall have a glimpse at the challenges faced by Oil Marketing
Companies regarding the same.

1. Investment: A bigger amount of capital investment is required


in order to carry out the concept at the retail outlets. Money is
required to set up a convenience store or a section for public
amenities or even a mini mall. This adds to the overall
investment requirement of the company. Now, the project tends
to be financed from any of the following sources in order to meet
the requirements:

• Dealer Managed: The basic requirements to carry out the


project plan of application of the concept can be financed from
the dealer to whom the retail outlet is outsourced to. This
ensures a better dealer for the company’s retail outlet, as the
franchisee seems to be well off in terms of financial support.
This can be a part of the company’s policies for the selection
procedure of a dealer for the company-customer touch point.

• Finance From Company itself: If it works out to be a


herculean task to find out a set of better quality dealers for the
retail outlets, the company can also look to finance such
projects as it is their own venture. A company knows best
about the level of investment to be made, precisely in every
different project altogether. The company’s current financial
status, recent past performance and expected future revenue
Page | 37
statements can help to work out the amount of investment the
firm wants to venture in its projects.

• Financial Institutions: A major source of capital can be a


financial services providing institution which can lend the
desired amount of money as capital at a certain rate of
interest. This option can be considered in case of huge capital
requirements which cannot be financed from elsewhere easily.
A financial institution can be considered as the last resort for
financial aid if the other options fail to work out effectively.

2. Control over the C-Store: The next major question arises,


who will run the c-store? Or, alternatively who will be
managing the allied services which will be provided at the retail
outlet premises. The various options that can be considered to
resolve this problem can be:

• Company Managed: An option for the company is to


manage the services for itself. The company can hire a team of
specialized personals who can manage the retail outlet’s
services better. This will keep a check on the performance of
the differentiated team and help the company to decide
accordingly for the next step of the extension of the practice.
• Dealer Managed: A company can also delegate the job
downwards to the dealer to which the company has to assign
the control over the retail outlet. Dealers can manage for
themselves regarding the work force and other minor issues
pertaining to the same issue. A dealer will know the best
regarding the conditions of the retail outlet, and hence can
decide according to his requirements and conditions.

• Outsourcing: A company can consider the option of


outsourcing the marketing job of the allied services to a
professional institution, which can handle the situation and job
perfectly. Any outsourced job is very much authentic because
of the level of perfection in their own domain, which the
executives possess. The job can be much more fruitful, if it is
handed in the expert’s palms.

Page | 38
3. Availability of Land: Another major issue pertaining to the
same concept is availability of land for the establishment of the
same kind of retail outlets, i.e. with all the allied services that the
company seeks to market. A better landscape is required to carry
out the plans to work effectively. For the construction of a c-store
or a public amenities section, the total ground clearance of the
outlet increases, and this is hardly feasible in the case of an
outlet that needs to be setup within the boundaries of a city,
especially in dense residential areas.

4. cost effectiveness
- profitability
- ROI
- what if a mall or a food court grows in the locality of the retail
outlet

5. permissions –
- local government
- franchising company

6. Image controlling –
- products and services sold may control the image of the
retail outlet
- core products may influence the sales and visits of the c-
store

7. Infrastructure requirements –
- safety norms
- approvals

8. Pricing -
- pricing of petro products to cover other costs ?
- pricing of allied services to cover core product costs ?

9. Customer Image Mapping :


- hard to determine, what exactly a customer expects from the
retail outlet.

Page | 39
- mass customization.

10. maintaining a difference with what the competitors are doing.


- create a different visual identity
- create a different brand image
- free deliveries within a certain area, to create brand loyalty.

Page | 40
4.4 Allied retailing concept of Bharat Petroleum

Bharat Petroleum's efforts have all along been to build a superior


understanding of customer needs and relentlessly work towards
fulfilling these needs. Bharat Petroleum is consciously working towards
providing added value to customers, both in fuel and non-fuel areas.
Initiatives, some of them pioneering efforts, have been introduced
based on need gaps articulated by consumers during focus group
discussions and extensive market research.

On the Non-Fuel front, Bharat Petroleum has introduced the Errand Mall
concept successfully at select markets. Called the 'In St Out', these
malls offer the customer a broad range of facilities and brands to
choose from. ATMs, Cyber-cafes, Courier services, Laundry, Photo
Studio, Music, Fast Food, Greeting Cards, Courier Services, Bill
Payments, Movies Entertainment Tickets, etc. have made Bharat
Petroleum's Retail Outlets a happening place and indeed an rewarding
experience for motorists.

Bharat Petroleum has also pioneered the concept of convenience stores


at select petrol pumps that operate under the name 'Bazaar*. These
Bazaars provide a wide range of convenience items and fast foods to
customers in a clean, air-conditioned and friendly environment.

THE 'In & Out' CONCEPT

The Indian Petroleum retailing industry is today poised to make giant


strides both in terms of new forecourt retailing opportunities and
superior customer offerings at the retail outlet WMi the onset of me post
APM deregulated scenario, me spirit of competitiveness amongst the
Page | 41
petroleum companies augurs well for the consumer with each of the
companies adopting innovative ways to capture a larger part of the
consumers mind share.

With the emergence of organized retailing in the country and a growing


demand from consumers for a superior shopping experience,
Convenience Retailing has emerged as a key business area for
petroleum companies given their wide retail presence, existing
customer base and strategically located sites. Convenience need gaps
have been felt in various fields and research has shown that the urban
consumer today seeks convenience in shopping for their basic
requirements so that their precious time is reserved for more fruitful
pursuits.

Petrol retail outlets provide the right framework for setting up


convenience retail chains where the consumer has the opportunity of
combining shopping with the fuelling occasion.
Petrol stations are widely recognized to be one of the highest traffic
aggregators and retail majors like hypermarkets such as Sainsbury,
Tesco have added motor fuels in their basket of services for the
convenience of their customers.

Hence along with strategic locations, the availability of footfall in the


petrol retail outlets gives petroleum retail companies the competitive
advantage. Worldwide, petrol station convenience stores have
developed into a serious business in itself with companies like Shell,
Caltex, BP running their convenience store chains very profitably. All of
them have deployed best retail practices in their stores and offer a wide
Page | 42
range of services including laundry, postal services, courier services,
fast food etc.

Realizing the importance of a greater understanding of consumers'


needs and consistent with its core objective of continuously adding
value to its customers through innovative means, Bharat Petroleum has
launched its convenience retailing initiative under the "In &Out brand.
Bharat Petroleum is the 2nd largest oil marketing company in the
country with over 6000 retail outlets spread across the length and
breadth of the country. The In &Out chain of convenience stores is
being set up in the urban markets at strategically located retail outlet
sites with high customer footfalls.

The In & Out network

The "In & Out" store at Bharat Petroleum petrol pumps, which was
launched in 2001, offers a convenience proposition where a number
of typical household errands are aggregated under one roof for the
benefit of the customers. Today there are more than 300 In &Out
stores across India, which bring in unmatched convenience at the
petrol station. Strategic alliances have been formed with major brand
owners and retailers in the country to further strengthen the
convenience proposition. Company has already planned to increase the
number of In & Out store up to 400 in 2004 - 2005 financial year.

• The In & Out stores have a wide range of services viz. ATMs of leading
Banks, Music stores from Planet M and Music World, Beverages from
Pepsi, Coffee and snacks from Cafe Coffee Day and Coffee Day Xpress
and a variety of impulse buys including confectionery, snacks,
convenience foods, toiletries and select range of branded groceries and
other FMCG products through exclusive tie-ups with such FMCG majors
like ITC, Cadbury and Frito-Lay.

• In &Out stores are the first to open and last to shut in the
Page | 43
neighborhood

• Customers can use their Petro-Card for In &Out shopping and


earn valuable "Petromiles".

• In & Out stores are the largest organized convenience store retailing
chain in the country with a standardized layout across the country,
with a high level of aesthetics and an ambience aimed at deriving
maximum value for our alliance partners and offering consumers a
revolutionary solution for attending to their daily chores.

• The In & Out stores offer Western Union Money Transfer facilities in
Mumbai -
Money available all the time from your near and dear ones abroad at
our store

• In &Out stores offer all cell-phone recharge cards, and today


with the launch of e-charge we are the first in the country to
offer electronic charging of e-cards -now you can never lose
your prepaid card re-charge voucher

• Have Pepsi at In & Out - anytime; if you want something more


indulge in Coffee & Snacks from CAFE COFFEE DAY at selected
In & Out stores.

• If you want the latest music -come to the "Satellites" from


Planet M and to "Unplugged" from Music World, next to your
home and get top quality music cassettes and CDs. .

• Pick the latest issue of India Today, Outlook and any


other magazine at store.

Generating Excitement
If you have gone to BPCL store in the last few weeks, you would have
noticed some pioneering initiatives to attract fuel customers and non
fuel customers at our store.

• BPCL is the first to pioneer the concept of "Hood talkers" in India in


Page | 44
a few select stores in Hyderabad, Mumbai, Delhi, Jaipur, Kolkata,
Bhubaneswar, Chennai, Bangalore, Coimbatore, Ernakulum and
Baroda - a concept widely implemented by global oil majors.

• For the convenience of our fueling customers who have very little
time, we have mobile trolleys at the fuel outlet which will bring
convenience to your car

• We have implemented In-store branding across large part of our


network to help you locate what you want easily

• All purchases are through computerized billing through India's


largest retail information network to help us get the products
you want

• Watch out for regular promotions that are going to be run


across your city network in the next two weeks! The offers are
always a steal and our alliance partners too regularly chip in
with exclusive promotions to make the shopping experience
truly convenient and exciting!

Over the past two years, one of the key learning has been the high
level of acceptance of the cell phone offering in our In & Out stores.
Consistent customer feedback has indicated the high level of
convenience perception in having made cell phone recharge cards
available at the In & Out stores. With the cellular market showing
manifold growth, cell phones have become a way of life and our
endeavor has been to make recharge cards easily available for our
customers.

With our stores operating 7 days a week through extended working


hours, we believe that we would be in a position to maximize
convenience in this category.

E-Charge is a complete system and service provider offering


"electronic delivery system" for the prepaid product industry through
Page | 45
electronic terminals. This innovative system vertically integrates the
distribution value chain by linking mobile operators with the retail
channel. This service is synergistic with BPCL's overall strategic
objective of leveraging technology for optimizing customer offerings
and by introducing the E-Charge service through the In & Out stores,
the customer would have the convenience of purchasing recharge
cards of the cellular company and denomination of his choice at any
point of time. The service optimizes customer convenience, ensures
complete security of the prepaid PINs and is highly scalable. The
technology can also be leveraged to introduce other products like
movie tickets, sporting tickets etc and services like Bill Payments etc.

4.5 Allied retailing concept of Hindustan Petroleum Club HP

High - quality personalized "Vehicle and Consumer Care

A part of HPCL’s strategic retail marketing initiative that seeks to break


out of traditional fuel, retailing, our new Retail Brand "Club HP"
assures high - quality personalized "Vehicle and Consumer Care"
through a select set of outlets.
Developed after an exhaustive research of over a year which included
collecting feedback from over 13,000 respondents in several key
markets across the country, the "Club HP" concept aims to provide
the assurance of "Quick Fills", "Expert, Personalized Service", Total
Vehicle Management" and "Consumer Conveniences".
While designing the bouquet of services for Club HP outlets, we have
relied upon the feedback received directly from consumers. We
realize that consumers are highly conscious of the fuel that goes
into their vehicles - each "Club HP" outlet carries the assurance of

Page | 46
HPCL’s Good Fuel Promise and delivers the right quality and quantity
of the products on offer. Fuel is delivered to these outlets in tank
trucks fitted with tamper proof locks and a high degree of control is
kept by the HPCL staff to ensure that quality standards are strictly
enforced.

The "Club HP" concept also recognizes the fact that the consumer
today places very high importance on vehicle care and at the same
time expects other value added services from a fuel retail outlet that
help him take care of diverse activities under one roof and in the
shortest possible time. The Club HP outlets provide a distinct set of
basic and value added offerings which include "Efficient & Expert
Service", "Quick Care Point", "Digital Air Towers", "Vehicle Finance
and Insurance related assistance", "Bills Payment facilities",
“Refreshments”, "HPCL - ICICI Credit Cards", "Club HP Smart 1
Cards" and a host of other amenities.

To deliver the many conveniences and services, they have associated


with leading companies like Coca Cola India, ICICI Bank, Fed Ex,
Western Union Money Transfer, Cafe Coffee Day, US Pizza, Skypak and
many more. We are also forging service specific alliances with several
automobile companies and OEMs like Tata Motors to jointly identify
"Club HP" outlet which could qualify as "Authorized Service Centers"
for leading automobile brands The roll out of "Club HP" began in a
phased manner initially targeted 85 outlets in the cities of Mumbai,
Delhi, Bangalore and Kolkata .

Encouraged by the initial experience, the "Club HP- brand has been
quickly expanded to cover over 2000 from 1600 outlets in all major
cities and towns across India. The distinctive red and blue Club HP logo
is an all too familiar symbol inviting motorists looking for a quick and
refreshing fuelling experience."Club HP" outlets are categorized as
Standard, Mega and Max depending on the levels of services and
Page | 47
amenities available. Each outlet will offer a bouquet of standardized
services to consumers, depending upon market requirements and
logistical abilities.

• Vehicle Care - The Club HP outlets have been carefully selected


to ensure that they can offer high quality vehicle care. Each Club HP
Mega and Max outlet is equipped with a service station. In addition, the
outlets will also provide vehicle consumable and accessories, all under
one roof. More and more outlets will progressively upgrade to
"Authorized Service Stations'* as part of our association with various
vehicle manufacturers.
• Quick Care Points - Consumers are offered a free check up of
vital elements such as engine oil, brake oil, battery water, coolant, fan
belt, radiator hose etc. by the specially trained "Club HP" attendants. In
addition, a quick inspection of the tires is done and recommendations
given in case any immediate action is required.
• Digital Air Towers - The performance and safety of new
generation cars depend
a lot on the correct air pressure maintained in the tires. The specially
designed
digital air pressure equipment not only ensures accurate air pressure in
the
shortest time but also adds to the comfort and safety of travel. Good
Fuel Promise' Towers - Consumers are offered the facility to personally
conduct simple tests with the help of specially designed standard
apparatus. A simple procedure booklet is also provided to help anyone
check the quality and quantity of fuel. The consumers are also invited
to fill in the printed certificate booklet which will be available at the
"Club HP" outlets in order to record their assessment. This feedback is
regularly screened by the HPCL team to plan remedial actions or
service upgrades in accordance.
• Vehicle Finance and Insurance Related Counsel - HPCL has
tied up with leading vehicle insurance and finance service providers for
these activities which include assistance towards issuance and renewal
of policies as well as extension of loans for purchase of new or second
Page | 48
hand vehicles.
• ATMs - HPCL has taken the lead in providing ATM facilities at its
outlets in association with leading banks and is targeting over 400
ATMs very soon. Selected Club HP outlets have already been equipped
with ATMs.
• Bills Payments - HPCL has tied up with Skypak Financial
Services which is providing "Drop boxes" at all "Club HP" outlets in a
phased manner. Consumers can utilize these drop boxes to pay bills
relating to a variety of service providers. All one has to do is drop the
bill and payment instrument (Cheque / Demand Draft) for the
designated service provider and Skypak will route the same to the
correct destination at no extra cost.
• Communication Facilities - Each Club HP outlet is equipped
with a pay – phone for the convenience of consumers. In addition,
select outlets will also provide high speed internet browsing and e -
mail facility.
• HPCL - ICICI co - branded Credit Cards and Chip HP Smart
Cards -Customers visiting the "Club HP" outlets will be able to use the
HPCL – ICICI Credit Cards to reap the higher reward points offered by
this unique product. The "Club HP Smart 1", a smart card based loyalty
program launched for the cash paying customers, will also be available
at select Club HP outlets to reward loyal Club HP customers.
• Basic Amenities - Each "Club HP" outlet will extend basic
amenities such as "safe drinking water" through water purifiers,
hygienic rest room facilities, food counters, basic medicines and first
aid facilities. HPCL has also tied up with Coca Cola India to provide
beverages and bottled water as well as snacks at all "Club HP" outlets.

4.6 Selling of consumer durables, FMCG products via LPG


outlets

Oil companies have planned to start selling of consumer durables and


FMCG products Vis LPG outlets for example Bharat Petroleum (BPCL)
Page | 49
has already planned to use its LPG (liquefied petroleum gas)
distribution chain to sell non-fuel products such as soaps and pressure
cookers. Mumbai-based BPCL, in a new initiative to be launched this
week, has tied up with Hindustan Lever (HLL) and several others such
as Prestige and Nirlep to market their goods with the LPG cylinders.
The distribution will be through the oil company's LPG dealers, who will
service cylinder demand as well as that for allied products. Perforated
discount coupons from the HLL's 'Sangam' line will be attached to
cylinder neck labels, which can be torn off and orders placed with the
delivery boy or on phone, company sources said. The product will be
delivered using the LPG dealer network. BPCL has already test-
marketed the scheme through pilot projects in Bangalore, Chennai and
Chandigarh. Mumbai will however be the first major market The
company has about 17m LPG customers in the country today and sells
about 13.5 crore LPG cylinders every year, marketed under 'Bharat
Gas'. Oil companies have been trying to increase non-fuel revenues
through retailing at petrol stations But this is the first time that non-fuel
retailing will be tried on this scale with LPG cylinders. BPCL is starting
off with products such as pressure cookers, saucepans, tavas as well as
HLL’s food and detergent brands. The company plans to add to the list
in the future. The order, will be tracked by the company on its online
tracking system.

Page | 50
Page | 51
CHAPTER 5 ANALYSIS

Q3
8%
Definitely ,Yes And I Often Visit The Store 4
18%
Yes, But I Hardly Visit It 9
Page | 52
Yeah ,I Have Seen It From Outside While 44%
Refueling My Vehicle 22
14%
Just Heard Of It From Someone 7
16%
No 8

According To Survey Mostly Customer Said Yeah, I Have Seen It From Outside
While Refueling The Vehicle Then Customer Said That They Aware Of BPCL(IN &
OUT) But Hardly Visit It.

Q4
Ho:- In & Out Is Not A Major Reason To Visit BPCL(IN & OUT) For Fueling Vehicle.

H1:- In & Out Is A Major Reason To Visit BPCL(IN & OUT) For Fueling Vehicle.

One-Sample Statistics

Std. Error
N Mean Std. Deviation Mean
V1 50 3.0000 1.01015 .14286

One-Sample Test

Test Value = 3
90% Confidence
Interval Of The
Difference
Mean
T Df Sig. (2-Tailed) Difference Lower Upper
V1 .000 49 1.000 .00000 -.2395 .2395

Page | 53
According To T-Test Ho Is Accepted That In & Out Not A Major Reason To Visit BPCL(IN &
OUT).

Q5
Ho:-BPCL(IN & OUT) Is Not Convenient Located
H1:- BPCL(IN & OUT) Is Convenient Located

One-Sample Statistics

Std. Error
N Mean Std. Deviation Mean
V2 50 3.4200 .97080 .13729

One-Sample Test

Test Value = 3
90% Confidence
Interval Of The
Difference
Mean
T Df Sig. (2-Tailed) Difference Lower Upper
V2 3.059 49 .004 .42000 .1898 .6502

According To T-Test H1 Is Accepted That. BPCL(IN & OUT) Is Convenient Located

Q6

Grocery 6

A.T.M 25

Bookstore 5

Air Check 16

Page | 54
According To Survey Most Of The People Said That They Transact Mainly A.T.M
And Air check At BPCL(IN & OUT) Petrol Pumps.

Q7

Grocery 4
A.T.M 18
Toilets 11
Bookstore 8
Air check 14
General Stores 6

According To Survey Mostly People Said That A.T.M’s ,Air check And Toilets
Stand For Convenient At BPCL(IN & OUT)(In & Out) Stores

Q8
Ho:-Price Of BPCL(IN & OUT) Is Higher Than Other Stores.
H1:- Price Of BPCL(IN & OUT) Is Lesser Than Other Stores.

One-Sample Statistics
Std. Error
N Mean Std. Deviation Mean
V3 50 3.3000 .93131 .13171

One-Sample Test

Test Value = 3
90% Confidence Interval
Of The Difference
Mean
T Df Sig. (2-Tailed) Difference Lower Upper
V3 2.278 49 .027 .30000 .0792 .5208

Page | 55
According To T-Test H1 Is Accepted That Price Of BPCL(IN & OUT) Is Lesser Than
Other Stores.

Q9
Ho:-BPCL(IN & OUT) Is Not Satisfied Store.
H1:- BPCL(IN & OUT) Is Satisfied Store.

One-Sample Statistics

Std. Error
N Mean Std. Deviation Mean
V4 50 3.4400 .88433 .12506

One-Sample Test

Test Value = 3
90% Confidence
Interval Of The
Difference
Mean
T Df Sig. (2-Tailed) Difference Lower Upper
V4 3.518 49 .001 .44000 .2303 .6497

According To T-Test H1 Is Accepted That BPCL(IN & OUT) Is Satisfied Store.

Q10

Page | 56
Grocery 8
A.T.M 19
Toilets 16
Bookstore 6
Air check 11
General
Stores 16

According To Survey Most Of The People Said That A.T.M’s , General Stores ,
Toilets & Air check Are The Services What They Expect From In & Out Stores.

Page | 57
CHAPTER 6 –
CONCLUSION

Page | 58
Conclusion

With the deregulation of the petroleum sector and the change in the
retail scenario of the petro business. This liberalised scenario has
madding the sector intensely competitive and the oil companies,
especially those in the public sector would need to adopt a more
customer-focused approach to the retail end of their business.
Number of retail outlets is increasing rapidly because of that
throughput per retail outlets came down up to 160 KL from 180 KL
Margin of companies are shrinking and on the other hand pricing of
petroleum product is still in government's hand.

Oil companies are competing with each other to reinvent themselves


and capture the biggest market share. To achieve this, efforts would
be required to gain a competitive edge and to increase volume off
lake, by enhancing scale of operations, upgrading retail outlets and
finding new business opportunities

Allied Petro retailing has been adopted by all oil companies as a tool
to generate more revenue as well as allure the customer to avail the
bunch of facilities under one roof.

Importance of Allied Petro-Retailing increasing going up in present


scenario because of following;-

Benefits to the Customer:


Page | 59
• More than one requirement at one place.

• Time saving.
• Money saving because of less transportation.

Benefits to the company:

• Better utilization of fixed assets.


• New source of revenue generation.
• New tool for differentiation.
• Benefiting from positive rub off.
• Attracting more customers.
• Giving opportunity making long term relationship.

Area of Operation

Present:
• National highway, State highway, State Capital and some
good town.
• In rural India, still in nascent stage.
Future:
• Rural India as well as small town are better prospect for
expansion of Allied Petro-Retailing Facilities at retail outlets.

Page | 60
REFERENCES
 Websites – www.iocl.com, www.bharatpetroleum.com,
www.hindustanpetroleum.com, www.ril.com,
www.dgh.org, www.essar.com, www.shellindia.com,
www.indiainfoline.com/businessschool/archives/marketing
strategiescurrentlyfollowed
 Address by Mr.S.C. Tripathi, Secretary, Ministry Of
Petroleum & Natural Gas, Government of India at
Petrotech 2005, January 17-18, 2005 , New Delhi.
 Presentation by Dr. C. Srinivasan, Chairman, A.T. Kearney
India at Petrotech 2003, 10th January.
 Business World – issue dated February 15th, 2005.
Petroleum Retail Stuck in Pipeline.
Page | 61
 The Hindu Business Line Reliance , Essar changing the
rules of fuel retailing, Tuesday, July 20, 2004, Archana
Chaudhary.
 The Hindu Business Line Strategy Report – Indian Oil &
Gas Industry 2004, Chemtech, December 31, 2003.
 TERI, Background paper issues in the deregulation of the
Oil & Gas sector, New Delhi, R.K.Narang, Ardhendu Sen
and Leena Srivastava.
 Presentation by Hemant D.P., Country Manager, Sales,
FEDEX Express, India at Petrotech 2003, 10th January
2003.
 Petro Retailing book (basic reference material) Published
by UPES, Dehradun , 2004
 Research methodology (basic reference material),
Published by UPES, Dehradun , 2004
 www.businessline.com
 www.timesofindia.com
 www.economictimes.com
 www.hindustantimes.com
 www.infraline.com

ANNEXURE
QUESTIONNAIRE ON BPCL (IN & OUT)

Q1. How Frequently Do U Refill Your Vehicle?

a) Twice In A Week
b) Weekly
c) Fortnight
d) Monthly

Q2. How Frequent Do You Visit BPCL Retail Outlet in a month?

Page | 62
a) 1-2
b) 2-5
c) 5-10
d) More than 10

Q3. Are YOU Aware of Bpcl(In & Out)?

a) Definately, Yes and I often visit the store.


b) Yes, but I hardly visit it.
c) Yeah,I have seen it from outside while refueling my vehicle.
d) Just heard of it from someone
e) No

Q4. Do You Feel That Because Of In And Out You Visit BPCL?

a) Highy Agree
b) Agree
c) Neither Agree Nor Disagree
d) Disagree
e) Higly Disagree

Q5. Paying A Visit To BPCL Stands Convienient For You Or Not?

a) Highy Agree
b) Agree
c) Neither Agree Nor Disagree
d) Disagree
e) Higly Disagree

Q6. What Are The Things You Generally Transact With At A BPCL(In And
Out)Store?

a) Grocery
b) A.T.M
c) Bookstore
d) Aircheck

Q7. Paying A Visit To BPCL(In And Out)Store Stands Convienient For You
Because Of:

a) Grocery
b) A.T.M
c) Toilets
d) Bookstore
Page | 63
e) Aircheck
f) General Store

Q8. Prices Of BPCL Stores Are Competitive Or Less Than That Of Other
Stores?

a) Highy Agree
b) Agree
c) Neither Agree Nor Disagree
d) Disagree
e) Higly Disagree

Q9.Are You Satisfied With BPCL(In And Out) Stores?

a) Highy Agree
b) Agree
c) Neither Agree Nor Disagree
d) Disagree
e) Higly Disagree

Q10 .what services you expect from in & out store?

a) Grocery
b) A.T.M
c) Toilets
d) Bookstore
e) Aircheck
f) General Store

Q11. Suggestions For The In & Out Store?.........................


…………………………………………………..

Page | 64