The ratio of branded fuel to total sales of unbranded fuel (conversion rate) for IOCL has come down to single digits, ranging between five per cent and 10 per cent in various markets.
This is a far cry from the heydays of fuel brands (regular fuels with additives supposed to enhance a vehicle’s performance).
In 2007, the ratio of the sale of branded fuel amounted to 30 per cent to the overall sale of unbranded fuel for IOCL.
Branded diesel scripted a similar downfall -- the conversion rate of 20 per cent in 2007 is now as low as two-four per cent.
What triggered dismal sales were government rulings which led to large price differences.
In the 2009 Union Budget, new duties were introduced on branded fuels which raised the differential between unbranded and branded fuel to Rs 2.50 (of which Rs 1.75 was special duty) a litre for petrol and to Rs 4.95 (Rs 4.20 special duty) a litre for diesel.
Branded fuels started taking a beating.
This weaned away truckers, who largely patronised both regular and branded diesel, away from the latter.
In September, 2012, another blow was dealt, with the government withdrawing the subsidy support for branded fuels (although branded fuels are nothing but regular automotive fuels, blended with special additives).
It further increased branded fuel prices.
Branded petrol was popular with premium and luxury car owners; it, too, began to suffer from waning demand.
With the twin nails wedged in, the downward spiral has been difficult to stem since then.
“With the conversion rate down, the retail network which offered these branded fuels has shrunk.
"The high price difference between regular and branded automotive fuels has forced the latter out of the market,” says Srikumar N, executive director (corporate communications and branding), IOCL.
"Unlike those in industries with branded and unbranded products, the oil marketing companies (which buy, refine and market fuel from others), largely IOCL, HPCL (Hindustan Petroleum Corp Ltd) and BPCL (Bharat Petroleum Corp Ltd), did not have much scope in taking a hit on their own margins to contain the prices.
An official, from one of the companies, who did not wish to be named, says decreasing their own margins on branded fuel to cushion the consumer from the price increase was not considered: “Our
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