Indian Oil Corporation expects to commission 15,247 of its retail outlets in urban and metropolitan locations across the country based on the performance and viability of each outlet during 2006-07.
In the current financial year, the state-owned oil company would focus on the rural market, as it plans to add 1,000 new outlets to its existing 557-station rural network.
N G Kannan, director (marketing), said before the company plans to roll out any more retail outlets in the urban and metropolitan cities, the company will take stock of the financial performance of existing outlets.
He was speaking at the sidelines of a convocation ceremony of the Institute for Technology and Management in Chennai last weekend.
In a consolidation effort and to improve sales, each retail outlet will be quantified for a threshold level of sales, and those which fall below the threshold, will be asked to sell more branded fuels, loyalty cards and improve customer services, he added.
He said the rationalisation on commissioning the outlets has been prempt from the fact that more number of retail outlets have resulted in lower volumes, which leads to adulteration and low performance.
Kannan also said the corporation had taken a conscious decision to increase its retail presence in the last two years, rapidly adding outlets at prime locations so that it would be sort of an entry barrier for private players to set up outlets.
IOC's decision to increase its presence and reach in rural markets, can be considered as a move to reap the benefits of being the first player in these virgin markets and, also, the per pump throughout has been falling and increasing stiff competition in urban and metropolitan cities in the last two years.
Kannan said unavailability of fuel in rural areas is forcing people to access fuel from nearest towns or use adulterated fuel.
He said the rural retail outlets will largely be company-owned as private dealers may not be willing to set up outlets in these markets.
The cost of setting up a retail outlet is estimated at Rs 500,000 to 800,000, which means IOC will be investing Rs 50 crore (Rs 500 million) to 80 crore (Rs 800 million) on this initiative.
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