Body (Not more than 50-60 pages in double space)

a) Introduction
i) Background
Petroleum Industry :-
Petroleum Industry is generally divided into two Sections: UPSTREAM and
DOWNSTREAM. Both sectors are equally important for each other as both are
interdependent on one another. UPSTREAM sector deals with Exploration and
Production of crude oil and natural gas, while Downstream is engaged in
further processing of the same for consumption.
There are 3 major PSU sector company in India which plays a major role in the
petroleum sector in India. These companies are IOCL,BPCL, HPCL.

1.2 Structure of Indian Petroleum Industry

Primarily, the Indian oil sector has been a regulated sector dominated by
Government undertakings. However, with the Government loosening its
control, new private sector players are now gaining presence. Unlike the
international oil majors; the Indian oil sector has companies operating in three
distinct sub-segments: Oil & Gas Exploration and Production (E&P), Crude
Refining, marketing of petroleum & petroleum products (R&M) and, their
Distribution. The various players in each of these sub-sectors are listed in the
figure below.
ONGC is the leading player among the Indian exploration & production
companies.
Other players in the upstream sector include1. Oil India Ltd.
2. Gas Authority of India Ltd.
3. Indian Oil Corporation
4. Gujarat State Petroleum Corporation
5. Reliance Industries
6. Essar Oil
7. Cairn Energy
8. L&T,

Welcome to IndianOil, The of India

Welcome to the world of IndianOil, a diversified, integrated energy
major with presence in almost all the streams of oil, gas,
petrochemicals and alternative energy sources; a world of high-
calibre people, state-of-the-art technologies and cutting-edge
R&D; a world of best practices, quality-consciousness and
transparency; and a world where energy in all its forms is tapped
most responsibly and delivered to the consumers most affordably.

IndianOil leverages high-calibre people and state-of-the-art

technologies to tap all forms of energy most responsibly and
delivering them to the consumers most affordably. India's highest
rank Energy PSU in Fortune-500 list (Rank 212), IndianOil
recorded Revenue from Operations of ₹7,28,460 crores and a net
profit of ₹24,184 crores for the financial year 2021-22.

As a Brand with one of the largest customer interface in India, IndianOil

reaches precious petroleum fuels to every nook and corner of the
country through its network of over 56,000 plus customer touch-points,
surmounting the challenges of tough terrain, climate and accessibility.
The marketing network is bolstered by 80.55 MMTPA of Group Refining
Capacity and more than 15,000 KM of cross country pipelines.
Moreover, IndianOil's R&D Centre at Faridabad, one of Asia's finest in
downstream petroleum R&D, offers a competitive advantage to the
Corporation through world-class technology and process solutions and
innovative products. IndianOil R&D has also been instrumental in
pioneering path-breaking research to leverage the potential of Hydrogen
and other cleaner fuels for the sustainable progress of the nation.
One of India’s most socially responsive brands, IndianOil, has
successfully combined its corporate social responsibility agenda with its
business offerings. The Corporation has been partnering with
communities in which it operates by supporting numerous initiatives
connected with health, family welfare, education, environment protection,
potable water, sanitation, and empowerment of women and other
marginalised groups.

IndianOil – In Every Part, In Every Heart

 IndianOil reaches precious petroleum fuels to every nook and
corner of the country through its network of over 56,000 plus
customer touch-points.
 The marketing network is bolstered by 80.55 MMTPA of Group
Refining Capacity and more than 15,000 KM of cross country
pipelines.
 Over 32,000 Fuel Stations spread across India, fuelling the dreams
and aspirations of around 30 million Indians every day.
 IndianOil's LPG brand Indane caters to more than 137 million
customers.
 One of the leading Petrochemical players in India with a
petrochemical production capacity of nearly 3200 KTA.
 Undertaking research in all facets of hydrogen, including
production, storage and applications like fuel cells. To set up
Green Hydrogen plants at IndianOil refineries in Mathura and
Panipat. IndianOil is also forging crucial partnerships to strengthen
the Green Hydrogen ecosystem in the country.
 IndainOil has established itself as a leading CGD (City Gas
Distribution) player in the country.
 The leading promoter of the Govt Of India's SATAT (Sustainable
Alternative Towards Affordable Transportation) scheme. First
Indian company to start CBG marketing under the brand name
"IndiGreen".
 IndianOil has a Solar PV capacity of around 70 MW & Wind
Capacity of 168 MW, with a total renewable energy capacity of
nearly 240 MW.
 Collaborated with Israeli company Phinergy Limited to form 'IOC
Phinergy Private Limited' (IOP) to commercialise the Aluminium-Air
Battery technology in India.
  Achieved the milestone of installing over 2000 EV charging
stations at IndianOil Fuel Stations across the country.
 Spent nearly Rs 1800 Crore on CSR endeavours during the last
four years across healthcare, education, sanitation, skill
development, women empowerment and environmental
sustainability
Our Vision with Values

IndianOil’s ‘Vision with Values’ encompasses the Corporation’s new

aspirations – to broaden its horizons, to expand across new vistas, and
to infuse new-age dynamism among its employees. Adopted in the
company’s Golden Jubilee year (2009), as a ‘shared vision’ of
IndianOilPeople and other stakeholders, it is a matrix of six cornerstones
that would together facilitate the Corporation’s endeavours to be ‘The
Energy of India’ and to become ‘A globally admired company.’
More importantly, the Vision is infused with the core values of Care,
Innovation, Passion and Trust, which embody the collective conscience
of the company and its people, and have helped it to grow and achieve
new heights of success year after year.
Our Business

IndianOil is India's flagship Maharatna national oil company with

business interests straddling the entire hydrocarbon value chain - from
refining, pipeline transportation & marketing, to exploration & production
of crude oil & gas, petrochemicals, gas marketing, alternative energy
sources and globalisation of downstream operations. It also has global
aspirations, fulfilled to an extent by the formation of subsidiaries in Sri
Lanka, Mauritius, the UAE, Sweden, USA and The Netherlands. It is
pursuing diverse business interests with the setting up of over 15 joint
ventures with reputed business partners from India and abroad to
explore global opportunities.

Marketing

Reaching out to a Billion Hearts

IndianOil has one of the largest petroleum marketing and distribution

networks in Asia, with over 50,000 marketing touch points. Its ubiquitous
fuel stations are located across different terrains and regions of the
Indian sub-continent. From the icy heights of the Himalayas to the sun-
soaked shores of Kerala, from Kutch on India's western tip to Kohima in
the verdant North East, IndianOil is truly 'in every heart, in every part'.
IndianOil's vast marketing infrastructure of petrol/diesel stations, Indane
(LPG) distributorships, SERVO lubricants & greases outlets and large
volume consumer pumps are backed by bulk storage terminals and
installations, inland depots, aviation fuel stations, LPG bottling plants
and lube blending plants amongst others. The countrywide marketing
operations are coordinated by 16 State Offices and over 100
decentralised administrative offices.
Several landmark surveys continue to rate IndianOil as the dominant
energy brand in the country and an enduring symbol for high quality
petroleum products and services. The heritage and iconic association
that the brand invokes has been built over four decades of commitment
to uninterrupted supply line of petroleum products to every part of the
country, and unique products that cater not only to the functional
requirements but also the aspirational needs of millions of customers.
IndianOil has been adjudged as one of India's top brands by UK-based
Brand Finance, an independent consultancy that deals with valuation of
brands. It was also listed as India's 'Most Trusted Brand' in the 'Gasoline'
category in a Readers' Digest - AC Nielsen survey. However, the value
of the IndianOil brand is not just limited to its commercial role as an
energy provider but straddles the entire value chain of gamut of
exploration & production, refining, transportation & marketing,
petrochemicals & natural gas and downstream marketing operations
abroad. IndianOil is a national brand owned by over a billion Indians and
that is a priceless value.
Enriched customer experience over time converts into customer's
loyalty. Automation, modernisation of the dispensing units, improving
visual identity of fuel stations, imparting training to dealers and customer
attendants are key steps being taken by IndianOil to enhance customer
experience. As the industry leader in retail sales, IndianOil has
completed automation of its countrywide fuel stations to enhance Q&Q
(Quality & Quantity) assurance to its customers. Our Corporation's
business strategy has always been in tune with technology and
innovations. We have installed the best of automation processes and the
latest safety systems at our installations. Optimised operations and
logistics smart terminals, automated fuel supply points and a dedicated
field force are helping us lead the competition. We have now embarked
on digital transformation of the organisation to serve and sustain the
trust of our billion plus customers across the country.

Swagat
https://swagat.iocxtrapower.com/#Gallery

Non-Fuel Alliances

Retail

In an effort to tap alternate revenue streams, IndianOil is focused on

enhancing its non-fuel revenues (NFR) through its 195 million sq feet of
retail space. IndianOil has already mapped petrol stations to study the
tyrefalls and assess their site potential with the help of consultants,
Technopak Advisors Pvt Ltd. A well-structured roll out plan is already
underway and petrol stations, primarily in the North have been identified
for a pilot study. The NFR model developed will provide for sharing of
revenue streams with the dealer network to enable unlocking of existing
retail space value that both IndianOil and its dealers command. Several
alliances have already been forged with leading brands like Hindustan
Unilever Ltd, Dabur, ICICI Bank, Ferns & Petals, MTR Foods, PVR
Cinema, UAE Exchange, Reliance Capital and DHL. If you wish to
partner us in our non-fuel business ventures email your proposal to
IndianOil

LPG

For the benefit of its LPG cooking gas customers, IndianOil is promoting
fuel-efficient, safe & quality products through its Indane distributorships.
For undertaking this non-fuel business activity, IndianOil has signed
agreements with reputed companies and brands, allowing them to
market their products through its countrywide network of Indane
distributorships. Some of the hugely successful products being currently
sold through the Indane distributorships are Suraksha LPG hoses, LPG
stoves, flame-retardant Suraksha kitchen aprons, flame-type LP gas
lighters, domestic LPG cylinder trolleys, kitchenware, etc.
…………………………………………………………………………………..

Non-fuel retail at petrol pumps

Other than conventional market places like high streets and malls, retailers also
select unconventional places like airports and railway stations for business
expansion. These places do offer unique facilities and an ambience that is very
much in tune with bustling atmosphere of a marketplace. They also ensure larger
space, high footfalls, parking facilities etc. Considering these factors, retailers have
found petrol pumps as ideal places for setting up their outlets. Oil companies too
have been experiencing the necessity to adopt a new image. Bharat Shell Ltd, joint
venture between Bharat Petroleum and Shell Overseas Investments of Netherlands,
launched the first convenience store at its outlet in late nineties and pioneered this
business model. Earlier, petrol companies had indifferent approach towards
customer services. Later, oil companies started to think of gradually making their
services more customer-centric. Nowadays, petrol pumps are trying to provide their
customers with every commodity required for everyday-use.

Non-fuel retail activities

Gone are the days when everything about a petrol pump was vehicle-related.
Nowadays, a petrol filling station spruced up with retail facilities has a retail-
friendly look and offers offers a variety of value-added service centres that
include departmental stores, coffee shops, pubs, kiosks, cyber cafés, laundry,
pizzas, courier, drugs, pollution check, ticketing, music shops, auto LPG
stations, auto service centres, kerosene distribution, photo shop, pay by card,
telephone directories distribution, ATM, jewellery shop and general stores.
George Paul, GM, Retail HQ (Brand & ARB), BPCL, observes, “Most of the
petrol pumps are prominently located and highly visible to customers. Non-fuel
activities give these petrol pumps opportunity to derive maximum value from
these sites. Since petrol buying is usually considered an uninvolved category
of purchase, bundling more products and services through non-fuel retail
initiatives transforms the station into a add-value place.”

Various tie-ups 

IOC entered into tie-up with Akbarally’s for convenience stores and also
formed alliances with ICICI Bank, Centurion Bank and Bank of Punjab for
ATMs. It tied up with MTNL so that its customers can make their payments at
the select outlets in Delhi and Mumbai. It also introduced Jubilee retail outlets
along highways, which offer a number of services like first aid area, mini mall
with post office, banking facilities and spare part retail shops.  At its select
outlets, it has launched ‘Top Gear’ outlets featuring fast food, restaurants,
pharmacies and auto car wash. IOC has currently tied up with leading players
like Tata Motors, Eicher Motors, Café Coffee Day, Domino’s Pizza, Exide and
JK Tyres for setting up different non-fuel facilities at their retail outlets.

HPCL has Speed Mart, the convenience store, stationed at its outlets. It has
also the ATM booths, the provision for automatic car wash and India’s first
public access internet kiosk. It tied up with Satyam Infoway as the internet
service provider. The oil company has also tied up with Sangini Diamonds and
Crossword Book stores.

BPCL launched convenience retail initiative under ‘In&Out’ brand offering a

wide range of services. Apart from various food joints, it has formed alliances
with ITC, HUL, Pepsi, Coke, Planet M and Music World to set up outlets at
select-locations. Also, BPCL has a partnership with Cross Roads (car help-
line) to offer customers value added services such as discounts on lubricants
and engine oil and free petrol cards. For money transfer service, the company
has tied up with Western Union.

These filling stations have become abodes for unconventional shops and
services. A ‘Surf Laundry Service’ is on the anvil at one of the outlets of
BPCL, where consumers could avail of dry cleaning and mending of garments.
Launched in Mumbai, the concept involves dropping the garments at In&Out
stores and picking them later.

Eating joints

Eating joints at petrol pumps have proved to be the most popular destinations
as revealed by all the oil companies. Manpreet Gulri of Subway says, “In
terms of sales and volumes, it is not very different. However, from operation
point of view, it is very different. Also, the customer profile is different.”
According to SP Chaudhry, Executive Director (Retail Sales), HPCL, fast food
sells most in this kind of retail outlets. To cater the gastronomical urge, HPCL
has tied up with McDonald’s and Kamat chain of restaurants. Pizza Corner
has set up two outlets at BPCL petrol pumps in Chennai and Bangalore. 
These are ‘Express Outlets’ where one can get pizza within five minutes. Mr
Kaushik Roy, CEO, Pizza Corner, observes, “After filling their vehicles,
customers here have no time to wait and they prefer fast service.”  Other food-
joints like McDonald’s, Café Coffee Day and Subway are following the
example. McDonald’s has tied up with HPCL and BPCL, Café Coffee Day has
partnership with BPCL and also with HPCL. IOC has tied up with Domino’s
Pizza and Nirula’s. Also, BPCL has taken initiative for launching Quick
Restaurant Service (QRS) with McDonald’s, Pizza Hut, Subway and Nirula’s.

Outlets on highways

Mr Chaudhry says that highway retailing is gaining momentum in Indian retail

scenario. The model offers convenience for customers and proves to be a
distinct mode of revenue generation. For highway travellers, refreshment
comes as the first priority. People look for food joints and toilets in hygienic
conditions.  BPCL is going to invest Rs 6 billion in the next five years to set up
250 ‘Ghar’ outlets on highways to provide home-away-from-home experience
to truckers and highway travellers. These outlets will provide non-fuel facilities
like shopping, eateries and entertainment.

First to enter such a strategic alliance, McDonald’s has three such outlets in
Mathura (UP), Doraha (Punjab) and Chanakyapuri (New Delhi).  Asked about
any special feature of such outlets, Mr Vikram Bakshi, Managing Director,
McDonald’s India (North & East), says, “ Our primary focus is on providing
convenience to our customers while they are on the move, especially on
highways.” While speaking about petrol pump as retail destination, Mr Bakshi
highlights– “McDonald’s restaurants at petrol pumps are beneficial proposition
for customers travelling on highways. BPCL and HPCL have an advantage
because of their state-of-the-art infrastructures. McDonald’s wants these
restaurants to be relaxing destinations for travellers.” Ms Simran Sablok,
General Manager, Marketing, Café Coffee Day, opines, “The outlets at petrol
pumps and gas stations are not different from our regular outlets. It is
important to understand that classic retail- spaces (like gas station or petrol
pump) are frequented by many people and are good places to have coffee
shops like ours. Many a time, while people are in transit, they look for a cup of
coffee or a bite – a Café Coffee Day at a gas station provides just that.” Here,
the fast food joints always offer some additional items. Besides a variety of
coffees, Café Coffee Day offers snacks like pakoras, bread and omlette that
hungry travellers can gorge on.  Café Coffee Day has around 20 such outlets
at petrol pumps. Ms Sblok says, “A gas station with a coffee shop is a
welcome concept as one can execute two different tasks at the same time.”
She also reveals that this kind of retail mode is definitely having a contribution
to their overall brand image and the company is mulling over opening more
such outlets in future.

Jewellery store

Mehul Modh, CEO, Sangini Diamonds, thinks of non-fuel retailing as an

innovative way for branding strategy. The company’s tie-up with HPCL has
resulted in cross-promotion of both the brands. “These petrol pumps are
strategically located and ensure high footfalls. Moreover, with ever-increasing
price of real estate, such retail venues become more reasonable options.
Maintenance cost is less here as compared to any other busy market or mall
at prime locations.” He also acknowledges that the company has so far
experienced encouraging response from such retail models. At their Kolkata
outlet, the company has recovered an amount, which is 10 per cent more than
the investment value within nine months. Sangini has six such outlets – two in
Bangalore and one each in Mumbai, Kolkata, Hyderabad and Pune.

Pharmacy store

Guardian Lifecare, a chain of pharmacy store, has tied up with HPCL to set up
their outlets at petrol pumps. Ashutosh Garg, Chairman and Managing
Director, Guardian Lifecare, is quite positive about such a venture. He says,
“The conventional petrol pump is changing rapidly. There has been an
increase in the non-petrol commercial activity at petrol pumps. Planning the
retail mix of products at such petrol pumps depends on the need of the local
community. A pharmacy pulls in customers increasing petrol sales in
comparison with usual formats that rely, for footfalls, only on petrol.”

Non-fuel initiatives at rural areas

According to Mr Chaudhry, this non-fuel retailing format varies from place to

place. In the heart of a city, within an area of student community or BPOs,
ATM and STD outlets, apart from food joints, are always preferred. In rural
areas, HPCL has set up stores where rural people can get items of daily use.
In this regard, HPCL has tie-up with Godrej Agrovet Ltd to set up Godrej
Adhaar, retail chain that offers seeds and fertilisers. Similarly, IOC has set up
low-cost petrol pumps, Kisan Seva Kendra, in rural areas across the country
where retailing facility for agro-based products like seeds, fertiliser and
pesticide are made available. These petrol pumps also house convenience
store for consumable products of everyday use and banking facilities. The
company has tied up with ICICI, oriental Bank of Commerce and Bank of
Baroda. Recently, BPCL has tied up with Godej Agrovet Ltd to open Adhaar
Express at its outlets in semi-urban and rural areas so as to provide agri-
advisory services and customised products.

Investment for setting up outlets            

As regards investment for setting up non-fuel retail outlets, Mr Chaudhry
informs that it can vary from Rs 15 lakh for a small outlet to Rs 50 lakh for a
food joint like McDonald’s. HPCL provides the basic infrastructure in return for
rental and some percentage of the turnover. Mr Roy informs that the company
has invested approximately Rs 5,000 per sq. ft to set up outlets at BPCL
petrol pumps in Chennai and Banagalore. K R Suresh Kumar, GM (Retail
Sales), HO, IOC, says, “IOC generally invests in setting up the civil structure
and the operators furnish the interiors. This investment varies for each site
depending on the type of facility set up.”  Mr Paul shares one and same point
with Mr Roy. He says, “Cost of constructing an outlet largely depends on the
class of market, location, products and services to be offered at the outlet.” Mr
Gulri reveals, “The investment in a 500 sq. ft-location is approximately Rs 35
lakh.” The company has three such outlets and plans to open soon another
three outlets. Mr Garg informs that the company has invested Rs 1,700 per sq.
ft to set up the outlet at petrol pumps.

Revenue share by oil companies

Commenting on ‘sharing of revenue’, Mr Chaudhry says that his company

shares a certain percentage of turnover apart from receiving rentals. Mr
Kumar informs, “IOC recovers licence fees and/ or revenue share from various
alliance-partners for allowing them to set up various non-fuel facilities.
However, increase in revenues is nominal as compared to fuel sales, which is
a very high volume and high value business.” As far as the sharing of profit
concerned, he states, “We generally receive a certain percentage of sales
from the outlets as revenue share.” Mr Paul informs that his company shares
the revenue in the form of signage fees. 

Commodities in demand

Mr Kumar admits that food joints have turned out as the most successful
business in this format. It is followed by general merchandise, impulse items
and car care products. He says, “ Items not so popular in this business format
are electronic goods, cosmetics, music cassettes, toys and gifts.” However, he
points out the important role played by locality and residents in the
neighbourhood area in selling merchandise. Mr Paul informs, “In&Out
convenience stores are mainly offering impulsive buying items, which enable
customers to do top-up purchase from these stores. Beverages, chocolates,
ready to eat items, personal care products, music and diet products are some
of the major categories that are always in demand.”

How good for retailers?

Mr Gulri seems to be optimistic about such retail models – “Subway

restaurants at petrol pumps have a bigger delivery base than other outlets.
The retail space is cheaper in comparison with high street and malls but its
has shortcomings too. Also, return on investment is good as the cost of real
estate is low.”  Sharing this opinion, Ms Sablok says, “We are happy with the
contributions our cafes at gas stations are making to the overall and will
continue to open more outlets in future.”

Future

Mr Chaudhry acknowledges India’s potential to accept this kind of retail

model. He is fully convinced that oil companies, like in the US, will be able to
generate 30 to 40 per cent of their revenues from non-fuel retail, within four to
five years. According to Mr Kumar non-fuel retailing definitely increases
profitability of retail outlet dealership and generates non-fuel revenues of the
company.  Mr Paul’s statement pronounces this point conspicuously:  “ Non-
fuel retailing has definitely changed the complexion and ambience of the
outlets.  It has enhanced retention of customers as well as added new
customers. Currently, non-fuel initiatives are contributing only five to eight per
cent of the total turnover. But, we believe that the contribution will go as high
as 20 to 25 per cent in near future.” 
……………………………………………………………………………………………………………………….
Non Fuel Retailing is basically the retailing of value added services and products which
would cater to the customer needs and want while his/her stay at petrol pump and help
company to earn extra revenue apart from selling fuel.
One can see conventional market places in high streets and malls, but apart from that
retailers are also interested in non-conventional area such as airports and railway
stations for their expansion. At present due to unique facilities provided by these retailers
at these outlets enabled high density of footfalls. So retailers thought petrol pumps to be
the better places for their business plan. Hence the days of what the petrol pumps was
vehicle-related is slightly converting into new business model and coming up with
facilities ranging over convenience store, laundry, courier, medicines, flowers, fresh
fruits, insurance, fast food etc. The purchasing of petrol is totally uninvolved process, so
by enhancing such facilities would add value. In India this model of transformation is
going on and would definitely in coming days it would contribute more to the retail and
have wide range of services. And this provided all the oil companies to enter into the tie-
up with the convenience stores, so petrol destinations are now one of the preferred
destinations. After filling their vehicles, customers have no time to wait and they prefer
fast service.
Since retail in India is gaining momentum, this model would offer convenience to the
customers and would be a profit centre for the company. If you talk about outlets on
highways, there the prime need are of the customers is the refreshment, food and toilets
in hygienic conditions.

Market / India as a Non Fuel Retailing Destination-

 2nd Most attractive developing market.

 4th Largest economy after USA, China & Japan.
 2nd Fastest growing economy in the world.
 Would be 3rd largest economy in next 15 years.
 5th among the 30 emerging markets for retailers.
 300+ million middle class – the Real consumers.
 Increased disposable Income.
 Among top 5 FDI destinations.
 Massive investment planned in infrastructure development in next 5 year.
 Exponential growth is taking place in Retailing in India.
 Organized Retail Only 3% but growing at 30%.

………………………………………………………………………………………………………………………….
ii) Relevance

The face of the Indian consumer is changing at a great pace. With the
rise in disposable income the needs of the customer is also changing.
Today a customer looks for “value for money” and also expects to get
a customized solution for his needs with a personal touch.

3.1 The great Changes

India had deregulated the petroleum retail sector in 2002 by dismantling APM
and enabling new players to enter the market. The entry of private players like
Reliance, Essar, Shell, NRL, and many more have increased the number of retail
outlets as well as the competition. On one hand it would foster competition
but on the other hand it will also reduce the average throughput per station
and total fuel volumes per player.
With a market determined pricing mechanism in place, prices will have to be
lowered, which would further reduce the margins from fuel products. With
insufficient growth in the number of vehicles, the fuel volumes are expected to
remain stagnant, offering little scope for further improvement of the overall
revenues and margins.
In such a scenario, the petroleum retailers will need to develop differentiated
value propositions to improve revenues. It will require customer centric
approach and building of a strong brand equity and identity. To impel revenues
and margins, the retailers will have to attract new customers or increase share
of their existing customer’s wallet. The second option of increasing share of
customer’s wallet can be achieved by means of non-fuel products and services.
Non-fuel products tender higher margins as compared to petroleum products
and enable companies to sustain themselves, especially during times when oil
prices are high. However, it is to be kept in mind that petroleum retailing is a
retailing of petroleum product and service, with differentiation possible in
either or both areas.
Callous Competitive Environment
The retail sector is destined to witness intense competition in future due to
entry of the private players. In the competitive scenario, whosoever will have
adequate infrastructure for transportation, storage and distribution will
emerge as winner. With this game plan, the existing as well as private oil
companies are strengthening their retail network continuously.
Mounting Expectations of Consumer
With increasing competition in the retailing sector, today’s consumers are
becoming more and more demanding. The emergence of new psychographic
segments in petro-retail market bears the testimony to this fact. A closer look
at these segments tells us what exactly a consumer is looking for whenever he
goes to a fuel station to purchase fuel.
A consumer tries to find
1. Quality & Quantity assurance
2. Quick filling and efficient forecourt service
3. Rewards for loyalty
4. Premium fuels
5. Cashless transactions
6. Non-fuel services
Call for Alternate Sources of Revenue
One major challenge that the oil marketing companies are facing today is the
need for the alternate revenue sources. Many factors have prompted this new
affair in today’s petro-retailing environment.
These factors are
1. Increased pressures on margins
2. Desire to leverage real estate and increase revenues
3. Evolving customer segments like “Value time saving propositions,
Quality and Environment consciousness, Prestige seeker etc.”
4. Need to differentiate offerings

Shift in Branding (From Outlet to Corporate)

Ever since the market was deregulated, the oil companies have been actively
bringing in the branding concept in petro-retailing which was a commodity
market for years with no differentiation. However, consistent efforts make
them taste success with the advent of branded fuels such as Speed,
Xtrapremium etc.
Also, at the same time outlet branding was initiated and PFS (Pure For Sure),
Club HP and Q&Q outlets came into existence. But still the oil companies have
not found the way to make a customer point towards an outlet and say that
“as this outlet belongs to a particular company, it will be the best in Q&Q and
others concerns”. In other words, corporate branding is on the cards in the
future of petro-retailing.

Emergence of Non-Fuel Services As a Major Activity at Retail Outlets

The dismantling of APM has removed the privilege of assured returns for the
PSUs thereby increasing the pressure on their margins. To compete with the
private players, who are with deep pockets, it is an imperative to make huge
investment in the services being offered at the outlets. Since the base product
is same, the differentiating element would be the non-fuel services.
Also, the changing face of the Indian consumer is one of the main reasons for
offering the non-fuel services at petro-retail outlets. Today, consumer is
looking at a one stop solution to all his needs – buying groceries, withdrawing
cash from his bank, making utility payments, renewing his insurance cover,
grabbing a quick bite, obtaining Pollution Under Control Certification and of
course filling fuel in his car. On the other hand, the driver on the highways is
seeking a clean and hygienic place to relax and freshen-up, service his vehicle
and have a good meal at the restaurant in the pump.
Competition on price
Price until recently was not a differentiating factor in Indian market. Prices
were controlled and fixed by the Government making it same for all the
companies. However, with private players in the market, the picture has
changed. Essar is an evident example of this. In the future when the market
determined pricing mechanism will come into full effect, we will see the focus
of competition shifting from Q&Q to price.
Alternate sources of revenues
The growing competition will increase pressure on margins. Therefore, the
retailers will have to seek for alternate sources of revenue. By taking examples
of foreign experiences, to taste success in this ruthless competition, retailers
need to develop a sustainable non-fuel model which should find synergies with
core fuel business. However, strategic foresight is one thing, but what matters
most is the superior execution of the strategies. This is the factor which shapes
core competency for a company that is hard to replicate by the competitors.
Key Issues and Imperatives for the Industry –
Given the opportunities and changing consumer needs, there are three key
imperatives for retailers. Let’s first have a look at the two important or key
issues.
 Key Issues-
• How to build a unique and sustainable competitive advantage?
• How to attract new customers and capture a share of their wallet?
Let us discuss each of the issues one by one:
1. An open evening
Providing refreshments and a free vehicle cleaning would attract customers.
A local paper can be used to promote the event (such as free check-up
camps, etc). Both retailer and customer stand to gain, especially if a prize is
there from supplier. Invite the paper people to participate in publicity.
Liaison with the paper to measure response, and ensure they are in
attendance with photographer for follow-up publicity.
2. Make outlet look inviting
Inviting outlet does not mean a total makeover - just rearranging furniture
and creating an interesting shop window will make a difference. Few new
posters or branded displays will also help.
3. Community Spirit
Local charities or community organizations such as the local Chamber of
Commerce, Lions Club, and Round Table, Women's Institute, school fetes or
fairs - all will bring potential new customers. A shop or counter can be set.
Setting up shop does not have to be expensive - it may be just a table with
brochures and latest offers. A sponsorship to any of these events can do
wonders.
4. Use of Local Media
One should not forget local media - it can provide many PR opportunities.
Local press generally support businesses in the area, and its surprising what
can develop from a small advertisement. The trick is to not only consider
the implications for the business, but also remember to find and highlight
the benefits for the third party.
5. Partnerships
All options should be kept open for potential partners, as they are also
seeking to attract new customers. This may be a local retail outlet,
restaurant or supermarket. All of these are excellent shop windows for joint
promotion of events. Offer to provide a placement/staff member in their
environment on a trial basis to see if this attracts new customers and
simultaneously demonstrate that new customers can be attracted into their
store in return.
6. Motivate the staff
 Engage staff in new approach so they are motivated to sell and understand
the importance of acquiring new customers. Inform them of what is being
done, why it's important, and encourage ideas and suggestions - some of
them may surprise. Their support is paramount for success.
*Key Imperatives for Retailers
Develop in-depth consumer insight (Know the Consumer) and Building
offerings around the target consumer Customer segmentation is an
indispensable tool for performance improvement. Are we selling to the
right customers? Which segments should be the primary target of our
product-development efforts, sales and marketing activities? In which
regions and countries should we be competing? In which markets can we
create differential value? How should we differentially allocate our sales
and marketing resource to various segments? To answer such questions, a
management team must understand which customer segments are most
attractive in terms of size, profitability, and growth. They must also make an
honest assessment of their company’s capabilities to meet each segment’s
needs relative to the competition. Some segments “fit” a company better
than others -- that is, the company has greater ability to serve these
segments in a way that is differentiated from competitors. Some segments
are more profitable, either because they generate higher revenues, because
they can be served at lower cost, or both. And some segments are growing
faster. Segments with high growth, high profitability, and sufficiently large
revenue potential are a company’s natural focus. But the company may also
be able to adjust its value proposition to serve high-growth customers that
are not currently very profitable. Effective segmentation can also reveal
underexploited opportunities within the customer base. By “de-averaging”
customers and prospects, often a hidden pool of profit can be found which
could be more fully exploited

iii) Literature Review

iv) Objectives
RESEARCH OBJECTIVES:-
1. To Study the Background of Petroleum Industry in India -
The first objective of this study is to study the Indian petroleum industry in
details. The objective would encompass the genesis of Indian petroleum
industry, the consumption mix, the major players and regulators in this
industry and its contribution to the economy.
2. To Highlight the Importance of Non Fuel Offerings for Petroleum
Marketing
Companies(IOCL,BPCL,HPCL) in India and compare themThe second objective
has led to reasons for increasing importance of non fuel retailing in context of
Indian Petroleum Industry(IOCL,BPCL,HPCL). This objective has streamlined the
process to explore the reasons for increasing importance of allied retail
business. It also focused on ways toenhance the market share and level of
customer satisfaction.
3. To accentuate on the non fuel offerings and the initiatives taken by
Indian petroleum
Marketing Companies(IOCL,BPCL,HPCL)-The third objective of the study
focuses on the importance of retail, its presence in India, non fuel initiatives of
global oil majors and analyses the non fuel offerings of Indian petroleum
marketing companies(IOCL,BPCL,HPCL). It has also encompassed the various
services provided by the petroleum companies and the brands under which
they are served.
4. To showcase the advantages of non fuel services for optimal utilization
of real Estate
The last objective of the study highlights the importance of non fuel services
for optimal utilization of real estate. Here we have taken a case study to
showcase the revenue enhancement that can be achieved by introduction of
various non fuel offerings on the real estate available on petro retail outlets.

b) Methodology
i) Project Design : Descriptive
It consist of
1. Information needed is defined only loosely.
2. Research process is structured but flexible.
3. Sample is small and not completely representative.
 4. Analysis of secondary data is qualitative.
The major part of the research is an exploratory research design. Some
portions follow the descriptive design criteria.
This type of research design is generally followed by further exploratory or
conclusive Research
ii) Data Collection methods
Primary data :
1. Questionnaire (Designed questionnaire to understand the customer buying
behaviour and its implacability at the IOCL Ros.)
2. Observation ( While visiting the Ros we observed various demographic aspets,
aspects relating to the implacability of new NFR services at various Ros)
3. Personal Interview ( we took interview of owners and managers of different Ros, and
understand their take on NFR, the profits they are or will be able to generate
through NFR services.)
Secondary data-
a) Research reports on Non Fuel Retailing.
b) Performance and strategy reports of IOCL.
c) Articles on Non Fuel retailing.
d) White papers on non fuel retailing
e) Newspaper articles on non-fuel business
f) Online journals.

iii) Sampling
The survey was conducted across 4 retail outlets for the avenue of the Non-
Fuel Revenue generation in petroleum retail sector.
The survey for NFR was conducted across 4 distributors including the
customers which are covered under the NFR initiatives.
The total number of respondents for NFR initiatives was 200.
The Retailers covered for NFR initiatives were spread across the Gurugram city.
These are:
 Janta Filling Station
  COCO Manesar
 Maitri Filling Station
 Akash & Brothers Filling Station

iv) Field work

For more understanding on the NFR initiatives I chose 4 IOCL Ros:

I. Two of them having NFR initiatives, namely

a) Janta Filling Station
b) COCO Manesar

II. Two of them having enough area for implication of NFR initiatives, namely
a) Akash & Brothers Filling Station
b) Maitri Filling Station

v) Analysis
c) Results and Discussion
d) Conclusions and Recommendations
e) Limitations

1. Study is limited to 3-Indian petroleum companies i.e. IOCL, BPCL &,

HPCL only.
2. Detailed study cannot be done as downstream sector has many
technical aspects involved in it.
3. Though it is assumed that the data collected from the internet,
trade journals, newsletters and organizational documents would be
accurate, we cannot be certain that they would be and to what
extent.
4. Limited samples taken for interview.
5. It is a study of PSU sector companies and does not include private
players. However some relevant points of private companies are
described in the study
f) Further Scope of Study