IndianOil records 8.7% volume growth in FY08
New Delhi 23-Apr-2008
<b>Plans Rs 2000 cr. investment to consolidate market leadership in FY09</b>
India's energy major, IndianOil, sold 58.3 million tonnes of petroleum products during 2007-08, registering a 8.7% growth in volumes as compared to the previous year. IndianOil's market share increased by 1.1% to touch 48.9% in the oil industry. Exports during the year touched 3.3 million tonnes recording a 8.5% growth over last year. Speaking to the media here, Mr. G.C. Daga, Director (Marketing), IndianOil said that the spectacular sales growth was achieved despite several constraints including high international crude oil prices and consequent higher under-recoveries in all frontline products. He added that the volume growth was strongly backed by a range of pioneering initiatives in rural marketing, expansion in retail network, seamless brand portfolio management besides completion of fast-track infrastructure projects.
<b>Commitment to Customers</b>
A standing testimony to IndianOil's commitment to Indian customers is the Rs 7,700 crore investment that the company has made in developing marketing infrastructure and launching new products and services since the dismantling of the APM in 2002. Since 2002, IndianOil's cash flows have been adversely affected on account of rising crude oil prices on the one hand and severe under-realization of market prices for the majority of the petroleum products.
"Despite the challenges we stay committed to our customers and for the current year alone we propose to invest Rs 2000 crore in various marketing activities. Of this, Rs 790 crore will be for retail network expansion and upgradation, Rs 600 crore in LPG business including network expansion for Autogas, Rs 400 crore towards bulk storage and additional tankage for petroleum products, Rs 90 crore in aviation business and Rs 50 crore for augmenting bulk storage facilities for our large volume consumers. The real challenge for a company of our size is to sustain growth and we continued to scale new heights in all areas including Aviation, Lubes, Retail, LPG, Autogas and branded fuels," Mr. Daga went on to add.
<b>Retail - Driving Forward</b>
"During the year, our retail network was further expanded with the commissioning of 1200 petrol stations across the country of which Kisan Seva Kendras (KSKs) alone were 726. Presently, we have a total of over 17,626 retail outlets of which about 2100 are KSKs. For the current year we propose to commission over 800 KSKs to further strengthen our rural presence", Mr. Daga said.
To give impetus to green fuels, 50 new Auto LPG Dispensing Stations (ALDS) were commissioned during the year taking their total number to 157. IndianOil sold 90 TMT of Autogas thus registering a 59% growth in volume and attaining45% market share in 2007-08 as against 43% market share registered in the previous year. 100 new ALDS are proposed for commissioning during the current year. Emphasis on Q&Q also gained momentum during the year with the introduction of Automation at retail outlets and GPS tracking system for tank trucks. "We have embarked upon an ambitious retail automation programme that has already covered over 1050 ROs at a total cost of about Rs 132 crore." Mr. Daga said.
One of the major challenges during the year was forging a seamless merger of IBP with IndianOil's Marketing Division. "We swiftly integrated the assets of both companies leading to a larger and more formidable network. The 49 IndianOil Divisional Offices and the 30 IBP Divisional Offices were replaced by a full complement of 66 Divisional Offices covering 450 new and rationalized sales areas. This rationalization also helped leverage the strengths of both IndianOil & IBP, and our efforts have been rewarded by the combined good performance we achieved during the year" said Mr. Daga.
<b>Non-Fuel Retail Forays</b>
With under-recoveries reaching new highs, IndianOil has now plotted alternative revenue streams from its existing and proposed reseller network and accordingly a major thrust has been given to increasing revenues from non-fuel sales during the year 2008-09. Through its 195 million sq feet of retail space, the company has ambitious plans to double the current Non Fuel Retail income of Rs 41 crore during the year and increase it by five fold over the next 4 years. Towards this, IndianOil has already mapped more than 2000 retail stations to study the tyrefalls and assess the potential for non-fuel retail (NFR) revenues with the help of a consultant – Technopak Advisors Pvt Ltd. A well-structured roll out plan is already underway. During FY09, 100 retail outlets, primarily in the Northern Region have been identified for a pilot study as part of this plan. Thereafter, more retail outlets will be taken up in a phased manner to expand our NFR plans.
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, DHL Couriers, etc to name a few.
<b>Sustaining Leadership</b>
During the year 2007-08, every brand in IndianOil's portfolio further consolidated its leadership status. In fact, XTRAPREMIUM registered a whopping 89% growth in sales over the previous year to emerge as the country's leader in the branded petrol segment. Similarly XTRAMILE Diesel, the numero uno in the branded diesel segment, saw a sales growth of 65% over the last year. XTRAPOWER Fleet Card usage went up by 26% and earned the recognition as the largest Loyalty Programme on the basis of sales turnover at the recently concluded Loyalty Summit 2008. During the year around Rs 10,000 crore worth of fuels were transacted using the XTRAPOWER Fleet Card. India's largest lubricant brand, SERVO registered a 4.4% volume growth during the year and retained its No. 1 brand status.
In Aviation Fuel Business too IndianOil retained its market share of 62.3% during the year. Four new Aviation Fuel Stations were commissioned during the year and new businesses from major international airlines like Finnair, Srilankan Airlines, Kuwait Airways, Indigo Airlines, Continental Airlines and Air Arabia were added to our large portfolio of airline customers.
A tripartite agreement for aviation fuel supplies was also signed with Reliance Industries and Hyderabad International Airport for supplies at the new airport in Shamshabad.
IndianOil also successfully completed the trials for the RFID (Radio Frequency Identification) system at our Trichy Bottling Plant. A pilot project for the implementation of RFID is underway at Coimbatore Indane LPG Bottling Plant and in surrounding markets. "The RFID facility will enable the tracking of LPG cylinder moving from our plant premises to the customers' kitchen.
This will help in monitoring cylinder movement and prevention of diversion if any. To enhance availability of domestic LPG cylinders, IndianOil is also pioneering the launch of new generation composite LPG cylinders using materials like HDPE, PET and FRP. The composite cylinder will have 10.5 kg of LPG and nearly 2 lakh such composite cylinders are proposed to be imported on an industry basis in the first phase and test marketing will be undertaken by IndianOil in Bengaluru this year." added Mr. Daga.
<b>Building for the future</b>
"The aviation sector is growing at a rapid pace and we are bolstering our infrastructure all around. A state of the art hydrant refueling system was commissioned at Agra for the Indian Defence Services there. IndianOil led a consortium of Skytanking and IndianOil Tanking Ltd. for commissioning the fuel farm and HRS facility at the new Bengaluru International Airport. A dedicated Aviation Turbine Fuel pipeline is underway from CPCL Refinery at Chennai to our Aviation Fuel Station at Meenambakkam(Chennai Airport). This 95 km long pipeline built at a cost of Rs 50 cr will enable safe and rapid transit of aviation fuel bypassing the congested traffic in the city,” said Mr. Daga.
To meet the growing demand for LPG, IndianOil proposes to set up LPG import facilities at Ennore near Chennai (Rs 326 crore) and at Kochi in Kerala (Rs 170 crore). "The LPG import facilities will on completion help in greater availability of the product to meet the growing demand particularly in the southern states where currently IndianOil does not have any exclusive LPG import terminal," Mr Daga said.
Two new Indane LPG bottling plants were commissioned at Sekmai (Manipur) Raipur (Chattisgarh)) during 2007-08. A new plant at Baroda is expected to be commissioned this year. Another bottling plant at Muzzafarpur(Bihar) is also on the anvil and the work for this project is expected to commence by early 2009. The existing Mathura LPG bottling plant within the Refinery premises is being resited for which land has been identified.
"There is a huge advantage in logistics if petroleum products are transported through pipelines. Our planned 290 km long Chennai-Bengaluru Pipeline from CPCL Refinery in Chennai to Devanagundi Terminal near Bengaluru is expected to make a vital difference to customers in South India. We also propose to set up a modern bulk storage Terminal at Chittor, which is on the Chennai-Bengaluru Pipeline. To enhance our marketing operations capability, additional tankage of 37,000 kl were commissioned during the year taking our total tankage capacity to 7 million kl. For the year 2008-09, we propose to add another 152,000 kl tankage to meet the growing demand. New terminals at Jasidih, Tikrikalan, Rourkela, Rengali and Ennore, a tap of point at Bangrod on the Koyali-Ratlam pipeline as well as depots at Lalkuan in Uttaranchal and Zeewan near Srinagar are some of the other major projects planned for the year.
<b>Global Footprints</b>
In Mauritius and Sri Lanka, IndianOil's subsidiaries, IndianOil (Mauritius) Limited (IOML) and Lanka IOC(LIOC) performed creditably during the year. In Mauritius, IndianOil (Mauritius) Ltd. (IOML) emerged as the leader in the highly competitive aviation fuel business during the year, with a market share of 35%. The overall product sales grew by 19.3% to 195 thousand kilolitres (KL) as compared to 163 thousand KL in 2006-07, while SERVO lubricants grew by 46% to 142 KL. Five new retail outlets were commissioned during the year, taking their total number to 13. With the commissioning of two new bulk storage tanks at our existing terminal at Mer Rouge, the total storage capacity of the terminal has gone up to 24 thousand tonnes.
In Sri Lanka, LIOC continued to grow and expand its footprints. Currently LIOC commands a 23% market share in all products in Sri Lanka. A new semi-automated 18,000 tonnes per annum capacity Lube Blending Plant was commissioned at Trincomalee at a cost of Rs 25 crore. In addition, a state-of-the-art laboratory for testing fuels and lubricants was also commissioned at Trincomalee. To generate non-fuel revenues, LIOC entered into a pact with Lanka Orix Leasing Corporation, a subsidiary of Orix Corporation, Japan, and a leading financial company in Sri Lanka, for leasing space at LIOC retail outlets. Nine new lube distributorships were commissioned during the year to expand the existing lube marketing network. Also for the first time LIOC entered the lucrative bunkering business from our terminal at Trincomalee.
<b>Other Key Highlights of 2007-08: </b>
<li>A revolutionary initiative was the introduction of Kerosene in smart 1-litre pack bottles for which a mini pilot plant was commissioned at Rewari in Haryana.</li>
<li>During the year, 30 lac new Indane LPG connections were issued. Today IndianOil is reaching Indane to 5 crore households in the country. 50 new LPG distributorships were also commissioned during the year, to take their total to over 5000. </li>
<li>IndianOil's XtraRewards is the country's one and only on-line Rewards Program for cash customers and we have already touched 1.25 lac customer base and the card is currently active in Mumbai, Ahmedabad, Bengaluru, Mysore, Coimbatore and Chennai. It will shortly be available in other markets like Delhi. XtraRewards programme has a wide range of alliance partners like Domino's Pizza, JK Tyres, Rediff Shopping, MTR Foods, Vishal Megamart, PVR, Onida and Gulf Car Care Products.</li>
<li>SMS facility for refill booking has been extended across 1200 Indane distributors. The Data online facility connecting Indane distributors to IndianOil marketing offices has also been introduced at 600 showrooms.</li>
<li>Prompt refueling services were extended to provide relief operations during the West Bengal floods. </li>
<li>Transactions worth Rs 65,000 crore were made on a dedicated e-platform to speed up both collection and payment processes. </li>
<li>During 2007-08 IndianOil supplied (exports) 640 TMT to Nepal Oil Corporation as compared to 590 TMT during 2006-07.
Some of the key recognitions received by IndianOil during the year are: <ol type=i><li>IndianOil bagged the "Most Admired Retailer of the Year Award" in the Rural Retailing category at the India Retail Forum. </li>
<li>IndianOil awarded Retailer of the Year – Rural Impact Award - at Asia Retail Congress. </li>
<li>IndianOil's XTRAPOWER declared the largest Loyalty Programme on the basis of Sales Turnover at the recently concluded Loyalty Summit 2008. </li>
<li>Best Oil & Gas Corporate of the Year – from PetroFed. </li></ol></li>
