News Release Details
The rural route
New Delhi 24-Aug-2007
IndianOil has embarked on a major initiative to unlock rural retailing opportunities. Traditionally, most rural areas have been served from the pumps at the national and state highways. But, facing competition from Reliance Industries' (RIL) and Essar's outlets, after the opening up of the retail sector to the private oil companies, IndianOil decided to reach out to the rural consumers at their doorstep. To begin with, branding petrol pumps for the rural areas as Kisan Seva Kendras (KSK), it rolled out, multi-product rural kiosks at 150 villages across different parts of India. Based on the success of these KSKs, it has now expanded its presence to 1,300 more outlets spread across the country. Another 1,000 are being rolled out this year taking the total number to 2,500 by the end of this year. Though most of these KSKs are selling only the diesel and IndianOil 's <b><i>SERVO</i></b> lubricants at the moment, they are to be gradually groomed to full-fledged KSKs in due course. "The aim is to capture the rural market for diesel that accounts for over 20 per cent of the total semi- rural and rural sales," says G.C. Daga, director, marketing of IndianOil . Emulating IndianOil , even HPCL has entered this segment with Hamara Pump and if the industry sources are to be believed BPCL is also planning an entry. But what are KSKs and how do they function? Typically, it has a pump for dispensing fuel. But equally it functions as a one-stop shop stocking items of agricultural use and rural household requirements. For example, non-fuel items like FMCG products for household consumption; seeds, fertilizers, farming equipment and lubricants for irrigation pumps; school stationary, school textbooks for children and even confectionery and soft drinks. In fact, once the number of pumps grows, it will open up a major rural distribution channel for the companies looking out to reach rural customers. At present IndianOil has tied up with wholesalers of various FMCG companies (Godrej Consumer Products and Dabur) for retailing their products at KSKs, with National Seeds Corporation, fertiliser companies such as Indo Gulf, Tata Chemicals for sealing their products to farmers and started stocking even Airtel mobile cards and phones. Interestingly, in Kerala, where the state government has a tie-up with Western Union Money Transfer, IndianOil 's KSKs have started offering this facility at its pumps. IndianOil also has tie-ups with Bank of Baroda, Oriental Bank of Commerce and NABARD (refinance) for providing term loans and working capital loans to its dealers operating KSKs. These are low cost pumps that break even at annual diesel volume of 30 kilolitres or annual fuel revenue of Rs 10.5 lakhs. In 2006-07, the 150 full-fledged KSKs had Rs 4 crore revenue from non-fuel sales, which constituted about a third of these dealers' revenues. Though the current tie-ups with most non-fuel product suppliers are at wholesaler levels, lndianOil's KSK initiative is a part of its larger programme of selling non-fuel products. Consultants, Tachnopak, are working out the details. Once this is over, the company expects to go for tie-ups at the apex level with the companies wanting to distribute their products through this channel. This is as far as IndianOil is concerned. However, other oil PSUs who plan to expand their presence in this segment are driven by a fact that the opportunities in urban and highway segments have reached a saturation level. For them, rural kiosks are still a low-cost-low-volume opportunity that's viable and still untapped. Clearly, the KSKs are slated to open up new rural marketing channels for the companies wanting to reach out to these consumers.
New Delhi 24-Aug-2007
IndianOil has embarked on a major initiative to unlock rural retailing opportunities. Traditionally, most rural areas have been served from the pumps at the national and state highways. But, facing competition from Reliance Industries' (RIL) and Essar's outlets, after the opening up of the retail sector to the private oil companies, IndianOil decided to reach out to the rural consumers at their doorstep. To begin with, branding petrol pumps for the rural areas as Kisan Seva Kendras (KSK), it rolled out, multi-product rural kiosks at 150 villages across different parts of India. Based on the success of these KSKs, it has now expanded its presence to 1,300 more outlets spread across the country. Another 1,000 are being rolled out this year taking the total number to 2,500 by the end of this year. Though most of these KSKs are selling only the diesel and IndianOil 's <b><i>SERVO</i></b> lubricants at the moment, they are to be gradually groomed to full-fledged KSKs in due course. "The aim is to capture the rural market for diesel that accounts for over 20 per cent of the total semi- rural and rural sales," says G.C. Daga, director, marketing of IndianOil . Emulating IndianOil , even HPCL has entered this segment with Hamara Pump and if the industry sources are to be believed BPCL is also planning an entry. But what are KSKs and how do they function? Typically, it has a pump for dispensing fuel. But equally it functions as a one-stop shop stocking items of agricultural use and rural household requirements. For example, non-fuel items like FMCG products for household consumption; seeds, fertilizers, farming equipment and lubricants for irrigation pumps; school stationary, school textbooks for children and even confectionery and soft drinks. In fact, once the number of pumps grows, it will open up a major rural distribution channel for the companies looking out to reach rural customers. At present IndianOil has tied up with wholesalers of various FMCG companies (Godrej Consumer Products and Dabur) for retailing their products at KSKs, with National Seeds Corporation, fertiliser companies such as Indo Gulf, Tata Chemicals for sealing their products to farmers and started stocking even Airtel mobile cards and phones. Interestingly, in Kerala, where the state government has a tie-up with Western Union Money Transfer, IndianOil 's KSKs have started offering this facility at its pumps. IndianOil also has tie-ups with Bank of Baroda, Oriental Bank of Commerce and NABARD (refinance) for providing term loans and working capital loans to its dealers operating KSKs. These are low cost pumps that break even at annual diesel volume of 30 kilolitres or annual fuel revenue of Rs 10.5 lakhs. In 2006-07, the 150 full-fledged KSKs had Rs 4 crore revenue from non-fuel sales, which constituted about a third of these dealers' revenues. Though the current tie-ups with most non-fuel product suppliers are at wholesaler levels, lndianOil's KSK initiative is a part of its larger programme of selling non-fuel products. Consultants, Tachnopak, are working out the details. Once this is over, the company expects to go for tie-ups at the apex level with the companies wanting to distribute their products through this channel. This is as far as IndianOil is concerned. However, other oil PSUs who plan to expand their presence in this segment are driven by a fact that the opportunities in urban and highway segments have reached a saturation level. For them, rural kiosks are still a low-cost-low-volume opportunity that's viable and still untapped. Clearly, the KSKs are slated to open up new rural marketing channels for the companies wanting to reach out to these consumers.