EOL to review retail network expansion plan

Subsidized diesel sales by state firms have forced Essar Oil Ltd. (EOL) to review plans to expand its retail network. To provide franchisees with additional revenue streams, the company has forged alliances with alternative fuel and non-fuel retailers in segments like autogas, auto components, lubricants and services. The company is also talking with retailers in the food & beverage, agro products, telecom and banking/finance segments to set up points of sale at its retail outlets. The company has about 1,400 petrol pumps, and the number would rise to 1,700 in March, but further growth was uncertain, said Chief Executive Naresh Nayyar. “Further expansion and the pace will depend on deregulation,” he said. India lifted price controls on petrol last June and said it had decided in-principle to decontrol diesel also, boosting prospects of retail outlets of private oil firms in India. But rising oil prices and an uncomfortably high inflation rate forced the government to freeze the price of diesel sold by state firms, which dominate the retail market. The company recorded the highest-ever petrol sales in the last quarter as the government’s decision to decontrol the fuel last June boosted sales by 16%. EOL post a quarterly net profit of Rs 273 crore (US$60.11 million) against a year-ago loss of Rs 226 crore (US$49.75 million), on the back of better margins and higher exports. The company reported revenues of Rs 13,809 crore (US$3.04 billion) for the quarter ending December 2010, up 21% from a year-ago period. (January 20, 2011)