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Essar Oil to roll out first retail outlet next month
Business Line - August 16, 2003    

Essar Oil Ltd is all set to open its first retail outlet at Ratnagiri in Maharashra next month, more than a year after it received licence for setting up petrol pumps.

The franchisee-run outlet of Essar will be the first to be set up in the private sector after the oil sector is deregulated.

The retail outlet will be under Essar label but products may be branded to indicate their quality, said Mr Raj Varma, Chief Executive Officer, (Marketing) Essar Oil Ltd.

Essar Oil, which has a licence to set up 1700 retail outlets, plans to have 50-55 such outlets in the next one year. Most of these will be franchisee-run, Mr Varma told Business Line today.

The retail outlets selling fuel and lubricants will also have an eating place, ATM and communication facilities, he said.

Essar may price its products marginally lower than that of the oil PSUs, Mr Varma said. "We have yet to workout the pricing strategy. But if we have to be competitive, we cannot price our products higher than that of our competitors."

Essar Oil has a stock of 18,000 tonnes of imported diesel, stored in the private tankage facility at JN Port. Initially, supply to the Ratnagiri outlet will be made from this stock, Mr Varma said.

The company is trying to source petrol and lubricants locally. Earlier, public sector oil companies had refused to supply products to Essar. However, according to Essar officials, there is a change in the attitude of oil PSUs. "In any case, they have surplus products, instead of exporting them, they can sell them locally," said an Essar official.
The company is also negotiating for a tie-up with a lubricant supplier. It is possible that Essar will sell the lubricants of an oil company that will agree to supply petrol, an official said.

"We are also prepared to import petrol. By cutting down on overheads, we can still get a reasonable margin," Mr Varma said. "We had sold 5000 tonnes of imported diesel to bulk consumers. Even after offering a discount of Rs 200 per kiloliter on the price charged by other oil companies, we could manage to make a small profit," he said.
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