Comparison between LPG Distributorship Business and Retail Dealership Business

Prepared by
K.RAJASEKARAN
NANJAPPA ENTERPRISES
BPCL DEALERS
COIMBATORE-641005
Sl No Parameters LPG Distributor ship Retail Outlets

1 Level of Level of competition is Level of competition is Very

competition Very low. Almost nil. High.
Maximum Number of pumps is
established by all PSO
Companies.

2 Time available to Convenient, Flexible time No time available Real time,

provide service available. Can be planned Instant service required. Hence
with less number of more number of employees
employees. required.

3 Free allied value Almost Nil. Free Air/Free Water/

added services Free Toilet/Free Nitrogen

4 Customer base Standard. Permanent base No Permanent customer base.

5 Weekly Holiday Yes Possible. No.Alldays, 365 days.

6 Product loss due to Product is packed. 1. Product is fluid

various reasons Almost nil Loss. 2. Self loss by evaporation.
3. Transport loss.
4. Possibility of loss by
pilferage.

7 Labour Very high due to indirect Very low. Due to NIL

Involvement income of voluntary tips indirect income to labours.
by customers in each
transaction.
8 Investment required Moderate Very high.

9 Nature of Only cash. Standard By Cash, Credit, Credit card,

transaction amount. Rewards program card.
Hence various forms of cash
requires educated, skilled
workforce.

10 Risk of Credit NIL Very High

Business
11 Business Hours. Standardised time. Always open. Real time.
Almost matching with
office hours.
12 Number of One Product in three Many products. Petrol,
Business products. sizes. Diesel, Premium
Petrol/Diesel, Lubricants.

13 Risk of Tank/Line NIL YES

leakage

14 Risk of excess Nil YES

delivery during sale

15 Labour availability Very High Very Low.

16 Percentage of 6% 1.92%
Profitability
17 Profitability of Very high due to Very low due to High
Business to Minimum number of number of outlets.
Distributors/Dealers distributors for large
number of customer base
18 Profitability to Almost and Always loss Good profitability in
stake holders, to companies due to the lubricants, Auto LPG,
shareholders of heavy subsidies. Hence Petrol, Diesel, Premium
Public sector Oil results in under Products.
companies recoveries.
19 Tax income to state No Tax income from Hefty tax income by sale of
and central domestic connections. all types of fuels. Petrol,
governments Tax income through Diesel and Lubricants are
commercial cylinders highly taxed and maximum
only. income to the exchequer.
20. Electricity charges Very minimum electricity Very high electrical charges.
consumption. Hence very Every litre of product sold is
minimum expenses pumped out using electricity.
incurred by LPG Very high level of
Distributors. illumination required. Hence
very high electricity
expenses to the Retail
Dealers.
Dear Dealer friends,

From the above 20 compared parameters, it is evident that our retail business, which is facing lot
of operational costs, difficulties yields very lower return on our investment But the LPG
Distribution business, which is not facing much operational costs, difficulties when comparing
to ours yields very high returns.

The irony is both are under One Ministry.

What could be the reason for this kind of disparity?

I found one conspicuous reason.

LPG Distributors are united. We, the retail dealers are not.

Let us begin a debate online about how to bring about unity and resolve the disparity.

I request all dealer friends to post their views. Let us share our views. So that we can strengthen
the interest group so that we can proceed further.

Thanking you,

With highest regards,

K.Rajasekaran