Company Confidential 2010-11 Qcaliber-India Services Pvt. Ltd.

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SMEToolKit: Obtaining a Petrol Pump Dealership
License
Query Resolution

15
th
December, 2010
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Contents

Query Summary......................................................................................................................................... 3
Resolution.................................................................................................................................................. 3
About Us .................................................................................................................................................... 7
















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Query Summary

Client Name: SMEToolkit Client Delivery Manager: 91-02-4
Query Date: 07/12/2010 Query Type: Free, SMEToolkit India
Business Result Area: Business Planning SLA*: Not Applicable
*SLA (Service Level Assurance) is only applicable for our premium members
Query Description:
I am looking for a business plan/template on running a petrol pump (dealership) in India.
Would be greatly helpful if you could please provide me with one.

Resolution
Introduction
The number of petrol pumps in India has risen significantly in last few years due to the increase
in the number of cars in India every year. Cars in India are no more a luxurious item but have
become a necessity item nowadays and hence the demand for petrol pumps has risen. In 2009,
India was the fourth largest consumer of crude oil and petroleum, after United States, China
and Japan. It is expected that by 2014, India will become the third largest consumer of
petroleum products.
There are 2 categories under which the allotments of petrol pumps are done. Under category A,
the company provides land, pump, cabin etc. and owner just have to run the pump. While
under category B, the land is owned by the owner and rests all the equipments are provided by
the company. In Category B, one needs to incur the cost of buying a land and to set up a petrol
pump, which may result in investment of few lakh more. The licenses for opening of petrol
pumps are issued by the ministry of petroleum. Both the categories are open to all type of
applicants.
Procedure followed in selection of dealer/distributors by oil companies to sell petroleum
products.
Government of India has advised the Oil Marketing companies viz., Indian Oil Corporation,
Hindustan petroleum Corporation Limited, Bharat Petroleum Corporation Limited and IBP co.
Ltd to keep the broad parameters in selection of a dealer. The issues such as reservation for


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weaker section of society, multiple dealership norms and to adopt fair and transparent method
of allotment are necessary parameters in allotment process. The Oil Marketing companies have
freedom to choose the location for the retail outlet. Some of the important provisions of the
selection guidelines adopted by Oil Companies are:
a) 50% of dealership/distributorship is reserved for special categories as under:

i. Scheduled Caste/Scheduled
Tribes
25%
ii Defence Category 8%
iii Physically handicapped 5%
iv Freedom Fighters 2%
v Outstanding sports persons 2%
vi Para military/police/Government
personnel
8%

Out of the above, 1/3
rd
of the dealership is reserved for the women belonging to that category.
b) Oil Management companies are required to advertise the location of the pump in
prominent newspapers and sufficient time should be given to applicant for collection of
required information needed to complete the form. Application process fees of Rs.
1000 (non refundable) is charged from all applicants except from SC/STs, where the fees
is Rs. 500.

c) Once the scrutiny of the applications is done, the eligible candidates are called for
interview. The interview panel comprises of three officers of the company of the
appropriate rank. There is a specific evaluation criteria defined by the company with
appropriate weightage given to each criteria. The interviewers judge the applicants on
the basis of their capability to provide land/infrastructure/facilities/finance, capability to
generate business, personality, educational qualification, age, experience and business
ability. The applicants are advised to consult their territory manager about the criteria
for selection and get themselves prepared according to them.

d) On the completion of the interviews for the dealership, the selection committee
prepares a panel of three candidates according to merit. Letter of Intent (LOI) is issued



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to the first candidate in the merit list after all the investigation and based report
thereof.

e) Single dealership is allowed to a family unit consisting of individual, his/her spouse and
unmarried children.

f) There is also provision for grievance redressal system. Any complaint with regard to
selection is investigated and remedial action taken. Any Government complaints
received is also investigated on the basis of content in the complaint.
Distributor Selection Criteria
a) For Individuals:
a. Applicants should be Indian.
b. Age of the Applicant should not be less than 21 years as on the date of the
Application.
c. For regular retail outlets, minimum education qualification for applicant is
matriculation except freedom fighters (FF), outstanding sport person (OSP) and
defence personnels (DF).
d. For rural retail outlets minimum education criteria set is matriculation or recognized
equivalent for all categories except FF, OSP, DF and SC candidates. Under the special
categories candidates not having minimum qualifications should be able to read,
write and count.
e. In case of rural retail outlets applications, applicants should be resident of the
concerned district with attached of resident.
b) In case of partnership, each partner should fulfill the general criteria and is required to
fill the forms individually.
c) Other Categories:
a. Registered Cooperative/Consumer Societies Under this category, all the members
of the society should belong to the same category for which the location has been
advertised. For the reserved women category, all the members of the society should
be women. Only the society making profits in last 3 financial years, certified by a
Chartered Accountant will be eligible.
b. Organized Bodies/Corporate Houses Under this category all the registered
truck/bus associations, charitable trusts, corporate houses, government bodies,
PSUs and companies registered under Companies Act, 1956 are eligible to apply


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under OPEN category. Private limited companies can only apply only if they are in
existence and the profit making during last 3 financial years from the date of
application.
c. Fleet Operators the applicant in the category must have the volume commitment
of minimum 30Kls per month.
Retail outlet site evaluation
The inspection/evaluation of the site or land offered by the applicant is done before the
interview by the committee of the oil company on the basis of following parameters:
Land availability applicant should own the land or should have a lease period of
minimum 15 days.
Sales potential of the site
Frontage
There should be no requirement of earth filling on the site.
No requirement of earth/rock cutting required on site.
No low tension over headline should be there on the site.
No trees should be there on the site.
There should be desirable distance from the culvert.
Soil type soft
There should be availability of power on the site.
There should be availability of water on the site.
Land should be easily visible from the road.
No presence of divider
In case of the land offered is on the highway, the same should meet the distance from
intersection and plot size criteria as per the guidelines of Nation Highway Authority of
India (NHAI). Only the land with the 75% of sales potential will be considered for setting
retail outlet.
Cost of setting a Petrol Pump
The major cost components to be considered for setting up petrol/gas retail outlet under
category A and B:
Category A Category B
Cost of Labours on the outlet Cost of the land acquired/lease payment


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during the lease period.
Maintenance cost Labour cost
Cost of infrastructure setup Maintenance cost
Cost of infrastructure setup

About Us
SME ToolKit
The SME Toolkit is a joint project of IFC (International Finance Corporation), a member of the
World Bank Group and ICICI Bank. The Toolkit website has been created as an online resource
centre to empower Indian SMEs and help them become globally competitive

http://india.smetoolkit.org/india/en

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