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CHAPTER-1

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INTRODUCTION TO THE SUBJECT:

1.1 Theoretical Foundation:


 Petroleum Retailing in India

Indian retail business is the fastest growing business in India. It accounts for over 13% of
country’s G.D.P.and around 10% of the country’s employment. Indian petroleum retail sector
is fastest growing sector with a contribution of over 13% in country’s G.D.P. The petroleum
retailing industry in India faces significant challenges in the deregulated environment
coupled with intense competition, a downward pressure is exerted on margins forcing players
to adopt new and innovative strategies.
India has deregulated the pricing mechanism for retail petroleum in 2002, enabling new
players to enter into the market.
The entry of new players like Reliance has increased the no.of petrol stations from existing
15000 to more than 30000 in the past five years.
This will also reduce the average throughput per station, and total fuel volumes per player.
With a market determined pricing mechanism, prices will have to be lowered, thus reducing
margins from fuel products. With limited growth in the number of vehicles, the retail fuel
volumes will remain stagnant, thus offering little scope for further improving the overall
revenues and margins.

Indian retail industry.


The petro-retail Petroleum retailing is a retailing in which differentiation is possible both in
service and product. India has close to 13 million retail outlets-the highest in the world while
the retail industry is close to Rs.9 lakh crore, growing at 20 percent but organized retail is
only 2.5 percent of the pie, through growing at a healty rate of 35 percent. the downstream
petroleum retailing can
sector can be termed as one of the most organized sector of the retail industry. Now, it is not
all about offering fuel only at the petrol stations. The new look petrol pumps, apart from
dispensing fuels, now offer the best of retail chains providing a value added service to busy
consumers. This trend is in circulation in the international markets and the big petrol station
convenience stores earn more than30 to 40 per cent of their profits from the non-fuel
activities. The range of value added services is all beneath one roof. The new-look petrol
pumps are now the more advanced multi-purpose dispenser petrol-pumps.

The petrol pumps are computerized, thus reducing waiting time which not only ensures
accuracy, but also saves a lot of time for customers and avoids misconception and arguments.
But the history of petro retailing is not of same kind. In order to study the history of petro-
retailing era can be
classified into two era’s.
● Pro APM( Administrative Pricing Mechanism) era

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● Post APM era

Indian Petro-Retail Sector- Pro APM Era


The development of petrol-retail sector in India has witnessed three distinct phases:
a) Period of dominance of multinational companies
b) Advent of public sector, its growth in co-existence with these transnational companies.
c) Marketing by the wholly government-owned companies and the fulfillment of socio-
economic objectives.
At the time of independence, the marketing & retailing of petroleum products was in the
hands of private companies like Caltex, Esso, Shell etc. Later the government gradually
exercised control through public sector companies.

The second phase started with actions taken in pursuance of the Industrial Policy Resolution,
1956 to promote growth of the vital petroleum sector under the state control. Eventually, IOC
was formed in 1959, IBP was acquired in 1970, HPC came into existence in 1974 and BPC in
1976.
In the third phase, the experience gained by the government during the second phase and the
socio-economic factors encouraged it to go ahead for acquiring the assets ofall multinational
companies operating in the country. In 1981, the entire oil industrywas truly in the
government fold.

A new era of planned development in consonance with national priorities under the overall
direction of the government thus began in the oil sector. From the state of cut-throat
competition in marketing and distribution, the PSUs had to quickly adapt to the changed
scenario. The assets of oil companies in terms of infrastructure facilities were now the
national assets. The important area of concern was their optimum utilization.

Administrative Pricing Mechanism in Petro Retailing:

Up to 1939, there were no controls whatsoever on the pricing of petroleum products.


Between 1939 and 1948, the oil companies themselves maintained pool accounts formajor
products without any intervention by the government. In 1948, an attempt was made to
regulate prices through Valued Stock account procedure. Under this procedure realization of
oil companies was restricted to the import parity price of finished goods (with Ras Tanura as
the basing point), plus excise duties/ local taxes/ dealer margins and agreed marketing
margins of each of the refineries. Any excess realization was surrendered to the Government.

In 1976, the Oil Pricing Committee (OPC) recommended the discontinuance of the import
parity principle on the ground that about 90% of the total demand of POL products was met
by indigenous production and no major shortfall was anticipated. The OPC therefore
suggested that the domestic cost of production should be the determining factor for pricing of
petroleum products. The present day APM was evolved on the recommendation of the OPC
and came into existence on December 16, 1977.

One of the important drawbacks of the import parity pricing was that the indigenous cost of
production was totally overlooked while determining producer prices. This issue was

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addressed through Retention Pricing Mechanism, by which refiners were allowed to "retain"
out of the sale proceeds. The same mechanism was extended to marketing & distribution
companies as well. The Government of India also fixed the pricing of finished products and
the returns of oil companies were de-linked from the price at which the goods were finally
sold. With the administration of pricing of products by the government, the retention
mechanism also came to be known as the Administrated Pricing Mechanism or APM.

The APM, although effective for two decades, started exhibiting cracks when subjected to the
joint pressures of spiraling demand and global prices;oil pool deficit rose to alarming
levels,cross subsidization resulted in distortion in the consumer prices, adulteration and
misuse of subsidies resulted were rampant, there was no incentive to improve efficiency with
assured returns. In such situation, the Govt. of India initiated a phases era of reforms in the
oil industry by forming different committees like the Sundarajan Committee in 1995, the R-
group and the Nirmal Singh Committee. Based on the recommendation of these committees,
on September 1, 1997, Govt.of India decided on a comprehensive package to undertake
Phased dismantling of APM. In a gazette notification dated November 21, 1997, the Govt.of
India issued a timetable for the phased reforms.
Pursuant to the decisions contained in the aforesaid resolution of November, 1997 the
government decided to dismantle the APM in the petroleum sector with effect from the April
1,2002.

Liberalisation in Marketing Sector:


Keeping its promise of decontrolling pricing and control over marketing structures, the
Government of India on April 1, 2002, opened up retail marketing of automotive
transportation
fuels (petrol, diesel) to private and foreign companies with 100% FDI allowed. This marked
the end of an era in which only state owned HPCL, BPCL, IOC and IBP were allowed to
undertake retail marketing in automotive fuels. Based on the recommendation of the Naresh
Narad Committee on regulation of marketing of controlled products, players who satisfy the
entry criterion i.e.companies which have the capabilities to invest Rs.20 billion in oil
exploration and production,refining pipelines or terminals were allowed to set up retail
network for marketing petrol and diesel with immediate effect. Also, new players can set up a
number of outlets as long as they commit to set up certain 11% of total number of outlets in
remote and low service areas.

The New Players in Petro-Retail Sector:

The deregulation of the marketing sector has led to the grant of marketing rights to Reliance
Industries (5,849), Essar Oil (1,700), ONGC (1,500), and Shell (2,000).
Anticipating the immense competition ahead in the petro-retailing the existing oil marketing
companies has geared up and the following are the changes that have occurred in recent past
since the deregulation of downstream oil industry.
• Shifting focus from the urban to highways and sub-urban areas.
• More communication with the customers in the media and onsite
• Building PFS, Club HP, Q&Q as a brand
• From fuel dispensing to multi product selling

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• From commodity selling to brand marketing
• From executive level sales management to intermediary supervisory cadres
• From direct controls to third party audits – these certifying agencies require their own
infrastructure
• From dealer proprietor to reputed companies from other sectors making forays into petro-
retail management

Given today's open & competitive environment, oil marketing companies, both existing and
new entrants, are going full steam ahead to capture the largest share of the pie. While the
PSUs have added more than 3000 retail outlets to their network in last three years since
deregulation, the private players have added only a little over 450 retail outlets. However, we
can say that with 30,000 petrol retail outlets expected in the next 5 years, up by 30% from
today, there is going to be a downward pressure on profit margins and revenue per outlet
which will push the industry to reinvent itself.

This is the foundation of the Indian petroleum industry. Thing is that Indian as well as all
other economies are connected to each other. Whatever happens in one economy it results in
change in the scenario of other economies. It is called coupling of economies. Thing is that
presently the factors that are causing a change in the oil prices are being discussed below

Global Demand:

This surge in oil prices is because of increase in demand from developing countries like
India and China. The global consumption went up by 4.5% last year. Most of demand has
come from China. Last year China’s demand grown by almost 15%. Although demand
hasn’t increased up to that level in this year, but as the China go on progressing it will result
in increase in transportation and hence its demand for oil will also rise.As China is a net
importing country for oil it will add to world’s demand for oil.The biggest reason for
increase in the oil prices is United states of America which consumes about one fourth of the
global fuel. The oil efficiency of vehicles in the US has now fallen to a 20-year low. Its
energy policy does very little to ensure greater fuel economy in cars or sports utility vehicles.
Further, as developing countries keep improving their standards of living and automobiles
remain a symbol of aspiration, there is only one way where the oil price is headed: upwards.
Also what needs to be understood is the link between and interest rates. Interest rates the
world over have been very low and this, in turn, has led to increased consumption.

This, in turn, has led to an increased demand for oil and thus the increase in oil price. If the
oil prices are high because of high demand they will stay there for much longer.This was not
the case when the world went through supply-led oil shocks, where once the supplies were
restored fell.

Political instability:

Most of the known oil reserves are in one part of the world, i.e. West Asia (or the Middle
East). The other major petroleum exporting countries are Russia, Nigeria, Indonesia and

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Venezuela. These countries have been politically unstable in the recent past and this has also
led to the oil traders demanding a premium.

Speculation:

Another reason for the northward movement of oil price is speculation. Some experts have
recently talked about oil prices touching even a high of $150. If something like this does
happen, it will create havoc in the equity markets. As oil price go up, energy costs will rise
and the cost of doing business will go up. This, in turn, will affect the profit of companies. So
big equity funds the world over are investing in oil futures to hedge against the risk of the
value of their other investments falling.Pension funds have also made a beeline and have
poured in a lot of money into securitized investments in This has led to sustained high prices
of oil. The fact that OPEC has reiterated time and again that it will not allow prices to fall has
helped these speculators.

1.2 REVIEW OF LITERATURE:


1. FICCI (2007): According to FICCI survey on fuel retailing industry in India , they
concluded that the rising rate of growth of GDP, rising purchasing power of people with
higher propensity to consume with preference for sophisticated brands would provide
constant impetus to growth of petroleum industry. As people will have huge amount of
money to buy their own vehicles. So as per as FICCI automobile sector will emerge as the
front running sector in India. There is a very good chance for Indian fuel retailing sector to
gain big hold in the market. The potential market will be rural one which is still being
untapped. Rural India which constitutes about 70% part of India will drive the major chunk
of income of oil companies. So they need to concentrate on Indian rural market.

2. Mckinsey (2006): The Indian market for transportation fuels holds a lot of promise. The
country’s aspiring middle class, recently estimated at 40 million households by consultancy
McKinsey, is becoming increasingly motorised. Small towns are expanding at a rapid pace,
sparking investment in roads and other infrastructure. The largest express highway project in
India, for example, aims to link the cities of New Delhi, Mumbai, Kolkata and Chennai with
a system of four- to six-lane highways. Automobile sales, which today number just over a
million vehicles a year, could reach 20 million a year by 2030, predicts US-based
consultancy Keystone, making India the third-largest automobile market in the world after
China and the USA. Moreover, the fact that many of India’s service stations are poorly
designed and congested leaves a natural opening for newcomers who offer a better
alternative. Typical old-fashioned Indian service stations feature long queues, cars jockeying
for position, oily forecourts and hand-operated petrol pumps that may not accurately measure
the volume of each sale.

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CHAPTER-2

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2.1 INTRODUCTION TO TRTHE INDUSTRY

The oil industry can be divided into three major components: upstream, midstream and
downstream. The upstream industry includes exploration and production activities, hence is
also referred as the exploration and production (E&P) sector. The middle stream industry
processes, stores, markets and transports commodities including crude oil, natural gas,
natural gas liquids (NGLs) like ethane propane and butane and sulphur. The downstream
industry includes oil refineries, petrochemical plants, petroleum products distributors, retail
outlets and natural gas distribution companies. The downstream industry provides consumers
thousands of products such as gasoline, diesel, jet fuel, heating oil, asphalt, lubricants,
synthetic rubber, plastics, fertilizers, antifreeze, pesticides, pharmaceuticals, natural gas and
propane. Both internationally and within India the oil and gas sector is characterized by
existence of "integrated" companies, which are present in all these three sectors.

Upstream sector: Exploration and production

Upstream sector, the first part of the oil and gas industry, deals with exploration and
production of oil and gas. Oil exploration takes place at oil wells in four stages. The first
stage is drilling, act of boring a hole through which oil or gas may be produced if
encountered in commercial quantities. The second stage is completion, process in which the
well is enabled to produce oil or gas. The third stage is production, production time of oil and
gas and the final stage is abandonment, where the well no longer produces or produces so
poorly that it is a liability to its owner and is abandoned. An oil field is a region with an
abundance of oil wells extracting petroleum (oil) from below ground. Because the oil
reservoirs typically extend over a large area, possibly several hundred kilometres across, full
exploitation entails multiple wells scattered across the area. There are more than 40,000 oil
and gas fields of all sizes in the world (BP statistical Review, 2006) and the largest
discovered conventional oil field is the Ghawar Field (75-83 billion) is Saudi Arabia. In
tandem with the stagnated reserves, the production of oil has also been sluggish over the last
decade, as a matter of fact in last ten years oil production has increased by only 1.6%.

Downstream: Refining and marketing

Refining, the second part of the oil industry after exploration and production, is related with
manufacturing petroleum products by a series of processes that separate crude oil into its
major components and blend or convert these components into a wide range of finished
products, such as gasoline or Aviation Turbine Fuel. Refining capacity depends on the
technology used in refineries, capable of processing crude production into clean fuels. In the
recent age of decreasing oil production refining capacity have to have well supportive
technology, which meet increasingly more stringent environmental Standards. With the
increase in global oil demand and stagnant reserve, refining capacity deserves new capacity
addition to meet demand. But the graph shows slightly increasing trend of refining capacity
till date in last decade. Refinery throuput, as opposed to designed capacity, is computed by
dividing the number of refined barrels of oil processed by the actual number of days the
refinery was in operation. Refined capacity is lower than refined throuput in the graph below

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implying underutilisation of capabilty of processing crude in the existing refineries and lack
of upgradation.

2.1a) HISTORY AND GROWDTH OF INDIAN OIL INDUSTRY:

The origin of oil & gas industry in India can be traced back to 1867 when oil was struck at
Makum near Margherita in Assam. At the time of independence in 1947, the Oil & Gas
industry was controlled by international companies. India's domestic oil production was just
250,000 tonnes per annum and the entire production was from one state - Assam.

The foundation of the Oil & Gas Industry in India was laid by the Industrial Policy
Resolution, 1954, when the government announced that petroleum would be the core sector
industry. In pursuance of the Industrial Policy Resolution, 1954, Government-owned
National Oil Companies ONGC (Oil & Natural Gas Commission), IOC (Indian Oil
Corporation), and OIL (Oil India Ltd.) were formed. ONGC was formed as a Directorate in
1955, and became a Commission in 1956. In 1958, Indian Refineries Ltd, a government
company was set up. In 1959, for marketing of petroleum products, the government set up
another company called Indian Refineries Ltd. In 1964, Indian Refineries Ltd was merged
with Indian Oil Company Ltd. to form Indian Oil Corporation Ltd.

During 1960s, a number of oil and gas-bearing structures were discovered by ONGC in
Gujarat and Assam. Discovery of oil in significant quantities in Bombay High in February,
1974 opened up new avenues of oil exploration in offshore areas. During 1970s and till mid
1980s exploratory efforts by ONGC and OIL India yielded discoveries of oil and gas in a
number of structures in Bassein, Tapti, Krishna-Godavari-Cauvery basins, Cachar (Assam),
Nagaland, and Tripura. In 1984-85, India achieved a self-sufficiency level of 70% in
petroleum products.

In 1984, Gas Authority of India Ltd. (GAIL) was set up to look after transportation,
processing and marketing of natural gas and natural gas liquids. GAIL has been instrumental
in the laying of a 1700 km-long gas pipeline (HBJ pipeline) from Hazira in Gujarat to
Jagdishpur in Uttar Pradesh, passing through Rajasthan and Madhya Pradesh.

After Independence, India also made significant additions to its refining capacity. In the first
decade after independence, three coastal refineries were established by multinational oil
companies operating in India at that time. These included refineries by Burma Shell, and
Esso Stanvac at Mumbai, and by Caltex at Visakhapatnam. Today, there are a total of 18
refineries in the country comprising 17 in the Public Sector, one in the private sector. The 17
Public sector refineries are located at Guwahati, Barauni, Koyali, Haldia, Mathura, Digboi,
Panipat, Vishakapatnam, Chennai, Nagapatinam, Kochi, Bongaigaon, Numaligarh,
Mangalore, Tatipaka, and two refineries in Mumbai. The private sector refinery built by
Reliance Petroleum Ltd is in Jamnagar. It is the biggest oil refinery in Asia.

By the end of 1980s, the petroleum sector was in the doldrums. Oil production had begun to
decline whereas there was a steady increase in consumption and domestic oil production was
able to meet only about 35% of the domestic requirement. The situation was further

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rcompounded by the resource crunch in early 1990s. The Government had no money for the
development of some of the then newly discovered fields (Gandhar, Heera Phase-II and III,
Neelam, Ravva, Panna, Mukta, Tapti, Lakwa Phase-II, Geleki, Bombay High Final
Development schemes etc. This forced the Government to go for the petroleum sector
reforms which had become inevitable if India had to attract funds and technology from
abroad into the petroleum sector.

The government in order to increase exploration activity, approved the New Exploration
Licensing Policy (NELP) in March 1997 to ensure level playing field in the upstream sector
between private and public sector companies in all fiscal, financial and contractual matters.
This ensured there was no mandatory state participation through ONGC/OIL nor there was
any carried interest of the government.
For this India finally formulated New Exploration Licensing Policy in 1999.After that Indian
Government has come up with six more NELP Policies. These are as listed below a) 2000-
NELP II
b) 2002- NELP III
c) 2003- NELP IV
d) 2004- NELP V
e) 2006- NELP VI
f) 2007- NELP VII

To meet its growing petroleum demand, India is investing heavily in oil fields abroad. India's
state-owned oil firms already have stakes in oil and gas fields in Russia, Sudan, Iraq, Libya,
Egypt, Qatar, Ivory Coast, Australia, Vietnam and Myanmar. Oil and Gas Industry has a vital
role to play in India's energy security and if India has to sustain its high economic growth
rate.

2.1b) Landmark of Indian oil industry:

The Indian Oil and Gas sector is one of the six core industries in India and has very
significant forward linkages with the entire economy. The oil & gas sector meets more than
two third of the total primary energy needs in the country. The sector has been instrumental
in putting India on the world map. At present India is the sixth largest crude oil consumer in
the world and the ninth largest crude oil importer. The country is also increasing its share in
the global refining market. At present Indian refining sector is the sixth largest in the world.
This position is expected to be strengthened with plans of Reliance Petroleum Limited to
commission another refinery with a capacity of 29 MTPA next to its 33 MTPA refinery at
Jamanagar, Gujarat. As a result of this the Reliance refinery would be world’s largest single
place refinery.

2.1 c)List of Companies in indian petroleum retailing sector:

1. IOC

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2.HPCL

3. BPCL

4. RELIANCE

5.ESSAR

6. SHELL

2.1 d) Major players in India fuel retailing business:

IOC:

Indian Oil Corporation Ltd. (IOC) is the flagship national oil company in the downstream
sector. The IndianOil Group of companies owns and operates 10 of India's 19 refineries with
a combined refining capacity of 1.2 million barrels per day. These include two refineries of
subsidiary Chennai Petroleum Corporation Ltd. (CPCL) and one of Bongaigaon Refinery and
Petrochemicals Limited (BRPL). The 10 refineries are located at Guwahati, Barauni, Koyali,
Haldia, Mathura, Digboi, Panipat, Chennai, Narimanam, and Bongaigaon. Indian Oil's cross-
country crude oil and product pipelines network span over 9,300 km. It operates the largest
and the widest network of petrol & diesel stations in the country, numbering around 16,455.

Indian Oil Corporation Ltd. (IndianOil) was formed in 1964 through the merger of Indian Oil
Company Ltd and Indian Refineries Ltd. Indian Refineries Ltd was formed in 1958, with
Feroze Gandhi as Chairman and Indian Oil Company Ltd. was established on 30th June 1959
with Mr. S. Nijalingappa as the first Chairman. In 1964, Indian Oil commissioned Barauni
Refinery and the first petroleum product pipeline from Guwahati. In 1965, Gujarat Refinery
was inaugurated. In 1967, Haldia Baraurii Pipeline (HBPL) was commissioned. In 1972,
Indian Oil launched SERVO, the first indigenous lubricant. In 1974, Indian Oil Blending Ltd.
(IOBL) became the wholly owned subsidiary of Indian Oil. In 1975, Haldia Refinery was
commissioned. In 1981, Digboi Refinery and Assam Oil Company's (AOC) marketing
operations came under the control of Indian Oil. In 1982, Mathura Refinery and Mathura-
Jalandhar Pipeline (MJPL) were commissioned. In 1994, India's First Hydrocracker Unit was
commissioned at Gujarat Refinery. In 1995, 1,443 km. long Kandla-Bhatinda Pipeline
(KBPL) was commissioned at Sanganer. In 1998, Panipat Refinery was commissioned. In the
same year, Haldia, Barauni Crude Oil Pipeline (HBCPL) was completed. In 2000, Indian Oil
crossed the turnover of Rs l, 00,000 crore and became the first Corporate in India to do so. In
the same year Indian Oil entered into Exploration & Production (E&P) with the award of two
exploration blocks to Indian Oil and ONGC consortium under NELP-I. In 2003, Lanka IOC
Pvt. Ltd. (LIOC) was launched in Sri Lanka. In 2005, Indian Oil's Mathura Refinery became
the first refinery in India to attain the capability of producing entire quantity of Euro-III
compliant diesel.

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Major Achievements of Indian Oil Corporation

• Currently India's largest company by sales.


• Highest ranked Indian company in the prestigious Fortune 'Global 500' listing, at
135th position.
• 20th largest petroleum company in the world.

HPCL:

HPCL is a fortune 500 company , with an annual turnover of over Rs 1,03,837 Crores ($
25,142 Millions) during FY 2007-08, 16% Refining & Marketing share in India and a strong
market infrastructure. Corresponding figures for FY 2006-07 are: Rs 91,448 crores ($20,892
Million).

The Corporation operates 2 major refineries producing a wide variety of petroleum fuels &
specialties, one in Mumbai (West Coast) of 5.5 MMTPA capacity and the other in
Vishakapatnam, (East Coast) with a capacity of 7.5 MMTPA. HPCL holds an equity stake of
16.95% in Mangalore Refinery & Petrochemicals Limited, a state-of-the-art refinery at
Mangalore with a capacity of 9 MMTPA. In addition, HPCL is progressing towards setting
up of a refinery in the state of Punjab in the joint sector.

HPCL also owns and operates the largest Lube Refinery in the country producing Lube Base
Oils of international standards. With a capacity of 335 TMT. This Lube Refinery accounts for
over 40% of the India's total Lube Base Oil production.

The vast marketing network of the Corporation consists of Zonal offices in the 4 metro cities
and over 85 Regional offices facilitated by a Supply & Distribution infrastructure comprising
Terminals, Aviation Service Stations, LPG Bottling Plants, and Inland Relay Depots & Retail
Outlets. The Corporation over the years has moved from strength to strength on all fronts.
Our refining capacity steadily increased from 5.5 million tonnes in 1984/85 to 13.70 million
metric tonnes (MMT) presently. On the financial front, the turnover grew from Rs. 2687
crores in 1984-85 to an impressive Rs 91,448 crores in FY 2006-07 and Rs 1,03,837 Crores
in FY 2007-08.

BPCL:

The 1860s saw vast industrial development. A lot of petroleum refineries also came up. An
important player in the South Asian market then was the Burmah Oil Company. Though
incorporated in Scotland in 1886, the company grew out of the enterprises of the Rangoon
Oil Company, which had been formed in 1871 to refine crude oil produced from primitive
hand dug wells in Upper Burma.. The search for oil in India began in 1886, when Mr.

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Goodenough of McKillop Stewart Company drilled a well near Jaypore in upper Assam and
struck oil. In 1889, the Assam Railway and Trading Company (ARTC) struck oil at Digboi
marking the beginning of oil production in India.

While discoveries were made and industries expanded, John D Rockefeller together with his
business associates acquired control over numerous refineries and pipelines to later form the
giant Standard Oil Trust. The largest rivals of Standard Oil - Royal Dutch, Shell, Rothschilds
- came together to form a single organisation: Asiatic Petroleum to market petroleum
products in South Asia. In 1928, Asiatic Petroleum (India) joined hands with Burmah Oil
Company - an active producer, refiner and distributor of petroleum products, particularly in
Indian and Burmese markets. This alliance led to the formation of Burmah-Shell Oil Storage
and Distributing Company of India Limited.

A pioneer in more ways than one, Burmah Shell began its operations with import and
marketing of Kerosene. This was imported in bulk and transported in 4 gallon and 1 gallon
tins through rail, road and country craft all over India. The company took up the challenge of
reaching out to the people even in the remote villages to ensure every home had its supply of
kerosene. The development and promotion of efficient kerosene-burning appliances for
lighting and cooking was an important part of kerosene selling activity. With motor cars,
came canned Petrol, followed by service stations. In the 1930s, retail sales points were built
with driveways set back from the road; service stations began to appear and became accepted
as a part of road development. After the war Burmah Shell established efficient and up-to-
date service and filling stations to give the customers the highest possible standard of service
facilities.

On 15th October 1932, when civil aviation arrived in India, the company had the honour of
fuelling J.R.D. Tata's historic solo flight in a single engined de Havillian Puss Moth from
Karachi to Bombay (Juhu) via Ahmedabad. Thirty years later, i.e. in 1962, Burmah Shell
again had the privilege to fuel JRD Tata's re-enactment of the original flight. Burmah Shell
also fuelled flying boats, which carried airmail at slightly higher rates than sea transport, at
several locations. As a true pioneer would, the company introduced LPG as a cooking fuel to
the Indian home in the mid-1950s. And all along, it went beyond selling petroleum, to
educate the customer. Besides selling Bitumen, the company pioneered desert road
construction, training road engineers. It provided free technical services to industrial
customers - big and small - and it became a part of the company's culture. An agreement to
build a modern refinery at Trombay, Bo Burmah Shell group of companies and the
Government of India on 15th December 1951.

Burmah Shell Refineries Limited was incorporated as a private limited company under the
Indian Companies Act on 3rd November 1952, and work began on the marshland of Trombay
at Bombay. Man and machine worked relentlessly, and soon the swamps gave way to towers
and tanks of steel, and miles of pipeline. .

The refinery on 454 acres of land at village Mahul went on-stream on 30th January 1955, one
year ahead of schedule. Dr. S. Radakrishnan, Vice President of India, declared the 2.2
MMTPA (Million Metric Tonnes Per Annum) Refinery open on 17th March 1955. It was

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sthen the largest refinery in India then. On 24th January 1976, the Burmah Shell Group of
Companies was taken over by the Government of India to form Bharat Refineries Limited.
On 1st August 1977, it was renamed Bharat Petroleum Corporation Limited. It was also the
first refinery to process newly found indigenous crude (Bombay High), in the country.

Beside these players from Public sector some private players are also actively participating in
Indian petroleum industry.These are viz.Reliance industries Ltd.(RIL), Shell India Ltd. and
Essar. But they failed to live upto their expectations. This is because they aren’t compensated
by Government for their revenue losses as in the case of PSU’S.Due to this Reliance recently
decided to close one third of its retail outlets in India because of heavy losses. But Shell
which has nearly 1260 retail outlets in India and operates a very small number of outlets in
South India isn’t closing its operations. On the other hand Essar is following franchises
distribution to cope up in this environment. India’s biggest refinery is being operated by RIL
in Jamnagar. When in 2002 Government of India dismantled APM then with its entry in the
retailing business Reliance grabbed market share of 14.69% within a year.

2.1 e) Market share of different fuel retailing companies in India :

As explained earlier the major player in the petroleum retailing business are IOC,
BPCL,HPCL,IBP,RIL,ESSAR,SHELL. To explain more let us consider the statistics of no.of
retail outlets of different OMC’s in India.

Statistics of Total no. of Petroleum retail outlets for different OMC’s in India:

Company name March-2007 December-2007 March-2008


PSU’s
IOC 16,540 16,540 17,460
BPCL 7,609 8,089 8,100
HPCL 7,909 8,060 8,080
Total 32,058 32,689 33,640
Private Player
RIL 898 1800 1,800
Essar 1,149 1,250 1,250
Shell 32 35 37
Others 2,079 3,035 3,042
Total 34,137 35,724 36682

Sources: Indian Oil and Gas and CRISIL Research

It is clear from the data that IOC is the biggest player with 17,460 retail outlets followed by
BPCL with 8,100,HPCL with 8,080 and rest followed by private players. It is clear that
majority of retail outlets are being operated by PSU’S while private players are operating
very few.This is because of the fact that prior to 2002 it was only public sector OMC’s which
were allowed to sell fuel in the market.

14
But in 2002, government also allowed private players to set up their own retail outlets. After
this decision the private player started operating their retail outlets. But in all of these private
player Reliance was the only one which acquired the market share of 14.45% during its first
fiscal. It was because of tie of petroleum fueling with organized retail activities.Private
player added 1006 retail outlets during March-December 2007 and public sector could only
add 630 retail outlets.

Market share of OMC’s in India:

Sources: Indian Oil and Gas and CRISIL Research

It is clear from the graph that IOC is the biggest player in the petroleum retailing business in
India, followed by BPCL,HPCL and other private players. The statistics available upto 2007-
08 suggest that IOC has a market share of 49%. While the share of other PSU’s has also
shown an increasing trend. While the share of the private player has decreased. This is
because of the fact that they aren’t given the kind of subsidies and oil bonds issued as in case
of public sector oil companies.

When private players entered into retailing business market share of public sector companies
continued to decline from 15.2%-19% during 2006-07. In the fiscal 2007-08 IOC has lost its
market share from 49%-40.36%. While BPCL has increased its market share from 21%-
24.56%. While other gainers are Essar and Shell.

It is clear that IOC is still the biggest player in the market. It is trying hard to regain its lost
share.

15
Market share of Petroleum Company in auto fuel sector:

%tage MS HSD Total


share of
companies
April-Oct April-Oct April-Oct April-Oct April-Oct April-Oct
2006 2007 2006 2007 2006 2007
IOC 42.70 42.55 52.88 52.69 47.79 47.62
BPCL 28.74 28.21 23.52 23.93 26.13 26.07
HPCL 23/69 23.87 18.36 18.96 21.03 21.41
RIL 4.31 3.75 4.47 3.27 4.39 3.51
ONGC 0 0 0.56 0.54 4.39 0.27
ESSAR 0.13 0.85 0.06 0.35 0.10 0.60
SHELL 0.41 0.78 0.14 0.26 0.28 0.50
100 100 100 100 100 100

Sources: Indian Oil and Gas and CRISIL Research:

These are the figures for sales of HSD and MS for different oil companies in Indian market.
These are upto October 2007 indiacating that the share of private player has improved by a
small margin. Share of IOC has gone down, while HPCL has gained significant share of
BPCL and IOC. The entry of new private player in the petroleum industry has resulted in the
loss of market share of public companies in the market. This is as shown

16
It is clear from the figure that IOC, BPCLand RIL were the major companies which lost
considerable market share in auto fuel sector. This was all because of rising oil prices. The
prices are also being determined on the basis of demand and supply.

Demand and Supply Scenario of Petroproducts:

There is always been a gap between supply and demand. This is the reason that’s why oil
prices shoot up and sales of retail outlets decreases.This can be seen from the graph given
below:

Sources: Bloomberg, Edelweiss Research:

According to a research carried out by Security Marketing Research agency Bloomberg


(Bombay) it is going to be difficult for Indian government to get rid of this problem. As their
research clearly points out that in coming days the gap is going to widen more between
demand and supply. All these results are being forecasted by considering all the aspects of
present scenario. The supply and demand gap is always been persistent for India.

17
Prior to liberalization in petroleum industry there were very less no. of retail outlets. So the
sales of retail outlets were good enough. In order to check the health of petrol pumps the
parameter used is Per Pump Thruput (PPT). This can be seen from the PPT factor prior
liberalization as shown by fig.1.

Sources: FICCI Petrotech, ATKERNEY January 18, 2007:

The value of PPT remained around 200 KIs/pm. Which is a good factor. As there were lesser
no.of retail outlets so the financial health of retail outlets was good enough.

But as the government opened the petroleum industry for private players it resulted in
increase in entry of new players and after liberalization in petroleum sector large no. of
petrol retail outlets were being opened by the private as well as public players. After
liberalization the scenario changed and PPT value come down to below 200 as shown:

18
Sources: FICCI Petrotech, ATKERNEY January 18, 2007

This decrease in PPT is because of the fact that as a company operates large no.of retail
outlets then sale of one retail outlet increases while that of other decreases. Then to counter
this their competitors also open their retail outlets. Due to this their sales fluctuates. Their
sale may increase but the overall sold volume of petroleum products remains same. Hence it
results in increase in sale of one of the outlets and decline in the sales of other outlets. So
increasing no. of retail outlets is also another reason in the decline in the sales.

19
Due to rising oil prices the public sector companies has to bear the losses. And
underecoveries for the oil companies has increased. This is as shown below by the following

charts:

This is clear from the graph that there is increase in the underecoveries on the sale of auto
fuels. It is clear that under recovery for diesel is Rs.5/liter and Rs.3/liter for the sale of
petrol. Government has done their level best in order to compensate for the under recoveries
of the oil companies. This is done by providing subsidies from upstream sector and issuing
oil bonds.This is shown in the form of table as shown:

( Rs.million) 2005-06 2006-07 2007-08 2008-09 P


Subsidies 140000 205000 208462 181365
shared by
upstream sector
Oil bonds by 115000 240500 244562 212773
Government
Total 255000 445500 453024 394138

Sources: Indian Oil and Gas, CRISIL Research

20
It is clear from table that the under recoveries has increased by greater proportion and
government has passed this burden to India’s upstream companies and also has shed this
burden itself. These subsidies and oil bonds are provided to public sector companies only not
to the private players .As a result of this Reliance shut down its petroleum operation in India.
Instead of selling it in domestic market they have turned onto the export side. They are
getting better returns from export than selling it in domestic market. So there is a great
shuffle in Indian petroleum retailing industry.

2.1 f) Challenges ahead for Indian petro-retail sector:

a)No real Market Determined Pricing 
Three years passed since APM was dismantled but still the promise of Government of india
to establish a regulatory board has not bore fruit and it seems that the government has made
an “April Fool”* of all of us. Now its implication is that although APM is not in use in
theory, but in practical the petro-products price is still determined by the government.
Consultation with the oil companies and the price competition has not happened yet. A
serious battle revolving around the pricing and related competition would potentially come
into play only with the active involvement of the private sector in the marketing segment.

b) Cut-throat Competitive environment


With the coming of the private players in the petro-retailing, the sector is destined to witness
immense competition in the future. In the changed scenario, whosoever would be in the
possession of adequate infrastructure for transportation, storage and distribution will emerge
as winner in due course of time. With this game plan in mind, the existing as well as private
oil companies are trying to strengthen their retail network continuously. However, the
government has taken enough steps to ensure that the new entrants could not have an easy
route to build a retail network. The government had specified that private companies could
not poach on the outlets of state-owned oil companies for a period of five years starting 1
April 2002.
Consumer’s increasing expectations 
With growing competition in the petro­retailing sector, today’s consumer is becoming more 
and more demanding. The emergence of new psychographic segments in petro­retail market 
bears the testimony to this fact. A closer look at these segments tells us what exactly a
Consumer is looking for whenever he goes to a fuel station to purchase fuel. He looks for­ 
• Quality & Quantity assurance 
• Quick filling and efficient forecourt service 
• Rewarding loyalty 
• Premium fuels 
• Cashless transactions 
• Non­fuel services 
c) Need to provide alternate sources for revenue 

21
One major challenge that the oil marketing companies are facing today is the need to provide 
the alternate sources for revenue. Many factors have triggered this new event in today’s petro­
retailing environment. These factors are­ 

• Increased pressures on margins 
• Desire to leverage real estate and increase revenues 
• Evolving customer segments like “Value time saving propositions, Quality and 
• Environment consciousness, Prestige seeker etc.” 
• Need to differentiate offerings

2.1 g) Future vision of petroleum industry:

a) Shift from retail outlet branding to corporate branding :
Ever since the market was deregulated, the oil companies are busy in bringing the branding 
concept in petro­retailing which was a commodity market for years with no differentiation.
However, consistent efforts make them taste success with the advent of branded fuels such as 
Speed, Xtrapremium etc. Also, at the same time RO branding was initiated and PFS (Pure 
For Sure), Club HP and Q&Q outlets came into existence. But still the oil companies have not 
found the way how to make a customer say pointing towards a RO that as this outlet belongs 
to a particular company, it will be the best in Q&Q and others concerns. In other words, 
corporate branding is what on the cards in the future of petro­retailing. 

b)Offer of range of premium branded fuels :
Today, there are so many branded fuels of different oil companies in the market like Speed 
(BPCL), Turbojet (HPCL) and Xtrapremium (IOCL) etc. But these fuels are more or less 
same with slight variations in the chemistry. Also, there is a lack of product assortment in this 
business of branded fuels. There is not much options to choose among. However, with high 
investment in R&D, things are not going to remain same and very soon we will see a full 
range of premium branded fuels like 93­octane petrol, 97­octane petrol, 125­octane petrol etc. 

c) Emergence of non­fuel services as a major activity at retail outlets :
The dismantling of APM has removed the privilege of assured returns from the PSUs and
thus, it has increased pressure on their margins, as to compete with the private players, who 
are with deep pockets, it is imperative to make huge investment in the services being offered
at the ROs. Since the base product is same, the differentiating factor would be the non­fuel 
services. Also, the changing face of the Indian consumer is one of the main reasons behind 
the non­fuel services in petro­retailing. Today, he is looking at a one stop solution to all his 
needs – buying groceries, withdrawing cash from his bank, making utility payments,

22
renewing his insurance cover, grabbing a quick bite, obtaining Pollution Under Control 
Certification and of course filling fuel in his car. On the other hand the driver on the 
highways is seeking a clean and hygienic place to relax and freshen­up, service his vehicle 
and have a good meal at the restaurant in the pump. 

d)Loyalty programs an integral part:
The immense competition will make loyalty programs an integral program of the day­to­day 
functioning of petro­retailing. Of course, right now many such loyalty programs are being run 
by the petro­retailers like Smart Fleet (BPCL), Xtrapower(IOCL), Drivetrack (HPCL), 
Transconnect (Reliance), Petrocard (BPCL) and others. However, these programs are mainly 
focussed at the bulk consumers and the small consumers are left unnoticed more or less. But 
in future, there won’t be such differentiation and loyalty programs will be there for every 
segment of consumers.

e) Attempt by all players to drive volumes to retail sites 
In order to saturate the market before the private players can consolidate network, the PSUs 
are vigorously setting up new outlets. In the last three years, the PSUs have added more than 
3000 outlets to their network. However, it will reduce the throughput per RO in long run. 
Hence in order to maintain the throughput, all players will strive to drive volumes to their 
retail sites. 

f) Leveraging automation and communication for enhanced offerings 
In the wake of the increased customer’s expectation, in future, retailing of petroleum products 
is going to be very sophisticated and highly modernized. In the pipeline, there is a slew of 
automation infrastructure solutions ranging from integrated point of sale terminals, 
aggregated data management system, fuel delivery management and fleet management
systems that help customer self­service, dynamic pricing, network planning, demand 
forecasting and s

2.2 Profile of ONGC:

ONGC (Oil and Natural Gas Corporation Limited) is India's leading oil & gas exploration
company. ONGC has produced more than 600 million metric tonnes of crude oil and
supplied more than 200 billion cubic metres of gas since its inception. Today, ONGC is
India's highest profit making corporate. It has a share of 77 percent in India's crude oil
production and 81 per cent in India's natural gas production.

The origins of ONGC can be traced to the Industrial Policy Statement of 1948, which called
for the development of petroleum industry in India. Until 1955, private oil companies such as
Assam Oil Company at Digboi, Oil India Ltd (a 50% joint venture between Government of

23
India and Burmah Oil Company) at Naharkatiya and Moran in Assam, and Indo-Stanvac
Petroleum project (a joint venture between Government of India and Standard Vacuum Oil
Company of USA) at West Bengal, were engaged in exploration work. The vast sedimentary
tract in other parts of India and adjoining offshore were largely unexplored. In 1955,
Government of India decided to develop the oil and natural gas resources in the various
regions of the country as part of the Public Sector development. To achieve this objective an
Oil and Natural Gas Directorate was set up in1955, as a subordinate office under the then
Ministry of Natural Resources and Scientific Research.

The Industrial Policy Resolution of 1956 placed mineral oil industry among the schedule 'A'
industries. In August 1956, to ensure efficient functioning of the Oil and Natural Gas
Directorate, the Directorate was raised to the status of a commission with enhanced powers.
In October 1959, the Commission was converted into a statutory body by an act of the Indian
Parliament, which enhanced powers of the commission further. In 1960s, ONGC found new
resources in Assam and established new oil province in Cambay basin (Gujarat). In early
1970s went offshore and discovered a giant oil field in the form of Bombay High. After
liberalization in 1991, ONGC was re-organized as a limited Company under the Company's
Act, 1956 in February 1994. Today, ONGC has grown into a full-fledged horizontally
integrated petroleum company. Recently, ONGC has made six new discoveries, at Vasai West
(oil and gas) in Western Offshore, GS-49 (gas) and GS-KW (oil and gas) in Krishna-
Godavari Offshore, Chinnewala Tibba (gas) in Rajasthan, and Laipling-gaon (oil and gas)
and Banamali (oil), both in Assam.

ONGC has a fully owned subsidiary, ONGC Videsh Ltd (OVL) that looks for exploration
opportunities in other parts of the world. OVL is pursuing exploration of oil and gas in
Russia, Iran, Iraq, Libya Myanmar and other countries. ONGC has also acquired 72% stake
in MRPL with full management control of the 9.69 tonne, state-of-the-art refinery.

ORGANISATIONAL CHART

24
2.3 History of ONGC:

During the pre-independence period, the Assam Oil Company and Attock Oil company in
northwestern part of the undivided India were the only oil companies producing oil in the
country, with minimal exploration input. The major part of Indian sedimentary basins was
deemed to be unfit for development of oil and gas resources.After independence, the
National Government realized the importance of oil and gas for rapid industrial development
and its strategic role in defense. Consequently they laid great emphasis on development of
petroleum industry in Industrial Policy Statement of 1948.All the major oil players were
carrying out exploration of hydrocarbon resources in India. In Assam, oil was being produced
by the Assam Oil Company at Digboi and oil India was developing two newly discovered
large fields Naharkatiya and Moran in Assam. In other parts of the country exploration work
was on progress. The vast sedimentary tract in other parts of India and adjoining offshore
remained largely unexplored.

In 1955 ,Government of India decided to develop the oil and natural gas resources in various
regions of the country as part of the Public Sector development.With this objective, an oil
and Natural Gas Directorate was set up towards the end of 1855, as a subordinate office
under the Ministry of Natural Resources and Scientific Research. The department was

25
constituted with geoscientists from the Geological survey of India. A delegation under the
leadership of Mr. K.D. Malviya , Minister of Natural Resources, visited several European
countries to study the status of oil industry in those countries and to facilitate the training of
Indian professionals for exploring potential oil and gas reserves.Foreign experts from
U.S.A.,West Germany, Romania and erstwhile U.S.S.R. visited India and helped the
government with their expertise.Finally, the visiting Soviet experts drew up a detailed plan
for geological and geophysical surveys and drilling operations to be carried out in 2nd Five
Year Plan (1956-57 to 1960-61).In April 1956m the Government of India adopted the
Industrial Policy Resolution, which placed mineral oil industry among the schedule ‘A’
industries, the future development of which was to be the sole and exclusive responsibility of
the state.

Soon, after the formation of Oil and Natural Gas Directorate, it became clear that it would
not be possible for the Directorate with its limited financial and administrative powers as
subordinate office of the Government, to function efficiently. So in August 1956, the
Directorate was raised to the status of a commission with enhanced powers, although it
continued to be under the government. In October 1959, the Commission was converted into
a statutory body by an act of the Indian Parliament, which enhanced powers of the
commission further. The main function of the Oil and Natural Gas Commission subject to the
provisions of the Act, were “to plan, promote, organize and implement programmer for
development of Petroleum Resources and the production and sale of petroleum and
petroleum products produced by it, and to perform such other functions as the Central
Government may, from time to time, assign to it “The act further outlined the activities and
steps to be taken by ONGC in fulfilling its mandate.

Period during 1960-80:

Since its inception, ONGC has been working very hard to transform country’s limited
upstream sector into a large viable playing field, with its activities speared throughout India
and overseas also. In India, ONGC found new resources in Assam, new oil province in
Cambay basin (Gujarat) and also added new petroliferous areas in the Assam-Arakan Fold
Belt and East Coast basins (both inland and offshore). ONGC went offshore in early 70’s and
discovered a giant oil field in the form of Bombay High, now known as Mumbai High. This
discovery, along with subsequent discoveries of huge oil and gas fields in Western offshore
changed the oil scenario of the country. Subsequently, over 5 billion tones of hydrocarbons,
which were present in the country, were discovered. The most important contribution of
ONGC however is its self-reliance and development of core competence in E and P activities
at a globally competitive level.

Period after 1990:

The liberalized economic policy, adopted by the Government of India in July 1991, with an
intention to deregulate and de-license the core industrial sectors including petroleum sectors
with partial disinvestments of government equity in Public Sector undertakings and other

26
measures. As a consequence, ONGC was re-organized as a limited Company under the
Company’s Act, 1956 in February 1994. After the conversion of business of the erstwhile Oil
and Natural Gas Commission to that of Oil and Natural Gas Corporation Limited in 1993, the
Government disinvested 2 percent of its shares through competitive bidding. Subsequently,
ONGC expanded its equity by another 2 percent by offering shares to its employees.
During March 1999, ONGC, Indian Oil Corporation (IOC) and GAIL the only gas marketing
company agreed to have cross holding in each other’s stock. This paved the way for long
term strategic alliances both for the domestic and overseas business opportunities in the
energy value chain, amongst themselves. Consequent to this the Government sold off 10
percent of its share holding in ONGC to IOC and 2.5 percent to GAIL. With this the
Government holding in ONGC came down to 84.11 per cent. In the year 2002-03, after
taking over MRPL from A V Birla Group, ONGC diversified into the downstream sector.
ONGC will soon be entering into retailing business. ONGC has also entered the global field
through its subsidiary, ONGC Videsh Ltd. (OVL). ONGC has made major investments in
Vietnam, Sakhalin and Sudan and earned its first hydrocarbon revenue from its investment in
Vietnam.

2.4 Recent Achievement and milestone:

ONGC is the major player in the energy upstream sector. They have achieved great
milestones and have a golden history behind it.ONGC has been ranked as the Numero Uno
Oil and Gas Exploration and Production (E&P) Company in Asia, as per Platts 250 Global
Energy Companies List for the year 2007.ONGC is ranked at 23rd spot amongst “Top 250
Energy Majors of the World in the Platt’s List” based on outstanding performance in respect
of Assets, Revenues, Profits and Return on Invested Capital (RIOC).
ONGC is the only Company from India in the Fortune Magazine’s list of the World’s Most
Admired Companies 2007. ONGC is 9th position in the Industry of Mining, curde oil
production.ONGC is ranked at 239th position in the prestigious Forbes Global 2000 and
Numero Uno ranking amongst Indian Companies.ONGC was ranked at 369th place in
Fortune Global 500 list for the year 2006 based on Revenue.ONGC is ranked amongst top 50
publicly traded Companies in Oil and Gas Industry, based on the year end (2007) market
Capitalization by PFC Energy.ONGC has established 6.42 billion tones of In-place
hydrocarbons reserves with more than 300 discoveries of oil and gas.

India has explored 7 basins, out of which ONGC has discovered 6.ONGC produces 762.3
million metric tones (MMT) of crude and 440.7 Billion Cubic Meters (BCM) of Natural Gas,
from 115 fields.ONGC got “Biggest Wealth Creator Award” for the third time in a row for
the period 2000-2006. OMGC is ranked as most respected Company in PSU category in the
2006 business survey, with 13th position in the league of the most respected Indian
Corporate.ONGC topped the Business India Super 100 list based on sales, Profit after Tax
(PAT), Net Fixed Assets and Market Capitalization for December 2006.India’s credit rating
agency CRISIL and ICRA gave highest credit rating of AAA and LAAA respectively.ONGC
is the only fully-integrated petroleum company in India, operating along the entire
hydrocarbon value chain. It holds largest share of acreages in India.It contributes about 78%
of Indian oil and gas production,about one tenth of Indian refining capacity.It created a
record by turning MRPL from BIFR to BSE Top 3

27
2.5 Product Rang of ONGC:

• Liquified Petroleum Gas (IS 4579-1999)


• Liquified Petroleum Gas for automotive purpose (IS 14861-2000)
• Naphtha (Fertilizer Grade)
• Naphtha (Export Grade)
• Motor Gasoline Grade-BJII MS 88 (IS 2706-2000)
• Aviation Turbine Fuel( IS 1571-2001) (Domestic)
• Aviation Turbine Fuel (JET A1)
• SKO (IS 1459 -2001)
• AUTOMOTIVE DIESEL FUEL (BS II) (IS 1460 - 2005)
• AUTOMOTIVE DIESEL FUEL (BS III) (IS 1460 - 2005)
• VACUUM GAS OIL (EXPORT)
• FURNACE OIL (IS 1593 - 1997)
• FURNACE OIL (Special Grade)
• FURNACE OIL (380 CST) (Export)
• LOW SULPHUR HEAVY STOCK (LSHS)
• BITUMEN (60-70) (IS 73 - 1961)
• BITUMEN (80-100) (IS 73 - 1961)
• SULPHUR (IS 6655: 1972)
• MOTOR GASOLINE GRADE- BS III MS 91 (IS 2796 - 2000)

28
2.6 Performance of the company over the last few years (Statistical Profile):

This is the graph for performance of ONGC for past few years.It is clear from graph that
company has performed consistently well for the past few years.It is clear that

• Crude Oil production has increased considerably for past few years
• The production of value added products has decreased onto certain level but in
the fiscal 2007-08 it has improved
• MRPL the petroleum retailing company of ONGC has performed well. This can
be seen from the graph

Globally it is difficult to maintain RRR>1. But ONGC is the only company whcih is
performing well on this front as shown in graph.

29
Sources: ONGC NEWS SHELF, May 2008

It is clear from the chart that ONGC performed quite well in terms of RRR. For past 10 years
ONGC have posted an average RRR equal to 1.02. And in terms of past 5 years ONGC has
posted RRR equal to 1.09.

At global scenario both ONGC and its subsidiary OVL are also posting RRR>1. In its total
global ranking 135% share of ONGC is 132.56% and that of OVL,its foreign subsidiary is
1.96%. Globally it stands at no.3 after PetroChina and ENI as shown in chart below:

30
Sources: ONGC NEWS SHELF, MAY 2008

In terms of Oil and Gas production the recent performance of ONGC and OVL is as shown
below:

Sources: ONGC NEWS SHELF, MAY 2008

31
Sources: ONGC NEWS SHELF, MAY 2008

It is clear from charts that there is a slight decrease in the production of gas and oil from
ONGC’S prespective. While it’s foreign subsidiary OVL has posted a net increase of 10.21%
in the production of oil and gas. ONGC has laid great hopes on its subsidiary OVL in future.
According to one of the survey conducted by Indian rating agency CRISIL OVL will emerge
as the biggest player in the Indian oil sector.

32
2. 7 Financial status of ONGC:

33
Above shown charts are indicating about the financial position of ONGC. It is clear from the
charts that ONGC have done well in past years. It can be seen from the EPS and PAT values.
The numbers are indicating that they have not only posted huge profits but also their EPS
has increased significantly.
It suggest that financial condition of ONGC is sound.
For the quarter ended on June,2008 profits has 44% as compared to the previous year. It is
because of higher revenues realization on account of higher crude prices.However, company
hasn’t gained in its efficiency as is net margin-net profit as a percentage of net sales dropped
to33 % in April-June quarter.
The company’s profit in the April-June quarter stood at Rs.6,636 crore against Rs.4,610
crore a year ago.It is significantly higher than 152% as compared to previous quarter.
Because in January-March quarter ONGC was badly hit by underrecoveries.
Quarterly net sales for the company crossed Rs.20,000 crore for the first time, rising 46.5%
to Rs. 20,052 crore.

2.8Future prospects/ plans:

To focus on core business of E&P, ONGC has set strategic objectives of:

• Doubling reserves (i.e. accreting 6 billion tonnes of O+OEG).


• Improving average recovery from 28 per cent to 40 per cent.
• Tie-up 20 MMTPA of equity Hydrocarbon from abroad.

The focus of management will be to monetise the assets as well as to assetise the money

ONGC looks forward to become an integrated energy provider, with:

1. New Discoveries and fast track development


2. Equity Oil from Abroad Downstream value additions and Forward Integrartions
3. Leveraging state-of-the art technology and global best practices
4. New source of Energy Production from small and marginal fields.
5. May decide to venture into petroleum industry

34
CHAPTER-3

35
3.1 OBJECTIVE OF STUDY:

ONGC is a major player in the energy’s upstream sector. They have performed quite well on
the front of Exploration and Research (E&R). They entered into petroleum retailing business
five year back when they acquired MRPL from A.V.Birla group by acquiring all the
shareholding of Birla group. This acquisition was carried out on 28th March, 2003. Also
ONGC invested equity of Rs.600 crore to make it ONGC’s highest paid subsidiary. MRPL
performed quite well on its front in retailing business. It enlightened the retailing business for
ONGC.

Due to MRPL’s success in retailing business Government of India give permission to ONGC
to set up 1500 petroleum retail outlets. ONGC has got exclusive marketing rights for the sale
of oil and petroleum products in Indian market. Although ONGC has not ventured into retail
business at present scenario.But they may decide to venture into this business in future.

The Research project has been carried out to aid the ONGC’S reach into retailing business.
Through my study I want to achieve following objectives:

● To study impact of rising oil prices on the sales of petroleum retail outlets

● To study the present market scenario for petroleum Retail Company

By doing this research I want to add to the knowledge of ONGC a brief picture of retailing
business in India (particularly in Delhi NCR) so that in future ONGC may decide to set up
their petroleum retail outlet.

36
3.2 Research Methodology:

In order to find out the real scenario of fuel retailing in India first hand data could prove to be
a major source. For this collection of raw data is very important. As raw data provides a great
deal of information to the researcher and he can take decision on the basis of information
obtained. This statement has the implications enlisted below:

● It will give a clear idea regarding the sales of petroleum retail outlets

● They can examine the available information in the form of data to make a decision.

● This will give a clear idea regarding market scenario of oil companies.

● This will help ONGC to take any decision whether to venture into the retailing business or
not?

From this it can be concluded that Data collection is a very important part of project.

Data

Raw Numbers

Information

Projected objectives were considered and a market survey was done. For this survey
following procedure was considered.

Procedure:

● Reading about the problem

● Deciding on objectives to proceed.

● Developing survey instruments

● Finally analyzing the data and make conclusion

Process adopted:

Gaining knowledge about the problem:

For this the reading work was undertaken first in order to gain in depth knowledge about the
problem. This was very useful while developing questionnaire.

37
Steps in developments of survey instruments:

The main instrument required for survey was a well developed questionnaire. The
development of questionnaire took place in following steps:

Step 1

Research objectives are being transformed into information objectives

Step 2

The appropriate data collection methods have been developed

Step 3

The information required by each objectives is being determined.

Specific Questions/ Scale measurement format is developed.

Step 4

Questions/ Scale measurements being evaluated.

Step 5

The number of information needed is being determined.

Step 6

The questionnaire and layout is being evaluated.

Step 7

Revise the questionnaire layout if needed.

Step 8

The questionnaire format is being finalized.

38
Survey:

In our research we have to find out the impact of rising oil prices on the sales of retail outlets,
so for this the survey of two sections was covered. These sections were

a) Owner of petroleum retail outlets


b) Customer who drives sales of petroleum outlets.

Research Design:

A two stage research was conducted.

1. Secondary Research:

Data was collected from Websites and Catalogues to get information about the problem.

2. Primary Research:

A primary research was conducted.

The questionnaires were developed for owners of petroleum retail outlets and customers and
in these questionnaires’s following areas covered:

1) Sales of Retail outlets


2) Preference of customer for public transportation(mainly metro) instead of their own
vehicle
3) Impact of surge in global prices on the sales or retail outlets.

3.3Sources of Data Collection

The first of research consisted of secondary data search from following sources:

a) Websites
b) Catalogues

In this search information about present market scenario of petroleum retailing business,
surge in global oil prices and the impact of increase in petroleum prices on the preference of
people was being evaluated.For conclusive research, questionnaires were developed based on
secondary data to gather information on the research objectives.

A pilot study was conducted to test these questionnaires. In this sample of 10 people was
picked up from the target population on convenience basis, to determine the limitation and
deficiencies in the questionnaires.

The final draft of the questionnaire was then prepared based on observations from the pilot
study.

39
3.4 Sampling Plan:

3.4a)Sampling place:

In the present research two segments covered were

a) Owners of Petroleum retail outlets


b) Customers section

For these two segments sample size of 50 each was being considered and for this Delhi
NCR region was being chosen as sampling place.

3.4b)Sampling technique:

For this Simple random sampling was used in both the cases. As in simple random
sampling every item in population has an equal chance of being selected. It removes the
element of biasness in the data collection, analysis and other factors.

As we have to cover mainly the customers and petroleum retail outlet owners there is
equal chance of being selection of every sampling element in this technique.

3.5 Limitation of study :

There were problems/obstacles faced during the initial part of project which were however
overcome successfully. To list:

1. It was difficult to break the ice with the petrol pump owners. It was a daunting task to
convince them to fill the personal information regarding volumes of petroleum products,
sales of their retail outlets as this information is very sensitive for them.

2. It was difficult to convince people for providing time to fill the questionnaire as every one
is very busy in their work. It was difficult to convince the owners of retail outlets that the
information obtained from them wouldn’t be disclosed to anybody.

40
CHAPTER-4

41
4.1DATA REPRESETATION ANALYSIS AND INTERPRETATION:
The data has been analyzed on the basis of two questionnaire’s. First questionnaire is based
upon survey conducted in Delhi NCR region covering a sample of 50 people about their
preference for public transport due to rising oil prices. The analysis of questionnaire 1 is as
follows:
In the very first survey 68% male and 32% females were taken as respondents. Out of these
26% people belong to student’s category, 68% service class and 6% to other categories. Out
of these people 84% were from Delhi and 16% to other states.

Q.5. Do you have your own vehicle:

Availability of vehicle Frequencies

Yes 41
No 9

Frequencies

50
40

30
20
10

0
Yes No

Frequencies 41 9

Interpretation:

Out of these respondents 82% of people have their own vehicles and that of 18% don’t have.
Q.6. If yes, then what type of vehicle do you have:

Type of vehicle Frequencies


Two wheeler 23
Four wheeler 18

42
Four
w he e ler
44%

Tw o
w he e le r
56%

Interpertation:

This question reveals the fact that people who have their own vehicle, out of these people
56% people have two-wheeler and 44% people have four-wheeler.
Q.7.)Do you operate it onto its full capacity:

Capacity utilization Frequencies


100% 6
80-100% 10
60-80% 13
50-60% 11
Less then 50% 1

Less
then 50%
2%
100%
15%

50-60%
27%

80-100%
24%

60-80%
32%

43
χ² test application:
By applying Chi square test (χ²) we can analyzed if there exists a significant difference
among choosing mutual fund schemes
Step1: State Hypothesis:

Ho: There is a significant relationship between rising oil prices and switching of people to
metro.
Ha: There is no significant relationship between rising oil prices and switching of people to
metro.

Step 2: Set the Rejection criteria:


DF = 5-1 = 4
At alpha .05 and 4 degrees of freedom, the critical value from the chi square distribution
table is 9.488.
Step 3: Compute the Test Statistics: χ² = ∑ (O-E)² E

Observed Expected O-E (O-E)² (O-E)² E


6 8.2 -2.2 4.84 0.59
10 8.2 1.8 3.24 0.39
13 8.2 4.5 20.25 2.46
11 8.2 2.8 7.84 0.95
1 8.2 2.8 7.84 0.95
χ² = 5.34

Interpretation:

As the Chi-square test statistics 5.34 is less then the critical value of 9.488, hence null
hypothesis is accepted and hence there exists a significant relationship between rising oil
prices and switching of people to metro.

Q.9 What are other mode of transportation:

Mode of transportation Frequencies

Metro 35

Others 9

44
Others
20%

Metro
80%

Interpertation:

From this pie chart it can be interpertated that people who don’t use their vehicle to its full
capacity have switched over to metro or other mode of transportation. It clearly shows that
rising oil prices are causing people to shift to other mode of transportation. It signifies that
due to this switch over people are buying less oil for their vehicle and hence sales of retail
outlets are declining.

Q.10) Is this switch over temporary or permanent:

Switch over Frequencies


Strongly permanent 4
Mostly permanent 17
Undecided 10
Temporary 2
Strongly permanent 2
χ² test application:
By applying Chi square test (χ²) we can analyze the switch over to metro is permanent due to
rising oil prices.
Step1: State Hypothesis:
Ho: There is a permanent shift of people to metro because of rising oil prices.
Ha: There is not a permanent shift of people to metro because of rising oil prices.
Step 2: Set the Rejection criteria:
DF = 5-1 = 4

45
At alpha .05 and 4 degrees of freedom, the critical value from the chi square distribution
table is 9.488.

Step 3: Compute the Test Statistics: χ² = ∑ (O-E)² E

Observed Expected O-E (O-E)² (O-E)² E


4 7 -3 9 1.28
17 7 10 100 14.28
10 7 3 9 1.28
2 7 -5 25 3.57
2 7 -5 25 3.57
χ² = 23.69

Interpretation:

As the Chi-square test statistics 23.69 exceeds the critical value of 9.488 hence null
hypothesis is rejected and hence there is not a permanent shift of people to the metro because
of rising oil prices. It is clear to all that oil prices are volatile and they keep on fluctuating
depending on demand-supply constraints. Hence people are still hopeful that these higher oil
prices will ease out in coming days.

Q.11) If switch over is temporary, what is the reason for this switch over:

Reason for switch over Frequencies


Higher oil prices 9
Others 1

Frequencies

others
10%

higher oil
prices
90%

46
Interpretation:

According to this pie-chart it can be concluded that people for whom switch over is
temporary, 90% of those blame higher oil prices for this switch over. While other 10% people
have other different reason to switch over. It clearly shows the impact of rising oil prices on
the sales of petroleum retail outlets. As people have switched over to metro so they have very
little tendency to go to petroleum retail outlets and buy oil. So the sales are declining.

10. Reason for permanent switch over:


Reason for permanent switch over Frequencies
Higher oil prices 21
Time factor 2
Others

Frequencies

Time factor Others


9% 0%

Higher oil
prices
91%

Interpretation:

Above pie-chart reveals that people for whom switch over is permanent, 91% of them relates
this switch over to higher oil prices and 9% of people relates this to the time factor. This is
similar to that of temporary switch over of people so higher oil prices are forcing people to
switch over to metro or other public transport and hence sales of petroleum retail outlets are
declining in Delhi NCR region.
This was the analysis part of first questionnaire. Second questionnaire was developed to find
out the sales of petroleum retail outlets. In this questionnaire 50 retail outlets of different oil
companies were covered.
The analysis of second questionnaire is as follows:
Q.5 Mention supplement operations:

47
Supplement activities Frequencies
Yes 23
No 27

Frequencies

Yes
No 46%
54%

Interpretation:

According to this pie-chart it can be interpreted that 46% of petroleum retail outlets are being
accompanied by supplement operations while 54% of retail outlets don’t have these facilities.
It shows that Indian petroleum industry is undergoing a transformation face that not only fuel
retailing but also non-fuel retailing activities have a major role to play.
Q.6)Mode of operations:

Mode of operation Frequencies


COCO 4
CODO 46
DODO

48
Frequencies

DODO
0% COCO
8%

CODO
92%

Interpretation:
This pie-chart reveals that 92% of the retail outlets are of CODO type and 8% are of COCO
type.It clearly shows that mostly all the retail outlets are CODO types means company
owned dealer operated. In India DODO type of retail outlets are very less and only Reliance
is the player who has large base of DODO type retail outlets.

Q.8) Supplement operation leads to increase in customer base. How will you rate this
statement.
Rating scale Your response
Strongly agree 45
Mostly agree 3
Mostly disagree 2
Strongly disagree

In this question the owners of petroleum retail outlets were asked about the fact whether
supplement operations like car wash, restaurants, convenience stores etc. play a vital role to
increase their customer base. According to 90% of them strongly agree, 6% mostly agree and
4% mostly disagree. It clearly shows that how much these non-fuel activities are important
and they are going to play a major role in coming days. The graphical representation of this
statement is as shown below:

49
Your response
Mos tly
dis agree
Strongly
4%
Mostly disagre e
agre e 0%
6%

Strongly
agree
90%

Q.9) Mention Cumulative sales of HSD and branded Diesel for different quarters:

Different quarters Cumulative sales of HSD Cumulative sales of branded


(in crores) Diesel ( in crores)
April07-June-07 71 35
July07-Sept.07 72 36
Oct.07-Dec.07 80 35
Jan.08-March08 86 34
April08-June-08 93 31

χ² test application:
By applying Chi square test (χ²) we can analyze if the sales of HSD are greater than that of
branded diesel.
Step1: State Hypothesis:
Ho: α≠β, The sales of HSD is greater than that of branded diesel.
Ha: α=β, The sales of HSD is less than that of branded diesel.
α =95% significance level, β= 5% significance level.

Step 2: Set the Rejection criteria:


DF = 5-1 = 4
At α=.95 and 4 degrees of freedom, the critical value from the chi square distribution
table is .711.

50
At β=.05 and 4 degree of freedom, the critical value from the chi-square distribution table is
9.884.

Step 3: Compute the Test Statistics: χ² = ∑ (O-E)² E

Observed Expected (in (O1-E1)²/ Observed Expected (in (O1-E1)²/ E2


(in crores) crores) E1 E1 (in crores) crores)
O1 for HSD for HSD O2 for E2for
Branded Branded
Diesel Diesel
71 80.4 1.09 35 34.2 0.020
72 80.4 0.87 36 34.2 0.100
80 80.4 0.01 35 34.2 0.020
86 80.4 0.39 34 34.2 0.001
93 80.4 1.97 31 34.2 0.300
5.21 0.441

χ² = ∑ (O-E)² E

=5.21+0.441
=5.651

Interpretation:

Calculated value DF Critical value


α=95% β=5%
5.651 4 .711 9.844

From this table it can be concluded that calculated value is not same for corresponding values
of α and β. Hence α≠β. Hence null hypothesis is accepted it means that sales of HSD is
greater than that of branded diesel. Hence the supposition made by me is correct that due to
rising oil prices people are switching to HSD which is cheaper than that of branded diesel.

Q.10) Mention cumulative sales of normal petrol and branded petrol for different
quarters:

Different quarters Cumulative sales of normal Cumulative sales of branded


Petrol (in crores) Petrol (in crores)
April07-June-07 57 27
July07-Sept.07 59 26
Oct.07-Dec.07 65 24
Jan.08-March08 67 18
April08-June-08 72 20

51
χ² test application:
By applying Chi square test (χ²) we can analyze if the sales of normal petol are greater than
that of branded petrol.
Step1: State Hypothesis:
Ho: α≠β, The sales of normal petrol is greater than that of branded petrol.
Ha: α=β, The sales of normal petrol is less than that of branded petrol.
α =95% significance level, β= 5% significance level.

Step 2: Set the Rejection criteria:


DF = 5-1 = 4
At α=.95 and 4 degrees of freedom, the critical value from the chi square distribution
table is .711.
At β=.05 and 4 degree of freedom, the critical value from the chi-square distribution table is
9.884.

Step 3: Compute the Test Statistics: χ² = ∑ (O-E)² E

Observed Expected (in (O1-E1)²/ Observed Expected (in (O1-E1)²/ E2


(in crores) crores) E1 E1 (in crores) crores)
O1 for HSD for HSD O2 for E2for
Branded Branded
Diesel Diesel
57 64 0.76 27 23 0.70
59 64 0.39 26 23 0.39
65 64 0.02 24 23 0.04
67 64 0.14 18 23 0.92
72 64 1 20 23 0.39
2.31 2.44

χ² = ∑ (O-E)² E

=2.31+2.44
=4.75

52
Interpretation:

Calculated value DF Critical value


α=95% β=5%
4.75 4 .711 9.844

From this table it can be concluded that calculated value is not same for corresponding values
of α and β. Hence α≠β. Hence null hypothesis is accepted it means that sales of normal
petrol is greater than that of branded petrol. Hence the supposition made by me is correct that
due to rising oil prices people are switching to normal petrol which is cheaper than that of
branded petrol.
Q.11) “ Higher oil prices are resulting in decline in the sales of retail outlets”.How will
you rate this statement on rating scale.

Rating scale Your response


Strongly agree 48
Mostly agree 2
Mostly disagree
Strongly disagree

Your response
Mostly
agree
4% Mostly
Strongly disagree
disagree 0%
0%

Strongly
agree
96%

Interpretation:

It can be concluded from this pie-chart that 96% owners of petroleum retail outlets strongly
agree that higher oil prices are resulting in decline in sales of retail outlets and 4% mostly
agree with this statement. It clearly indicates that higher oil prices are badly affecting sales of
retail outlets.

53
CHAPTER-5

54
5.1 SUMMARY:

This research paper is all about studying impact of rising oil prices on the sales of
petroleum retail outlets in Delhi NCR region. Every economy in the world is
interconnected with other economies. Whatever happens in one economy has an impact
on the other economy. Similarly true for oil prices. Worldwide oil prices are rising
causing petroleum products to be dearer.

In this scenario oil marketing companies are suffering losses all across the world. The
Indian government is trying hard to compensate for the losses of oil companies. For this
government is providing subsidies and oil bonds to public sector oil companies. But
impact of rising oil prices has a much wider effect. These subsidies are not sufficient to
make over the losses suffered by oil companies.

In Delhi NCR region operation of metro also has a pronounced effect on the sales of
retail outlets. With metro in operation which is more convenient, cheaper, affordable and
easily accessible people are shifting to metro. This is resulting in decline in sales of
petroleum retail outlets as people are using their vehicle less frequentlty.

In this scenario oil companies are battling hard to compensate for losses. The landscape
of petroleum retailing is changing in India. Petroleum retail outlets are being
accompanied by more non-fuel activities like fun cinemas, restaurants, convenience
stores, malls etc. It is being believed that these activities provides an extra edge to the
petroleum retail outlets and their sales increases. It is believed that people prefer those
places where with fuel retailing they can also enjoy other facilities.

55
5.2 CONCLUSIONS:

From this research following conclusions have been drawn:

• In petroleum fuel retailing business the major players are IOC, BPCL and HPCL.
• IOC is the biggest player in India as it has largest no.of petroleum retail outlets in
India and having highest market share.
• Although APM was being dismantled in 2002, but still it is the Indian government
who drives the prices of petroleum product in India. The prices of petroleum products
aren’t market driven.
• Oil prices are rising sharply and this effect is not limited to India only but it is a
global phenomenon.
• Due to rising oil prices sales of retail outlets are declining and oil marketing
companies are suffering huge losses.
• In Delhi NCR region it is not only the reason for declining sales but operation of
metro is also a major reason. People are traveling at a very low cost and they prefer
metro as a more convenient mode of transportation as compared to their own
vehicles. So they drive less and hence sales of petroleum retail outlets are being
affected.
• These losses of oil companies are being shared by government and upstream
companies like ONGC.
• For this government provides subsidies and issue oil bonds. These methods are
providing a very little relief to oil marketing companies and their losses are still large
enough.
• Another interesting thing has been observed that people are preferring non-branded
products as compared to branded ones which are costly as compared to non-branded
ones.
• The non-fuel activities are playing major roles in the sales proportions of petroleum
retail outlets.

56
5.3 RECOMMENDATIONS:

From this research it is clear that growth of Indian fuel retailing business is being greatly
affected by oil prices and large no. of retail outlets. So to improve the conditions for Indian
oil marketing companies government of India has decided to put on hold opening of
petroleum retail outlets in India for 2 years.

So on the basis of my studies I want to give following recommendations:

• The prices of petroleum products should be market driven rather than government
driven. This will provide equal playing field for all players.
• Indian urban sector has saturated by petroleum retail outlets but India’s rural market
is still being untapped. So oil companies should try to tap that market.
• In the changed environment, establishing superior network architecture will be the 
core area. Building of multiple networks like flagship urban, flagship highway, 
              flanking, rural etc. is what needed. Also, companies have to consider each network 
              like a distinct business line (separate strategy, goals, performance management, 
               execution teams).
        ●     Proper understanding of market forces and economics at state/territory level will be
               the most important. It will help in not only smooth functioning of business but also
               in driving customers to the outlets, like by managing tactical pricing at a trading  
               area level.
       ●     In the changed scenario, petro­retailers will have to take a look into the retail skills 
              they have and accordingly have to make adjustments in that. Network optimization,
              Proposition/Brand Management, Dealer Management, Site Operations Management, 
              Partner Management, Customer Relationship Management etc. are some of the skills 
              that should be incorporated to succeed. 
       ●     The growing competition will increase pressure on margins and therefore, the
              retailers will seek for alternate sources of revenue, taking examples of foreign 
             experiences. To taste success in this, retailers need to develop a sustainable non­fuel 
             model which should synergize with core fuel business and not detract.  However,
             strategic foresight is one thing but what matters most is the superior execution of 
              those strategies and this is the factor which shapes core competency for a company 
              that is hard to replicate by the competitors.
 So finally on the basis of my study I just want to suggest that Although  Government of  
 India has hold the opening of  petroleum retail outlets in India for 2 years and ONGC has got 
 exclusive marketing rights for fuel retailing in India. They can venture into this business any 
 time. They aren’t getting any subsidies from Indian government. So they should venture in  

57
 to this business only when the prices are being controlled and determined by industry rather 
 than government and the mechanism of sharing oil losses with government is being   
dismantled.

Appendix

58
QUESTIONNAIRE:Yor are required to fill this questionnaire with best of your own will.
Information obtained through this survey is for general purpose only
and will not be disclosed to any body else.
OBJECTIVE:
●To determine the impact of rising oil prices on the sales of retail outlets
●To determine the present market scenario of petroleum retail outlets of
oil companies.
Q.1) Location of outlet:……………………………..

Q.2) Current owner of retail outlet:………………….

Q.3) No.of years in an operation:………………………

Q.4) Type of facility:………………………………..


a) Self serve
b) Full serve
c) Both

Q.5) Mention supplement operations(Please tick at appropriate place)


a) Service Boys
b) Car wash
c) Convenience stores
d) Restaurants
e) Fast food outlets

Q.6) Mode of operation:………………………………..


a) COCO
b) CODO
c) DODO

Q.7) Any major changes that you have made either in the type of facilities or type of
Supplement operations,if any then please mention:
…………………………………………………………………………………….
………………………………………………………………………………………
………………………………………………………………………………………
Q.8) “Supplement activities leads to increase in customer base.” How you rate this
statement on rating scale?

Rating scale Your response


Strongly agree

59
Mostly agree
Mostly disagree
Strongly disagree

Q.9) Mention cumulative sales for HSD and normal diesel for different quarters:
Different quarters Cumulative sales of HSD Cumulative sales of branded
(in crores) Diesel ( in crores)
April07-June-07
July07-Sept.07
Oct.07-Dec.07
Jan.08-March08
April08-June-08

Q.10) ) Mention cumulative sales for normal petrol and branded petrol for different quarters:
Different quarters Cumulative sales of normal Cumulative sales of branded
Petrol (in crores) Petrol (in crores)
April07-June-07
July07-Sept.07
Oct.07-Dec.07
Jan.08-March08
April08-June-08

Q.11) “ Higher oil prices are resulting in decline in the sales of retail outlets”.How will
you rate this statement on rating scale?

Rating scale Your response


Strongly agree
Mostly agree
Mostly disagree
Strongly disagree

With Thanks,
Sandeep Sharma
Management Traniee,
ONGC,NEW DELHI

60
QUESTIONNAIRE: You are required to fill this questionnaire as according to your own
will.The information obtained through this survey is for general purpose only.

OBJECTIVE:
● To determine the preference of people from their own vehicle to the
public transport due to rising oil prices.

Q.1) Name:…………………………………………………

Q.2) Sex:……………………………………………………
a) Male
b) Female
Q.3) Profession………………………………………..
a) Student
b) Service Class
c) Others
Q.4) You are from:………………………………………….
a) Delhi
b) Other state
Q.5) Do you have your own vehicle?.....................................
a) Yes
b) No
Q.6) If yes, which type of vehicle do you have?
a) Two wheeler
b) Four wheeler
Q.7) Do you operate it on to its full capacity?(Please tick mark on the appropriate
place in the table)
Capacity Your response
100%
80-100%
60-80%
50-60%
Less then 50%
Q.8) Have you heard about rising oil prices? ( Please tick your response in the table)
View
Strongly aware
Mostly aware
Mostly unaware
Strongly unaware
Not aware

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Q.9) If no, then what are the other mode of transportation that you opt?
a) Metro
b) Others

Q.10) Is this switch over is permanent or temporary? ( Please mark your response in the
table)
View Your view
Strongly permanent
Mostly permanent
Mostly temporary
Strongly temporary
Can’t say
Q.11) If the switch is temporary,what is the reason for this switch over?
a) Higher oil prices
b) Others

Q.12) If the switch is permanent,what is the reason for this switch over?
a) Higher oil prices
b) Time factor
c) Cheap source of transportation
d) Others

With Thanks,
Sandeep Sharma,
Management Trainee,
ONGC,NEW DELHI

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BIBLIOGRAPHY

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Books

1. Kearney, A.T. (2007), Fuel Retailing in India, Prentice Hall of India, New Delhi

Websites

1. http://bloomberg.net
2. http:// crisil.com/doc
3. http://eia.doe.gov
4. http:// e-retailbiz.com/doc
5. http:// ficci.com/doc
6. http;// ibef.org
7. http:// ongcindia.com
8. http:// retailyatra.com/doc
9. http://.wtrg.com/prices

Article

1.Haider Ali, (2008), “A crude reality in globalised world”, The Economic Times,
New Delhi, July 16,p. 13

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