Upbeat with robust growth in profit in the first quarter of current financial year ( FY16), state owned Indian Corporation Ltd (IOCL) has big plans for its rural markets. Very soon customers of rural areas not only buy petrol, diesel and other oil products from IOCL rural outlets, but farmers can also purchase fertilisers, cement and FMCG products from there. The company plans to offer a range of products and services to its rural customers.
“Our domestic sale has gone up by 3.2 percent. Nearly 13 percent of it comes from rural outlets. A year back, contribution of rural was at 12.5 percent. Average growth rate in rural is higher than other areas. Out of nearly 25,000 total outlets, 6,500 are rural outlets,” IOCL Chairman and Managing Director(CMD) told RM.
Oil marketing major with nearly 50 percent market share in retail business spent about Rs 1,000 crore on retail outlet development last year. Automation and solarisation of retail outlets are on. Ashok said equipping rural retail outlets with solar power helped to ensure business continued uninterrupted even during power cuts.
With solarisation of rural outlets, profitibility of dealers in those areas has gone up. Cost of installation of solar is Rs 6 lakh per pump. They can recover their investment on solar within two years. Nearly 3,000 outlets have been equipped with solar panels. The company is providing soft loans to dealers to install solar power.
“We have big plans for rural. Rural outlets will offer fertilisers, Cement and FMCG products to the customers. We are also in talks with State Bank of India to install manual ATM at our rural outlets,” the CMD said.
The company is upbeat with financial performance in the first quarter of the current fiscal. It reported a net profit of Rs 6,436 crore in the first quarter (Q1) ending June in FY 16 as against Rs 2,523 crore in same period last year.
IOCL’s operating income stood at Rs 1,01,307 crore in the first quarter of FY 2015-16 against Rs 1,24,957 crore in the corresponding period in FY 2014-15.
Ashok said that the increase in net profit during Q1 of the current year vis-vis the same quarter of the last year was mainly attributable to increased refining and petrochemical margins.
About crude prices, he said that it was difficult to put a figure or a time frame but crude oil prices would continue to decline for some time but trough out later. crude prices have dipped from the historic high of over US$100 per bbl last year to now US$62 per bbl . Its expected that with Iran signing the nuclear deal with US and other western nations, sanctions being lifted, oil could flow from this country soon further depressing prices in a market already facing a severe glut.
The glut was triggered by lesser off-take of crude in the international market following a slump in the economies of several European nations and USA’s lesser dependence on imports as it indulged in a cutback on imports and increased emphasis on locally produced oil and gas from shale gas reserves.
Detailing about money spent on retail networks including rural outlets also dubbed as Kisan Sewa Kendra(KSK), Ashok said that IOCL had strengthened its retail network with over 25,000 outlets across the country. It had a steady growth and was not affected by any competition from private players such as Essar, Reliance or Total.
“Going forward, we are gearing up to beat competition on the strength of strong and unparalleled retail network, better customer services and incentives. Further incentives and offerings can be worked out depending upon the market conditions,”he added.