Essar Oil plans to roll out 5000 pumps in next 18 months

Essar Oil, India’s second largest private oil refiner, plans to nearly double its petrol pumps to 4,300 in next 18 months, a senior company executive  said.
“We have 2,225 petrol pumps now which we will increase to 4,300 in next 18 months,” Essar Oil’s chief executive officer (CEO) retail Madhur Taneja said.

The retail network expansion planned is on franchise model and will entail an investment of about Rs.2,500 crore by the pump owners. “We were the first private company to enter fuel retailing business when we in 2003 opened our first petrol station,” he said.
After diesel price was deregulated or freed from government control in October 2014, the expansion was restarted and network has reached 2,225 now, he said.

“We saw sales volume increase from 700,000 kilolitres in 2014-15 to 1.67 million kilolitres in 2015-16 and we hope to continue to grow at over 100% this year as well against an industry growth of 7-7.5%,” he said.

India’s first private sector petrol pump came up in Maharashtra only about 13 years ago in 2003. Essar Oil was therefore the first private company to enter petro product retailing in India at a time when the government was experimenting with the idea of deregulated oil pricing by freeing up the price of ATF.

Through the course of this regulation regime, Essar Oil, in a bid to keep its retail ambitions alive, provided financial support to its franchisees through various schemes, thus helping them in tiding over the difficult times. This earned the company the dealers’ trust. In October 2014 when diesel prices were completely deregulated, and private retailers like Essar Oil were given a level playing field with their PSU counterparts, the company already had a network of about 1,400 retail outlets. Over the last two years, Essar Oil has been on a ramp-up drive to create a larger retail footprint across the length and breadth of the country. Many outlets in its existing network were revived and work began on launching new Essar Oil pumps.
Today, Essar Oil has a pan-India network of 2,200+ fuel stations, while an additional 2,800+ stations are in various stages of commissioning.

Essar Oil has an asset-light business model. It pioneered the concept of setting up retail outlets using the franchisee-owned, franchisee-operated model wherein the dealer leases his land to Essar for 30 years and invests in setting up the entire infrastructure of the outlet. Essar focuses on enhancing franchisee business by supplying high quality petrol and diesel at competitive rates.

Easiest way to become a petrol pump owner

Essar Oil is looking at touching a nationwide retail count of 5,000 outlets in the next two years. It presently has 1550 operational outlets and another 1600+ are in various stages of implementation.

The company operates through Franchisees-Owned Franchisee-Operated model (FOFO) across the country. “Essar pioneered the concept of setting up retail outlets using the Franchisee-Owned Franchisee-Operated model whereby the franchisee leases his land to Essar for a period of 30 years and invests in setting up the infrastructure of the outlet. Essar on the other hand focuses on enhancing the franchisee’s business by supplying high quality petrol and diesel and adding other profitable business lines including a lease rental on the land and sales commission, non-fuel retail options, and performance based returns on our dealer’s investment made to construct the fuel station to keep our franchisee’s business viable at all times,” Madhur Taneja, CEO Retail, Essar Oil, said.

Apart from providing its franchisees with high quality petrol and diesel, it partners with them across every step, right from commissioning to smooth operations of the retail outlet. Essar Oil is a fully integrated oil and gas company of international scale with a strong presence across the hydrocarbon value chain from exploration and production to refining and oil retail, has a huge franchise network. It owns India’s second largest single site refinery at Vadinar, Gujarat, having a capacity of 20 MMTPA, or 405,000 barrels per day.