“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.