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11th Energy Summit

Petroleum Retailing – Future outlook

17th October 2008

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Understanding Retail Business

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Market size: Volume

MS( R )8%

Others64%

HSD( R )28%

Year : 2007-08

78.21 MMT

33.6 MMT

9.19 MMT

Retail market is 36% of petroleum products sold by volume in the Country

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Market Segmentation : Retail Business

Urban

42.4%

Small

town

16.1%

H/way

23.0%

Rural

18.5%

MS (R) HSD (R)

3.90 MMT

1.48 MMT

2.11 MMT

Year : 2007-08

1.70 MMT

Urban

15.0%

Small

town

13.0%

H/way

50.8%

Rural

21.2%

7.12 MMT

17.07 MMT

5.04 MMT

4.37 MMT

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Evolution of Retail Business

National Oil Companies

Regulated network expansion

Sellers market

Low infrastructure and service standards

De-regulation of Petroleum Retailing

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Impact of De-control on Retail Business

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Impact of Deregulation - Network Explosion

Oil Co. Apr. 02 Aug. 08

IOC Group 9429 17755

BPC 4711 8286

HPC 4729 8378

RIL - 1432

EOL - 1152

NRL/Shell/ONGC - 164

TOTAL 18869 37167

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New Entrants: Business Proposition

Automated ROs assuring highest level of Q&Q Professional Forecourt service Highest level of house-keeping Distinctive Visual Identity Fleet Loyalty Programmes Most ROs company operated Non-fuel facilities like Dhabas, C-store, fast

food, ATM, Vehicle Care, Toilet Complex etc. Discounting Strategy

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Activities of Existing Players

New Retail Visual Identity

Branding of RO Activities

Introduction of branded fuels

Loyalty Programmes

Non-Fuel Convenience Retailing

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Challenges from All Sides

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Improved Visual appearance

Increased focus on Q&Q

Branding of ROs & service

Aggressive new commissionings

CNG, Auto-LPG network expansion

Use of domestic LPG

Diversion of PDS/PMS SKO

““S

ub

sti

tute

S

ub

sti

tute

Fu

els

”Fu

els

”““Exis

ting

Exis

ting

P

layesr”

Pla

yesr”

Challenges from all sides . . .

Customer expectations gone up Quality and quick courteous service

important Bargaining power of specific Customer

groups

““New Entrants”New Entrants”

““High customer demands”High customer demands”

Under pressure . . .

. . . on several fronts

Approval for 11159 ROs High Focus on Q&Q and Service Attractive Appearance

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Future Outlook – Indian Oil perspective

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Future Outlook – Indian Oil perspective

Addressing Customer’s need of Q&Q

Market Segment wise Proposition

Network Augmentation

Top Line Loyalty Engines

Dedicated Retail Organisation

Galvanising Dealer Organisation

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Addressing Primary Need of Q&Q

High Frequency Sampling

Third Party Certification

Retail Automation

Vehicle Tracking

Capability Building of Dealer Organisation

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Addressing Secondary Need of Network Visual Appeal & Value Added Facilities

Distinctive Retail Visual Identity

Introduction of Branded Fuels

Non-Fuel Facilities

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Introduction of Branded Fuels

Dosed with Friction Busters

Market share (48.8%); available in 7260 ROs-(52.7% RO covered)

Conversion at 25.9%

Market leader with highest share (60.1%) available in 10,066 ROs (56.7% RO covered)

Conversion at 16.4%.

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Non-Fuel Business

Non-Fuel Business at Retail Outlets driven by time paucity in matured markets

This Activity is nascent in India

High network of “Mom & Pop” Stores are efficient and popular popular

Value added services

Present IndianOil approach thru Alliance Route

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Market Segment wise Proposition

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Xtracare for Urban Markets

Third-party certification & sampling to ensure highest industry standards

100% new generation DUs

Availability of premium fuels

Cashless transaction capability

Distinctive Branding

Trained manpower

Automation

Additional Compensation

More than 2000 ROs in place

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Swagat for Highway Markets

Large format networked ROs on GQ, corridor and major Highways meeting Fuel and non-fuel needs

Facilities include automated services, food and beverages, communication, shopping, customer health, hygiene, cashless transactions

Distinct branding

Network of 99 ROs in place

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KSK for Rural Markets

Low cost infrastructure For meeting Agricultural

requirements Addl. Inputs like Fertilizers, Seeds, Cement and Spare

Parts for augmenting dealer revenue

Nodal point for Community Services

2200 ROs commissioned

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Top Line Loyalty Engines

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Xtrapower Program

Best and fastest growing reward program in industry for fleet customers

Current strength of over 1.1 million cards and spend of over Rs.1000 crores per month

Accepted at over 4000 ROs across the country

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XTRAREWARDSTM Program

First & only on-line cash loyalty program in the Industry

Instant membership

Program launched in Bangalore, Mumbai, Delhi, Ahmedabad, Chennai, Hyderabad, Coimbatore & Mysore.

Target to enroll 6 lacs customers during current year.

Alliances with Dominos, Subhiksha, JK Tyres, Rediff Shopping and others

Xtrarewards

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Challenges before dealership network

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Challenges before dealership network

Increase in Retail Outlet Network

Increased Customer Expectations and Shifting Loyalty

Low RO Visual appeal and house keeping standards

Increased working capital requirements

Inadequately motivated & trained manpower

Reduced sales and profitability

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Way Forward

• Economise on logistics costs• Adoption of technology in Retail • Extending reach of network• Wholesome offering to customers in each segment• Thrust on Q&Q • Alternative Fuels – Auto LPG,CNG• Thrust on Bio-Fuels• Upgraded fuels for niche markets• Improved customer service standards

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Thank you