IOC to spend Rs 800 crore for rural retail

Indian Oil Corporation (IOC), the largest domestic oil marketing company in the country, is planning to invest Rs 800 crore during the financial year 2009 to expand and modernise its petrol stations, according to a top company executive.

The company's petrol pump stations at the end of the financial year 2008 stand at 17,600 and it plans to add 1,195 new outlets in the financial year 2009.

G C Daga, director - marketing, IOC, said that a majority of these stations would come up in rural areas.

IOC's expansion is taking place when oil marketing companies are grappling with an extremely difficult operating environment.

In the last fortnight of March 2008, for instance, oil marketing companies' under-recoveries from petrol sales exceeded Rs 8 per litre, while diesel under-recoveries reached more than Rs 15 per litre, according to analysts.

IOC, which accounts for nearly half of the total petroleum products sales in the country, has seen a strong growth in sales of diesel and petrol for the 12 months ending March 2008.

The company's petrol sales were 4.3 million tonnes in the financial year 2008, a rise of nearly 12.5 per cent y-o-y.

The company accounted for 42.5 per cent of the total petrol sales in the country in the financial year 2008, the company executive said.

IOC's total diesel sales were 17.6 million tonnes in the financial year 2008, a rise of 14 per cent y-o-y. The company's market share for diesel was nearly 47 per cent in the financial year 2008.

The executive said a strong demand for diesel from the power, mining and construction sectors fuelled growth.

In the first nine months of the financial year 2008, IOC's profit before tax grew by 52.6 per cent y-o-y to Rs 10, 749.9 crore.

Oil bonds worth Rs 11, 460.70 crore from the Central government and the Rs 8,946.70 crore subsidy sharing by upstream players helped the company post a robust PBT.