In the non-subsidied LPG distribution business, Essar Oil looks to target customers with an annual income of Rs 1 million and above. Oil refiner, Essar Oil Ltd, wants to enter the liquified Petroleum gas (LPG) distribution business in the country, said an Essar Oil official on Monday. Mahesh Advani, head of direct sales, Essar Oil, said the company was open to subsidised as well as non-subsidised LPG distribution business in the country. Advani was talking on sidelines of the Indo-American Chamber of Commerce annual convention in Mumbai.
At present, Essar produces about one million ton LPG, Advani said. In the non-subsidied LPG distribution business, Essar Oil looks to target customers with an annual income of Rs 1 million and above — who don’t get any subsidies. Advani added, the company expects better margins by selling LPG directly to the customers than to the state oil marketing companies. At present, Essar Oil sells its LPG production to the oil marketing companies and does not have any presence in the LPG distribution business. Reliance Industries Ltd is the only private oil refiner in India with an exposure to the non-subsidised LPG business. The current regulations in the country does not allow private companies to distribute subsidised LPG to households.
“We can start with the non-subsidised segment which constitutes 30 per cent of the market and then there is commerical LPG,” Advani said. On the timeline of starting operations in the non subsidised LPG distribution business, Advani said,” It is all in the application stage. We are open to doing the non subsidised if the government allows us to do it. ” Essar Oil is also increasing its presence in the fuel retailing business for Petrol and diesel by adding new outlets. Advani also said the company looks to increase the number of fuel outlets from the current 2500 outlets to 5000 outlets in the next eighteen months.
The subsidised LPG business in India is currently dominated by the state run companies like Bharat Petroleum Corporation Ltd, Indian Oil Corporation Ltd and Hindustan Petroleum Corporation Ltd with a combined bottling capacity of 15. 2 million ton. As of April 1, 2016, the combined consumer enrollment of the three companies was 204.1 million of which 201.8 million were domestic users. The three state run companies added more than 20 million new customers in the last financial year. Mike White Womens JerseyShare This