Chennai Petroleum to set up retail fuel outlets; commits Rs 400 cr capex

IndianOil Group company Chennai Petroleum Corporation Ltd coinciding with its Diamond Jubilee year has embarked on a journey to set up retail outlets to sell petrol and diesel, a top official said on Tuesday.

The company, which has been producing fuel at its refineries located near the city, has earmarked Rs 400 crore as capital expansion towards this cause.

"We are embarking on a journey to set up retail outlets. Long back about 20 years back, CPCL had one standalone outlet in Sriperumbudur. Now, we are again venturing into this strategic growth path. So this is one exciting journey we are taking now. We want to see that during this Diamond Jubilee year, we will be able to establish some diamond jubilee outlets that is a target we are working on," CPCL Managing Director H Shankar told reporters.

Declining to elaborate on the number of outlets planned initially, he said during the Diamond Jubilee celebrations the company would be in a position to launch the first round of retail outlets.

"Retail outlets will sell petrol and diesel. We got the approval from the Ministry (Ministry of Petroleum and Natural Gas) to set up the retail outlets. So, we are going to move in that direction," he said.

Responding to a query, he said, "it is a startup for us (To establish a retail outlet). We just want to roll out during the Diamond Jubilee year, see how the market reacts. We have set aside a minimum capex (capital expenditure) for that about Rs 400 crore over a period of 2-3 years."  "If the same excitement is reciprocated from the market, then the roll out of outlets will be much faster and bigger." he said.

Shankar said the expansion of the retail outlets would be gradually expanded into other States based on the prevailing market conditions. "We want to spread slowly not that we will do only in Tamil Nadu, we want to go all over (India). We will go in a careful way. It is a journey where it all depends on the market conditions."  According to Shankar, the company had initially set up its first retail outlet in Sriperumbudur near Chennai in 2002 but it was closed as the marketing of fuel products was given to the parent company IndianOil and it was decided that CPCL will be a standalone refinery company.

Asked whether establishing CPCL owned retail outlets would eat into the revenues of IndianOil, he replied that there was enough scope for petrol and diesel market in India and fuel outlets by CPCL would be decided based on the 'market potential'.

"So, whenever we advertise in the press, we have to see where we are going to set up what is the potential available. We have to see what are the sites available, what are the market potential and then only Letter of Intent will be given."  "If there are already established players in and around, there is no point in setting up. So, we need to be very judicious about site selection also. That is what we are now working on," he said.