11 th Energy Summit Petroleum Retailing – Future outlook 17 th October 2008

1. 11th Energy Summit Petroleum Retailing – Future outlook 17th October 2008

2. Understanding Retail Business

3. Market size: Volume 9.19 MMT Retail market is 36% of petroleum products sold by volume in the Country 33.6 MMT 78.21 MMT Year : 2007-08

4. Market Segmentation : Retail Business HSD (R) MS (R) 5.04 MMT 1.70 MMT 7.12 MMT 3.90 MMT 4.37 MMT 2.11 MMT 17.07 MMT 1.48 MMT Year : 2007-08

5. Evolution of Retail Business • National Oil Companies • Regulated network expansion • Sellers market • Low infrastructure and service standards • De-regulation of Petroleum Retailing

6. Impact of De-control on Retail Business

7. Impact of Deregulation - Network Explosion

8. 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 New Entrants: Business Proposition

9. Activities of Existing Players • New Retail Visual Identity • Branding of RO Activities • Introduction of branded fuels • Loyalty Programmes • Non-Fuel Convenience Retailing

10. Challenges from All Sides

11. Challenges from all sides . . . “New Entrants” • Approval for 11159 ROs • High Focus on Q&Q and Service • Attractive Appearance Under pressure . . . • 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 “Existing Playesr” “Substitute Fuels” . . . on several fronts • Customer expectations gone up • Quality and quick courteous service important • Bargaining power of specific Customer groups “High customer demands”

12. Future Outlook–Indian Oil perspective

13. 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

14. Addressing Primary Need of Q&Q • High Frequency Sampling • Third Party Certification • Retail Automation • Vehicle Tracking • Capability Building of Dealer Organisation

15. Addressing Secondary Need of Network Visual Appeal & Value Added Facilities • Distinctive Retail Visual Identity • Introduction of Branded Fuels • Non-Fuel Facilities

16. 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%.

17. 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

18. Market Segment wise Proposition

19. 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

20. 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

21. 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

22. Top Line Loyalty Engines

23. 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

24. 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

25. Challenges before dealership network

26. 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

27. 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

28. Thank you