Es­sar Oil Plays the ‘Made in UK Card’ to Gain Re­tail Mar­ket Share

The Economic Times - - Companies - Ra­chita.Prasad@ times­group.com

Stan­low: Es­sar Oil is play­ing the ‘made in UK’ card and pric­ing prod­ucts ag­gres­sively to grab a big­ger piece of the fuel-re­tail­ing pie that has been thus far dom­i­nated by global en­ergy con­glom­er­ates such as BP and Shell.

The com­pany has opened six re­tail out­lets, mak­ing its de­but in the con­sumer seg­ment, and has plans to run 400 out­lets in three years.

“Re­tail ven­ture is aimed at de­risk­ing. With our ef­forts, we have al­ready turned around the Stan­low re­fin­ery but now there is lim­ited op­por­tu­nity in the re­fin­ery busi­ness,” Naresh Nay­yar, ex­ec­u­tive chair­man of Es­sar Oil UK, told ET.

Bil­lion­aire brothers Shashi Ruia and Ravi Ruia-led Es­sar Group ac­quired the re­fin­ery from Royal Dutch Shell in July 2011 and has been able to turn around its per­for­mance and cap­ture15% of the UK’s road trans­port fuel de­mand. Es­sar Oil UK has turned around the loss mak­ing unit with a record net profit of $ 187 mil­lion in 2015-16 and its highest ever op­er­at­ing profit of $ 340 mil­lion in the pe­riod, pri­mar­ily by ra­tio­nal­is­ing op­er­a­tions, in­creas­ing ef­fi­cien­cies, di­ver­si­fy­ing the crude bas­ket and im­ple­ment­ing mar­gin im­prove­ment pro­grammes. The com­pany has made a quiet foray into the re­tail busi­ness, fo­cus­ing more on lo­cal brand­ing and mar­ket­ing ex­er­cise to lever­age of its lo­cal pres­ence with the tagline “di­rect from our UK re­fin­ery.” The Es­sar out­lets of­fer prices at dis­count to com­peti­tors and have man­aged to clock 20% av­er­age rev­enue growth. “We have grown 45% since we moved to Es­sar and com­pet­i­tive pric­ing is a key fac­tor but it also helps that the brand­ing is bright to look at. The chan­l­lege for these guys is to build a big net­work so that we can use fuel card. A lot of in­de­pen­dent com­pa­nies have talked about en­ter­ing en­ergy busi­ness but this is backed by a multi bil­lion con­glmer­ate and thats why the likes of BP and shell are wor­ried this time,” Shane Thakrar, CEO of HKS Group told ET. His com­pany runs 61 out­lets across the coun­try which in­cludes one Es­sar out­let at Coalville, Le­ices­ter­shire.

SB Prasad, chief com­mer­cial of­fi­cer­re­tail of Es­sar UK said: "For us ro make a dent in this mar­ket as an In­dian com­pany was tough. We are build­ing a brand that con­veys that our re­fin­ery is lo­cal un­like oth­ers." (The re­porter is vis­it­ing Es­sar Oil's Stan­low plant on in­vi­ta­tion from

the com­pany)

Co’s opened 6 re­tail out­lets, mak­ing its de­but in the con­sumer seg­ment, and plans to run 400 out­lets in 3years

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