1. Bharat-Gas Thinking Beyond
LPG ,Preparing For A Full-
Fledged Retail Store
The document comprises of a Case Study ,which was a part of the
summer internship Project at Bharat Petroleum Corporation Limited.
Guided By:
Dr. Satish Pandey – Associate Professor
School of Petroleum Management, (PDPU)
Gandhinagar
Submitted By:
Aakash Malu
Roll No. 20131001
PGP 2013-15 Batch – MBA (Energy & Infrastructure)
School of Petroleum Management, PDPU
Gandhinagar
2014
2. CASE STUDY
BPCL: Bharat Gas -Thinking Beyond LPG, Preparing for a Full Fledged
Retail Store.
It was in late 2003 that Bharat Petroleum Corporation Ltd (BPCL), in a bid to cut its losses
incurred on liquefied petroleum gas (LPG) distribution, lined up a direct-to-home delivery
model based on extensive retailing plan.
The company already joined hands with 36 major consumer goods brands and is in the
process of tying up with several others. These include Bharti Cellular, Godrej Sara Lee,
gensets from Honda, tea from Goodricke and Duncans, and Bajaj Electricals. The company is
the process of tying up with Western Union Money Transfer, Maharaja Whiteline and
groceries suppliers.
Since first year of the Beyond LPG the company cloaked a sales of about 700 crore. The
manager of LPG SBU was very confident for the new initiative by BPCL and in a press
release said.“We are embarking on a change in our image among the consumers from pure
gas suppliers of the controlled regime to a service-oriented company and we expect to
increase our sales five-fold in the next two years,” SK Jain, executive director (LPG), BPCL,
told FE.
TRENDS PREVELENT IN INDIAN LPG INDUSTRY
Since the LPG business was regulated and pricing of the gas was not in the hands of BPCL
,the only was to cut losses was innovations in retailing. Not only BPCL for that matter ,no
OMC had the freedom of pricing. All OMC’s were bleeding in all their business be it Retail
or LPG ,and the more they sale the more they bleed ,but they some how had to increase both
the number of their distributors as well as the volume of sales. While working in a such a
market, there was hardly any motivation for OMC’s to increase the level of customer services
and satisfaction levels.
3. BPCL AS A COMPANY AND BHARAT-GAS AS AN SBU
BPCL has always been known for innovations ,be it Retailing or LPG as a business ,though
its market shares are approximately 27% ,but the company has very strong presence in a few
geographies like Maharashtra with more than 50% market share .Its innovations are as
follows-
1)Petro Cards to increase customer loyalty.
2)The BMCG Gas ,which is a disruptive breakthrough in the metal cutting and brazing
industry ,BPCL has patented the product and has a monopoly.
3)Beyond LPG business .
4)Tie up with Amazon India in order to create a Win-Win situation ,where-in the was dealer
network of BPCL could be leveraged for last mile delivery of products ,COD etc .and at the
same time increasing revenues for BPCL.
5)Launch of the facilities like deliveries after 8 p.m and Sunday’s as well.
6)Launch of Plastic Composite Cylinders ,that are transparent .
BPCL can be called as an innovative and aggressive company.
BPCL’s strength’s that made it possible for it to enter into BEYOND LPG
Business .
1) Vast dealer distributor network.
2) Most people had to purchase a new Gas Stove ,Hose Pipe ,Regulator etc .when they
purchased a new connection ,and before the start of Beyond LPG ,the gas dealers used to sell
any quality Gas-Stove ,Pipe etc .This showed that there was a need to standardise the
business .The sales were that were currently being done were out of any scrutinising and
hence there was a scope for unscrupulous profits and in the end consumer feeling cheated.
3)BPCL was always known for its customer service and was a very strong and trusted brand .
4)BPCL claimed that it would offer discounts on MRP.
4. Products Sold under Beyond LPG
Exhibit 1
1. Gas Stoves – 1,2,3,4 burners, Glass Top ,All major brands ,Lesser known
brands as well.
2. Suraksha Hose Pipe – 1.2 meter, 1.5 meter.
3. Pressure Cookers – Large range of capacity, brands, models etc.
4. Non-Stick Cookware – Tawa, Fry Pan, Cookware Set, Dosa Tawa.
5. HUL products – Tooth-Paste, Washing Powder, Soap, Utensils cleaner etc.
6. Tea – Many brands and sizes of pouch .
7. Flame Retardant Apron –High quality Apron .
8. Rice – Basmati and Non-Basmati and brands like Dawaat etc.
9. Lighter – Gas Fired lighters.
10.Edible Oil –Brands like “Fortune” with large verities of oil like Sunflower,
Ground Nut, Rice Bran etc.
11.Gas Geyser – Many brands and capacity .
12.Appliances – Many brands like “Bajaj” and products like Iron, Oven etc.
13.Solar Products – Like Solar Lantern.
14.Kitchen Trolley – Cylinder Trolley, Plastic and S.S.
15.Water Purifiers – Like Aqua-guard.
16.Diesel Generators – Brands like “Honda”.
17.Cell Phone Connections –“Idea Cellular”, ”BSNL”.
18.Freeze Fresheners.
6. PHOTOGRAPH 2
MODUS-OPERANDI OF THE BEYOND LPG BUSINESS
Beyond LPG business model was built in a framework of keeping LPG Distributors in the
picture for selling the product in the market. Products will be directly sourced from known
manufactures at a wholesale price.
The role of each player was defined as given below:
1) BPCL will negotiate with the suppliers (vendors), set product standards, terms and
conditions and finalize the package deal.
2) BPCL would get into co-branding with reputed brands to give confidence to customers as
well as the vendors.
3) BPCL will work as an intermediary between LPG Distributor and the vendor in terms of
getting the order from LPG Distributor and forwarding it to the vendor and also monitoring
the supply execution.
4) BPCL would get a margin for intermediation and LPG Distributors would get the seller’s
margin.
5) There would be no investment on part of BPCL.
The process ensures benefit to all stakeholders. First, the customer gets the benefit of assured
home delivery of product of daily requirement from a known source. Second, the LPG
Distributor gets into a diversified portfolio of business, using his partnership with BPCL.
That becomes a revenue source for him. Third, the vendors get access to a wide nationwide
channel through BPCL.
7. Journey so far (2003-04 to 2011-12)
Select 20 LPG Distributors in Mumbai were the first lot to stock and sell kitchen wares like
pressure cookers and non-stick frying panes of Prestige and Hawkins. A launching program
in Rangsharada Hotel in Bandra in October 2003 witnessed the enthusiasm of select officials
of BPCL who dreamt of diversification into direct to home retailing initiative of BPCL. A
half page newspaper advertisement in Mumbai on a Saturday morning, as if heralded an era
where public sector oil major ventured into a fiercely competitive field of marketing
consumer goods. Ever since, there has been no looking back for BPCL. Riding on the spirit
of enterprising Distributors and more enterprising executives, Beyond LPG turnover has been
rising at an annual average rate of 50% per annum during last 6 years. Of course, the rate of
growth has slowed down of late, as the base is picking up and efforts are being directed
towards consolidation rather than expansion.
Journey and Growth Of the Beyond LPG business so far
Number
Of
Units 2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Distributor
Enrolled
No 1946 1960 1995 2022 2137 2343 2544
Customers Lakhs 222.3 235.1 252.7 262.4 283.1 310.9 344.7
Vendors
Enrolled
No 10 24 31 48 71 72 86 97 128
Turnover Lakhs 653 7047 13772 17665 34778 45177 69,992 79604 89216
Growth In
Turnover
% 979 95 28 97 30 54 14 12
Margin’s Lakhs 56.46 636 959 1318 2227 2424 3838 5245 6310
Margin’s
Growth
% 1026 51 38 69 9 58 37 20
8. PLANS AHEAD
BPCL now plans to achieve the following:
1. Triple the turnover of Beyond LPG in next 3 years (2015-16).
2. To realize business potential at a Distributor level; each Distributor supplying LPG to 10 to
20 thousand families, on regular basis.
3. Develop ‘Beyond LPG’ as a sub-brand of BPCL, providing a suitable brand name for this
initiative.
CONCLUSION
BPCL has to a marketing plan for the above two goals. Marketing plan has to have detailed
strategy encompassing all aspects of marketing like customer profiling, market segmentation,
product portfolio etc. The plan should be based on the strategy Be Global ,Think Local
,which means that BPCL has to analyse the markets across various geographies in detail ,it
has to cater to the demands in a way that is profitable as well as scalable .Needless to say, the
plan has to be in synch with the market realities, current and emerging, and is expected to
contain details of system, structure and network related activities, keeping in mind the overall
Business model of ‘Beyond LPG’.
