Lpg X Retail
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Comparison between LPG Distributorship Business and Retail Dealership Business Prepared by K.RAJASEKARAN NANJAPPA ENTERPRISES BPCL DEALERS COIMBATORE-641005 Sl No Parameters LPG Distributor ship Retail Outlets 1
Level of competition
Level of competition is Very low. Almost nil.
Level of competition is Very High. Maximum Number of pumps is established by all PSO Companies.
2
Time available to provide service
Convenient, Flexible time available. Can be planned with less number of employees.
No time available Real time, Instant service required. Hence more number of employees required.
3
Free allied value added services
Almost Nil.
Free Air/Free Water/ Free Toilet/Free Nitrogen
4
Customer base
Standard. Permanent base
No Permanent customer base.
5
Weekly Holiday
Yes Possible.
No.Alldays, 365 days.
6
Product loss due to various reasons
Product is packed. Almost nil Loss.
7
Labour Involvement
1. 2. 3. 4.
Product is fluid Self loss by evaporation. Transport loss. Possibility of loss by pilferage.
Very high due to indirect income of voluntary tips by customers in each transaction. Investment required Moderate
Very low. Due to NIL indirect income to labours.
9
Nature of transaction
Only cash. Standard amount.
By Cash, Credit, Credit card, Rewards program card. Hence various forms of cash requires educated, skilled workforce.
10
Risk of Credit Business
NIL
Very High
8
Very high.
11
Business Hours.
Standardised time. Almost matching with office hours. One Product in three sizes.
Always open. Real time.
12
Number of Business products.
13
Risk of Tank/Line leakage
NIL
YES
14
Risk of excess delivery during sale
Nil
YES
15
Labour availability
Very High
Very Low.
16
Percentage of Profitability Profitability of Business to Distributors/Dealers
6%
1.92%
Very high due to Minimum number of distributors for large number of customer base Almost and Always loss to companies due to the heavy subsidies. Hence results in under recoveries. No Tax income from domestic connections. Tax income through commercial cylinders only. Very minimum electricity consumption. Hence very minimum expenses incurred by LPG Distributors.
Very low due to High number of outlets.
17
18
19
20.
Profitability to stake holders, shareholders of Public sector Oil companies Tax income to state and central governments Electricity charges
Many products. Petrol, Diesel, Premium Petrol/Diesel, Lubricants.
Good profitability in lubricants, Auto LPG, Petrol, Diesel, Premium Products. Hefty tax income by sale of all types of fuels. Petrol, Diesel and Lubricants are highly taxed and maximum income to the exchequer. Very high electrical charges. Every litre of product sold is pumped out using electricity. Very high level of illumination required. Hence very high electricity expenses to the Retail Dealers.
Dear Dealer friends, From the above 20 compared parameters, it is evident that our retail business, which is facing lot of operational costs, difficulties yields very lower return on our investment But the LPG Distribution business, which is not facing much operational costs, difficulties when comparing to ours yields very high returns. The irony is both are under One Ministry. What could be the reason for this kind of disparity? I found one conspicuous reason. LPG Distributors are united. We, the retail dealers are not. Let us begin a debate online about how to bring about unity and resolve the disparity. I request all dealer friends to post their views. Let us share our views. So that we can strengthen the interest group so that we can proceed further. Thanking you, With highest regards, K.Rajasekaran
Level of competition
Level of competition is Very low. Almost nil.
Level of competition is Very High. Maximum Number of pumps is established by all PSO Companies.
2
Time available to provide service
Convenient, Flexible time available. Can be planned with less number of employees.
No time available Real time, Instant service required. Hence more number of employees required.
3
Free allied value added services
Almost Nil.
Free Air/Free Water/ Free Toilet/Free Nitrogen
4
Customer base
Standard. Permanent base
No Permanent customer base.
5
Weekly Holiday
Yes Possible.
No.Alldays, 365 days.
6
Product loss due to various reasons
Product is packed. Almost nil Loss.
7
Labour Involvement
1. 2. 3. 4.
Product is fluid Self loss by evaporation. Transport loss. Possibility of loss by pilferage.
Very high due to indirect income of voluntary tips by customers in each transaction. Investment required Moderate
Very low. Due to NIL indirect income to labours.
9
Nature of transaction
Only cash. Standard amount.
By Cash, Credit, Credit card, Rewards program card. Hence various forms of cash requires educated, skilled workforce.
10
Risk of Credit Business
NIL
Very High
8
Very high.
11
Business Hours.
Standardised time. Almost matching with office hours. One Product in three sizes.
Always open. Real time.
12
Number of Business products.
13
Risk of Tank/Line leakage
NIL
YES
14
Risk of excess delivery during sale
Nil
YES
15
Labour availability
Very High
Very Low.
16
Percentage of Profitability Profitability of Business to Distributors/Dealers
6%
1.92%
Very high due to Minimum number of distributors for large number of customer base Almost and Always loss to companies due to the heavy subsidies. Hence results in under recoveries. No Tax income from domestic connections. Tax income through commercial cylinders only. Very minimum electricity consumption. Hence very minimum expenses incurred by LPG Distributors.
Very low due to High number of outlets.
17
18
19
20.
Profitability to stake holders, shareholders of Public sector Oil companies Tax income to state and central governments Electricity charges
Many products. Petrol, Diesel, Premium Petrol/Diesel, Lubricants.
Good profitability in lubricants, Auto LPG, Petrol, Diesel, Premium Products. Hefty tax income by sale of all types of fuels. Petrol, Diesel and Lubricants are highly taxed and maximum income to the exchequer. Very high electrical charges. Every litre of product sold is pumped out using electricity. Very high level of illumination required. Hence very high electricity expenses to the Retail Dealers.
Dear Dealer friends, From the above 20 compared parameters, it is evident that our retail business, which is facing lot of operational costs, difficulties yields very lower return on our investment But the LPG Distribution business, which is not facing much operational costs, difficulties when comparing to ours yields very high returns. The irony is both are under One Ministry. What could be the reason for this kind of disparity? I found one conspicuous reason. LPG Distributors are united. We, the retail dealers are not. Let us begin a debate online about how to bring about unity and resolve the disparity. I request all dealer friends to post their views. Let us share our views. So that we can strengthen the interest group so that we can proceed further. Thanking you, With highest regards, K.Rajasekaran
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