Aegis Logistics partners with Essar Oil to sell fuel  

November 24, 2009

Auto liquefied petroleum gas (LPG) distributor Aegis Logistics Ltd and Essar Oil Ltd have joined hands to sell each other’s fuel products through their retail outlets. Bulk of the investments for adding such facilities on both sides will be undertaken by Aegis, which views this partnership as a key in fast tracking of the rollout of 300 Autogas Stations by FY11.

“In a station of Essar where we have petrol and diesel facility, Aegis will be putting up their auto LPG station, thus adding one more fuel steam in the network for the customers. Vice-versa, wherever Aegis has their Auto LPG station, Essar Oil will set up the petrol and diesel fuel streams to increase the customer service base. You will also have the full fuel spread for customers,” said S Thangapandian, chief executive for marketing, Essar Oil.

Aegis presently has a network of 65 Autogas Stations operational in seven states, whereas Essar Oil has over 1,200 retail outlets across the country. However, there is a possibility that the alliance might not use all these sites. “When we say 1,200 sites, what we mean is, we will survey and choose the best sites amongst them. One criterion would be the highest selling Essar sites and also the distance that has to be maintained for safety purposes,” said Anish Chandaria, joint managing director, Aegis Logistics.

Though the total amount of investment depends on the number of sites that would be finalised, setting up infrastructure would involve an investment of Rs25 lakh for each site. The investment model to be followed is the dealer owned and dealer operated (DODO) as well as company owned and dealer operated (CODO) types. Both companies refused to comment on the revenue-sharing details.

Aegis Logistics has made this exclusive arrangement with Essar Oil for seven states—Gujarat, Maharashtra, Karnataka, Andhra Pradesh, Madhya Pradesh, Rajasthan and Tamil Nadu, but officials from Aegis Logistics do not deny a possibility of increasing their presence in the other states as well.

“This is an exclusive arrangement made by Aegis with Essar for seven states. These are the states where we are operating mainly, but just like Essar, we also have an intention to ultimately go national,” said Mr Chandaria.

Aegis Logistics’ current market share in the auto LPG section is around 6% to 7%. “The demand for auto LPG in India for the last fiscal was 3 lakh metric tonnes as against 1 lakh metric tonnes two years back. We expect it to increase to 4 lakh metric tonnes in FY10,” said SO Malhotra, president, commercial, Aegis Logistics.
- Amritha Pillay [email protected]