Published on: 2024-04-09
Author - Prakalp M Jain | Published on 10th April, 2024
With rising automobile sales and increasing demand of mobility & transportation, starting a petrol pump (Fuel Station, Retail Outlet, Petrol Bunk) in India can be a very profitable business idea. With alternative fuel like Electric Vehicle, Solar Charging, Compressed Bio Gas, etc., it’s becoming more and more lucrative to setup an integrated petrol bunk or fuel station to make good profit. But, it’s also equally important to research the market and undertake proper due-diligence before starting Petrol Pump Business in India.
At Effologic, we have assisted many entrepreneurs in successfully setting up and scaling up their Fuel Station (Petrol Pump) business with leading Brands of India like Bharat Petrolium, Hindustan Petroleum, Indian Oil, Nayara Energy, etc by arranging Land Allotment, Dealership Allotment, Project Loan, Project Report, Working Capital, Inventory Funding, E-Dealer Funding (e-DFS), etc. in Madhya Pradesh, Rajasthan, Chhattisgarh, Gujarat areas. Based on our experience, we are hereby summarizing key points that require careful planning to Start & run Petrol Pump Business in successfully.
First of all, a proper market research about the local catchment area needs to be undertaken before finalizing the Project. Factors like land accessibility and road conditions (04 lane, 02 lane , divider distance, U-Turn availability, etc.), nearby catchment areas (residential colonies, industrial areas, bypass or ring road connections, bulk consumers like schools, collages, industries, etc.), competition levels ( presence of other petrol pumps, brands in 01 to 06 kilometers range need to be analyzed carefully), Competitor Sales Data , land location (Rural or Urban), etc. need to be researched by visiting the local micro markets In India. Before finalizing location, it is necessary to review above parameters and finalise as per the above.
Based on the market research, decision need to be taken about which Oil Marketing Company (OMC) should be preferred to apply and get Dealership for Petrol Pump. As dealership eligibility norms and selection process differ from Company to Company, it is better to keep couple of options and apply to them. Generally selection criteria includes following norms (though criteria can vary for each Company)-
It is also to be noted that while most dealerships are awarded in name of individual applicants / proprietership firms, you may also check and decide if you can avail dealership in name of Partnership Firm, Pvt Ltd Company, Society or other formats.
In order to apply for dealership, you may visit website of respective OMC Company and apply through the official portal only. Do not fall prey to scammers pretending to arrange any dealership to you against payment of advance fees etc.
Once a OMC / Brand is identified for opening Petrol Pump, an application need to made in prescribed format to the Oil Marketing Company. Many times, newspaper advertisement are published by OMCs seeking proposal from investors / entrepreneurs. Proper Application submission with supporting documents is required to get the Dealership approval.
Upon signing of Dealership Agreement, required statutory approvals & licenses is a mandatory step to start the Petrol Pump business. Approval & Licenses include Change in Land Use (CLU or Diversion to Non-Agriculture Category if required), GST Registration, VAT Tax Registration, Business License, Udyam Registration, Weights & Measurements Certificate, Electric Connection, Explosive License (PESO License), Municipal Corporation approval, Fire Safety approval, NHAI Approval for Highway Petrol Pumps, Gumasta, Business License, etc.
Side by side, entrepreneur must work out total project cost of setting up Petrol Pump Business to move ahead. Project Cost shall include Land Cost, Approval & Licensing Cost, Dealership Agreement charges, Deposits, Equipment Costs, Civil Construction & Shed Construction, Office & Electrical Setup cost and most importantly working capital requirement. Once Project Cost is finalised and OMC dealership is done, it is suggested that a Detailed Project Report (DPR) with Project Details, Location Analysis, SWOT Analysis, Risk Analysis, Financial Projections, CMA Data, etc . Assistance from Professional Consulting agencies may be taken for this purpose.
Once Project Cost is finalized, entrepreneur needs to ensure availability of margin money and also apply to Bank / Financing Institution for obtaining Project Loan and Working Capital facility like Cash Credit / Overdraft facility. Special focus need to be given to assessment of working capital requirement so that smooth day to day business can be run. In today’s time, schemes like redit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for collateral free loans, E-Dealer Finance Scheme (eDFS), Supply Chain Finance, etc. can be explored to avail smooth financing.
Once all approvals, licenses are applied and obtained and Finance is available, entrepreneur need to put maximum focus on timely completion of project construction like Canopy, Underground Tanks, Dispenser Machines installation, testing equipments, fire safety equipment, CCTV Cameras, Boundary Walls, Office Area, Toilets & public facilities, etc. as per OMC and Good Market Practices standards.
Once Construction and development works are complete and all required approvals, licenses are obtained, it is time to open the Petrol Pump for business & commercial operations. Adequate advertisement and publicity like Banners, Hoardings, signage etc will be helpful in drawing Public Attention towards your Petrol Pump.
It is to be noted that customers would not just buy fuel from your Pump because fuel is available. Remember, in today’s era, offering customer service is more important than anything else. Below factors would help in improving customer satisfaction :
As the demand of fuel in India is growing, it is good opportunity to tap this segment as an entrepreneur. However, in today’s competitive scenario, proper planning, careful execution and diligent operations of the business are the key to success.
{Note – Details given hereinabove are general in nature and can differ from state to state, Company to Company, client to client from time to time. Please read, understand and analyze each OMCs requirement carefully before applying and take professional help prior to making decision}
Scam Alert – Please note that there are scammers posing as some agent or employees of any OMC Company and asking for cash / some kind of reward to allot any dealership to you over call / SMS / Whatsap. Please stay aware of such scammers and do not respond to them. Always apply through the official website of the OMC or visit OMCs office in your area to know more about the process.
1 Comments
Saurabh
2025-03-17Survey of profit and construction of petrol pump