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 capture 15% 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 challenge 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 multibillion conglomerate 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.
