How To Open A Petrol Pump In India – Apply Online, Procedure & Investment

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hp petrol pump

Do you have a dream of becoming an Entrepreneur or you want, start your own business and be your boss.Today we are going to tell you the full procedure, Initial Investments, Online application procedure, How to open the Petrol Pump or bunk In India in any state of India and How to get a petrol pump license in India and apply online for the dealership, and so on. Now anyone can open petrol pump in India according to an influential news channel of India, check here.Here we will explain the process to open a general fuel station and getting dealership of Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL), Indian Oil (IOCL), Essar Oil or any other oil company. Also, know the guidelines and formalities for getting the license and license fees and how to apply online.Gone are days where you need to follow the lengthy process and Unnecessary conditions. Now anyone can petrol or fuel station in India with ease as Govt of India is also easing the norms to do business in India and recently GST bill is also passed in Parliment of India, These days are perfect to start business in India

Some Interesting Facts and Advantages Of Petrol Pump Business in India,

  • Public-Sector-Units (PSUs) have control over 94% of the 53,420+(may vary day-to-day) total petrol pumps in India.
  • Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL), Hindustan Petroleum Corp (BPCL) have around 50,448 (may subject to change anytime)
  •  Private players Essar Oil, Shell & Reliance Industries Limited, are also growing very fast following deregulation of petrol and diesel prices in 2002.
  • Growing fuel market: India is one of the fastest growing economies in the world, which is the reason the automobile sales are also increasing day by day.

How to get a petrol pump license in India and apply online for dealership

Rules and Regulations need to be followed:

  • You need to be so sure about all the rules and regulations of government, to avoid any problems in Future. To start any business you need to fulfill some requirements, rules and requirements, so what we suggest is that you need to very clear about all rules and acts of govt.
  • You must be an Indian citizen and a resident of India as on the date of affidavit.
  • Age of individual applicant must be 21-55 years (except for Freedom Fighter under CC2 category).
  • Minimum educational qualification required for rural ROs is 10+2 examination conducted by a Board/University and Graduation/ Chartered Accountant/ Company Secretary/ Cost Accountant/ Diploma in Engineering for regular ROs. For candidates belonging to CC1 and CC2 category, minimum education required is Class 10th and Class 10+2 examination conducted by a Board/University for rural ROs and regular ROs respectively. However, this norm of minimum education is not applicable to freedom Fighters under CC2 category.
  • Minimum fund requirement is Rs. 12,00,000 and Rs. 25,00,000 respectively for rural ROs and regular ROs. This fund can be in the form of savings accounts, deposits with bank/registered companies/postal schemes OR bonds OR shares of listed companies in Demat form OR mutual funds OR National Savings Certificates, etc. Please note that only 60% of the certified value of Shares, Mutual funds & Bonds will be taken into consideration for eligibility purpose.
  • All applicants must possess suitable piece of land in the area mentioned in advertisement. You may either own it or have it on long term lease for minimum time period as specified in the notification
  • Note:  Regular ROs means locations on Highways (NH/SH) and Urban/Semi Urban areas while Rural ROs means locations in Rural areas but not on Highways (NH/SH).

Source: indiastudychannel.com

Also checkout: How To Start Business With Ola and Make Money

Investment requirement for starting petrol pump in India

Initial Investment Is huge obvisouly due to equipments and Place required to setup petrol pump.To take dealership, cost required would range close around to fifty lakh. It also depends on where you want to setup petrol pump like urban area, rural area, highway etc all require defferent cost and profit margin will also depend on it.

The procedures involved in the setting up of the petrol pumps in India

What are the license fees and application fees for petrol pump station,

  • License fees is Rs. 18/KL for MS and Rs. 16/KL for HSD for dealer owned “B” / “DC” site ROs, while license fees is Rs. 48/KL for MS and Rs. 41/KL for HSD for corporation owned “A” / “CC” site ROs.
  • Application fees is Rs. 100 in case of rural ROs and Rs. 1000 in case of regular ROs. 50% concession is available for candidates belonging to SC/ ST. Application fees must be paid in the form of Demand Draft (DD) of schedule bank drawn in favour of concerned Oil Company or you can pay online now. Fees is non refundable. Please note that one applicant cannot apply for more than one location. In other words, one application for one applicant for one location.
  • In case of Dealer Owned / Company leased sites, non refundable fixed fees of Rs. 5,00,000 is required to be paid for rural ROs and Rs. 15,00,000 is required to be paid for regular ROs. In case of Corporation owned sites (other than CFS) which involves bidding for allotment, bidding amount of Rs. 10,00,000 and Rs. 30,00,000 is applicable for rural ROs and regular ROs respectively.

Source: Indiastudychannel.com

How to apply online for retail outlet of BPCL, HPCL & IOCL

  • First of all, You need to look out for Advertisements posted by the oil companies.
  • Advertisements are published in all leading newspapers and on official websites of the concerned company.
  • In these Advertisements you can find the where the oil companies want to open their  retail outlet
  • So that interested people can open the petrol pump in that area be it may be urban, rural, highway areas.
  • Online Applications can be submitted trough their official website, which will be mentioned at the end of this article.
  • Application must be submitted before the last date of submission.
  • All the documents(Hard copies) must be sent to address mention by the oil companies within seven days of expiry of last date of online application.
  • Applications must be submitted in a sealed envelope mentioning the name and serial number of the location (as per the advertisement). Envelop must also be super scribed as “Application for Regular RO / Rural RO dealership at _________________ (location), ______________(District) of____________(Name of Oil Company)”.
  • Official websites are,
  •  http://www.hindustanpetroleum.com/retailpetrolpumpdealership
  • http://www.bharatpetroleum.in/dealer/dealerSection.asp
  • http://iocl.com/Talktous/Guidelines.aspx
  • http://www.essar.com/section_level3.aspx?cont_id=tyN/VXziEDc=

 

Now coming important question,

How much money does a petrol pump owner make in India?

Petrol Pump businesses are very low margin businesses. The net profit percentages can vary between 0.5% to around 1% depending on how one manages employee salaries, expenses for current/power consumption, credit to bulk buyers such as truck and bus owners, and interest on working capital. There is also revenue from commission paid for transportation of fuel from the fuel depot to the pump (approx. Rs. 3 per km/kl).

As of August 15th, 2015, commission on diesel is approximately 2.5% of sale price and for petrol is slightly higher than 3%, so essentially that would be gross profit. I’ll try to break down the revenue and costs a little more.

Commissions are published at Prices:Petroleum Planning & Analysis Cell

Let’s assume a decently run petrol pump sells 400KL (Kilo Litres) of Diesel and 100KL of Petrol. Also, let’s assume that his petrol pump is about 100 KM from the fuel depot.

Additionally, even in most dealer managed petrol pumps, capital investment for building, underground pumps, fuel stations, sign boards, canopy are made by the oil marketing company, therefore initial capital investment if any is small.

Revenue (based on commission % as on Jan 2016)

1. Commision from sale of petrol = 100 x 2280 = 228,000

2. Commission from sale of diesel = 400 x 1428 = 571,200

3. Commission on transportation of fuel = 500 x 100 x 3 = 150,000

4. Lease of Land to the Oil Marketing Company = 20,000

Total Revenue = 969200 (approx. 9.7 Lakhs)

Expenses

1. Salaries (approx. 20 employees at approx. Rs. 12000 per employee, includes people who fill, managerial staff running 2 shifts, and truck driver and cleaner ) = Rs. 250,000

2. Electricity = Rs. 50,000 (the fuel pumps are real energy suckers)

3. Monthly Interest on Working Capital Requirement of 40Lakhs (for fuel cost, credit, etc.) at 12% = 40,000

4. Interest on Truck Purchase and Maintenance= Rs 30,000

5. Loss of fuel during transportation (50 litres per truck load and 20 trips) = 1000 x 50 = 50,000

6. Fuel Transportation expenses (besides driver and cleaner salaries) = Rs. 50,000

7. Misc. expenses (maintenance, accounting, etc.) = Rs 25000

Total expenses are about 5 Lakhs.

Approx. pre tax profit = Rs. 4 – 4.5 Lakhs per month.

Given the above, the annual net profit can be Rs.50 Lakhs and post tax profit approx., Rs 35-40 Lakhs.

While the number may sound quite rosy, several petrol pumps are poorly managed, in terms of credit recovery, over draft management, etc., which typically brings down the profit margins even further. Additionally, if the owner does not have the financial wherewithal to manage the working capital and give sufficient credit for bulk buyers, his sales tend to go down even further.

Petrol bunk ownership is typically for the well-connected and is largely a 2nd business for the proprietor.

Source: Quora

DisclaimerThe information provided in this article is accurate to the best of our knowledge. Any modifications can be made later by the companies. Readers are advised to use their own judgement skills.

Vithalreddy.M.B is the Editor of VMRworld.com with a focus on startups, Startup News, Business, and Technology.He is also an Electrical & Electronics Engineer, Technology Lover and Entrepreneur by choice.Started His first startup at 21.