The Hindu : IOC plans differential commission for dealers

Online edition of India's National Newspaper
Friday, Mar 12, 2004

Andhra Pradesh

Andhra Pradesh - Visakhapatnam

IOC plans differential commission for dealers

By Our Special Correspondent

VISAKHAPATNAM, MARCH 11. The Indian Oil Corporation (IOC) plans to introduce differential commission rates for its dealers to compel them to sell more in a bid two retain its market share and meet the impending competition from Reliance and other private companies.

Addressing a meeting of dealers in Visakhapatnam division held here on Thursday, the Executive Director (Retail Sales), T.L. Jain, gave them a candid message that they should either improve their performance or quit.

"The IOC plans to give higher commission for those dealers who achieve or exceed their sales target and also introduce disincentives for those who fail to meet the target given. We are heading for fixing dealer-wise commission,'' he said.

Mr. Jain took pains to explain the changing scenario in retail market of petrol and diesel in the wake of liberalisation policies of the Government. Though there were only four players - all nationalised companies - they had been vying with one another to improve their sales and spending a fortune on publicity and facelift of their outlets. They also offered various incentives to attract customers. The competition would become more intense and real when once private companies entered the market in a big way, he feared.

The IOC had already introduced loyalty programme, credit cards, insurance, rewards, etc., to retain its customers. It had made an agreement with ICICI, Sundaram Finance, to provide credit cards without collecting any interest for 15 days and that it would subsidise the loss.

He said that the IOC had opened 914 retail outlets last year and spent Rs.2,000 crores on upgradation of existing outlets. He admitted that the old dealers suffered loss due to sharing of business with new dealers. To compensate the loss, the IOC had planned to increase their commission substantially (by about 50 per cent) from April 1 even though the Government did not permit any enhancement in customer price immediately.

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