IndianOil brings packaged water to the pump in a non-fuel revenue push

State-owned refiner and oil marketing giant Indian Oil Corporation (IndianOil) has invited expressions of interest (EOI) from companies to help launch its own packaged drinking water brand across its retail outlet network, as the oil marketing company looks to increase non-fuel revenue.

IndianOil's EOI, issued on September 18 by its Retail Sales division, proposes an aggregator-led model under which partners will manage manufacturing, quality assurance, supply chain, logistics and rollout. The brand, including its trademarks, artwork and packaging designs, will remain exclusively owned by IndianOil.

The company has about 43,603 retail outlets, according to the EOI, of which 21,435 are located on national and state highways. It plans a phased packaged drinking water rollout, starting with highway retail outlets before expanding to urban, semi-urban and rural locations.

Three pack sizes in first phase

The initial product portfolio will comprise packaged drinking water in PET bottles of 250 ml, 500 ml and 1 litre, with the 1-litre bottle envisaged as the lead product. IndianOil has also indicated that it could subsequently expand the range to premium water, natural mineral water, alkaline water and functional hydration products, subject to technical feasibility and regulatory compliance.

The EOI provides tentative consumer prices of ₹6 for 250 ml, ₹10 for 500 ml and ₹20 for 1 litre, inclusive of goods and services tax. It proposes a dealer margin of 25-35 per cent of the maximum retail price excluding GST and an IndianOil revenue share of at least 12 per cent of the Dealer Landed Price, also excluding GST.

Aggregator to handle manufacturing and distribution

Under the proposed model, the aggregator will arrange for the water to be manufactured by facilities approved by IndianOil and sold under the IndianOil brand. It will also be responsible for procuring packaging materials, production planning, warehousing, transportation, inventory management and servicing designated retail outlets. The aggregator will bear the cost of visi-coolers and recover it from its share of the Dealer Landed Price.

The proposed arrangement is currently restricted to IndianOil's designated retail outlets. It does not cover LPG distributorships, institutional customers, IndianOil offices, joint ventures, subsidiaries, e-commerce or general trade. IndianOil has retained the option to extend the engagement to other channels at a later stage.