Transactions
at
Presented by:
Namita Gupta
FMG XVII B
81091
FORE School of
Management
Concept of sale & purchase
BPCL &amongst
HPCL does notOMCs
have their
refineries in northern region still they have
their retail outlets that too conveniently
located.
Determination of Quantity
ü For the purpose of billing the quantity supplied of
the product is measured at 150 C.
ü For the products like MS, HSD, SKO the quantity is
determined in KL and for LPG it is determined in
MT.
Determination of Price
ü The products are transferred at RTP, determined
every fortnightly at headquarters of respective
OMCs.
A comparison is being made
between the different products to
determine which are more profitable
when they are being sold through the
OMC route or through the retail
outlets.
For the purpose of operation, Indian
Oil Corporation has divided whole of
India into 8 locations.
Product wise analysis
The major products involved in the OMC
transactions are:
Aviation Turbine Fuel (ATF).
BS-III HSD (High Speed Diesel)
Euro-III MS (Motor Spirit) commonly known as petrol
Superior Kerosene Oil (SKO) for Public Distribution System(PDS).
Aviation Turbine Fuel
Calculation of Cost
BS III HSD
EURO III MS
Superior Kerosene Oil
Retail vs. OMC
Fig. in Rs./KL
Interpretations
When crude oil price is between $35 per barrel
to $55 per barrel, it is profitable for OMCs to
sell most of their products through retail
outlets.
Even though IOC is incurring loss on sale of
SKO through retail outlet it cannot stop its sale.
Other products are more profitable when sold
through retail outlets, but the sale has to be
made to other OMCs as per their requirements.
Retail Pricing
Multiple Objectives of
Pricing System
200%
%
180%
160%
140%
120%
100%
2004 2005 2006 2007 2008
Year
Brent Crude Indian Crude basket Petrol
Diesel Kerosene LPG
Sources: PPAC
Kerosene and LPG
Kerosene
• Subsidized kerosene siphoned off to adulterate
diesel
• Less than 2% of rural households use kerosene for
cooking
• 55% rural households use for lighting but is an
inefficient source of lighting
LPG
A non level playing field has been created between Public and
Private sector
Managing Volatility
Suggestion:
The replacement of ad-valorem portion of the excise duty to
specific duty on un-branded products as well is expected to act as
a cushion against the cascading effect of any future change in
international prices on domestic prices for consumers.
SALES TAX RATES ON MAJOR
PETROLEUM PRODUCTS AS ON
01.06.2009