Indian Oil plans fresh investment in Mauritius; eyes Africa

Having established itself as a major fuel retailer in Mauritius, India's leading public sector oil company IOC is planning fresh investments to expand its capacity in the island nation.

Besides, it is also looking to expand into other African markets by making Mauritius as its base for the region, IndianOil Mauritius Ltd (IOML) Managing Director Ranjan Kumar Mohapatra said here.

IOML is a wholly owned subsidiary of Indian Oil Corp Ltd (IOC), a leading PSU and the largest oil company in India. It entered Mauritius in 2002 and began operations in 2004 after setting up terminals and other facilities.

"Yes, we are trying to make Mauritius a base to enter Africa. In the first phase, we would like to take our lubricant product Servo to Africa.

"Currently we are not exporting anything, but we being a Free Port entity in Mauritius would have significant benefits once we start exporting to Africa," Mohapatra told PTI in an interview here.

A Free Port entity in Mauritius gets various tax breaks for operating from the country's ports for exports to Africa.

"Mauritius has been always considered as a gateway to Africa and we must capitalise on this. Unlike many African countries, the systems are very well laid out here with a level playing fields for everyone and having a base in Mauritius would help in doing business in Africa," he said.

Asked about investment plans in Mauritius itself, Mohapatra said IOML's turnover rose to MUR 7.2 billion in the last fiscal and the company plans to invest MUR 175 million (over Rs 31 crore) in the current fiscal year 2013-14.

One Mauritian Rupee (MUR) equals to about Rs 1.78.

"We will be building tanks for increasing our aviation fuel facility. Besides, we would also like to expand our filling station network both in terms of numbers as well as in terms of facilities. In addition, there would be some other small investments there this fiscal," he said.

"Hopefully, we would be able to increase our market share following these investments," he said.

IOML has 18 filling stations in Mauritius and is also a major supplier of aviation fuel with almost 49 per cent market share in this segment. Across all petroleum products, it has an overall market share of 23.4 per cent, Mohapatra said.

"In aviation fuel segment, there are further growth opportunities. Although our market share is already close to 50 per cent, we have been constrained to some extent due to lack of sufficient tankage facility and the investment in building the new tank would address that issue," he said.

IOML chief said the company started making profits from the very first year of operations here and it has been a debt free company for the fourth year now.

"For the last fiscal, we recorded profit before tax of MUR 148 million and profit after tax of 122.3 million, as against 117.1 million last year," he said.

On his targets, Mohapatra said: "We would look at having at least 25 per cent of all filling stations in the country, since we have about 25 per cent market share.

"There are about 170 filling stations and one-fourth of that would be more than 40 stations. We would reach that level in stages and for now, we are looking at about 25 filling stations in the first phase," he said.

The entire petroleum product needs of Mauritius is being imported from India and MRPL is the sole supplier.

"Currently there are four players in Mauritius for oil marketing -- Total, Shell (now known as Vivo Energy), Indian Oil Mauritius and Engen, which has taken over from Chevron that was earlier operating in this country," Mohapatra said.

"Our physical operations began less than ten years ago. Such kind of market share has been possible in just nine years because of various reasons including a level playing field here in this country.

"We have never faced any bottlenecks while functioning here. A level playing field is provided to all the investors here, while the another factor in favour of Mauritius are well-laid out systems for various business activities.

"For example, if I want to start a new filling station, I know where to go and how to go about it. While there is huge competition in the market here, we never faced any problems in operating here despite being the newest player in terms of greenfield presence," he said.

Mohapatra said initially it was difficult for IOML to establish its presence, because consumers were attached with other players already present here and its competitors were the likes of Total and Shell.

"But when we came here, we decided to give the customers a new experience, including in terms of making the filling station a nice place to visit and later all our rivals started doing the same.

"As a result, we have provided for convenience stores, car washing facilities etc. and such initiatives have resulted in greater footfalls at the filling stations," he said.

IOML is operating here on a very minimal workforce here with a total staff of 30 persons, including five expats from India and 25 from Mauritius itself.

"Besides, we have given indirect employment to 170 locals here through our filling stations and other setups and functions like gardening, servicing etc.

"With expansion going ahead, the staff size would also increase, but we will ensure that number of expats do not increase. When we started here, there were 3-4 expats and 2-3 locals and this ratio has now dipped to 1-5 and we plan to further reduce this ratio in favour of local employees here.

"As we grow, we would like to have more employees from Mauritius, which has got a very skilled workforce," he said.