BOC India has entered into a strategic alliance with Bharat Petroleum Corporation (BPCL) for distribution of liquefied petroleum gas (LPG). This is likely to develop into an exclusive arrangement betw…
BOC India has entered into a strategic alliance with Bharat Petroleum Corporation (BPCL) for distribution of liquefied petroleum gas (LPG). This is likely to develop into an exclusive arrangement between the two companies in the long run, and to generate over Rs 350 crore for BOC. BOC managing director Raman Pandya said the business when fully developed would double the company“s income. The business would be test launched in Mumbai shortly. BOC would be prepared to launch the business nationwide by September, he added. Under the agreement, BOC would initially distribute LPG for bulk industrial use. But, in the long run, the company plans to lay pipeline and to distribute to households. Pandya said: “We are developing this line of business with an eye on the withdrawal of the administered pricing mechanism (APM). When the pricing mechanism would be dismantled finally, the distribution business will become even more lucrative.” Globally, the business generates 7-10% margins. But since the volume is easily expandable and cash flows in short cycles, LPG distribution is an attractive business.