If you want to open your own petrol pump business then you have come to right place. In this comprehensive researched article I will discuss about various topics which are given below:-
- Profit margin in petrol pump business
- How much money does a petrol pump owner make in India in general?
- Is it profitable to open a petrol bunk in India?
- How to start a petrol pump business in India?
- Petrol pump dealership investment and commission
- Investment required to start petrol pump in rural and urban areas
- Petrol pump dealership opportunity and how to apply for dealership
- Petrol pump license eligibility criteria
- Why you should start a petrol pump?
- Business basics
- The market
Profit margin in petrol pump business
Lets have a look at dealer’s profit margin:- Generally profit margin for diesel is Rs 1.8 for selling 1 litre of petrol and Rs 1.2 for selling 1 litre of diesel. As you can see that this is low margin business and one can generate good profit per month by having a nice location for his/her petrol pump. Also, this profit margin varies for every dealer.
Final profit in this business depends on various other factors such as:-
- Monthly rent to land owners if its rented property
- Staff salary
- Electricity bill
- Fuel transportation expenses and loss of petrol in transportation
- Maintenance and accounting expenses
How much money does petrol pump owner make in India?
Let’s do the math:-
|Net profit||Rs 3,58,000 Monthly|
|Average sales per month||250000 Litre||150000 Litre||400000 Litre|
|Your commission per litre||Rs 1.2/litre||Rs 1.8/litre||Rs 3.0/litre|
|Gross earning||Rs 3,00,000||Rs 2,70,000||Rs 5,70,000 per month|
|Staff Salary – 10 staff||Rs 1,00,000 monthly|
|If rented property||Rs 40,000 monthly|
|Electricity Bill||Rs 12,000 monthly|
|Miscellaneous expenses per month||Rs 10,000 monthly|
|Average product lost in transportation, etc||Rs 50,000 monthly|
|Total expenses monthly||Rs 2,12,000|
Above chart is average calculation. Net profit also depends on location of petrol pump because if it is in urban city areas then sale of petrol will be more as compared to diesels. If it is installed in a highway then diesel sale will be more.
If you have properly managed this business then you could expect a good net profit. Many petrol bunks in India is not properly managed and at the end they suffer losses.
Is it profitable to open a petrol bunk in India?
Yes, it is profitable if you manage it properly.
How to start a petrol pump business in India?
- Register a firm (Private Limited Company) . It can also be done after final selection by company
- Complete tax registration
- Check advertisement in newspaper by various companies like hindustan petroleum, Bharat Petroleum, Indian Oil, Reliance Petroleum, Essar Petroleum, Shell Petroleum, etc.
- Make sure that you meet the eligibility criteria (given below).
- Further selection process and then final selection.
- Deposit amount – for Bharat Petroleum is 15 Lakhs(non-refundable)
Investment required to start petrol pump in rural and urban areas
Total investment is around 50 lakhs to 2 crores and it depends on locality. It will cost less i.e 50 – 60 lakhs in rural areas but in urban areas it will cost more because it is difficult to get license.
Why open a petrol pump?
In today’s world, personal vehicles have increased manifold. There are more personal vehicles than public vehicles. Either way, all vehicles need fuel. Many eco-friendly alternatives have been introduced to save the earth from the noxious emissions of fuel like CNG and LPG. But with the increasing amount of vehicles, the demand for gas is increasing with each passing day. At this present scenario, starting a petrol pump of your own is a very lucrative idea. More and more people will be buying vehicles and that way, this is one field that will hardly never lose its touch. Whether you are opening a pump in the city or on the outskirts, closer to Highway routes, the business will be profitable everywhere. In modern day situation, this business is more lucrative. Your profit will depend upon the amount of petrol diesel or gas sold annually and your profit margin would also vary.Nonetheless, the fuel demand will hardly decrease.
All types of business requires not only sufficient knowledge but also money. Since it is a petrol pump and you will be dealing with highly inflammable liquids, ensuring all sorts of safety measures is very important. Even the slightest mistake could lead to a major accident. That is why; you need to first acquire a proper license to open a pump. There are certain tests and standards that need to be passed for you to acquire your license. Once all the safety measures and standards are carefully met, you can start with your legal procedures.
Signing necessary bonds and papers are important since most petrol pumps are government undertakings. Even if you are opening a private pump, you need to be registered with the required authorities to ensure that your business is legal.
Location matters a lot!
Location of the pump is also important. If you are choosing to open the pump in the city, it will be better to open it some place there is no other pump in the vicinity. Opening a new pump there will definitely draw more customers. In case you are choosing the outskirts or choosing to start the pump close to Highway routes, that would also be more lucrative. Highways do not have a lot of settlements close by which is why it is also safer to open a pump there. Moreover, people never know when they run out of fuel which is why starting a pump there will automatically attract more customers.
Petrol and diesel do not come cheap, neither do CNG. For this reason, it is very important to ensure that your business funding is regular and sufficient. If it is not taken care of, there could be chances of incurring losses. Therefore, keeping in mind about steady investment is necessary.
There is only one market that can be targeted, that of the vehicles. All vehicles need fuel which is why petrol pumps keep all the fuels available. Many cities in India are now shifting to CNG immediately instead of petrol and diesel. CNG is neither very expensive nor as heavy as petrol and diesel. Moreover it is totally eco-friendly. So, keeping CNG dispensers in your pump would be your step towards making a better and cleaner environment.
While opening a pump, you must also sign several documents that will provide with the knowledge of the emission standards of all fuel. That way if anything illegal happens, you can immediately inform the necessary authorities and also be safe on your side.