Petrol Pump Business Plan

A Complete Guide on How to Start a Petrol Pump Business

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Petrol pump business is one of the most lucrative business models across the world. Though establishing and running a petrol pump business might seem daunting to many, given the number of formalities and administrative procedures involved, the returns far outweigh the efforts. Here’s a comprehensive guide to establishing and running your very own petrol business.

A Step by Step guide on Starting a Petrol Pump

There are a number of steps involved in starting a business, particularly so for a petrol pump, given that it is a highly regulated industry. Here’s a breakdown of the steps involved in starting a petrol pump business.

Make a Business Plan

The first order of business while trying to start any business is making a comprehensive business plan that is sustainable in the long run and takes into account all your unique advantages and disadvantages. However, it always helps to have a detailed business plan that you can follow while also leaving some space for the unknown. For many, a business plan will include funds required, manpower required, administrative tasks, business goals to achieve, etc.

Source Funds

Depending on the location, you might need anywhere from ₹12 Lakhs to ₹25 Lakhs to get started with your petrol pump business. If you have the entire funding available, then that’s all well and good, you can get started with your business as per plan. However, if you don’t have the funds readily available to you, you might want to consider other options for funding your business. This can include business loans or personal loans.

Study Competition

In order to be more strategic and make informed decisions that are instrumental to your success, it’s important that you study your competition. This can be a great way for you to understand the business model a little bit better. This will also help you recognise a number of opportunities that you can seize while also giving you an idea of the potential mistakes to avoid for success. This will help you position yourself and your business for growth and success.

Land Required

Since a petrol pump business is one that is land-intensive, it’s crucial that you find a piece of land that’s ideal for your business model. This can be highways, main roads or roads where there is demand for petrol pumps but not supply. It’s also important that you choose a piece of land that is compatible with the petrol pump business model.

Finding a location

The location of your petrol station is imperative to the success of your business. This is why it’s important to do some research and understand the location of your business better before establishing your business unit. Understand the demand in the location and compare it to demand in other locations to understand if your location is ideal for your business.

Fees & Charges

1. Application Fees: As an applicant, you are required to deposit an application fee of ₹100 for rural retail outlets and ₹1000 for regular retail outlets. People belonging to the SC/ST/OBC will be offered a 50% concession on the application fees.

2. Fixed Fees:In case the applicant owns the land that is to be used as the petrol pump, then they will be required to pay ₹15 Lakhs in the case of regular retail outlets and ₹5 Lakhs in the case of rural retail outlets. Whereas, for company-owned dealerships, the applicant will have to pay a fixed fee of ₹30 Lakhs for regular sites and ₹10 Lakhs for rural sites.

Applying for a Petrol Pump Dealership

Entrepreneurs must acquire franchising licences or other applicable licences from any public or private sector Oil Marketing Companies (OMCs). OMCs will inform the public regarding openings through advertisements in newspapers or online portals. Interested applicants can apply through the OMC’s online application portal or write to the address mentioned in the advertisement. In case there are a number of applicants applying for the same location then the OMCs will conduct a lottery or a bid to arrive at a winner.

List of Leading OMCs

Here’s a list of leading OMCs in India:

Indraprastha Gas Ltd. (IGL)
Bharat Petroleum Corp. Ltd. (BPCL)
Hindustan Petroleum Corp. Ltd. (HPCL)
Essar Oil Ltd.
Indian Oil Corp. (IOC)
Reliance Petroleum Ltd.
Oil and Natural Gas Corp. Ltd. (ONGC)
Shell India Private Limited, Essar Oil Limited

Hiring of Staff

The success of any organisation is dependent on the quality of its staff. Capable and hardworking employees are the cornerstone of every successful business, which is why it’s important to hire talented employees to take your business to the next level. This is especially crucial for a petrol pump business, given that it is a highly technical one.

Legal Registration & Compliances

In order to establish a new petrol pump, you’d need to obtain certain permissions and certificates.Here are a few of them:

NOC(No Objection Certificate) from the Licensing Authority
Location’s certified copy
Certification and NOC from other related authorities
Permission from the Fire Safety Office and the Municipal Corporation Department

Comparison of Business Loan Interest Rates offered by Top Banks/NBFCs

Here’s a list of Bajaj Markets’s partners for business loans and their terms:

Our Partners	Interest Rate Range	Max Loan Amount/ Tenure	Avail Loan
Ambit Finvest	20% onwards	36 months	Apply Now
AYE Finance	28% onwards	36 months	Apply Now
FlexiLoans	12% onwards	36 months	Apply Now
IIFL Finance	18% onwards	60 months	Apply Now
InCred	20% onwards	48 months	Apply Now
Indifi	16% onwards	36 months	Apply Now
KreditBee	15% onwards	9 months	Apply Now
Lendingkart Finance Limited	15% onwards	36 months	Apply Now
Protium Finance Limited	1.25% p.m. onwards	72 months	Apply Now

Disclaimer: The interest rates and terms are subject to change at the lending partner’s discretion.

Eligibility criteria for a Business Loan to Start a Petrol Pump

There are some eligibility criteria that you’ll have to meet in order to establish your petrol pump business, here they are:

You must be between the ages of 21 and 55.
You must be an Indian citizen.
NRIs can establish their own petrol pump units, provided they have stayed in India for at least 182 days.
An educational qualification of 12th standard or higher is compulsory for General category applicants and 10th standard or higher is compulsory for SC/ST/OBC applicants; freedom fighters who come under the CC2 category need not meet the educational criteria.
In order to establish a petrol pump in urban areas, the applicant must hold a graduate degree.
Your business area must not be a part of any blacklisted or excluded zone.

Documents Required for a Business Loan to Start a Petrol Pump

Here are some documents required to get started with a petrol pump business unit, bear in mind that the documents required may vary depending on the OMC you choose. Hence, you can use this list as a starting point

Residence certificate

Proof of Age - birth certificate, Voter ID, etc will be accepted, SSLC
Bank statement, passbook or similar documents
Business KYC Documents (any one of these will be required) - GST Registration Certificate, Business PAN Card or Shops & Establishment Certificate

How to Apply for a Petrol Pump Business Loan at Bajaj Markets

Here’s how you can apply for a business loan on Bajaj Markets:

Click on ‘Apply Now.’ on this page
Now fill in relevant personal and business details.
Choose your preferred lending partner from the list of lenders.
Choose your loan amount and repayment tenure.
Post approval, your loan amount will be credited to your bank account.

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There are a number of OMCs that you can choose from, depending on your priorities and needs. To choose an OMC that’s ideal for you, do a thorough analysis of all relevant OMCs and map out their pros and cons to arrive at your preferred OMC.

You can visit your preferred OMC and follow the instructions indicated on their website to get started with obtaining your petrol pump licence.

The minimum amount that you’d need in order to get started with a petrol pump business is ₹12 Lakhs in case of rural business units and ₹25 Lakhs in case of urban business units.

Petrol pumps get a commission of around ₹2.90 per litre of petrol and around ₹1.85 per litre in the case of diesel.

The licence fee for a petrol pump dealership is ₹18/KL for Motor Spirit (MS) and ₹16/KL for High-Speed Diesel (HSD) for dealer owned “B”/“DC” site Retail Outlets and Rs 48/KL for Motor Speed and ₹41/KL for High-Speed Diesel for a corporation owned “A”/“CC” site Retail Outlets.

Bharat Petroleum, Indian Oil and Hindustan Petroleum are three of the most pop

In Company Owned Dealer Operated Petrol Pump, the dealer leases their land to a company, the company then makes the investment. Whereas in the case of Dealer Owned Dealer Operated Petrol Pump, the dealer provides the land and also makes infrastructure investments.

Though setting up a petrol pump in India is a high-investment business idea, it is also an extremely lucrative one.