[Start-it-up] How To Start A Fuel Delivery Business?
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A fuel delivering startup is an emerging concept that provides doorstep refueling services to its customers. Most of the companies have a website and a mobile app through which you can place your order and also track your fuel consumption and spending.
In contrast to petrol pumps, fuel delivering startups provide convenience and saves time. You can order fuel in far-fetched areas where there is no petrol pump nearby. For example, you can order diesel for your colony generator without having to go anywhere.
However a thing to note is that right now in India only diesel can be delivered and not petrol, because of the government regulations.
What is the size of the fuel delivering market?
According to Economic Times, “India has almost the same number of vehicles as the US at 200 million, yet the number of fuel stations fall acutely short in comparison. Broad estimates peg the country’s fuel stations at 60,000, one third the number compared to that of the US at 160,000.”
Apart from the personal automobiles - tractors used in farming, generators used in industries, hospitals, schools, etc.also require diesel to function.
Economic Times story further claims, “Opening of 100,000 new fuel stations is also practically and economically an impossible task due to the soaring land prices. In fact, a CRISIL report in June 2019 also revealed that there is room for only about 30,000 fuel pumps if the current throughput levels have to be maintained.”
Opening a fuel delivery startup is much easier as compared to starting a petrol pump. Plus the demand opens a huge market opportunity for fuel delivery startups in India.
Who are your prospective clients?
Hospitals, apartments and residential complexes, schools, cab rental companies and big corporate houses like OYO Hotels, Delhivery, Jaquar, Amazon, Wipro, Toyota, etc. are your prospective clients.
Investment Plan (courtesy - Pep Fuel)
To start a fuel delivery startup, the most important thing to keep in mind are the rules and regulations by the government. You need to take an approval from the state-run Petroleum and Explosives Safety Organization (PESO) for your startup. You will need to get proper licenses for your company.
The startup also requires some heavy investment.You will have to invest in Mobile Defense Units (MDUs) or the specialized vehicles that will transport your fuel.
Below is the breakup of a 100 MDUs fuel delivery startup.
1 MDU costs rupees 23 lakh and the license cost per MDU for 10 years is INR 20,000.
IT cost (including development of the front-end and backend infrastructure) will cost you another INR 20 lacs and your operational cost per MDU will be 60k monthly.
Return On Investment (courtesy - Pep Fuels)
Return on investment of 1 MDU will take you about 10 months. The Delivery Capacity per day of an MDU is 15000 liters and the margin as of now are INR 1.20 per liter and the margin after the government policy gets shaped will be INR 2.10 per liter.