How the “Chhotu” LPG cylinder grew a bestseller

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Small soon became big in the FMCG industry, with everything from coffee to chips being sold in single-use packing costing not more than Rs 5, thus reaching buyers who could never afford the more substantial packs.

 A choice to maintain regular refill, from the standard 14.2 kg links to 5 kg LPG connections were offered to users by Pradhan Mantri Ujjwala Yojana (PMUY).

With fuel costs, the LPG cylinder has also taken on a small 5-kg  that is more in demand than the standard 14.2 kg version. 

Even if the small cylinder costs a tad more, it makes discernment for many who can’t shell out Rs 900 in one go but would favor committing Rs 500 for the small one instead.

State-run oil marketing companies are said to have welcomed the proposal of retailing through fair-price shops and have even committed their support. 

The user affairs ministry had asked the Union ministry of petroleum and natural gas for leveraging electronic point of sale devices for the sale of 5 kg small cylinders from fair price shops. 

IOCL attached to their statement, “As per preceding discussions and the business model proposed, the retail sale price of the small cylinder at FPS will be the same as the market price”. 

As towards the IOCL, the 5 kg small cylinder has primarily marketed to cater to the customers for their needs, such as migrant workers, students, food hawkers who were reliant on the shade market due to lack of address proof, etc. 

The sale of certain small cylinders recorded a vital jump in FY20 following it was re-launched under the ‘Indane Chhotu’ brand name in Dec 2020. Sales increased further in FY21 when subsidies on standard 14.2 kg domestic cylinders are stopped.

Hence, a fall in global crude oil prices, and global LPG product prices since May 2020, allowed the government to withdraw the subsidy. 

The end consumers had not observed the pinch till Nov 2020, thanks to softening global LPG prices. 

Domestic LPG cylinders cost just almost Rs 600, close to the price at which is the subsidies kicked in,  without subsidy.

While the global prices have since increased, the government has not reinstated the subsidy

India is importing a maximum of 55% of its LPG demand and the cost of an unsubsidized cylinder depends upon global rates.

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