"Within three years of entry (we) must be more than 50 percent, we are very confident of that. Maybe our market share as usual will start anywhere within 10-15 pct," Nageswaran said in an interview.
"We are waiting ... for a clear-cut pricing formula and a clear-cut norm on the filling of cylinders," he added. "We will be in (the market) because LPG is one of (IOC's) core areas."
Lanka IOC aims to corner the market by cutting operational costs, importing LPG through parent IOC and bottling the gas locally, Nageswaran said. He declined to comment when asked whether Lanka IOC would undercut Shell's LPG prices.
"There is a big difference between importing gas from Malaysia and from India," Nageswaran said.
Shell Gas Lanka Ltd, in which the Sri Lankan government has a 49 percent stake with the balance held by parent Shell, controls more than 80 percent of the retail LPG market.
Most homes in urban Sri Lanka use LPG for cooking.
Sri Lanka imported 4.5 billion rupees ($45.3 million) worth of LPG in 2003, latest sector statistics showed, or about 141,000 tonnes of the fuel.
IOC is one of the world's largest LPG sellers, supplying more than 400 million people with its INDANE brand.
"Indian Oil is so big on LPG, and they have the management capabilities and the muscle power to achieve this target. They do have the potential," said energy analyst Vajira Kulatilaka, CEO at NDB Investment Bank in Colombo.
Kulatilaka cautioned that Lanka IOC's biggest challenges would be to keep filling and storage costs down and to convince existing LPG users to switch brands.
Lanka IOC's group net profit rose 120 percent to 527.6 million rupees in the third quarter ended December 31, 2004, compared to the same period in 2003, thanks to increased sales.
Lanka IOC imports refined oil products from IOC and holds a one-third stake in state fuel giant Ceypetco's storage and pipeline facilities.
Lanka IOC also plans to expand its distribution network island-wide by adding 50 to 60 new petrol stations in a bid to double its retail fuel market this year.