# Stock variation: the 4% rule

> Explains MS and HSD stock verification at Indian petrol pumps per MDG 2024 clause 5.1.11 and Annexure 9: book stock against dip stock, the ±4% normal operational variation, evaporation allowances and what happens beyond the limit.

Canonical: https://dipdensity.watsinfo.com/guides/stock-variation-4-percent-rule/
Last updated: 2026-11-02

**Short answer:** Book stock is the opening dip stock plus receipts, less sales by the meters. Compare it with the closing dip stock. MDG 2024 allows a normal operational variation of 4% of tank stock, after considering evaporation and handling losses. A variation beyond that is an irregularity.

## The method (Annexure 9)

| Line | | Example, litres |
|---|---|---|
| A | Stock as per opening dip | 9,200 |
| B | Plus receipts | 12,000 |
| C | Less shrinkage, where allowed | 0 |
| D | A + B − C | 21,200 |
| E | Less sales as per meter | 10,450 |
| F | Closing stock as per book | 10,750 |
| G | Closing stock as per dip | 10,690 |
| | Variation, G − F | −60 |
| | Limit, ±4% of G | ±427.6 |

The variation is −60 litres, −0.56% of G. Within the limit. Try your own figures in the [stock variation calculator](https://dipdensity.watsinfo.com/tools/stock-variation-calculator/).

## What clause 5.1.11 adds

Stock reconciliation should establish any variation "after taking into account the normal operational variation of 4 % of tank stock and after considering" evaporation and handling losses for petrol and diesel, and shrinkage and temperature variation losses where those allowances apply. See [evaporation loss allowance](https://dipdensity.watsinfo.com/guides/evaporation-loss-allowance/).

## Beyond the limit

- **Positive variation (gain):** samples are drawn and sent to the laboratory, sales and supplies of all products stop at once, and the cause is studied.
- **Negative variation (loss):** samples are drawn; if the loss is beyond the limit, sales and supplies go on during the investigation, the dealer's explanation is called for, and supply stops if it is not satisfactory.

## Keep the inputs clean

Most stock variations are not theft or leaks but bad inputs: a misread dip, a meter reading copied wrong, test fuel counted as sales, or a receipt entered on the wrong day. Check those first.

## Questions

### Is 4% of the stock or of the sales?

Of the tank stock. Annexure 9 compares book stock F with dip stock G, plus or minus 4% of G.

### Which is worse, a gain or a loss?

Both are treated seriously. A gain beyond the limit can mean product bought from elsewhere or something added, so sales stop and samples go to the lab. A loss beyond the limit calls for the dealer's explanation while sales go on.

## Sources

- [BPCL, Marketing Discipline Guidelines 2024](https://www.bharatpetroleum.in/images/files/MDG-2024-Effective-24-10-2024.pdf)