Reliance Industries Ltd. (RIL) has announced that it will commission all of its fuel retail outlets by 2016. Since the deregulation of diesel in October last year, the company has already resumed operations in over 200 outlets. At present, its market share is less than 0.5%. In the third quarter of 2014, the company reported net profit of INR 5,256 crore, which belied a 4.5% drop. This move to commission 1,400 fuel retail outlets will expand RIL’s market share to more than 14% in high-speed diesel and over 7% in petrol.
Inability to match the subsidized prices offered by State-owned oil companies caused RIL to bear mounting losses earlier. In 2008, the company had taken a decision to close down its fuel pumps. This is set to change with the company’s recent announcement.
In a presentation made to analysts last week, RIL revealed that it had seen an increase in the demand for diesel by 11% quarter-on-quarter; whereas the industry-wide demand had witnessed only a 1% increase due to sluggishness in economic activities.
RIL confirmed that it will launch aggressive consumer schemes to expeditiously raise volumes. Last month, it offered discounts to customers with the aim of attracting footfalls. Discounts of INR 5 on INR 300 worth of petrol as well as INR 10 on INR 1,000 worth of diesel were given. While these discounts offered seem insignificant, they were greatly appreciated by bulk buyers and companies who facilitate the transportation of fuel to remote locations. The move also dispelled the myth that the fuel retail outlets of RIL charge more than those of its competitors.
In addition, the company will capitalize on technology and provide enhanced customer value across its fuel retail network. Leveraging on its cutting-edge infrastructure and widespread automation, RIL will offer instant reward schemes that are expected to afford the company an edge over competition. In addition, the company will offer distinctive value-added services to equip customers with the ability to manage fleet control, cashless transactions, data and cash flow.
A senior official from Indial Oil Corporation expressed the market sentiment by saying that RIL as well as its competitor, Essar, are getting aggressive in this segment since the deregulation of diesel. He added, “So far there has been a shift of 0.2-0.3 per cent from the market share of state-run oil marketing companies.”
Several company-owned fuel pumps have already commenced operations. 150 dealer-operated pumps owned by either dealers or RIL itself are expected to re-open in the next stage. The company aims to reach its own commendable performance levels in the fuel retail market as seen in 2006.