Reliance Industries’ return to fuel retailing business not as spectacular as its debut
Reliance Industries’ return to the fuel retailing business is turning out to be a pale shadow of the spectacular debut it made a decade ago, when the company quickly earned consumer confidence and snatched a big market share from state firms.
In more than a year since diesel sales were deregulated in October 2014 and private players started reopening outlets, Reliance has gathered only 1.7% market share in diesel sales and 1.4% in petrol, according to industry data for December. In comparison, it had captured 14.3% share in diesel in less than two years last time round before the reappearance of fuel subsidy forced private players’ exit.
“This time, it seems their heart and soul is not in the retail business,” said an oil industry executive who had closely observed Reliance’s aggressive moves a decade ago. “They have the resources and the capabilities, but it doesn’t reflect in their market share or the number of outlets.”
Reliance has reopened 750 filling stations so far and plans to get its entire network of 1,400 outlets working by March. In comparison, rival Essar Oil has been swifter in expanding with 1,900 outlets already operational. But its share in sales seems disproportionate to the number of its stores, with just 1.7% in diesel and 1.6% in petrol. Essar aims to have 5,000 outlets by 2017. Royal Dutch Shell has about 0.3% share in diesel and 0.9% in petrol sales.
“Reliance was initially cautious because of the government’s flip-flop on deregulation in the past. Another thing that has slowed Reliance’s progress in reopening outlets is its relationship with dealers which turned sour following a closure of pumps last time,” said an equity analyst who tracks the oil sector, adding that the company didn’t treat dealers very well last time and that lowered their confidence in doing business with the company once again.