Financial Daily from THE HINDU group of publications
Tuesday, May 16, 2006
Financial Daily from THE HINDU group of publications Tuesday, May 16, 2006 |
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Petroleum Corporate - Announcements Marketing - Channels and Franchises RIL works out compensation package for its dealers Richa Mishra
The deal For the retail outlets opened before February 28, 2006, the calculation would be on the actual dispensed volume in April 2006. For the outlets opened after March 1, 2006, the calculations would be based on the actual dispensed volume in the last 15 days or monthly projected sales by the territory manager/business development manager, which ever is higher.
New Delhi , May 15 Reliance Industries Ltd (RIL) is understood to have worked out a compensation package for its dealers of petroleum products to ensure that their profitability does not get affected due to the recent price hike in domestic petrol announced by the company. The company has increased the price of domestic petrol to be sold through its retail outlets by Rs 2 per litre plus local taxes. According to industry sources, the price increase would make RIL product more expensive than what is currently being charged by the public sector undertakings' (PSUs) retail outlets. This could lead to Reliance dealers suffering loss in sales as some price sensitive customers may move to competitors. Sources told Business Line that to ascertain the loss, if any, on the sales volumes at the retail outlets, the base sales figures would be calculated as follows — for the retail outlets opened before February 28, 2006, the calculation would be on the actual dispensed volume in April 2006. For the outlets opened after March 1, 2006, the calculations would be based on the actual dispensed volume in the last 15 days or monthly projected sales by the territory manager/business development manager, which ever is higher. This package has been devised specifically for its new initiative `Reliance Petrol' on an experimental basis, the sources added. They, however, declined to divulge the financial details of the package. As regards validity of the compensation package, sources said if the company brings its selling price more or less in line with its competitors, then the package in all probability would be discontinued. Besides, a compensation package for its dealers, the company is making all efforts to educate the customers on its newly introduced product, in order to retain their patronage. Asked whether the company would review the dealers' commission as and when the margins improve, sources said the present commission was already higher than what a PSU dealer enjoys. The PSUs offer commission of 84 paise per litre on sale of petrol and 50 paise per litre on diesel. RIL has not revised its dealer's commission in the last two years. However, the company is not averse to reviewing it in the light of the business needs and the competitive market scenario. RIL retails 342 thousand tonnes (TMT) of petrol and 3,599 TMT of diesel through its 1,300 odd retail outlets in the country. In contrast, the volume of sales by PSU companies — Indian Oil, Hindustan Petroleum, Bharat Petroleum, and IBP - is 8,681 TMT of petrol and 40,308 TMT of diesel.
Related Stories: More Stories on : Petroleum | Announcements | Channels and Franchises | Reliance Industries Ltd
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