RIL gains diesel market share

Reliance Industries’ aggressive discounts on diesel sales at its fuel retail outlets from January to March this year helped it double market share in the segment over the quarter, a company official told BusinessLine.

The days after demonetisation at the close of the last calendar year squeezed sales for private fuel retailers since only state-owned retailers could accept old currency notes. However, RIL brought buyers back to its outlets by selling each litre of diesel ₹1 cheaper than its public sector competitors for the three-month period.

It gained a market share of 5 per cent in retail diesel and 5.8 per cent in bulk diesel with throughput per month per outlet at the end of March standing at 300 kilolitres. The company has 1,221 outlets operational, of which 448 are company owned and operated. At the end of December, RIL’s diesel market share had been about 2.5 per cent; so, the discount programme helped double its market share. It petrol throughput was at 50 klpm over the March quarter.

With the move, the company’s diesel throughput/outlet is 2.4 times that of public sector competition (125 kilolitres per month per outlet). RIL is looking to restart another 1,400 outlets in 3-4 months, management told analysts at a conference to announce its March quarter results on Monday.

Since April 1, the company has discontinued the discount programme but the management has indicated that volumes and market share are likely to stay firm. The market share of other private players — mainly Essar Oil and Shell — in the diesel segment is approximately 8.2 per cent as of March 2017, a report by ICICI Securities noted.

RIL has seen its bulk diesel market share rising for every quarter since Q3FY16 (when it was 3.5 per cent) and is now at 5.8 per cent.

RIL’s fuel marketing accounts for about 20 per cent of revenues for the company’s organised retail segment, which stood at ₹33,765 crore for FY17, which includes ₹6,400 crore from sales through CoCo (company-owned, company-operated) outlets, which are part of Reliance Petro Marketing, a subsidiary of Reliance Retail. However, with costs of managing fuel outlets much higher than other forms of retail, the auto fuel business contributes a substantially smaller share of retail operating revenues, a research note by JP Morgan concluded.

COMMENT NOW