Mumbai: Mumbai: Eleven years after Reliance Industries Ltd (RIL) began shuttering its fuel retail outlets, it has now regained market share in petrol and diesel to pre-2006 levels.
While petrol and diesel sales nationwide grew 9% and 3%, respectively, in 2018-19 from a year ago, RIL outperformed the industry with figures of 21% and 16%, respectively, the company said in a presentation to analysts after its quarterly earnings.
Till 2006, when RIL’s fuel sales were at their peak, the refiner had a market share of 14.3% in diesel and 7.2% in petrol.
“With 1,372 outlets, we clocked the highest-ever exit volume at 5.6 million kilolitres in March 2019," said RIL in the presentation. A kiloliter is equivalent to 1,000 litres.
RIL, which enjoyed an overall 12% market share in fuel retailing till 2006, saw this slip to less than 0.5% in 2014, by when it had shut most of its fuel retail outlets due to spiralling crude oil prices.
RIL spent ₹5,000 crore in setting up 1,470 retail outlets between 2004 and 2006. In 2008, however, RIL started shutting down outlets, and later reopened some of them. In 2018-19, it reopened or added 59 stations, reaching 1,372 fuel retail outlets now.
“In the domestic market, RIL is gaining market share across categories. RIL continues to be optimistic on gross refining margins owing to scale-up of petcoke gasification, International Maritime Organisation (IMO) regulation implementation, and demand improvement in China," said Yes Securities in a report dated 19 April.
Under regulations issued in October 2016 by the IMO, ships must shift to fuel oil with sulphur content below 0.5% from January 2020. This is against the present 3.5%.
With this impending shift, demand for low-sulphur fuel oil is expected to rise. According to analysts, RIL’s gross refining margin stands to gain from expansion in middle distillate cracks, including LPG, diesel, fuel oil, kerosene and marine bunker fuel.
During the fourth quarter, RIL’s gross refining margin (GRM), or the amount a refiner earns by refining one barrel of crude oil, narrowed to a 17-quarter low of $8.2 per barrel. On a sequential basis, GRM declined 7%.
RIL has also outperformed the industry in sales of aviation turbine fuel and bulk diesel and is preparing to onboard Air India for diversifying its portfolio and reinforce its industry position.
“Year-on-year volume growth of 33% in direct sales to airline partners and breakthrough hospitality arrangement with Shell MRPL," said RIL.
The oil-to-telecom conglomerate, along with its partner BP Plc, plans to jointly set up as many as 2,000 petrol pumps in India over the next few years.
While Reliance holds a licence to set up 5,000 fuel retail outlets, BP has a licence to set up 3,500 fuel retail outlets in India.
Currently, RIL’s fuel retail outlets are largely concentrated in the western region.
Its key competitors are state-owned oil marketing firms — IndianOil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd—which together dominate over 90% of the fuel retailing market.