Eleven years after Reliance Industries Ltd (RIL) began shuttering its fuel retail outlets, it has regained market share in petrol and diesel sales 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 its peak, it had a market share of 14.3% in diesel and 7.2% in petrol. “With 1,372 outlets, we clocked highest-ever exit volume at 5.6 million kilolitres in March 2019," RIL said in the presentation. A kiloliter equals 1,000 litres.
RIL, which enjoyed an overall 12% market share in fuel retailing till 2006, saw it 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 in 2004 and 2006. In 2008, however, it started shutting outlets, and later reopened some. 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 Organization (IMO) regulation implementation and demand improvement in China," said Yes Securities (India) Ltd 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% January 2020, 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 liquefied petroleum gas (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 on-board Air India for diversifying its portfolio and reinforce its industry position.
“Our year-on-year volume growth in ATF (aviation turbine fuel) is 33% in direct sales to airline partners. We achieved a hospitality arrangement with Shell MRPL and are preparing to onboard Air India for diversifying portfolio and reinforcing industry position," RIL said in the presentation to analysts.
The oil-to-telecom conglomerate along with partner BP Plc plans to jointly set up 2,000 petrol pumps in India over the next few years.