Reliance's Exit from Petroleum Retailing*

            


Details

Case Code : CLBS101
Publication date : 2009
Subject : Business Strategy
Industry : -
Length : 03 Pages
Price : Rs. 100

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Key words:

Exit, retail, petroleum, Reliance Industries Limited, retail outlet, crude oil, subsidies, Public Sector Units, oil marketing companies, private oil companies, crude oil price

Note

* This caselet is intended for use only in class discussions.
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Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

In May 2008, Reliance Industries Limited (RIL), one of the largest private sector companies in India, announced that it was shutting down all its petroleum retail outlets in India after incurring losses. The move took not only the dealers and the industry by surprise but also the Indian government.

Introduction

In May 2008, Reliance Industries Limited (RIL), one of the largest private sector companies in India, owned by Mukesh Ambani, announced that it was shutting down all its petroleum retail outlets (RO) after incurring a loss of Rs. 8 billion in 2007-08.

Murli Deora, Petroleum Minister, Government of India, announced, "Reliance has informed that sales at their retail outlets was negligible due to selling price differential between private and public sector ROs, leading to the closure of all their 1,432 pumps in the country with effect from March 15." RIL had accounted for around 3% of the total petrol pumps operated in the country.


Nine hundred of the pumps were operated by the company and the remaining were dealer owned. RIL invested about Rs. 40 billion in setting up these retail outlets, which were spread across various states of India...

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