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Buy phone, fuel and handsets under one roof: RIL’s new plan

business Updated: Aug 26, 2016 20:12 IST
Suchetana Ray

Mumbai: Reliance Industries Limited Chairman and Managing Director Mukesh Ambani with actor Shahrukh Khan at the launch of Reliance Jio's 4G services for its employees in Mumbai in December 2015.(PTI)

Sunil A was driving to Dalhousie in Himachal Pradesh for a well-deserved holiday. On the way he stopped to fuel up the car, and a signage caught his eye: a Reliance Jio advertisement for its 4G services. Asked, the petrol station attendant explained “Eventually we will sell phones and connections as well.”

This was one of the 1,000 operational fuel outlets of Mukesh Ambani-led Reliance Industries, which is taking its fuel retailing plans out of cold storage. The launch of Jio adds impetus as RIL plans to integrate all its retail businesses under one roof.

Mukesh Ambani is reported to be pumping in ₹1.5 lakh crore into his ambitious telecom venture. “As we saw in 2012-13, India is 150th in the world in mobile broadband penetration as well as quality. Jio has really been conceived to change this position,” Ambani had said in an interview to CNN in February.

Jio got a soft launch in December 2015, when RIL offered mobile connections and discount-price handsets to its over 100,000 employees. Sources said the launch announcement is likely to come at RIL’s annual general meeting on September 1.

“RIL knows that their consumer interface has reduced significantly over the years. With all efforts focused on telecom, the need to showcase B2C ventures is immediate. A drive-in shopping experience at petrol pumps is aimed at capturing consumer attention,” said a source.

He further clarified that about 500 moribund pumps will re-commissioned at the earliest to explore this new model — retailing through Reliance Fresh and Reliance Digital in addition to vehicular fuel.

RIL is working on this model at a few outlets they have on the Chennai-Bangalore highway and is keen to expand in the north.

“It is no longer simply a petrol pump. Today, what you can do with fuel retail outlets by virtue of the synergies make it a more consumer-facing business,” said V Srikanth, joint CFO at RIL had said after its fiscal first-quarter earnings on July 15.

“This is an exercise to use the real estate available with RIL’s petrol pumps. They are within city limits, on highways as well as in small towns, where a Reliance Fresh or a Reliance Digital could become a catchment area,” said Arvind Singhal, CMD, Technopak.

RIL holds licences to set up 5,000 fuel retail outlets. However, it has set up only 1,470 filling stations so far, of which just 1,022 are operational. It has been shutting outlets since 2008 as government-administered fuel prices made the venture unprofitable.

Ever since the de-regulation of petrol and diesel prices, speculation has been high about Reliance aggressively re-entering the market, but a global crude price slide put brakes on the plan. From $115 a barrel in mid-2014, crude relentlessly fell to below $30 in January 2016. It is ruling at about $49 per barrel.

Reliance and Essar Oil Limited, the only other private refiner in India, together had a 17% share in the domestic retail market for diesel and 10% for petrol in 2006, before competition from public sector companies halted their progress.