RIL focuses on domestic market for refined products

Sees scope for growth in India and rise in fuel consumption for next 10-15 years

Mukesh Ambani-led Reliance Industries (RIL) is looking to increase focus on the domestic market for its refined products, a company official said on Friday.

“We will focus more on India, where we see scope for growth. We will also focus on the East for exports,” said an RIL official, who did not wish to be named.

On July 15, in its results press statement, RIL said its exports of refined products from India were at Rs 28,610 crore during the April-June 2016 quarter, compared to Rs 32,352 crore in the same period a year ago. In terms of volume, exports of refined products were at 9.8 million metric tonnes (MMT) during the April-June 2016 quarter, compared to 8.5 MMT in the corresponding period a year ago.

RIL expects growth in India’s diesel and gasoline consumption for the next 10-15 years, as the country’s economy and disposable income increase.

For the financial year 2015-2016, India’s industry sales for petrol rose 15 per cent, to 21.84 million tonnes (MT), and sales for diesel rose eight per cent to 74.63 MT, according to data available with the Petroleum Planning and Analysis Cell.

Ratings agency India Ratings & Research (Ind-Ra), in its outlook for FY17, said, “Growth was driven by strong pick-up in automobile sales, particularly passenger vehicles. Ind-Ra expects petrol consumption to further increase by eight to 10 per cent in FY17, driven by strong passenger vehicle sales.”

Diesel consumption, the rating agency said, is likely to grow by five to six per cent on improved sales of commercial vehicles, however, offset to some extent by lower consumption of diesel in power backup.

RIL is also in the process of reopening its 1,400 retail outlets, which were earlier mothballed. So far, the company has restarted operations at more than 1,000 such outlets.

The company official added the expected growth will help support the company’s gross refining margins (GRMs). In the April-June 2016 quarter, RIL reported GRMs of $11.5 per barrel, higher than the $10.4 per barrel seen in the same period a year ago.

For its liquefied petroleum gas (LPG) business, the official said, “We are looking at all options in India, including LPG. Our market is small, as our customers do not get subsidised. We reach areas where the public sector companies do not reach, and with subsidy coming down, our products will become more economical.”

FUEL PROSPECTS

• In 2015-16, India’s industry sales for petrol rose 15 per cent to 21.84 MT, and sales for diesel rose eight per cent to 74.63 MT
   
• Ratings agency Ind-Ra expects petrol consumption to increase by eight-10 per cent in FY17
   
• Diesel consumption set to grow five-six per cent, says Ind-Ra