Reliance dealers seek petro price cut

An association of around 300 dealers of Reliance petro-products have demanded that the company either reduce the retail price of its products or give them a compensatory package besides treating their deposits as investments in Reliance Industries.

The association has been registered as the All India Reliance Petroleum Dealers' Association. President of the Association, Ranjitsinh Patil said, the body was formed to address the grievances of the dealers. "We have been patient but cannot take this any more. Many of us will be ruined," he said.

The association has put forward two demands: The company should reduce prices of petro-products to the level of PSU oil companies or come out with compensatory packages depending on individual sales figures and secondly, treat deposits in the company as investments. "We want an interest equal to what the money would earn as a fixed deposit in a bank," Patil said.

Reliance's dealers have deposited varying amounts ranging from Rs 10 lakh to Rs 30 lakh with the company depending on the number of dispensing units they have opted for.

Patil said the company has been given time till July 15 following which 500 dealers will assemble in front of the Dhirubhai Ambani Knowledge City and a two day demonstration.

Reliance's has hiked petrol and diesel prices unilaterally mid-May following which there has been a heavy dip in sales. Petrol prices were raised by Rs 2.80 and diesel by Rs 2.84.

Moreover, Reliance has also asked its dealers to close down night operations and cut manpower. "We cannot possibly do this. Reliance's operations are computerised and we have recruited staff at great expense. What do we tell these people now?" asked a worried dealer.

Dealers have been lossing around Rs 50,000 to Rs 70,000 a month. Giving a break-up of expenses, they said they spend about Rs 1.3 lakh per month for running the outlets.

This include a sum of Rs 35,000 towards electricity, Rs 45,000 in wages for 12 delivery service men and 3 shift supervisors, Rs 35,000 towards under storage tank losses, and Rs 15,000 towards miscellaneous expenses.

Reliance offers a commission of Rs 1,110 per kilo litre on petrol and Rs 650 per kilo litre on diesel for all dealer-owned dealer-operated service stations.

"We earn about Rs 60,000 per month on commission," explained the dealers adding, they couldn't possibly function on such commissions. "All of us have taken loans to construct these swanky outlets according to Reliance's standards. Now we are finding it difficult to service our loans," said the dealers.

Reliance Industries did not comment but its plight is pretty well known. PSU oil companies were issued oil bonds of Rs 28,000 crore besides sourcing crude at subsidised rates from the government.

The government too gets some discount on crude purchase from friendly countries whose benefits are now being extended to the PSUs.These measures help ease the burden of oil companies to some extent.

Reliance, however, does not have such advantages and therefore has to go in for an increase in prices.

Reliance too has approached the government and appealed that benefits being offered to PSUs be extended to it too.

As far as the problem of dealers are concerned, sources said, the company was working on some "long term, sustainable solution" which should be ready within 2-3 months time''.

Reliance has invested close to Rs 5,000 crore in setting up its 1250 retail outlets in the country. Its competitor from the private sector, Essar, has long suspended operations in many of its outlets.