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Reliance Petroleum - Failure: Presented by

Reliance Petroleum, once one of India's largest petrochemical firms and among the country's largest companies, has failed and is shutting down its network of 14,000 retail petroleum outlets across India. As a private company, Reliance had to sell petrol and diesel at much higher prices than state-owned companies due to the absence of government subsidies. This led to a significant drop in sales volumes and the failure was anticipated as continuing operations was not financially viable. The shutdown will deprive consumers of competition and choice as they will have to rely solely on state-owned companies for their petroleum needs. The failure was due to bad strategic management, financial management, cost control, and potentially human resources management.

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Sangeerthana Seenivasan
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48 views11 pages

Reliance Petroleum - Failure: Presented by

Reliance Petroleum, once one of India's largest petrochemical firms and among the country's largest companies, has failed and is shutting down its network of 14,000 retail petroleum outlets across India. As a private company, Reliance had to sell petrol and diesel at much higher prices than state-owned companies due to the absence of government subsidies. This led to a significant drop in sales volumes and the failure was anticipated as continuing operations was not financially viable. The shutdown will deprive consumers of competition and choice as they will have to rely solely on state-owned companies for their petroleum needs. The failure was due to bad strategic management, financial management, cost control, and potentially human resources management.

Uploaded by

Sangeerthana Seenivasan
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Reliance Petroleum - Failure

Presented By
Introduction
The company is India's largest
petrochemical firm and among the
country's largest companies (along with
the likes of Indian Oil and the Tata
Group).
Introduction
Reliance Petroleum, RPL, is entered into
the capital market on April 13
With a public issue of 135 crore equity
shares of Rs 10 each for cash
 At a premium to be decided through
100% book building route.
Competitors
 Indian Oil Corporation Ltd.;
 Hindustan Petroleum Corporation Ltd.;
 Bharat Petroleum Corporation Ltd.;
 Indian Petrochemicals Corporation Ltd.;
 Mangalore Refinery and Petrochemicals Ltd.;
 Kochi Refineries Ltd.;
 Chennai Petroleum Corporation Ltd.;
 Parker Agrochem Exports Ltd
Corporate Ranking
 Itfeatured in the Fortune Global 500 list of ‘World's
Largest Corporations' for the fourth consecutive year.
 Ranked 269th in 2007 having moved up 73 places from
last year.
 Featured as one of the world's Top 200 companies in
terms of Profits.
 Featured among top 50 companies with the biggest
increase in Revenues.
 In September,2008 it was the only Indian Company
which was featured in forbes top 100 list
Failure
 Reliance is shutting its much popular petroleum retail
outlets across India.
 Of the 14000 retail pumps, Petrol bunks owned by
reliance are closed while those operated by the dealers
are continuing its functioning.
 When it was started, it virtually created a stir among
other state owned oil marketing companies as it was
attracting heavy sales with a 14% market share in no
time.
 They have to sell their petrol and diesel at quite high
prices as compared to government prices. Sales volumes
of RIL outlets fell significantly after the price increase.
 However with rising crude prices and absence of
government subsidies, the failure was anticipated as it
was not financially viable to run these outlets.
 Reliance was selling its petrol at Rs.6 and diesel at
Rs.14 more than PSU companies.
 The shutdown of Reliance pumps would signal an end
to the plans of other private retailers such as Essar
Oil and Shell.
 But the biggest loser would be the consumer as he
would be deprived of healthy competition and be relied
upon state owned companies for his petroleum needs.
 About 50,000 customers switched to other dealers.
 The Government should had also given an equal hand
and opportunity to PSU and Private companies, as the
former are beneficiaries of oil bonds and discounts from
upstream oil companies.
Reasons for failure
 Reliance failed because of:
- bad strategic/corporate management and execution
- bad financial management (currency
prediction/trading, daily deposit trading, financial
leveraging to lover overall costs)
- bad cost control
- maybe, even bad HR
Problem
The problem which arise out of this
scenario is that :
 They not only loosing shareholders money but also
loosing faith on the company
 Dealers who invested in the basis of reputation of
reliance would suffer heavy losses.
 Closing of so many petrol pumps will create huge
unemployment
Share Price
Opening –
High
Low
Closing
Volume – Nil

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