Updates on Reliance Industries, petroleum retailers in Gujarat and land lease

Reliance Asks retailer in Gujarat to surrender land leased on its name.




Reliance Industries (RIL) has asked one of its petroleum retailers in Gujarat, which wants a ‘clean exit’, to surrender the outlet land on the ground that it has been leased on its name.




-On July 15, around 75 dealers had informed RIL about their intention of winding up operations. Of the company’s 225 operational retail outlets in Gujarat, 150 are dealer-owned, dealer-operated (Dodo) and company-owned, dealer-operated (Codo). The rest are company-owned, company-operated (Coco).



RIL said there was no clean exit policy as mentioned by the dealer. Sunil Golwala, president of the Gujarat Reliance Petrol Pump Dealers Association, claimed the company had granted clean exit to four of its dealers in the state. The retail outlet land would remain with the dealers as the sites were Dodo.



“You would be required to hand over the possession of the site to us and as regards support money, the support scheme expired on March 31, 2007,” RIL said in a letter to the dealer. The company said it would refund the security deposit as per the dealership agreement, after deducting its due. The dealer used to operate a company-owned outlet.



Dealers in Gujarat claim they have invested between Rs 2 crore to Rs 4 crore in their outlets. Depending on the location, cost of land has been Rs 1.5 crore-3 crore, with another Rs 30 lakh to Rs 1 crore thrown in on maintaining services at outlets. While in a Codo site, the company takes care of the services cost, a dealer has to deposit Rs 13 lakh to Rs 33 lakh, depending on the site.



RIL said till the time the dealer continued to be a dealer under its dealership agreement, the dealer alone should be responsible for and bear all expenses of and in connection with the dealership business.



“If you are unable to carry on the business as and want to terminate the dealership, you may confirm the same where after, we shall take appropriate action in the matter. If you wish to continue as a dealer you are called up on to resume the sales operations with in 15 days of receipt of this letter,” RIL said.



Terming the RIL option unviable, the dealer, Bhavin Choksi, is contesting the RIL compensation package. Choksi is also the secretary of the Gujarat Reliance Petrol Pump Dealers Association.



The company said suspension of sales by the dealer had caused “huge loss of revenue” to it, since it made huge investment in setting up the outlet. “Besides capital investment, the company is continuing to incur recurring cost on the site,” claimed the company.



In his letter, the Gondal-based retailer had sought clean exit, saying the company should pay him return on investment support from April 2009 till the clean exit is cleared. He also demanded the site be restored, deposit refunded and no objection certificate given.



Industry players say RIL has less than 0.5 per cent market share. The company has 1,450 fuel retail outlets. The company has so far opened around 667 outlets in the western and southern regions.

http://www.business-standard.com/india/news/there-is-no-/clean-exit/-policy-ril/407824/