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TRANSCRIPT
Amit Chaturvedi
Senior Vice President & Head of Cracker
Reliance Industries Ltd
Olefin and Polyolefin Markets in India
Forward Looking Statements
This presentation contains forward-looking statements which may be identified by their use
of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,”
“estimates” or other words of similar meaning. All statements that address expectations or
projections about the future, including, but not limited to, statements about the strategy for
growth, product development, market position, expenditures, and financial results, are
forward-looking statements.
Forward-looking statements are based on certain assumptions and expectations of future
events. The companies referred to in this presentation cannot guarantee that these
assumptions and expectations are accurate or will be realised. The actual results,
performance or achievements, could thus differ materially from those projected in any such
forward-looking statements. These companies assume no responsibility to publicly amend,
modify or revise any forward looking statements, on the basis of any subsequent
developments, information or events, or otherwise.
Presentation Plan
Role of Petrochemicals
India’s Economic Transformation
Petrochemical Industry Outlook
Conclusion
Reliance
Reliance Overview
• India’s Largest Private Sector Enterprise
– World # 107 by Revenue as per Fortune Global 500 (July 2013)
• Market Capitalization of 41 Bn $ (as on 28 Feb’14)
• Pre-eminent Position in India’s Economy
– Exports to over 100 countries representing 64% of total turnover
– 14% of Exports (FY 12) and 4% of the total Market Capitalization in India
– 8.6% Weightage in the BSE Sensex
Large contribution in the country’s economy
World scale Capacities
• Largest refining capacity at any single location
• Largest producer of Polyester Fibre and Yarn
• 5th largest producer of Paraxylene (PX) currently, will be 2nd Largest
by 2016
• 5th largest producer of Polypropylene (PP)
• 8th largest producer of Mono Ethylene Glycol (MEG) currently, will be
5th Largest by 2016
• 9th largest producer of Purified Terephthalic Acid (PTA) currently, will
be 5th Largest by 2016
The growth continues….
• Turnover of 68.4 billion $
• EBIDTA of 7.1 billion $
• Net Profit of 3.9 billion $
• Total Exports of 44.1 billion $
FY 12-13 Financial Highlights
EBIDTA growing at CAGR of 12.3% over last 10 years
Presentation Plan
Role of Petrochemicals
India’s Economic Transformation
Petrochemical Industry Outlook
Conclusion
Reliance
Petrochemicals– an “enabling” industry
Petrochemicals – key role in modern day living
Petrochemicals in Food/
Agriculture
Petrochemicals in
Clothing
Petrochemicals in
Building/Construction
PVC Flooring
PVC Doors
PVC Windows
PVC Roofs
Wall Coverings
PVC Cot
Petrochemicals in
Automobiles Petrochemicals in
Healthcare
Petrochemicals in
Consumer Durables
Presentation Plan
Role of Petrochemicals
India’s Economic Transformation
Petrochemical Industry Outlook
Conclusion
Reliance
Today’s India – Transforming India
2,241
5,750
2,042
4,506
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$ Billion $
GDP,on PPP basis (Billion $)
Per Capita GDP, on PPP basis ($)
Source: IMF
India’s GDP growing from 4.2% of world in 2004 to 5.9 % in 2015
India – Economy Growth
Forecast
• Increasing urban share in population
– 2011 : 31%
– 2021 : 35%
– 2030 : 40%
• Number of cities with population >1 million to rise from 53 in 2011 to 75+
in 2021
Investment Required in Urban Infrastructure (excl Housing) 2012-30 ($ billion)
360.2 93.6
85.2
66.9
50.6
39.8
21.2
20.4
10.1
68.4
0 100 200 300 400
Urban Roads
Urban Transport
Renewal & Redevelopment
Water Supply
Sewerage
Storm Water Drains
Capacity Building
Traffic Infrastructure
Waste Management
Miscellaneous
Total Investments >$ 860 bn
Accelerated Urbanization
Source: NCAER, Reliance Research
Purchasing power continues to rise
50% of India’s population is < 25 years of age and 65% is < 35 years old
• India to become the most populous country by 2025
• Population growth higher demand for food and water
• Limited increase of arable land and usable water possible
– Higher productivity of water and land vital
– Plastics applications can raise production of agri produce
– India adopting globally followed practices for productivity enhancement
• Future investments in agriculture expected to rise significantly
Translates to additional consumption of petrochemicals
Food security and water management
Average Daily Sales of Consumer Products in India
India’s growth is expected to accelerate in the coming years
- Providing further fillip to petrochemicals consumption
2012
Cars 6000
TVs 36400
ACs 10100
Refrigerators 22100
Washing Machines 10600
2-wheelers 36800
2016
10900
55100
15900
31500
14700
76100
A day in the life of India: 2012 vs 2016
• Economic Advantage 3rd largest economy globally (PPP) with
potential for high growth rate
• Demographic Advantage
– Emergence of Middle class - rising household income
– Growing consumer market
– Large workforce - Highly skilled & Educated
• Urbanization 31% - 2010 to 35% -2020 (Population living in city)
• Growth of real estate sector and construction activity
• Modernization of Agriculture Plasticulture, Micro Irrigation, etc.
• India as auto manufacturing hub
• Booming retail sector
• Low levels of per capita consumption of polyolefins (6.1 Kg against
global average of 20 kg)
Indicative of India’s potential for sustained high growth in coming years
India’s Demand Drivers - Summary
Presentation Plan
Role of Petrochemicals
India’s Economic Transformation
Petrochemical Industry Outlook
Conclusion
Reliance
Indian PE Demand Growth
Capacity additions in line with the domestic demand growth
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Op. Rate Qty, KT
Production Domestic Demand Capacity Operating Rate
Indian PP Demand Growth
India continues to be long in PP
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Op. Rate Qty, KT
Production Domestic Demand Capacity Operating Rate
12th Plan projections for petrochemicals
Overall consumption likely to grow by ~20 MMT
All Fig in KTs
Actual Estimated CARG
Group 2011-12 2016-17 11/12-16/17Building Blocks 8105 12746 9.5%
Comm Plastics 8555 14001 10.4%
Syn Rubbers 462 721 9.3%
Surfactants 648 868 6.0%
Solvents and Int 1726 2563 8.2%
Fibre Intermediates 9034 16911 13.4%
Syn Fibres 3405 5364 9.5%
Total 31934 53173 10.7%
Consumption
Actual Estimated CARG
2011-12 2016-17 11/12-16/178460 12533 8.2%
8975 12671 7.1%
124 764 43.9%
733 784 1.3%
2129 3304 9.2%
8977 17664 14.5%
4527 7390 10.3%
33925 55110 10.2%
Capacity
Company Locations
Ethylene
Production
(KTA
Propylene
Production
(KTA)
ONGC Petro
Additions Dahej, Gujarat 1100 340
MRPL Mangalore, Karnataka 440
BCPL Lapetkata, Assam 220 60
GAIL PATA, Uttar Pradesh 450
HMEL Bhatinda 440
BPCL Kochi 500
Reliance Gujarat 1400 150
Total 3170 1930
Huge investments in petrochemicals sector planned for next few years
Upcoming Petrochemical Projects
• Notwithstanding growing demand, ensuring competitiveness is a
“MUST”
• Historically Middle East was growth center – thanks to low feedstock
and Energy costs
– Less Ethane for new projects
• North America today is new epicenter of growth
– Low energy and feedstock costs
– However no domestic demand for polymers
• High energy costs on account of soaring LNG prices
• New coal-based manufacturing capacities can redefine the industry
– Environmental issues will have to be addressed suitably
Industry will have to keep improving itself continuously
But Some Challenges ……..
Ethylene Cash Cost Curve
0
200
400
600
800
1000
1200
1400
1600
1800
1 7
13
19
25
29
31
38
43
48
55
60
66
72
76
80
85
90
96
100
104
107
112
115
119
123
126
129
133
135
139
142
145
148
151
Cas
h C
ost
($/M
T)
Cumulative Capacity (MMTPA)
Asian/European
Gas/Mixed Feed
Crackers
Small European
and JKT Crackers
Middle East Gas
Crackers and US
Gas crackers
Asian and European
Naphtha Crackers
Feedstock and Energy costs driving competitiveness
Presentation Plan
Role of Petrochemicals
India’s Economic Transformation
Petrochemical Industry Outlook
Conclusion
Reliance
Conclusion
• Economic transformation of India continues accompanied by
income growth
• Coupled with population growth, demand for resources expected
to increase manifold
• Increase in consumption translates to higher demand for
petrochemicals
• Industry in India is responding to rising demand with additional
investments creating growth opportunities
Unprecedented opportunities in petrochemicals
Thank You