presentation-reliance industries ltd

8/4/2019 Presentation-reliance Industries Ltd

1/104

1

Reliance Industries LimitedFinancial Presentation Q1 FY 2001-02

July 31, 2001


2/104

2

Background

Major Subsidiaries & Associates

BCG Matrix

GE Nine Cell Matrix

Hofers Product Evolution matrix

Contents


3/104

3

Operating Environment

Financial Performance

Business Review

Reliance Petroleum

Reliance Infocom

Summary

Contents


4/104

4

Background

The Reliance Group, founded by Dhirubhai H.Ambani (1932-2002), is India's largest privatesector enterprise, with businesses in theenergy and materials value chain. Group'sannual revenues are in excess of US$ 30billion. The flagship company, RelianceIndustries Limited, is a Fortune Global 500

company and is the largest private sectorcompany in India. Dhirubhai H.AmbaniFounder Chairman Reliance GroupDecember 28, 1932 - July 6, 2002


5/104

5

Refinery

Reliance Petroleum Reliance Retail (R R L)

Reliance Global Management Services (P) Ltd

Reliance Biopharmaceuticals Ranger Farms Ltd

Reliance Engineering Associates (P) Ltd

Reliance Oil & Gas Find Petrochemicals Business

Major Subsidiaries & Associates


6/104

6

Jamnagar Refinery: The Jamnagar Refinery is aprivate sector crude oil refinery owned by RelianceIndustries Limited in Jamnagar, India. The refinerywas commissioned on 14 July 1999 with an installedcapacity of 661,000 barrels per day (105,100 m/d). It

is the largest greenfield refinery in the world. With thecompletion of the RPL refinery, Jamnagar hasemerged as the Refining Hub of the World with thelargest refining complex with an aggregate refining

capacity of 1.24 million barrels of oil per day in anysingle location in the world.

Refinery


7/1047

Refining activities of Reliance Industries Limited arecarried out at the Jamnagar refinery complex withrefining capacity of 27 million tonnes per annum.The refinery is able to process a wide variety ofcrudes- from very light to very heavy (from 18 to 45

degree API) and from sweet to very heavy (withsulphur content from 0 to 4.5%).

With an annual crude processing capacity of 580,000

barrels (92,000 m3) per stream day (BPSD), RPL isthe sixth largest refinery in the world.

Refinery


8/1048

Reliance Petroleum Reliance PetroleumLimited :Set up by Reliance Industries Limited (RIL), one ofIndia's largest private sector companies.

RPL has a strategic alliance with Chevron IndiaHoldings Pte Limited, Singapore, a wholly ownedsubsidiary of Chevron Corporation USA (Chevron),which currently holds a 5% equity stake in the

Company

Reliance Petroleum ReliancePetroleum Limited


9/1049

Reliance Retail is the retail business wing ofthe Reliance business.

Reliance Retail continues to consolidate its

presence and operations with more than 900stores in over80 cities where it is operationaltoday.

E-Office Planet Private Limited, Reliancesjoint venture with Office Depot has expandedits footprint across India for better serving its

customers.

Reliance Retail (RRL)


10/10410

Many Brands come under the Reliance Retail Brandlike :- Reliance Fresh. Reliance Footprint. Reliance Time Out.

Reliance Digital. Reliance Wellness. Reliance Trendz. Reliance Autozone.

Reliance Super. Reliance Mart. Reliance i-Store. Reliance Home Kitchens.

Reliance Jewel.

Reliance Retail (RRL)


11/104

11

Reliance Global Services Pvt Ltd is one of the fastgrowing IT solutions and services provider with officesin USA, Hyderabad-India, delivering best-in-classservices to help clients reduce costs, enhanceorganizational flexibility, and improve business and IT

performance. It encompass:- ERP specialized in SAP.

Custom application development. Application maintenance and support.

Management-consulting services

Reliance Global Management Services(P) Limited


12/104

12

. Reliance Global management team comprisesof ace professionals, each with years ofmanagerial experience, rich industry knowledgeand multidimensional skills. They form a

formidable think tank with their industryknowledge, understanding of clientrequirements, processes and key clientbackgrounds



13/104

13

Reliance Life Sciences (Rabale, India), is building aprotein manufacturing facility at the Dhirubhai AmbaniLife Sciences Center at Rabale, near Mumbai.

The company has invested more than Rs9 billion($200 million) to build the complex, which will beReliance's first such facility. It will use mammalian celland microbial fermentation technology to produceproteins.

The protein plant will have initial capacity for 10,000liters of mammalian cell culture and 1,000 liters ofmicrobial cell culture .

Reliance Biopharmaceuticals


14/104

14

Reliance Fresh to become a separateentity Reliance Industries is likely to turntheir consumer retail project RelianceFresh into a separate entity. It could beadded to the Ranger Farm brand name.This particular division of the companydeals in food, fruits and vegetables and

consumer products.

Ranger Farms Limited


15/104

15

REAL is a Reliance Group Company dedicated toEngineering procurement and construction of variousprojects in both reliance group companies and otherindustries.Its services include:-

Part design for molding. Mold design, prototype and production tooling. Pre-production prototyping. Full-scale manufacturing of precision

thermosplastic and thermoset plastic parts..

Reliance Engineering AssociatesPrivate Limited (REAL)


16/104

16

These parts are used in a wide range ofdemanding and critical end-use applications.Building on this core expertise.

Reliance Engineering provides contractmanufacturing services for original equipmentmanufacturers.

This service includes procurement to rigidspecifications and build-to-printassembly of lowto moderate volume products.

Reliance Engineering AssociatesPrivate Limited (REAL)


17/104

17

In 2002, Reliance found natural gas in theKrishna Godavari basin off the coast of AndhraPradesh near Vishakapatnam. Reliance Industries (RIL) commenced natural

gas production from its D-6 block in theKrishna-Godavari (KG) basin. The gas reserveis 7 trillion cubic feet in size. Equivalent to 1.2billion barrels (165 million tonnes) of crude oil,

but only 5 trillion cubic feet are extractable.

Reliance Natural gas

BCG MATRIX


18/104

18

BCG MATRIX


19/104

1919

RelianceBCG Matrix

Dogs (=Low growth, Lowmarket share)Reliance

Petrochemicals

IV

Cash Cows (=Low

growth, High marketshare)(Reliance Oil &Gas,Reliance

Biopharmaceuticals,RelianceRanger farms Ltd)

III

Question Marks(= Highgrowth, Low market share)

RELIANCE PETROLEUM

I

StarsII(=Highgrowth,Highmarketshare)

JamNagarRefinary,Reliance Global

MGMTServices,RelianceEngineeringAssociated ltd(Real),Reliance

Retail ltd(RRL)

Relative Market Share Position

High1.0

Medium.50

Low0.0

IndustryS

ales

High+20

Low-20

Medium

0


20/104

20

Justification: (STAR):JAMNAGAR REFINERY: The rating on Reliance IndustriesLtd. reflects the company's global scale of integrated operationswith a strong competitive position in its core petrochemical andoil refining business and intermediate financial risk profile.

RELIANCE GLOBAL MANAGEMENT SERVICES:InThe Scenario Of Reliance Global Management Services Has

Achieved A Considerable Position In The World Market. BesidesAll These Factors A High Investment And Growth Rate Is BeingProcured.

RELIANCE ENGINEERING ASSOCIATES (P)LTD:Reliance engineering associates (p) ltd has not been in formof providing lot of amount as per current base; hence it needs lotof amount to stand the business.

RelianceBCG Matrix


21/104

21

Justification: (STAR):RELIANCE RETAIL:Reliance Retail is theretail business wing of the Reliancebusiness having high growth rate and highmarket share. They are not for long terminvestment but they generated cash for theorganization Justification.

RelianceBCG Matrix


22/104

22

Justification: (QUESTION MARK)

RELIANCE PETROLEUM LTD: In thecurrent reliance market condition, this issomething equalizing to high growth rate andlow or optimum investment.

RelianceBCG Matrix


23/104

23

Justification: (CASHCOWS)RANGER FARMS LTD: Ranger Farm dealsin food , fruits and vegetables and consumerproducts hasn't achieved a dominant market

position, that's what don't generate much cash.We need much cash because things arechanging every minute in Reliance Retail of the

market conditions to stand the firm rigidly. lowgrowth and high investment is primarily

observed.

RelianceBCG Matrix


24/104

24

Justification: (CASHCOWS)

RELIANCE BIOPHARMACEUTICALS: RelianceBiopharmaceuticals is providing world-class therapies andrecombinant biopharmaceuticals for the treatment of both acuteand chronic diseases in European market. This requires focusedefforts at keeping large amount of cash to grow their marketshare.

RELIANCE OILS & GAS: Krishna-Godavari (KG) D-6block is amongst the five largest deepwater gas projects globally.

It was the largest discovery of natural gas in world in financialyear 2002-2003. Gas production is expected to transform Indiasenergy landscape having low growth rate and is expected todouble market share the current level of indigenous gasproduction.

RelianceBCG Matrix


25/104

25

Justification: (DOGS)

Reliance Petrochemicals:Revenue for the

petrochemicals segment for the year 2008-2009decreased marginally from Rs 53,000 crore to Rs.52,767 crore (US$ 10.4 billion). According torecession period it had low market share in a highly

low growth market .

RelianceBCG Matrix

BCG MATRIX


26/104

26

BCG MATRIX


27/104

27

BCG MATRIX


28/104

28

BCG MatrixStars

(=high growth, high market share)

Best long-run opportunities for growth &profitability.

Large amounts of cash and are leaders in thebusiness so they should also generate largeamounts of cash.

Substantial investment to maintain or strengthen

dominant position

Integration strategies, intensive strategies, jointventures


29/104

29

BCG Matrix

Question Marks(= high growth, low market share)

Cash needs are high

Cash generation is low

Decision to strengthen (intensive strategies) ordivest

Have the worst cash characteristics of all, because highdemands and low returns due to low market share. - If nothing isdone to change the market share, question marks will simply

absorb great amounts of cash and later, as the growth stops, adog. - Either invests heavily or sell off or invest nothing andgenerate whatever cash it can. - - Increase market share ordeliver cash


30/104

30

BCG Matrix

Cash Cows

Cash Cows (=low growth, high market share)Profits and cash generation should be high, and

because of the low growth, investments neededshould be low. Keep profits highGenerate cash in excess of their needs

Maintain strong position as long as possible

Product development, concentricdiversification

If weakensretrenchment or divestiture


31/104

31

BCG Matrix

Dogs

Low relative market share & competein slow or no market growth (=lowgrowth, low market share)

Weak internal & external position.Deliver cash, otherwise liquidateLiquidation, divestiture, retrenchment

Avoid and minimize the number ofdogs in a company.Beware of expensive turn aroundplans.


32/104

32

GE Nine-cell Matrix

It is based on the pioneering efforts of the GeneralElectric (GE) company of the united statessupported by the consulting firm of McKinsey &company.

The nine cells of the GE matrix are grouped on thebasis of low to high industry attractiveness, andweak to strong business strength.

Three zones of three cells each are made,

denoting different combinations represented bygreen, yellow and red colours.


33/104

33

GE Nine-cell Matrix

Green Zone:- The signal is go ahead to growand build, indicating expansion strategies.

Yellow zone:- the signal is wait and seeindicating hold and maintain type of strategies

Aimed at stability and consolidation. Red zone:- the signal is stop indicating the

retrenchment strategies of divestment andliquidation or the rebuilding approach for adopting

turnaround strategies.


34/104

34

GE Nine-cell Matrix

GE NINE CELL MATRIX


35/104

35

GE NINE CELL MATRIX

35INDUSTRY ATTRACTIVENESS

HIGH

LOW

LOW

HIGH

YELLOW-Reliance

communication-Reliance Power

GREEN-Petroleum Refining &

Market Business-Oil & Gas ExplorationProduct- Big Entertainment

GREEN

RED YELLOW-Reliance Capital-Reliance Infrastructure

-Reliance Retail

GREEN

REDRELIANCE

PETROCHEMICALS

RED-

YELLOW

MEDIUM

MED

COMPETITIV

EPOSITION


36/104

36

Hofers product market evolution matrix

Hofers and schendel proposed a 15 cell matrix,that considers the stages of development of theproduct or market and the competitive position ofdifferent businesses in a companys corporate

portfolio.


37/104

37


A business in the development or growth stagehas a potential to be a star.

If the market share is large in these growthoriented stages, more resources must be invested

to develop competitive position. But if market share is low, a strategy to improve

the same must be developed.

If the industry is relatively small and market shareis low despite high growth stage, managementmust consider divesting and redeploying resourcesin other competitive business.

HOFERS PRODUCT MARKET


38/104

38

HOFER S PRODUCT MARKET

EVOLUTION MATRIX


39/104

39

Reliance and the Indian Economy

Reliance groups leadership position in the Indianeconomy, is reflected in its all-round contribution:

- 3% of Indias GDP

- 5% of Indias total exports

- Nearly 10% of governments indirect tax

revenues

- 2.3% of the gross capital formation in the

country, in the last 5 years

RelianceReliance

makesmakes

significantsignificant

contributionscontributions

to the Indianto the Indian

economy oneconomy on

variousvarious

parametersparameters


40/104

40

Leadership in the Corporate Sector

Reliance groups pre-eminent role in the Indian corporate sector:

- 30% of the total profits of the private sector

- 10% of the profits of the entire corporate sector

- over 12% of total market capitalisation

- weightage of 22% in the Sensex

- weightage of 19% in the Nifty

- 1 out of every 4 investors in India is a Reliance shareholder

RIL and RPL are now the top 2 companies in India on all majorRIL and RPL are now the top 2 companies in India on all major

financial parametersfinancial parameters


41/104

41

* Date of first IPO; all figures are for RIL & RPL

Consistent Track-Record of Profitable Growth

Compounded Annual Rate of Growth (%)

Since 1977* 10 Year 5 Year

Sales 33 40 50

Net Profit 41 42 26

Cash Profit 40 36 31

Assets 36 34 27

Market Cap 43 41 41

EPS 21 23 20

Record high levels of compounded double digit growth rates on all major

parameters, across all timeframes

Reliance Global Management Services


42/104

42

ERP specialized in SAP. ERP, which is an

abbreviation forEnterprise Resource Planning, isprincipally an integration of business managementpractices and modern technology. InformationTechnology (IT) integrates with the core business

processes of a corporate house to streamline andaccomplish specific business objectives.Consequently, ERP is an amalgamation of three mostimportant components; Business Management

Practices, Information Technology and SpecificBusiness Objectives.


http://www.tech-faq.com/enterprise-resource-planning.htmlhttp://www.tech-faq.com/enterprise-resource-planning.html


43/104

43

ERP specialized in SAP. In simpler words, an ERP is a massive

software architecture that supports the streaming and distributionof geographically scattered enterprise wide information across allthe functional units of a business house. It provides the businessmanagement executives with a comprehensive overview of thecomplete business execution which in turn influences their

decisions in a productive way.Information in large business organizations is accumulated onvarious servers across many functional units and sometimesseparated by geographical boundaries. Such information islandscan possibly service individual organizational units but fail toenhance enterprise wide performance, speed and competence.The term ERP originally referred to the way a large organizationplanned to use its organizational wide resources.




44/104

44

ERP specialized in SAP. The name SAP isacronym for Systems, Applications andProducts in Data Processing. SAP is anextremely complicated system where no one

individual can understand all of it.

SAP runs on a fourth generation programminglanguage language called Advance Business

Application Programming (ABAP). It have manyof the features of other modern programminglanguages such as the familiar C, Visual Basic,and Power Builder.




45/104

45

ERP specialized in SAP. SAP are categorized into 3 corefunctional areas:LogisticsSales and Distribution (SD)Material Management (MM)Warehouse Management (WM)

Production Planning (PP)General Logistics (LO)Quality Management (QM)

FinancialFinancial Accounting (FI)

Controlling (CO)Enterprise Controlling (EC)Investment Management (IM)Treasury (TR)

Human Resources

Personnel Administration (PA)



46/104

46

Corporate Philosophy

World scale, and world class

State-of-the-art technologies

Global competitiveness

Leadership in chosen areas of business

Superior Project Execution

Financial Conservatism

Highest standards for Health, Safety and Environment

Consistent overall shareholder value enhancement

RelianceReliance

benchmarksbenchmarks

itself withitself with

global best prglobal best pr

in all aspectsin all aspects

of itsof its

operationsoperations


47/104

47


Business unit A would to be a developing winner.

Its relatively large share of the market combinedwith its being at the development stage of product-market evolution and its potential for being in astrong competitive position make it a good

candidate for receiving more corporate resources.

Business unit B is somewhat similar to A.However, it has a relatively small share of the

market given its strong competitive position. Astrategy would have to be developed to overcomethis low market share in order to justify moreinvestments.


48/104

48


Business unit C might be classified as a potential

loser(DOG). A strategy must be developed toovercome the low market share and weakcompetitive position in order to justify futureinvestments.

-Business unit D is in a shakeout period, has arelatively large share of the market, and is in arelatively strong position. Investment should be

made to maintain that position. A BUSINESS USED FOR (CASH GENERATION), THAT COULD BEDIVERTED TO A & B.


49/104

49


Business units E and F are cash cows and

should be used for cash generation.

-Business unit G appears to be a dog. It shouldbe managed to generate cash in the short run, ifpossible; however, the long-run strategy will more

the likely be divestment or liquidation.


50/104

50

Rs. crores $ bn Rank

Sales 60,000 12.8 1

Exports 9,000 1.9 1

Cash Flow 7,000 1.5 1Net Profit 4,700 1.0 1

Assets 55,000 11.8 1

Market Cap 56,000 11.9 1

Reliance is the largest, fastest growing, and the most valuablebusiness group, in India - just 23 years young

Indias No. 1 Group

l b


51/104

51

Financial Objectives

Emphasis on capital productivity, and returns, to generateattractive spreads over cost of capital

Targets of minimum 20% ROE, and 20% 5 year EPS CARG,

across business cycles

Conservative gearing - maintain top end credit ratings

New investments based on achievement of hurdle rates of 20%

ROCE, and low gestation period to further enhance ROE

Strong and conservative financial discipline in place


52/104

52


Q1 FY 2001-02


53/104

53


Operating margins for the global petrochemicals industry were

under considerable pressure in Q1

Significant capacity additions in the petrochemicals industry in the

Middle East and Asia, and the US slowdown .caused a sharp decline in international and domestic selling

prices of major petrochemicals products

In addition, continuing volatility in crude oil prices led to volatility in

prices of the principal petrochemicals feedstock, naphtha

The global petrochemicals industry is witnessing amongst the mostchallenging conditions in its history

Change in feedstock and product prices


54/104

54


% change in international prices Q1 FY02 over Q1 FY01

Selling Prices of Products(US$/MT) PE -12%

PP -10%

PVC -29%POY -9%PSF -14%PTA -9%MEG -21%PX -1%

..but international selling prices ofproducts declined sharply

Raw Material Costs

Crude oil ($/bbl) -1%

Naphtha Prices ($/MT) 0%

Average naphtha prices in US$terms remained flat Q-on-Q ...

Ch i f d k d d i


55/104

55

% change in domestic prices Q1 FY02 over Q1 FY01

Selling Prices of Products (Rs/kg) PE -8%

PP 0%PVC -10%

POY +3%PSF -9%PTA -6%MEG -11%PX +6%

. but domestic selling prices of

most products also declined

Raw Material Costs

Crude oil ($/bbl) -1%

Naphtha Prices (Rs.kg) -1%

Naphtha landed prices in rupee termsmarginally lower Q-on-Q


RIL Q1 P f Hi hli h


56/104

56

RILs Q1 Performance Highlights

Plants operated at average capacity utilisation rate of 103%

Production volumes increased 7% to record 2.8 million tonnes

Domestic market sales accounted for nearly 90% of total sales

Exports stood at US$ 159 million (Rs. 749 crores) exports were

Rs. 86 crores per annum just 5 years back

Market shares were 55% for polyester, 77% for polyester

intermediates, and 50% for polymers

RIL has maintained its track record of strong operationalperformance despite challenging industry conditions


57/104

57

Financial PerformanceFinancial Performance

Q1 FY 2001-02Q1 FY 2001-02

RIL Income Statement for Q1 FY 2001 02


58/104

58

Q1 FY 2001-02 Q1 FY 2000-01 % Change

Rs.crs. $ mn. Rs.crs. $ mn.Sales 6,390 1,358 6,136 1,373 4%

Trading Sales - - 479 107

EBITDA 1,302 277 1,235 275 5%

Interest 257 55 298 67 -14%Depreciation 396 84 366 82

Tax 30 6 28 6

Deferred Tax 1

Net Profit 618 131 543 122 14%

Cash Profit 1,045 222 937 210 12%

RIL Income Statement for Q1 FY 2001-02

Net Profit increased 14% in a difficult operating environment

RIL+RPL Income Statement for Q1 FY 2001 02


59/104

59

Q1 FY 2001-02 Q1 FY 2000-01 % Change

Rs.crs. $ mn. Rs.crs. $ mn.

Gross Sales 15,255 3,243 12,598 2,820 21%

EBITDA 2,235 475 1,866 418 20%

Interest 500 106 470 105Depreciation 595 126 501 112

Tax 66 14 52 12

Net Profit 1,074 228 843 189 27%

Cash Profit 1,735 368 1,396 313 24%

RIL+RPL Income Statement for Q1 FY 2001-02

RIL and RPL have combined cash flows of Rs. 1,670 crores (US$355 mn) in Q1

Proforma Consolidated RIL Income


60/104

60

Q1 FY 2001-02Rs.crs. $ mn.

RILs EBITDA 1,302 277

Income from Associates 243 52

and Subsidiaries

Interest 258 55

Depreciation 396 84

Tax 30 6

Deferred Tax 1 -

Net Profit 860 183

f

Statement for Q1 FY 2001-02

The true picture of RILs profitability is reflected by the proformaconsolidated income statement, which includes financials ofsubsidiaries, RPL, RCL, RIIL and BSES


61/104

61

Elements of RILs Net Profit Growth

High capacity utilisation rates leading to volume growth Higher proportion of sales in domestic market

Increased share of speciality products, contributing higher

margins

Productivity improvements and cost reduction

Interest cost savings, owing to lower debt and refinancing

Dividends of only Rs. 16 crores (US$ 3.4 mn) from RPL

accounted in Q1 on pro-rata basis total dividends on Reliances

64% stake for full year Rs. 153 crores (US$ 33 mn)

Profit growth arising from successful twin business strategies of

improving sales realisations and lowering costs


62/104

62

Composition of 4%

Sales Revenue Growth

Impact of volume growth 6%

Impact of price changes -2%

RIL - Elements of Sales Growth

Production volume up 7% to 2.8 million tonnes

Overall average capacity utilisation rate 103%

Polymers capacity utilisation rate 110%, polyester 95% and

polyester intermediates 105%

RIL P fi bili R i


63/104

63

RIL Profitability Ratios

RIL has amongst the highest Returns on Equity (ROEs) amongstthe top petrochemicals companies globally

Q1 FY 2001-02 Q1 FY 2000-01

OPM % 18.4% 17.4%*

NPM % 9.7% 8.9%

ROE % 18.3% 16.4%

EPS - Rs. ($) 23.4(0.50) 20.4 (0.46)

Cash EPS - Rs($) 38.5(0.82) 34.3 (0.77)

* excluding FX gains

Proforma Consolidated Profitability Ratios


64/104

64

Proforma consolidation of financials, to include income fromsubsidiaries, RPL, RCL , RIIL and BSES, reflects the true picture ofreturns on RILs investments

Q1 FY 2001-02

NPM % 13.5%

ROE % 25.2%EPS - Rs. ($) 32.6(0.69)

Proforma Consolidated Profitability Ratios

RIL Liquidity Ratios


65/104

65

RIL Liquidity Ratios

RILs financial strength is reflected by its conservative liquidity ratios

and top end credit ratings

Q1 FY 2001-02 FY 2000-01

Debt : Equity 0.83 0.72

Gearing 44% 41%

Interest Cover 3.5x 3.3x

Total Debt/Cash Flow 2.0 1.8

Conservative Financial Management


66/104

66

Conservative Financial Management

AAA credit ratings from CRISIL and FITCH for domestic debt International debt rated BB (Stable outlook) from S&P and Ba2

from Moodys constrained by sovereign ceiling

Weighted average maturity of foreign exchange denominated

debt of US $ 1,300 mn (Rs. 6,000 crores) is 21 years

Annual forex denominated interest liability covered more than 7

times by US$ denominated exports, and oil and gas revenues

Reliances strong financial position provides a high degree of

financial flexibility to capture future opportunities

Reliance is Indias Largest Exporter


67/104

67

Reliance is India s Largest Exporter

Reliance is Indias largest exporter with group exports of US$ 2

bn (Rs. 9,370 crores) in FY 2001

Individually too, RIL and RPL are Indias top 2 exporters

RILs manufactured exports declined 10% to US$ 159 mn (Rs.

749 crores) in Q1

RIL exports products to over 100 countries, including to the most

quality conscious customers in the US and Europe

RIL recently became Indias first manufacturing entity to receivethe status of Golden Super Star Trading House

Reliances high exports demonstrate the international quality of its

products, and its ability to compete against global leaders

Consistent Growth in Exports Revenues


68/104

68

Consistent Growth in Exports Revenues

Exports still represent only 10% of total sales even after 8 times

increase in absolute terms over the last 5 years

86 107 366 6851,478 2,960

7,786 8,730

13,40414,533

19,968

25,731

0

5000

10000

15000

20000

25000

30000

35000

95-96 96-97 97-98 98-99 99-00 00-01

Exports Total Sales

Rs.crores


69/104

69

Business ReviewBusiness Review

Product Mix


70/104

70

Product Mix

Composition of RILs sales

Petrochemicals businesses dominate RILs portfolio, with an 86%share of sales share of oil and gas business likely to increase

Chemicals

10%

Plastics & Int.

32%

Fabrics

1%Polyester

22%

Fibre Int.

32%

Oil & Gas

3%

Oil & Gas - Review


71/104

71

Oil & Gas Review

RIL is Indias largest private sector E&P operator in India

Number of properties increased from just 2 to 25 over the last 2

years

Four new exploration blocks awarded in Q1, in second round ofbidding under New Exploration Licensing Policy (NELP)

100 strong team currently manning operations

Fiscal incentives to enhance overall returns from this business

RILs E&P investments are expected to enhance overall feedstock

integration levels and generate attractive returns

Oil d G E i ti P d ti


72/104

72

Reliances Production Q1 FY02 Q1 FY01 %Change

Oil (in kT) 100 92 8%

Gas (in kTOE) 165 157 6%

Oil and Gas - Existing Production

Output from the 2 currently producing oil and gas fields of Panna-

Mukta and Tapti (PMT) has further increased in Q1

The 3% share in RILs revenues by Oil and Gas is from the 2 PMT

fields alone the 23 new exploration blocks are still to make any

contribution

Reliances Oil & Gas Properties


73/104

73

SHALLOW WATER BLOCKSBLOCK 1 : Kutch OffshoreBLOCK 2 : SaurashtraBLOCK 3 : Saurashtra *BLOCK 4 : Mumbai OffshoreBLOCK 5 : Mumbai Offshore

BLOCK 8 : Kerala-KonkanBLOCK 18 : Krishna GodavariBLOCK 19 : Krishna GodavariBLOCK 20 : Krishna GodavariBLOCK 25 : North East CoastDEEP WATER BLOCKSBLOCK D4 : Krishna GodavariBLOCK D5 : Kerala Konkan *BLOCK D6 : Krishna GodavariBLOCK D7 : Kerala Konkan *

BLOCK D10 : MahanadiONSHORE BLOCKSBLOCK 17 : Assam *NON-NELP BLOCKSGK-1 : Kutch OffshoreSR-2 : SaurashtraTULLOW BLOCKST1 : Krishna GodavariT2 : Kutch Offshore

T3 : Kutch OffshoreT4 : Kutch OffshoreT5 : Cambay

* Recently awarded under NELP - II

OnlandDeep Water

NELP - I

Legend

Deep WaterShallow Water

Earlier Awarded Exploration Blocks

Shallow WaterNELP - II

Tullow Blocks

Mukta

Tapti

Panna

25

D1020

D6

D4

T1

18

19

8D7

D5

54

3SR2

2

GK1

T31T2

T4T5

17

Well balanced portfolio of 25 deep and shallow water, offshore and

onshore E & P blocks, aggregating over 1,75,000 square kilometers

Polyester - Background


74/104

74

Polyester Background

Leading global rankings, and lowest cost positions:

- 2nd largest producer of PSF/POY

- 3rd largest producer of PX

- 4th largest producer of PTA

Strong demand potential in domestic markets - per capitaconsumption amongst the lowest in the world

High tariff protection removed - import duties already at restingpoint of 20%, as per the WTO bound rates

Anti dumping duties imposed on POY exports from leading regionalproducers, to counter unfair competition

The Indian polyester market has witnessed compounded double digit

annual demand growth rates over 2 decades

Polyester - Review


75/104

75

y

Present capacity of POY, PSF and PET 900,000 tonnes per year to

be increased 33% to 1.2 million tonnes per year, in next 2 years

Capacity expansion planned through attractive acquisition deals,

and building cost competitive facilities at existing sites

RIL is the only player making investments to capture future growth

opportunities in polyester in India

RILs market share of POY, PSF and PET has grown to 55% -

reflecting acquisitions of 250,000 tonnes over the past few years

Demand fundamentals point to sustainable double digit growth rates

for polyester in India in the medium to long term

Polyester - Existing Production


76/104

76

Polyester - Existing Production

Industry Reliance

(Production in Q1 Q1 % Q1 Q1 %000 tonnes) FY02 FY01 change FY02 FY01 change

Polyester 370 349 6% 205 178 15%

(PFY, PSF, PET)

Intermediates 880 891 -1% 681 728 -6%

(PTA, MEG, PX)

Polyester demand growth of 6% quarter-on-quarter

Polymers - Background


77/104

77

Polymers - Background

Reliance amongst the top 10 players globally in polymers

India the worlds fastest growing polymers market

Likely to be the worlds third largest market within this decade

RILs major polymer, PP, accounting for 60% of production,

witnessed demand growth of over 19% this year

Import tariffs already down to 35% - gradual further reduction by 5%

per year over the next 3 years

RIL enjoys a leading 50% share in the rapidly growing polymers market inIndia

Polymers - Existing Production


78/104

78

Polymers Existing Production

Industry Reliance(Production in Q1 Q1 % Q1 Q1 %

000 tonnes) FY02 FY01 change FY02 FY01 change

Plastics 837 707 18% 416 387 8%

(PE, PP, PVC)

Polymers demand growth of 16% quarter on quarter

Higher industry production growth rate reflects impact of capacities

of new players operating at higher rates compared to the last year

Emphasis on Higher Margin Speciality Grades


79/104

79

POY 26% 750 - 12,000 2% - 27%

PSF 59% 2,800 - 10,200 5% - 19%

PE 21% 665 - 6,6551.8% - 18%

PP 20% 330 - 3,3301% - 10%

Emphasis on Higher Margin Speciality Grades

Speciality as % Premium over

of Total Volume Commodity

Q1 FY02 (Rs./MT) (%)

Speciality grades yield premium pricing and contribute to highermargins, product differentiation, and relative insulation from commoditycycles


80/104

80

Reliance PetroleumReliance Petroleum

RPL - World class refinery


81/104

81

Capacity of 540,000 b/d

comparable to US andEuropean supersites

Worlds largest greenfield

refinery and 7th largest in the

world

Complexity at top end of global

range

Capability to produce higher

value products from lower

cost, heavier grade crude

f y

US supersites refer to a sample of refineries with capacities of at least 225 kbpd and complexities of at least 9.5

European supersites refer to a sample of refineries with capacities of at least 245 kbpd and complexities of at least 6.5

Certain US and European supersites include petrochemical facilities

Sources: RPL, Wood Mackenzie

US supersites refer to a sample of refineries with capacities of at least 225 kbpd and complexities of at least 9.5

European supersites refer to a sample of refineries with capacities of at least 245 kbpd and complexities of at least 6.5

Certain US and European supersites include petrochemical facilities

Sources: RPL, Wood Mackenzie

ComparisonsComparisons

kb/d

0

100

200

300

400

500

600

RPL US supersite European

supersite

0

2

4

6

8

10

12

14

ComplexityIndex

Shell Singapore

Reliance

JamnagarUS supersite European

supersite

Shell Singapore

16

RIL

Petrochem

plants

RPL

refinery

RPL - Peer comparisons


82/104

82

RPL Peer comparisons

Source: Study by Solomon Associates, Inc. on RPL (March 1999)1. Indian peers refer to seven Indian refineries that participated in the 1996 study by Solomon Associates, Inc.

2. Asian peers refer to four refineries that are among the better refineries in Asia according to Solomon Associates, Inc.

3. US pacesetter refineries represent a group of seven refineries located in the U.S. and Canada, which have achieved first or second

quartile rankings in all of the major indicators in the past three or four studies by Solomon Associates, Inc.

4. Europe pacesetter refineries refer to a group of six refineries located in Europe which have achieved similar rankings as the US pacesetterrefineries

Source: Study by Solomon Associates, Inc. on RPL (March 1999)1. Indian peers refer to seven Indian refineries that participated in the 1996 study by Solomon Associates, Inc.

2. Asian peers refer to four refineries that are among the better refineries in Asia according to Solomon Associates, Inc.

3. US pacesetter refineries represent a group of seven refineries located in the U.S. and Canada, which have achieved first or second

quartile rankings in all of the major indicators in the past three or four studies by Solomon Associates, Inc.

4. Europe pacesetter refineries refer to a group of six refineries located in Europe which have achieved similar rankings as the US pacesetterrefineries

Total cash operating costsTotal cash operating costs Energy intensity indexEnergy intensity index

Crude sulfurCrude sulfur Crude gravityCrude gravity

0

510

1520

2530

35

40

Indian peers Asian peers Europepacesetters

USpacesetters

RPL

US cents / Utilized Equivalent Distillation CapacityUS cents / Utilized Equivalent Distillation Capacity

0

20

40

60

80100

120

Indian peers Asian peers Europepacesetters

USpacesetters

RPL

0.0

0.5

1.0

1.5

2.0

2.5

Ind ian peers Asi an peers Europe

pacesetters

US

pacesetters

RPL

Weight %Weight %

26

28

30

32

34

36

38

Indian peers Asian peers Europe

pacesetters

US pacesetters RPL

Degree APIDegree API

RPL - Higher GRMs


83/104

83

Complexity

Good product fit

g

Low crude delivery

cost

Favorable tariffenvironment

Drivers of high refining margins

Fiscal

benefits

0

1

2

3

4

5

6

7

Apr-June'00 July-Sep'00 Oct-Dec'00 Jan-Mar'01 Apr-June'01

RPL

US Gulf Coast

Mediterranean

Rotterdam

Singapore

$

/b

b l

RPL Consistent Increase in Operating Rates


84/104

84

RPLs record capacity utilisation rate of 108% is far ahead of the

average 85% for other refineries in India and Asia Pacific region, 86%for Europe, and 92% for North America

Integration with groups downstream operations and ability to tapexports markets significantly contribute to high operating rates

86%

101% 101%

95%

108%

80%

85%

90%

95%

100%

105%

110%

Q1 FY'01 Q2 FY'01 Q3 FY'01 Q4 FY'01 Q1 FY'02

RPL - Income Statement for Q1 FY 2001-02


85/104

85

RPL is Indias largest company in terms of sales and is second onlyto RIL in terms of net profits, net worth, and assets

Q1 FY 2001-02 Q1 FY 2000-01 % Change

Rs.crs. $ mn. Rs.crs. $ mn.Gross Sales 8,865 1,884 5,983 1,339 48%

EBITDA 933 198 631 141 48%

Interest 243 52 172 39

Depreciation 199 42 135 30

Tax 35 7 24 5

Net Profit 456 97 300 67 52%

Cash Profit 690 147 459 103 50%

El t f RPL N t P fit G th


86/104

86

Elements of RPLs Net Profit Growth

High capacity utilisation rates of 108% leading to 26% volumegrowth from 5.8 to 7.3 million tonnes

Increased processing of heavier and relatively less expensive

varieties of crude oil

Improved product mix to take advantage of niche opportunities

Import tariff rationalisation in October, 2000, as well as in March

and April, 2001, leading to higher effective import tariff differentials

Ongoing productivity gains and cost reductions

Strong volume growth and superiority of RPL refinerys configurationhave contributed significantly to net profit growth

RPL - Profitability Ratios


87/104

87

f y

RPLs ROE ranks amongst the highest in refining companies globally

Q1 FY 2001-02 Q1 FY 2000-01

OPM% 10.3% 10.3%

NPM % 5.1% 5.0%

ROE % 21.4% 20.8%

EPS - Rs. ($) 3.8 (0.08) 2.8 (0.06)

CEPS - Rs. ($) 5.5 (0.12) 4.1 (0.09)

RPL - Liquidity Ratios


88/104

88

AA+ rating from CRISIL and FITCH a unique achievement for a

company of this scale in just over a year of operations Recently concluded Indias largest syndicated loan facility for US$

750 mn (Rs. 3,500 crores) enhancing financial flexibility

Q1 FY 2001-02 FY 2000-01

Debt : Equity 0.89 0.86

Gearing 47% 44%

Interest Cover 3.3 2.9

Total Debt / Cash Flow 2.2 2.3

RPL - Indias Largest Exporter


89/104

89

RPL is Indias largest exporter with exports of US$ 1,375 mn (Rs.

6,410 crores) in FY 2001

Q1 exports of RPLs products have increased 200% to US$ 306 mn

(Rs. 1,440 crores)

Exports to the US and other discerning markets reflect:

global competitiveness

international quality of products

operational flexibilityworld class logistics capabilities

RPLs ability to deliver international quality products provides asignificant competitive edge in a decontrolled environment

Integration with Marketing


90/104

90

RPL proposes to enter the business of retail marketing of controlledproducts in India, in line with government policies

RPL is currently evaluating a multi-pronged strategy, encompassing:

- potential joint ventures and alliances

- acquisitions of marketing and distribution assets, and/or

- development of its own distribution and marketing infrastructure

RPLs Memorandum Of Understanding with Indian Oil Corporation for

formation of a JV for marketing, and the companys participation in the

process for disinvestment of IBP, reflect this strategy

RPLs entry into marketing will enhance integration and provideopportunities for generating attractive returns


91/104

Reliance TelecomReliance Telecom

Reliance Telecom - Review


92/104

92

165% growth in cellular subscriber base over last one year double

the industry growth rate of 87%

Current subscriber base of over 236,000 with services in 113 cities

across 15 states

Leading market shares in all 7 circles

Pre paid account for 90% of cellular revenues low risk strategy

Strength of Reliance Mobile brand and expertise in building retail

consumer franchise demonstrated

Reliances existing mobile operations span 1/3rd of Indiasgeographical area and cover nearly 400 million people


93/104

Reliance InfocomReliance Infocom

Reliance Infocom - Review


94/104

94

Reliance Infocom to be the holding company for all infocom and

related businesses of Reliance group

Reliance Infocom to invest up to Rs. 25,000 crores (US$ 5 bn) over

the next 5 years

Project proposed to be financed with 2:1 debt:equity

RIL is the lead investor with 45% equity stake

f

Reliance is leveraging its superior project execution capabilities andsuccessful experience in telecom business

Reliance Infocom - Update


95/104

95

First company to receive licences for providing fixed line services in

16 circles national footprint excluding Tamilnadu and J&K

Fixed line licences also enable tapping of mobile segment through

low cost WiLL services in addition to existing GSM business

First company to receive National Long Distance (NLD) licence Work on 60,000 route kms, world class IP backbone on schedule

project on target for completion by end 2002

Participating in process for disinvestment of VSNL, Indias

monopoly international long distance carrier

f p

Reliance Infocoms comprehensive business model targetsopportunities in high growth voice and data markets

Reliance Infocom - Update


96/104

96

Plans announced for Indian telecom markets by several domestic

and international players scrapped

Consolidation of telecom industry in India gathers pace

Significant reduction in equipment and fibre costs owing to global

telecom slowdown and cancellation of large number of projects

Phased approach by Reliance towards infocom investments, based

on:

strong cash flows

attractive IRRslow payback period

f p

Reliance Infocom is building amongst the lowest cost integratedcommunications networks in the country


97/104

SummarySummary

Indias Top 5 Wealth Creators in 2000-01Mkt Cap on Addition in


98/104

98

(Rs.crs) (US$ mn) (Rs.crs) (US$ mn)

RIL 41,191 8,835 8,051 1,727

ITC 19,988 4,287 1,948 418

HDFC 6,490 1,392 1,947 418

BPCL 5,717 1,226 1,765 379

Nestle 4,879 1,047 1,270 272

Total 78,265 16,788 14,981 3,213

Mkt. Cap on

31-Mar-01

Addition in

2000-01

RIL is the No. 1 wealth creator in the year 2000-01 - wealth creationexceeds the next company by a factor of 4 times

RILs Superior Share Price Performance


99/104

99

RIL shares have consistently outperformed the broad market overall time frames

% change

Period RIL Sensex Nifty

Year to date -8% -17% -16%

1 year -8% -23% -20%

2 year 76% -28% -19%

3 year 129% 2% 14%

5 year 204% -5% 5%

Since 1994* 53% -24% -

10 year 257% 100% -* Last equity placement from RIL

Returns from RIL to Financial Institutions


100/104

100

f

Amount (Rs. crores)

Private placement in October 1994 945

Current value of RIL shares (4.9 crore shares @Rs. 313) 1536

Income from dividends including reinvestments 150

Total profit earned by FIs till date 741

Profit from an equivalent investment in Sensex -148(including dividends and reinvestments)

Total returns over market returns 889

UTI, LIC, and GIC have earned total returns of Rs. 889 crores over

market returns, on their original investment of Rs. 945 crores

RIL stock price has appreciated 53% from its placement price,

outperforming the Sensex by 77% over this period

Reliance Industries Ltd.

Price Performance of Leading Index Movers


101/104

101

f f g

% change

Period RIL HLL ITC

Year to date -8% 6% -14%

1 year -8% -8% 3%

2 year 76% -20% -22%

3 year 129% 27% 22%

5 year 204% 160% 170%

The RIL stock is the best performing index heavyweight over virtuallyall time frames

RPLs Superior Share Price Performance


102/104

102

% change

Period RPL Sensex Nifty

1 year -9% -23% -20%

2 year 49% -28% -19%

3 year 152% 2% 14%

5 year 260% -5% 5%

RPL shares have outperformed the broad market over all timeframes, creating superior value for both RPL and RIL shareholders

Summary


103/104

103

Production volumes in existing petrochemicals business likely to

cross 11 million tonnes in the current year Global petrochemicals operating margins likely to remain under

pressure during the current year

RILs investment in RPL now generating attractive returns RILs future investments in Oil and Gas and infocom to generate

significant returns in the medium to long term

RILs proforma consolidated EPS of Rs. 32.6 (US$ 0.69) reflects

the true picture of returns on its overall investments

RIL will endeavour to maintain its demonstrated and consistent trackrecord of shareholder value enhancement


104/104

Reliance Industries Limited

Indias World Class Corporation

presentation-reliance industries ltd

Documents