Reliance Industries Limited

Financial Presentation Q1 FY 2001-02 July 31, 2001

1

Contents
Background Major Subsidiaries & Associates BCG Matrix GE Nine Cell Matrix Hofers Product Evolution matrix

Contents
Operating Environment Financial Performance Business Review Reliance Petroleum Reliance Infocom Summary

Background
The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of US$ 30 billion. The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India. Dhirubhai H. AmbaniFounder Chairman Reliance Group December 28, 1932 - July 6, 2002
4

Major Subsidiaries & Associates

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

Refinery
Jamnagar Refinery: The Jamnagar Refinery is a private sector crude oil refinery owned by Reliance Industries Limited in Jamnagar, India. The refinery was commissioned on 14 July 1999 with an installed capacity of 661,000 barrels per day (105,100 m/d). It is the largest greenfield refinery in the world. With the completion of the RPL refinery, Jamnagar has emerged as the Refining Hub of the World with the largest refining complex with an aggregate refining capacity of 1.24 million barrels of oil per day in any single location in the world.

Refinery
Refining activities of Reliance Industries Limited are carried out at the Jamnagar refinery complex with refining capacity of 27 million tonnes per annum. The refinery is able to process a wide variety of crudes- from very light to very heavy (from 18 to 45 degree API) and from sweet to very heavy (with sulphur content from 0 to 4.5%). With an annual crude processing capacity of 580,000 barrels (92,000 m3) per stream day (BPSD), RPL is the sixth largest refinery in the world.

Reliance Petroleum Reliance Petroleum Limited

Reliance Petroleum Reliance Petroleum Limited :
Set up by Reliance Industries Limited (RIL), one of India's largest private sector companies. RPL has a strategic alliance with Chevron India Holdings Pte Limited, Singapore, a wholly owned subsidiary of Chevron Corporation USA (Chevron), which currently holds a 5% equity stake in the Company

Reliance Retail (RRL)

Reliance Retail is the retail business wing of the Reliance business. Reliance Retail continues to consolidate its presence and operations with more than 900 stores in over80 cities where it is operational today. E-Office Planet Private Limited, Reliances joint venture with Office Depot has expanded its footprint across India for better serving its customers.
9

Reliance Retail (RRL)

Many Brands come under the Reliance Retail Brand like : 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.

10

Reliance Global Management Services (P) Limited

Reliance Global Services Pvt Ltd is one of the fast growing IT solutions and services provider with offices in USA, Hyderabad-India, delivering best-in-class services to help clients reduce costs, enhance organizational flexibility, and improve business and IT performance. It encompass: ERP specialized in SAP. Custom application development. Application maintenance and support. Management-consulting services
11

Reliance Global Management Services (P) Limited

. Reliance Global management team comprises of ace professionals, each with years of managerial experience, rich industry knowledge and multidimensional skills. They form a formidable think tank with their industry knowledge, understanding of client requirements, processes and key client backgrounds

12

Reliance Biopharmaceuticals
Reliance Life Sciences (Rabale, India), is building a
protein manufacturing facility at the Dhirubhai Ambani Life Sciences Center at Rabale, near Mumbai. The company has invested more than Rs9 billion ($200 million) to build the complex, which will be Reliance's first such facility. It will use mammalian cell and microbial fermentation technology to produce proteins. The protein plant will have initial capacity for 10,000 liters of mammalian cell culture and 1,000 liters of microbial cell culture .
13

Ranger Farms Limited

Reliance Fresh to become a separate entity Reliance Industries is likely to turn their consumer retail project Reliance Fresh into a separate entity. It could be added to the Ranger Farm brand name. This particular division of the company deals in food, fruits and vegetables and consumer products.

14

Reliance Engineering Associates Private Limited (REAL)

REAL is a Reliance Group Company dedicated to Engineering procurement and construction of various projects in both reliance group companies and other industries. 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..

15

Reliance Engineering Associates Private Limited (REAL)

These parts are used in a wide range of demanding and critical end-use applications. Building on this core expertise. Reliance Engineering provides contract manufacturing services for original equipment manufacturers. This service includes procurement to rigid specifications and build-to-printassembly of low to moderate volume products.
16

Reliance Natural gas

In 2002, Reliance found natural gas in the Krishna Godavari basin off the coast of Andhra Pradesh near Vishakapatnam. Reliance Industries (RIL) commenced natural gas production from its D-6 block in the Krishna-Godavari (KG) basin. The gas reserve is 7 trillion cubic feet in size. Equivalent to 1.2 billion barrels (165 million tonnes) of crude oil, but only 5 trillion cubic feet are extractable.

17

BCG MATRIX

18

High 1.0

RelianceBCG Matrix Medium

Relative Market Share Position
.50

Low 0.0

High +20

StarsII(=Highgrowth,Highma
rketshare)

Question Marks(= High

growth, Low market share) RELIANCE PETROLEUM I

JamNagarRefinary,Reliance Global MGMT Services,RelianceEngineering Medium Associated ltd(Real),Reliance 0 Retail ltd(RRL)

Cash Cows (=Low growth, High market share) (Reliance Oil &

s e a S yrt s udn l I

Low -20

Gas,Reliance Biopharmaceuticals, RelianceRanger farms Ltd)

Dogs (=Low growth, Low market share)Reliance

Petrochemicals

IV
19 19

III

RelianceBCG Matrix
Justification: (STAR):
JAMNAGAR REFINERY: The rating on Reliance Industries
Ltd. reflects the company's global scale of integrated operations with a strong competitive position in its core petrochemical and oil refining business and intermediate financial risk profile.

RELIANCE GLOBAL MANAGEMENT SERVICES:In

The Scenario Of Reliance Global Management Services Has Achieved A Considerable Position In The World Market. Besides All These Factors A High Investment And Growth Rate Is Being Procured.

RELIANCE ENGINEERING ASSOCIATES (P)

LTD:Reliance engineering associates (p) ltd has not been in form of providing lot of amount as per current base; hence it needs lot of amount to stand the business.
20

RelianceBCG Matrix Justification: (STAR):

RELIANCE RETAIL:Reliance Retail is the retail business wing of the Reliance business having high growth rate and high market share. They are not for long term investment but they generated cash for the organization Justification.

21

RelianceBCG Matrix Justification: (QUESTION MARK)

RELIANCE PETROLEUM LTD: In the
current reliance market condition, this is something equalizing to high growth rate and low or optimum investment.

22

RelianceBCG Matrix Justification: (CASHCOWS)

RANGER FARMS LTD: Ranger Farm deals
in food , fruits and vegetables and consumer products hasn't achieved a dominant market position, that's what don't generate much cash. We need much cash because things are changing every minute in Reliance Retail of the market conditions to stand the firm rigidly. low growth and high investment is primarily observed.
23

RelianceBCG Matrix Justification: (CASHCOWS)

RELIANCE BIOPHARMACEUTICALS: Reliance
Biopharmaceuticals is providing world-class therapies and recombinant biopharmaceuticals for the treatment of both acute and chronic diseases in European market. This requires focused efforts at keeping large amount of cash to grow their market share.

RELIANCE OILS & GAS: Krishna-Godavari (KG) D-6

block is amongst the five largest deepwater gas projects globally. It was the largest discovery of natural gas in world in financial year 2002-2003. Gas production is expected to transform Indias energy landscape having low growth rate and is expected to double market share the current level of indigenous gas production.
24

RelianceBCG Matrix Justification: (DOGS)

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

25

BCG MATRIX

26

BCG MATRIX

27

BCG Matrix Stars

(=high growth, high market share) Best long-run opportunities for growth & profitability. Large amounts of cash and are leaders in the business so they should also generate large amounts of cash. Substantial investment to maintain or strengthen dominant position Integration strategies, intensive strategies, joint ventures
28

BCG Matrix Question Marks

(= high growth, low market share)
Cash needs are high Cash generation is low

Decision to strengthen (intensive strategies) or divest

Have the worst cash characteristics of all, because high demands and low returns due to low market share. - If nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog. - Either invests heavily or sell off or invest nothing and generate whatever cash it can. - - Increase market share or deliver cash

29

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 needed should be low. Keep profits high Generate cash in excess of their needs

Maintain strong position as long as possible Product development, concentric diversification If weakensretrenchment or divestiture
30

BCG Matrix Dogs

Low relative market share & compete in slow or no market growth (=low growth, low market share) Weak internal & external position. Deliver cash, otherwise liquidate Liquidation, divestiture, retrenchment Avoid and minimize the number of dogs in a company. Beware of expensive turn around plans.
31

GE Nine-cell Matrix

It is based on the pioneering efforts of the General Electric (GE) company of the united states supported by the consulting firm of McKinsey & company. The nine cells of the GE matrix are grouped on the basis of low to high industry attractiveness, and weak to strong business strength. Three zones of three cells each are made, denoting different combinations represented by green, yellow and red colours.

32

GE Nine-cell Matrix

Green Zone:- The signal is go ahead to grow and build, indicating expansion strategies. Yellow zone:- the signal is wait and see indicating hold and maintain type of strategies Aimed at stability and consolidation. Red zone:- the signal is stop indicating the retrenchment strategies of divestment and liquidation or the rebuilding approach for adopting turnaround strategies.

33

GE Nine-cell Matrix

34

GE NINE CELL MATRIX

-Reliance HIGH communication -Reliance Power
COMPETITIVE POSITION

YELLOW

-Petroleum Refining & Market Business -Oil & Gas Exploration Product - Big Entertainment

GREEN

GREEN

MED

RED

-Reliance Capital -Reliance Infrastructure -Reliance Retail

YELLOW

GREEN

LOW

RELIANCE PETROCHEMICALS LOW

RED

RED
MEDIUM

YELLOW
HIGH
35 35

INDUSTRY ATTRACTIVENESS

Hofers product market evolution matrix

Hofers and schendel proposed a 15 cell matrix, that considers the stages of development of the product or market and the competitive position of different businesses in a companys corporate portfolio.

36

Hofers product market evolution matrix

A business in the development or growth stage has a potential to be a star. If the market share is large in these growth oriented 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 share is low despite high growth stage, management must consider divesting and redeploying resources in other competitive business.
37

HOFERS PRODUCT MARKET EVOLUTION MATRIX

38

Reliance and the Indian Economy

Reliance groups leadership position in the Indian

Reliance makes significant contributions to the Indian economy on various parameters

39

economy, 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

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 major financial parameters
40

Consistent Track-Record of Profitable Growth

Compounded Annual Rate of Growth (%) Since 1977* Sales Net Profit Cash Profit Assets Market Cap EPS
* Date of first IPO; all figures are for RIL & RPL

10 Year 40 42 36 34 41 23

5 Year 50 26 31 27 41 20

33 41 40 36 43 21

Record high levels of compounded double digit growth rates on all major parameters, across all timeframes
41

Reliance Global Management Services (P) Limited

ERP specialized in SAP. ERP, which is an abbreviation for Enterprise Resource Planning, is principally an integration of business management practices and modern technology. Information Technology (IT) integrates with the core business processes of a corporate house to streamline and accomplish specific business objectives. Consequently, ERP is an amalgamation of three most important components; Business Management Practices, Information Technology and Specific Business Objectives.

42

Reliance Global Management Services (P) Limited

ERP specialized in SAP. In simpler words, an ERP is a massive software architecture that supports the streaming and distribution of geographically scattered enterprise wide information across all the functional units of a business house. It provides the business management executives with a comprehensive overview of the complete business execution which in turn influences their decisions in a productive way. Information in large business organizations is accumulated on various servers across many functional units and sometimes separated by geographical boundaries. Such information islands can possibly service individual organizational units but fail to enhance enterprise wide performance, speed and competence. The term ERP originally referred to the way a large organization planned to use its organizational wide resources.
43

Reliance Global Management Services (P) Limited

ERP specialized in SAP. The name SAP is acronym for Systems, Applications and Products in Data Processing. SAP is an extremely complicated system where no one individual can understand all of it. SAP runs on a fourth generation programming language language called Advance Business Application Programming (ABAP). It have many of the features of other modern programming languages such as the familiar C, Visual Basic, and Power Builder.
44

Reliance Global Management Services

ERP specialized in SAP. SAP are categorized into 3 core functional areas: Logistics Sales and Distribution (SD) Material Management (MM) Warehouse Management (WM) Production Planning (PP) General Logistics (LO) Quality Management (QM) Financial Financial Accounting (FI) Controlling (CO) Enterprise Controlling (EC) Investment Management (IM) Treasury (TR) Human Resources Personnel Administration (PA)

(P) Limited

45

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

Reliance benchmarks itself with

global best pra

in all aspects of its operations

46

Hofers product market evolution matrix

Business unit A would to be a developing winner. Its relatively large share of the market combined with its being at the development stage of productmarket evolution and its potential for being in a strong 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. A strategy would have to be developed to overcome this low market share in order to justify more investments.
47

Hofers product market evolution matrix

Business unit C might be classified as a potential loser(DOG). A strategy must be developed to overcome the low market share and weak competitive position in order to justify future investments. -Business unit D is in a shakeout period, has a relatively large share of the market, and is in a relatively strong position. Investment should be made to maintain that position. A BUSINESS USE D FOR (CASH GENERATION), THAT COULD BE DIVERTED TO A & B.
48

Hofers product market evolution matrix

Business units E and F are cash cows and should be used for cash generation.

-Business unit G appears to be a dog. It should be managed to generate cash in the short run, if possible; however, the long-run strategy will more the likely be divestment or liquidation.

49

Indias No. 1 Group

Rs. crores Sales Exports Cash Flow Net Profit Assets Market Cap 60,000 9,000 7,000 4,700 55,000 56,000 $ bn 12.8 1.9 1.5 1.0 11.8 11.9 Rank 1 1 1 1 1 1

Reliance is the largest, fastest growing, and the most valuable business group, in India - just 23 years young
50

Financial Objectives

Emphasis on capital productivity, and returns, to generate attractive 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

51

Operating Environment Q1 FY 2001-02

52

Operating Environment

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 most challenging conditions in its history
53

Change in feedstock and product prices

% change in international prices Q1 FY02 over Q1 FY01 Selling Prices (US$/MT)
-1% 0% PE PP PVC POY PSF PTA MEG PX

of

Products
-12% -10% -29% -9% -14% -9% -21% -1%

Raw Material Costs

Crude oil ($/bbl) Naphtha Prices ($/MT)

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

..but international selling prices of products declined sharply

54

Change in feedstock and product prices

% change in domestic prices Q1 FY02 over Q1 FY01 Selling Prices of Products (Rs/kg)
-1% -1% PE PP PVC POY PSF PTA MEG PX -8% 0% -10% +3% -9% -6% -11% +6%

Raw Material Costs

Crude oil ($/bbl) Naphtha Prices (Rs.kg)

. but domestic selling prices of Naphtha landed prices in rupee terms most products also declined marginally lower Q-on-Q

55

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 operational performance despite challenging industry conditions
56

Financial Performance Q1 FY 2001-02

57

RIL Income Statement for Q1 FY 2001-02

Q1 FY 2001-02 Rs.crs. $ mn. Sales Trading Sales EBITDA Interest Depreciation Tax Deferred Tax Net Profit Cash Profit 6,390 1,302 257 396 30 1 618 1,045 1,358 277 55 84 6 131 222 Q1 FY 2000-01 Rs.crs. $ mn. 6,136 479 1,235 298 366 28 543 937 1,373 107 275 67 82 6 122 210 14% 12% 5% -14% % Change 4%

Net Profit increased 14% in a difficult operating environment

58

RIL+RPL Income Statement for Q1 FY 2001-02

Q1 FY 2001-02 Rs.crs. $ mn. Gross Sales EBITDA Interest Depreciation Tax Net Profit Cash Profit 15,255 2,235 500 595 66 1,074 1,735 3,243 475 106 126 14 228 368 Q1 FY 2000-01 Rs.crs. $ mn. 12,598 1,866 470 501 52 843 1,396 2,820 418 105 112 12 189 313 27% 24% % Change

21% 20%

RIL and RPL have combined cash flows of Rs. 1,670 crores (US$ 355 mn) in Q1
59

Proforma Consolidated RIL Income Statement for Q1 FY 2001-02

Q1 FY 2001-02 Rs.crs. $ mn. 1,302 277 243 52 258 396 30 1 860 55 84 6 183

RILs EBITDA Income from Associates and Subsidiaries Interest Depreciation Tax Deferred Tax Net Profit

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

60

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

61

RIL - Elements of Sales Growth

Composition of 4% Sales Revenue Growth Impact of volume growth Impact of price changes

6% -2%

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%

62

RIL Profitability Ratios

Q1 FY 2001-02 OPM % NPM % ROE % EPS - Rs. ($) Cash EPS - Rs($)
* excluding FX gains

Q1 FY 2000-01 17.4%* 8.9% 16.4% 20.4 (0.46) 34.3 (0.77)

18.4% 9.7% 18.3% 23.4(0.50) 38.5(0.82)

RIL has amongst the highest Returns on Equity (ROEs) amongst the top petrochemicals companies globally
63

Proforma Consolidated Profitability Ratios

Q1 FY 2001-02

NPM % ROE % EPS - Rs. ($)

13.5% 25.2% 32.6(0.69)

Proforma consolidation of financials, to include income from subsidiaries, RPL, RCL , RIIL and BSES, reflects the true picture of returns on RILs investments
64

RIL Liquidity Ratios

Q1 FY 2001-02 Debt : Equity Gearing Interest Cover Total Debt/Cash Flow 0.83 44% 3.5x 2.0 FY 2000-01 0.72 41% 3.3x 1.8

RILs financial strength is reflected by its conservative liquidity ratios and top end credit ratings
65

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
66

Reliance is Indias 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 receive the 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
67

Consistent Growth in Exports Revenues

35000 30000 25000 20000 15000 10000 5000 0 95-96 96-97 97-98 98-99 99-00 7,786 86 8,730 1,478 13,404 14,533 19,968 Exports Total Sales

Rs.crores

25,731

107

366

685

2,960

00-01

Exports still represent only 10% of total sales even after 8 times increase in absolute terms over the last 5 years
68

Business Review

69

Product Mix
Composition of RILs sales
Oil & Gas 3% Fibre Int. 32% Chem icals 10%

Plastics & Int. 32% Polyester 22% Fabrics 1%

Petrochemicals businesses dominate RILs portfolio, with an 86% share of sales share of oil and gas business likely to increase
70

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 of bidding 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
71

Oil and Gas - Existing Production

Reliances Production Oil (in kT) Gas (in kTOE) Q1 FY02 100 165 Q1 FY01 92 157 %Change 8% 6%

Output from the 2 currently producing oil and gas fields of PannaMukta 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
72

Reliances Oil & Gas Properties

SHALLOW WATER BLOCKS BLOCK 1 : Kutch Offshore BLOCK 2 : Saurashtra BLOCK 3 : Saurashtra * BLOCK 4 : Mumbai Offshore BLOCK 5 : Mumbai Offshore BLOCK 8 : Kerala-Konkan BLOCK 18 : Krishna Godavari BLOCK 19 : Krishna Godavari BLOCK 20 : Krishna Godavari BLOCK 25 : North East Coast DEEP WATER BLOCKS BLOCK D4 : Krishna Godavari BLOCK D5 : Kerala Konkan * BLOCK D6 : Krishna Godavari BLOCK D7 : Kerala Konkan * BLOCK D10 : Mahanadi ONSHORE BLOCKS BLOCK 17 : Assam * NON-NELP BLOCKS GK-1 : Kutch Offshore SR-2 : Saurashtra TULLOW BLOCKS T1 : Krishna Godavari T2 : Kutch Offshore T3 : Kutch Offshore T4 : Kutch Offshore T5 : Cambay * Recently awarded under NELP - II

17 T4 T2 1 T3 2 GK1 T5

Tapti

SR2 3 4 5

25
Mukta Panna

20 D5 D7 8 T1 18 19 D4 D6

D10

Legend
NELP - I Shallow Water Deep Water Earlier Awarded Exploration Blocks Tullow Blocks NELP - II Shallow Water Deep Water Onland

Well balanced portfolio of 25 deep and shallow water, offshore and onshore E & P blocks, aggregating over 1,75,000 square kilometers

73

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 capita consumption amongst the lowest in the world

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

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

The Indian polyester market has witnessed compounded double digit annual demand growth rates over 2 decades
74

Polyester - Review
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
75

Polyester - Existing Production

(Production in 000 tonnes) Polyester (PFY, PSF, PET) Intermediates (PTA, MEG, PX) Q1 FY02 370 Industry Q1 FY01 349 % change 6% Reliance Q1 Q1 FY02 FY01 205 178 % change 15%

880

891

-1%

681

728

-6%

Polyester demand growth of 6% quarter-on-quarter

76

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 in India
77

Polymers - Existing Production

Industry (Production in 000 tonnes) Plastics (PE, PP, PVC) Q1 FY02 837 Q1 FY01 707 % change 18% Q1 FY02 416 Reliance Q1 FY01 387 % change 8%

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

78

Emphasis on Higher Margin Speciality Grades

Speciality as %

of Total Volume Q1 FY02 POY PSF PE PP 26% 59% 21% 20%

Premium over Commodity (Rs./MT) (%) 750 - 12,000 2,800 - 10,200 2% - 27% 5% - 19%

665 - 6,6551.8% - 18% 330 - 3,3301% - 10%

Speciality grades yield premium pricing and contribute to higher margins, product differentiation, and relative insulation from commodity cycles
79

Reliance Petroleum

80

RPL - World class refinery

Comparisons

kb/d

Capacity of 540,000 b/d comparable to US and European supersites Worlds largest greenfield refinery and 7th largest in the world

600 500 400 300 200 100 0

16 14 Complexity Index 12 10 8 6 4 2 0

RPL

US supersite

European supersite

Shell Singapore

Complexity at top end of global range Capability to produce higher value products from lower cost, heavier grade crude

RIL Petrochem plants

RPL refinery

Reliance Jamnagar

US supersite

European supersite

Shell Singapore

US supersites refer to a sample of refineries with capacities of at least 225 kbpd and complexities of at least 9.5 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 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 Certain US and European supersites include petrochemical facilities Sources: RPL, Wood Mackenzie Sources: RPL, Wood Mackenzie

81

RPL - Peer comparisons

Total cash operating costs
US cents / Utilized Equivalent Distillation Capacity US Capacity
40 35 30 25 20 15 10 5 0 Indian peers Asian peers Europe US pacesetters pacesetters RPL

Energy intensity index

120 100 80 60 40 20 0 Indian peers Asian peers Europe US pacesetters pacesetters RPL

Crude sulfur
Weight % Weight
2.5 2.0 1.5 1.0 0.5 0.0 Indian peers Asian peers Europe pacesetters US pacesetters RPL

Crude gravity
Degree API Degree API
38 36 34 32 30 28 26 Indian peers Asian peers Europe pacesetters US pacesetters RPL

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 pacesetter refineries

82

RPL - Higher GRMs

Drivers of high refining margins
Low crude delivery cost Good product fit Favorable tariff environment Complexity
7 6 5
RPL US Gulf Coast Mediterranean Rotterdam Singapore

Fiscal benefits

$ / bbl

4 3 2 1 0
Apr-June'00 July-Sep'00 Oct-Dec'00 Jan-Mar'01 Apr-June'01

83

RPL Consistent Increase in Operating Rates

110% 105% 100% 95% 90% 85% 80% Q1 FY'01 Q2 FY'01 Q3 FY'01 Q4 FY'01 Q1 FY'02 86% 101% 101% 95% 108%

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 tap exports markets significantly contribute to high operating rates

84

RPL - Income Statement for Q1 FY 2001-02

Q1 FY 2001-02 Rs.crs. $ mn. Gross Sales EBITDA Interest Depreciation Tax Net Profit Cash Profit 8,865 933 243 199 35 456 690 1,884 198 52 42 7 97 147 Q1 FY 2000-01 Rs.crs. $ mn. 5,983 631 172 135 24 300 459 1,339 141 39 30 5 67 103 52% 50% % Change 48% 48%

RPL is Indias largest company in terms of sales and is second only to RIL in terms of net profits, net worth, and assets
85

Elements of RPLs Net Profit Growth

High capacity utilisation rates of 108% leading to 26% volume

growth 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 configuration have contributed significantly to net profit growth
86

RPL - Profitability Ratios

Q1 FY 2001-02 OPM % NPM % ROE % EPS - Rs. ($) CEPS - Rs. ($) 10.3% 5.1% 21.4% 3.8 (0.08) 5.5 (0.12) Q1 FY 2000-01 10.3% 5.0% 20.8% 2.8 (0.06) 4.1 (0.09)

RPLs ROE ranks amongst the highest in refining companies globally

87

RPL - Liquidity Ratios

Q1 FY 2001-02 FY 2000-01

Debt : Equity Gearing Interest Cover Total Debt / Cash Flow

0.89 47% 3.3 2.2

0.86 44% 2.9 2.3

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
88

RPL - Indias Largest Exporter

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 flexibility world class logistics capabilities RPLs ability to deliver international quality products provides a significant competitive edge in a decontrolled environment
89

Integration with Marketing

RPL proposes to enter the business of retail marketing of controlled products 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 provide opportunities for generating attractive returns
90

Reliance Telecom

Reliance Telecom - Review

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 Indias geographical area and cover nearly 400 million people
92

Reliance Infocom

Reliance Infocom - Review

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

Reliance is leveraging its superior project execution capabilities and successful experience in telecom business
94

Reliance Infocom - Update

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

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

targets
95

Reliance Infocom - Update

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 IRRs low payback period Reliance Infocom is building amongst the lowest cost integrated communications networks in the country
96

Summary

Indias Top 5 Wealth Creators in 2000-01

Mkt. Cap on 31-Mar-01 (Rs.crs) (US$ mn) RIL ITC HDFC BPCL Nestle Total 41,191 19,988 6,490 5,717 4,879 78,265 8,835 4,287 1,392 1,226 1,047 16,788 Addition in 2000-01 (Rs.crs) (US$ mn) 8,051 1,948 1,947 1,765 1,270 14,981 1,727 418 418 379 272 3,213

RIL is the No. 1 wealth creator in the year 2000-01 - wealth creation exceeds the next company by a factor of 4 times
98

RILs Superior Share Price Performance

Period Year to date 1 year 2 year 3 year 5 year Since 1994* 10 year RIL -8% -8% 76% 129% 204% 53% 257% % change Sensex -17% -23% -28% 2% -5% -24% 100% Nifty -16% -20% -19% 14% 5% -

* Last equity placement from RIL

RIL shares have consistently outperformed the broad market over all time frames
99

Returns from RIL to Financial Institutions

Amount (Rs. crores) Private placement in October 1994 Current value of RIL shares (4.9 crore shares @Rs. 313) Income from dividends including reinvestments Total profit earned by FIs till date Profit from an equivalent investment in Sensex (including dividends and reinvestments) Total returns over market returns 945 1536 150 741 -148 889

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.
100

Price Performance of Leading Index Movers

% change
Period RIL HLL ITC

Year to date 1 year 2 year 3 year 5 year

-8% -8% 76% 129% 204%

6% -8% -20% 27% 160%

-14% 3% -22% 22% 170%

The RIL stock is the best performing index heavyweight over virtually all time frames
101

RPLs Superior Share Price Performance

Period 1 year 2 year 3 year 5 year RPL -9% 49% 152% 260% % change Sensex -23% -28% 2% -5% Nifty -20% -19% 14% 5%

RPL shares have outperformed the broad market over all time frames, creating superior value for both RPL and RIL shareholders
102

Summary

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 track record of shareholder value enhancement
103

Reliance Industries Limited

Indias World Class Corporation
104