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  • Production volumes increased 33% to a record level of 5.27 million tonnes in the first nine months of 1998-99. This is despite the temporary dislocation in feedstock supplies at the Hazira petrochemicals complex in October 1998. Total production volume slated to touch nearly 7 million tonnes for the full year - final production volume for the year likely to be 20% higher than beginning of the year estimates. Sales revenues were up 11% at Rs. 109.5 billion (US$ 2.6 billion) in the first nine months. This comprised of the impact of volume growth at 23%, partially offset, to the extent of 12%, by the decline in average product selling prices. Reliance sold 95% of its production within India. Value added export opportunities selectively pursued with export revenues increasing 145% to Rs. 5.12 billion (US $ 121 million). Exports focussed on quality conscious markets of US and Europe, in recognition of the superior quality of Reliance’s products.
  • Production volumes increased 33% to a record level of 5.27 million tonnes in the first nine months of 1998-99. This is despite the temporary dislocation in feedstock supplies at the Hazira petrochemicals complex in October 1998. Total production volume slated to touch nearly 7 million tonnes for the full year - final production volume for the year likely to be 20% higher than beginning of the year estimates. Sales revenues were up 11% at Rs. 109.5 billion (US$ 2.6 billion) in the first nine months. This comprised of the impact of volume growth at 23%, partially offset, to the extent of 12%, by the decline in average product selling prices. Reliance sold 95% of its production within India. Value added export opportunities selectively pursued with export revenues increasing 145% to Rs. 5.12 billion (US $ 121 million). Exports focussed on quality conscious markets of US and Europe, in recognition of the superior quality of Reliance’s products.
  • Transcript

    • 1. Reliance Industries Limited Financial Presentation April-December 2000 1
    • 2. The Worst Earthquake affecting India in last 50 years • The recent earthquake in Gujarat is the most severe to hit the Indian subcontinent in the last 50 years - 8.46 a.m. 26th Jan, 2001 - 7.9 on Richter scale • Last severe earthquake in the Gujarat area was in the year 1819 (also measuring 7.9 on Richter scale) Reliance Industries Ltd. 2
    • 3. National Calamity of Unprecedented Proportions Unprecedented loss of life and property Loss of life running into tens of thousands of people Death toll still climbing - large numbers currently “missing /injured” Initial estimates of damage to property in the state of Gujaratexceed Rs.15,000 crores (US$ 3.3 bn)The Gujarat earthquake tragedy represents the biggest calamity tohit India in recent timesReliance Industries Ltd. 3
    • 4. Reliance Deploys its Entire Resources for Relief Operations Reliance has initially allocated a sum of Rs. 15 crores (US$ 3.3mn) for earthquake relief measures in Gujarat Rs. 5 crores (US$ 1.1 mn) already contributed to the PrimeMinister’s Relief Fund Reliance has placed all available human and material resources atthe disposal of the state government and the army / air forceauthorities, for rescue and relief operations Reliance actively engaged in rescue and relief operations inAhmedabad, Jamnagar, Bhuj, and surrounding areas Reliance has fully adopted the village of Anjar, for rescue, reliefand reconstruction activities - located 40 kms from Bhuj, population estimated at 80,000 - second most affected area, with most structures completelyflattenedReliance is committed to deploying all resources for relief of affectedpeople in GujaratReliance Industries Ltd. 4
    • 5. Round-the-Clock Efforts to Alleviate Suffering More than 3,000 construction workers, and hundreds of vehicles(including dumpers, trucks, tempos) pressed into service for round-the-clock relief work Over 60 heavy equipments and machinery (cranes, bull-dozers,etc) mobilised for removal of debris / rescue work Continuously distributing food rations and water supplies to about15,000 people Several medical centres opened including a very large makeshifthospital, with over 50 medical and paramedical staff, and over 200other personnel, on round-the-clock dutyReliance is working round-the-clock and providing all possiblesupport to help the affected areasReliance Industries Ltd. 5
    • 6. Serving the People Devastated by the Tragedy 20 DG sets provided in Bhuj, the worst affected area forrestoration of emergency power Communication links opened in several areas with satellitetelephones Direct wireless links set up between Anjar and Jamnagar Helicopter sorties are being flown to bring in people, materials,supplies and to evacuate the most seriously injured personsEmergency supplies of food, clothing and materials are being rushedfrom all over the country to the control rooms set up at Mumbai andJamnagar to coordinate the relief workReliance Industries Ltd. 6
    • 7. Reliance Operations Normal within Days Superior design and technology of Reliance’s world classcomplexes ensured there was no loss of life or property Automated safety procedures achieved safe shutdown of theHazira and Jamnagar complexes within moments of the tremors Power systems and other utilities fully restored within hours of theearthquake - phased start-up of plants activated the same day Most plants already operating normally - the balance followingprogressively, in accordance with safe start-up procedures All product evacuation infrastructure safe and intact - jetty,pipelines, rail and road loading terminalsThe entire Reliance team responded to the occasion, and ensuredoperations were normalised within hours of the incidentReliance Industries Ltd. 7
    • 8. IndexOperating EnvironmentFinancial PerformanceCurrent Business OutlookReliance PetroleumReliance InfocomShareholder Value EnhancementSummary and Outlook 8
    • 9. Operating Environment 9
    • 10. Increased Feedstock Costs and Declining Product Selling Prices ...Crude oil prices touched record highs in $35 to The petrochemicals $40 range - 65% rise from April 2000 industry globallyKey feedstock, naphtha, soared from $ 210 in faced difficult times April 2000 to $ 310+ in Q3 - rise of 50%Decline in Q3, owing to in product selling prices, with bunching of new capacities increasedReliance’s strategy - focus on productivity, feedstock costs, efficiency, and cost reduction and decliningIncreasing emphasis on speciality products, to product selling improve pricing power and enhance margins pricesReliance Industries Ltd. 10
    • 11. ….leading to pressure on operating margins change in average prices for Q3 2000-01 over Q3 1999-2000Raw Material Costs Domestic Selling Prices of Products (Rs./kg) Crude oil ($/bbl) +25% PE +1% PP -1% Naphtha Prices ($/MT) +5% PVC -2% Naphtha Landed (Rs.kg) +15% POY +1% PSF -5% PTA +10% MEG -10% PX +2%Naphtha prices were significantly … with product prices trending flat tohigher in Q3... lower - negative impact on margins Reliance Industries Ltd. 11
    • 12. Increase in Product Selling Prices for first 9 months has lagged increase in Feedstock Costs change in prices April-December, 2000 over April-December, 1999Raw Material Costs Domestic Selling Prices of Products (Rs./kg) Crude oil ($/bbl) +46% PE +11% Naphtha Prices ($/MT) +17% PP +7% PVC +14% EDC Prices ($/MT) +7% POY +0.5% Naphtha Landed (Rs./Kg) +24% PSF +6% PTA +21% MEG +12% PX +9%The increase in naphtha prices... … is higher than the increase in product selling prices Reliance Industries Ltd. 12
    • 13. Future Margin Outlook dependent on Several Macro VariablesInternational crude oil prices have come off significantly from their Q3 highs - volatility in Feedstock energy prices continues prices haveLongerterm impact of recent output cuts by come off their OPEC suppliers to be awaited recent highs,The impact of a slowdown in the US economy on global demand growth is also an important but several other variable variables mayDepreciation in the value of regional Asian have an impact currencies relative to the US$ and the Indian rupee may impact regional prices on marginsReliance Industries Ltd. 13
    • 14. Financial Performance 14
    • 15. Income Statement for first 9 months Apr-Dec 1999 Apr-Dec 2000 % Change Rs. crs. $ mn. Rs. crs. $ mn.Gross Sales 13,707 3,151 21,564 4,619 57%Gross Sales(excl. 13,707 3,151 19,287 4,132 41%RPL exports)Net Sales 8,204 1,886 13,526 2,898 65% EBITDA 3,153 725 4,049 867 28%Interest 699 161 925 699Depreciation 705 162 1,018 218Tax - - - -Net Profit 1,749 402 2,106 451 20%Cash Profit 2,454 564 3,124 669 27% Production volumes increased 24%to 7.9 million tonnesReliance Industries Ltd. 15
    • 16. US GAAP Reconciliation Indian GAAP US GAAP Rs. crs. $ mn Rs. crs $ mn Net Profit 2,106 451 1,754 376 Difference (352) (75) The differences are largely on account of foreign exchange variations and deferred taxationReliance Industries Ltd. 16
    • 17. Elements of Sales Growth Composition of 41 % Sales Revenue Growth Impact of volume growth 32 % Impact of price increases 9%Volume growth contributed significantly to the revenue growth asa result of commissioning of Jamnagar Petrochemical complex Reliance Industries Ltd. 17
    • 18. Profitability Ratios Apr-Dec Apr-Dec 1999 2000 OPM * % 20 20 NPM % 13 11 RONW% 23 21 EPS – Rs. ($) 21.8 (0.50) 26.6 (0.57) Cash EPS – Rs. ($) 30.8 (0.71) 39.5 (0.85) * Excluding RPL Exports Healthy profitability ratios reflect global competitiveness and sound business strategiesReliance Industries Ltd. 18
    • 19. Liquidity Ratios 31 Dec 99 31 Dec 00 Gross Debt : Equity 0.96 0.76 Net Debt: Equity 0.57 0.72 Net Gearing (%) 36% 42% Net Interest Cover 5.9 5.6 Net Debt / Cash Flow 1.8 2.0Conservative liquidity ratios underscore inherent financialstrengthReliance Industries Ltd. 19
    • 20. Income Statement for Q3 Oct-Dec 1999 Oct-Dec 2000 % Change Rs. crs. $ mn. Rs. crs. $ mn.oss Sales 5,034 1,157 6,555 1,404 30% Sales 2,933 674 4,439 951 51% EBITDA 1,161 267 1,406 301 21% Interest 276 63 294 63 Depreciation 258 59 353 76 Tax - - - - Net Profit 627 144 759 163 21% Cash Profit 885 203 1,112 238 26% Quarter-on-quarter sales and profit growth for 43 consecutive quarters Reliance Industries Ltd. 20
    • 21. Exponential Growth in Exports Combined exports of RIL and RPL have grown 8 times to US$ 1.5bn (Rs.7,000 crs) during the nine month period, making Reliance thelargest manufacturer exporter from India RIL’s exports grew 200 % to US$ 491 mn (Rs.2,292 crs) whileRPL’s exports were US$ 1,024 mn (Rs.4,714 crs) Exports comprised 12 % of RIL’s total sales, 20 % of RPL’s totalsales, and 16 % of their combined sales, during this period High exports reflect superior product quality, diversification ofmarkets, and optimal utilisation of installed facilitiesStrong growth in exports achieved while retaining thrust ondomestic markets - 84 % of combined revenues coming from saleswithin IndiaReliance Industries Ltd. 21
    • 22. Conservative Financial Management Top end domestic AAA credit rating RIL has achieved – international ratings constrained by sovereign ceiling quantum growth in RIL’s cash flows for approximately 2 the scale of itsyears sufficient to extinguish its net debtExternal operations, while debt of $ 1.3 billion has weightedaverage maturity of 22 years pursuing RIL’s exports are more than 5 times itsannual FX denominated interest liability, conservativeproviding adequate risk management financial policies Dollar revenues from oil and gas provideadditional coverReliance Industries Ltd. 22
    • 23. Current Business Outlook 23
    • 24. Business MixBreak-down of RIL’s sales - excluding exports of RPL’s products Oil and Gas Chem icals 3% 14% Fibr e I nt . 28% Plast ics & Polyest er Fabr ics I nt . 21% 1% 33%Balanced exposure to polyester and plastics contributes tostability in marginsReliance Industries Ltd. 24
    • 25. Business Review - Oil and Gas Reliance’s Production Apr-Dec Apr-Dec % 1999 2000 change Oil ( in KT) 256 307 +20 % Gas (in KTOE) 506 516 +2 % The oil and gas operations are progressively becoming more significant in Reliance’s overall business profileReliance Industries Ltd. 25
    • 26. Oil and Gas - Plans and Outlook RIL is India’s No.1 private sector E&P player Reliance is with 100,000 sq. kms in exploration acreage generating Oil and Gas production from existing fields is attractive dollar growing at 5%-10% per year denominated Potential to increase gas production by 3 times revenues from 14 exploration blocks recently awarded under attractive new policy regime, with fiscal and its growing oil other benefits - will participate in next round and gas Enron’s 30% stake in PMT venture under sale business process - Reliance reviewing optionsReliance Industries Ltd. 26
    • 27. Business Review - Polyester Industry Reliance(Production in Apr-Dec Apr-Dec % Apr-Dec Apr-Dec % ‘000 tonnes) 1999 2000 change 1999 2000 change Polyester 1036 1083 5% 481 560 16% (PFY, PSF, PET) Fibre Intermed. 1710 2713 59% 1503 2182 45% (PTA, MEG, PX) The sharp increase in fibre intermediates production reflects the commissioning of the new paraxylene facilities at JamnagarReliance Industries Ltd. 27
    • 28. Polyester (PFY, PSF and PET) Reliance is now the 2nd largest, and the lowest cost, producer ofpolyester in the world, as per latest industry rankings Reliance is also the 3rd largest producer of PX, and the 4thlargest producer of PTA, in the world Demand growth forecast to outpace capacity additions in India, inAsia, and globally, over the next few years Reliance is the only player making investments in the Indianpolyester sector, to capture future demand growth Import tariffs already at resting point of 20%, as per the WTObound ratesReliance is ideally positioned to benefit from an improvement in longterm industry fundamentals, with its global scale and cost leadershipReliance Industries Ltd. 28
    • 29. Global Polyester Demand Growth to Outpace Additions (MMT) 2001 2002 2003 Total 2001-03Global Forecast Capacity AdditionsPOY 0.8 0.8 0.8 2.4PSF 0.5 0.6 0.7 1.8POY+PSF 1.3 1.4 1.5 4.2Global Forecast Demand GrowthPOY 1.1 1.0 1.0 3.1PSF 0.5 0.7 0.6 1.8POY+PSF 1.6 1.7 1.6 4.9Source: PCI World Synthetic Report Global polyester demand growth in each of the next 3 years is forecast to exceed capacity additions Reliance Industries Ltd. 29
    • 30. Positive Global Demand Supply Fundamentals 25 96 Capacity Demand Operating Rate 20 92P Global M. MTO 15 88 operating rates %Y 10 84 are forecast 5 80 0 76 to steadily 1990 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 16 Capacity Operating Rate Demand 96 climb to 14 12 92 historically highP M. MT 10S 88 levels of 95% + % 8F 6 84 in this 4 2 80 decade 0 76 1990 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 30
    • 31. Positive Regional Demand Supply Fundamentals 18 Capacity Demand 16 Operating Rate 96 14 Regional 12 92 operating ratesP 10 M. MT % 8 88O 6 are likewiseY 4 84 expected to 2 0 1990 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 80 increase 10 Capacity Demand 98 Operating Rate 9 consistently 8 94P 7 over the M. MT 6 90S % 5 nextF 4 86 3 few years 2 82 1 0 78 1990 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 31
    • 32. Polyester - Indian Demand Supply Situation 3000 200 Available Capacity Demand Operating Rate 180 2500 Demand exceeds capacity 160 Deficit in every year beginning 1.3 140 million 2000 from the current yearKT 120 tonnes 1500 100 (%) (assuming no 80 new capacity 1000 additions) 60 40 500 20 0 0 90-91 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 09-10 Room for creating 1.3 mn tonnes additional capacity in this decade - Reliance is well poised to capture this growthReliance Industries Ltd. 32
    • 33. Business Review - Polymers Industry Reliance (Production in Apr-Dec Apr-Dec % Apr-Dec Apr-Dec % ‘000 tonnes) 1999 2000 change 1999 2000 change Polymers 1650 2224 34% 917 1187 30% (PE, PP, PVC) • Demand for RIL’s polymers increased 15 % during the nine month period • Demand for PP, which accounts for nearly 60% of RIL’s polymers production, increased 25% during the nine month periodReliance Industries Ltd. 33
    • 34. Polymers (PP, PE and PVC)  India is the world’s fastest growing polymers market  Global industry demand supply fundamentals will improve, over the next 3 years, with demand growth exceeding capacity additions by 6 million tonnes  Reliance will benefit from these trends, with its world scale capacity, and cost leadership, in the Indian polymers markets  Limited room for further import tariff cuts over next few years - rupee depreciation provide cushionThe global demand supply balance is expected to improve from 2002,with the Indian markets offering the highest growth opportunitiesReliance Industries Ltd. 34
    • 35. Global Polymer Demand Supply to Improve Significantly 2001 2002 2003 Total 2001-03Global Forecast Capacity Additions (MMT)PE 4.2 1.7 1.9 7.8PP 2.2 1.6 2.1 5.9PVC 0.7 0.2 0.3 1.2PE+PP+PVC 7.1 3.5 4.3 14.9Global Forecast Demand Growth (MMT)PE 3.0 2.9 3.3 9.2PP 2.4 2.1 2.5 7.0PVC 1.6 1.4 1.5 4.5PE+PP+PVC 7.0 6.4 7.3 20.7Source: ChemsystemsGlobal demand growth over the next 3 years will exceed capacityincreases by 6 MMT - by comparison, in 1999 and 2000, capacity hadoutpaced demand by 3 MMT, leading to the current imbalance Reliance Industries Ltd. 35
    • 36. Emphasis on Speciality Products leads to Important Competitive Advantages Wider product choice to customers Product differentiation from commodity producers Enhanced margins due to premium pricing of speciality grades Enabling expansion into new markets, including the mostdiscerning and quality conscious export markets Reliance is ahead of competition in introducing specialty grades Part insulation from volatility of commodity product pricesReliance is able to deliver superior overall value to its customers withits increasing thrust on speciality productsReliance Industries Ltd. 36
    • 37. Growing Emphasis on Speciality Products Speciality as % Premium over of Total Volume Commodity 1999-2000 Apr-Dec’00 (Rs./MT) (%)POY 10% 19% 3,000-15,000 5%-25%PSF 41% 63% 500-14,000 1%-28%PE 13% 25% 500-4,500 1%-11%PP 17% 19% 500-4,500 1%-12%Reliance is the only producer of many fast growing speciality productsin India - leading to higher value added product portfolio and superiorcompetitive positionReliance Industries Ltd. 37
    • 38. Reliance Petroleum 38
    • 39. Reliance Petroleum - Overview RPL operates the largest, and most complex, refinery in India,with over 25% of total domestic capacity World’s largest grassroots refinery, with capacity of 27 mn tpa -the 7th largest refinery in the world at any single location 30% + capital cost advantage, over global peer group Flexibility in crude processing and product mix Capacity utilisation of 101% achieved in the second and thirdquarters of operations - a unique achievement in the global contextRPL and RIL are now India’s top 2 private sector companiesReliance Industries Ltd. 39
    • 40. Significant Q3 Highlights Capacity utilisation of 101% in Q3 - compares with Indian sector average of 93%, Asian average of 99%, and US average of 91% Exports of HSD, gasoline, and naphtha for the first time from India - products meet the most stringent international norms India’s largest manufacturer exporter with exports of US$ 1.02 billion (Rs. 4,714 crs.) in the first nine months of the current financial year CRISIL upgraded rating of RPL’s debt from BBB+ to AA, indicating high safety of timely payment of interest and principal The first Indian refinery to perform risk management under the new government policies for hedging price and margin risksReliance Industries Ltd. 40
    • 41. RPL - Income Statement Apr-Dec 2000 Oct-Dec 2000 Rs. crs. $ mn. Rs. crs. $ mn. Gross Sales 23,457 5,025 9,149 1,960 EBITDA 2,363 506 884 189Interest 727 156 271 58Depreciation 469 100 172 37Tax - - - - Net Profit 1,167 250 441 94 Cash Profit 1,636 350 613 131 RPL has generated cash profits of Rs.1,636 crores (US$ 350 million) in the first nine months of operations Reliance Industries Ltd. 41
    • 42. Profitability Ratios Apr-Dec 2000 Oct-Dec 2000 OPM % 9.4 8.9 NPM % 5.0 4.8 ROE % 24.1 23.4 ROCE % 13.3 13.9 Annualised EPS (Rs.) 3.3 3.7 Annualised CEPS (Rs.) 4.6 5.1 Healthy profitability ratios reflect global competitiveness and efficiency of operationsReliance Industries Ltd. 42
    • 43. Current Marketing Arrangements RPL is required to sell 5 controlled products (gasoline, diesel,kerosene, LPG, ATF) to oil PSUs Market determined import parity prices received for controlledproducts Payments received directly from oil PSUs normally within 10 days- not linked to the OCC pool mechanism All other products marketed directly by RPL - 20%-30% outputconsumed by group companies Complete flexibility in sourcing of crude oil, and determiningproduct mixRPL’s margins are determined by international market related prices,even under the current regulatory environmentReliance Industries Ltd. 43
    • 44. Petroleum Product Demand to Grow Manifold Consumption Per Capita (kgs. p.a.) Total (MMT) India 98 95 China 165 200 North America 2,610 1,047 World Average 585 3,462 China consumes more than double the quantity of petroleum products than IndiaReliance Industries Ltd. 44
    • 45. Conservative and Strong Financial ProfileLow debt: equity ratio of 0.83 : 1 Healthy operatingHigh interest coverage of 2.39 cash flows andForeign exchange debt exposure limited to strong balance US$ 130 million in an over US$ 3 billion project sheet provideStrong cash flows ability to pursueLarge shareholder family of over 2 million - attractive future stable base of retail investors reduces share growth price volatility opportunitiesWeightage of 10.3% in Sensex and 9.1% in Nifty IndexReliance Industries Ltd. 45
    • 46. Future Growth Opportunities for RPL RPL intends participating in marketing of all petroleum products - has applied for direct marketing rights Marketing rights likely to be granted during the course of the year - APM to be dismantled by March, 2002, as per current schedule RPL already has dedicated product evacuation infrastructure to support full-fledged marketing activities for its entire production: - Port and jetties – Rail despatch terminal – Road loading facilities – PipelinesRPL is pursuing growth opportunities for generating attractive returnsand enhancing competitivenessReliance Industries Ltd. 46
    • 47. Future Growth Opportunities for RPL RPL is also making investments for creating distribution infrastructure for petroleum products across the country RPL has a 10% stake in Petronet India, the holding company, responsible for setting up pipeline networks in the country RPL to invest Rs. 500 crores (US$ 110 mn) for 26% stake, in Central India Pipeline Ltd. (CIPL), implementing a 1615 km pipeline reaching markets in the central/southern parts of India RPL has a 13% stake in the already operational, 113 km Vadinar Kandla pipeline, connecting Jamnagar to the high growth Northern markets through the Kandla Bhatinda pipelineNew pipelines being set up in the country will open up new marketsand lead to increased consumption of petroleum productsReliance Industries Ltd. 47
    • 48. Reliance Telecom
    • 49. Reliance Telecom - Cellular Operations Rapid growth in coverage and subscriber base, currently over150,000 subscribers in over 75 cities Reliance’s cellular subscriber base has grown 115% during April-Dec 2000, compared with industry growth rate of 65% Average revenue per user (ARPU) of over Rs. 1,000 per month -in line with trend in metros Cellular operations have already become cash positive Reliance’s licensed area covers 13 states, 1/3rd of India’sgeographical area, and 380 mn populationIndia’s largest network, and the growing presence in largecontiguous areas, fits in perfectly with the group’s infocom plansReliance Industries Ltd. 49
    • 50. Reliance Infocom
    • 51. Overview Reliance to offer full bouquet of voice, data, Reliance’simage, and value-added services, and high qualityend-to-end connectivity, on a nationwide basis low-cost A nationwide, terabit bandwidth, 60,000 route communicationskilometer broadband network, connecting India’s infrastructure,top 115 cities and integrated Build-up of last mile connectivity and roll-out ofservices based on market revenue potential - initial approach, willfocus on high revenue business segment provide a lasting Targeting leading positions in all major competitive edgesegments of the voice markets initiallyReliance Industries Ltd. 51
    • 52. Reliance’s Voice Offerings Voice services to provide end-to-end Reliance willconnectivity, to customers on a nationwidebasis provide all voice Leading presence targeted in all segments of services on athe voice market: nationwide basis,- Local thereby delivering- National Long Distance- International Long Distance superior service- Mobile to a large Reliance has already filed applications for customer basebasic services licences in 11 circlesReliance Industries Ltd. 52
    • 53. Reliance’s Data and Other Value Added Services Internet data centres Colocation Web-hosting Secure VPNs Reliance Infocom’s Managed E- communications software commerce infrastructure services Media-casting Serving ISPs/ ASPs/ Bandwidth selling/ trading content and other service Call centres providersReliance’s comprehensive offerings strategy will reduce risk, andgenerate attractive returns even in an intensely competitive scenarioReliance Industries Ltd. 53
    • 54. An ‘Old’ Economy Approach to a ‘New’ Economy Business Speed and efficiency of execution Reliance is Lowest cost provider of services implementing its Integrated service offerings infocom project Capturing value across the entire chain with a Investments based on traditional financialcriteria, including: traditional return - Positive Cash Flows based philosophy - Attractive IRRs to maximise - Low payback period value - ROE EnhancingReliance Industries Ltd. 54
    • 55. Open Door Policies to encourage entry of new players Unlimited entry for new players in fixed line A suitableservices in all circles at attractive terms Limited mobility (WiLL) by fixed line operators framework forapproved - mobile telephony at lower costs Entry of fourth operator in all cellular circles Reliance tothrough bidding process – Multi-stage process, existing players can not bid in their create a own circles – Graded payment to eliminate unrealistically high bids national – Introduction of WiLL leading to lower tariffs and licence valuations telecom Unlimited entry for new players in long distanceat reasonable terms footprintReliance Industries Ltd. 55
    • 56. Reliance Infocom - Progress Backbone presently being implemented in 13 states - Tamil Nadu,Andhra Pradesh, Karnataka, Maharashtra, Gujarat, Rajasthan,Delhi, Haryana, Uttar Pradesh, Madhya Pradesh, Orissa, W. Bengaland Kerala Over 35,000 strong construction force at work Fast growing team of highly qualified and experienced industryprofessionals from all over the world Rollout of services based on market revenue potential Fibre being sourced internationally - 100% in-house projectmanagement The nationwide backbone to be completed by end 2002Reliance will rollout its services and offerings in a phased manner,starting in the next financial yearReliance Industries Ltd. 56
    • 57. Reliance Infocom - Corporate Structure Reliance Infocom will be the lead company for undertaking/promoting all future telecom/ infocom initiatives of the Reliance group Capital outlay, excluding licence fees, presently estimated at Rs.15,000 crores (US$ 3.3 billion) - 2:1 debt: equity being considered RIL to hold 45% of equity, balance to be held by employees,Reliance promoters, and other Reliance group companies International listing of Reliance Infocom at an appropriate time overthe next 2-3 years, to unlock value for RIL shareholders Proposed corporate structure targets the optimal risk/ return balance for RIL shareholdersReliance Industries Ltd. 57
    • 58. Shareholder Value Enhancement 58
    • 59. RIL share’s superior price performance % Change RIL Sensex Nifty YTD 15% 10% 9% Year 2000 45% -20% -14% 1 year 16% -18% -14% 2 year 194% 32% 43% 3 year 160% 36% 43% 5 year 345% 50% 63% 10 year 700% 345% -The RIL stock price has consistently outperformed the broadmarket indices over all time framesReliance Industries Ltd. 59
    • 60. Top Sensex Performer for Calendar Year 2000 60% 45% 35% 40% 20% 0% -7% -8% -8% -10%-20% -14% -20% -21% -23% -26% -27% -29%-40% -37%-60% -52% -56% -59% -64%-80% -74% C T L e L IT Se I NL Ca co Sa CL xo No lco SB IT im HL Ze L& RI s l s I n ex Ra a m Gr y ro NI sy rt i Tis MT Gla HP as ax Te ns st ty fo va nbRIL is the best performing Sensex stock in the calendar year 2000Reliance Industries Ltd. 60
    • 61. RIL Best Performer Amongst Leading Global Petrochemicals Stocks 60% 35% 40% 20% 20% 2% 0% - 20% -8% -12% -17% -22% -25% -26% - 40% -31% -32% -34% -36% -44% - 60% -63% -66% - 80% -71% IL Pl r o s ow an LG l e s SM l Te r o s y em Pl n t I em m um IC el a m t ic e n t ic g h lv a R e o t t nd D tm i D Pe Pe uP Ch Ch ni Ch on as zh a s xt a n So o en s D ai g Ly a Ea os i ll Ya a n M os er m n H r m Yi st Na Fo Sh r Ea Fo r FaRIL is amongst the best performing petrochemicals stocks globally,measured even in US$ termsReliance Industries Ltd. 61
    • 62. Valuation Upside from RPL Stake RIL will consolidate RPL’s financials, from the RIL’s investmentyear 2001-02 in RPL has –- adding approximately 40% to RIL’s bottomline rapidly created – contributing additional Rs. 10 EPS significant – reflecting consolidated ROE of 28% shareholder RPL will pay a dividend this year - contributingto RIL’s cash flows value, in a business The value of RIL’s stake in RPL translates intoover Rs. 200 per share - unrealised capital gains regarded ason this account over Rs. 13,000 crs. (US$ 3 bn) having long RIL exploring various options for unlocking value gestationin its RPL stake for the benefit of RIL shareholdersReliance Industries Ltd. 62
    • 63. Summary RIL gives exposure to major growth sectors A world classof the Indian economy enterprise, at the Significant hidden values in RIL’s interestsin oil and gas, shareholding in ReliancePetroleum and Reliance Telecom, and the intersection of theinfocom initiative ‘old’ and the ‘new’ Reliance is the demonstrated leader inidentifying and capturing attractive marketopportunities in India economy RIL is amongst the best performing largerIndian stocks since the past several yearsReliance Industries Ltd. 63
    • 64. Reliance Industries LimitedIndia’s World Class Corporation 64

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