Small steps lead to giant leaps.
You start at the base and climb the peak.
You start by TOUCHING LIVES around you.
And reach out to the wider community and beyond.
You begin with dreams in your eyes.
And move on to share them with others.
You derive inspiration from the visions of prosperity.
And share it with fellow-citizens.
You nurture the finest young minds with commitment to excellence.
And unleash their positive energy with the magic of enterprise.
With all this, you create history by TRANSFORMING INDIA.
These are the unforgettable lessons from the life of our Founder Chairman
Shri Dhirubhai H. Ambani.
Today, our Chairman Shri Mukesh D. Ambani is taking his legacy forward.
Under his able leadership Reliance is expanding to new horizons.
From refineries to oil and gas exploration, chemicals and textiles to retail,
Special Economic Zones to overseas ventures.
The world is waking up to a new resurgent Reliance.
It showcases the arrival of a new global India.
We soar in the sky, with our feet firmly on the ground.
With every Reliance face lit with confidence and optimism.
Letter to Shareholders
Dear Shareowners, and started shipping products to the East African
market. GAPCO owns and operates large storage
I have great pleasure in sharing with you the terminalling facilities and a retail distribution
highlights of another year of great achievements. network including 250 retail outlets in several
We set new records for turnover, net profits and countries.
Reliance Petroleum Limited (RPL), a subsidiary of
Reliance achieved several milestones during the our Company has completed 90% progress in
year. We became India's first company in the building a new refinery. This will be an even more
private sector to surpass cash profit of Rs.25,000 complex and flexible refinery than the existing
crores and net profit of Rs.15,000 crores (excluding refinery. Based on the progress so far, we expect to
exceptional income). We increased our dividend complete the new refinery ahead of schedule.
payout to 130% amounting to Rs.1631 crores,
a new record for us as well as for private sector Both Reliance and RPL Shareholders have gained
in India. from the value creation during the project's
In our upstream business, we had nine discoveries
in the various explorations blocks in India. We also The Indian economy grew at nearly 9% this year.
added to our international footprint by signing Our Polyester and Polymer businesses also
production sharing contracts in several countries. exhibited impressive growth.
We also made very creditable progress in the In Polyester, we commissioned the largest
implementation of the KGD6 project. This is expansion in the world last year and consolidated
one of the largest and most complex deepwater our market position both in India and globally. In
gas projects in the world. As we bring this addition, we entered into agreements to acquire
field to commercial production it will be a proud the assets of Hualon Malaysia, which will add
day for Reliance and an important day in India's another 5 lakh tonnes of globally competitive
hydrocarbon history. capacity. Reliance will now account for nearly 7%
of global Polyester production this year.
Energy prices, both oil and gas, scaled new heights
globally this year. The development of new Our polymers business also benefited from a 15%
hydrocarbon resources is now more challenging growth in demand in India. We have expanded
and expensive than ever before. Reliance has customer reach, introduced new applications and
successfully taken up this challenge in building a increased market share to 55% in our polymer
world class organization and mobilizing resources business.
to develop its upstream portfolio.
Reliance Retail Ltd. (RRL) continued its roll out of
Our Jamnagar refinery clearly demonstrated stores during the year across various verticals and
its best-in-class operations with another year of formats. With 590 stores in 57 cities, spanning 13
high capacity utilization and record margins. states, and over 3.5 million square feet of trading
The flexibility, scale and complexity of the refinery space, I am confident that our newest business will
were manifest in its operating performance far scale the same heights as all our other businesses
exceeding the regional benchmarks. We were also have. Additionally, I believe that with the stated
able to capture the 'Clean and Green' premium aim of generating 1 million jobs in retail, this is a
from supplying low sulphur petroleum products to truly transformational venture whose success will
discerning markets worldwide. further our national priorities.
During the year we took over the operations of Last year, at our Annual General Meeting
Gulf Africa Petroleum Corporation (GAPCO) I had talked about infusing a new spirit of
“The development of new
innovativeness in the company. Innovation is truly
the new watchword for companies that want to is now more challenging
survive beyond and into the next century. Our
recent measures including that of setting up an and expensive than ever before.
Innovation Council comprising some of the best
minds, has borne fruit. We were recently ranked
19th in the list of the “World's 25 Most Innovative Reliance has successfully
Companies” compiled by Business Week in
collaboration with the Boston Consulting Group. taken up this challenge
Our pride in our people and performance was in building a world class
endorsed by influential global bodies. Reliance's
Hazira manufacturing division won the “Deming
Quality Control Award” for the Operations organization and mobilizing
Business Unit (2007), making it the world's first
petrochemical company to win this award. Our resources to develop
Jamnagar refinery was adjudged the winner of
“Golden Peacock National Training Award 2007” its upstream portfolio.”
while the Hazira manufacturing division won the
“Golden Peacock Innovation Award 2007”.
India is globalizing rapidly and is today a force to
reckon with in the marketplace. India's growth is
creating wealth and jobs across the world. We are
an integral part of this evolution and have the
responsibility to accelerate India's growth by
reinvesting our cash flow in our businesses.
I am confident that Reliance will firmly establish
itself as one of the world's most successful and
admired companies in the years to come.
I would like to express my gratitude to our
Board of Directors for their unstinting support
and guidance. I am also grateful to all our
stakeholders – our customers, suppliers, bankers,
employees and shareholders, who have reposed
their trust in us and given us their constant
With best wishes,
Mukesh D Ambani
Chairman & Managing Director
April 21, 2008
Turnover Rs. 139,269 crore ($ 34,713 million)
PBDIT Rs. 24,201 crore ($ 6,032 million)
Cash Profit Rs. 25,205 crore ($ 6,282 million)
Net Profit Rs. 19,458 crore ($ 4,850 million)
Net Profit (excl. exceptional income) Rs. 15,261 crore ($ 3,804 million)
Net Profit 5 years CAGR 30%
Total Assets Rs. 149,792 crore ($ 37,336 million)
Significant contribution to India's economic growth
• Revenues equivalent to about 3% of India's GDP
• 13.4% of India's total exports
• 4.9% of the Government of India's indirect tax revenues
• 6.6% of the total market capitalisation in India
• Weightage of 16.5% in the BSE Sensex
• Weightage of 12.5% in the Nifty Index
Growing importance across the globe
• Largest producer of Polyester fibre and yarn
• 4th largest producer of Paraxylene (PX) and Purified Terephthalic Acid (PTA)
• 6th largest producer of Mono Ethylene Glycol (MEG)
• 7th largest producer of Polypropylene (PP)
Featured above is the Board of Directors of Reliance Industries Limited.
Standing from left to right: Dr. Raghunath Anant Mashelkar, Prof. Dipak C. Jain, Shri Nikhil R. Meswani,
Dr. Dharam Vir Kapur, Shri Ramniklal H. Ambani, Shri Mansingh L. Bhakta, Shri Mukesh D. Ambani,
Shri Yogendra P Trivedi, Shri S. Venkitaramanan, Shri Mahesh P Modi, Shri Hital R. Meswani,
Shri Hardev Singh Kohli and Prof. Ashok Misra.
RELIANCE INDUSTRIES LIMITED 1
07 Company Information
09 Financial Highlights
10 Notice of Annual General Meeting
14 Management’s Discussion and Analysis
36 Report on Corporate Social Responsibility
45 Report on Corporate Governance
73 Secretarial Audit Report
75 Shareholders’ Referencer
88 Directors’ Report
97 Auditors’ Certificate on Corporate Governance
101 Auditors’ Report on Financial Statements
104 Balance Sheet
105 Profit and Loss Account
106 Cash Flow Statement
108 Schedules forming part of Balance Sheet and
Profit and Loss Account
124 Significant Accounting Policies and Notes on Accounts
149 Financial Information of Subsidiary Companies
153 Auditors’ Report on Consolidated Financial Statements
154 Consolidated Balance Sheet
155 Consolidated Profit and Loss Account
156 Consolidated Cash Flow Statement
158 Schedules forming part of Consolidated Balance Sheet and
Profit and Loss Account
167 Significant Accounting Policies and Notes on Consolidated Accounts
187 List of Investor Service Centres of Karvy
189 Members’ Feedback Form
191 Attendance Slip and Proxy Form
2 Touching lives. Transforming India.
Major Products and Brands
Business/ Product Brand End Uses Technology
Brand Logo Partner
Exploration & Crude Oil and Natural Refining, power, fertilisers, petrochemicals and other
Production Gas industries
Refining Liquefied Petroleum Gas Domestic and industrial fuel
Propylene Feedstock for polypropylene
Naphtha Feedstock for petrochemicals such
as ethylene, propylene & fertilisers, etc.
and as fuel in power plants
Gasoline Transport fuel
Jet / Aviation Turbine Fuel Aviation fuel
Superior Kerosene Oil Domestic fuel
High Speed Diesel Transport fuel
Sulphur Feedstock for fertilisers, pharmaceuticals
Petroleum Coke Fuel for power plants and cement plants
Repol Polypropylene (PP) Woven sacks for cement, food-grains, sugar, fertiliser, leno DOW, USA
bags for fruits & vegetables, TQ & BOPP films and containers
for packaging textiles, processed food, FMCG, office stationery,
components for automobile and consumer durables, moulded
furniture & luggage, houseware, geotextiles, fibres for socks,
sports wear, soft luggage.
Relene High Density Woven sacks, raschel bags for fruits & vegetables, containers NOVA, Canada
Polyethylene (HDPE) for packaging edible oil, processed food, FMCG, lubricants,
detergents, chemicals, pesticides, industrial crates & containers,
carrier bags, houseware, ropes & twines, pipes for water supply,
irrigation, process industry & telecom.
Reclair Liner Low Density Films for packaging milk, edible oil, salt, processed NOVA, Canada
Polyethylene (LLDPE) food, roto-moulded containers for storage of water, chemical
storage and general purpose tanks, protective films and pipes
for agriculture, cable sheathing, lids & caps, master batches.
Reon Polyvinyl Chloride Pipes & fittings; door & window profiles, insulation & Oxyvinyl, USA
(PVC) sheathing for wire & cables, rigid bottles & containers for
packaging applications, footwear, flooring, partitions, roofing,
I.V. fluid & blood bags.
Relpipe Poly-Olefin Irrigation, water supply, drainage, industrial effluents, telecom
(HDPE & PP) Pipes cable ducts, gas distribution.
Relab Linear Alkyl Benzene Detergents UOP, USA
Indolab Linear Alkyl Benzene Detergents UOP, USA
Fibre Paraxylene (PX) Raw material - PTA UOP, USA,
Intermediates Purified Terephthalic Raw material - Polyester ICI, UK/DuPont/Investa
Mono Ethylene Glycol Raw material - Polyester ABB Lummus Crest
RELIANCE INDUSTRIES LIMITED 3
Business/ Product Brand End Uses Technology
Brand Logo Partner
Recron Staple Fibre Apparel, home textile, industrial sewing thread, automotive E.I. DuPont, USA
Filament Yarn upholstery, carpets, canvas, luggage, spunlace & non Zimmer, Germany
Texturised Yarn woven fabrics Barmag, Germany
Twisted / Dyed Yarn Toray, Japan, Murata,
Japan, ICI, UK,
Recron Stretch yarns Blouse material, denim, shirting, suiting, dress material,
Stretch for comfortable fit T-shirt, sportswear, swimwear, medical bandages, diapers
and freedom of movement
Recron Cotton Look, Cotton Dress material, shirting, suiting, furnishing
Cotluk Feel Yarns fabric, curtain, bed sheet
Recron Can dye at boiling water Ladies outerwear, feather yarn for knitted
Dyefast temperature with cardigan, decorative fabric & home furnishing
high colour fastness
Recron Dope dyed black with Apparel, automotive, non-woven & interlining
Superblack high consistency in shade
Recron Bright, brilliant colours Woven & knitted apparel, furnishing & home textile
Superdye and soft feel, low pill
Recron Moisture management Active sports and high performance wear applications
Recron Hollow fibres with high Pillows, cushions, quilts, mattresses, furniture, toys & E.I. DuPont, USA
Fibrefill bounce and resilience non-wovens
Recron 3S Secondary Construction industry (concrete / mortar), asbestos
Reinforcement cement (sheet & pipe), paper industry (conventional
Produts & speciality), battery industry, wetlaid industry (wall
papers, filtration, wipes & hygiene products)
Recron Quality Certified India’s first certified Pillows, Cushions & Bedcovers,
Certified Sleep Products made as per the quality norms and inputs specified by
Relpet Polyethylene Packaging-water, soft drinks, beverages, confectionary, E.I. DuPont,
Terephthalate (PET) pharmaceutial, agro-chemical, food products USA Sinco, Italy
Vimal Suitings, Shirtings, Fabrics, Suits, Jackets, Shirts & Trousers
Harmony Furnishing fabrics, Furnishings, home textiles
RueRel Suitings Fabrics
V2 Ready-to-stitch, Fabrics
Take away fabric
4 Touching lives. Transforming India.
Business/ Product Brand End Uses
Reliance Retail Organised Retail
Food & Grocery Fresh vegetables, grocery, general and convenience
Specialty Store merchandise and more
Mini Hypermarket Grocery, Clothing, Leisure, Beauty and style, Electronics, Home
merchandise and more
Hypermarket Grocery, Clothing, Leisure, Beauty and style, Electronics, Home
merchandise, Furniture, Jewellery and more
Electronics Computers, Mobiles, Entertainment, Gaming
Specialty Store merchandise and more
Exclusive Apple Range of Apple products like ipod, imac and more
Apparel Specialty Men, Ladies, Children clothing and accessories and more
Health, Wellness & Pharma, Opticals, Natural remedies, Nutrition, fitness,
Pharma Specialty skin and personal care merchandise and more
Footwear Specialty Men, Ladies, Children footwear, sports, handbags, accessories
Store and more
Jewellery Specialty Fine jewellery
Books, Music, Toys & Books, Music, Stationary, Toys, Gifts merchandise and more
Gifts Specialty Store
Vehicle Care Services
RELIANCE INDUSTRIES LIMITED 5
Business/ Product Brand End Uses
The sports marque Basis for breathable textiles that withstand all weathers.
Protects against wind and weather, thanks to its
climate control properties.
The fine marque Basis for light and elegant fashion, finer than found in
nature, with high weather comfort and pleasant to the bare skin.
The versatile marque Basis for fleecy winter fashion and ultra light summer wear. Heat
regulating even at extreme temperatures.
The elestic marque Basis for optimised stretch performance. With good stretch and
excellent recovery, moulds perfectly to the body.
The cosy marque Basis for pillow and duvet interiors that are soft and gentle,
ideal for all seasons.
The receptive marque Basis for home textiles that are easy care, durable and in every
The high performance marque Basis for long lasting lowpill, functional and prestigious fabrics.
In blends or by itself, the perfect balance between looks and comfort.
The classic marque Basis for easy care, hardwearing fabrics of durable quality. The
pure delight of comfort with style.
The flame retardant marque Basis for fabrics that are both safe and comfortable. Flame
retardant to all appropriate fire protection requirements.
Malaysia Polyester and textiles
GAPCO Petroleum Retail
RELIANCE INDUSTRIES LIMITED 7
Health, Safety & State Bank of Saurashtra
Board of Directors Syndicate Bank
Hital R. Meswani (Chairman) UCO Bank
Mukesh D. Ambani
Dr. Dharam Vir Kapur Union Bank of India
Chairman & Managing Director
Hardev Singh Kohli Vijaya Bank
Nikhil R. Meswani
Executive Director Remuneration Committee Registered Office
Mansingh L. Bhakta (Chairman) 3rd Floor, Maker Chambers IV
Hital R. Meswani 222, Nariman Point
Yogendra P. Trivedi Mumbai 400 021, India
Executive Director S. Venkitaramanan Tel: +91 22 2278 5000
Hardev Singh Kohli Dr. Dharam Vir Kapur Fax: +91 22 2278 5111
Executive Director e-mail: email@example.com
Shareholders’/Investors’ Website: www.ril.com
Ramniklal H. Ambani Grievance Committee
Mansingh L. Bhakta (Chairman) Major Manufacturing
Mansingh L. Bhakta
Yogendra P. Trivedi Divisions
Yogendra P. Trivedi
Mukesh D. Ambani
Dr. Dharam Vir Kapur Nikhil R. Meswani Dahej
Mahesh P. Modi Hital R. Meswani P. O. Dahej, Bharuch - 392 130,
S. Venkitaramanan Solicitors & Advocates Hazira
Prof. Ashok Misra Kanga & Co.
Village Mora, Bhatha P.O.,
Prof. Dipak C. Jain Surat-Hazira Road,
Auditors Surat 394 510, Gujarat, India.
Dr. Raghunath A. Mashelkar
Chaturvedi & Shah
Company Secretary Deloittee, Haskins & Sells
Village Meghpar / Padana,
Vinod M. Ambani Rajendra & Co. Taluk Lalpur,
Dist. Jamnagar 361 280
Board Committees: Bankers Gujarat, India.
ABN AMRO Bank
Allahabad Bank Nagothane
Audit Committee P. O. Petrochemicals Township,
Yogendra P. Trivedi (Chairman) Bank of America Nagothane,
S.Venkitaramanan (Vice Chairman) Raigad - 402 125, Maharashtra, India.
Bank of Baroda
Mahesh P. Modi Bank of India Naroda
Bank of Maharashtra 103/106, Naroda Industrial Estate,
Corporate Governance and Calyon Bank Naroda, Ahmedabad 382 320
Stakeholders’ Interface Canara Bank Gujarat, India.
Committee Central Bank of India
Citi Bank N.A.
Yogendra P. Trivedi (Chairman) B-4, Industrial Area, Patalganga,
Mahesh P. Modi Corporation Bank Off Bombay-Pune Road,
Dr. Dharam Vir Kapur Deutsche Bank Near Panvel, Dist. Raigad 410 207,
HDFC Bank Limited Maharashtra, India.
Employees Stock Hong Kong and Shanghai
Banking Corporation Limited Vadodara
Compensation Committee P. O. Petrochemicals,
Yogendra P. Trivedi (Chairman) ICICI Bank Limited Vadodara - 391 346, Gujarat, India.
IDBI Bank Limited
Mukesh D. Ambani
Indian Bank Registrars & Transfer Agents
Mahesh P. Modi
Indian Overseas Bank
Prof. Dipak C. Jain Karvy Computershare Private
Oriental Bank of Commerce
Punjab National Bank Limited
Finance Committee 46, Avenue 4, Street No.1,
Standard Chartered Bank
Mukesh D. Ambani (Chairman) Banjara Hills,
State Bank of Hyderabad
Nikhil R. Meswani Hyderabad 500 034, India.
State Bank of India Tel: +91 40 2332 0666, 2332 0711
Hital R. Meswani
State Bank of Patiala 2332 3031, 2332 3037
34th Annual General Meeting on Thursday, June 12, 2008 at 11.00 a.m. at Fax: +91 40 2332 3058
Birla Matushri Sabhagar, 19, Marine Lines, Mumbai 400 020. Website: www.karvy.com
8 Touching lives. Transforming India.
Consistent growth over ten years
Turnover (Rs. crore) Profit After Tax (Rs. crore)
Net Worth (Rs. crore) Market Capitalisation (Rs. crore)
Earnings Per Share (Rs.) Book Value Per Share (Rs.)
10 Touching lives. Transforming India.
Notice is hereby given that the Thirty-fourth Annual General RESOLVED FURTHER THAT the Board be and is hereby
Meeting of the Members of Reliance Industries Limited will be authorised to take all such steps as may be necessary, proper
held on Thursday, June 12, 2008 at 11.00 a.m., at Birla Matushri or expedient to give effect to this Resolution.”
Sabhagar, 19, New Marine Lines, Mumbai 400 020, to transact
the following businesses : 6. To re-appoint Shri Nikhil R. Meswani as a Whole-time
Director designated as Executive Director and in this regard
Ordinary Business : to consider and if thought fit, to pass, with or without
1. To consider and adopt the audited Balance Sheet as at March modification(s), the following resolution as an Ordinary
31, 2008, the Profit and Loss Account for the year ended on Resolution:
that date and the Reports of the Board of Directors and “RESOLVED THAT in accordance with the provisions of
Auditors thereon. Sections 198, 269, 309 and 317 read with Schedule XIII and
2. To declare a dividend on equity shares. all other applicable provisions, if any, of the Companies
Act, 1956 or any statutory modification(s) or re-enactment
3. To appoint Directors in place of those retiring by rotation. thereof, approval of the Company be and is hereby accorded
4. To appoint Auditors and to fix their remuneration and in to the re-appointment of Shri Nikhil R. Meswani, as a
this regard to consider and if thought fit, to pass, with or Whole-time Director, designated as Executive Director of
without modification(s), the following resolution as an the Company, for a period of 5 (five) years with effect from
Ordinary Resolution : July 1, 2008, on the terms and conditions including
remuneration as set out in the Explanatory Statement
“RESOLVED THAT M/s. Chaturvedi & Shah, Chartered annexed to the Notice convening this Meeting, with liberty
Accountants, M/s. Deloitte Haskins and Sells, Chartered to the Board of Directors (hereinafter referred to as “the
Accountants, and M/s. Rajendra & Co., Chartered Board” which term shall be deemed to include any Committee
Accountants, be and are hereby appointed as Auditors of of the Board constituted to exercise its powers, including
the Company, to hold office from the conclusion of this the powers conferred by this Resolution) to alter and vary
Annual General Meeting until the conclusion of the next the terms and conditions and / or remuneration, subject to
Annual General Meeting of the Company on such the same not exceeding the limits specified under Schedule
remuneration as shall be fixed by the Board of Directors.” XIII to the Companies Act, 1956 or any statutory
Special Business : modification(s) or re-enactment thereof.
5. To re-appoint Shri Mukesh D. Ambani as Managing Director RESOLVED FURTHER THAT the Board be and is hereby
and in this regard to consider and if thought fit, to pass, authorised to take all such steps as may be necessary, proper
with or without modification(s), the following resolution or expedient to give effect to this Resolution.”
as an Ordinary Resolution : By Order of the Board of Directors
“RESOLVED THAT in accordance with the provisions of
Sections 198, 269, 309 and 317 read with Schedule XIII and
all other applicable provisions, if any, of the Companies Vinod M. Ambani
Act, 1956 or any statutory modification(s) or re-enactment President and Company Secretary
thereof, approval of the Company be and is hereby accorded
to the re-appointment of Shri Mukesh D. Ambani, as Mumbai
Managing Director of the Company, for a period of 5 (five) April 21, 2008
years with effect from April 19, 2009, on the terms and
conditions including remuneration as set out in the Registered Office:
Explanatory Statement annexed to the Notice convening 3rd Floor, Maker Chambers IV,
this Meeting, with liberty to the Board of Directors 222, Nariman Point,
(hereinafter referred to as “the Board” which term shall be Mumbai 400 021, India
deemed to include any Committee of the Board constituted e-mail : firstname.lastname@example.org
to exercise its powers, including the powers conferred by
this Resolution) to alter and vary the terms and conditions
and / or remuneration, subject to the same not exceeding the
limits specified under Schedule XIII to the Companies Act,
1956 or any statutory modification(s) or re-enactment
RELIANCE INDUSTRIES LIMITED 11
Notes : (b) The dividend on Equity Shares, if declared at the
Meeting, will be paid on or after June 12, 2008 to
1. A member entitled to attend and vote at the Annual
those Members whose names shall appear on the
General Meeting (the Meeting) is entitled to appoint
a proxy to attend and vote on a poll instead of himself Company’s Register of Members on May 9, 2008; in
and the proxy need not be a member of the Company. respect of shares held in dematerialised form, the
The instrument appointing the proxy should, dividend will be paid to members whose names are
however, be deposited at the Registered Office of the furnished by National Securities Depository Limited and
Company not less than forty-eight hours before the Central Depository Services (India) Limited as beneficial
commencement of the Meeting. owners as on that date.
2. Corporate members intending to send their authorised 10. (a) In order to provide protection against fraudulent
representatives to attend the Meeting are requested to send encashment of dividend warrants, Members who hold
a certified copy of the Board Resolution authorising their shares in physical form are requested to intimate the
representative to attend and vote on their behalf at the Company’s Registrars and Transfer Agents ,
Meeting. M/s. Karvy Computershare Private Limited, under
3. In terms of Article 155 of the Articles of Association of the the signature of the Sole/First joint holder, the
Company, Shri R.H. Ambani, Shri S. Venkitaramanan, Prof. following information to be incorporated on dividend
Ashok Misra and Shri Nikhil R. Meswani, Directors, retire warrants:
by rotation at the ensuing Annual General Meeting and
(i) Name of the Sole/First joint holder and the
being eligible offer themselves for re-appointment. Brief
resume of these Directors, nature of their expertise in
specific functional areas, names of companies in which they (ii) Particulars of Bank Account, viz.:
hold directorships and memberships/chairmanships of Board Name of the Bank
Committees, shareholding and relationships between Name of the Branch
directors inter-se as stipulated under Clause 49 of the Listing
Complete address of the Bank with Pin Code
Agreement with the Stock Exchanges in India, are provided
in the Report on Corporate Governance forming part of the
Account type, whether Savings Account
Annual Report. The Board of Directors of the Company
commends their respective re-appointments. (SA) or Current Account (CA)
Bank Account Number
4. An Explanatory Statement pursuant to Section 173(2) of
the Companies Act, 1956, relating to the Special Business (b) Members who hold shares in dematerialised form
to be transacted at the Meeting is annexed hereto. may kindly note that their Bank Account details, as
furnished by their Depositories to the Company, will
5. Members are requested to bring their Attendance Slip along be printed on their dividend warrants as per the
with their copy of Annual Report to the Meeting. applicable regulations of the Depositories and the
6. Members who hold shares in dematerialised form are Company will not entertain any direct request from
requested to write their Client ID and DP ID and those who such Members for deletion of or change in such Bank
hold shares in physical form are requested to write their Account details. Further, instructions, if any, already
Folio Number in the attendance slip for attending the given by them in respect of shares held in physical
Meeting. form will not be automatically applicable to shares
7. In case of joint holders attending the Meeting, only such held in electronic form. Members who wish to
joint holder who is higher in the order of names will be change such Bank Account details are therefore
entitled to vote. requested to advise their Depository Participants
about such change with complete details of Bank
8. Relevant documents referred to in the accompanying Notice Account.
are open for inspection by the members at the Registered
Office of the Company on all working days, except (c) To avoid loss of dividend warrants in transit and undue
Saturdays, between 11.00 a.m. and 1.00 p.m. upto the date delay in respect of receipt of dividend warrants, the
of the Meeting. Company has provided a facility to the Members for
remittance of dividend through the Electronic Clearing
9. (a) The Company has already notified closure of System (ECS). The ECS facility is available at locations
Register of Members and Transfer Books from identified by Reserve Bank of India from time to time
Saturday, May 10, 2008 to Saturday, May 17, 2008
and covers most of the cities and towns. Members
(both days inclusive) for determining the names of
holding shares in physical form and desirous of availing
Members eligible for dividend on Equity Shares, if
declared at the Meeting.
12 Touching lives. Transforming India.
this facility are requested to contact the Company’s 14. Non-Resident Indian Members are requested to inform
Registrars and Transfer Agents, M/s. Karvy the Company’s Registrars and Transfer Agents, M/s.
Computershare Private Limited. Karvy Computershare Private Limited, immediately
11. All unclaimed dividends declared up to the financial
year ended March 31, 1995 have been transferred to a) Change in their Residential status on return to
the General Revenue Account of the Central India for permanent settlement.
Government as required under the Companies Unpaid
b) Particulars of their Bank Account maintained in
Dividend (Transfer to General Revenue Account of
India with complete name, branch, account type,
the Central Government) Rules, 1978 (the Rules).
account number and address of the Bank with Pin
Members who have not so far claimed or collected
Code Number, if not furnished earlier.
their dividends declared up to the aforesaid financial
year are requested to claim such dividends from the 15. Members are advised to refer to the Shareholders’
Registrar of Companies, Maharashtra, CGO Complex, Referencer provided in the Annual Report.
2nd Floor, “A” Wing, CBD-Belapur, Navi Mumbai -
400 614, Telephone (091) (022) 2757 6802, by making 16. Members are requested to fill in and send the
an application in Form II of the Rules. Feedback Form provided in the Annual Report.
12. Pursuant to the provisions of Section 205A(5) and EXPLANATORY STATEMENT PURSUANT TO SECTION
205C of the Companies Act, 1956, the Company has 173(2) OF THE COMPANIES ACT, 1956
transferred the unpaid or unclaimed dividends for the
financial years 1995-96, 1996-97, 1997-98, 1998-99 The following Explanatory Statement sets out all material facts
and 1999-2000 to the Investor Education and relating to the Special Business mentioned in the accompanying
Protection Fund (the IEPF) established by the Central Notice:
Item Nos. 5 and 6
Dividends for the financial year ended March 31, 2002
Shri Mukesh D. Ambani has been the Chairman and Managing
and thereafter, which remain unpaid or unclaimed for a
Director of the Company since July 31, 2002. The term of
period of 7 years from the date they became due for
office of Shri Mukesh D. Ambani, as Managing Director of the
payment will be transferred by the Company to IEPF.
Company will expire on April 18, 2009.
Information in respect of such unclaimed
dividends and the last date for claiming the same The term of office of Shri Nikhil R. Meswani, Whole-time
are provided in the Shareholders’ Referencer Director, designated as Executive Director, will expire on June
forming part of the Annual Report. Members who 30, 2008
have not so far encashed dividend warrant(s) for the
aforesaid years are requested to seek issue of duplicate The present proposal is to seek the members’ approval for the
warrant(s) by writing to the Company’s Registrars reappointment of and remuneration payable to Shri Mukesh D.
and Transfer Agents, M/s. Karvy Computershare Ambani as Managing Director and Shri Nikhil R. Meswani as
Private Limited, immediately. Whole-time Director, designated as Executive Director, in terms
of the applicable provisions of the Companies Act, 1956.
It may be noted that the Company had sent reminders
to the Members in this regard. Members are The Board of Directors of the Company (the ‘Board’), at its
requested to note that no claims shall lie against meeting held on April 21, 2008 has, subject to the approval of
the Company or the IEPF in respect of any Members, re-appointed Shri Mukesh D. Ambani and Shri Nikhil
amounts which were unclaimed and unpaid for a R. Meswani for a further period of 5 years from the expiry of
period of seven years from the dates that they their respective term, on the remuneration determined by the
first became due for payment and no payment Remuneration Committee of the Board at its meeting held on
shall be made in respect of any such claim. April 21, 2008.
13. Members who hold shares in physical form in multiple Shri Mukesh D. Ambani upon reappointment as Managing
Director shall continue to hold office of the Chairman and
folios in identical names or joint holding in the same
order of names are requested to send the share Managing Director.
certificates to the Company’s Registrars and Transfer Broad particulars of the terms of re-appointment of and
Agents, M/s. Karvy Computershare Private Limited, remuneration payable to Shri Mukesh D. Ambani and Shri Nikhil
for consolidation into a single folio. R. Meswani are as under:
RELIANCE INDUSTRIES LIMITED 13
(a) Salary, Perquisites and Allowances: spouses and attendant(s) during business trips;
provision of car for use on the Company’s business
Rs. per month and telephone expenses at residence shall be reimbursed
Name and Designation Sa l a r y P erq u i si t es and not considered as perquisites.
& Allowances (d) General:
Shri Mukesh D. Ambani 5,00,000 4,00,000 (i) The office of Managing Director and Whole-time
Chairman and Director may be terminated by the Company or
Managing Director the concerned Director by giving the other 3
(three) months’ prior notice in writing.
Shri Nikhil R. Meswani 1,25,000 2,00,000 (ii) The terms and conditions set out for re-
Executive Director appointment and payment of remuneration herein
may be altered and varied by the Board as it may,
from time to time, deem fit.
The perquisites and allowances, as aforesaid, shall
include accommodation (furnished or otherwise) or Shri Mukesh D. Ambani and Shri Nikhil R. Meswani satisfy all
house rent allowance in lieu thereof; house maintenance the conditions set out in Part-I of Schedule XIII to the Companies
allowance together with reimbursement of expenses Act, 1956 for being eligible for the re-appointment.
and / or allowances for utilisation of gas, electricity,
The above may be treated as an abstract of the terms of
water, furnishing and repairs; medical reimbursement;
re-appointment of Shri Mukesh D. Ambani and Shri Nikhil R.
leave travel concession for self and family including
Meswani under Section 302 of the Companies Act, 1956.
dependents; club fees, medical insurance and such other
perquisites and / or allowances. The said perquisites A brief resume of Shri Mukesh D. Ambani and Shri Nikhil R.
and allowances shall be evaluated, wherever applicable, Meswani, nature of their expertise in specific functional areas,
as per the provisions of Income-tax Act, 1961 or any names of companies in which they hold directorship and
rules thereunder or any statutory modification(s) or membership / chairmanship of Board Committees and
re-enactment thereof; in the absence of any such Rules, relationships between directors inter-se, as stipulated under
perquisites and allowances shall be evaluated at actual Clause 49 of Listing Agreement with the Stock Exchanges in
cost. However, the Company’s contribution to India, are provided in the Report on Corporate Governance
Provident Fund, Superannuation or Annuity Fund, to forming part of the Annual Report.
the extent these singly or together are not taxable under
the Income-tax law, and gratuity payable and Shri Mukesh D. Ambani and Shri Nikhil R. Meswani are interested
encashment of leave at the end of the tenure, as per the in the resolutions set out respectively at Item Nos. 5 and 6 of
rules of the Company and to the extent not taxable the Notice, which pertain to their respective re-appointments
under the Income-tax law, shall not be included for the and remuneration payable to each of them. Further, Shri Hital R.
purpose of computation of the overall ceiling of Meswani may be deemed to be interested in the Resolution
remuneration. Further, Employee Stock Options pertaining to the re-appointment of and remuneration payable
granted / to be granted, from time to time, are not to be to Shri Nikhil R. Meswani, as they are related to each other.
considered as perquisite and not to be included for the Save and except the above, none of the other Directors of the
purpose of computation of the overall ceiling of Company is, in any way, concerned or interested in these
(b) Commission: The Board commends the Resolutions set out at Item Nos. 5
and 6 of the Notice for your approval.
In addition to the salary, perquisites and allowances as
above, Shri Mukesh D. Ambani and Shri Nikhil R.
Meswani shall also be entitled to receive commission By Order of the Board of Directors
on net profits. The commission payable to them as
also to Shri Hital R. Meswani, another Whole-time
Director of the Company for each financial year, shall Vinod M. Ambani
be in the ratio of their respective salaries (excluding President and Company Secretary
perquisites and allowances), and the overall
remuneration (including commission to all three of them) Mumbai
shall not exceed 0.402% of the net profits of the April 21, 2008
Company as computed in the manner referred to under
Section 198(1) of the Companies Act, 1956, or any
statutory modification(s) or re-enactment thereof.
(c) Reimbursement of Expenses:
Reimbursement of expenses incurred for travelling,
boarding and lodging including for their respective
14 Touching lives. Transforming India.
Management’s Discussion And Analysis
Forward-looking Statements In the Refining & Marketing business, Reliance took over majority
control of Gulf Africa Petroleum Corporation (GAPCO) and started
This report contains forward-looking statements, which may be shipping products to the East African markets. GAPCO owns and
identified by their use of words like ‘plans’, ‘expects’, ‘will’, operates large storage terminal facilities and a retail distribution
‘anticipates’, ‘believes’, ‘intends’, ‘projects’, ‘estimates’ or other network in countries like Tanzania, Uganda and Kenya. It owns
words of similar meaning. All statements that address expectations and operates large coastal storage terminals in Dar es Salaam
or projections about the future, including, but not limited to (Tanzania), Mombassa (Kenya), and Kampala (Uganda). It has
statements about the company’s strategy for growth, product other well-spread depots in East and Central Africa. It also markets
development, market position, expenditures, and financial results, through 250 outlets covering retail and industrial segments.
are forward-looking statements. Forward-looking statements are
based on certain assumptions and expectations of future events. Reliance also signed MoU with GAIL (India) Limited to explore
The company cannot guarantee that these assumptions and opportunities of setting up petrochemical plants in feedstock rich
expectations are accurate or will be realised. The company’s actual countries outside India. Earlier, Reliance and GAIL had signed a
results, performance or achievements could thus differ materially MoU for co-operation in identified areas in natural gas - pipeline
from those projected in any such forward-looking statements. The transmission and marketing, coal bed methane gas opportunities,
company assumes no responsibility to publicly amend, modify or city and local gas distribution, operations and maintenance services,
revise any forward looking statements, on the basis of any exploration & production and technology and knowledge sharing.
subsequent developments, information or events.
Reliance Petroleum Limited (RPL) continued the second year of
Overview FY 2007-08 implementation of its refinery project with an overall project
progress of 90%. Based on the progress made so far, RPL expects
A year of significant achievements to complete the refinery project ahead of schedule.
This was yet another successful period for Reliance Industries During the year, Reliance Retail Limited (RRL) continued its rollout
Limited’s Oil and Gas Exploration & Production business which of stores across various verticals and formats. Reliance Retail today
resulted in several key achievements. operates over 590 stores in 57 cities, spanning 13 states, with over
• Reliance announced several discoveries which are as follows: 3.5 million square feet of trading space.
• Wells KG-III-05-P1 and KG-III-05-J1 in block KG-OSN- During FY 2007-08, two international investment rating agencies,
2001/1 (KG-III-5) Moody’s and S&P, reaffirmed investment grade rating for the
international debt of Reliance.
• Well MD1 in block KG-DWN-98/1 (KG-D4)
Reliance’s Hazira manufacturing division was awarded the “Deming
• Well CY-III-D5-A1 in block CY-DWN-2001/2 (CY-III- Quality Control Award” for the Operations Business Unit (2007),
D5) making it the world’s first petrochemical company to win this
• Well KG-D6-R1 in block KG-DWN-98/3 (KG-D6) award.
• Well GS-01-B1 in block GS-OSN-2001/1 (GS-01) Reliance’s Jamnagar refinery was adjudged the winner of “Golden
Peacock National Training Award 2007”.
• Well KG-V-D3-A1 and B1 in block KG-DWN-2003/1
(KG-V-D3) Reliance’s Hazira manufacturing division was adjudged the winner
of “Golden Peacock Innovation Award 2007”.
• Well NEC-25-J1 in block NEC-OSN 97/2 (8 th gas
discovery in NEC-25 block) Reliance is amongst the “World’s 25 Most Innovative Companies”.
The Company was ranked 19th in the list compiled by Business
• Development plan for MA oil fields (KG-D6) approved Week in collaboration with Boston Consulting Group.
by the Management Committee.
Record financial performance
• Development plan for Sohagpur Coal Bed Methane (CBM)
Blocks (East and West) approved by the Directorate General Turnover Rs. 139,269 crore + 18%
of Hydrocarbons (DGH). $ 34,713 million + 27%
During the year, Reliance signed an agreement to acquire certain PBDIT Rs. 24,201 crore + 18%
polyester (capacity) assets of Hualon, Malaysia. It is a leading $ 6,032 million + 28%
polyester producer in Malaysia with a capacity of half a million
tonnes per annum along with downstream textile manufacturing Cash Profit Rs. 25,205 crore + 43%
capabilities spread over two locations in Malaysia, namely Nilai $ 6,282 million + 54%
and Malacca. This acquisition was the second international
acquisition in the polyester sector after Reliance acquired Trevira. Net Profit Rs. 19,458 crore + 63%
This will help Reliance consolidate its position as the world’s largest $ 4,850 million + 77%
polyester manufacturer with an annual capacity of 2.5 million
tonnes, which represents an increase of 25% over its existing Net Profit (excl. Rs. 15,261 crore + 28%
capacity. With this acquisition, Reliance’s global market share in exceptional income) $ 3,804 million + 38%
polyester fibre and yarn will exceed 7%.
RELIANCE INDUSTRIES LIMITED 15
During the year, Reliance set several benchmarks in terms of sales, capitalized, as against Rs 535 crore in the previous year. Gross
profits, net worth and assets. Reliance achieved the unique status interest cover was 12.3 compared to 11.9 for the previous year.
of becoming India’s first Company in the private sector to achieve
a net profit exceeding Rs. 15,000 crore (excluding exceptional Depreciation was marginally higher at Rs. 4,847 crore
income). The net profit for the year was at Rs. 15,261 crore ($ ($ 1.2 billion) against Rs. 4,815 crore in the previous year.
3,804 million) with a Compounded Annual Growth Rate (CAGR) Exceptional item of Rs. 4,733 crore ($ 1.2 billion) represents
of 30% over the past five years excluding exceptional income. gains primarily arising out of transactions concerning RPL shares.
Reliance announced a dividend of 130% - amounting to Rs. 1,631 The transactions were conducted through stock exchanges and
crore ($ 407 million). This is the highest ever payout by any have helped to further broad base the shareholding pattern of RPL.
private sector company in India. The sale of shares monetises only a fraction of Reliance’s holding
in RPL at the same time increasing free float in the market. This
Return on Equity was at 24.8% and Return on Capital Employed has unlocked value for Reliance shareholders. Reliance now holds
was at 20.3%. Reliance’s net gearing was at 22.3% and the net 70.38% of RPL’s equity.
debt/equity ratio was 0.35 as on March 31, 2008.
Profit after tax, including exceptional item, was Rs. 19,458 crore
Reliance has always played a pivotal role in the growth of India’s ($ 4.9 billion) as against Rs. 11,943 crore for the previous year, an
economy and endeavours to contribute to the country’s progress increase of 63%. Profit after tax, excluding exceptional item was
and development. Reliance’s revenues are equivalent to about 3% Rs. 15,261 crore ($ 3.8 billion), representing an increase
of India’s GDP. Reliance accounts for: of 28%.
• 13.4% of India’s total exports Basic earning per share (EPS), including exceptional item, for the
year was Rs. 133.9 ($ 3.3). Basic earning per share (EPS) excluding
• 4.9% of the Government of India’s indirect tax revenues exceptional item, for the year was Rs. 105.0 ($ 2.6) against
• 6.7% of the total market capitalisation in India Rs. 82.2 for the previous year.
• Weightage of 16.5% in the BSE Sensex The outstanding debt as on 31st March 2008 was Rs 36,480 crore
($ 9.1 billion) compared to Rs 27,826 crore as on 31st March
• Weightage of 12.5% in the Nifty Index 2007. Net gearing as on 31st March 2008 was 22.3% as compared
Financial Review to 25.2% on 31st March 2007.
Reliance delivered superior financial performance during the year Reliance has domestic credit ratings of AAA from CRISIL and
with improvement across all major parameters. FITCH. Moody’s and S&P have reaffirmed investment grade ratings
for international debt of Reliance, as Baa2 and BBB respectively.
Turnover achieved for the year ended 31st March 2008 was Rs.
139,269 crore ($ 34.7 billion), reflecting a growth of 18% over Capital expenditure during the year was Rs. 19,503 crore ($ 4.9
the previous year. Increase in revenue was due to 12% increase in billion) primarily on account of exploration and production,
prices and a 6% growth in volumes. During the year, exports were implementation of value maximisation projects and expansion of
higher by 25% at Rs. 83,492 crore ($ 20.8 billion). petrochemical capacities. Details of the capital expenditure
undertaken during the year are as follows:
Consumption of raw materials increased by 17% from Rs. 76,872 (In Rs. crore)
crore to Rs. 90,304 crore ($ 22.5 billion). This was mainly on FY 2007-08 FY 2006-07
account of higher crude and naphtha prices. Traded goods purchase
Oil & Gas (E&P) 13,443 5,725
increased from Rs. 1,821 crore to Rs. 6,008 crore ($ 1.5 billion)
primarily comprising petroleum products for retail sales. Refining & Marketing 2,661 1,430
Petrochemicals 506 462
Employee cost was Rs. 2,119 crore ($ 528 million) for the year as Common 2,893 1,363
against Rs. 2,094 crore. The previous year’s figure includes TOTAL 19,503 8,980
Rs. 376 crore towards expenditure incurred on Voluntary Retirement
Scheme / Special Separation Scheme announced for the employees Contribution to the National Exchequer
of erstwhile IPCL Vadodara unit.
Reliance is one of India’s largest contributors to the national
Operating Profit before other income increased by 16% from exchequer primarily by way of payment of taxes and duties
Rs. 20,046 crore to Rs. 23,306 crore ($ 5.8 billion). Net operating to various government agencies. During the year, a total of
margin for the period was 17.5% as compared to 17.9% in the Rs. 13,696 crore ($ 3.4 billion) was paid in the form of various
previous year. taxes and duties.
Other income was higher at Rs. 895 crore ($ 223 million) against Leadership in exports
Rs. 478 crore primarily on account of increase in interest income.
Reliance maintained its leadership status as India’s largest exporter.
Interest costs were lower by 9% at Rs. 1,077 crore ($ 269 million) Exports, including deemed exports, were at Rs. 83,492 crore
primarily on account of appreciation of the rupee vis-à-vis the US ($ 20.8 billion) as against Rs. 66,627 crore in the previous year.
dollar. During the year, the rupee appreciated by 7.7% against the
US dollar. Moreover, 85% of Reliance’s debt is foreign currency Reliance exports products to 108 countries. Some of them are the
denominated. During the year, Rs. 885 crore of interest was most stringent quality-driven and value-driven developed nations.
This demonstrates Reliance’s global competitiveness, the world-
16 Touching lives. Transforming India.
class quality of its products and superior logistical capabilities. The development, spot Liquefied Natural Gas (LNG) prices breached its
Company has achieved this significant growth in exports while oil price parity in the Asian LNG markets.
maintaining its share in the domestic market.
The International Energy Agency forecasts the global demand for
Revenues from exports now represent 60% of the Company’s oil to grow by 1.5% to 87.2 million BPD in 2008. The previous
turnover. Petroleum products constitute 77% and petrochemicals year 2007 saw an increase in global oil demand to 86.0 million
contribute 23% of the total exports. BPD, resulting in an increase of 1.3% over 2006.
Resources and Liquidity High commodity prices and robust growth have ensured strong
profitability and cash flows for E&P companies. They have
Reliance’s financial framework allows it to maintain a conservative encouraged significant investments across the global energy value
financial profile even while pursuing aggressive business growth chain, resulting in severe pressure in the supply chain. The cost of
strategies. This is reflected in Reliance’s domestic as well as exploration and development has increased sharply with the cost
international ratings. The Company’s long-term debt is rated ‘AAA’ of drilling rigs, seismic services, engineering, fabrication and
from CRISIL and ‘Ind AAA’ by Fitch - the highest ratings awarded installation costs contributing to the increase. This trend is likely
by these agencies. The short-term debt programme is rated P1+ to continue in the medium term.
and working capital debt programme is rated AAA (Assigned) by
CRISIL, the highest credit rating that can be assigned in this category. Rising challenges in the E&P sector
The Company’s international debt has been rated BBB (Stable
Outlook) by S&P, Baa2 (Stable Outlook) by Moody’s and BBB- The capital expenditure in the E&P industry is estimated to be
(Stable Outlook) by Fitch. S&P has rated Reliance above India’s upwards of $ 300 billion per annum. Operators are increasingly
sovereign rating. looking at opportunities in the deep waters of the Gulf of Mexico,
West Africa, Latin America and in the Asia Pacific Region.
Reliance’s gross debt equity ratio, including long-term and short
term debt as on March 31, 2008, is at 0.45. The Company’s long Deep water exploration is a fast emerging frontier for oil and gas
term debt as on March 31, 2008 was at Rs. 27,957 crore ($ 6,968 as the era of ‘easy’ oil seems to have come to an end. The overall
million). Of this, foreign currency denominated debt represents cost inflation in upstream projects in deepwater areas has increased
85% with an average maturity of 5.2 years. The average maturity by more than 100% since 2002. Cost of steel has increased by
of the Company’s long-term debt is 5 years. 100% since 2002 while in sub-sea and EPC contracts price inflation
is also around 100%. PIRA estimates that since 2002, finding &
Reliance continued to demonstrate dynamism and flexibility in development costs have increased from $ 8/ bbl to $ 15/ bbl in
debt issuance during the year. In May 2007, the Company set a new 2006, an increase of 90%. CERA estimates that capex inflation
benchmark in Asia by raising a $ 2 billion syndicated term loan for has risen from a base of 100 to touch 198 in the third quarter of
a 10-year period at competitive rates with participation from 23 2007.
banks from across the globe. This is a landmark deal as it makes
Reliance the first corporate borrower from India to have accessed Shortage of rigs is hampering exploration efforts worldwide. The
the External Commercial Borrowings (ECB) market for this size. high day rates of operating the rigs are driven by demand/supply
In September 2007 the Company also raised $ 500 million by way fundamentals and rise in the cost of manpower, services and raw
of a syndicated term loan at competitive rates amidst the sub- materials. Demand for 6th generation drill-ships capable of drilling
prime turmoil in the global markets. in harsher environments far exceeds the availability. Consequently,
contracting rigs is a big challenge for operators and due to this
Reliance meets its working capital requirements through commercial shortage, rig utilisation rates are expected to remain high. Shipyards
credit lines provided by a consortium of Indian and foreign banks. constructing deepwater rigs are fully booked and the lead time for
Reliance undertakes liability management transactions to reduce a new build is between 3-4 years.
overall cost of debt and diversify liability mix.
Recent oil and gas discoveries are in deep waters, oil sands, shales,
As on March 31, 2008, Reliance has cash and cash equivalent of arctic and unconventional geographies. These discoveries are in
Rs. 7,566 crore ($ 1,886 million). The Company actively manages much harsher terrains and in new frontiers. In addition, availability
its short-term liquidity to generate reasonable returns by investing of manpower, services and equipment is limited. Evacuation and
surplus funds while preserving the safety of capital. transportation logistics of resources are also becoming more
challenging. All these factors are resulting in project cost escalation
Business Review and delays.
Oil and Gas Exploration & Production (E&P) About 88% of world’s proven oil reserves of 1,148 billion barrels
Sector overview are under the control of national oil companies (NOCs) with no
equity participation by international oil companies (IOCs) in them.
High commodity prices and robust demand for oil and gas resulted IOCs in the western part of the world now control less than 10% of
in the E&P industry experiencing a record year. IPE Brent prices the world’s oil and gas resource base.
averaged at $ 82.8 /bbl during FY 2007-08 as against an average of
$ 64.2 /bbl in FY 2006-07. Henry Hub natural gas price averaged at In spite of these challenges, profitability of E&P companies has
$ 7.4 /MMBTU for FY 2007- 08. One of the major events in the been strong in recent times, driven largely by record oil prices.
industry was crude oil prices crossing an all time high of $ 100 /bbl. During the past five years, oil prices have increased from an average
The energy demand was driven by secular global growth. Supply of $ 25 /bbl in 2002 to $ 72 / bbl in 2007, an increase of 188%.
chain pressures also led to price escalations. In another significant More recently, oil prices have moved to as high as $ 120 /bbl.
RELIANCE INDUSTRIES LIMITED 17
Henry Hub gas prices have also increased from $ 3.34 /MMBTU in • Macro-economic factors
2002 to the average price of $ 7.4 /MMBTU in 2007.
• Growth of end-user segments
Development of a global natural gas market continues
• Cost of gas vis-à-vis alternate liquid fuels
Gas accounts for 34% of the energy basket in the Former Soviet
Union region and in Europe, 24% in USA, 15% in Japan and 14% • Regulation and policy making
in Korea. The world average is 24%. In India, gas accounts for just • Environmental concerns
8% of the energy basket constrained by limited availability of gas
and nascent transmission and distribution infrastructure. • New uses of natural gas (for example, co-generation)
The share of gas in the global energy mix is set to increase primarily Reliance’s E&P portfolio
driven by the power sector, industrial sector, city gas distribution Reliance with its subsidiaries is India’s largest exploration acreage
and gas-to-liquid opportunities. Gas is preferred because of its cost holder in the private sector with a portfolio comprising the
competitiveness and environmental advantages over other fossil following:
fuels. Gas is also more convenient to use vis-à-vis other
fossil fuels. • 30% interest in Panna-Mukta and Tapti (PMT) fields
Accelerating global demand, increasing import dependency, and • 33 exploration blocks awarded under the NELP and Pre-NELP
the build-out of LNG infrastructure are supporting price discovery. licensing rounds
Industry expectations suggest continued strength in global GDP
over the long-term driven by developing economies of Asia and • 5 coal bed methane (CBM) blocks
the Middle East and a 40% increase in LNG liquefaction capacity • Exploration interests in Yemen, Oman, East Timor, Kurdistan
over the coming 3 years addressing 11% of global demand by 2010. (Iraq), Colombia and Australia
Powerful trends are supporting demand growth and prices in both Reliance’s ambition is to be a global energy major with a significantly
the developed and developing nations. In 2007-08, Henry Hub diversified upstream portfolio. The Company’s focus on training
Prices averaged $ 7.4 / MMBTU. In Europe, the NBP prices people, processes and technology is expected to help in
averaged 40 pence per therm which is the equivalent of around strengthening its commitment towards exploration, development
$ 8 /MMBTU. The Asian LNG prices were $ 9.5 /MMBTU based and production activities.
on average for prices in Japan and Korea. Long term contracts
signed by China for LNG are at around $ 10 /MMBTU (FOB).
These contracts are for 2-3 MMTPA and the first sale is expected
to commence in the year 2013-14.
In the developed world, natural gas is the only near-term generation
option to bridge the energy gap. A similar trend is clear in Asia and
Australia. In the developing world, rapid economic growth is fueling
energy demand in all its forms. Natural gas has been a niche fuel,
not easily available due to infrastructure constraints and domestic
productive capacity. However, the price of alternative fuels
(particularly crude products) is supporting a re-evaluation of energy
source, which in many cases favors natural gas. While nuclear and
renewable remain the long term “green” solutions of choice, natural
gas will remain the primary near-term alternative to meet the
demand for growth in generation in developed and developing
Natural Gas in India
The landscape of the Indian natural gas market is set to witness
significant change. Natural gas currently accounts for around 8%
of the total energy mix in India as against the global average of
24%. However, with increased availability and spurt in transmission
and distribution infrastructure, the share of natural gas in the energy
mix is set to rise. For 2007-08, gas production is expected to be 88
MMSCMD and LNG consumption is estimated at 33 MMSCMD.
The major demand centers, excepting the north-eastern market
which is not connected to the transmission network of the rest of
India, have been considered for making demand projections. The
un-met demand for natural gas is estimated to increase from about
113 MMSCMD (FY 2007-08) to 396 MMSCMD by the year 2022.
The following factors are expected to drive the increased
consumption of natural gas in India:
18 Touching lives. Transforming India.
Performance of PMT The development plans of South West Panna (SWP) and Panna K
(PK) fields have been approved and the Engineering, Procurement,
The Tapti expansion project called “New Revised Plan of Installation and Commissioning Contracts (EPIC) are in progress.
Development” was carried with the objective of development of Production from SWP and PK fields is expected in 2009.
Mid Tapti field and expansion of Central Processing/Compression/
Export capacity. This included a new Compression and Processing The Panna-Mukta fields produced 1,910,000 tonnes of crude oil
Platform (TCPP), a Second Tapti Flare Platforms (STFP), a new and 2,030 MMSCM of natural gas, reflecting a growth of 9% and
9 slot well head platform (MTA), intra-field flow lines and an 22% respectively. The Tapti field produced 3,365 MMSCM of gas
export pipeline. On completion of this project, additional and 232,000 tonnes of condensate, reflecting a growth of 51% and
production from Tapti has stabilized at 6 MMSCMD of gas and 82% respectively.
4,500 BOPD of condensate.