1235994360125 02032009

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1235994360125 02032009

  1. 1. RIL – RPL MergerAnalyst Presentation 2 March 2009
  2. 2. Business Highlights 2
  3. 3. Reliance Industries India’s largest private sector enterprise with strong financials: Global Ranks (Fortune Global 500 ) – Revenue exceeds $ 33 billion* Criteria Global Ranking – Exports of about $ 21 billion* 2008 2007 – EBITDA of over $ 5 billion* Net Sales 206 269 Significant global player in Refining and Net Worth 161 190 Petrochemicals - contribute 98% to revenues Total Assets 273 299 RIL at an inflection point – Production of gas and oil from KG D6 to Net Profit 103 179 double India’s gas availability – Investment in a world-class, complex refinery asset RIL is India’s most valuable company 3* 9 Months FY09 figures annualized
  4. 4. Robust Growth Since IPO CAGR % CAGR % FY 1977 FY 2002-03 FY 2007-08(in US$ Million) 31 Years 5 YearsTurnover 76 13,701 34,713 22% 20%Net Profit 3 864 3,804 26% 35%Cash Profit 5 1,593 6,282 26% 32%Total Assets 38 13,422 37,348 25% 23%NetWorth 11 6,387 20,311 27% 26%Exports 7 2,424 20,811 29% 54%Market Cap* 11 8,129 39,507 30% 37%Data of as on March 31 each year; * Market Cap data as on 27th February 2009Consistent growth through business cyclesNet Profit increase greater than 20% per annum in any 5-year period since IPO 4
  5. 5. RIL Refining – Mantras for Success In 1999, RIL commissioned a large, world class, complex refinery in record time at competitive capital cost Created industry benchmarks across various operating parameters Product slate designed to cater to fast growing transportation fuels segment and stringent product specifications, across regions Processed over 80 heavy/sour crude variants from across the world Consistently demonstrated higher GRMs compared to global benchmarksRIL has an enviable track record in its decade long refining operations 5
  6. 6. RIL: Unparalleled Refining Efficiency Average Capacity Utilization (%) - 2001-2008 99% 88% 86% 86% Asia Pacific Europe North America RILSource: BP Statistical ReviewPremium quality of assets enabled consistent highest operating rate 6
  7. 7. RIL’s Refining Performance RIL GRM Singapore Complex Premium over Sing 16 10 14 8 12 US$/bbl 10 6 8 6 4 4 2 2 0 0 Q1 FY03 Q3 FY03 Q1 FY04 Q3 FY04 Q1 FY05 Q3 FY05 Q1 FY06 Q3 FY06 Q1 FY07 Q3 FY07 Q1 FY08 Q3 FY08 Q1 FY09 Q3 FY09Cracking margins Source: Reuters / Company Data High quality of refining asset and operations resulting in consistent and superior performance across business cycles 7
  8. 8. RPL Highlights Crude processing capacity of 580,000 barrels/day, completed in a record time of 36 months Higher complexity: Nelson Complexity Index of 14.0 – Among the top 5% refineries globally with capability to process ultra- heavy crude (Average API of 24) – Built to supply ultra-clean fuels to meet the world’s evolving needs – Focus on high growth transportation fuel segment Lowest US$/complexity-barrel cost among recently built refinery projects Crude refining commenced on 25th Dec ‘08 and first parcel of product exported in Jan ‘09World class refinery with minimal project risk; ready to deliver superior returns 8
  9. 9. Merger Highlights 9
  10. 10. Merger Rationale Unlock synergies from combined operations – Crude sourcing, Product placement, Supply Chain Optimization Greater flexibility in operations planning Expansion of refined product range Optimized utilization of secondary process units and infrastructure Efficient utilization of combined cash flows Integrated energy companies consistently get higher valuations vis-à-vis pure refiners; Mitigate Holding Company discount EPS accretiveRIL to enhance its competitiveness in energy value chain 10
  11. 11. Merger Rationale Diversified businesses Diversified businesses State of the art Refinery State of the art Refinery Oil & gas, refining and Oil & gas, refining and Superior product slate Superior product slate marketing, marketing, with higher margins with higher margins petrochemicals, petrochemicals, Operating in cyclical organized retail and Operating in cyclical organized retail and industry industry developmental of SEZ developmental of SEZ Wider avenues for fund Wider avenues for fund deployment deployment Amalgamated Entity Amalgamated Entity RPL transforms into a diversified business with less cyclicality RPL transforms into a diversified business with less cyclicality RIL shareholders benefit from participating in state of the art RIL shareholders benefit from participating in state of the art refinery without execution risk refinery without execution risk Mitigate holding company discount Mitigate holding company discount Integrated company valuation versus standalone refinery Integrated company valuation versus standalone refinery 11
  12. 12. Integrated vs Standalone - Historical PE Ratio EV / EBIDTA30 10-Yr Avg. Premium of 26% 16 10-Yr Avg. Premium of 26% 5-Yr Avg. Premium of 18% 14 5-Yr Avg. Premium of 16% 1220 10 8 610 4 2- - 97 98 99 00 01 02 03 04 05 06 07 08 19 19 19 20 20 20 20 20 20 20 20 20 97 98 99 00 01 02 03 04 05 06 07 08 19 19 19 20 20 20 20 20 20 20 20 20 Pure Refiners Integrated Pure Refiners Integrated Source: BloombergOn a longer-term, sustainable basis, markets ascribe superior valuations tointegrated energy companies vis-a-vis standalone refiners 12
  13. 13. RIL vs RPL - Historical Indexed Stock Performance 350 300 250 200 150 100 50 Sensex RIL RPL 0 06 07 08 07 08 09 06 07 08 6 7 8 -0 -0 -0 v- v- v- b- b- b- g- g- g-ay ay ay No No No Fe Fe Fe Au Au AuM M M Source: BloombergRIL and RPL have outperformed the Sensex since RPL IPORIL’s superior performance relative to RPL demonstrates its evolution as aworld-class integrated energy company 13
  14. 14. Current Valuations PER (x) EV/EBIDTA (x) PBV (x) CY09 / CY10 / CY09 / CY10 / CY09 / CY10 / FY09 FY11 FY09 FY11 FY09 FY11Reliance Industries 9.7 7.9 7.5 6.1 1.5 1.2Reliance Petroleum 7.0 5.0 6.1 4.4 2.3 1.7Asian Refiners 9.9 7.4 6.5 4.1 1.3 1.1European Refinerw 10.7 9.5 4.7 4.5 0.7 0.6US Refiners 8.8 6.6 4.7 3.6 1.4 0.9Global Refining Average 9.8 7.8 5.3 4.1 1.1 0.9Asian Integrated 11.4 9.2 6.6 5.1 1.2 1.1Europen Integrated 13.6 9.8 5.8 4.5 1.6 1.5US Integrated 16.9 8.9 5.7 4.0 1.5 1.4Global Integrated Cos. 14.0 9.3 6.0 4.5 1.4 1.3 Source: Research ReportsPremium over Pure Refiners 43% 19% 14% 11% 28% 49%Source: Bloomberg / Analyst Research; Based on 27-Feb-09 Prices Current valuation reflects premium for integrated players across all parameters 14
  15. 15. Merger Details Appointed date of 1st April 2008 Merger ratio of 1 share of RIL for every 16 shares of RPL RPL shares held by RIL to be cancelled. No fresh treasury stock created RIL to issue 6.92 crore shares to RPL shareholders 4.4% increase in equity base from Rs 1,574 crore shares to Rs 1,643 crore Promoter holding in RIL will reduce from 49% to 47% 15
  16. 16. Advisors Valuation Advisors – Ernst & Young Pvt. Ltd. And – Morgan Stanley India Co. Pvt. Ltd. Transaction Advisors – J.M. Financial Services Pvt. Ltd. and – Kotak Mahindra Capital Co Ltd. Fairness Opinion – DSP Merrill Lynch Ltd. (for RIL) and – Citigroup Global Markets India Pvt. Ltd (for RPL) Legal Advisor – Amarchand & Mangaldas & Suresh A. Shroff & Co. Tax Advisor – PriceWaterhouse and Coopers Pvt. Ltd. 16
  17. 17. RIL Shareholding Dec-08 Post MergerPromoter Group 49.0 47.0Held by RIL Subsidiaries 6.0 5.7Banks and FIs 6.5 6.9Mutual Funds 2.5 2.7FIIs 15.5 15.1GDRs 3.7 3.6Public 16.7 19.0TOTAL 100.0 100.0Merger results in the creation of the world’s largest shareholderfamily of around 3.7 million shareholders; Promoters diluted by 2%. 17
  18. 18. Impact of Merger Proposal RIL among top 10 private sector refining companies globally Will own 2 of the world’s 3 largest, most complex modern refineries Will be the world’s largest producer of ultra-clean fuels at a single location Among 50 most profitable companies globally Among five largest producers of PolypropyleneProviding the growth platform for creating value-accretive downstreamopportunities 18
  19. 19. Post Merger Highlights 19
  20. 20. World’s Largest Refining Companies6.0 5.6 (In Mn BPD)5.0 4.64.0 3.8 3.33.0 2.7 2.7 2.7 2.6 2.4 2.4 2.0 2.02.0 1.7 1.5 1.3 1.3 1.21.00.0 l BP l L s ro as l t n il ta c s n el co s m Oi ef RI leo ob ili p pe ro no ra le Sh To Br leu sn m ev on lI nM no Va tro ica Ph tr o ra Ro t ro na Ch pp Si Pe xo iA ex Pe o tio Pe Ni ccEx sM ud Na no a Sa leo in Co Ch tr o Pe Source: Oil & Gas Journal State-owned Refining CompanyRIL to be amongst Top 10 non-state owned refining companies globallyRIL has doubled its refining capacity with focus on scale and complexity 20
  21. 21. World’s Most Complex Refineries CDU Nelson Company Location Capacity Complexity I ndex (KBPS D)CONOCO IMMINGHAM 170 16.8ULTRAMAR DIAMOND MARTINEZ 108 16.6SHELL / TEXACO MARTINEZ 151 15.1EXXONMOBIL TORRANCE 130 14.9BP-AMOCO TEX.CITY 433 14.2RIL - SEZ JAMNAGAR 580 14.0CITGO (PDVSA) CORP.CRISTEX 133 13.8CHEVRON USA RICHMOND 229 13.7BP-AMOCO CORP TOLEDO 137 13.4OBERRHEINISCHE KARLSRUHE 116 13.4VALERO ENERGY CORP. BENICIA 128 13.3SHELL/TEX / S.ARAMCO DEL.CITY 140 13.1MARAVEN CARDON 286 12.8PHILLIPS CO. BORGER 125 12.7LYONDELL CITGO REF HOUSTON 265 12.7CHEVRON USA INC. PASCAGULAMSS 295 11.9SHELL OIL CO. USA DEER PK 268 11.4RIL - EOU JAMNAGAR 660 11.3CITGO PETR.CORP LAKE CHARLOU 320 11.2KOCH REFINING CO. ROSEMOUNT 262 11.1Total 4,936Source: IEAReliance owns 25% of World’s most complex refining capacity 21
  22. 22. Top 5 Complex Refineries Globally CDU Capcity Nelson ComplexityCompany Location kbpsd IndexBP Texas City 433 14.2RIL SEZ Jamnagar 580 14.0RIL EOU Jamnagar 660 11.3Citgo Lake Charles 320 11.2Exxon Mobil Baytown 428 10.9Exxon Mobil Beaumont 320 10.8Source: IEAReliance owns 2 of the 3 largest complex refineries 22
  23. 23. Creating the Refining Hub of the World Capacity in Mn BPD Nelson Complexity RIL, India 1.24 12.6 Paraguana, Venezuela 0.94 7.1 SK Corp, S. Korea 0.82 4.6 LG -Caltex, S. Korea 0.68 4.9 XOM, Singapore 0.61 8.8 XOM, Baytown, USA 0.57 12.6 Saudi Aramco 0.55 3.0 Formosa, Taiwan 0.52 6.2 S-Oil Corp, S. Korea 0.52 6.9 XOM, Baton Rouge 0.50 12.3 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 Source: Oil & Gas Journal, Dec’ 08RIL will have the largest and the most complex refining capacity atsingle location in the world 23
  24. 24. Global Polypropylene Rankings 2008 Capacity 2010 Capacity Rank (In MMTPA) Capacity Rank 5.8 1 Basell 6.1 1 3.7 2 SINOP C E 4.6 2 1.9 8 C C NP 3.2 3 2.0 7 SABIC 2.9 4 1.9 9 RIL 2.8 5 2.6 3 Total 2.7 6 2.1 6 Formosa 2.3 7 2.3 4 Ineos 1.7 9 2.2 5 Exxon Mobil 2.3 8 1.3 10 Abu Dhabi Govt 1.6 10Source: CMAI 2009 Merger takes RIL in to a Top 5 PP producer globally 24
  25. 25. Jamnagar – A Refinery Super-site Dedicated Storage Infrastructure - Captive Products Jetties 226 Tanks and 4.6 Mn MT capacityDedicated deepwater portcapable of turning around RIL EOU Refinery RIL SEZ RefineryVLCC & ULCC in 24/36 hours 660 KBPSD 580 KBPSD Road loading Rail loading Dedicated De-sal / Captive 1000 MW Power DM Plant Gas / LPG Pipeline 25
  26. 26. Summary India’s largest ever merger RPL shareholders to get 1 share of RIL for every 16 shares of RPL RIL’s holding in RPL to be cancelled. No fresh treasury stock created RIL to be among top 10 private sector refining company globally RIL to be among the world’s largest producer of Ultra Clean Fuels Merger to unlock greater efficiency from scale and synergies Merger to be EPS accretive; AAA rating reaffirmed by CRISIL RIL to have 3.7 million shareholders 26
  27. 27. Thank You

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