RIL Q4 08 presentation

8/7/2019 RIL Q4 08 presentation

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April 21, 2008

FY 2007-08 Results



2www.ril.com

Forward Looking Statements

This presentation contains forward-looking statements which may be identified

by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,”

“intends,” “projects,” “estimates” or other words of similar meaning. All

statements that address expectations or projections about the future,including, but not limited to, statements about the strategy for growth, product

development, market position, expenditures, and financial results, are forward-

looking statements.

Forward-looking statements are based on certain assumptions and

expectations of future events. The companies referred to in this presentation

cannot guarantee that these assumptions and expectations are accurate or

will be realised. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements.

These companies assume no responsibility to publicly amend, modify or

revise any forward looking statements, on the basis of any subsequent

developments, information or events, or otherwise.



3www.ril.com

Contents

Business Review

Business Review

Summary

Summary

Financial Performance

Financial Performance

Performance Highlights




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E&P

Days of ‘easy’ oil over – paradigm shift in prices

9 additional oil and gas discoveries in several blocks

KG D6 projects (D1, D3 gas and MA oil) on schedule for commissioning this year

Development plans for NEC-25 and MA oil field (KG-D6) submitted to DGH.

Development plan for CBM blocks approved

Sr.No.

Block & Well Well Name Oil/GasDiscovery

1 KG- D6 R1 Gas

2 CY-D5 A1 Oil & Gas

3 KG-D4 MD1 Oil

4 KG III 5 P1 Gas

5 KG III 5 J1 Gas

6 KG V D3 A1 Gas

7 NE-25 J1 Gas

8 GS-01 B1 Gas9 KG V D3 B1 Gas



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R&M

Refining complexity, higher yields, superior product mix and wide crude slate enabled

RIL to achieve superior GRM

GRM at $15.5/bbl for the quarter and at $15/bbl for the full year

Strong product cracks in Asia result in high Singapore complex margins

Petrochemicals

Strong domestic demand for polyester (up 17%) and polymer (up 15%) support

volume growth

Polymer margins remain strong despite high feedstock cost

Standalone polyester margins improve significantly – chain margins impacted on

account of significant margin contraction in PX



Financial Performance FY 2007-08Financial Performance FY 2007-08



Financial Performance FY 2007-08Financial Performance FY 2007-08



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Financial Results – FY 2007-08

Robust Operating Performance – Net Profit Growth of 38%

4Q FY08 3Q FY08 4Q FY07

%

Change

over 4Q

FY07

FY08 FY07%

Change

9,645 9,103 6,735 43% Turnover 34,713 27,227 27%

1,572 1,541 1,218 29% PBDIT 6,032 4,722 27%

975 2,050 726 34% Net Profit 4,850 2,747 77%

975 985 726 34%Net Profit [excl.exceptional item]

3,804 2,747 38%

0.7 0.7 0.5 EPS (US$) [excl.exceptional item]

2.6 1.9

(In USD Million)



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Financial Results – FY 2007-08

Robust Operating Performance – Net Profit Growth of 28%

4Q FY08 3Q FY08 4Q FY07

%

Change

over 4Q

FY07

FY08 FY07

%

Change

38,697 35,880 29,276 32% Turnover 139,269 118,354 18%

6,308 6,074 5,293 19% PBDIT 24,201 20,525 18%

3,912 8,079 3,156 24% Net Profit 19,458 11,943 63%

3,912 3,882 3,156 24%Net Profit [excl.

exceptional item]

15,261 11,943 28%

26.9 26.7 21.7EPS (Rs.) [excl.exceptional item]

105.0 82.2

(In Rs. Crores)



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Segment Results

4Q 3Q 4Q Chg. Over FY08 FY07 Change

FY08 FY08 FY07 4Q FY07 YoY

Refining

7,150 6,636 4,837 48% Revenues 25,110 19,768 27%

708 663 523 35% EBIT 2,575 1,777 45%

9.9% 10.0% 10.8% EBIT (%) 10.3% 9.0%

15.5 15.4 13.0 GRM (US$ / bbl) 15.0 11.7

Petrochemicals

3,519 3,224 2,892 22% Revenues 13,210 11,588 14%365 451 318 15% EBIT 1,773 1,513 17%

10.4% 14.0% 11.0% EBIT (%) 13.4% 13.1%

Oil and Gas

206 192 126 63% Revenues 673 470 43%111 98 70 59% EBIT 375 295 27%

54.0% 51.1% 55.3% EBIT (%) 55.6% 62.7%

In US$ Million

Strong market dynamics drive refining performance; high naphtha

cracks impacts petrochemical margins

(In US$ Million)



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Segment Results

4Q 3Q 4Q Chg. Over FY08 FY07 Change

FY08 FY08 FY07 4Q FY07 YoY

Refining

28,686 26,154 21,025 36% Revenues 100,743 85,932 17%

2,839 2,614 2,275 25% EBIT 10,332 7,724 34%

9.9% 10.0% 10.8% EBIT (%) 10.3% 9.0%

15.5 15.4 13.0 GRM (US$ / bbl) 15.0 11.7

Petrochemicals

14,119 12,706 12,572 12% Revenues 53,000 50,371 5%1,466 1,777 1,381 6% EBIT 7,113 6,578 8%

10.4% 14.0% 11.0% EBIT (%) 13.4% 13.1%

Oil and Gas

828 758 548 51% Revenues 2,702 2,043 32%

447 387 303 48% EBIT 1,503 1,281 17%

54.0% 51.1% 55.3% EBIT (%) 55.6% 62.7%

In Rs. Crore

Strong market dynamics drive refining performance; high naphtha

cracks impacts petrochemical margins

(In Rs. Crore)



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Segment EBIT Bridge – FY08 Vs FY07

Higher EBIT due to higher operating profit from all three operating segments -

refining, petrochemicals and oil & gas

FY07 FY08

EBIT Variance Rs. Crore

R& M

Operating

Profit

OthersPetchem

Operating

Profit

Net Impact

Rs. 3,352 Crore

Depreciation

15,636

18,988(32)

2,639366

45

Oil & Gas

Operating

Profit

334





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Oil & Gas

1.7%

Others

0.5%

Refining

64.1%

Petchem

33.7%

Oil & Gas

7.9%

Others

0.2%

Refining

54.4%

Petchem

37.5%

Business Mix for FY08

Refining and petrochemicals contributed 98% of revenues and 92% of EBIT

Revenues FY08 EBIT FY08



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Financial Ratios – FY08

Ratios Mar-08 Mar-07

Net Debt : Equity 0.35 0.34

Net Gearing 22% 25%

Interest Cover 12.3 11.9

Weighted Avg. Cost of Debt (%) 5.9 7.1Avg. Maturity of Debt (years) 5.0 5.4

Forex Debt (%) 85.0 73.0

ROCE (%) 20.1 20.5ROE (%) (Adjusted) 23.0 24.0

Strong balance sheet with conservative financing norms



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Capex – FY08

4Q

FY08

3Q

FY08

4Q

FY07 (in US$ M illion) FY08 FY07

855 1,236 758 Oil & Gas (E&P) 3,351 1,317

232 136 76 Refining & Marketing 663 329

18 57 22 Petrochemicals 126 106

294 136 15 Common 721 314

1,399 1,565 871 Tota l 4,861 2,066

Almost 70% of the capex incurred in Oil & Gas business

Cash profits fully re-deployed in existing businesses



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RIL Financial: 5 Year Trends

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

FY04 FY05 FY06 FY07 FY08

Revenues

0

5,000

10,000

15,000

20,000

25,000


0

4,000

8,000

12,000

16,000


EBITDA

PAT

(Rs. Crores)

CAGR

– 21%

CAGR

–23%

30% CAGR inPAT

30% CAGR inPAT



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0%

5%

10%

15%

20%

25%

30%


ROCE ROE

RIL Financial: 5 Year Trends (Contd.)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000


Market Cap. (Rs. Crs.) ROCE - ROE

Consistent performance across all key metrics

CAGR –54%



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Stock Performance

Significant out-performance over benchmark indices

Source: Bloomberg



Business ReviewBusiness Review



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Exploration & Production (E&P)Exploration & Production (E&P)



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E&P Environment

Energy demand driven by secular growth

– OECD slowdown mitigated by demand

from Middle East and Emerging

Economies Energy supply challenge - production from

existing fields declining at about 5%

Energy prices to remain firm

– Era of Easy oil finds are over

– High F&D costs in Frontier Areas

– Resource Nationalism

Despite high prices, demand is sustained

– IEA expects oil demand to grow by 1.5

MMBD in 2008

Supply chain continues to be tight

High prices and tight supply chain to continue

90

100

110

120

May-08

Jun-08

Jul-08

3Q 08

4Q 08

1Q 09

2Q 09

3Q 09

4Q 09

($/bbl)

B r e nt A ve ra ge

IPE Brent Futures

IHS/CERA Upstream Capital Costs Index



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Limited access to New Resources

Source:Industry Reports

1960s

FullInternational Oil

CompanyAccess

85%

2008(a)

SovietReserves

14%

National OilCompany Reserves

1%

No Equity AccessFull Equity Access(c) Limited Equity Access

Full International OilCompany Access

16%

NationalOil Company

Reserves65%

LimitedInternational

Access(b)

19%

Gas Reserves split between NOCs and

IOCs

IOCs NOCs

IOCs 9%

NOCs 91%

Resource Nationalism - larger state

control of oil and gas resources

– Restricted access to large

resources– Increasing fiscal terms

IOCs had access to 85% of the worlds

oil reserves in the 1960s - current

share at about 16%

NOCs had access to 1% of the world’s

oil reserves in the 1960s – now at 65%

Access to conventional low cost

prospects a challenge

IEA expects NOCs will dominate oil

production by 2030



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New Finds are in Frontier areas

– Arctic, Deepwater, Oil Sands, Shale

Exploitation of Deepwater resources remain low

–

Deepwater resources aggregate to 300Billion barrels

– About 30% discovered and only 2.5%

exploited

– 13 deepwater basins being developed

around the world

Long Lead times to monetisation- 8-10 years

Technology Challenges

– Subsurface

– Drilling

– Field Development

– Production

Harsh Environment for Operations

New Resources in Challenging Frontiers

Future oil and gas deepwater potential in the world

Deepwater E&P is characterized by technology challenges and long lead times

Cutting / Breaking

Edge Technologies !

DEPTH

COSTS

DEPTH

COSTSCOSTS

DRILLING COSTS

Expensive

Cutting / Breaking

Edge Technologies

DEPTH

COSTS

DEPTH

COSTSCOSTS

DRILLING COSTS



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0

400

800

1200

1600

2006 2015 2030

(MMSCD)

China India ROW

Global LNG Demand

8

10

12

14

16

18

20

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Asian LNG HH NBP Crude Oil

Rising Oil Prices& Tight LNG Supply

Addl LNGCome onStream

New Plateau:Incr Globalisation of LNG

Trade

Key Trends in LNG

Tight markets and record prices for long-term contracts at above $ 10 /MMBTUSource: Platts, Energy Intel

Asian LNG prices to rise with demand,

cost escalation and a tight supply market

New and future LNG contracts expected

to have higher crude linkages

General trend of shorter contracts

Spot LNG prices still high due to strong

Asian demand

– Asian cargoes for March delivery at$15 -17/ MMBTU

– Deal between a Japanese utility and

with Abu Dhabi at $13/MMBTU

– Petrochina contract with Australia at$10/MMBTU

LNG prices ex-ship expected to range

between $8/mmbtu to $18/mmbtu



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Indian Business Environment

Energy demand mirroring growth in

economy

Gas demand set to treble by 2012

from current level of 110 MMSCMD -

supply unlikely to keep pace

Dependence on LNG imports to

increase - spot LNG cargoes at$10+/mmbtu

Investments to spur connectivity and

demand growth88%

61%

38%

12%

19%

40%

20% 22%

2001 2006 2009E

APM PSC LNG

* BP Statistical Review, MOPNG, Planning Commission’s report – Integrated Energy Policy, Aug’06

179196

226

261280

120

190 197 202

110

81

0

50

100

150

200

250

300

2008 2009 2010 2011 2012

Total Gas Demand Total Gas Supply Current Consumption

Indian gas sector poised for vibrant growth

Domestic Gas Scenario



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E&P Strategy

Grow domestic business and also look beyond

– Early development to supply into Indian markets

– Reserve accretion in India and other countries

Transfer competencies to replicate success

– Business structure and processes to support organic and inorganic

growth globally

Portfolio diversification - onshore, shallow, new plays and mature assets

Enhance technical skill-set and experience base

– Build world-class technology centers for deepwater etc. with local

talent pool to build supply chain capacity

– Focusing on growth and unlocking value in current portfolio

Build portfolio and competence to be a leading upstream player



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RIL Upstream Business

Integrated model across Exploration & Production

Largest acreagein the privatesector

Domesticportfolio of 33 oiland gas blocks

5 CBM blocks PMT (Pre-

NELP) International

blocks

Exploration

KG-D6 gas KG-D6 oil NEC25 gas CBM gas PMT

Development

30% stake inPMT fields Joint

operator 17MMscmd

of gas prod.and40,000bopdof oil (gross)

Oil production inYemen

Production

East –Westpipeline networkunder development

Plans to createnational gas grid

Pipelines

Bulk gasmarketing

Development of CGD projects

Marketing



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Key Differentiating Factors for RIL

Large acreage especially in the emerging hydrocarbon region along the

east coast of India

Pioneering exploration and development work in India’s deepwater basins

Commercial discoveries in four of India’s major offshore basins in the

recent past

Efficient project execution leveraging human resources and cutting-edge

processes and technologies

– Completing a competitive development project which is the amongst

the fastest deepwater oil and gas projects in the world

Ongoing focus on safety performance and minimize environmental impact



30www.ril.com

RIL E&P Business – Journey So Far

Exploration

KG D6

NEC25PMT

Yemen

KG D6 (D1/D3 &MA)

NEC25

KG III 5 & 6

Yemen

Acreage /

Portfolio

Economic

Discoveries

Commercial

Fields

InDevelopment

KG D6

NEC 25

GS 01CY D5

KG -V-D3

KGD4

KG Blocks

NEC Blocks

MN Blocks

CY Blocks

GS Blocks

CB Blocks

KK Blocks

International

Blocks

Appraisal

Under Production

KG D6

PMT

Yemen

Acquisition Development Production

& Marketing



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63%3863TOTAL

--9Relinquished

76%1621Shallow Water

44%49Deep Water -Others

86%1824Deep Water - D6

SuccessRate

SuccessDrilled

RIL – Domestic Portfolio

Amongst the fastest growing private sector E&P companies in the world

DescriptionNo. of

Blocks

Acreage -

'000 Sq KM

Deepwater

Acreage %

PMT 2 2.7Pre NELP 4 22.5

Nelp 1 5 38.7 59%Nelp 2 2 14.6Nelp 3 9 113.5 99%Nelp 4 1 25.6 100%Nelp 5 5 51.5 99%Nelp 6 7 76.1 100%

CBM 5 3.9

International 11 78.8 70%

51 427.8 80%

Success Ratio



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RIL - International Portfolio

International footprint with focus on Asia-Pacific & Latin Americanopportunities

Consolidated presence in Middle East

– Plan to drill Oman Block 18 – 2H FY2008-09

Tapping opportunities in Columbia and Peru

– Signed a deal in Peru for exploration



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Basin Location Block & Well Disc. No. Discovery

Guj.

Saurashtra

SW GS-01 - B1 D33 Gas

Godavari DW KG- D6 - R1 D34 Gas

Cauvery DW CY-D5 - A1 D35 Oil & Gas

Krishna DW KG-D4 - MD1 D36 Oil

Krishna SW KG III 5 - P1 D37 Gas

Krishna SW KG III 5 - J1 D38 Gas

Krishna DW KG V D3 - A1 D39 Gas

Mahanadi DW NEC-25 - J1 D40 Gas

Krishna DW KG V D3 - B1 D41 Gas

SW = Shallow water DW = Deep water

Domestic Exploration Performance

Discoveries have opened new vistas for further exploration

Discoveries in 2007-08



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Discoveries in FY08

KG basin Discoveries:

– Extension of the 'Biogenic Gas

Corridor' across the basin

Cauvery Discovery

– Field Delineation and reservoir

characterization underway

– Further prospecting underway to

establish the extents of this play

Gujarat Saurashtra Discovery

– Discovery establishes existence of

a petroleum system– Extension of play fairway is being

evaluated

Global leadership in success rate – 64%



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Rig Fleet Update

Day Rates of Deepwater Rigs

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 2007 2008 2009 2010

Market Average Rate

RIL Average Contract Rate

‘000 US$ per day Current fleet - 4 rigs

– 2 deep / ultra deepwater

– 2 Jack-ups

Rigs contracted for FY 2009

– 3 deepwater

– 1 onshore rig

3 more deepwater rigs

contracted – currently under

construction

Superior contracting strategies driving performance

Source: Industry Research



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Accelerating Monetisation of reserves in India

Source: Top 170 E&P Projects to Change the World (Goldman Sachs, February 2007)

0

2

4

6

810

12

14

16

18

20

22

24

KG-D6-RIL

Project A

Project B

Project C

Project D

Project E

Project F

Project G

Project H

Project I

Project J

Project K

Project L

Project M

Project N

Project O

Project P

Project Q

Project R

Project S

Project T

Project U

Project V

Project W

Project X

Project Y

Project Z

Project AA

Field – Operator

Time (Years)

Global Average of 9 Years

Deepwater Fields – Estimated Time From First Discovery to Production



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Operating under severe resource constraints

0

100000

200000

300000

400000

500000

600000

700000

800000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source:Deutsche Bank

Market for deepwater rigs is expected

to remain tight in the coming years

– New deep water discoveries

– Limited Vendors globally

– High oil prices supporting record

upstream spend

Under these circumstances

– RIL has added 3 rigs to its fleet to

speed up its exploration and

development efforts– They have been contracted at very

competitive rates

Drill Ship Day Rates (> 7500 Feet)



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D1 D3 Gas Fields - Project on Track for First Gas by2H 2008

■ Drilling of wells: 17 drilled

■ Well completions hardware delivered

■ Two rigs deployed for well completions

■

Lower well completions: 5 wellscompleted

■ Upper well completions commenced.

Drilling & WellCompletions

OffshoreSubsea, CRP

OnshoreTerminal

■ XMT: 6 nos. recd at site. 3 No.installed. Progressive deliveries up toAug 08.

■ All the installation barges/supportvessels mobilized/operating

■ CRP:

– Jacket, deck & LQ installationcompleted.

– Hookup & pre-commissioning

commenced. Target completionMay 08.

■ Subsea Installation:

– Structures: All 11 installed

– Pipe laying: Total 50 % completed

– Dredging & pipe-laying in river section nearing completion

– 2 Major Infield Umbilicals layingcompleted. Target completion for major umbilicals by end Jun 08

■ LFP to OT Pipe laying: 80%completed. Target installation

completion by end May 08

■ Structural: 78% completed

■ Pipe rack erection: 100% completed

■ All major equipment /packages at site■ AG Piping fabrication – 70 %

completed.

■ AG Piping erection – 62& completed

■ Installation of all major equipment/packages completed.

■ Field Fab Tanks – Installationcompleted. Testing in progress.

■ Infrastructure facilities in operation:

– Construction jetty

– Haul road from LFP to OT

■ Construction of buildings in

infrastructure area: advanced stage of completion.

■ Transformers completed and HT/LVpanels nearing completion.

■ Instrumentation – Commenced.

Drilling: 94% of planned wellscompleted Offshore Facilities: 79% complete Onshore Facilities: 83% complete



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Sub Surface, Drilling andWell Completions

Sub Sea InstallationOnshore Terminal and

Infrastructure Facilities

KG D6 - D1 D3 Gas Field Development

Development Concept: Full Sub-sea Production System with Shallow Water

Control & Riser Platform and Onshore Processing. Shallow Water CompressionPlatform at a Future Date



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Tog Mor Laying pipelines



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Offshore Installation Works

Audacia – Stringer

Stemat 82 – Umbilical Laying



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Lorelay laying pipelines



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Lorelay installing PLET



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Sub-Sea Installation Activities: Express

SDA2 Rigging SDA2 in Splash Zone

ROV Monitoring during Installation



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Installation of Deepwater PLEM



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CRP Installation Completed

NORTH DECK LOAD OUTNORTH DECK LOAD OUT



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LFP to OT Pipe Lines & Umbilicals

Pipe Welding Activities in Progress



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Onshore Terminal - Then …….and Now

May 2006

April 2008

Onshore Terminal 25 km from

Kakinada

Spread over approx 300 acres of land

Peripheral bund constructed. About 2 Million

meters band drains installed for the peripheralbund to facilitate drainage

OT site raised to +4.2 m above MSL by

hydraulic filling.

Total 20,000 piles driven equivalent to 1000

kms



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MEG Regeneration / Reclamation area



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Fuel Gas Skids



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Flare and Hot Oil Heaters



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Chemical Injection skids – MEG area

MA Status Project on Track for First Oil by



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MA Status - Project on Track for First Oil by2H 2008

■ Drilling of Wells : Drilling of 3 wells ( 2production wells + 1 Gas Injectionwell) completed

■ Lower Well Completions : 2 Productionwells + 1 Gas Injection well completed.

■ Upper Well Completions : tocommence after Subsea facilities areinstalled.

Drilling & WellCompletions

OffshoreSubsea

FPSO

■ All subsea Hardware received.

■ All the installation barges / support

vessels mobilized / operating.2 Vesseldemobilized after completing their scope.

■ Installation :

Installation of Suction anchors (9Nos), Mooring Lines and Buoycompleted.

Installation of Manifold completed.

Installation of Hold Back Piles,Tether Piles (16 Nos) completed

Installation of Gas InjectionUmbilical Completed

Installation of Production Risers in

progress.

■ All Major modules received andinstalled on FPSO except for GasCompression Module.

■ 2nd Dry docking period completed.

■ Mechanical Completion of Subsystemis in progress

■ Pre commissioning activities startedon FPSO

Drilling & Well Completion: 82%Complete Subsea Supply & Logistic andInstallation: 85% complete FPSO: 95% complete



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Key Components -MA Field Development



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FPSO



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FPSO



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FPSO

Gas Compression and DehydrationFPSO



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FPSO Handling Capacities

Oil storage = 1.3 MM bbls

Liquid handling = 80,000 BPD

Gas processing = 9.0 MMscmd

Gas dehydration unit = 9.0 MMscmd

Gas injection = 3.0 MMscmd

Gas export = 9.0 MMscmd



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Key Challenges

Weather uncertainties: Met / Oceanic conditions

Complex logistics: Vessel Mobility Management - 70 vessels

Sensitivity to local issues: Managing local fisherman

Resource constraints

−

Tight supply chain market

− Global shortage of manpower

Project on track to deliver first gas and oil by 2H 2008-09



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Other Development Projects

Commerciality of nine satellite gas discoveries in KG D6 approved

Development of NEC25

– Concepts and other G&G studies underway

– Drilled 11 Exploration wells with 8 discoveries

Development Plan for CBM discoveries in Sohagpur East and

West Blocks approved

Appraisal plan for discoveries in blocks SR01, KGIII5, KGD4,

NEC25, KGIII6 and CYD5 are underway



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Panna-Mukta and Tapti Update

Panna – Mukta: Crude production up 9% to 1.91 MMT and Gas production

up 22% to 2,030 MMSCM

Tapti block: Condensate production up 82% to 232,000 MT and Gas

production up 51% to 3,365 MMSCM

Panna-Mukta EPOD yielded incremental production of 850bopd

Tapti NRPOD completed in September 07 - incremental production of 6.4

MMSCMD of gas and 4000 bopd of condensate.

Development Plan of SWP & PK approved

– EPIC award in progress.

– Incremental Recovery of 14.5 MMBbls and 21.4 Bcf of gas

GAIL nominated for off take of entire PMT JV gas. Effective price at $5.57

to $5.73 per MMbtu



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Summary

KG-D6 - amongst most complex deep water projects - on schedule for

delivery of first gas and oil by H2 FY2008-09

Growing market and competitive pricing assures off take in the domestic

market

Resources mobilised to continue exploration, appraisal and development

in other blocks

E&P to be significant contributor to RIL’s earnings and cash flows in

coming years



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Refining & Marketing BusinessRefining & Marketing Business



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Global Business Environment

Crude oil touched an all-time high - crossed $110/bbl in Mar’2008

OPEC remains unfazed with price rally. Keeps quota unchanged

Non-OPEC capacity additions suffering schedule delays; Spare

capacity only in the hands of OPEC

Geopolitical concerns persist

Asian Sour Benchmark crude (Dubai) likely to remain above

$85/bbl in 2008



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Global Business Environment (Contd.)

Middle distillate cracks crossed $30/bbl; Light distillate cracks under

pressure

Oil demand remains healthy, forecast to grow at 1.3 MMBD in 2008

– Global economic growth positive, supported by emerging economies

– Driven largely by China, India, Middle East and Latin America

– Demand expected to stay flat in North America and Europe

New refining projects continuing to suffer from costs and time overruns

Medium term tightness in refining capacity expected to stay

Positive outlook for the refining sector

Wh i d b lli h



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Why is crude so bullish…..

SUPPLY CONCERNS

–OPEC did not increase quota

–

Nigeria remains a concernamidst renewed threats for

kidnapping and militants attacks

OTHERS

–Weakening of US dollar

– Flow of investor funds into oil

– High degree of speculative

activity: NYMEX sees all time

high net speculative length

Bullish factors seem to persist in the short term

50

55

60

65

70

75

80

85

90

95

100

105

110

115

02APR07

24APR07

15MAY07

06JUN07

27JUN07

19JUL07

09AUG07

30AUG07

21SEP07

12OCT07

02NOV07

26NOV07

17DEC07

09JAN08

31JAN08

22FEB08

14MAR08

$/BBL

NYMEX WTI Daily Closing Prices

S



67www.ril.com

Product Price Scenario

In US, Gasoline cracks improved only marginally due to high stocks

Gasoline margin in Asia remains stable due to restricted exports from China

Middle Distillates cracks average $22/bbl in Asia due to stock draw onextended winter and upsurge in Asian demand

Margins better in Q1-2008

114.13102.13Gas Oil

113.21104.38Heating Oil

104.1394.10Gasoline

104.2895.77RBOB (Gasoline)

91.2782.83

Dubai

97.8690.47

WTI (Cushing)

Q1-2008Q4-2007Q1-2008Q4-2007

SingaporeUS

$/bblGasoline / Gasoil price performance



68www.ril.com

Singapore Product Deltas

Gasoil - Dubai Crack

10

15

20

25

30

35

Apr-0

7

May-07

Jun-07

Jul-0

7

Aug -07

Sep-07

Oct-0

7

Nov-07

Dec-07

Jan-08

Feb-08

Mar-08

Jet/Kero - Dubai Crack

10

15

20

25

30

35

Apr-0

7

May-07

Jun-07

Jul-0

7

Aug -07

Sep-07

Oct-0

7

Nov-07

Dec-07

Jan-08

Feb-08

Mar-08

Gasoline - Dubai Crack

-

5

10

15

20

2530

Apr-0

7

May

-07

Jun-07

Jul-0

7

Aug -07

Sep-07

Oct-0

7

Nov-07

Dec-07

Jan-08

Feb-08

Mar-08

US$/bbl

Significant improvement in Jet/Kero

and Gasoil cracks during the last

quarter of FY 2007-08

Source: Reuters

RIL R fi O ti Hi hli ht



69www.ril.com

RIL - Refinery Operating Highlights

Consistent out performance amongst key benchmark regions

Refining complexity, higher yields, superior product slate and export

revenues enabled RIL to achieve GRM at $15.5 /bbl for the quarter

Average GRM at US$ 15 / bbl in FY08 - with continued strong performance

against all global benchmarks

Refinery utilization at 96.4% with 31.8 Mn Tons of crude processed in FY08

Export volumes soared to 22.1 Mn Tons against 17.7 Mn Tons in FY07

Aviation sector presence expanded further - operating at 13 airports

Six new varieties of crude processed

50 ppm ULSD produced and sold for the first time

E t k t



70www.ril.com

Export markets

Americas

7%

Africa

18%Europe

20%

Asia / Middle

East

55%

Thrust on emerging markets continued for transportation fuels

Commenced export of 50ppm Ultra Low Sulphur Diesel to Europe

R fi P d t S l FY08



71www.ril.com

Refinery Product Sales: FY08

Exports account for 63% of aggregate volumes

Growth driven by higher volumes of HSD and ATF

Export Domestic Total Export Domestic Total

LPG - 2,712 2,712 - 2,671 2,671

HSD 11,482 929 12,411 9,147 2,031 11,178

MS 3,607 322 3,929 3,154 388 3,542

ATF 3,276 20 3,296 2,834 31 2,866

Naphtha 3,273 3,965 7,238 2,276 5,093 7,369

Propylene - 1,019 1,019 - 996 996

Others 510 4,469 4,979 243 4,990 4,990

22,147 13,437 35,584 17,655 16,200 33,612

2007-08 2006-07

M i B h ki



72www.ril.com

Margin Benchmarking

15.0

8.9

5.16.1

8.8

10.3

11.7

4.8

4.9

7.6

0

2

4

6

8

10

12

14

16

18

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

US$ / bbl

RIL US Gulf Coast Mediterranean Rotterdam Singapore

Increasing out-performance over the global benchmarks

Cracking margins Source: Reuters / Company Data

RIL Refining B siness Trends



73www.ril.com

22.1

6.6

16.1

1.4

0

4

8

12

16

20

24

FY03 FY04 FY05 FY06 FY07 FY08

-

2

4

6

8

10

12

14

16

18

Volume (MMT) Value (US$ Billion)

RIL Refining Business Trends

0

40000

80000

120000


Export Performance

63% CAGR in value

Refining Revenues (Rs. Crs)

5 Yr. CAGR – 24%

RIL Margin Trends



74www.ril.com

RIL Margin Trends

15.0

5.3

2.4

7.6

0

2

4

6

8

10

12

14

16


-

2,000

4,000

6,000

8,00010,000

12,000

EBIT (Rs crore) RIL GRM ($/bbl) Singapore GRM ($/bbl)

Refining EBIT records a CAGR of 36% over the last 5 years

Premium over Singapore complex margins have more than doubled

Crude Oil Outlook



75www.ril.com

Demand outlook positive, despite fears of slower economic expansion

Vigilant OPEC not looking to add production even at all-time high prices

New investment and index funds chasing commodities as a hedge

Ailing US economy leading to low interest rates, weaker dollar and flight to

commodities. Emerging markets remain strong and partially decoupled

Demand from China expected to stay robust

Marginal cost of production increasing : ~ 4 million bpd @ 75 $/bbl or more

Outlook for oil price stays firm

Crude Oil Outlook

P d t O tl k



76www.ril.com

Product Outlook

Global demand is expected to grow by a estimated 1.3 MMBPD

– Agency forecasts range between 1.21 – 1.30 MMBPD

– Downward revision by about 0.2 mbd from previous quarter estimates

Demand growth is expected to come from Asia Pacific, Middle East, Latin

America and Russia. US demand growth vulnerable to economic slow

down

Gasoil demand is expected to be strong, led by growth in Asia and

‘dieselisation’ in Europe

Gasoline demand growth is expected to be robust in Asia-Pacific. Potential

downside risk for growth in US due to high inventories, economic slow

down and ethanol substitution

RPL Project Progress



77www.ril.com

RPL Project Progress

Overall implementation progress at 90%

Project engineering efforts completed

Procurement activities nearing completion

Overall construction progress nearing 80% mark for the complex

Nearly 65% of project scope of equipments already installed

Startup planning and operation preparedness activities gained momentum

Sufficient site infrastructure mobilised to sustain construction on fast track

Project on-track for early commissioning

GAPCO Update



78www.ril.com

GAPCO Update

Acquired towards enhancing wider footprint in petroleum retailing

Owns 250 retail outlets and 225,200 KL of storage capacity with 2 large

coastal terminals at Dar-es- salaam and Mombassa in East Africa

Significant progress made already

– Successfully revived business in Tanzania

– Improved supply chain management

– Obtained marketing/import rights in Kenya

Refining Business Summary



79www.ril.com

Refining Business Summary

Oil demand growth expected to stay firm, supported by rising

consumption in emerging economies. Demand softening likely in the US

and Europe

WTI prices likely to average upwards of $90/bbl in 2008

Product spec changes to present exciting trade opportunities

Extended strength in refining margins seen till 2012 with continuing delays

/ cancellation of new projects. Middle distillates margins seen well

supported

Light – heavy differentials to remain wide



80www.ril.com

PetrochemicalsPetrochemicals

Business Environment: Polymers



81www.ril.com

Business Environment: Polymers

Global

– Firm price trends across the value chain

– Global polymer demand growth strong at 5.5%

– New cracker capacities on-stream ( in million tonnes)

FPC, Taiwan 1.2 (Q1FY08)

Qapco, Qatar (expansion) 0.2 (Q2FY08)

Arya Sasol, Iran 1.0 (Q4FY08)

Jam Petro, Iran 1.3 (Q4FY08)

India

– Domestic demand grew by 15% year-on-year

–

Aggregate consumption of PE, PP and PVC crossed 5 million tonnes– Growth driven by infrastructure and flexible packaging

– Over 1 million tonne capacity added by producers in downstream

industries

Product Deltas



82www.ril.com

Product Deltas

USD/MT

Q4 FY08 Q3 FY08 Q4 FY07 FY08 FY07

PE - Naphtha 694 628 697 651 704

PP - Propylene 134 211 52 163 54

PVC - EDC 461 448 345 457 387

Margins remained robust in ’07-08

Ethylene : Global Demand Supply



83www.ril.com

Ethylene : Global Demand Supply

Operating rates peaked at 91% in 2008

Startup delays in Middle East can push operating rates to 93%

0

50

100

150

200

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280%

85%

90%

95%

100%Op Rate %

Demand / Capacity

MMTPA

Capacity

DemandOp Rate

Source -CMAI

Middle East Capacity Expansions Update



84www.ril.com

Middle East Capacity Expansions Update

# in bracket indicate capacity in 2012

Source : CMAI web site

In MMTPA

2007 2012

Saudi Arabia 9.5 17.6

Iran 5.0 7.6

UAE 1.4 2.0

Qatar 2.9 4.0

Kuwait 0.8 1.8

Total 19.6 32.5

32 mmta of new capacities underway; 11 mmta to go onstream by 1H 2009

Global Cracker Vintage



85www.ril.com

2007

17%

19%31%

23%

10%

0-5 Yrs 5-10 Yrs 10-20 Yrs 20-30 Yrs 30+ Yrs

2012

29%

9%

21%

10%

31%

Global Cracker Vintage

30% of global capacity is vulnerable to a down cycle

Growth Opportunities



86www.ril.com

Growth Opportunities

Current Market Size

148 Mn Tons

Source : CMAI

Estimated Market Size

192 Mn Tons in 2012

US22%

China

23%

India4%

Rest of

World

51%

Rest of the

World

50%

India

5%

China

28%

US17%

52% of incremental demand to come from India and China

RIL Downstream Portfolio



87www.ril.com

RIL Downstream Portfolio

Site Polymer CapacityKTA

Remarks

Baroda LD 95 Only domestic producer

PP 165 Only plant with Adipol technology in Asia

PVC 55

Gandhar PE 160 Speciality HM Grades

PVC 245 High value - Low K grades

Hazira PE 450 Swing plant - Quick to respond to market needs

PP 400 ICP Capability

PVC 325

Jamnagar PP 1030 World Scale plants

Nagothane LD 110 Only domestic producer

PE 240 Only plant with metallocene capability

PP 115 Highly Reliable

3390

Balanced portfolio of gas based and low cost naphtha based assets

Polymer Production: FY 2007-08



88www.ril.com

Polymer Production: FY 2007-08

FY07 FY08 % change FY07 FY08 % change

PE 1,925 2,004 4.1% 1,011 1,084 7.2%

PP 1,917 1,978 3.2% 1,641 1,712 4.3%

PVC 889 958 7.8% 561 578 3.0%

TOTAL 4,731 4,940 4.4% 3,214 3,374 5.0%

Industry RIL

Slowdown in industry capacity addition despite strong demand due to

concerns over impact of impending capacity additions in the Middle East

Polymers – Demand / Supply Outlook



89www.ril.com

Polymers Demand / Supply Outlook

PE

– Global demand at 68 MMT in 2007; growing at over 5% annually

– 50% incremental demand to come from China and India

–

China and India growing 10% annually, aided by robust demand fromdownstream user industries

PP

– Global demand grew by 5.6% to 44.5 MMT in 2007

– PP demand from China and India to rise 5 MMT in the next 5 years

– India is the fastest growing market with 14% annual growth

PVC

–

Global PVC demand at 35.5 MMT in 2007 - a growth of 5% YoY– China to provide impetus to PVC demand. Aggregate consumption to

rise to 15 MMT by 2012 from 10 MMT in 2007

– India would continue be the fastest growing market growing at 10%

PE – Sector Outlook



90www.ril.com

PE Sector Outlook

Demand likely to grow at healthy pace

– Driven by large consumption base and retailing

Key Growth Sectors

– HD : HM Film, HD/HM Pipe and Blow Molding

– LLD : Flexible Packaging, Roto Molding

Films/ Pipes continue to grow over 20%.

– Packaging: Retail boom

– Pipes: Infrastructure growth

RIL: Unique Metallocene capability– Converting NC-LLD to NC-mLLD

– Reviving specialty products like EVA / UHMWPE

PP – Sector Outlook



91www.ril.com

PP Sector Outlook

Demand: Double digit growth likely to continue in ’08-09

– Likely to double in next 7 years reaching 4.0 MMT by 2014

Raffia and BOPP with 50% sector share would remain mainstay

– Cement industry to drive growth

Films/ Sheets/Moulding would also grow over 10%

– Packaging Retail boom, Moulding Automobile boom

RIL is the only manufacturer catering to all end-use segments

PVC – Sector Outlook



92www.ril.com

PVC Sector Outlook

With infrastructure growth demand would continue to be healthy

– Likely to double in next 7 years reaching 2.7 MMT by 2014

Pipes and fittings with 70% sector share would remain mainstay

– Government focus on Irrigation / Sanitation

Films/ Sheets and Calendering would also grow over 10%

– Packaging Retail boom; Blister Pharmaceuticals

RIL Only manufacturer catering to all end-use segments

– Wide spectrum of grade slate from K 57 (Blister) to K67 (Pipes/

Flexible applications)

Polymer Price Outlook



93www.ril.com

o y e ce Out oo

Source: Platts400

600

800

1000

1200

1400

1600

03-04 04-05 05-06 06-07 07-08 10 yr 5 yr

PE PP PVC Long Term Averages

$ /MT

Prices to remain firm in the near term

Polymer Summary



94www.ril.com

Demand outlook remains positive, particularly in India and China

Polymer prices likely to stay firm, pending new capacity additions

in ME

RIL to continue focus on fast growing domestic market

RIL cost competitiveness to remain with refining off-gas based

cracker at Jamnagar

y y



95www.ril.com

Polyester Polyester

Business Environment: Polyester



96www.ril.com

y

International cotton prices averaged 25% higher at US$ 1631/MT in 2007

Polyester margin improved, despite higher input costs

High MEG prices due to unplanned capacity shutdowns in Middle East

Slowdown in capacity additions in China due to monetary tightening,

stringent labour laws and fresh pollution control measures

Integrated players maintained margins

Integrated players pursuing consolidation opportunities before upcycle

Margin Environment



97www.ril.com

Margin Environment

Q4 FY08 Q3 FY08 Q4 FY07 FY08 FY07

PX - Naphtha 338 339 620 430 672

PTA - PX 83 92 77 107 86

MEG - Naphtha 626 1,022 508 712 499

POY - PTA/MEG 455 320 375 348 301

PSF - PTA/MEG 327 195 257 222 168

PET - PTA/MEG 262 126 226 188 172

Standalone polyester margins improve - chain margins impacted due to

intermediates

Global Polyester Fiber Production



98www.ril.com

y

0

500010000

15000

20000

25000

30000

35000

40000

45000

2005 2006 2007 2008 2009 2010 2015

Asia North America Latin America Europe (Incld Turkey) Af rica/M iddle East

KT

Polyester Growth: 5.4% ; All fiber growth 3% (CAGR 2005-15)

Asia contributes 82% to the world’s textile polyester production

Asian dominance to continue

Source: PCI 2007

Key Growth Drivers

• Economic growth,

New applications, Life

style changes andgrowing affluence

• Higher cotton prices

• Short term driver:

Beijing Olympics in

2008 for incremental

polyester demand in

China

Global Per Capita Fibre Consumption



99www.ril.com

p p

0

1

2

3

4

5

6

1980 1985 1990 1995 2000 2005 2010 2015 2020Source: Tecnon OrbiChem

Polyester Filament

Polyester Staple

Polyamide Filament

Polyamide Staple

Acrylic

Polypropylene

Cellulosic

Cotton

Wool

Cotton struggling

PES filament to overtake

cotton by 2015PES staple to overtake

cotton by 2020

Share of Polyester to grow from 40% to 56%

World Fibre Demand



100www.ril.com

Fibre growth rate : Positive correlation with GDP

Polyester: Foundation to the growth of global industry

-

10000

20000

30000

40000

50000

60000

70000

KT

6.5%

4.2%

1%

6% - 0.5%

CAGR 2005-2010

Source: PCI

-0.4%

PSF

PFY

Cotton

Cellulose

Acrylic

Nylon

Textile industry growth 3%

Cotton: Global Supply Demand Outlook



101www.ril.com

Declining stock to use ratio pushing prices higher

Acreage expected to decline in USA and increase only marginally in China,

India, Brazil, African Franc Zone and Australia

Key Issues: Consumption, currency appreciation & acreage

Bio fuel crops influencing cotton economy

Source: ICAC , Apr ‘08

2006-07 2007-08 (E) 2008-09 (P)Acreage Mn Ha 34.7 33.8 33.8

Yield Kg/Ha 766 763 794

Production Mn MT 26.7 26.0 26.9

Year on year growth -2.6 3.3

Consumption Mn MT 26.7 27.1 27.5

Year on year growth 1.8 1.3

Closing Stock Mn MT 12.7 11.6 11.0

Stock-to-use ratio % 48% 43% 40%

Cotlook 'A' - FE USD/MT 1304 1631 1763

Cotton Outlook



102www.ril.com

700

1100

1500

1900

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008 (P)

2009 (P)

USD/MT

Long term avg: $ 1428/MT

5 Yr avg: $ 1366/MT

Cotton prices on Upcycle

c/lbs 63 58 71 94 86 79 72 59 53 57 42 59 68 52 56 59 74 80 83Cotlook ‘A’

Cotlook ‘A’

PSF

Indian Business Environment



103www.ril.com

18%

12%

26%

PFY PSF PET

Custom duty of polyester products reduced to 5% from 10% (mid year revision to 7.5%)

Major filament capacity (~1.3 MMT) being planned in view of strong domestic demand

–

Backward integrated texturisers have better margins versus standalone players

Rupee appreciation has hit downstream exporters resulting in slower demand growth

– Government announces measures to cushion rupee hit exporters

10% capital subsidy on technical textiles & garments m/c under TUFS

Demand Growth FY 2007-08

Polyester Production: FY 2007-08



104www.ril.com

y

FY07 FY08 % change FY07 FY08 % change

POY 1,415 1,684 19.0% 616 683 10.9%

PSF 774 897 15.9% 610 621 1.8%

PET 490 510 4.1% 256 268 4.7%

TOTAL 2,679 3,091 15.4% 1,482 1,572 6.1%

Industry RIL

Growth in RIL production reflects full year impact of additional capacity

added during FY2006-07

Industry capacity addition on the back of improvement in standalone

margins and strong outlook on cotton prices

Upstream & downstream squeezing PX



105www.ril.com

0

200

400

600

800

1000

1200

1400

1600

1800

Aug-02

Nov-02

Feb-03

May-03

Aug-03

Nov-03

Feb-04

May-04

Aug-04

Nov-04

Feb-05

May-05

Aug-05

Nov-05

Feb-06

May-06

Aug-06

Nov-06

Feb-07

May-07

Aug-07

Nov-07

Feb-08

0

200

400

600

800

1000

1200

1400

1600

1800Naptha in PSF PX Delta

PTA Delta MEG in PSF

PSF Price Cotton Price

PX deltasunder pressure

MEG pricesSkyrocket on the

back of globaloutages

Cotton pricescapping Polyester

Crude drivingNaptha prices

upwards

Domestic Market Outlook : 2008-09



106www.ril.com

Cotton prices to remain firm; to support polyester prices

Polyester operating rates to improve

Margins to improve with easing of raw material supplies

New capacity addition in China slowing down or deferred

India: Government action review

– Extended DEPB scheme & interest payment on delayed

refunds to provide cushion to rupee appreciation hit exporters

– TUFS extended for the period of full 11th plan; downstream

investments to continue

Rising domestic demand to cushion against unfavourable export

environment

Domestic Fiber Market: Growth outlook



107www.ril.com

12%120006043Grand total

23%32731160PFY

8%906627Others

23%1907676PSF

10%59143580Raw Cotton

CARG (07-12)2011-122006-07KTA

Source: CITI

Incremental polyester demand of 3.4 MT in the next 5 years

Polyester: Journey beyond Apparels



108www.ril.com

Huge untapped potential in non-apparel applications in India

Apparel

41%Automotive

20%

Industrial

23%

Home

Textiles

16%

Source: PCI

Apparel

90%

Automotive

3%

Home

Textiles

5%

Industrial

2%

India World

Innovations



109www.ril.com

Recron Polylon

Recron Stretch

Octagonal Black

Deep Dye Low Shrinkage FDY

Carpet fibre

Low Pill Tow Recrobulk

Short cut fibers for wet laid

application

Developed a strategy for implementing “open innovation”

Self sustaining innovative process capability for idea generation

New Products

Growth Strategy



110www.ril.com

Pursue both organic and inorganic growth opportunities

Integrated POY-PTY for new capacity to reduce packing and logistic costs

Participate in high value growing business segments

Enhance innovation through integration of efforts between research,

manufacturing and business development

Poised to reap benefits of leadership in large growth markets

Trevira Performance



111www.ril.com

New Product Development

Four new patent applications

Marketing

Focus on premium automotive, functional wear, home and technical textiles market

Thrust on quality conscious markets in Germany, France, Italy, US and Spain

Leading customers include Toyota, Volkswagen, BMW, Mercedes, Volvo, Nissan

Manufacturing Transfer of production of Air texturising and Dyed yarn to Poland initiated

Other manufacturing locations are in Germany, Belgium and Denmark

2006 2007

Sales (KT) 126 138

Recron Malaysia (Hualon): Update



112www.ril.com

Management control taken over in Dec ’07

– Physical control of assets in Jan ‘08

Complete overhaul of production being done to optimize assets

Quality improvement being undertaken to bring it to RIL standards

Strategic initiatives taken to reduce cost, utility optimization and effective

supply chain management

Polyester : 550 KTA (POY, FDY, PSF, PET)

Texturising : 200 Murata machines

Spun Yarn : 2.5 lacs spindlesIndia’s largest synthetic spinner, 2.6 lacs

Weaving : 5758 water jet looms 500 mn yards

Larger than any Indian company

Finishing : 80 mn yards

Nylon : 36 KTA (New product for RIL)



SummarySummary

Summary



114www.ril.com

Superior performance from world-class assets in all our businesses

Best-in-class project execution for RPL refinery project - Reliance’s refining

capacity to double - Jamnagar to be the largest refining hub in the World

Production of 80 MMSCMD gas from D1 & D3 fields to double India’s gas

availability - will operate amongst the most complex deep water production

systems globally



Thank YouThank You

Documents

RIL Q4 08 presentation