Reliance Industries Limited

1
Reliance Industries Limited Financial
Presentation April - December 2001 January 31,
2002
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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 Reliance group
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.
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Contents
Operating Environment Financial
Performance Business Review Reliance
Petroleum Reliance Infocom Summary
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Operating Environment
5
Petrochemicals - Challenging Times Continue

• Extended downtrend in global petrochemicals cycle
• New capacity additions in Middle East and Asia
  during 2001, added significantly to global
  surplus
• Weak demand environment Indian polyester demand
  growth restricted to 5
• Sharp decline in end product 15-32 fall in
  selling prices prices
• Impact only partly offset by naphtha prices down
  only
• declining feedstock prices 17

Profitability of petrochemicals companies
globally has remained under pressure due to weak
demand and declining product prices
6
Trends in Feedstock Product Prices -
International
change in international prices Apr-Dec 2001
over Apr-Dec 2000
Raw Material
There has been a sharp decline in international
prices of RILs products during the 9 month period
7
Trends in Feedstock Product Prices - Domestic
change in domestic prices Apr-Dec 2001 over
Apr-Dec2000
Raw Material
Domestic prices of RILs products have also
fallen sharply, impacting margins
8
Key Elements of Reliances Strategy

• High operating rates 104 in Apr-Dec 2001
• Emphasis on speciality 20 of polymers
• products 30-60 of polyester
• 5-20 price premium
• Focus on domestic markets 87 of revenues
• Diversified revenue streams Polyester, Polymers,
  Oil Gas
• Consolidation of industry Improved pricing power

Strong fundamentals and financial strength have
enabled Reliance to better withstand the industry
downtrend

9
RILs Performance Highlights Apr-Dec 2001

• Production volumes 8.6 mn. tonnes, up 9
• Total Exports US 494 mn. (Rs. 2,381 crores)
• 13 of Total Sales
• Market shares polyester 53
• intermediates 78
• polymers 49
• Capex in 9 months Rs.592 crores (US 123 mn.)

Record production volumes achieved despite a weak
economic scenario in the country
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• Financial Performance

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RILRPL - Financial Highlights

April-Dec 2001 Rs.crs.
mn. Sales 43,887 9,101 Operating
Profit 6,571 1,363 Cash Flow 5,278 1,095 Net
Profit 3,411 707 Total Assets 54,663 11,336
Reliance continues to be the No. 1 business group
in India in terms of all major financial
parameters
12
RIL Income Statement for 9 months FY 2001-02
Apr-Dec 2001
Apr-Dec 2000 Change Rs.crs.
mn. Rs.crs. mn. Sales 18,091 3,752 19,287 4,132
(6.2) Trading Sales 299 62 2,277 488 Total
Sales 18,390 3,814 21,564 4,620 (14.7) EBITDA 3,87
5 804 4,049 867 (4.3) Extra-ordinary
Income 358 74 Interest 730 151 925 198 (21.1) Dep
reciation 1,259 261 1,141 244 10.4 Tax/Deferred
Tax 102 21 96 21 Net Profit 2,142 444 1,887 404 1
3.5 Cash Profit 3,401 705 3,028 648 12.3
Capex for the 9 month period is just Rs 592
crores (US 123 mn) - 17 of cash flows and only
47 of depreciation
13
RIL Consolidated Income Statement for 9 Months

Apr-Dec 2001 Rs.crs
mn. Sales 18,393 3,815 Total Expenditure 14,959
3,102 Operating Profit 3,435 712 Share in
Income of Associates 736 153 Other
Income 360 75 Extra-ordinary Income 358 74 Inter
est 732 152 Depreciation 1,259 261 Tax 102 21 N
et Profit 2,795 580
Consolidated net profit reflects the true picture
of RILs returns on its investments
14
Segment Information for 9 Months
Rs Crores
Petrochemicals Refining Others Segment
Revenue 17,356 25,497 1,038 Segment Results
(EBIT) 1,888 1,971 588 Capital Employed 12,379 20,
580 6,167 Return on Capital 20.3 12.8 12.7 Emp
loyed (ROCE)
Return on Capital Employed significantly higher
than cost of capital for a large petrochemical
and refining enterprise
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RIL Income Statement for Q3 FY 2001-02
Q3 FY 2001-02
Q3 FY 2000-01 Change Rs.crs.
mn. Rs.crs. mn. Sales 5,467 1,134 6,430 1,377
(15.0) Trading Sales 299 62 125 27 Total
Sales 5,766 1,196 6,555 1,404 (12.0) EBITDA 1,159
240 1,406 301 (17.6) Interest 218 45 294 63 (26.0)
Depreciation 441 92 394 84 12.0 Tax/Deferred
Tax 36 7 34 7 Net Profit 822 171 684 146 20.3 Cas
h Profit 1,263 262 1,078 231 17.2
Profit for the period includes Rs.358 crores (US
74 mn) on account of sale of LT stake
16
Elements of Sales Change

• Composition of
• Sales Revenue Change
• Impact of volume change -1
• Impact of product price change -5
• Total impact on Sales Revenues -6

Sales revenue decline of 6 in the 9 month period
reflects mainly the sharp decline in product
prices
17
RIL Profitability Ratios

• Apr-Dec 2001 Apr-Dec 2000
• OPM 19.0 18.6
• NPM 11.8 9.8
• ROE 20.8 18.4
• ROCE 19.9 18.4
• EPS - Rs. () annualised
  27.1(0.56) 23.8(0.51)
• Cash EPS - Rs() 43.0(0.89) 38.3(0.82)
• excluding FX gains

Margins have remained largely stable despite the
tough operating environment
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RIL Consolidated Profitability Ratios

• Apr-Dec 2001
• NPM 22.2
• ROE 26.1
• ROCE 31.3
• EPS - Rs. () annualised 35.3(0.73)

At the current market price, RIL shares are
trading at 9 times consolidated EPS
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RIL Liquidity Ratios

• Apr-Dec 2001 FY 2000-01
• Debt Equity 0.58 0.72
• Gearing 36.1 41.0
• Interest Cover 3.5x 3.3
• Total Debt/Cash Flow 1.8x 1.8 x

RILs strong cash flows and refinancing
initiatives have enabled lowering of interest
costs
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Reliance is Indias Largest Exporter

• Reliance group is Indias
  Rs.8,382 crs (US 1,738 mn)
• largest exporter in 9 months
• RIL is Indias 2nd largest Exports still only
  13 of exporter after RPL RILs Sales
• RILs manufactured exports Rs. 2,083 crs (US 432
  mn)
• Exports to most quality Exports to over 100
• conscious customers countries globally

Reliances high exports demonstrate the
international quality of its products, and its
ability to compete against global leaders
21
Unlocking Value through Sale of LT Stake

• Sold 2.5 crore shares of LT (10 of equity) to
  Grasim at a price of Rs.306.60 per share
• Stake sold at 47 premium to prevailing market
  price of Rs.208.50 per share
• Sale proceeds of Rs.766.50 crores (US 160 mn)
  received in cash
• Capital gains of Rs.358 crores (US 74 mn)

Cash flows and capital gains have accrued to RIL
22
Unlocking Value through Sale of LT Stake

• No strategic rationale for retaining investment
  in LT in view of successful completion of
  Reliances major projects
• Divestment of non-strategic stake to unlock
  significant value for shareholders
• Enhancement of returns on RILs investments
• Increased availability of funds for announced
  investments in oil and gas, infocom, reduction of
  debt, and other uses

LT stake sale is in line with Reliances stated
philosophy of unlocking value from investments to
maximise shareholder wealth
23

• Business Review

24
Oil Gas - Review

• RIL is the largest private sector EP operator in
  India, with total acreage of 175,000 square
  kilometers
• Reliance holds 30 interest in the producing
  Panna, Mukta and Tapti oil and gas fields
• Over the last few years, Reliance has acquired 18
  new blocks
• - 2 blocks in pre-NELP round of bidding
• - 12 blocks in NELP-1 in 9010 consortium with
  Niko (Canada)
• - 4 blocks in NELP-2 in 9010 consortium with
  Hardy Oil (UK)
• In February 2001, Reliance entered into an
  agreement with Tullow (UK) for acquiring
  participating interest in 5 blocks

Well balanced portfolio of 25 deep and shallow
water, offshore and onshore EP blocks
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Oil Gas - Update

• Exploration work consisting of seismic surveys,
  data processing, and interpretation in progress
• Drilling of first well to commence over next few
  months
• Estimated initial capex of Rs. 1,500 crores (US
  300 million) over the next 3 years
• Later stage exploration capex can be
  self-financing through monetisation of future
  revenues

Contribution of Oil and Gas business to revenues
likely to grow significantly in the future
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Oil and Gas - Production Growth
Oil Production in kT Gas Production in kTOE
Oil
Gas
1
550
325
-3
310
516
307
502
500
300
275
450
Apr-Dec 2000
Apr-Dec 2001
Apr-Dec 2000
Apr-Dec 2001
Output from existing Oil Gas fields has broadly
been maintained at previous year levels
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Polyester - Update

• Polyester demand increased by only 5 during
  Apr-Dec 2001
• Demand slowdown due to historically low cotton
  prices, general economic slowdown, and the recent
  unrest in some weaving and texturising markets
• Reliance is responding by creating new markets
  for speciality grades and growing high potential
  segments
• Increasing focus on polyester grades finding
  application in segments with higher growth
  potential such as home furnishings, automobiles,
  and industrial textiles

Strong emphasis on specialities to counter demand
slowdown and to take advantage of the longer term
growth prospects
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Polyester - Production Growth
Production in 000 tonnes
Industry
Reliance
650
15
7
1200
614
1153
600
1150
534
550
1100
1074
500
1050
1000
450
Apr-Dec 2000
Apr-Dec 2001
Apr-Dec 2000
Apr-Dec 2001
Much higher production growth rate for RIL
reflects acquisition of control over JCTs
polyester capacity
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Fibre Intermediates - Production Trend
Production in 000 tonnes
Industry
Reliance
1
2174
2757
2164
2175
2750
2725
2710
2670
2125
2630
2590
2075
2550
Apr-Dec 2000
Apr-Dec 2001
Apr-Dec 2000
Apr-Dec 2001
Fibre intermediates production remained flat,
both for Reliance and the Industry, in view of
low polyester demand growth
30
Polymers - Update

• Healthy demand growth for RILs polymers during
  Apr-Dec 2001
• - PP 16
• - PE 10
• - PVC 21
• Demand from high growth user industries like
  telecom, packaging, food and beverages, consumer
  durables
• Domestic demand / supply balance is progressively
  improving with healthy growth

RIL is the leading player in the rapidly growing
polymers market in India with a 49 market share
31
Polymers - Production Growth
Production in 000 tonnes
Industry
Reliance
13
6
Polymers demand has shown further strong growth
of 15 during the first nine months of FY 2001-02
32

• Reliance Petroleum

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RPLs Performance Highlights Apr-Dec 2001

• Capacity utilisation 107 (Apr-Dec 2001)
• 109 (Oct-Dec 2001)
• Crude processed 21.8 MMT, up 12
• Exports US 1,263 mn. (Rs. 6,001 crores)

RPL has operated at significantly higher capacity
utilisation rates compared to its global peer
group
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RPL Higher Operating Rates
Integration with groups downstream operations,
ability to tap exports markets and flexibility of
product slate enabled RPL to operate at much
higher rates
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Comparison with Benchmark GRMs
Apr-Dec Apr-Dec 2001 2000 RPL 5.3 6.0 US
Gulf Coast 1.53 2.58 Mediterranean 1.85 4.84 Ro
tterdam 0.49 2.25 Singapore 1.93 3.30
RPL has reported significantly higher GRMs than
its global peer group, and with lower volatility
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RPL - Income Statement for 9 Months FY 2001-02
Apr-Dec 2001
Apr-Dec 2000 Rs.crs.
mn. Rs.crs. mn. Change Gross
Sales 25,497 5,288 23,457 5,025 9 EBITDA 2,696 55
9 2,363 506 14 Interest 735 152 727 156 Deprecia
tion 608 126 469 100 Tax 84 17 87 19 Net
Profit 1,269 263 1,080 231 18 Cash
Profit 1,877 389 1,549 331 21
RPLs net profits have increased by 18 despite
lower product prices, and the downtrend in
regional refining margins
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RPL - Income Statement for Q3 FY 2001-02
Q3 FY2001-02
Q3 FY2000-01 Rs.crs.
mn. Rs.crs. mn. Change Gross
Sales 8,166 1,693 9,149 1,960 -11 EBITDA 866 180
884 189 -2 Interest 246 51 271 58 Depreciation 2
01 42 172 37 Tax 17 4 33 7 Net
Profit 402 83 408 87 -1 Cash Profit 603 125 580 1
24 4
RPL is Indias largest private sector company in
terms of sales
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RPL - Factors Contributing to Profit Growth

• High capacity utilisation rates of 107, leading
  to 12 volume growth from 19.4 to 21.8 million
  tonnes
• Improved product mix enabling RPL to take
  advantage of niche opportunities
• Stability of earnings through risk management
• Ongoing productivity gains and cost reductions

Strong volume growth and superiority of RPL
refinerys configuration have contributed
significantly to net profit growth
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RPL - Profitability Ratios

• Apr-Dec 2001 Apr-Dec 2000
• OPM 9.8 9.4
• NPM 5.0 4.6
• ROE 18.5 22.3
• Annualised EPS - Rs. () 3.25 (0.07) 3.03 (0.06)
• Annualised CEPS - Rs. () 4.81 (0.10) 4.35 (0.09)

RPLs ROE is amongst the highest in refining
companies globally
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RPL - Liquidity Ratios

• Apr-Dec 2001 Apr-Dec 2000
• Debt Equity 0.97 0.86
• Gearing 49.3 46.2
• Interest Cover 3.4 2.82
• Total Debt / Cash Flow 2.82 3.15

RPLs cash flows for less than 3 years are
adequate to extinguish its entire debt
41
RPL - Indias Largest Exporter

• RPL Indias largest exporter Rs.6,001 crs (US
  1,263 mn), in 9 months
• Exports up by 27
• Gasoline, diesel, naphtha Total exports of 6.6
  mn
• were largest items of exports tonnes
• Exports to most quality Exports to over 14
  countries conscious customers globally

Reliances high exports demonstrate the
international quality of its products, and its
ability to compete against global leaders
42
New Auto Fuel Policy

• In a recent report on Auto Fuel Policy, the
  Expert Committee has recommended
• - Euro - II in the entire country from April
  2005
• - Euro - III to be introduced in seven mega
  cities from April 2005 and extended to other
  parts of the country from 2010
• RPL already meets Euro II norms
• With minimal investments, RPL can supply Euro III
  grade products
• Other Indian refineries as per the reports need
  Rs. 17,000 crs. for Euro II compliance and
  another Rs. 18,000 crs. for Euro III compliance

RPLs competitive strengths are expected to be
further enhanced when product specifications are
tightened
43
RPL - ECB Deal of the Year

• RPLs US 750 million syndicated loan has been
  named Indian Capital Markets Deal of the Year
  by IFR Asia
• This was the largest commercial term loan for an
  Indian borrower
• Attractive features of this deal included
• - amortising structure with step-up pricing
• - average life of 5 years
• The facility oversubscribed by 1.5 times with
  participation of leading banks from 13 countries

This attractive loan facility will enhance the
RPLs financial flexibility, reduce interest cost
and improve profitability
44
Cellular Business
45
Reliance Telecom - Update

• Reliance's cellular subscriber base has continued
  to grow strongly to cross 345,000, with services
  in 118 cities and 15 states
• 124 growth in GSM based cellular subscriber base
  in calendar year 2001 as compared to industry
  growth rate of 76
• Roll out plans for the recently acquired Kolkata
  circle being finalised currently
• Pre-paid services account for over 90 of
  cellular revenues low risk strategy
• Strength of Reliance Mobile brand and expertise
  in building retail consumer franchise
  demonstrated

Reliance has successfully established an
extensive GSM network in the central and eastern
part of the country
46
Reliance Infocom
47
Reliances Integrated Business Model

• Reliance is building a 60,000 kms, nationwide,
  terabit bandwidth, broadband network connecting
  Indias top 115 cities - representing over 50 of
  the countrys GDP
• All optic, facilities based, intelligent IP
  networks - robust and scaleable
• Reliance will leverage infocom infrastructure to
  capture value across the entire digital chain
• Reliance will offer a complete bouquet of voice,
  data, and value added services, and high quality
  end-to-end connectivity, including the last mile
• Backbone for own services, as well as carriers
  carrier

Reliances low-cost communications
infrastructure, and integrated approach, will
provide a lasting competitive edge
48
Reliance Infocom Update

• Work on backbone on schedule for completion by
  end 2002
• Work on providing fibre to the identified
  buildings at various stages of completion
• Completed procurement of entire fibre requirement
• Orders for equipment/ switches to be placed
  shortly
• Evaluation of proposals for handsets in progress

Reliance Infocom currently has nearly 1,500 full
time employees, with a target to increase this to
8,000 over a period of time
49
Reliance Infocom Update

• Data centre at Thane near Mumbai already
  operational
• Work at data centre at Bangalore in progress
  scheduled to be operational in this year
• Rollout plans for various voice services
  currently being finalised
• National footprint and the Reliance brand to be
  leveraged
• Customer acquisition strategy to be based on
  bundled offers in enterprise relationships, and
  segment specific value propositions

Reliance Infocom will endeavor to offer the
highest quality services and provide the best
value to its customers
50
Reliance Infocom Update
Service No. of Licenses License Fees
(Rs.crores) Cash Bank Guarantee Total Basic
17 circles 398 1,792 2,190 NLD 1
(Nationwide) 100 400 500
Licenses already obtained for providing basic
services in 18 circles (including Gujarat through
Reliance Telecom) covering 95 of Indias
population, and for providing national long
distance (NLD) services
51
Reliance Infocom Qualcomm Investment

• Qualcomm has committed to invest up to US 200
  million (Rs. 1,000 crores) in Reliance
  Communications (RCL) for acquisition of a
  minority stake
• This is the largest investment in basic services
  in any single telecom services licensee company
  in India
• RCL is Reliance Infocoms subsidiary providing
  voice services on a nationwide basis basic
  telephony, including WLL service with limited
  mobility, and NLD
• RCL proposes to provide limited mobility wireless
  services by deploying CDMA 2000 1X technology of
  Qualcomm - the pioneer and world leader of CDMA
  digital wireless technology

RCL plans to leverage the cost, capacity, and
quality advantages of CDMA to offer the most
competitive wireless voice and data services
nationwide
52
Reliance Infocom Investment Plans and Capex

• Reliance Infocom to invest up to Rs. 25,000
  crores (US 5 billion) over the next 5 years
• Proposed financing with 21 debtequity
• RIL is the lead investor with 45 equity stake
• RILs investment in Reliance Infocom Rs. 2,600
  crores (US 550 million) to date

Reliance Infocom will target leading market
shares and attractive returns on capital employed
53
Summary
54
RILs Share Price Performance
change Period RIL Sense
x Nifty Year to date 3 1 1 1
year -19 -25 -23 2 year -6 -38 -33 3
year 137 -1 10 5 year 123 -6 7 10 year
311 43 -
RIL shares have consistently outperformed the
benchmark indices over all time frames
55
Summary

• RIL provides exposure to major growth sectors of
  the economy - oil gas, petrochemicals, refining
  and marketing, power, infocom
• Continued industry downtrend has adversely
  affected margins of petrochemicals producers
  globally
• RILs superior performance amongst international
  peers reflects its global competitiveness and the
  success of its business strategies
• RILs investments in oil gas and infocom are
  expected to generate significant returns in the
  medium to long term for maximisation of overall
  shareholder value

Reliance has adopted strategies for enhancing
operational and financial flexibility, and
outperforming peers in an uncertain industry
environment
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Reliance Industries Limited Indias World Class
Corporation