Reliance Industries Limited

September 2006

RIL’s Existing Refinery At Jamnagar, Gujarat

Contents

Reliance Industries: An Overview

Business Review

Summary

2
RIL – Unique Business Model

World class
execution Financial
capabilities to prudence &
implement large conservatism
projects

Benchmarked Vertically
efficiencies and integrated;
controlled costs global scale
operations

Strengthening Steady cash

presence in new flows; Proven
growth - Oil & financial
Gas, R&M strength &
stability

India’s only private sector company in Fortune Global 500

3

Reliance Industries – India’s Proxy

„ Revenues of US$ 19.9 billion

„ Cash Profit of US$ 2.9 billion

„ Net Profit of US$ 2 billion

„ 98% of revenues from Refining and

Petrochemicals, 2% from E&P & others

India and Reliance

„ Revenues equivalent to 2.8% of India’s GDP

„ 8.2% of India’s total exports

Note: All numbers for FY 2005-06
„ Contributing 8% India’s indirect taxes

„ 4.7% of the total market capitalization,

11.5% weightage in Sensex

What is good for India is good for Reliance

4
Fortune Global 500

Amongst the 200 most Profitable Companies in the Fortune Global 500

Among the top 25 Climbers – change of 75 ranks

Global
Rank

Net Sales 342 75

Net Profit 194 11

Net Worth 226 19

Assets 351 6

India’s only private sector company in Fortune Global 500 list

Consistent Growth
Turnover (US$ Million) 19,976
21,000
18,000 16,725
12,866
15,000
10,549
12,000 9,304
9,000
4,938
6,000
3,000
FY-01 FY-02 FY-03 FY-04 FY-05 FY-06
Net Profit (US$ Million) 2,033
2,100 1,731
1,800
1,500 1,180
1,200 864
567 664
900
600
300
-
FY-01 FY-02 FY-03 FY-04 FY-05 FY-06

Turnover CAGR of 32% and Net Profit CAGR at 29% over 5 years

6
Strong Fundamentals
„ Strong Cash flows
¾ Existing businesses generating cash flows of US$ 2.9 billion per annum

„ Solid Balance Sheet

¾ Total Assets have grown from US$ 4.3 billion to US$ 20.8 billion over the last 10
years

„ Conservative gearing

¾ Debt to Equity ratio of 0.47, Net Gearing at 29% as on June 30, 2006

„ Top end credit ratings

¾ Baa2 Stable Outlook by Moody’s

¾ BBB Stable Outlook by S&P (above Sovereign Rating)

¾ AAA by CRISIL (S&P-India) for the past 12 years

Experience in multi-billion dollar projects on the strength of cash

flows with marginal recourse to external borrowings

Oil to Textiles: Value from Integration

Oil and Gas Oil and Gas
Exploration Production

Petroleum Petroleum
Refining Retailing

Olefins and
Aromatics

Plastics Fiber Petrochemicals

Intermediates
(PE, PP, PVC, PET) (PX, PTA & MEG) (LAB, EO)

Polyester
(Fiber, Filament)

Textiles

Unique level of integration among the global players

8
Domestic Leadership & Global Rankings

Leading Market Shares in India Leading Global Position

1 Polyester 4 Paraxylene
Polyester (2) 56% (Fibre & Yarn)

Fibre Intermediates (2) 87%

3 Refining (1) 6 Purified
Polymers (2) 67% Terephthalic
Acid
Refining 28%
7 MEG 7 Polypropylene

Amongst top 10 global players

Dominant market share in India
in all its core businesses

(1) At any single location

(2) Petrochemicals market share incl. IPCL

Leading domestic market shares and global positions

Tenets of RIL’s Value Creation Journey

„ Ability to identify and pursue high growth businesses

„ Superior execution capabilities in setting up world-class projects in record time

„ Global competitiveness and leadership position in most businesses

„ Low cost manufacturer and quality service provider

„ Integration across the value chain

„ Financial conservatism and prudent financing norms

„ High standards of Health, Safety and Environment

Consistently Enhancing Stakeholder Value

10
 Exploration & Production (E&P)

Upstream Business Approach

Large High-Quality
Exploration Portfolio
Exploration
Excellence to add resources
at low finding cost

Growth in Create Attractive

Shareholders Project Inventory
Value

Superior Project Execution

with focus on time
Capitalise On management & costs
Growing Domestic
Natural Gas Market

12
Large High-Quality Exploration Portfolio
Domestic
5 Blocks
41 Blocks (including PMT & 5 CBM) ~ 52,000 Sq.
KM
Acreage Holding: 340,000 Sq. KM
1 Blocks
Overseas ~ 26,000 Sq. NELP V
KM
2 Blocks – Oman and Yemen 9 Blocks
NELP IV KGD6-
~ 114,000 MA1 Oil
Sq. KM Discovery
4 Blocks
~ 42,000 Sq. NELP III
11 Blocks KM
NEC Gas
(including Discovery 5 CBM
KGD6) Blocks
NELP II
~ 74,000 Sq.
4 Blocks ~ KM
1994 23,000 Sq. KG D6
KM NELP I Gas
Discovery
Panna-Mukta World’s largest
& Tapti 2 gas discovery in
Blocks ~ Pre NELP 2002
2,700 Sq. KM

RIL is the India’s largest private sector E&P player

13

International Business
OMAN YEMEN COLOMBIA

21,140 square km, 100% PI 2,464 square km, 25% PI 15,718 square km

Work Program on schedule Producing around 10,000 bpd TEA signed with Eco-petrol
First well to be spudded next year Efforts to increase production Technical evaluation under
progress

14
Creating Attractive Project Inventory
„ Panna-Mukta EPOD, Tapti NRPOD & KGD6 under implementation
„ Target to complete projects at globally competitive costs.
„ Continued focus on exploration to maintain inventory
„ Development using globally proven technologies
„ Capitalise on RIL’s project management skills KG III6

NEC25

KGD6
& CBM

Tapti
NRPOD

Panna Mukta
EPOD

'06-07 '07-08 '08-09 '09-10 '10-11

Significant contribution to RIL cash-flow on project completion

15

Reserves

„ World largest gas discovery in 2002 - Krishna-Godavari basin (14 TCF OGIP) –

with further potential upside under exploration

„ Discovery in NEC-25- puts Mahanadi offshore to petroliferous map of India (2.3

TCF OGIP)

„ CBM Gas – puts Coal Bed Methane in the map of India (3.65 TCF OGIP)

„ Crude oil discovery notification was made for the MA1 well in KGD6

„ Signifies a large geological play that could result in future discoveries

„ Testing done in 2 zones located 3 kms below sea level

FY09 will be a watershed change with E&P contributions

to overall revenue increasing significantly
16
KG D6 – Highlights

„ Successful exploration efforts reduce finding costs

„ 17 exploratory wells drilled, notified 14 discoveries to the DGH

„ Aker Kvaerner appointed as the engineering consultant

„ Bechtel is the PMC

„ Development Plan for discovery of D1 & D3 fields, currently the most prolific

fields in block D6, has been approved

„ Capex at US$ 2.4 billion for production profile of 40 MMSCMD

„ High EBITDA potential

Development of KG-D6 project progressing as planned

17

Gas Transportation

„ 48 inch – 1,400 KM East West Pipeline

across Andhra, Karnataka,
Maharashtra and Gujarat

„ EWP to provide access to potential gas

markets in its corridor

„ Leverage deficit gas market in India –

current shortfall>100 MMSCMD

„ EWPL commissioning synchronized

with KGD6 development

„ Project implemented by Reliance Gas

Transportation Infrastructure Limited

Work on schedule to ensure first gas delivery in FY09

18
 E&P - Summary

„ Diversified and high-potential exploration portfolio

„ Successful exploration efforts reduce finding costs

„ Development of KG-D6 project progressing as planned

„ NEC25: Six discoveries declared as Commercial – development plan under

preperation

„ CBM: Commenced drilling in Rajasthan Blocks

¾ Environmental Clearance obtained for Sonhat Block

„ Opportunistic expansion of international portfolio

E&P likely to contribute 15-20% of revenue by 2010

19

Refining & Marketing (R&M)

Key Industry Trends

„
„ Rapid
Rapid economic
economic growth
growth :: “Fueling”
“Fueling” energy
energy demand
demand

„
„ Structural
Structural changes
changes in
in demand
demand composition
composition

„
„ Shortage
Shortage of
of complex
complex refining
refining capacity
capacity

„
„ Increase
Increase in
in light-heavy
light-heavy spread
spread

„
„ Stricter
Stricter environmental
environmental regulations
regulations

21

Stretched Global Refining System

90 MMBD 20

80 18

16
70
14
60
12
50
10
40
8
30
6
20
4

10 2

0 0
1965 1970 1975 1980 1985 1990 1995 2000 2005

Oil consumption Refining Capacity Surplus Capacity

Source: BP Statistical Review of World Energy, June 2005

HART’S World Refining and Fuel Services, Dec’05

Global utilisation rates at its highest in the last 2 decades

22
Insignificant Capacity Additions in recent past

30%
25%
Refin ing Capacity 20%
% o f G lob al

15%
10%
5%
0%
0-5

5 - 10

10 - 15

15 - 20

20 - 25

25 - 30

30 - 35

35 - 40

> 40
Age of Refining Capacity (Years)

Source: Based on data from BP Statistical Review of World Energy, June 2005

72% of global weighted average refining capacity is aging

23

Global Crude Oil Availability Trends

Global Crude Oil Availability Trends (2005-2020)

1.4 32.9

32.8
32.8
1.35 1.4
32.7
32.6
1.3
API Gravity

32.6
(Degrees)

32.5
Sulphur (wt%)

32.5
1.25

32.4
1.3
1.2
32.3
1.2 32.3
1.15 1.2 32.2

32.1
1.1
32

1.05 31.9
2005 2010 2015 2020
Years
API Gravity Sulphur (%)

Source: HART’S World Refining and Fuel Services, Dec’05

Global crude oil basket likely to become heavier and sourer,

thus favoring higher complexity refineries
24
Arab Light and Heavy Differential
Light-Heavy Differential
8
Avg differential
7 of US $ 5.2/bbl

5
$ / Barrel

3
Avg differential
2 of US $ 1.6/bbl

0
May-00

May-01

May-02

May-03

May-04

May-05

May-06
Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06
Sep-00

Sep-01

Sep-02

Sep-03

Sep-04

Sep-05

Sep-06
Significant differential in Light and heavy over last 5-6 quarters

25

Product Specifications Getting Tighter

800 Gasoline Sulphur Specs (ppm) 3,000 Diesel Sulphur Specs (ppm)
700 2,500

600
2,000
500
1,500
400

300 1,000

200
500
100
0
0
2005 2010 2015
2005 2010 2015
North Am erica Latin Am erica
North Am erica Latin Am erica Western Europe Asia Pacific
Western Europe Asia Pacific Middle East
Middle East

Source:Hart’s Downstream Energy Services, World Fuels and Refining Analysis (2002)

Tighter product specs force higher desulphurization requirements

26
Structural Strengthening of GRMs

Increasing Global
CleanFuels
Fuels Increasing Global
Clean Heavy, Sour Crude
Specifications Heavy, Sour Crude
Specifications Slate
Slate

GrowthCapex
Capex
Significant Growth
Significant divertedtotoClean
Clean
Demand Growth diverted
Demand Growth Fuels
in Asia Fuels
in Asia Investments
Investments

Global Refining
Margins

Expanding US & RisingGreenfield

Greenfield
Expanding US & Rising
Global Economy Project Costs
Global Economy Project Costs

IncreasingDemand
Demand
Increasing
MTBEPhase-out
Phase-out forLight
Light&&Middle
Middle
MTBE for
DistillateProducts
Products
Distillate

27

RIL Jamnagar - World-Class Refinery

„ World’s 3rd largest refinery with capacity of 33 million tonnes per annum

„ A complex refinery integrated with petrochemicals, captive power & port –

Nelson Complexity Index of 11.3

„ Proximate to crude supply sources and markets

„ Consistently earning $2 - $3 / bbl GRMs above the Singapore Complex Margin

„ Exporting products to the most quality conscious markets such as the US,

Europe and Japan – 51% of refinery volume exported in Q1 FY07

Top quartile performer in productivity,

efficiency and technical complexity

28
Consistently High GRMs

14
12.4
12
10.3
10 8.8
8
$ / bbl

6.1
6 5.1

4
2.3
2.2
2 1.4
0
2002-03 2003-04 2004-05 2005-06 QI FY07

RIL N Y Harbour Mediterranean

Rotterdam Singapore

Source: Reuters / Company Data

Record GRM with RIL outperforming global benchmarks

29

R&M – Business Strategies

„ Cost leadership, Operational excellence

„ Feedstock flexibility - Increasingly heavier crude basket

„ Superior product slate

„ Increasing focus on exports

30
Reliance Petroleum: A snapshot

„ A refinery for the world, located in India

„ Investments of US$ 6bn; Being set up in an SEZ at Jamnagar

„ Refining capacity of 580,000 BPSD – to be 6th largest at a single location

„ Nelson Complexity of 14.0

„ Sustainable competitive advantages; shall allow major margin upside under

favorable global industry dynamics

„ On fast track implementation, to be fully operational by Dec’08

A Reliance value creation initiative

31

Superior Configuration and Product Slate

„ Sustainable twin benefits:

Product Base Range
(MMTPA)
„ To process heavier/sourer crude Diesel 12.0 - 13.0
with avg. API of 24 Gasoline 8.0 - 10.0
Jet 1.0 - 2.0
„ To meet superior product specs for
Petcoke 2.0 - 3.0
European and US markets (Euro
Alkylates* 2.0 - 3.0
IV)
Polypropylene 0.50 - 0.90
Sulphur 0.50 - 0.60

* High Octane gasoline used in the developed

markets, trades at a significant premium

RPL’s to produce superior spec products

to make it a truly global refinery

32
Feedstock Flexibility

„ RPL expected to be among the top Feedstock No. of % of

Refineries Total
5% of refineries with extra heavy
Extra heavy crude 31 4.7%
crudes (below 26 API) processing Heavy crude 114 17.2%
capabilities Medium crude 260 39.3%
Light crude 135 20.4%
„ A high light-heavy crude price delta Extra light crude 121 18.3%
scenario may lead to significant Total 661 100.0%
Source: Based on data from Oil & Gas Journal
margin advantage

High level of flexibility to enable RPL to process opportunistic crudes

33

Summary of progress in recent months

„ Engineering completion on schedule

„ Basic engineering nearly done

„ 25% of detailed engineering completed

„ Over 5000 engineers / managers working across locations globally

„ Major purchase commitments made

„ Critical and long lead equipments ordered

„ Steel and piping bulks committed; Deliveries being effected already

„ Infrastructure and construction activities progressing rapidly

„ Staffing at Bechtel and others contractor offices saturated

„ Project expected to be completed on time and within budget

Project on fast track completion : Positive for margins

34
Project cost and timeline risks mitigated

„ Early commitment of high value and long lead equipments

„ Benefits of ‘repeat’ approach maximised

„ Booked shop capacities ahead of the competition

„ Competitive prices and delivery schedules

„ De-risking from price volatility of various commodities

„ Current procurement status highly conducive

„ Purchase commitments made for over 3/4th of project equipment

„ All long-lead items of equipment & packages committed

„ Engineering design work at advanced stage, further minimises the risk

High confidence level for capex & project schedule

35

Petrochemicals - Polymers
Polymer : Demand Supply
Polymer Demand Supply : Global Polymer Demand Supply : Asia

200 100% 100 100%

Capacity Demand Op. Rate Capacity Demand Op. Rate
MMTA
MMTA
90% 90%
150 75

80% 80%
100 50
70% 70%

50 25
60% 60%

0 50% 0 50%
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010
CAGR % 00 - 05 05-10 CAGR % 00 - 05 05-10
Demand 4.6% 4.8% Demand 7.0% 6.5%
Capacity 3.6% 5.1% Capacity 5.6% 5.1%
Source: CMAI
Asian demand growth outpacing capacity addition
37

India on a Inflection Point

Source :Nation Master
Polymer Consumption (MMT) GDP (Billion US $ Constant)
Source :CMAI

China Is India at an
China 1910
inflection
India
30

India point?
27

1654
25

China’s
Inflection
23

1418
point 1271
20

1176
17

1081
16

946991
14

816 898 746

11

700 665
10

406 543 407 495 576

9

483 601 458

7

373 409 471

6

437
4.4
4.1
4.1
3.8
5

3.7

311 353
3.3
3.1

280
2.7
4

2.4
0.9 3

278
1.9

273
1.8
1.7
1.4
1.0
1.1

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005*
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005

China 6 times India China’s GDP 2.5 times India

India has potential to replicate China but with a time lag

38
India’s Leading Petrochemical Player

ƒ Polymers, Polyester, Polyester Intermediaries

Diverse Product
ƒ Cracker Products (Ethylene and Propylene)
Range
ƒ Chemicals (Linear Alkyl Benzene, Normal Paraffin)

Market ƒ 67% of domestic polymers market

Dominance ƒ 56% of domestic polyester market

ƒ Capacity utilisation rates 100% plus

Unrivalled
ƒ Record production of nearly 13.5 million tonnes in FY06
Performance
ƒ Recently added capacity of 1.56 million tonnes

Strategic ƒ IPCL - India’s 2nd largest petrochemicals company

Acquisition of ƒ Enhanced competitive advantages - feedstock
IPCL integration; infrastructure sharing

Reliance’s global scale, competitiveness and emphasis on specialty

products allow for leadership in the industry
39

Polymer Portfolio: Market Trends

Growth Opportunities

„ Indian per capita consumption 4.5kg Vs 75 Kg in developed countries

„ 8% GDP growth will boost all round consumption

„ India experiencing retail, automobile and construction boom

Asia and Mid East Emerging as production Hub

„ 75% of Global Ethylene expansion is in Asia and Mid East

„ India’s participation in export of converted product to West will increase

Emergence of Global markets

„ Reliance has locational, structural and cost advantages

40
 Cash Cost Competitiveness Asia / ME
Asia/ME Cash Cost compititiveness

1400 1000
Capacity Ethylene Cash Cost

R IL H az ira
900
1200
800

1000 700

C ash C o st ($/M T )
600
C ap acity (K T A )

800

500

600
400

400 300

200
200
100

0 0

Middle East Gas Crackers Asian/ME Crackers

Asian Naphtha Crackers

Base : Crude Dubai @ US$ 60/bbl

Reliance : Ethylene Cash cost among the lowest in Asian Naphtha crackers
41

Polymers - Priorities and Growth Strategies

„ Improved cost position in manufacturing

„ Volume growth and value improvement in ‘basics’

„ Expansion of speciality portfolio

„ Enhance customer relationship

„ Enhance speed to market through R&D and Application development

42
 Petrochemicals - Polyester

Polyester Production: Changing Trends

1980 2000 2005

Producer KTA Producer KTA Producer KTA

DuPont 841 Nan Ya 1035 Reliance 1700

Celanese 605 Reliance 779 Nan Ya 1080
Hoechst 395 KoSa 700 Sanfangxiang 1050
AKZO 316 Teijin 698 Yizheng 945
Eastman 302 Sam Yang/SS (Huvis) 658 Yuandong 900
Rhone Poulenc 248 Hualon 575 Tuntex 885
Teijin 219 Far Eastern 604 Far Eastern 781
Toray 172 DuPont 583 Huvis 750
ICI 155 Tuntex 561 Rongsheng 650
Monsanto 146 Toray 543 Tongkun 640
1982: RIL commissioned first polyester plant of 10 KTA
US, EU, Japan Taiwan, Korea China, India

RIL: Leadership in two decades

44
 Chain Delta: More Stable

US$/Mt
900
PX delta PTA delta mod PES delta
800
Average 3 yr avg
700
Average $605
600
500
400
300
200
100
0
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
'97 '97 '98 '98 '99 '99 '00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06

Lower volatility improves investment framework

45

India: Textile Vision 2010

MMT

Cotton Polyester Other MMF 0.8

15% p.a
15% growth required in MMF
production as cotton faces
4.1
0.4 natural restrictions on supply

1.7
2% p.a

Cotton projected to grow @

2.9 3.2 2%, the growth rate recorded
in past 10 years.

2004 2010
Source: CRISIL

Polyester to drive future growth of textile industry in India

46
Polyester Summary

„ Rising Cotton prices combined with lower availability to encourage polyester

consumption in India

„ Consumption to grow substantially from low base

„ Positive fiscal environment to improve polyester demand

„ Reliance well positioned to improve its leadership in volume, product portfolio

and earnings

Strong growth momentum across Polyester sector

47

Summary
Reliance: Superior Stock Performance

Relative Stock Performance

250 RIL Sensex MSCI AXJ S&P 500 Chem

200

150

100

50

M 6

Ju 6

Ju 6
Au 06
Ja 6
Fe 6

Ju 6
06
Se 5
O 5

N 05
D 5
D 05

Ja 5

Fe 06

M 6
M 6
Ap 06

06
O 5
N 5
Se 5

Au 6

Se 6
M 6
-0
-0

l-0
0
0

-0

-0

0
-0
-0
-0

0
0

0
0

0
0
p-
p-

p-
l-
n-
n-

n-
n-
b-
b-

-
g-

g-
g-
r-
ov
ov
ec
ec

ay
ay
ar
ar
ct
ct

Ju
Au

Outperforming most benchmarks in last one year

49

Summary

„ Significant value enhancement of portfolio through investments in Exploration

and Production of oil and gas – on target for first gas production in 2008

„ Positive outlook on refining margins and volume growth with full capacity

utilisation

„ Stable margins expected in Polymers business

„ Volume growth in Polyester with expanded capacity

Strong growth momentum in all major businesses

50
Thank You