Beruflich Dokumente
Kultur Dokumente
Results
Reliance
Industries Limited
January 10, 2006
2
Contents
Economic
EconomicOverview
Overview
Financial
FinancialPerformance
Performance
Business
BusinessReview
Review
Summary
Summary
Economic
EconomicOverview
Overview
Global Economic Trends - GDP
Fed signals approaching end of rate hike cycle, Dr. Bernanke to take-over
6
Indian Economic Backdrop
Inflation under control in spite of oil shock and strong growth – potential
upside risks from wage pressures, demand factors, and high global
commodity prices
Record trade deficit of US$ 16.2 bio in Q2 05-06 on back of strong import
growth
May-05
Mar-04
Nov-04
Mar-05
Nov-05
Jul-04
Jul-05
Jan-04
Jan-05
Jan-06
Sep-04
Sep-05
market concerns
Flattening of yield curve even as Fed nears neutral rate – inversion of curve possible
8
Trend in Commodity Prices
C R B Index B rent
350 70
65
330 60
55
310 50
290 45
40
270 35
30
250 25
May-04
May-05
Mar-04
Mar-05
Nov-04
Nov-05
Jan-04
Jul-04
Sep-04
Jan-05
Jul-05
Sep-05
Jan-06
Soft energy prices offset strong rise in
FY 05 Q2 Q3
most commodity prices in last quarter
CRB Index 11% 11% 0%
Commodity Group:
Energy 63% 48% -16%
Metals and agri commodities at or
Industrials 10% 16% 12% close to new highs
Precious Metals -6% 6% 14%
Energy prices soft on high inventory
Source: Bloomberg
and slower demand growth
Source: Bloomberg
Rupee demonstrated sharp two-way volatility over the last quarter with net loss of
2.3% over the quarter – Rupee weakened initially on worsening current account,
global Dollar rally, and REER correction - Rupee appreciation since December is
driven by strong capital flows and overseas weakness of Dollar
10
Performance of Currencies over 2005
FX rate on
31-Dec-04 30-Dec-05 % Change
Dollar Index 80.85 91.07 12.64%
Major Currencies:
GBP 1.9181 1.723 -10.17%
EUR 1.3554 1.1849 -12.58%
JPY 102.63 117.75 -12.84%
Asian currencies:
TWD 31.74 32.825 -3.31%
KRW 1035 1010 2.49%
SGD 1.6317 1.663 -1.88%
INR 43.46 45.05 -3.53%
11
12
Summary – Global Economic Backdrop
13
Financial
FinancialPerformance
Performance
Production
10.00
7.76 7.95
8.00 6.70
6.00
2.00
0.00
Petrochemicals Crude Processed
15
17
Net Profit – Q3 FY 06 Vs Q3 FY 05
Other Income
-152
Interest
Net Profit for the
11
quarter down by
Rs 315 crore
compared to Depreciation
previous quarter 88
Operating Profit
-313
Tax
51
Operating Profit
-737
Interest
29
Depreciation
-20
Tax
65
Others
Petrochemicals Others 14%
Petrochemicals
37% 2%
48%
Refining
61% Refining
38%
20
Segment Results
(in Rs crore) Q3 Q2 Q3 % Change wrt
FY05 FY06 FY06 Q3 FY05 Q2 FY06
Refining
Refinery EBIT margin lower due to lower GRM and refinery shutdown
21
Segment Analysis Q3 Vs Q2 FY 06
Refining EBIT lower by Rs 676 crore mainly due to :
USD Bn
1.8
Refining 2.0 1.4 1.5
contributes 80%
1.0
Petrochem at
20% -
Q3 FY05 Q2 FY06 Q3 FY06
23
Return on Equity
25%
22.3% 22.7%
22% 20.4% 20.1%
19%
15.5%
16%
13%
10%
FY 05 Q1 Q2 FY Q3 FY 9m
FY06 06 06 FY06
30.5%
31%
27.5%
27%
23% 21.3%
19.1%
19% 17.8%
15%
FY 05 Q1 Q2 FY Q3 FY 9 m FY
FY06 06 06 06
25
ROCE Calculation
Rs. Crore
26
Liquidity Ratios
27
31-Dec-05
28
Capex
E&P 1,251
Refining 2,028
Petrochemicals 2,400
Common 383
Total 6,800
29
Business
BusinessReview
Review
Exploration
Exploration&&Production
Production(E&P)
(E&P)
E&P Portfolio
Exploration Blocks - 34
blocks in India and one each
in Yemen and Oman
32
Highlights for the Quarter
33
Total Oil production for the quarter was at 412,327 MT an increase of 13%
over previous quarter. Gas production was at 32 BCF same as the previous
quarter.
around $58.78 per bbl as against Q1 and Q2 of $50.98 and $58.90 per bbl
34
Status – KG D6 Development
Two Development wells drilled and core samples obtained. Core Analysis
has commenced.
35
Status – NEC 25
drilled prospects at 2.3 TCF(2P) with a further upside potential of 8.2 TCF.
This covers only 20% of the block area. Further exploration is in progress.
MoEF has now permitted drilling throughout the year under monitoring by
Govt. agencies.
Commerciality report for the discoveries in the block approved by partners &
36
Status – Coal Bed Methane
Till date, 19 information wells and 10 production test wells have been drilled. CBM gas
estimated at 3.65 Tcf - as certified by the DGH.
Plans being finalised to produce commercial CBM first time in the country by mid 2009.
Next 3-5 yrs plan - Over 1100 wells in1200 sq.km area at approximately Rs.2200 cr.
10 information wells drilled till date.- 5 production test wells planned in the next quarter.
Geological assessment for determining commercial CBM potential is in progress
37
Overseas Assets
Yemen: Block 9
38
Overseas Assets
Oman
‒ 2D reprocessing activity underway. Likely to be completed by the end
March 2006
‒ EIA draft report under internal review. Final report likely to be submitted to
the Ministry by End January.
‒ Tendering process initiated for Multi-beam Bathymetry and Backscatter
surveys
Columbia
39
Refining
Refining&&Marketing
Marketing(R&M)
(R&M)
Global Oil – Remains Stronger
70
Brent Dated ($/ bbl) Dubai ($/ bbl)
65
14 Brent Dubai Spreads ($/ bbl)
60
12
55
10
50
8
45 6
40 4
35 2
30 0
1 -M ar-05
1-A p r-05
1-M ay-05
1 - J u l- 0 5
1-A u g -05
1-O c t-0 4
1-N o v -0 4
1 -D e c -0 4
1-J an -0 5
1 -F eb -0 5
1 -J u n -0 5
1 -S ep -0 5
1-O c t-0 5
1-N o v -0 5
1 -D e c -0 5
Au 5
5
Ma 5
Se 5
Ma 5
5
No 4
Fe 5
No 5
De 4
De 5
4
5
l-0
r -0
n -0
g-0
t- 0
t- 0
n -0
b -0
r -0
v-0
p- 0
v-0
y -0
c-0
c-0
Ju
Ap
Oc
Oc
Ju
Ja
Source: Platts
•Around 5% downward correction in Oil prices (vs. Q 2 2005-06 ), but still strong
•Brent Dubai spreads have declined compared to Q2 2005-06
41
90
84.8 85.4
83.9 84.1 82.8
85 81.9
80
75
70
2004 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1
Source: IEA
42
Global Refining Operating Rates
North America Europe Asia-Pacific
94% 93%
93%
92%
92% 91%
91%
90% 90%
90%
89% 89%
88% 88%
88%
88%
86%
86%
86%
84%
84%
82%
80%
2004 Q4 2005 Q1 Q2 Q3 Q4
Source: ESAI
Oct-Dec quarter saw higher operating rates in Europe and Asia Pacific but
lower operating rates in N. America due to Katrina and Rita hurricanes
43
05
05
5
5
05
05
05
l- 0
r-0
t-0
r-0
n-
g-
v-
y-
p-
Ju
Oc
Ma
Ap
Ju
Au
No
Ma
Se
Source: Reuters
• Q3 average Singapore complex margins at US$ 6.0 per barrel – much above
the five year average of US$ 4 per barrel
• RIL continues to show superior GRMs of US$ 9.1 /bbl during the quarter,
higher by US$ 3.1/bbl compared to Singapore complex margins
44
Highlights : RIL Performance
Partial shutdown of Jamnagar complex during Oct/Nov’05.
Shutdown successfully completed with all units commencing
normal operations
45
Q3 FY05 Q2 FY06
46
Refinery Product Sales
47
Procurement of Major equipments (including high value and long lead items)
commenced
Operating Rates
86% 88%
84%
84%
84%
82%
80% 80%
2004 Q4 2005 Q1 Q2 Q3 Q4 2004 Q4 2005 Q1 Q2 Q3 Q4
50
Ethylene Cash Margins
500 1000
400 800
300 600
200 400
100 200
0 0
Nov-04
Nov-05
Nov-04
Nov-05
Jan-05
Jun-05
Jul-05
Jan-05
Jun-05
Jul-05
Oct-04
Dec-04
Feb-05
Mar-05
Apr-05
May-05
Aug-05
Sep-05
Oct-05
Dec-05
Oct-04
Dec-04
Feb-05
Mar-05
Apr-05
May-05
Aug-05
Sep-05
Oct-05
Dec-05
Source – CMAI
51
Business Dynamics
52
International Prices
(US$/MT) Q3 FY05 Q3 FY06 Change Q2 FY06 Q3 FY06 Change
Naphtha 390 469 20.3% 490 469 -4.3%
Propylene 987 988 0.1% 956 988 3.3%
EDC 550 314 -42.9% 301 314 4.3%
Domestic Prices
(Rs. / kg ) Q3 FY05 Q3 FY06 Change Q2 FY06 Q3 FY06 Change
Naphtha 19.6 22.9 16.8% 23.2 22.9 -1.3%
Propylene 48.1 47.2 -1.9% 38.6 47.2 22.3%
EDC 28.9 14.9 -48.4% 13.9 14.9 7.2%
55
56
Domestic Demand - Polyester
57
Polyester Production
220 220
Q3 FY05 Q3 FY06 Q2 FY06 Q3 FY06
58
Polyester Intermediates Deltas
MEG - Naphtha (Rs / kg)
18.6 PTA - PX (Rs / kg)
52.3
14.3 13.9
31.3
26.9
59
Polyester Deltas
60
Polymer – Business Environment
No new cracker start up during 3Q’FY05-06 : Margins above
historic averages
Crude and Naphtha prices witnessed drop during Oct / Nov’05,
however prices rebound in Dec’05 – polymer prices followed the
same trend
US witnessed soaring imports during the quarter due to
¾ Continued effect of Katrina and Rita
¾ Lower operating rates
Comparatively weak demand in Europe and North East Asia
(lowest in the calendar 2005)
Domestic Polymer Industry witnessed ~ 21% Y-o-Y growth
61
62
Domestic Demand - Polymers
63
Polymer Production
64
Polymer Deltas
65
Summary
Summary
Summary
68
Reliance: Superior Stock Performance
180
Indexed one year price performance
170
160
150
140
130
120
110
100
90
80
Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06
69
Apr-03
Jul-03
Oct-03
Jan-04
Apr-04
Jul-04
Oct-04
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
70
Outperforming the Global Peers in Energy and
Chemical sectors
Last 1 year Performance (%)
80
70
60
50
40
30
20
10
0
-10
-20
-30
ENI
BASF
BP
Total
Lyon d ell
E xxon
Nan Ya
LG Ch em
Du Pon t
Form osa
Form osa
DOW
Relian ce
Petch em
Ch evron
Con oco
Plastics 71
Views on Petrochemicals
Ethylene Chain Margins To Remain Strong In 2006 (Merrill Lynch)
While prices and margins will undoubtedly decline from current unsustainable
levels, full-year 2006 ethylene/PE margins are likely to be above 2005 levels.
While ethylene/PE availability has improved from critically low levels reached in
September/October, U.S. ethylene production should remain constrained in 2006,
particularly in the first half of the year, as planned and unplanned outages reduce
US ethylene supply by as much as 7% in 2006 – only slightly below the 10%
largely hurricane-induced capacity-loss in 2005. Furthermore, we see US demand
rebounding 7% in 2006 after a 5% decline in 2005 due primarily to a drawdown of
derivative inventories.
72
Views on Refining
Capacity addition remains limited until 2008 (ABN AMRO)
Overall, we see the current weakness in refining margins as temporary and argue
that the macro trend of tight refining capacity is still intact. We therefore remain
bullish on the refining sector and believe the cycle will remain strong until 2007. We
also add there is nothing inconsistent about higher refining margins and lower oil
prices. The caveat to this is the risk that demand comes in a lot weaker than we
expect. Our current forecast is for a 3% yoy increase in product demand for 2006 vs
just 1.8% in 2005.
73
Demerger Update
74
Growth is Life
Thank
ThankYou
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