Reliance Industries Limited · NSE:RELIANCE
Reliance Industries — Q3 FY2004-05 Earnings Presentation
67 slides from Reliance Industries's earnings presentation, Jan 21, 2005
Slide 1: If you can dream it, you can do it
“If you can dream it, you can do it !” - Dhirubhai H. Ambani Founder & Visionary 1
Slide 2: Financial Presentation 3rd Quarter FY 2004-05
Financial Presentation 3rd Quarter FY 2004-05 Reliance Industries Limited January 21, 2005
Slide 3: Forward Looking Statements
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
Slide 4: Contents
Contents Financial FinancialPerformance Performance Business BusinessReview Review Summary Summary 4
Slide 5: Financial Performance
Financial FinancialPerformance Performance
Slide 6: Revenues
Revenues 75,000 Revenues (Rs crore) Revenues (Rs crore) 35,000 65,000 55,000 30,000 68,535 45,000 54,066 25,000 35,000 24,855 22,917 25,000 20,000 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 Gross Turnover up 8% compared to the trailing quarter and 27% for the 9 month period 6
Slide 7: Key Revenue Drivers
Key Revenue Drivers Volume growth of 3% Impact of increase in product selling prices 24 % Growth in the 9 months period mainly driven by higher selling prices 7
Slide 8: Record Production
Record Production 25.0 21.8 23.7 20.0 15.0 9.2 9.5 10.0 5.0 0.0 Petrochemicals Crude Processed 9M FY-04 9M FY-05 Production / Crude processed in Million Tonnes Petrochemicals up 3%, Crude Processed up 9% 8
Slide 9: Exports
Exports USD Bn 4.0 3.7 3.0 2.4 2.0 1.0 - 9M FY-04 9M FY-05 Exports up 55% and now at 24% of total revenues 9
Slide 10: Segment Revenues - Petrochemicals
Segment Revenues - Petrochemicals 30,000 Revenues (Rs crore) Revenues (Rs crore) 20,000 25,000 20,000 15,000 28,588 15,000 22,841 10,000 10,000 11,021 9,425 5,000 5,000 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 Petrochemicals segment revenues up 17% compared to the trailing quarter and 25% for the 9 month
Slide 11: Segment Revenues - Refining
Segment Revenues - Refining Revenues (Rs crore) Revenues (Rs crore) 40,000 25,000 35,000 30,000 20,000 25,000 38,494 15,000 20,000 29,589 15,000 10,000 13,415 12,980 10,000 5,000 5,000 Q2 FY-05 Q3 FY-05 9M FY-04 9M FY-05 Refining segment revenues up 3% compared to trailing quarter and 30% for the 9
Slide 12: EBITDA
EBITDA (Rs crore) (Rs crore) 11,000 10,000 8,000 9,000 7,000 8,000 7,000 6,000 6,000 10,239 5,000 5,000 7,858 4,000 4,000 3,000 3,000 3,466 3,621 2,000 2,000 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 EBITDA up 5% compared to trailing quarter and 30% for the 9 month period 12
Slide 13: Segment EBIT Margins
Segment EBIT Margins 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 Petrochemicals (%) 10.8 9.7 11.0 7.7 Refining & Marketing (%) 8.1 10.2 9.6 11.8 Increase in EBIT margins of Refinery Petrochemical EBIT margins impacted due to high input cost and consumer resistance at higher product prices 13
Slide 14: Interest
Interest Gross Interest (Rs Cr) Net Interest (Rs Cr) 1,107 945 900 1,100 900 700 700 500 500 284 300 133 300 100 100 9M FY-04 9M FY-05 9M FY-04 9M FY-05 Gross Interest up 17% due to impact of rupee depreciation Net Interest down 53% 14
Slide 15: Cash Profit
Cash Profit 9,000 (Rs crore) (Rs crore) 8,000 7,000 7,000 6,000 6,000 5,000 5,000 8,622 4,000 4,000 6,550 3,000 3,000 2,000 2,000 3,203 2,866 1,000 1,000 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 Cash profit up 12% compared to the trailing quarter and up 32% for the 9 month period 15
Slide 16: Net Profit
Net Profit (Rs crore) 6,000 (Rs crore) 5,000 5,000 4,000 4,000 5,280 3,000 3,000 3,741 2,000 2,000 2,091 1,752 1,000 1,000 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 Net profit up 19% compared to the trailing quarter and up 41% for the 9 month period 16
Slide 17: Growth in Net Profit
Growth in Net Profit 9M FY-05 (Rs crore) Operating Profit +2,068 Other Income +313 EBIDTA +2,381 Interest -162 Depreciation -463 Tax -324 Net Profit +1,539 Net profit growth solely by operating profit 17
Slide 18: Consolidated Net Profit
Consolidated Net Profit (Rs Cr) 6,000 5,360 5,000 3,944 4,000 3,000 2,000 1,000 9M FY-04 9M FY-05 Consolidated Net Profit up 36% 18
Slide 19: Consolidated Profit
Consolidated Profit Rs crore RIL Standalone 5,280 Share of REL 162 IPCL 152 Infocomm -38 Others 38 Elimination of premium on preference shares -238 Consolidated Profit 5,360 Future profit growth in associates will reflect true value of returns on RIL’s investments 19
Slide 20: Capex
Capex 9M FY-05 (Rs crore) Oil & Gas 1,000 Retail Marketing 450 Refining & Petrochemicals 1,150 Total 2,600 Capex to lead to sustained growth in future 20
Slide 21: Profitability Ratios
Profitability Ratios 9M FY-04 9M FY-05 EPS – Rs 26.8 37.8 Cash EPS – Rs 46.9 61.7 ROCE (%) 11.8 17.8 RONW (%) 16.6 20.7 Significant improvement in all profitability ratios 21
Slide 22: Liquidity Ratios
Liquidity Ratios 9M FY-04 9M FY-05 Gross Debt : Equity 0.72 0.42 Net Debt:Equity 0.60 0.34 Net Gearing 37.3% 25.4% Interest Cover 5.7 5.7 Adjusted for market value of investments, RIL is debt free 22
Slide 23: Conservative Debt Profile
Conservative Debt Profile 31st Dec 2004 Weighted Avg Cost of Debt 7.3% Avg. Maturity of Debt 4.75 yrs Forex debt 45% Top end ‘AAA’ rating maintained for over 10 consecutive years 23
Slide 24: Business Review
Business BusinessReview Review
Slide 25: Business Mix for 9 Months FY 2004-05
Business Mix for 9 Months FY 2004-05 Others 2% Petrochemicals 45% Refining 53% Refining and Petrochemicals contribute 98% of revenues. Share of Oil & Gas business poised to increase 25
Slide 26: Exploration & Production (E&P)
Exploration Exploration&&Production Production(E&P) (E&P)
Slide 27: Status – Panna-Mukta and Tapti
Status – Panna-Mukta and Tapti Crude oil production increased by 8% during the 9 month YOY Gas production increased by 10% during 9 month period YOY Oil production is at 30,000 BOPD Gas production is about 400 MMSCFD Oil and Gas production increased by 9% during the 9 month period 27
Slide 28: Exploration Status – KG-D6 and Other Blocks
Exploration Status – KG-D6 and Other Blocks Seismic data acquisition in progress in 3 blocks Seismic data interpretation in progress in other blocks. This would lead to identification of drillable locations in phases Drilling in progress in 4 blocks 13th exploration well currently in progres
Slide 29: Status – KG D6 development
Status – KG D6 development Development plan for Dhirubhai 1 & 3 fields approved by the Directorate General of Hydrocarbons; Forest clearance awaited Resolution of “cash vs. kind” issue pending Commercial production from D6 expected in the year 2008-09, subject to various statutory approvals Ac
Slide 30: Refining & Marketing (R&M)
Refining Refining&&Marketing Marketing(R&M) (R&M)
Slide 31: Global Crude Oil Prices
Global Crude Oil Prices Prices dropped US$10/bbl in 65 Dec’04 from the Oct’04 peak of Crude Price $ per barrel 55 US$55/bbl 45 OPEC announced production 35 cuts in mid-Dec’04 with further review of production quota in 25 end-Jan’05 15 Jul Jan Feb Jun Jan Oct Mar May Nov Dec Sep Aug Apr Geopoli
Slide 32: Global Refining Margins
Global Refining Margins Strong refining margins in Ref Margins- all regions 1st half of Q3FY05 12 However, margins softened 10 in 2nd half of the quarter 8 due to 6 4 • Mild weather conditions 2 • General economic 0 slowdown Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 • Build-
Slide 33: Highlights: Refinery Performance
Highlights : Refinery Performance Crude processed • 23.69 million tons • 96% capacity utilisation 7 new opportunity crudes processed Capacity utilisation for the secondary processing units continues to be high 5% reduction in fuel and loss on YOY basis High capacity utilisation and strong GR
Slide 34: Refinery Product Sales
Refinery Product Sales Million Tonnes 9M FY-04 9M FY-05 PSU 8.5 6.6 Captive 3.8 5.1 Others 2.8 4.1 Exports 5.6 7.6 Total 20.7 23.4 Own Domestic Sales and Exports offset lower PSU off-take 34
Slide 35: Highlights: Marketing
Highlights : Marketing 280 outlets fully operational, offering customised value-propositions for different consumer segments and on their way to Market Leadership in their respective territories Initiated bulk sales to Government and Public sector customers Nationwide supply chain network of t
Slide 36: Performance of commissioned ROs
Performance of commissioned ROs Throughput from Reliance outlets 2.5 times industry average Over 60% of the outlets achieve Market Leadership within weeks of operations Implementation of balance value propositions expected to further improve market effectiveness 36
Slide 37: Petrochemicals
Petrochemicals Petrochemicals
Slide 38: Polyester Deltas
Polyester Deltas POY (Rs/Kg) PSF (Rs/Kg) 25.0 21.0 25.0 20.0 20.0 15.0 12.00 15.0 11.0 10.0 10.0 6.00 5.0 5.0 Q2 FY-05 Q3 FY-05 Q2 FY-05 Q3 FY-05 POY/PSF deltas significantly lower during Q3 FY-05 due to strong fibre intermediate prices 38
Slide 39: Polyester Consumption
Polyester Consumption Domestic Demand (KT) Domestic Demand (KT) 1,500 1,000 1,000 1,254 500 1,227 500 407 405 - - 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 Demand flat compared to the trailing quarter due to high polyester prices 39
Slide 40: Polyester Intermediates Deltas
Polyester Intermediates Deltas PTA (Rs/Kg) MEG (Rs/Kg) 50.0 60.0 52.00 40.0 32.00 50.0 42.0 27.0 40.0 30.0 30.0 20.0 20.0 10.0 10.0 Q2 FY-05 Q3 FY-05 Q2 FY-05 Q3 FY-05 Polyester intermediates deltas continue to remain strong due to supply constraints 40
Slide 41: Polyester Intermediates Consumption
Polyester Intermediates Consumption Domestic Demand (KT) Domestic Demand (KT) 3,000 2,000 2,500 2,000 1,500 2,762 1,500 2,525 1,000 1,000 967 862 500 500 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 Demand down 11% compared to the trailing quarter due to price sensitivity 41
Slide 42: Polymer Deltas
Polymer Deltas PP (Rs/Kg) PE (Rs/Kg) 50.0 50.0 38.0 40.00 38.0 39.00 40.0 40.0 30.0 30.0 20.0 20.0 10.0 10.0 Q2 FY-05 Q3 FY-05 Q2 FY-05 Q3 FY-05 PVC (Rs/Kg) 50.0 40.0 Polymer deltas remain stable 30.0 22.0 22.00 20.0 10.0 Q2 FY-05 Q3 FY-05 42
Slide 43: Polymer Consumption
Polymer Consumption Domestic Demand (KT) Domestic Demand (KT) 2,400 2,000 2,000 1,600 1,600 1,200 2,512 2,438 1,200 800 800 400 400 818 745 - - 9M FY-04 9M FY-05 Q2 FY-05 Q3 FY-05 Ongoing high prices impact demand 43
Slide 44: Capacity Expansion Plans
Capacity Expansion Plans (KTA) FY-06 FY-07 FY-08 PP 280 Styrene 550 POY 330 PSF 220 PX 310 PTA 532 Total 830 842 550 2.5 million tonnes capacity addition in next 2-3 years 44
Slide 45: Acquisitions Update: Trevira
Acquisitions Update : Trevira Acquisition Date - August 11, 2004 Significant progress in the following areas: – Advance impact € 30 mn in raw materials fully mitigated through price & volume increases and product mix changes – Transfer of texturising equipment from Silkeborg to Guben commenced,
Slide 46: Acquisitions Update: NOCIL
Acquisitions Update : NOCIL Production Capacities : – Specialty Polymers – EVA (Ethyl Vinyl Acetate) - 13 KTA – UHMWPE (Ultra High Molecular Weight PE) - 2.4 KTA – Commodity Polymer – HDPE (High Density Polyethylene) - 60 KTA Commenced production and sales of specialty polymer EVA & HDPE Anoth
Slide 47: Acquisitions Update: S M Dyechem
Acquisitions update : S M Dyechem 80,000 tonnes per annum of MEG capacity based on alcohol Reliance becomes the fifth largest MEG producer in the world, with total capacity of 832,000 tonnes per annum Plant shut down since 1996 Reliance confident of successful start up of the plant – likely
Slide 48: IPCL
IPCL IPCL
Slide 49: IPCL – Impressive Performance
IPCL – Impressive Performance Gross Turnover Rs 10,312 crore, up 8% Cash profit Rs 989 crore, up 88% Net profit Rs 450 crore, up 159% Export earnings Rs 938 crore, up 117% Production 3.83 million tonnes, up 9% Strong performance on the back of robust margins 49
Slide 50: Reliance Energy
Reliance RelianceEnergy Energy
Slide 51: REL - Strong Performance
REL - Strong Performance Total Income of Rs 3,003 crore, up 11% Cash Profit of Rs 615 crore, up 20% Net Profit of Rs 366 crore, up 37% Net worth Rs 6,251 crore Successful turnaround of Delhi operations - aggregate PBT up from Rs 12 crore to Rs 128 crore for 9 months Ranked No. 3 in the pri
Slide 52: Reliance Infocomm
Reliance RelianceInfocomm Infocomm
Slide 53: RIC Q3 Performance Highlights
RIC Q3 Performance Highlights Subscriber base crosses 10 mn landmark Avg. monthly acquisitions at 0.45 mn, highest during the year Revenues at Rs 1,415 crore, up 58% YOY EBITDA at Rs. 219 crore, up 284% YOY Loss lower at Rs. 6 cr, against loss of Rs. 111 cr in Q3 FY04 53
Slide 54: RIC – Income Statement for 9mth FY05
RIC – Income Statement for 9mth FY05 (Rs. Crores) Y-o-Y Particulars 9 mths FY04 9 mths FY05 Growth Revenue 1,708 3,728 118% EBITDA 64 512 700% Interest - - Depreciation 334 676 102% Tax - - PAT (272) (164) NM Cash Profit 64 512 700% Significant improvement in revenues and operating profit 54
Slide 55: RIC – Income Statement Q3 Vs Q2 FY05
RIC – Income Statement Q3 Vs Q2 FY05 (Rs. Crores) Q-o-Q Particulars Q2 FY05 Q3 FY05 Growth Revenue 1,207 1,415 17% EBITDA 166 219 32% Interest - - Depreciation 225 225 Tax - - PAT (58) (6) NM Cash Profit 166 219 32% Operations expected to be profitable in the forthcoming quarters 55
Slide 56: RCIL Consolidated Profit
RCIL Consolidated Profit (Rs. Crores) 9 mths FY 05 RIC Standalone Net Profit (164) RCIL Standalone Net Profit 2 Subsidiaries of RIC and RCIL, net of minority interest 83 RCIL Consolidated Net Profit / (Loss) (79) RIL Share (45%) (36) Elimiation of Income on Preference Shares (238) Net impact on RIL
Slide 57: Migration leads to lower Bad Debts
Migration leads to lower Bad Debts Trend in Bad Debt Provisioning 500 20.0% 436 LHS: Bad Debt (Rs. Cr) 400 16.1% RHS : Bad Debt % of Revenue 15.0% Rs crores 300 Targeting to contain 7.7% 10.0% bad debts 200 5.8% under 2% 4.0% 85 70 5.0% 100 56 0 0.0% FY04 Q1 FY05 Q2 FY05 Q3 FY05 Bad debts have dec
Slide 58: Project Cost and Means of Finance
Project Cost and Means of Finance Project Cost Means of Finance Particulars Rs. Cr. US$ Bn Particulars Rs. Cr. U$ Bn Entry Fee 2,234 0.50 6,785 1.50 Equity IRU & Other Infrastructure 7,499 1.66 8,100 1.80 Preference Shares Electronics & OSS/BSS 12,403 2.75 Debt 9,733 2.16 Investment in Subsidiary 1,
Slide 59: Equity and Debt Funding
Equity and Debt Funding Equity of Rs 3,035 cr and Preference shares of Rs 8,100 cr raised as part of project funding. Balance Rs 3,750 cr. to be raised Total Debt equivalent to US$ 2.2 Bn (Rs 9,700 cr) tied up and committed by lenders From Domestic Banks (raised) Rs. 5,000 cr Foreign Debt - Synd
Slide 60: Summary
Summary Summary
Slide 61: Major Financial Transactions
Major Financial Transactions USD 150 million equivalent in EUR – Funding Polyester Expansion plans – First ECA covered facility for RIL in over 2 decades – Represents longest tenor financing (11 years) since issuance of Bonds in 1996-97 USD350 million – First Multi-currency (JPY, USD, EUR) trans
Slide 62: Share Buyback
Share Buyback Buyback opened on 10-Jan-2005, to remain open until 26-Dec-2005 Price not exceeding Rs 570 per share Aggregate amount not exceeding Rs 2,999 crore Shares bought back till date: • No. of shares 2,669,495 • % of equity capital 0.19 • Avg. price (Rs) 522 • Total Amount (Rs crore)
Slide 63: RIL Stock Price Performance
RIL Stock Price Performance Date 20-Dec-04 27-Dec-04 31-Dec-04 Sensex 6403.00 6513.03 6602.69 RIL 480.65 516.85 533.80 Relative performance to Sensex as on date 10.14% 4.18% 2.26% RIL has comfortably outperformed the Sensex since the buyback announcement and even on a YTD basis 63
Slide 64: RIL relative to Sensex after buyback
100.00 102.00 104.00 92.00 94.00 96.00 98.00 20-Dec 21-Dec 22-Dec 23-Dec 24-Dec 25-Dec 26-Dec from 1.19 to 0.81 27-Dec 28-Dec 29-Dec 30-Dec 31-Dec 1-Jan 2-Jan RIL 3-Jan 4-Jan RIL Relative to Sensex 5-Jan 6-Jan 7-Jan 8-Jan 9-Jan SENSEX 10-Jan 11-Jan 12-Jan 13-Jan 14-Jan 15-Jan 16-Jan 17-Jan 18-Jan 19
Slide 65: Analyst Views on Share Buyback
Analyst Views on Share Buyback Goldman Sachs “We believe this offer for buy back for nearly 7% of RIL’s floating stock should boost investor sentiment once the company starts implementing the buy back scheme.” UBS “The buy-back proposal aims to correct the under performance and indicates under-v
Slide 66: The Growth Engines
The Growth Engines Substantial investments in Oil & Gas • New exploration activities • Development of gas fields Creation of retail marketing network for transportation fuels Increase in petrochemicals capacities Investments in new opportunities Investments of US$ 8-10 billion over next five
Slide 67: Growth is Life – Thank You
Growth is Life Thank ThankYou You
Reliance Industries — Q3 FY2004-05 Earnings Presentation on 6ix