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Reliance Industries Limited

Financial Presentation April - December 2001

January 31, 2002

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Forward Looking StatementsThis 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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Operating Environment

Financial Performance

Business Review

Reliance Petroleum

Reliance Infocom

Summary

Contents

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Operating Environment

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Petrochemicals - Challenging Times Continue

Profitability of petrochemicals companies globally has remained under pressure due to weak demand and declining product prices

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

onlydeclining feedstock prices 17%

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Trends in Feedstock & Product Prices - International % change in international prices Apr-Dec 2001 over Apr-Dec 2000

There has been a sharp decline in international prices of RIL’s products during the 9 month period

Raw Material

-7%

-8%

-15%

-17%

-17%

-17%

-17%

-18%

-32%

-8%

PX

POY

PTA

PSF

Crude

Naphtha

PE

MEG

PP

PVC

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% change in domestic prices Apr-Dec 2001 over Apr-Dec2000

Domestic prices of RIL’s products have also fallen sharply, impacting margins

Trends in Feedstock & Product Prices - Domestic

Raw Material2%

-2%

-10%

-12%

-13%

-13%

-15%

-19%

-8%

PX

POY

PP

PTA

PSF

MEG

PE

Naphtha

PVC

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Key Elements of Reliance’s Strategy

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

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

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RIL’s 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 PerformanceFinancial Performance

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RIL+RPL - Financial Highlights

April-Dec 2001Rs.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

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RIL Income Statement for 9 months FY 2001-02

Capex for the 9 month period is just Rs 592 crores (US$ 123 mn) -17% of cash flows and only 47% of depreciation

Apr-Dec 2001 Apr-Dec 2000 % ChangeRs.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 3,875 804 4,049 867 (4.3)

Extra-ordinary Income 358 74

Interest 730 151 925 198 (21.1)

Depreciation 1,259 261 1,141 244 10.4

Tax/Deferred Tax 102 21 96 21

Net Profit 2,142 444 1,887 404 13.5

Cash Profit 3,401 705 3,028 648 12.3

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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

Interest 732 152

Depreciation 1,259 261

Tax 102 21

Net Profit 2,795 580

Consolidated net profit reflects the true picture of RIL’s returns on its investments

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Segment Information for 9 Months

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%Employed (ROCE)

Return on Capital Employed significantly higher than cost of capital for a large petrochemical and refining enterprise

Rs CroresRs Crores

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RIL Income Statement for Q3 FY 2001-02

Profit for the period includes Rs.358 crores (US$ 74 mn) on account of sale of L&T stake

Q3 FY 2001-02 Q3 FY 2000-01 % ChangeRs.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

Cash Profit 1,263 262 1,078 231 17.2

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Sales revenue decline of 6% in the 9 month period reflects mainly the sharp decline in product prices

Composition of

Sales Revenue Change

Impact of volume change -1%

Impact of product price change -5%

Total impact on Sales Revenues -6%

Elements of Sales Change

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RIL Profitability Ratios

Margins have remained largely stable despite the tough operating environment

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

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

Apr-Dec 2001

NPM % 22.2

ROE % 26.1

ROCE % 31.3

EPS - Rs. ($) annualised 35.3(0.73)

RIL Consolidated Profitability Ratios

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RIL Liquidity Ratios

RIL’s strong cash flows and refinancing initiatives have enabled lowering of interest costs

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

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Reliance is India’s Largest Exporter

Reliance’s high exports demonstrate the international quality of its products, and its ability to compete against global leaders

Reliance group is India’s Rs.8,382 crs (US$ 1,738 mn)

largest exporter in 9 months

RIL is India’s 2nd largest Exports still only 13 % of exporter after RPL RIL’s Sales

RIL’s manufactured exports Rs. 2,083 crs (US$ 432 mn)

Exports to most quality Exports to over 100

conscious customers countries globally

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Unlocking Value through Sale of L&T Stake

Sold 2.5 crore shares of L&T (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

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Unlocking Value through Sale of L&T Stake

No strategic rationale for retaining investment in L&T in view of

successful completion of Reliance’s major projects

Divestment of non-strategic stake to unlock significant value for

shareholders

Enhancement of returns on RIL’s investments

Increased availability of funds for announced investments in oil

and gas, infocom, reduction of debt, and other uses

L&T stake sale is in line with Reliance’s stated philosophy of unlocking value from investments to maximise shareholder wealth

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Business ReviewBusiness Review

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Oil & Gas - Review RIL is the largest private sector E&P 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 90:10 consortium with Niko (Canada)

- 4 blocks in NELP-2 in 90:10 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 E&P 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 GrowthOil Production in kT

Gas Production in kTOE

Output from existing Oil & Gas fields has broadly been maintained

at previous year levels

Oil

307 310

275

300

325

Apr-Dec 2000 Apr-Dec 2001

1%516

502

450

500

550

Apr-Dec 2000 Apr-Dec 2001

-3%

Gas

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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 GrowthProduction in ‘000 tonnes

Much higher production growth rate for RIL reflects acquisition of control over JCT’s polyester capacity

1074

1153

1000

1050

1100

1150

1200

Apr-Dec 2000 Apr-Dec 2001

534

614

450

500

550

600

650

Apr-Dec 2000 Apr-Dec 2001

Industry Reliance

7% 15%

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Fibre Intermediates - Production Trend

Fibre intermediates production remained flat, both for Reliance and the Industry, in view of low polyester demand growth

Production in ‘000 tonnes

Industry Reliance

27252757

2550

2590

2630

2670

2710

2750

Apr-Dec 2000 Apr-Dec 2001

21742164

2075

2125

2175

Apr-Dec 2000 Apr-Dec 2001

1%

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Polymers - Update

Healthy demand growth for RIL’s 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

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Polymers - Production GrowthProduction in ‘000 tonnes

Polymers demand has shown further strong growth of 15% during

the first nine months of FY 2001-02

2231

2526

2050

2150

2250

2350

2450

2550

Apr-Dec 2000 Apr-Dec 2001

1184

1249

1050

1100

1150

1200

1250

Apr-Dec 2000 Apr-Dec 2001

Industry

13%

Reliance

6%

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Reliance PetroleumReliance Petroleum

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RPL’s 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 group’s downstream operations, ability to tap exports markets and flexibility of product slate enabled RPL to operate at much higher rates

Operating Rates (April - Dec 2001)

84% 87% 90%

107%

Asia-Pacific Europe N. America RPL

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Comparison with Benchmark GRMs

RPL has reported significantly higher GRMs than its global peer group, and with lower volatility

Apr-Dec Apr-Dec

2001 2000

RPL 5.3 6.0

US Gulf Coast 1.53 2.58

Mediterranean 1.85 4.84

Rotterdam 0.49 2.25

Singapore 1.93 3.30

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RPL - Income Statement for 9 Months FY 2001-02

RPL’s net profits have increased by 18 % despite lower product prices, and the downtrend in regional refining margins

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 2,696 559 2,363 506 14%

Interest 735 152 727 156

Depreciation 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%

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RPL - Income Statement for Q3 FY 2001-02

RPL is India’s largest private sector company in terms of sales

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 201 42 172 37

Tax 17 4 33 7

Net Profit 402 83 408 87 -1%

Cash Profit 603 125 580 124 4%

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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 refinery’s configuration have contributed significantly to net profit growth

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RPL - Profitability Ratios

RPL’s ROE is amongst the highest in refining companies globally

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)

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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

RPL’s cash flows for less than 3 years are adequate to extinguish its entire debt

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RPL - India’s Largest Exporter

Reliance’s high exports demonstrate the international quality of its products, and its ability to compete against global leaders

RPL India’s 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

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New Auto Fuel Policy

RPL’s competitive strengths are expected to be further enhanced when product specifications are tightened

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

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RPL - ECB Deal of the Year

RPL’s 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 RPL’s financial flexibility, reduce interest cost and improve profitability

Cellular BusinessCellular Business

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Reliance Telecom - Update

Reliance has successfully established an extensive GSM network in the central and eastern part of the country

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 InfocomReliance Infocom

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Reliance’s Integrated Business Model

Reliance’s low-cost communications infrastructure, and integrated approach, will provide a lasting competitive edge

Reliance is building a 60,000 kms, nationwide, terabit bandwidth,

broadband network connecting India’s top 115 cities - representing

over 50% of the country’s 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 carrier’s carrier

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Reliance Infocom – Update

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

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

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Reliance Infocom – Update

Reliance Infocom will endeavor to offer the highest quality services and provide the best value to its customers

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

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Reliance Infocom – Update

Licenses already obtained for providing basic services in 18 circles

(including Gujarat through Reliance Telecom) covering 95% of

India’s population, and for providing national long distance (NLD)

services

Service No. of Licenses License Fees (Rs.crores)

Cash Bank GuaranteeTotal

Basic 17 circles 398 1,7922,190

NLD 1 (Nationwide) 100 400 500

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Reliance Infocom – Qualcomm Investment

RCL plans to leverage the cost, capacity, and quality advantages of CDMA to offer the most competitive wireless voice and data services nationwide

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 Infocom’s 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

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Reliance Infocom – Investment Plans and Capex

Reliance Infocom will target leading market shares and attractive

returns on capital employed

Reliance Infocom to invest up to Rs. 25,000 crores (US$ 5 billion)

over the next 5 years

Proposed financing with 2:1 debt:equity

RIL is the lead investor with 45% equity stake

RIL’s investment in Reliance Infocom: Rs. 2,600 crores (US$ 550

million) to date

SummarySummary

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RIL’s Share Price Performance

RIL shares have consistently outperformed the benchmark indices over all time frames

% change

Period RIL Sensex 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% -

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SummaryRIL 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

RIL’s superior performance amongst international peers reflects its

global competitiveness and the success of its business strategies

RIL’s 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

India’s World Class Corporation