1

A Project On

Reliance Industries Limited

Operations Management

Submitted To:

Prof.Amal S.Roy

Submitted By: (Group 1)

Anchal Mittal(10BSP0643)

Anil Verma(10BSP0000)

Brijmohan Prashar(10BSP0)

Jayanti Kumari(10BSP0369)

Shrikant Ajmera(10BSP0000)

Sumit Paul(10BSP0529)

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INDEX

Sr.no

Content Page No.

1. Reliance Background 42. Reliance company manufacturing

facilities5

3. Mission 74. Vision 75. Values 76. Quality Policy 77. Major Products & Brands 88. Technology & Process Detail 149. Energy Conservation Measures &

results25

10. Detail Of Operations Cost 3311. Supply Chain Management &

Logistics37

12. Competitor’s & company in terms of operation Excellence

48

13. Conclusion 5214. Limitations 5315. Bibliography 54

ANNEX 55

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1.RELIANCE COMPANY BACKGROUND

The Company has a customer base of 105 million including over 2.5 million

individual overseas retail customers. It ranks among the Top 5 Telecom

companies in the world by number of customers in a single country. Reliance

Communications corporate clientele includes 2,100 Indian and multinational,

and over 800 global, regional and domestic carriers. A pan-India, next

generation, integrated (wireless and wire line), convergent (voice, data and

video) digital network that is capable of supporting services spanning the

entire communications value chain, covering over 24,000 towns and 600,000

villages has been established by Reliance Communications. Reliance

Communications owns and operates the next generation IP enabled

connectivity infrastructure comprising over 190,000 kilometers of fiber

optic cable systems in India, USA, Europe, Middle East and the Asia Pacific

region.

Reliance Communications formerly known as Reliance Infocomm, along with

Reliance Telecom and Flag Telecom, is part of Reliance Communications

Ventures (RCoVL).Reliance Communications Limited founded by the late

Shri Dhirubhai H Ambani (1932–2002) is the flagship company of the

Reliance Anil Dhirubhai Ambani Group. The Reliance Anil Dhirubhai Ambani

Group currently has a net worth in excess of Rs. 64,000 crore (US$ 13.6

billion), cash flows of Rs. 13,000 crore (US$ 2.8 billion), net profit of Rs. 8,400

crore (US$ 1.8 billion).The Equity Shares of RCOM are listed on Bombay

Stock Exchange Limited and National Stock Exchange Limited.

The Global Depository Receipts and Foreign Currency Convertible Bonds

are listed on Luxembourg Stock Exchange and Singapore Stock

Exchange respectively.

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2.RELIANCE COMPANY MANUFACTURING FACILITIES (OUTSOURCING)

Manufacturing Facilities

Reliance Industries Limited operates world-class manufacturing facilities

across the country at Allahabad, Barabanki, Dahej, Hazira, Hoshiarpur,

Jamnagar, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and Vadodara.

Allahabad Manufacturing Division is located in Allahabad, Uttar Pradesh. It is

equipped with batch polymerization and continuous polymerization facilities.

Barabanki Manufacturing Division is located near Lucknow, Uttar Pradesh. It

manufactures Black Fibre.

Dahej Manufacturing Division is located near Bharuch, Gujarat. It comprises of

an ethane / propane recovery unit, a gas cracker, a caustic chlorine plant and 4

downstream plants, which manufacture polymers and fiber intermediates.

Hoshiarpur Manufacturing Division is located in Hoshiarpur, Punjab. It

manufactures a wide range of PSF, PFF, POY and polyester chips. Hazira

Manufacturing Division is located near Surat, Gujarat. It comprises of a Naptha

cracker feeding downstream fiber intermediates, plastics and polyester plants.

Jamnagar Manufacturing Division is located near Jamnagar. It comprises of a

petroleum refineries and associated petrochemical plants. The refinery is

equipped to refine various types of crude oil (sour crude, sweet crude or a

mixture of both) and manufactures various grades of fuel from motor gasoline

to Aviation Turbine Fuel (ATF). The petrochemicals plant produces plastics and

fiber intermediates.

Nagothane Manufacturing Division is located in Raigad, Maharashtra. It

comprises of an ethane and propane gas cracker and five downstream plants

for the manufacture of polymers, fiber intermediates and chemicals. Nagpur

Manufacturing Division is located in Nagpur, Maharashtra. It manufactures

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polyester filament yarn, dope-dyed specialty products of different ranges, fully

drawn yarn and polyester chips.

Naroda Manufacturing Division is located near Ahmadabad, Gujarat, is RIL’s

first manufacturing facility. This synthetic textiles and fabrics manufacturing

facility manufactures and markets woven and knitted fabrics for home textiles,

synthetic and worsted suiting and shirting, ready to wear garments and

automotive fabrics.

Patalganga Manufacturing Division is located near Mumbai, Maharashtra. It

comprises of polyester, fiber intermediates and linear alklyl benzene

manufacturing plants. Silvassa Manufacturing Division is located in the Union

Territory of Dadra and Nagar Haveli. It manufactures a wide range of specialty

products such as Recron Stretch, Linen Like, Mélange, Thick-n-thin and Bi-

shrinkage yarns.

Vadodara Manufacturing Division is located in Vadodara, Gujarat. It comprises

of a Naptha cracker and 15 downstream plants for the manufacture of

polymers, fibres, fiber intermediates and chemicals. Each of these complexes

has world class manufacturing facilities.

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3.VISION

Through sustainable measures, create value for the nation, enhance quality of

life across the entire socio-economic spectrum and help spearhead India as a

global leader in the domains where we operate.

4.MISSION

Create value for all stakeholders

Grow through innovation

Lead in good governance practices

Use sustainability to drive product development and enhance

operational efficiencies.

Ensure energy security of the nation.

Foster rural prosperity.

5.VALUES

Our growth and success are based on the ten core values of Care, Citizenship,

Honesty, Integrity, Purposefulness, Respect, Responsibility, Safety and Trust.

6.QUALITY POLICY

Reliance is committed to meeting customer requirements through continual

improvement of its quality management systems. Reliance shall sustain

organizational excellence through visionary leadership and innovative efforts.

Few examples;

The Hazira manufacturing division won the global award for the ‘Best TQM

Success Story’ at the international forum of AOTS in 2009.

The Allahabad manufacturing division’s three Quality Circle(QC) projects

received ‘excellent’, ‘distinguished’ and ‘meritorious’ category certifications

from the National Centre for Quality Control’s (NCQC) Kanpur chapter, while

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the fourth QC project was awarded ‘distinguished’ category certification by

NCQC’S Bangalore chapter in 2009.

7.MAJOR PRODUCTS AND BRANDS

Business/Brands Product Brand End Use

Exploration &

Production

Crude Oil and

Natural Gas

Refining, power,

fertilizers,

petrochemicals

and other

industries

Refining Liquefied

Petroleum Gas

Reliance Gas Domestic &

Industrial fuel

Propylene Feedstock for

polypropylene

Naphtha Feedstock for

petrochemicals

such

asethylene,prop

ylene &

fertilizers, etc.

Gasoline Transport fuel

Jet/Aviation

Turbine Fuel

Reliance Aviation Aviation Fuel

Super Kerosene Oil Domestic Fuel

High Speed Diesel Transport Fuel

Sulphur Feedstock for

fertilizers &

Pharmaceutical

s

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Petroleum Coke Fuel for power

and cement

plants

Petrochemicals

Polymers

REPOL Polypropylene (PP) REPOL Woven sacks

for cement, food

grain, sugar,

etc..

RELENE Polyethylene

(HDPE, LLDPE,

LDPE)

RELENE House ware,

ropes & twines,

pipes for water

supply, etc.

RELENE Ethylene Vinyl

Acetate copolymer

RELENE (EVA) Footwear & hot

melt adhesives

REON Polyvinyl Chloride

(PVC)

REON Pipes & fittings;

door & window

profiles, roofing,

partition, etc.

RELPIPE Poly-Olefin (HDPE

& PP)

RELPIPE Irrigation, water

supply,

drainage, etc.

CISAMER Poly Butadiene

Rubber (PBR)

CISAMER Tyres, tread,

rubber,

conveyor belts,

etc.

CHEMICALS

RELAB Linear Alkyl

Benzene (LAB)

RELAB Detergents

Petrochemicals- Paraxylene (PX) Rm for PTA

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Polyster & Fibres

Intermediates

Purified

Terephthalic Acid

Raw material for

polyster

Mono Ethylene

Glycol

Raw material for

polyster

RECRON Staple fibre

filament yarn

RECRON Apparel, home

textile, etc.

RECRON Stretch Stretch yarns for

comfortable fit

RECRON Stretch Blouse material,

denim, etc.

RECRON Cotluk Cotton look, Cotton

feel yarns

RECRON Cotluk Dress material,

etc.

RECRON Dyefast Can dye at boiling

water temperature

with high color

fastness

RECRON Dye fast Ladies outwear,

feather yarn for

knitted cardigan,

decorative fabric

& home

furnishing

RECRON Superdye Bright, brilliant

colours and soft

feel, low pill

RECRON Super dye Woven & knitted

apparel,

furnishing &

home textile

RECRON Kooltex Moisture

management Yarn

RECRON Kooltex Active sports

and high

performance

wear

RECRON 3S Secondary

Reinforcement

products

RECRON 3S Construction

industry,

cement, paper

industry. Etc.

RECRON Certified Quality Certified

Sleep products

RECRON Certified Pillows,

cushions,

blankets, &

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quilts

RECRON Dura tarp Polyester fibres

with increased

abrasion resistance

for better water

proof, tear proof

and fade-proof

qualities

RECRON Dura tarp Tarpaulin,

Tents, Awnings

RELPET Polyethylene

Terephthalate

(PET)

RELPET Packaged-

water,

beverages,

confectionaries,

pharmaceuticals

, etc,

TEXTILES

VIMAL Suitings, Shirtings,

Readymade

garments

VIMAL Fabrics, suits,

jackets, shirts &

trousers

VIMAL Gifting Ready-to-stitch,

take away fabric in

gift packs

VIMAL gifting Fabrics

V2 Ready-to-stitch,

take away fabric

V2 vimal Fabrics

RETAIL Reliance Retail Reliance retail Organized retail

Food & Grocery

Specialty Store

Reliance Fresh Fresh

vegetables,

grocery, general

and convenient

merchandise

Mini Hypermarket Reliance Super Grocery,

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clothing, leisure,

beauty & style,

electronics &

home

merchandise

Hypermarket Reliance Mart Furniture &

jewellery

Electronics

Specialty Store

Reliance digital Computers,

mobiles,

entertainment,

Exclusive Apple

Store

iStore Range of Apple

products like

IPod & IMac

Apparel Specialty Reliance trends Men, ladies,

children clothing

& accessories

Health, wellness &

Pharmacy

Specialty Store

Reliance wellness Pharmacy,

optical, natural

remedies,

nutrition, etc

Footwear Specialty

Store

Reliance footprint Men, ladies,

children, sports

handbags and

accessories

Jeweler Specialty

Store

Reliance jewel Fine Jewellery.

Books, Music, Toys

& Gifts Specialty

Store

Reliance Timeout Merchandise

Kitchen Solutions

Specialty Store

Reliance Home

KITCHENS

Multiple modern

kitchen design

solutions

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Furniture,

Furnishing & Home

ware Specialty

Store

Reliance living Home-décor,

crockery,

cutlery,

glassware,

cookware &

kitchen aids

Automotive

Services &

Products Specialty

Store

Reliance Auto zone Repair &

maintenance

services for 2 &

4 wheelers, etc

GAPCO Petroleum Retail Gapco

Lubricants RELSTAR

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8.Technology & Process Detail

Process design in Vadodra :

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15

JAMNAGAR REFINING PROCESS:

TECHNOLOGY IMPROVEMENT IN JAMNAGAR REFINARY:

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Energy Consumption

Year Sp Power Cons Kwhr/MT of Thermal Consumption Mkcal/MT of Intake

Intake2003-04 73.49 0.661

2004-05 73.1 0.6622005-06 74.23 0.668

In the Refinery Energy monitoring, the practice of evaluation of Energy Index

is prevailing. An Energy Index is the ratio of actual energy consumed and the

standard or theoretical energy consumed. Lower the Energy Index better is

the Energy Efficiency.

In Energy Indices evaluation, the feed stocks of all the processing units are

considered and the energy Index arrived at by International Systems such as

either Shell or Solomon Benchmarking normalizes all the specific energy

consumption and the reduction in the Index Indicates true reduction in the

energy consumption. Following are the Energy Indices for Reliance Jamnagar.

Shell Benchmarking Solomon Benchmarking

Year CEL* Year EII*2001 94.3 2000 69.22002 88.7 2002 64.22003 87.6 2004 62.32004 86.92005 89.5

Reliance Jamnagar is topping the list of Shell Benchmarked Refineries in the

world and also topping the list of Large Complex Refineries in Solomon

Benchmarking in the Asia Pacific Region for last five years. Reliance

Jamnagar is the pace setter refinery in the field of energy conservation in shell

and Solomon benchmarking continuously since last five years. Increase in

CEL in year 2005 is due to the major VMP shutdowns taken for regular

maintenance, Capacity enhancement and commissioning of new units.

Major Encon Projects in 2005-06

Project detail Sr. No. 1

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Reduction of MP steam consumption by using LCGO Pump Around as Heating Medium in Parallel Naphtha Splitter Reboiler in Coker

Coker Fractionator top temp. was raised from the original design of 113°c to

122°c to reduce the surface area getting effected due to corrosion in the top

section of the Fractionator from Ammonium Chloride deposition on to the wall

& trays due to high nitrogen in feed (Vacuum Residue). This along with

separate Kerosene Draw off nozzles enable to increase the Draw off temp of

LCGO Pump Around & LCGO Product to 244°c from original design of 194°c .If

the Original design equipment set up was not modified this energy would have

got wasted to atmosphere with the help of Fin fans 371A07 & 371 A08C as

shown in fig 1.

This opportunity was utilized to divert this hot LCGO Pump Around stream first

through Parallel Naphtha Splitter Reboiler 372S07A and off loading the heat

duty of the Existing Naphtha Splitter Reboiler using Medium Pressure Steam

as the heating medium (see fig2) after which the existing route was retained ,

The series of exchangers that comprise this circuit are as listed below

ME-RK372-S07A Naphtha Splitter Reboiler ( LCGO Pumparound as Heating edium )

ME-RK371-S05 LCGO Pumparound /LP Steam Generator

ME-RK371-S04 LCGO Pumparound /BFW Exchanger

ME-RK371-A07 LCGO Pumparound CoolerME-RK371-A08C Condenser Cooler

Since recoverable heat from the LCGO Pumparound circuit had greatly increased from the original design . There was no modifications carried out on existing equipments in the LCGO Pump Around loop. This resulted in off loading the existing Naphtha Splitter Reboiler to the tune of 9TPH which equivalent to (heat duty ) thermal saving of 6.1MMKCal/h at present throughput. This scheme also increased the LCGO Product temp. to the downstream Diesel Hydro treating units as shown in the graph below, which is equivalent to 0.485MMKcal/Hr. In order to have greater flexibility at higher plant throughput & in view of presence of corrosive substance like Ammonium

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Chloride in LCGO Pump Around the option of using it as heating medium in the Parallel Naphtha Splitter Reboiler ME-RK372-S07A was frozen.

Jamnagar existing technology

Jamnagar modified technology:

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Heat Duty Q = 6.1MMKCal/hr Steam Saved = 9TPH

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Annual Savings due to MP Steam savings in Naphtha Splitter Reboiler = 35.7 RS Million. Fuel Savings in downstream Hydrotreaters due to high temperature LCGO = 6.425 RS Million Total Annual Savings = 42.125 Rs Million

The following graph indicates the reduction trend of MP Steam consumption (TPH) to the Old Naphtha Splitter Reboiler.:

Using LCGO Pump Around asHeating Medium in Parallel Naphtha

Splitter Reboiler 372S07A

TP

H

3 2072

STE

AM 15 Savings 9TPH

FMP SteamI

10C

M P 0 5

CONS

UMPT

ION

3 Before After9

0

2/20/2006

6

3/6/20063/13/2006

00

27/2

2/

DATE

Some of the challenges that were overcome in the course of design & execution of the Project are as follows:

In view of the tight shutdown schedule it was proposed that no new nozzles will be added on to the Naphtha Splitter & only the existing nozzles to be augmented in the design stage only which made it mandatory to modify vapor outlet lines of existing Naphtha Splitter Reboiler.During the course of Detailed Engineering it was found that the Reboiler vapor lines two phase was in Wavy Stratified flow regime & the rerouting needs to be modified to get in two phase regime to Annular flow.

Moreover, to commission this system, an innovative method of Hot-tapping had

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to be adopted for cutting the blind flange at the installed at Naphtha Splitter Vapor nozzle along with the valve during the earlier shutdown (Oct’05) as valve was heavily passing and conventional way of deblinding will require shutdown of unit.

Conclusion:Using LCGO Pump Around as heating medium to Parallel Naphtha Splitter Reboiler 372S07A was successfully commissioned in Coker and the summary of findings of the system is as follows:

1) Increase in LCGO Product temp. to downstream hydro treating unit to 237°c, which is equivalent to 0.485MMKCal/hr (0.6425 Crores Per annum) .

Project detail Sr. No. 2

MP steam consumption reduction in CDU by commissioning of S-41 Exchanger in 312 utilizing heat from hot HK product to preheat crude.

Objective:

To recover Heat from HK product from 312/311 which was being lost in Fin fan coolers before being routed to Diesel Product Storage Tank? It was decided to locate this new w exchanger S – 41 in the upstream of S-03 in Cold preheat train. The exchanger is designed to recover 9 MMKcals/hr of heat from HK product to Crude. This scheme will be applicable only during 0.25 % S in Diesel run. During Diesel BS-II & BS III runs as HK from CDU-1 & 2 is routed to DHT, this Exchanger S-41 will be bypassed and hot HK will be routed to DHT.

Methodology:

There was a emergency s/d on the 2nd of March 06 in CDU-2 due to power tripping caused in CPP. The emergency s/d & subsequent startup led to a leak in S-03 Exchanger which resulted in a decrease in Desalter Temperature & subsequent loss of Crude Preheat which also resulted in decrease in Crude throughput by 50 m3/hr. This necessitated early commissioning of S-41. The exchanger was commissioned in March – 06.

Details of key operating parameters before implementation (Feb 2006) and

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after implementation (March 2006) are given in the Table below:

Sr. Parameter Before Installing After S-41 Units

No S-41Exchanger Exchanger

1 Crude Throughput 305 307 Kbpsd

2 Crude Preheat temperature 244 246 Deg C

3 Desalter temperature 116 127 Deg C

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24

Benefits Achieved

Actual Benefits

Recovery of 9MMKcals/hr of heat which

0.9 T/hr of Equivalent Fuel in TSRF ( 1 kg =10 000 Kcals)

was being lost to atmosphere i.e Fin Fan

Cooler

Cost of Fuel 250 $/TonBenefits on account of Fuel =0.9 x 250 x 24 X 365 X 45/10000000

=8.87 Crores /annum

Increase in Throughput is 2Kbpsd =2 x 5 x 45 x 24 x 365/10000000

=0.39 Crores/annum

Total Benefits 9.26 Crores/annum

Cost of Project was Rs 1.98 Crores

Benefits 9.26 Crores

Pay back = 2.5 months

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9. Energy Conservation Measures and Results

These days energy conservation has become an important part of any company’s operational plans. It is so not only due to the present world’s focus on the rising global temperature and other environmental issues, but also due to depleting sources of energy. As the world’s energy resources are rapidly depleting, industries world-wide are either looking for alternative sources of energy or are trying to minimize their use of conventional sources of energy. It is being done by making the operations more energy efficient.

Indian companies are also focusing on energy conservation. As many as seven Indian energy companies from India have been chosen as the finalists in the Platts Global Energy Awards, an annual program recognizing exemplary industry leadership. These companies are Reliance Industries, HPCL, Coal India, Cairn India, North Delhi Power Ltd., Udhe India and GAIL India.

Reliance Industries Limited (RIL) also has focused its plans on energy conservation. For the last six years a number of practices, studies and improvement projects have been implemented. RIL regularly benchmarks its energy consumption levels with global standards and is constantly efforts are being made to make the operations more energy efficient. The energy consumption of all the manufacturing units and utility blocks are consistently monitored and steps are taken to make these operations such that energy consumption is reduced but at the same time productivity is improved.

In its pursuit to make its operations environment friendly, RIL has continued to integrate its ISO:14001 EMS, ISO:9000 QMS and ISO:18001 OSHA management systems. The company has a long term goal of becoming water positive, carbon neutral and also to achieve maximum possible recycling and reuse of wastes. For this the company has a management framework with defined structures, roles and responsibilities, group standards, audits and training programs.

In the financial year 2009-10 (FY 209-10) RIL has introduced nine new group standards covering various environmental aspects. This was further supported by the development and release of second party audit protocols for the standards. Environment impact assessment and risk analysis were performed for all new and major expansion projects. RIL also issued a RIL group standard and second party audit protocol on 'Environmental requirements for new projects' with an objective to incorporate necessary measures to mitigate adverse environmental impact at the planning stage of project implementation.

RIL gives priority to maintenance and performance improvements of all pollution abatement facilities like effluent treatment plants, inside battery limits area, air emission

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control and waste disposal facilities at its manufacturing divisions. It has also inculcated rain water harvesting and treated effluent recycling at most of their manufacturing establishments.

RIL also trains its employees to be more Environment friendly. This is done by conducting internal and advanced training programmes, inter-site meets, virtual classes, etc. involving subject experts; participation at national and international conferences, workshops and courses as well as networking/collaboration with universities, research institutes, regulatory bodies, industrial and professional associations, etc. Also the manufacturing departments celebrate occasions like the World Environment Day, Earth Day, Water Day, Ozone Day, etc.

To make harmony with nature a habit, RIL has taken up steps like afforestation, maintenance of green belts, gardens, vermi-compost of waste and its use as manure, reuse of treated water in horticulture activities.

Following are the steps taken by RIL in the direction of energy conservation:-

Allahabad Manufacturing Division:- Energy savings were achieved by combining steam jet ejectors used in

polymerizes for providing vacuum during polymerization reaction, minimizing the operation of Mono Ethylene Glycol (MEG) refining column by recycling process recovered MEG directly to reaction in Continuous Polymerization (CP) and optimizing utility equipment operation in Utilities plant.

Results:- Energy savings worth Rs 636 lakh per year was achieved by combining steam jet

ejectors used in polymeriser for providing vacuum during polymerization reaction, minimizing the operation of Mono Ethylene Glycol (MEG) refining column by recycling process recovered MEG directly to reaction in Continuous Polymerization (CP) and optimizing utility equipment operation in Utilities plant.

Barabanki Manufacturing Division:- Lowest diameter impellers were used in the process of cooling water pumps at

utilities. Power consumption was reduced by optimizing lighting load of entire

manufacturing division.

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Results:- Saving in power consumption worth Rs 5 lakh per year has been achieved by

installation of the lowest diameter impeller in process cooling water pumps at utilities.

Reduction in power consumption by optimizing lighting load of entire complex, thus saving Rs.2 lakh per year towards power consumption.

Dahej Manufacturing Division:- Improvements in steam generation were done by increasing steam generation

temperature at Gas Cracker Unit (GCU). Discharge pressure in Compressed Gas (CG) compressor was lowered as a

result of improvements in operational practices at GCU. Energy performance of EO Scrubber (C-115) was optimized using ASPEN TECH

at MEG plant. Improvements in heat recovery were done by up gradation in Material of

Construction (MOC) of First Effect Evaporator Reboiler (E-530) at MEG plant. Reduction in steam consumption was done by stoppage of one light end (LE)

column by process side improvements at Vinyl Chloride Monomer (VCM) plant. Old inefficient pumps were replaced with new energy efficient pumps in Cooling

tower (CT 04) at Utilities. Minimization of hydrogen flaring were done by improvement in hydrogen

recovery generated as byproduct of Chlor-Alkali (CA) plant & used in Captive Power Plant (CPP) boilers in place of purchased fuel, by installation of new hydrogen compressor (3rd) at CA plant.

Energy consumption was reduced by replacement of main reactor membrane in CA plant.

Identification & replacement of faulty steam traps were done for minimization of steam leakages done in CPP & yard piping at CPP plant. Also steam was recovered by condensation from the surface condenser of main turbine (TD-0301) at EPRU.

Minimization of lube oil vent flaring was done by the rerouting of Expander Booster (KE-302) lube oil tank vent from flare header to fuel gas header at Ethylene Propylene Recovery (EPRU).

Process to process heat recovery was implemented by provision of dehydrator regeneration gas-gas exchanger at EPRU.

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Results:- Improvement in steam generation worth Rs. 205 lakh per year, by increasing

steam generation temperature at the GCU. Energy savings worth Rs. 109 lakh per year has been achieved by lowering of

discharge pressure in Compressed Gas (CG) Compressor due to improvement in operational practices at the GCU.

Optimization of performance of EO Scrubber (C-115) using ASPEN TECH at MEG plant, thus saving Rs. 86 lakh per year towards energy consumption.

Energy savings worth Rs. 36 lakh per year has been achieved by improvement in heat recovery by upgradation in Material of Construction (MOC) of First Effect Evaporator Reboiler (E-530) at the MEG plant.

Reduction in steam consumption worth Rs. 472 lakh per year has been achieved, by stoppage of one light end (LE) column by process side improvements at the VCM plant.

Replacement of old inefficient pumps with new energy efficient pumps in cooling tower 04 at Utilities, resulting in power savings worth Rs. 69 lakh per year.

Minimization of hydrogen flaring worth Rs. 440 lakh per year has been achieved by improvement in hydrogen recovery generated as byproduct of Chlor-Alkali (CA) plant & used in CPP boilers in place of purchased fuel, by installation of new hydrogen compressor (3rd) at CA plant.

Reduction in energy consumption worth Rs. 661 lakh per year has been achieved by replacement of main reactor membrane in CA plant.

Identification & replacement of faulty steam traps & minimization of steam leakages done in CPP & yard piping at CPP plant, thus saving Rs. 72 lakh per year towards steam generation.

Recovery of steam condensate from surface condenser of main turbine (TD-0301), worth Rs.366 lakh per year has been achieved at EPRU.

Minimization of lube oil vent flaring by rerouting of Expander-Booster (KE-302) lube oil tank vent from flare header to fuel gas header at EPRU, thus saving Rs. 149 lakh per year towards fuel gas consumption.

Energy savings worth Rs. 60 lakh per year has been achieved by process to process heat recovery by provision of dehydrator regeneration gas-gas exchanger at EPRU.

Fuel savings worth Rs. 275 lakh per year has been achieved by implementation of offline fuel optimizer for CPP.

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Hazira Manufacturing Division:- Auto-cut provision for dryer fan motors were included when drawline is stopped

for more then 30minutes in Polyester Staple Fiber (PSF), Polyester Fiber Fill (PFF) & CP - 11 plants.

All the motors running below 40% loading were replaced with low rating motors or variable frequency drives (VFD) in PSF plant.

Reduction were brought in nitrogen consumption in PolyEthylene Teraphthalate (PET) / Partially Oriented Yarn (POY) plants by arresting system leaks & optimising consumption in CP-12 Solid State Polymerisation (SSP) and Purified

o Terephthalic Acid (PTA) bin filter in all CP plants.

Power consumption was reduced by conversion of Industrial Yarn (IDY) godet drives on all positions from “delta” to “star” electrical configuration in POY / PET Plants.

Fuel gas preheating from ambient to 7OC in four gas turbines (GTs) are now done using waste heat from stack at Captive Power Plant & Utilities (CPP&U) plant.

Results:- Autocut provision for dryer fan motors when drawline is stopped for more than

30minutes in PSF, PFF and CP 11 plants, thus saving Rs. 53 lakh per year. Replacement of all the motors running below 40% loading with lower rating

motors or VFDs in PSF plant, resulted in energy savings worth Rs. 40 lakh per year.

Savings worth Rs. 102.6 Lakh per year has been achieved by reduction in nitrogen consumption by arresting system leaks & optimizing consumption in CP-12 SSP & PTA bin filter in all CPs at POY / PET plants.

Reduction in power consumption by conversion of Industrial Yarn (IDY) godet drives on all positions from “delta” to “star” in POY/PET Plants, resulting in savings worth Rs. 11 lakh per year.

Optimisation of Hiboil reflux ratio in main column at VCM plant, thus saving Rs. 110 lakh per year.

Energy savings worth Rs. 345 Lakh per year has been achieved by improvement in steam generation by performing convection section cleaning in furnaces at VCM and Cracker plants.

Improvement in captive steam generation by recovering waste heat from vent gases through new heat exchanger E-1122N in cracker plant, resulting in savings worth Rs. 28 lakh per year.

Savings worth Rs. 60 Lakh per year has been achieved by fuel gas preheating from ambient to 70 OC to four GTs using waste heat from stack flue gases at CPP&U plant.

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Jamnagar Manufacturing Division:- Reductions in consumption of steam were done by decreasing operating

pressure of Naphtha Splitter & Depentaniser column by process side improvements in Aromatics Plant.

Recovery of hydrogen by done by diverting Isomer separator gas to platformer re-contact loop, which originally was downgraded to unsaturated gas header in Aromatics Plant.

Reduction in power consumption of fuel gas compressor were done by providing new tube bundle with additional baffles in inter stage cooler in Hydrogen Manufacturing Unit -2.

Minimizing Medium Pressure (MP) steam consumption in naphtha splitter re-boiler was done by recovering more heat from Light Cycle Gas Oil (LCGO) stream in Coker Plant.

Recoveries of additional process heat into cold leg from Light Vacuum Gas Oil (LVGO) pump around in Crude Distillation Unit (CDU) 1.

Reduction in MP steam consumption used as motive steam in ejectors for Vacuum Distillation Units (VDU) 1 & 2 by process side improvements.

Results:- Savings worth Rs. 269 Lakh per year has been achieved by reduction in

consumption of steam by decreasing operating pressure of Naphtha Splitter & Depentaniser column by process side improvements in Aromatics.

Savings worth Rs. 34 Lakh per year has been achieved by recovery of hydrogen by diverting Isomer separator gas to platformer recontact loop, which originally was downgraded to unsaturated gas header in Aromatics.

Savings worth Rs. 60 lakh per year has been achieved by reduction in power consumption of fuel gas compressor by providing new tube bundle with additional baffles in inter stage cooler in Hydrogen Manufacturing Unit HMU-2.

Savings worth Rs. 160 lakh per year has been achieved by minimising MP steam consumption in naphtha splitter reboiler by recovering more heat from LCGO stream in Coker Plant. Reliance Industries Limited 93

Savings worth Rs. 590 Lakh per year has been achieved by recovery of additional process heat into cold leg from LVGO pump around in CDU 1.

Savings worth Rs. 410 Lakh per year has been achieved by reduction in motive MP steam consumption in ejectors for VDU 1 & 2 by process side improvements.

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Jamnagar Manufacturing Division (SEZ):- Saving of 10 TPD of flaring by installation of low range pressure transmitters on

each unit’s flare knock-out drums for identification of flare sources in Low Low Pressure (LLP) flare.

Reduction in captive steam generation was achieved by decreasing motive steam pressure in all ejector stages in crude-3 & 4 units, decreasing High Pressure (HP) steam consumption in PRT 1 & 2 at Fluidized Catalytic Cracker (FCC) Plant & by putting restricted orifices in coke drum steam purge valves at Coker Plant 90.

Results:- Fuel savings worth Rs. 176 Lakh per year has been achieved by installation of

low range pressure transmitters on each unit’s flare knock-out drums for identification of flare sources in LLP flare.

Savings worth Rs. 4,340 lakh per year has been achieved by reduction in captive steam generation is achieved by decreasing motive steam pressure in all ejector stages in Crude - 3 & 4 units, decreasing HP steam consumption in PRT 1 & 2 at FCC Plant & by putting restricted orifices in coke drum steam purge valves at Coker Plant.

Savings worth Rs. 44 lakh per year has been achieved by reduction in fuel consumption by changing the burner tips for all the furnaces in Plat former.

Vadodara Manufacturing Division:- Improvement in heat recovery was achieved by replacement of combined Feed

to Effluent Exchanger from Shell and Tube to Helical Baffle type heat exchanger in PACOL section at the Linear Alkyl Benzene (LAB) Plant.

Stoppage of operation of three pumps and column by recovering process to process heat from splitter column overheads to recycle paraffin stream at the LAB Plant.

Improvement in High pressure (HP) steam generation by replacement of Transfer line Exchangers (TLE) with OLMI make TLE in 4 heaters in Naphtha Cracker Plant.

Results:- Energy savings worth Rs. 127 lakh per year has been achieved by improvement

in heat recovery by replacement of combined Feed to Effluent Exchanger from Shell and Tube to Helical Baffle type heat exchanger in PACOL section at LAB Plant.

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Energy savings worth Rs. 88 lakh per year has been achieved by stoppage of operation of three pumps and column by recovering process to process heat from splitter column overheads to recycle paraffin stream at LAB Plant.

Energy savings worth Rs. 360 lakh per year has been achieved by improvement in HP steam generation by replacement of Transfer line Exchangers (TLE) with OLMI make TLE in four heaters in Naphtha Cracker Plant (NCP).

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10.DETAIL OF OPERATIONS COST

Detail of Operations

2009-2010(Rs. Crore)

2008-2009(Rs. Crore)

2007-2008(Rs. Crore)

Purchases 2995.82 2205.27 6007.71

Manufacturing & other expenses

162832.38 116755.89 102262.28

Depreciation 10496.53 5195.29 4847.14s

Sub-total 176324.73 124156.45 113117.13

LessIncrease in stock

3947.89 427.56 1867.16

Net operating cost

172376.84 123728.89 111249.97

Turnover 200400 146328 139269

Operations cost As % turnover

86% 84% 79%

Comments:

From the evaluation of the above data it is observed as under:

The manufacturing & other expenses have increased by about 60% in FY-2010 over the FY-2008.

The depreciation has increased more than100% in FY-2010 over the FY-2008. The increase in turnover was 43% in FY-2010 over the FY-2008.

Therefore the increase in turnover has been much less as compared to increase in the operating expenses. This has resulted in increase in the operating cost from 79% in FY-2008 to 86% in FY-2010.

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RIL needs to either need to increase the selling price or reduce its operational costs so as to maintain the operating cost ratio at around 80%.

1. Operating Cycle:

OperatingC ycle=Inventory+Avg .C ollectionPeriod

Interpretation:

Operating cycle of RIL shows that the collection of cash is timely and the inventory is more in

the case of retail store. Operating cycle is upward in the year.

2005-06 2006-07 2007-08 2008-09 2009-10

5055606570

68.13

58.81 61.959.05 62.57

Operating Cycle

operating cycle

2. Collection and Payment Period

Avg payment Period= Avg .CreditorCOGS

×365

AvgCollectionPeriod= AverageDebtorsCredit sales

∗365

Interpretation:In this chart shows collection and payment strategy of RIL. They collected the money from

customer within the 10 to 20 days. And they paid to vendor within 60 to 83 days.

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Results Of Operations(2009-2010):

The year under review was a transformational year for the company. The company has set new global benchmarks for project execution. This was a landmark year for the company for its operating performance with earnings growth amidst extraordinary Challenges of price volatility and demand reduction.

During the year, the company has scaled new heights and set several benchmarks I terms of sales, profits, networth and assets. Turnover for the year was Rs.200400 crore ($ 44.6 billion) against Rs 146328 crore in the previous year. Exports were higher by 24% at Rs 110176 crore ($24.5 billion).

Profit after tax for the year was Rs. 16,236 crore ($ 3.6 billion) as against Rs. 15309 crore ($ 3.1 billion)

Company is one of the India’s largest contributors to the national exchequer by way of payment of taxes and duties to various government agencies. During the year, a total of Rs. 17,972 crore ($ 4.0 billion) was paid in the form of various taxes and duties.

Measures taken by RIL to improve its Production .

Enhancing propylene recovery in refinery. Wax reduction for polyethylene plants. High capacity revamps in paraxylene plants. Innovative methods for increasing Benezene/ olefin ratio in alkylation at Lab

plant.

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18.18 12.9 13.62 13.89 15.39

73.3460.7

69.3883.43 78.46

0

20

40

60

80

100

120

2005-06 2006-07 2007-08 2008-09 2009-10

Collection and Payment Period (in days)

Avg. Account collection Avg.Account payment

BENEFITS:

Benefit of Rs.15 Crore /annum in cost of FCC catalyst and additive. Benefit of Rs. 4 crore /annum through enhanced sales of spent refinery catalyst

to other refineries. Wax reduction in PE production has a potential value generation of Rs. 8 crore /

annum. Chemical grade recovery of ammonium sulphate has potential benefit of Rs.

2crore/annum.

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11.Supply Chain Management & Logistics

To run any manufacturing company, all you need at the first stage is raw material. At VMD, the basic raw material is Naptha along with many other materials. Purchase of raw material is basically done by:

Domestic Purchase International Purchase (Import)

The function of receiving and physically handling delivered material, together with verifying that the deliveries correspond exactly to those specified in the Purchase Order is done by a specialized group in the Receipt Section of Stores.

Purpose of this Procedure is to describe the methods employed for receipt and inspection of incoming materials, properly accounted for the purpose of payment, user information, and fast retrieval of information.

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Purchase Procedure

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TOL (TRUCK ORDER LINKING)

TRUCK ENTERS THE WAREHOUSE

INV (INVOICE)

WBN (WEIGH BRIDGE ENTRY) ENTRY TRUCK IS WEIGHTED

TPN (TRUCK PARKING ENTRY)

PICKING UP NOTE

WBX (WEIGH BRIDGE EXIT)

MGX (MAIN GATE EXIT)

WB (WEIGH BRIDGE)

Purchase to Issue Cycle

Purchase Requisition Note

(When plant require material)

Request Quotation

(Company ask for quotation from vendor)

Quotations comes

Selection of vendor

(On basis of terms and conditions expected by the company)

Put Purchase Order

Material comes

Material goes to the excise section

(Capture the invoices)

Material goes to security keeper

(They check the material are as per unit mention in invoices or not)

Material goes in stores Receipt Ward

(Here the material check against P.O. and labeling is done)

Material goes to the Inspection Ward

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On the basis of the Inspection Report they prepare Goods Receipt Note and also check Test Certificate send by vendor and then Inspected Material

Go to Issue Ward Go To Vendor

(If goods accepted) (If goods rejected)

Before sending goods to the Issue Ward goods are insured.

And for rejected goods they prepare Goods Rejection Note and also O.G.P.

(Out Goods Note) and sent to the vendor.

For the liquid chemicals used as raw material storing process are as follows:

Liquid chemical comes in tanker at gate

Tanker goes to excise section

(Capture the invoices)

Tanker goes to store

(Weight of the tanker with liquid and quality check of the chemical is done)

Unloading

(Tanker is unloaded to respective plant)

/Tanker again comes to the store after unloading

(Again weight of the tanker is done without liquid)

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Difference between weight of tanker before and after unloading the chemical is the actual quantity comes from the vendor. This is the whole procedure for Storing to issuing of the raw material. Thus stores department works with the materials.

Codification

RIL Vadodara complex is huge manufacturing division having different continuous manufacturing production processes. In VMD they are maintaining around 67000 items as the inventory having approximate value of Rs.225 crores. Codification helps in identifying the items individually. The items are known from the codes and not from the name. Materials are entered in the system with complete specification and details like size, name of manufacture, model number, design number, color, height and width of product etc. these information needed for the separation of the products and to assign different codes for different type of product.

First of all the codification request is been made for the new product, the form is to be filled with all the information of the inventory and where it is used. After getting the form inventory management department will check for the data validation of the inventory, if any manipulation is there then they have to again fill the form. Then checking of the data is been done for the existing inventory if any existing inventory’s sub part is there. The code is been given of 10 numbers.

The first two digits are known as the main group. It represents the similar items in a single group, the group is formed with the numbers from 01 to 99. It contains similar products and its spare parts. E.g. 68 – it contain all types of pumps and its spares.

Next two digits are known as the subgroup, it include 01 to 99 number of group. It shows the manufacturer codes. If the manufacturing code is not available than this group shows the design number. E.g. 6804 – It shows the pumps of ----company.

Next 3 digits are known as sub-subgroup, again it include groups from 01 to 99. These numbers are indicating the model number or identification or design number or blueprint number. E.g. 680401 – this number is for the pumps of ---- company having the design number ‘CNU465’.

Up this six numbers code is known as “CODING SCHEMA”. Next three digits are showing the serial number assign to a particular part or

item. It include the group the groups from 001 to 999. Last digit shows the origin of the product. This number must be 1 or 3. 1

indicates that this product is indigenous and 3 indicate that the product is imported.

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With this RIL generates the unique number for each and every product or spare. RMMCS is linked with the SAP system. SAP generates the unique serial number for each and every item as soon as RMMCS accepts the code. SAP numbers are just a serial number. These codes are maintained centrally so the same codes are used for a single product in all departments of RIL.

Flagging System:

RIL has 167th rank in ‘FORTUNE 500’ companies and one of the largest company in the world. In the time of recession management of RIL decides to go for centralization and manage the all departments from the head office. Management is also looking for minimum human efforts in the management work by using the technological changes. In such a huge company it becomes necessary to give more attention towards the inventory. RIL has its own system to manage the inventory i.e. RMMCS and one of the best techniques of managing the inventory is known as Flagging.

Flagging prevents the management from purchasing the goods if the similar goods are available in other department so it avoids the unnecessary blockage of money. This system is managed centrally by a team and prevents the duplication of purchase or over stocking of similar kind of goods in the RIL. Suppose the Vadodara department needs the ‘bearing of 14 inches of flag co.’ and if the similar bearings are available with any other department of RIL than if the Vadodara department could not enter purchase requisition order in the system as that item contain the flag. In this case system shows the name where the similar bearings are available. Vadodara department needs to contact the responsible person in the department having stock of those bearings. If That department did not need that bearings or that bearings are not in regular use than Vadodara department has to get those bearings by generating STO (Stock Transfer Certificate). Suppose those bearings are of regular use or they need it and not an over stock item than they have to conform it and department having the similar stock needs to remove the flag from that item. Once the flag has been removed, Vadodara department can enter a purchase requisition in the system to purchase those bearings. System generates the different type of flag for different reasons depending on the days of storage of that item.

02 flag for duplicate material available. 013 flag for material not moved within one year. 08 flag for moderate material not moved since last 2 years. 03 flag for slow moving material not move for more than 2 years. 05 flag for material stock more than the maximum limit.

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System generates the flags only for those materials having cost more than RS.5000 per unit .RIL is using the flagging system and with this system RIL able to reduce the investment in the inventory. This system really helps in managing the inventory and reduces the cost associate with the inventory and ultimately all these results in increase in profit by reduction in cost.

Classification of Material in SAP

RIL is centrally managed with the help of SAP system. In SAP system every material name is identified with the code, with this code system identify each material easily.

CODE MATERIALS

SPAR SPARES

CACH CHEMICALA& CATALYSTS

PAMA PACKAGING MATERIAL

FTRM FINISHED TRADABLE RAWMATERIALS

LABC LAB CHEMICALS

General Terms of Quotations

Purchase procedure actually starts with the demanding of quotations but prior this plant needs to generate purchase requisition (PR) before some days depending on the types of goods. It means plant requires the material for smooth functioning of production but if the material is not available with the stores they need to show the requirement in the system. Here the work of purchase department starts, after this purchase department fetches the data from the inventory module and search for the suppliers of the same material. RIL has predefined loyal suppliers and if the supplier is not available in this case they are looking for the new suppliers. They are sending the requirement to all the suppliers, with the terms and conditions, and ask the quotations for same.

Selection of Supplier:

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Once the quotations are demanded from the suppliers they need to respond for the same. Suppliers are sending the quotations, if they are accepting the terms & conditions or wants to negotiate with the terms and conditions or send the regrets letter if he is not ready to supply the same material. After collecting the quotations management are scrutinize the suppliers with the terms and condition and prepare a comparative statement of the suppliers which are suitable for the same. On the basis of comparative statement management decides the supplier who is tendered a lower price and easy terms and conditions. RIL has its approved suppliers and maintained relationship from a longer period so they are not worried about the quality but price matters here and lower quoted supplier gets the advantage. At the end order has been put to the selected supplier if needed after selecting the supplier management may enter in to negotiation for the price and terms and conditions.

Receipts

After the order has been placed, the goods have been transferred by the supplier. First of all the gate security will check the truck number and they will provide them the TPN number after taking that number the truck will go for the excise clearing where it will get the excise ID from there. The excise person will make a entry of excise, after that the MMN entry is done and then they will sent the goods to the stores department where the GRN (Goods Receipt Note) will be made. Stores department will send the goods for the inspection and on that base the inspection note is to be prepared of acceptance or rejection of the goods. That is also known as user decision and the goods will be consider as the RIL’s property and if the goods are rejected then they will make the MMX exit entry

Inspection

Inspections of all the materials are to be done on the basis of the purchase order that have been placed, they will check for the quality and the quantity of the material as per the purchase order. If all the criteria are ok then they will accept the material and will send to stores or at the where it is required. And if the material is inferior then they will reject that material and will quote the reasons for the rejection of the materials.

Storage and preservation

After the materials are checked they are kept in stores or at the plant site, where due care is been taken for the material so that they are not damaged or Obsolescence. Plant engineers are responsible for preservation of heavy machineries and specific goods. Chemicals and other hazardous material are kept well preserved so that they may not prove vital for the health of the employees.

Issue

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Issue of the materials is done as per the reservation made by the particular plant. Each plant has to make a reservation for the material that they required and also to show how much stock they have and how long it will last, the materials department will make the verification of the reservation and as per the past consumption record they will allot the materials to the plant. Plant has to give the fund center as well as profit center number it helps in costing computation of a particular plant.

Scrap and disposals

After the use of the materials some materials may turn to wastages or useless due to some reasons. So they are to be scraped, not only the materials but also any type of inventory like spares and mechanical will go Obsolescence with the time passing and will be useless for the plant that has to be scraped. First of the plant manager has to prepare MRV (Materials Return Voucher) which include all the details of inventory, with its code and type of inventory and where it is been used with the approval of the head that this is not usable now should be scraped. For the disposal of the scrap they will invite the tender and ask them to visit the scrap yard, the acceptance of the tender will be done by the Mumbai office. The disposal of the scrap is done once or twice a year. In scrap all the materials are to be kept as per their type if they are of electrical then at different place and so as on, and then in electrical each item at specific place like fans at different place, motors at different place. Each department has an authority to sell the scrap but the price of scrap is decided by the head office only.

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Supply Chain Management (SCM) is one of the most important parts of any companies operations. At the manufacturing units SCM plays an important part. Towards the end of each month the Marketing department of each unit predicts the likely sales for the month or a specific time period. SCM unit then contacts the production and the operational units, which tells them about the amount of raw material needed. The SCM then starts the process of raw material procurement. This is the start of the SCM’s functions, its function starts with the arrival of raw material to the delivery of the final products to the customers. These functions include logistics, distribution, retailers, suppliers, etc.

Similarly SCM is a very important of RIL’s operations. As being a company with a high degree of integration, RIL’s products are also used as raw materials for its various other plants. So now we take a look at various steps in the RIL’s SCM.

Raw Material Procurement:-

RIL’s main raw materials are Crude Oil and Natural Gas, of which RIL imports most of its crude oil requirements. RIL gets natural gas from its D6 gas fields of KG basin. The company brings the gas through pipelines to its Jamnagar refineries. It imports crude oil by ships at the Hazira port. This is one of the most important reasons of refineries being close to ports. For most of its petro-chemical and polymers business, the outputs from the refinery form the raw materials.

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Suppliers:-

RIL gets crude oil through suppliers like Cairn India through pipelines and from the gulf countries through ships. The products and bi-products which are formed as a result of distillation of crude oil and natural gas at its refineries, which are required as raw materials at its other plants are distributed through the networks of rail and road. This is usually done by the company Reliance Logistics.

Warehousing:-

The incoming raw materials are then stored at various warehouses. These warehouses have to be safe and large enough so that the materials are remain in the form that they should be in. Also the inventory has to be managed so that the raw materials do not become useless as a result of not being used within its useful life period, so inventory management forms an integral part of RIL’s SCM.

Manufacturing:-

At its various manufacturing sites throughout the country RIL produces various products. The products like LPG, Aviation Fuel, High speed diesel; Naphtha, etc are produced at its refineries. The products like Poly-Vinyl Chloride (PVC), Polypropylene, Poly Butadiene Rubber (PBR), etc are manufactured at its polymer units. Textiles are manufactured at the textile units.

Distribution:-

SCM oversees the distribution of the final products. The products of RIL, which are either hazardous or inflammable in nature, are generally distributed through pipelines or tankers to the customers or consumers. For example LPG is distributed through pipelines to the houses of the consumers, while fuels are transported through tankers through roads, rail or ships. Products which are non-hazardous are generally distributed through rail and road inland and through ships for exports.

Customers:-

The products reach the customers through wholesalers and retailers, the SCM has to oversee that the products have a continuous flow till the consumers without any glitches. RIL has its own retail outlets for fuel, textiles. It supplies LPG directly to the customers.

SCM also has to review the performance each of its control areas and has to gather constant feedbacks about the problems that surface during its operations.

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12.Competitors and Company in Terms of Operating Excellence

In today’s competitive world, companies have to keep improving their operating framework to be able to compete with their competitors. RIL also has over the decades improved its operating functions to be in the race. In this part we take a look at the company’s operating strategies and steps taken to improve its operation in comparison to its competitors.

Factory Locations and Layout:-

RIL which is the one of leading producers of petrochemicals in the world is now in competition with BASF SE. the largest chemical product producer in the world. So let’s compare these two on the base of factory locations.

RIL operates world-class manufacturing facilities across India at Allahabad, Barabanki, Dahej, Hazira, Hoshiarpur, Jamnagar, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and Vadodara. Most of these manufacturing sites are integrated plants. Integrated production sites are characterized by co-location of a large number of individual production lines (producing a specific chemical), which share an interconnected material flow, i.e. the production lines in these manufacturing sites have a common raw material or the raw material for one is the product of the another. For example the RIL’s Jamnagar unit has a refinery and related petrochemical factories. Most of the polymer factories are located in Gujarat, Maharashtra and Daman & Diu, as the refinery of Jamnagar is in close proximity and also the ports of Mumbai, Hazira and Kandla.

BASF SE has integrated sites throughout the world with the largest such integrated production site is located in Ludwigshafen, Germany employing 33,000 people.  The company is currently expanding its international activities with a particular focus on Asia. Between 1990 and 2005, the company invested €5.6 billion in Asia, for example in sites near Nanjing and Shanghai, China and Katipalla in India.

Business Management Strategies:-

RIL has always tried to incorporate the best management strategies in its operations. It was one of the first Indian companies to achieve TQM (Total Quality Management) in its various manufacturing units in as early as 1991. In 2001 RIL also started embarking on Six Sigma Initiatives. Six Sigma methodologies help in reducing variation and improve business process performance, profits, customer loyalty, and the environment. It uses SAP ERP solutions to streamline its operations which have helped it in various fields like logistics, inventory management, customer relationships, vendor relationships, etc. The company has also started CDM (Clean Development Mechanism). According to

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this mechanism development should therefore be with due regarded to environment protection. In line with this approach, RIL has set up state of the art facilities at all its manufacturing sites for the management of all emissions in liquid, gaseous or solid form. Major emphasis is given on conservation of natural resources like water, energy, raw material, green belt development etc. To conserve the precious water resource all sites of RIL have taken special steps such as rain water harvesting, reducing water consumption, recycling and reusing the treated water to the maximum extent in process, cooling water systems, and horticulture and gardening programs. Reduction in raw material consumption, waste generation and encouraging of reuse and recycle of products waste has been prime initiatives in this direction.

BASF SE applies management strategies like TQM, Six Sigma, and KAIZEN in its operations. BASF also takes initiatives to lower environmental pollution caused by it. In 2006 BASF was praised by the Climate Leadership Index for their efforts in problems with climate change and greenhouse gasses in our world. In recent years the BASF Company has set aside a large portion of their R&D budget on resource conservation. BASF has reported that one of their recent developments has been creating filters for wastewater treatments plants that help to reduce emissions. Another recent environmental move the BASF Company has done is formed a partnership with Columbia University. The BASF Company and Columbia University came together so that they can further research “environmentally benign and sustainable energy sources”.

Inventory Turnover Ratio:-

RIL has seen a drop in its Inventory Turnover ratios, i.e. from 12.92 in March 2009 to 8.29 in March 2010. Inventory turnover ratio shows how many times a company's inventory is sold and replaced over a period of time. Hence in the last one year RIL’s ability to sell whatever produced has gone down in comparison to the previous year.

Whereas BASF SE’s ratio too has dropped in the last financial year, it has been 5.8 (FY 09/10) in comparison to 6.32 for FY 08/09. But considering the size of BASF it is a good figure.

Since both the companies have shown a downward trend in the inventory turnover ratios, it could be so due the factors affecting polymer markets. Both the companies have a decent inventory turnover ratios, which is not too low neither too high as a low ratio shows company’s inability to sell its products, whereas a very high ratio shows ineffective buying by the company.

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Fixed Assets Turnover Ratio:-

RIL has seen a drop in its Fixed Asset Turnover Ratio, i.e. from 1.48 in the FY 2008-09 to 1.32 in the FY 2009-10. This means that the company’s ability to handle the fixed assets has diminished. However the present ratio is pretty good in respect to the ratios of the companies that deals with natural resources like oil and gas as these industries have high capital investments.

ONGC is the largest oil and gas sector company in India. It is RIL’s biggest competitor in the country. In terms of Fixed Asset Turnover Ratio, ONGC has seen a big fall of its ratio, i.e. from 6.24 in FY 2008-09 to 3.9 in the FY 2009-10.

This shows that RIL has performed better than ONGC in handling of its fixed assets.

Revenue per Employee Ratio:-

RIL has seen an increase in its Revenue/Employee ratio, i.e. from Rs. 60,127,233.68 per Employee in the FY 2008-09 to Rs. 86,822,169.91 per Employee in the FY2009-10. This means that the personnel productivity of the company has improved, which is a proof of its operational excellence.

RIL’s competitor ONGC has seen a drop in its Revenue/Employee ratio, i.e. from Rs. 60,127,233.68 per Employee in the FY 2008-09 to Rs. 86,822,169.91 per Employee in the FY 2008-10. This shows that RIL has improved more in its operational strategies than ONGC.

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INDIA’S Biggest Companies v/s Reliance Industries(ET 500)

Ranking

Company/city Revenues Net Profit

MCAP Assets TYPE

1. Indian Oil Corporation, Delhi/NCR

257,560 10,713 104,335 103,768 OIL & GAS

2. Reliance Industries, Mumbai

214,532 15,898 322,991 206,183 OIL & GAS

3. Bharat Petroleum Corpn, Mumbai

126,182 1,632 27,885 41,775 OIL & GAS

4. Hindustan Petroleum Corpn, Mumbai

113,304 1,475 18,032 36,614 OIL & GAS

5. ONGC, Delhi/NCR

107,066 19,404 297,257 126,776 OIL & GAS

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13. Conclusion:

In a challenging year of demand destruction and global financial crises ,RIL was resilient and continued to innovate to convert the adversity into an opportunity. RIL launched an innovative initiative called “ Mission Kurukshetra” aimed at galvanising and energising the entire organisation to rise to the acassion and help RIL emerge stronger.

RIL exported to 123 countries around the world. Exports represent 55% of the RIL’s turnover. Petroleum products constitute 85% and petrochemicals contribute 15% of the total exports.

KG-D6 completed 365 days of 100% uptime and zero-incident production. Gas production from KG-D6 has ramped up to 60 MMSCMD in a short span of 9 months from commencement. Current production of about 60 MMSCMD is from 16 wells. The design capacity of KG-D6 deepwater gas production facilities were assessed and achieved a flow rate of 80 MMSCM. During FY-2009-2010, total gas production was 14,397 MMSCM.

Oil production from the D26 field now exceeds 35,000 barrels per day. During the fY-2009-2010, total oil production from this field was 4.04 million barrels.

The two Jamanagar refineries that RIL operates are not only among the largest in the world, but also are the most complex, with average complexity of more than 12.0 on the nelson complexity index. RIL has become the world’s largest producer of ultra-clean fuel at a single location.

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14.Limitation:

This project is not far from limitations. The limitations are: -

A company generally doesn’t disclose its internal policies to outsiders. In such case, it is very

difficult to find out and gather complete and true information in the forms of figures regarding

financial matters.

The report highly depends on the secondary data and it may be possible that the data from

which the report is made may not appear in the report because some data is confidential for

the company.

The authenticity of the suggestions and recommendations depend upon the rationality of the

data provided to me.

Data for VMD separately are not provided as it is confidential so data are taken on

proportionate basis based on the information provided to us.

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15. Bibliography

1) Web site-www.ril.com

2) Annual report of RIL2009-10

3) Company’s internal portal

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Annex:

Profit and Loss account of RIL  Mar '06 Mar '07 Mar '08 Mar '09 Mar '10particulars 12 mths 12 mths 12 mths 12 mths 12 mthsIncome  

Sales Turnover 89,124.46 118,353.71 139,269.46 146,328.07 200,399.79Excise Duty 7,913.13 6,660.99 5,826.46 4,480.60 7,938.77Net Sales 81,211.33 111,692.72 133,443.00 141,847.47 192,461.02Other Income 682.92 478.28 5,628.79 2,059.88 2,460.47Stock Adjustments 2,131.19 654.6 -1,867.16 427.56 3,947.89Total Income 84,025.44 112,825.60 137,204.63 144,334.91 198,869.38Expenditure  

Raw Materials 59,739.29 80,791.65 98,832.14 109,284.34 153,689.01Power & Fuel Cost 1,146.26 2,261.69 2,052.84 3,355.98 2,706.71Employee Cost 978.45 2,094.09 2,119.33 2,397.50 2,330.82Other Manufacturing Expenses 668.31 1,112.17 715.19 1,162.98 2,153.67Selling and Admin Expenses 5,872.33 5,478.10 5,549.40 4,736.60 5,756.44Miscellaneous Expenses 300.74 321.23 412.66 562.42 651.96Preoperative Exp Capitalized -155.14 -111.21 -175.46 -3,265.65 -1,217.92Total Expenses 68,550.24 91,947.72 109,506.10 118,234.17 166,070.69Operating Profit 14,458.74 20,405.91 22,432.52 24,152.39 29,969.07PBDIT 15,005.70 20,642.80 29,028.18 25,416.42 33,057.12Interest 893.61 1,298.90 1,162.90 1,774.47 1,999.95PBDT 14,112.09 19,343.90 27,865.28 23,641.95 31,057.17Depreciation 3,400.91 4,815.15 4,847.14 5,195.29 10,496.53Other Written Off 0 0 0 0 0Profit Before Tax 10,711.18 14,528.75 23,018.14 18,446.66 20,560.64Extra-ordinary items 0.88 0.51 48.1 0 0PBT (Post Extra-ord Items) 10,712.06 14,529.26 23,066.24 18,446.66 20,560.64Tax 1,642.72 2,585.35 3,559.85 3,137.34 4,324.97Reported Net Profit 9,069.34 11,943.40 19,458.29 15,309.32 16,235.67Total Value Addition 8,810.95 11,156.07 10,673.96 8,949.83 12,381.68Preference Dividend 0 0 0 0 0Equity Dividend 1,393.51 1,440.44 1,631.24 1,897.05 2,084.67Corporate Dividend Tax 195.44 202.02 277.23 322.4 346.24Per share data (annualised)  

Shares in issue (lakhs) 13,935.08 13,935.08 14,536.49 15,737.98 32,703.74

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Earning Per Share (Rs) 65.08 85.71 133.86 97.28 49.64Equity Dividend (%) 100 110 130 130 70Book Value (Rs) 324.03 439.57 542.74 727.66 392.51No .of share 139.36 139.35 145.36 157.37 327.07

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