Reliance Industries Limited

First Half Results 1999 - 2000

October 20, 1999

Macro Economic Environment

Operating Environment

Financial Performance

Business Review

Shareholder Value Enhancement

Summary

Index

Macroeconomic Environment

GDP Growth Rates (%)

1998 1999 (E) 2000 (E)

Japan -2.8 1.4 1.7China 7.8 7.0 8.2Hong Kong -5.1 1.0 3.5South Korea -5.8 8.1 6.0Singapore 0.3 6.3 5.0Thailand -9.4 5.0 4.1Indonesia -14.5 0.1 5.1India 6.0 6.5 6.5

Source: Research Reports

Improved GDP Outlook for Asia

The Asian economic recovery is well underway - GDP growth in the region may average 5% in the year 2000

Stable Regional Currency Environment

The relative stability in regional currencies is indicative of the improvement in the overall business climate

% change overCurrency 3 months 6 months 1 year

Yen 12.8 11.9 8.9Korean Won -1.4 -0.1 10.2Singapore $ 1.9 1.9 -2.8Thai Baht -5.1 -4.8 -2.7Indonesian Rupiah -15.5 8.4 -1.4Indian Rupee -0.4 -1.2 -2.4

Performance of Regional Stock Markets

Country % changeYTD (US$)

Japan 37China 33Hongkong 25South Korea 38Singapore 41Thailand (3)Indonesia 40India 57

The general improvement in economic prospects is also reflected in buoyant stock market trends

20-1

0-9

7

20-1

1-9

7

20-1

2-9

7

20-0

1-9

8

20-0

2-9

8

20-0

3-9

8

20-0

4-9

8

20-0

5-9

8

20-0

6-9

8

20-0

7-9

8

20-0

8-9

8

20-0

9-9

8

20-1

0-9

8

20-1

1-9

8

20-1

2-9

8

20-0

1-9

9

20-0

2-9

9

20-0

3-9

9

20-0

4-9

9

20-0

5-9

9

20-0

6-9

9

20-0

7-9

9

20-0

8-9

9

20-0

9-9

9

bre

nt

$/bbl

Low of $9

Current $22.3

Crude prices have moved up sharply - 88% year-on-year

Trends in Crude Prices

Economic Recovery in India

GDP growth estimates revised to 6 - 6.5%

Industrial production growth increased to 6.3% in August 1999 from 5.9% in July 1999

Growth in manufacturing sector at 6.1% in August 1999; electricity sector up 11%

Inflation rate remains at historic lows - WPI at 1.8%

Revival in transportation sector - medium and heavy commercial vehicles production up 63% in H1 1999-00

Cement production up 21% and steel 7% A broad-based economic recovery is underway in India

Operating Environment

International Price Trends - Feedstocks

50100150200250300350400450500550600

$/M

T

Crude-Brent Naphtha PX EDC

The strong uptrend in crude prices has driven key petrochemicals feedstocks higher

International Price Trends - Polyester

250

450

650

850

1050

$/M

T

PTA MEG POY PSF

The average prices for PSF/POY in the first half have been lower than corresponding year ago figures

Domestic Price Trends - Polyester

10

20

30

40

50

60

70

Rs/

Kg

PTA MEG POY PSF

Domestic polyester prices have tracked international trends

International Price Trends - Plastics

300

400

500

600

700

800

900

$/M

T

PE PP PVC

A significant recovery has been witnessed in plastics prices

Domestic Price Trends - Plastics

20

25

30

35

40

45

50

55

Rs/Kg

PE PP PVC

The average plastics selling prices in the first half have been 15%-20% higher than corresponding year ago figures

Factors Contributing to Price Recovery

Stronger than anticipated recovery in regional economies and continued growth in the US and Euroland

A sharp rise in crude prices - driving product prices higher, throughout the petrochemicals chain

Destocking phase over last year - inventories at normal to low levels

Y2K concerns a short term demand factor Restocking by processors Commissioning delays in some ongoing projects -

Formosa Phase II, Petronas/Union Carbide

Petrochemicals prices have been driven up by a combination of cost push and demand pull factors

Outlook for Prices and Margins

Indications are that the bottom of the petrochemicals cycle may be behind us

Demand supply balance improving - no visible capacity growth beyond the year 2001 - several major projects in the region cancelled

Stronger yen and restructuring in Japan’s petrochemicals industry to lead to further rationalisation in the supply side

Eventual weakening in crude oil prices can lead to improvement in margins

RIL’s strategy of selling 10%-15% below landed cost of imports - cushion against any reduction in import dutiesThe global petrochemicals cycle may be turning sooner

than was earlier anticipated

Domestic Demand Supply Position

POY/PSF currently balanced: strong demand growth no new capacities announced - other than RIL rationalisation by RIL leading to more competitive industry structure

Fears of PE/PP surplus unfounded: Non RIL projects running behind schedule New capacities facing technical and quality problems - unable to achieve high operating rates

New capacities subject to export obligations - reduced availability for domestic markets

RIL producing speciality grades not offered by other producers

The concerns over a possible domestic surplus in plastics do not take into consideration the ground realities

Financial Performance

Performance Highlights

Reliance continues to lead the Indian private sector with highest sales, profits, assets, and net worth

Record production level of 3.91 million tonnes in the first half - increase of 13%

400,000 tpa of PP and 930,000 tpa PX commissioned at Jamnagar - balance plants will be commissioned ahead of schedule in the current financial year

Prices of petrochemical products as well as feedstocks have moved up sharply over the last few months

Recent price trends indicate firmness in the short term

Financial Highlights

Sales Rs. 8,673 crores (US $1,989 mn)

Operating Profit Rs.1,713 crores (US $ 393 mn)

Net Interest Cost Rs. 144 crores (US $ 33 mn)

Cash Profit Rs. 1,569 crores (US $ 360 mn)

Net Profit Rs. 1,122 crores (US $ 257 mn)

Annualised CEPS Rs. 33.2 (US $ 0.76)

Annualised EPS Rs. 23.6 (US $ 0.54)First private sector company to report net profit of over

Rs. 1,100 crores in six months

Income Statement

H1 1998-99 H1 1999-00

Rs. Crs. $ mn. Rs. Crs. $ mn. Growth

Sales 7,374 1,736 8,673 1,989 18%

Op. Profit 1,443 339 1,713 393 19%

PBDIT 1,670 393 1,992 457 19%

Interest 347 82 423 97 22%

Depreciation 402 95 447 103 11%

Tax Nil Nil Nil Nil

Net Profit 921 217 1,122 257 22%

Cash Profit 1,323 311 1,569 360 19%

First private sector company to report net profit of over Rs. 1,100 crores in six months

US GAAP/ IAS Reconciliation

Indian GAAP US GAAP IAS

Rs. Crs. $ mn Rs. Crs. $ mn Rs. Crs. $ mn

Net Profit 1,122 257 1,031 236 816 187

Difference (90) (21) (306) (70)

(8% ) (27% )

The major difference is primarily on account of higher deferred taxation, arising from imposition of surcharge on corporate tax

Business Mix

Reliance remains focussed on the petrochemicals business

Textiles1.0%

Polyester21.8%

Oil and Gas2.0%

Chemicals14.9%

Plastics & Int.

38.6%

Fibre Int.21.8%

Growth in Production and Sales

Sales revenue growth of 18%, contributed by:

–Impact of sales volume growth 13%

–Impact of increase in avg. product prices 5%

Robust growth in domestic demand - over 95% of production sold within India

Value added export opportunities captured - Exports at Rs. 421 crores (US $ 97 mn)

Production volume increased 13% to a record level of 3.91

million tonnes - on course to achieve forecast production

level of 8 - 8.5 million tonnes for the full year

Enhanced Operating Margins

Operating margins increased to 19.8% in H1 99-00.

This was the result of :

strong volume growth higher product prices mitigating increased feedstock costs continued focus on efficiency, productivity and costs rationalisation of customs duty

All plants operated at rated capacity during the period

Profitability Ratios

H1 1998-99 H1 1999-00

OPM % 19.6 19.8

NPM % 12.5 12.9

RONW % 20.4 23.4

EPS – Rs. ($) 19.6($0.46) 23.6($0.54)

Cash EPS – Rs. ($) 28.2($0.67) 33.2($0.76)

Increased OPM, Improved NPM and RONW

Annualised Cash EPS of Rs. 33.2 is discounted 7 times at current price

Liquidity Ratios

30 Sep 98 30 Sept 99

Gross Debt : Equity 0.93 0.98

Net Debt: Equity 0.48 0.52

Net Gearing (% ) 33.0 35.1

Net Interest Cover 6.4 5.5

Net Debt/ Cash Flow 1.6 1.6

Conservative liquidity ratios reflect RIL’s financial strength

Conservative Financial Management

Reliance is the only Indian company having international ratings constrained by the sovereign ceiling

Net gearing of 35% reflects conservative policies

Net Debt: Cash Flow ratio of 1.6 indicates the company’s ability to retire its entire debt in less than 2 years

Forex exposure on account of international borrowings of $ 1.3 billion fully hedged by dollar assets

Annual Forex debt service outflow of about $ 110 mn. adequately covered by export revenues alone

Increasing export revenues provide additional hedge

Exports To Rise Significantly

Exports revenues up 47% to Rs. 421 crores ($ 97

mn)

Export revenues will increase about 200% to $ 400-

500 mn (around Rs. 2,000 crores) p.a. by the year

2000-01

RIL’s imports of feedstocks will drop with the

commissioning of the Jamnagar complex

RIL to have substantial net foreign exchange

earnings by

2000-01

Reliance to emerge amongst the largest manufacturer exporters from the country

Y2K Compliance

All mission critical systems have been made Y2K capable

Remediation of some non-critical systems will extend in last quarter of 1999, due to plant scheduling and equipment lead times

Contingency plans in place to control any risk arising out of year 2000 problems

Y2K costs unlikely to have any significant impact on financial position or results of operations

All major customers, international suppliers, and banks are already Y2K compliant

Y2K issues are not expected to pose any material risk to RIL’s operations

Business Review

Business Review - Polyester

Industry Reliance

(Prodn. in‘000 tonnes)

H198-99

H199-00

%change

H198-99

H199-00

%change

Polyester(PFY, PSF, PET)

640 684 7% 292 318 9%

Fibre Int.(PTA, MEG)

766 865 13% 636 745 17%

RIL emerges as the 5th largest PFY producer in the world

The full impact of the Raymond Synthetics’ capacity of 74,000 tpa to be reflected in the next year

Business Review - Polymers

Industry Reliance

(Prodn. in ‘000tonnes)

H198-99

H199-00

%change

H198-99

H199-00

%change

Plastics(PE, PP, PVC)

870 1061 22% 516 583 13%

Polymers demand grew 14% in the first half

The full impact of the 60% increase in RIL’s plastics capacity will come through in the second half

Business Review - Oil and Gas

Reliance’s prodn. H1 98-99 H1 99-00 % change

Oil (in KT) 133 167 25%

Gas (in KT) 249 331 33%

Strong growth in production volumes - gas production up sharply from 5.7 to 7.6 mm cu. metres per day

Positive impact of higher oil and gas prices

Leading Market Shares

RIL maintains its market leadership through its nationwide marketing and distribution network, product development activities and strong customer relationships

Demand Growth Potential - Polyester

China consumes about 3 times as much polyester as India - indicating strong potential for continuing demand growth

Polyester* ConsumptionTotal (mn tpa) Per capita (kgs)

India 1106 1.1

China 3755 3.0

US 2203 7.8

World 15268 2.5

*Data for PFY and PSF

Strong domestic demand growth likely to continue with China consuming nearly 4 times as much plastics as India

Plastics* Consumption

Total (mn tpa) Per capita (kgs)

India 2308 2.4

China 11785 9.6

US 19487 72.2

World 77012 13.2

*Data for PE,PP, and PVC

Demand Growth Potential - Plastics

Robust Growth in Domestic Demand

Historic Future growth CARG Estimates Growth Drivers(last 5 yrs) (per annum)

Polyester 14% 10%-15% - lower prices(PFY, PSF, PET) - substitution of

cotton

Fibre Intermed. 17% 10%-15%- growth in polyester PTA, MEG) demand

Plastics 12% 12%-15% - JPMA implementation(PE, PP, PVC) - edible oil packaging

- Substitution of traditional

materials like metals, wood, glass- Convenience, presentation

RIL’s Acquisition Strategy

Growth over the past 2 decades has been achieved mainly through the organic route

Future growth to be driven by a mix of acquisition and fresh capacity creation

The global petrochemicals industry is undergoing a consolidation phase in pursuit of scale, focus and efficiencies - Dow/Union Carbide, Equistar, Montell

The domestic industry too will need to restructure in order to ensure competitiveness

Reliance will participate in acquisition opportunities to increase business competitiveness and enhance shareholder value

• RIL has acquired control of 140,000 tpa of polyester capacity in 3 separate deals over the last 2 years

• Achieved improvement in market share, diversification of manufacturing base, and increase in overall integration

• RIL’s acquisition strategy is focused at maintaining market leadership in a regional excess supply context

• Reliance to leverage its technical skills, financial strength, nation wide network, customer relationships, and access to key inputs, in creating value through acquisitions

• Reliance working towards a more competitive industry structure by leveraging its strengths to acquire capacities

Rationalising Indian Polyester Industry

Capital Allocation Framework

RIL will allocate upto 50% of its internal accruals over the next 3 years for capacity expansion/ debottlenecking

Reliance will also pursue other avenues for deployment of its cash flows such as:

acquisition opportunities in its business areas debt reduction enhanced distributions to shareholders, through appropriate dividend and stock buyback policies (subject to an appropriate regulatory framework)

Capital Allocation Framework

RIL is committed to deployment of its future cash flows in a manner that maximises shareholder value

Capital Allocation Framework

Profit growth and capital productivity will receive due emphasis

Reliance’s profit oriented growth strategy will: enable it to achieve significantly higher rates of return on capital

require a level of investment that is significantly lower than current capacity replacement costs

strengthen its overall cost and competitive position

enhance its overall market leadership improve its product mix, customer satisfaction and customer reach

RIL will spend Rs. 1,000 crores per year on expansion and de-bottlenecking programmes over the next 3 years

This is well below the indicated level of 50% of expected internal cash accruals

Additional capacities to be implemented at around 50% of the current replacement cost of comparable assets

This will ensure lower capital intensity and substantially higher returns

Detailed feasibility studies currently being conducted

Capex Plans for next 3 Years

RIL will implement necessary capex plans to maintain and enhance its leadership in growing markets

Reliance intends to double its polyester capacity, with the focus on PFY

Reliance aims to be amongst the top 3 polyester producers in the world

Reliance aims to be the lowest cost, and the most competitive, polyester producer in the world

Demand growth for polyester continues to be in double digits - PFY demand alone is increasing by 100,000 TPA

Reliance will correspondingly increase capacity of its existing PTA plants to maintain the level of integration

Polyester Business

RIL’s polyester capacity will cross 1 million TPA over the next 3 years

Reliance intends to de-bottleneck its existing multi-feed naphtha cracker from 750,000 tpa to nearly 1 million tpa of ethylene

Simultaneous de-bottlenecking of downstream capacities to achieve higher production of polymers and other cracker products

Domestic polymer consumption has been increasing at compounded double-digit growth rates

Polymers Business

The debottlenecking of the cracker will be achieved at marginal capital costs

Shareholder Value Enhancement

Key Value Drivers

Capex programme at Jamnagar nearing completion

Continuing strong growth in overall volumes

Upside from any further recovery in the petrochemicals cycle

Improvement in capital efficiency and productivity

Capital allocation framework transparently laid down for the future

Reliance is committed to enhancing shareholder value through appropriate business and financial strategies

Unlocking Hidden Values

RIL’s 50% stake in RPL has a market value of Rs. 15,000 crores (US$ 3.5 billion)

30% Participating interest in Panna, Mukta and Tapti oil and gas fields recently valued at Rs. 2,600 crores (US $ 600 mn) in Enron restructuring

RIL’s equity stakes in BSES and L&T have market value of Rs. 1000 crores (US $ 250 mn)

Cash balances of over Rs. 6000 crores (US $ 1.5 bn) - over Rs. 60 per RIL share

Replacement value of RIL’s manufacturing assets put at Rs. 40,000 crores (US $ 9 bn) - over Rs. 400 per RIL share

Total value of the above around Rs. 65,000 crs (nearly US $ 15 bn) - over Rs. 650 per RIL share

Reliance will endeavour to take all necessary steps to unlock hidden values for enhancing shareholder value

Creeping Acquisition of RIL Shares

The promoters have acquired around 20 million shares of RIL (2% of equity) from secondary markets

Purchase of shares in full compliance of SEBI guidelines for creeping acquisitions

Under SEBI guidelines, promoters have flexibility to buy additional 3% of equity (around 30 million shares) within the same 12 month period

Acquisition reflects promoters’ strong commitment to RIL, and their firm belief in under-valuation of shares

The promoters have affirmed their commitment to enhance their shareholding in RIL, utilising the creeping provisions to the fullest extent

RIL’s Shareholding Pattern

The shareholding has become increasingly institutionalised - retail shareholding has declined from 50% to around 25% currently

Effective floating stock is much lower - loyal base of over 2.2 million small investors

Category %

Promoters 28FIIs 16GDRs 8NRI / OCBs 2Indian FIs / MFs/ Banks 21Public 25

-----100

Price Performance of RIL’s Stock

RIL’s market capitalisation has increased to over Rs. 25,000 crores (US$ 6 billion)

Increase of over Rs. 12,000 crores (nearly $ 3 billion) since January 1999

% change in the local stock price in Rs.

Absolute Outperformance

to Sensex

3 years 142% + 85%

1 year 119% + 48%

Year To Date 91% + 32%

Valuation Comparison with Peer Group

RIL’s stock price is attractively valued in comparison to its peer group companies in the West

PE Relative PE

Dupont 25 1.0

Mobil-Exxon 28 1.1

Shell 29 1.1

ICI 21 1.1

Solvay 16 1.0

RIL 12 0.6

Summary

Summary

Commissioning of the Jamnagar petrochemicals complex will take volumes to over 10 million tonnes next year

Consolidation of RPL’s earnings, significant reduction in capital work in progress, and optimal capital allocation, to drive EVA, ROCE and RONW higher in the future

Significant upside from any further improvement in petrochemicals prices and margins

Value enhancing acquisitions and fresh capacity creation at marginal costs to drive profit oriented volume growth over the next few yearsRIL has moved to the top ranks of the international

petrochemicals industry, on the strength of its world class plants and demonstrated global competitiveness

Reliance Petroleum

Background

Global Competitiveness

Regulatory Environment

Marketing and Distribution

Financial Highlights

Index

Background

World’s Largest Grassroot Refinery

RPL’s 27 million tpa refinery at Jamnagar in Gujarat is the world’s largest grassroots refinery

The mega refinery will account for over 25% of India’s total refining capacity upon full commissioning

Phase wise commissioning currently underway - expected to be completed ahead of schedule this year

Output of controlled products being lifted and marketed by public sector oil companies - IOC, BPCL and HPCL

Unique positioning in the global context - a world class, state-of-the-art refinery in a fast growing market

A Fast Growing Domestic Market

Current Indian per capita consumption levels very low at 50% of Chinese, and 2% of US, levels

Upside potential with the recovery in overall economic growth, and improving business/consumer confidence

Adequate demand supply deficits in the country for all of RPL’s products, except gasoline

Superior quality gasoline (meeting California specs) from RPL’s refinery to target suitable export markets

The hugely deficit Indian market provides a ready home for virtually all of RPL’s production

RPL - Far Ahead of the Competition

Year ofcommissioning

Installedcapacity

Nelson’sComplexity Index

HPCL, Bombay 1954 5.50 4.07HPCL, Visakh 1957 4.50 3.27IOC, Guwahati 1962 1.00 3.16IOC, Barauni 1964 3.30 3.83IOC, Gujarat 1965 9.50 3.35IOC, Haldia 1974 3.75 4.81IOC, Mathura 1982 7.50 3.28CRL, Cochin 1966 7.50 4.97MRL, Madras 1969 6.50 3.59BR & PL, Assam 1979 2.35 4.04MRPL, Mangalore 1996 3.00 6.50IOC, Panipat 1998 6.00 6.31RPL, Jamnagar 1999 27.0 9.93

RPL is the most modern refinery in India with the highest complexity and greatest scope for value addition

Reliance’s investments at Jamnagar represent 5% of gross assets of the entire Indian corporate sector

The output from the Jamnagar complex will make up around 4% of total turnover of the Indian corporate sector

The multiplier effect of activities at the Jamnagr complex will be around Rs. 112,000 crores (US$ 26 billion) - equal to around 6.5% of India’s GDP

The production at Jamnagr will result in import substitution of US$ 5 billion

The Jamnagar complex will contribute Rs. 7,000 crores (US$ 1.6 billion) each year to the national exchequer - around 7% of total tax revenues of the Indian government

Major Contribution to the Nation

Global Competitiveness

Elements of Global Competitiveness

Economies of scale

Higher complexity

State of the art technology

Enhanced integration

Efficient logistics

Superior product mix

Optimum financing costs

Supportive regulatory framework

Located in a deficit and growing market

Economies of Scale

RPL’s per unit capital costs are 30% -60% lower than other recently completed Indian and international refineries, despite its higher complexity

RPL enjoys amongst the lowest capital and operating cost positions in Asia

Refining Company Com-missioningCapacity

Capital Cost

Cost per unit capacity Nelson

Year (M bpsd) (Million $)($ per bpd) Index

MRPL, India 1996 60 670 11.2 6.50

Shell, Malaysia 1996 125 1978 15.8 4.14

Star Petroleum,Malaysia 1996 150 1820 12.1 -

IOC, Panipat, India 1998 120 986 8.2 6.31

RPL (Only Refinery) 1999 540 3209 5.9 9.93

Jamnagar Complex 1999 13.77

Higher Complexity - Superior Margins

One of the most complex refineries in Asia

Nelson’s index of nearly 14 (including petrochemicals complex) compared to about 5 for average Asian refinery

Higher complexity due to a unique configuration comprising FCC, Coker, and Reformer, and integration with downstream petrochemicals and power plants

Deeper conversion leads to higher GRMs as compared to domestic, regional, and global peers

Enables maximisation of deficit middle distillate products and minimisation of bottom-of-the-barrel output

Unique configuration and integration results in significantly higher margins compared to peer group

Benefits of Integration

RPL’s refinery is fully integrated with petrochemicals, power plants, a captive port and related infrastructure

Combined investment of over Rs. 24,000 crores (US$ 6 billion) is the largest made at a single location in India by any private sector group

Key feedstock and product linkages lead to higher efficiencies and enhanced value addition

25%-30% of refinery’s total production (mainly reformate, naphtha, propylene, and coke) to be consumed captively within the group

Substantial savings in freight and incidental costsSignificant downstream linkages constitute a unique dimension of RPL’s global competitiveness

Efficient Logistics

Access to world class fully integrated logistics for product handling and evacuation

World scale captive port at Jamnagar Largest petroleum terminal in India with

capacity to handle 50 MMT - more than India’s entire crude imports

Only all weather deep sea port in India Can receive U/VLCCs carrying over 300,000

tonnes of crude round the year Dual SPMs and sub-sea pipelines for efficient

unloading and movement of crude

India’s largest tank farm with capacity of 3.5 MMT - around 20% of tank farm capacity of the Indian petroleum sector

Efficient Logistics

India’s largest product despatch terminal (capacity 10 MMT) with facilities for movement of products by road, rail and sea

Distribution Upcoming Vadinar Kandla pipeline to provide

access to the deficit North West market through the Kandla-Bhatinda pipeline

Strategic stake in Petronet India, the parent company implementing new pipeline networks in the country

Faster turn around and significantly lower crude and product handling costs add to the competitive edge

Efficient Crude Procurement

RPL is permitted to directly import its crude requirements - opportunity for cost savings through efficient procurement

RPL’s refinery has flexibility to process virtually any traded crude neat or in blend - benefits from price differentials

Most proximate location in India to crude surplus regions of the Middle East

World class in-house crude procurement planning and processing group to optimise procurement of crude

World class systems for optimising the supply chain and maximising operating margins - distinct edge over public sector refiners

Superior Product Specifications

Technical capability to deliver world class quality

products, even beyond Euro II norms HSD with less than 0.05% sulphur (stipulated max

0.25% for year 2000) gasoline adhering to California specifications Unleaded gasoline with benzene less than 1%

Decanalisation of exports of petroleum products

provides RPL opportunities for international product

swaps

RPL’s superior product quality will give it a competitive edge in domestic and export markets

Regulatory Environment

Oil Sector Reforms

Marketing of all products except gasoline, diesel,

kerosene, LPG and ATF (aviation turbine fuel)

decontrolled

The 5 controlled products can only be marketed by

oil PSUs during the transition period upto 2002

Refinery gate pricing for controlled products, based

on tariff adjusted import parity principle

10-15% tariff differential assured for domestic

refineries for the first 5 years to provide level

playing fieldReforms allow efficient new producers to earn excess profits - no upside potential for old refineries under the APM

Fiscal Benefits available to RPL

Income tax holiday for a period of 7 years

Availability of sales tax benefits as per Government of Gujarat policy (upto 90% of the project cost for a period of 14 years)

Government has announced several fiscal incentives to promote private sector investment in the refining sector

Marketing and Distribution

Marketing Arrangements - Till 2002

25%-30% of RPL’s production will be consumed captively (mainly, reformate, naphtha, propylene, and coke)

Arrangements in place for marketing controlled output (around 60% of total production) to oil PSUs - 50% to IOC, and 25% each to BPCL and HPCL

All products, except gasoline, to be fully absorbed in the deficit domestic markets

Marketing arrangements are in place in respect of RPL’s entire output of controlled and decontrolled products

Marketing Strategy Post 2002

RPL will be free to market all products directly, post the transition period beyond 2002

The existing agreements between RPL and IOC already contemplate formation of a 50:50 joint venture for marketing part of RPL’s production of controlled products post 2002

Potential disinvestment/strategic sale of government shareholding in marketing PSUs (IBP, HPCL, BPCL) may provide attractive opportunities

Strong cash flows provide flexibility with regard to future plans for marketing and distribution of products

Financial Highlights

Financial Management

Total capital outlay of Rs. 14,250 crores (US$ 3.4 billion) for the refinery project

Conservative gross debt:equity ratio of below 1:1 despite the capital intensive nature of the project

Foreign exchange component in debt restricted to less than 4% of the total project cost

Significant cash flows from the first full year of operations provide ability to gradually pay down debt

Debt:equity ratio likely to come down to an extremely conservative 0.5:1 over the next few yearsFinancing policies have been geared towards

minimising risks in the project implementation stage

Price Performance of RPL’s Stock

RPL’s market capitalisation has increased to over Rs. 20,000 crores (nearly US$ 5 billion)

RPL GDRs are now listed and traded on the Luxembourg stock exchange

% change in the local stock price in Rs.

Absolute Outperformance

to Sensex

3 years 449% + 392%

1 year 192% + 121%

Year To Date 188% + 129%

Shareholding Pattern

Large promoters’ holding reflects very strong commitment

Daily trading volumes have crossed 15 million shares

RPL enjoys the support of over 2.3 million retail investors

Fully diluted equity of Rs. 5,200 crores (US$ 1.2 billion)

% equity

Reliance group 64GDRs 7Financial Institutions 9FIIs 1Public 19

-----100

Performance Outlook for 2000-01

RPL likely to operate at 100% capacity in the next financial year ending March 2001

Rated Asia’s most competitive refinery, in a recent benchmarking study - highest cash margins

Comparable to RIL in size: Turnover of Rs. 22,000 crores (US$ 5 billion) in

first full year of operations Likely to generate significant cash flows and

profits

RPL will rank among the top 5 companies in India in assets, net worth, sales and profits from the very first year

Reliance

India’s World Class Corporation