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Tuesday, June 01, 2010
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Global sell-off cut winning streak
Today's major news
FY10 fiscal deficit at 6.6% of gross domestic product
Maruti Suzuki sales hit record high in May; the stock surges 1.80%
Lanco Infratech FY10 net profit jumps 84%, the stock closes 0.08% higher
Post-market summary
Global signals
European shares fell on Tuesday, as slowing Chinese factory output fuelled pessimism over global economic recovery and banks slid after the European Central Bank said Euro zone lenders face another wave of potential write-down. The key benchmark indices in France, Germany and UK fell by 1.61% to 2.43%.
The Asian indices closed in the red as Chinese manufacturing growth slowed. SGX Nifty closed 126 points lower.
The US stock index futures indicate a drop of more than 1% at the open on Tuesday as a slowdown in Asian manufacturing added to doubts about the pace of an economic recovery.
Indian indices
The worries across the globe got erupted after the Fitch Ratings on May 28, 2010 cut Spain's credit rating by one level to AA+ from AAA, saying that the country's debt burden is likely to weigh on growth. There was lack of support from the UK and US markets as they were shut overnight. The key benchmark index was keenly depended on Asian indices.
The Asian markets were down on the woes that Chinese economy may slow down as China's Purchasing Managers Index fell to 53.9 in May from 55.7 in April.
The Nifty again broke its psychological 5000 levels. However, the selling pressure across the sector indices dragged the benchmark indices.
Taking cues from Asian markets, the 30-share index, Sensex, opened mere two points lower at 16943 and this was also its day's high. The Sensex traded lackluster till the mid-session. Post lunch, the Sensex witnessed a sharp intraday fall of over 600 points due to some freak trades in the index heavyweight Reliance Industries. Ths European equities opened almost 2% lower, this also dragged the index further to touch the day’s low of 16318.
The India's exports rose 36% to $16.9 billion and the imports surged 43% to $27.3 billion in April 2010. The gross domestic product (GDP) readings for Q4FY2010 came in at 8.6% and FY2010 stood at 7.4%. The fiscal deficit stood at Rs4.12 lakh crore or roughly 6.6% of the GDP in 2009-10, as compared to a revised target of Rs4.14 lakh crore. The auto companies reported decent sales numbers for the month of May. These positive triggers could have bought some positive momentum in the domestic market today. But that failed to cheer the market and the Sensex extended its losses, with sell-off across the globe. The Sensex ended the day at 16572, 373 points lower. The Nifty closed below the 5000 levels at 4970, 116 points lower.
Market sentiment
The market breadth was unconstructive. Of the 2,898 shares traded on the BSE, 1,796 shares (61%) declined whereas 1,005 shares (35%) advanced. Ninety seven shares remained unchanged.
Sectoral & stock screening
All in red for the sector indices. The metal sector topped the losers’ list posting losses of 3.86% after downbeat Chinese economic data sparked concerns about demand for metals, which led to huge profit booking on sell-off in the metal stocks. The second, which was hit the most, was realty that fell by 2.95% due to selling pressure.
The defensive sectors — healthcare (HC) and fast moving consumer goods (FMCG) — saw some buying interest. But at last that too ended in red, with BSE HC and BSE FMCG down 0.02% and 0.63% respectively.
The top-3 gainers — Chambal Fertilisers and Chemicals that rose by 6.42%, Container Corporation of India that surged by 3.18% and Shree Renuka Sugars that was up by 2.27%. The top-3 losers — Jaiprakash Associates that slid by 6.04%, Fortis Healthcare that was down by 5.89% and Sesa Goa that declined by 5.19%.
Viewing volumes
Industrial finance company — IFCI saw highest trading with over 1.14 crore shares changing hands on the BSE, followed by Anil Dhirubhai Ambani Group firm — Reliance Natural Resources (0.66 crore share), wind turbine major — Suzlon Energy (0.66 crore shares), construction company — Unitech (0.55 crore shares) and sugar manufacturer — Shree Renuka Sugars (0.46 crore share).
Nifty June 2010 futures below 5,000
Turnover surges
Nifty June 2010 futures were at 4,940, at a discount of 30.20 points to spot closing of 4970.20. Turnover in NSE's futures & options (F&O) segment surged to Rs 81,961.32 crore from Rs 62,506.35 crore on Monday, 31 May 2010.
Bharat Heavy Electricals June 2010 futures were at discount at 2313.25 compared to the spot closing of 2315.90.
Reliance Industries June 2010 futures were at premium at 1012.50 compared to the spot closing of 1010.50.
Suzlon Energy June 2010 futures were near spot price at 55.80 compared to the spot closing of 55.65.
In the cash market, the S&P CNX Nifty fell 116.10 points or 2.28% at 4,970.20.
NSE Bulk Deals to Watch - June 1 2010
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
01-JUN-2010,DCB,Development Credit Bank L,GENUINE STOCK BROKERS PVT LTD,BUY,1256307,49.08,-
01-JUN-2010,DCB,Development Credit Bank L,RAVI SHANKARAN,BUY,1050000,48.84,-
01-JUN-2010,DCB,Development Credit Bank L,TRANSGLOBAL SECURITIES LTD.,BUY,1979253,47.56,-
01-JUN-2010,FCH,Future Capital Holdings L,DNYANESHWAR TRADING AND INVESTMENTS PRIVATE LIMITED,BUY,1000270,157.00,-
01-JUN-2010,TARAPUR,Tarapur Transformers Ltd,MBL & COMPANY LTD.,BUY,131460,39.72,-
01-JUN-2010,DCB,Development Credit Bank L,GENUINE STOCK BROKERS PVT LTD,SELL,1256307,49.16,-
01-JUN-2010,DCB,Development Credit Bank L,TRANSGLOBAL SECURITIES LTD.,SELL,1979253,47.67,-
01-JUN-2010,FCH,Future Capital Holdings L,AMIF I LTD,SELL,1048864,157.00,-
01-JUN-2010,FCH,Future Capital Holdings L,DNYANESHWAR TRADING AND INVESTMENTS PRIVATE LIMITED,SELL,270,157.70,-
01-JUN-2010,TARAPUR,Tarapur Transformers Ltd,MBL & COMPANY LTD.,SELL,131460,39.73,-
BSE Bulk Deals to Watch - June 1 2010
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
1/6/2010 530901 ACIL Cot Inds ABHIJAI INVESTMENT B 69300 33.24
1/6/2010 530901 ACIL Cot Inds MUKESH JAGDISH TRIVEDI S 62000 33.20
1/6/2010 530901 ACIL Cot Inds RAJENDRA N SURANA S 81000 33.25
1/6/2010 531761 Amulya Leas SURENDRA KUMAR JAIN S 50000 39.04
1/6/2010 531761 Amulya Leas MADHUR JAIN S 70500 39.01
1/6/2010 532542 Crew Bos LEASEMEN FIN-INVEST (INDIA) LIMITED S 70000 94.04
1/6/2010 512361 Cupid Trades PARVATI MINERALS PRIVATELTD B 10000 54.10
1/6/2010 512361 Cupid Trades SHAMANJWALI PVT LTD S 10000 54.10
1/6/2010 532772 Dev Credit Bank OPG SECURITIES P LTD B 1689176 49.30
1/6/2010 532772 Dev Credit Bank TRANSGLOBAL SECURITIES LTD. B 1747349 47.50
1/6/2010 532772 Dev Credit Bank TRANSGLOBAL SECURITIES LTD. S 1739816 47.41
1/6/2010 532772 Dev Credit Bank OPG SECURITIES P LTD S 1689176 49.34
1/6/2010 531601 Gujarat Capital BHARAT SHANTILAL THAKKAR B 100000 54.04
1/6/2010 531601 Gujarat Capital SITARAM COMPUTECH PRIVATE LIMITED S 75000 53.82
1/6/2010 515145 Hindusthan Nat IRONWOOD INVESTMENT HOLDINGS B 6348025 200.00
1/6/2010 515145 Hindusthan Nat HNG TRUST S 2910000 200.01
1/6/2010 515145 Hindusthan Nat SPOTLIGHT VANIJYA LIMITED S 675000 200.21
1/6/2010 515145 Hindusthan Nat TOPAZ COMMERCE LTD S 932000 200.02
1/6/2010 515145 Hindusthan Nat NOBLE ENCLAVE AND TOWERS LTD S 1975000 200.00
1/6/2010 514312 Jaihind Syn MITTAL NILESH SANGANI B 30000 11.58
1/6/2010 514312 Jaihind Syn VANDANA VIMAL MEHTA B 25000 11.91
1/6/2010 514312 Jaihind Syn PRASHAM DINISHBHAI DOSHI B 62291 10.94
1/6/2010 514312 Jaihind Syn REKHA KUNTAL NARCHENIA B 25000 11.91
1/6/2010 514312 Jaihind Syn PRASHAM DINISHBHAI DOSHI S 51891 11.89
1/6/2010 514312 Jaihind Syn JIGNESH J DHABALIA S 30681 11.05
1/6/2010 514312 Jaihind Syn VANDANA VIMAL MEHTA S 33000 11.06
1/6/2010 530255 KAY Power BAMPSL SECURITIES LTD B 57840 14.71
1/6/2010 511760 Kosian Inds VENILAXMI INVESTMENT PRIVATE LIMITED B 15390 7.77
1/6/2010 511760 Kosian Inds GRISHMA SANMATI DHANOTE S 15000 7.76
1/6/2010 509011 Livingroom Life SHRIM DEVELOPERS PVT LTD B 55000 43.90
1/6/2010 509011 Livingroom Life JEHANGIR TURABALI NAGREE S 55037 43.90
1/6/2010 590111 MASTER PARVATHANENI MOUNISHA B 36001 33.76
1/6/2010 590111 MASTER PARVATHANENI MOUNISHA S 33984 34.11
1/6/2010 590111 MASTER JAYA VEERA VENKATA DURGA PRAKASH MADDULA S 27100 33.29
1/6/2010 590111 MASTER GOPALA KRISHNA BONAM S 49658 33.10
1/6/2010 590060 MK Exim KETAN CHANDRAVADAN PARIKH B 20000 56.36
1/6/2010 590060 MK Exim NISHIL KANTILAL MALDE S 31000 56.40
1/6/2010 531453 Mohit Inds RAJESH VALLABHDAS KATARIA B 30000 32.40
1/6/2010 531453 Mohit Inds TIRATH PRADYUMAN PARIKH B 30926 32.53
1/6/2010 531453 Mohit Inds HITESH SHASHIKANT JHAVERI B 42332 32.60
1/6/2010 531453 Mohit Inds MONA MANISH SHAH B 32000 32.59
1/6/2010 531453 Mohit Inds NARESHCHAND JAIN B 41011 32.60
1/6/2010 531453 Mohit Inds SAVITRIDEVI FATECHAND JAIN B 57700 32.59
1/6/2010 531453 Mohit Inds BP FINTRADE PRIVATE LIMITED B 58162 32.59
1/6/2010 531453 Mohit Inds BP FINTRADE PRIVATE LIMITED S 58162 32.59
1/6/2010 531453 Mohit Inds HITESH SHASHIKANT JHAVERI S 40898 32.58
1/6/2010 531453 Mohit Inds NARESHCHAND JAIN S 41011 32.48
1/6/2010 531453 Mohit Inds GITA BHAINI RANJAN S 50000 32.60
1/6/2010 531453 Mohit Inds TIRATH PRADYUMAN PARIKH S 34926 32.22
1/6/2010 526263 Moldtek Tech USHA KUMARI S 20900 72.74
1/6/2010 531496 Omkar Overseas DARI TEJAS K B 33001 82.71
1/6/2010 531496 Omkar Overseas J V STOCK BROKING PRIVATE LIMITED B 27593 82.11
1/6/2010 531496 Omkar Overseas JYOTIBEN OMPRAKASH PUNJABI B 90502 82.45
1/6/2010 531496 Omkar Overseas ARVIND KASHMIRILAL PUNJABI B 56500 82.94
1/6/2010 531496 Omkar Overseas JYOTIBEN OMPRAKASH PUNJABI S 90502 82.67
1/6/2010 531496 Omkar Overseas J V STOCK BROKING PRIVATE LIMITED S 25765 82.37
1/6/2010 531496 Omkar Overseas AMBIKA SHYAM SHUKLA S 50000 82.45
1/6/2010 512097 Oregon Comm BHAVESH SHANTILAL TRIVEDI B 6400 327.00
1/6/2010 512097 Oregon Comm VIRENDRAKUMAR JAYANTILAL PATEL B 14447 336.59
1/6/2010 512097 Oregon Comm KINJAL GIRISH SHAH B 18526 336.61
1/6/2010 512097 Oregon Comm PRAKASH KISHANCHAND VIRWANI B 6100 327.00
1/6/2010 512097 Oregon Comm DILIP K VIRVANI B 6100 327.00
1/6/2010 512097 Oregon Comm PARESH RAMJIBHAI CHAUHAN S 12447 336.54
1/6/2010 512097 Oregon Comm SONAL BHUPENDRABHAI KAMODIA S 12626 336.54
1/6/2010 512097 Oregon Comm PATEL VIPUL S 8000 337.18
1/6/2010 530047 Rai Saheb Rekh VIBHA MADHUSUDAN MEHADIA B 22200 98.00
1/6/2010 530047 Rai Saheb Rekh BADJATE ANUJ SHANTILAL HUF S 28500 98.00
1/6/2010 590077 Ranklin Sol MALLI KHAR JUNARAO V B 29617 81.61
1/6/2010 590077 Ranklin Sol PABBATHIBADARI NARAYANA MURTHY S 32642 81.46
1/6/2010 526753 Roselabs Inds SWAGATAM MARKETING PRIVATE LIMITED B 100000 71.98
1/6/2010 530035 Santosh Fine ROSHANI NEETISH DOSHI B 32700 19.45
1/6/2010 530035 Santosh Fine MONEYCARE FINANCE AND LEASING PRIVATE LIMITED S 32700 19.45
1/6/2010 533056 SARK SYS SWETA TIBREWALA B 50000 41.65
1/6/2010 533056 SARK SYS MV TRADECOM PRIVATE LIMITED B 70000 41.99
1/6/2010 533056 SARK SYS S K TRADING (S K CHOURASIA) B 50000 41.65
1/6/2010 533056 SARK SYS THE IL&FS FINANCIAL SERVICES LIMITED S 351350 41.93
1/6/2010 526071 Sellaids Pub MAHIPAT IWDARMAL MEHTA B 39274 19.35
1/6/2010 526071 Sellaids Pub BHARAT SHANKAR PHAPALE S 39300 19.35
1/6/2010 511754 Shalibhadra Fin AMIT AGGARWAL S 27000 35.22
1/6/2010 532908 Sharon Bio HASINA KASAMBHAI SHEKH B 56089 138.93
1/6/2010 532908 Sharon Bio HASINA KASAMBHAI SHEKH S 56089 139.96
1/6/2010 531645 Southern Ispat HANUMAN GUPTA B 64910 16.92
1/6/2010 526133 Supertex Inds DHAVAL AMRISH SHAH B 748912 2.83
1/6/2010 526133 Supertex Inds SUPER INFINCON PVT LTD S 1050000 2.89
1/6/2010 523722 Svam Software SHRIDHAR FINANCIAL SERVICS LIMITED B 115725 2.84
1/6/2010 523722 Svam Software S L GUPTA AND Co S 115725 2.84
1/6/2010 533203 TARAPUR TRA MBL & Co. LTD. B 102285 39.79
1/6/2010 533203 TARAPUR TRA MBL & Co. LTD. S 102285 39.86
1/6/2010 522142 Techno Forge ASHOK MANSUKHLAL KAPASI B 50000 9.05
1/6/2010 522142 Techno Forge ABDUL MADARKASAM SHADIWAN S 50000 9.05
1/6/2010 590093 TRIMURTHI DR ARVIND SHAH S 464223 4.41
1/6/2010 531917 TWINSTA SO E MEENA MANOJ SHAH S 90000 3.30
* B - Buy, S - Sell
Market snaps four-day winning streak on weak global cues
The key benchmark indices suffered a severe setback in the second half of the trading session as slowdown in Chinese manufacturing growth pulled world stocks sharply lower. The BSE 30-share Sensex fell 372.60 points or 2.2%, up close to 250 points from the day's low and off close to 370 points from the day's high. A sharp intraday fall in the Sensex of over 600 points was due to some freak trades in the index heavyweight Reliance Industries (RIL) counter on BSE which were struck at about 12:50 IST.
The market snapped last four days' strong gains. From a recent low of 16,022.48 on 25 May 2010, the BSE Sensex had gained 922.15 points or 5.75% in four trading sessions to 16,944.63 on 31 May 2010. From a recent peak of 17,970.02 on 7 April 2010, the Sensex is down 1397.99 points or 7.77%. The Sensex has declined 892.78 oints or 5.11% in the calendar year 2010 so far after jumping 81% in calendar 2009.
Coming back to today's trade, the 50-unit S&P CNX Nifty fell below the psychological 5,000 mark. The market breadth was weak, in complete contrast to a strong breadth earlier in the day. IT stocks declined on fears the worsening Eurozone crisis would crimp outsourcing demand. Metal shares declined after downbeat Chinese economic data sparked concerns about demand for metals in the world's fastest growing economy. Infrastructure stocks declined on selling pressure. Banking stocks also fell. However, fertiliser stocks gained on optimism a normal monsoon will boost demand for fertilisers.
NSE's volatility index India VIX, reversed a recent steep slide. India VIX which is a gauge of traders' perception of near-term risks in the market based on options prices, jumped 9.16% to 29.08. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.
The market edged lower in opening trade tracking weak Asian stocks. The Sensex hit a fresh intraday low in morning trade on profit taking after a four-day sharp surge. The market came off the lower level in mid-morning trade on strong macro economic data. The market weakened again with the Sensex hitting a fresh intraday low in early afternoon trade. The market slumped in mid-afternoon trade, tracking weak European shares. The market extended losses in late trade.
India's exports rose 36% to $16.9 billion in April 2010 over April 2009, the latest government data showed. Exports rose for the sixth consecutive month in May 2010 after registering a slide in 13 straight months. Iimports rose 43% to $27.3 billion in April 2010 over April 2009.
HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian firms, surged to a 27-month high of 59 in May 2010 from 57.2 in April 2010, bolstered by steady growth in output, new orders and employment. The rate of growth had slowed in March 2010 and April 2010
Meanwhile, the provisional winning price for a single pan-India wireless broadband (BWA) spectrum touched Rs 7221 crore on Monday, with Delhi and Mumbai circles crossing the Rs 1000-crore mark. With this the government will get at least Rs 21664 crore from the BWA, taking the total revenues from both 3G and BWA spectrum auctions to nearly Rs 90000 crore, much above the government expectation. The revenue bounty would help bring down fiscal deficit.
European shares fell on Tuesday, as slowing Chinese factory output fuelled pessimism over global economic recovery and banks slid after the European Central Bank said euro zone lenders face another wave of potential write-down. The key benchmark indices in France, Germany and UK fell by 1.77% to 2.41%.
Asian stock markets were lower Tuesday as Chinese manufacturing growth slowed. The key benchmark indices in Hong Kong, South Korea, Indonesia, China, Japan and Taiwan were down by between 0.66% to 2.59%.
Data released today showed Chinese manufacturing expanded at a slower pace in May 2010, suggesting that the Chinese government's steps to cool the economy could be having an effect. The official China Federation of Logistics and Purchasing purchasing managers index fell to 53.9 in May 2010 from 55.70 in April 2010, while HSBC Holdings PLC's PMI fell to 52.7 in May from a revised 55.2 in April.
Trading in US index futures showed that the Dow could fall 104 points at the opening bell on Tuesday, 1 June 2010. US markets were closed on Monday, 31 May 2010, for the Memorial Day holiday.
Global ratings firm Fitch Ratings on 28 May 2010 cut Spain's credit rating by one level to AA+ from AAA, saying the country's debt burden is likely to weigh on growth. Fitch cited an inflexible labor market and a restructuring of regional and local savings banks as hindrances to the pace of adjustment. Spain is struggling to lower debt amid a fiscal crisis that prompted the European Union to forge an almost $1 trillion loan package for its weakest economies.
Spain's downgrade follows similar cuts in ratings of Greece and Portugal recently as those nations attempt to grapple with debt problems by implementing austerity measures.
Back home, India's economy grew at 8.6% in the March 2010 quarter driven by robust manufacturing sector on the back of government and consumer spending, data released by the government on Monday, 31 May 2010, showed. The growth was significantly higher than the revised 6.5% expansion in Q3 December 2009 and a 5.8% growth in Q4 March 2009. The manufacturing sector grew 16.3%, farm output rose 0.7%, mining sector expanded 14% and services increased by 8.4% in January-March 2010 quarter from a year earlier.
For the full year to March 2010, the economy expanded 7.4%, above a government forecast of 7.2%. Economic growth had slowed down to 6.7% in year ended March 2009.
The India Meteorological Department (IMD) on 31 May 2010 said that the monsoon has hit the southern coast. The weather office late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.
Six core infrastructure industries registered a 5.1% growth in April 2010 compared with 3.7% rise in April 2009. For the financial year ended March 2010, the core sector posted a growth 5.5% as against 3% in the same period last year.
Data released on 28 May 2010 showed food inflation rose 16.23% in the year through 15 May 2010, lower than previous week's annual rise of 16.49%. The fuel price inflation also slowed to 12.08% from the previous week's 12.33%. The primary articles index was up 15.90%, compared with the previous week's annual reading of 16.19%.
Prime Minister Manmohan Singh in late May 2010 said inflation is showing signs of moderating and the government expects to achieve a medium term target of 10% GDP growth annually. The Prime Minister said he expects inflation to moderate to 5-6% by December 2010. Singh expects 8.5% GDP growth in the year ending March 2011 (FY 2011).
The Reserve Bank of India (RBI) on 26 May 2010, eased rules to boost liquidity at banks to avoid a cash crunch because of payments for corporate advance tax and license fees for third-generation mobile-phone spectrum. As per RBI's circular released on 26 May 2010, banks can borrow as much as 0.5% of their deposits from the central bank under the repurchase agreement till 2 July 2010. In addition, RBI said that as an ad hoc measure, banks can seek a waiver for any shortfall in maintenance of the prescribed 25% statutory liquidity ratio (SLR) while availing the temporary facility.
Besides, the central bank has decided to conduct two rounds of liquidity adjustment facility (LAF) operations till 2 July 2010. Through LAFs, that are conducted at least once a day, banks can avail of funds through the repo window or park surplus cash through the reverse repo route.
The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.
China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.
In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.
The combined net profit of a total of 3,344 companies rose 14.2% to Rs 87,122 crore on 24.7% rise in sales to Rs 9,24,522 crore in the quarter ended March 2010 over the quarter ended March 2009.
The BSE 30-share Sensex fell 372.60 points or 2.2% to 16,572.03. The index fell 626.24 points at the day's low of 16,318.39 in afternoon trade due to some freak trades in index heavyweight Reliance Industries (RIL) counter. The Sensex declined 1.81 points at the day's high of 16,942.82 in early trade.
The S&P CNX Nifty declined 116.10 points or 2.28% to 4,970.20.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1804 shares declined as compared with 1007 that rose. A total of 87 remained unchanged. The breadth was strong earlier in the day.
The total turnover on BSE amounted to Rs 4242 crore, higher than Rs 3771 crore on Monday, 31 May 2010.
Among the 30-share Sensex pack, 27 declined while only 3 of them managed gains.
The BSE Mid-Cap index fell 1.33% and the BSE Small-Cap index fell 0.99%. Both the indices outperformed the Sensex.
All the sectoral indices on the BSE fell. BSE Metal index (down 3.86%), BSE Realty index (down 2.95%), Oil & Gas index (down 2.53%), Banking sector index Bankex (down 2.46%), underperformed the Sensex.
BSE Healthcare index (down 0.02%), FMCG index (down 0.63%), IT index (down 1.23%), Consumer Durables index (down 1.28%), Auto index (down 1.35%), Power index (down 1.63%), PSU index (down 1.68%), Capital Goods index (down 1.74%) outperformed the Sensex.
Index heavyweight Reliance Industries (RIL) shed 3.21% to Rs 1,011.55. A total of four deals were struck in the counter at about 12:50 IST on BSE at prices much lower than the ruling market price. One deal of 25,407 was struck at Rs 1,011 per share, another deal of 7,738 shares was executed at Rs 992.90 per share, a deal of 15,588 shares was executed at Rs 945 per share and yet another deal of 12,951 shares was executed at Rs 840.55 per share. Just before these four deals, RIL was changing hands at Rs 1028 level.
IT stocks declined on fears the worsening Eurozone debt crisis would crimp outsourcing demand. Europe is the second biggest market for Indian IT firms after the US. India's second largest software services exporter by sales Infosys fell 1.22%. India's largest software services exporter by sales TCS declined 0.43% and India's third largest software services exporter by sales Wipro slipped 1.53%.
Banking stocks declined as strong macro economic data reinforced expectations the Reserve Bank of India will hike interest rates at its next monetary policy review on 27 July 2010. India's largest private sector bank by net profit ICICI Bank declined 3.31%. India's second largest private sector bank by net profit HDFC Bank lost 1.48%. India's largest commercial bank in terms of branch network State Bank of India fell 2.57%. Among other PSU stocks, Bank of India, Bank of Baroda and Punjab National Bank fell by between 0.16% to 2.34%.
Metal shares declined as downbeat Chinese economic data sparked concerns about demand for metals. China is the world's largest consumer of copper and aluminum. Sterlite Industries, Hindalco Industries, Hindustan Zinc, Tata Steel, Jindal Steel & Power and Sesa Goa fell by between 3.03% to 5.19%.
India's largest small car maker by sales Maruti Suzuki India advanced 1.8% after total sales rose 27.90% to 1,02,175 units in May 2010 over May 2009. It was the top gainer from the Sensex pack. The company's domestic sales rose 27.2% to 90,041 units in May 2010 over May 2009. This is highest ever monthly domestic sales. Exports increased 33.5% to 12,134 units in May 2010 over May 2009.
India's largest vehicle maker, Tata Motors fell 3.84%. Total vehicle sales rose 41% to 56,779 units in May 2010 over May 2009. Domestic sales grew 38% to 52,801 units in May 2010 over May 2009.
Bajaj Auto fell 2.02% as sales declined 4.4% to 2,99,442 units in May 2010 over April 2010. The sales data was announced during market hours today.
Infrastructure stocks declined on selling pressure. India's largest dam builder by sales Jaiprakash Associates lost 6.04%, extending Monday's 1.54% fall. It was the top loser from the Sensex pack.
Larsen & Toubro, Nagarjuna Construction Company, Hindustan Construction Company and IVRCL Infrastructure fell by between 0.09% to 3.36%.
India's second largest listed cellular services provider by sales Reliance Communications declined 3.87% on reports South Africa's MTN Group may restart merger talks with the company. The company paid Rs 8,585.04 crore to the government on 31 May 2010 for 3G spectrum. It bagged 3G spectrum in 13 circles, including Delhi and Mumbai.
India's largest listed cellular services provider by sales Bharti Airtel fell 2.04%. The company paid Rs 12,295.46 crore to the government on 31 May 2010 for 3G spectrum in 13 circles.
India's third largest listed cellular services provider by sales Idea Cellular Services declined 2.87%. The company paid Rs 5768.59 crore to the government on 31 May 2010 for 3G spectrum in 11 circles.
Fertiliser stocks gained on optimism a normal monsoon will boost demand for fertilisers. Chambal Fertilisers, National Fertiliser, Coromandel International, Gujarat State Fertilisers, Deepak Fertilisers and Nagarjuna Fertiliser rose by between 0.96% to 6.42%.
Cals Refineries clocked the highest volume of 2.54 crore shares on BSE. Development Credi Bank (1.8 crore shares), IFCI (1.14 crore shares), Shree Ashtavinayak Cine Vision (1.08 crore shares) and Hindustan National Glass (75.46 lakh shares) were the other volume toppers in that order.
Hindustan National Glass clocked the highest turnover of Rs 177.49 crore on BSE. Tata Steel (Rs 174.29 crore), Reliance Industries (Rs 160.47 crore), Hindustan Copper (Rs 143.41 crore) and Educomp Solutions (Rs 123.90 crore) were the other turnover toppers in that order.
Fatpipe Networks Grey Market Premium
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| Standard Chartered PLC | 104 | Discount |
| Fatpipe Networks India Ltd. | 82 to 85 | 4 to 4.50 |
Clueless market to drift!
Into each life some rain must fall. – Henry Longfellow.
Monsoon has arrived in Kerala, but uncertainty persists over its progress. Last year, the kharif farm output was badly hit by dismal rains, though there was some improvement during the rabi season. The Indian economy held up pretty well in FY10 in the face of the global downturn and disappointing monsoon. The strong show could partly be attributed to Government stimulus and partly to the low base of H2 FY09. The Government is confident of 8.5% growth in FY11. That could be a touch ambitious given the emergence of a few headwinds.
High inflation, sluggish private consumption and a softening stimulus are some of key concerns. Interest rates will also head north though at a gradual pace. Exports could be hit by subdued global growth and the European debt crisis. One also has to see how fund flows play out. Still, positives outweigh the negatives for India.
We expect the key indices to open in red. Asian markets are clueless as Wall Street was shut overnight. European markets managed slim gains in a quiet session. The trend is likely to be choppy and rangebound. The NSE Nifty may consolidate between 4950 and 5120. It will find support at 4800 in case of a fresh selloff.
FIIs were net buyers of Rs5.86bn in the cash segment on Monday on a provisional basis, according to the NSE data. The local institutions were also net buyers at Rs737.7mn on the same day. In the F&O segment, the foreign funds were net buyers of Rs10.31bn.
Beginning of the new month means that we will get fresh manufacturing PMI data from across the globe. This particular data has been holding up well and may help restore investor confidence. Among the other data points to watch out for will be the monthly auto sales and the US employment report later in the week.
Stock markets in Japan, South Korea and Australia are all lower in early trading today, as Wall Street was closed for a holiday on Monday. Markets were also closed in the UK. Sentiment was dented by concerns that the Chinese economy may be slowing.
Chinese manufacturing expanded at a slower pace in May, adding to signs that growth may moderate in the world’s third-biggest economy.
The MSCI Asia Pacific Index declined 0.4% to 113.05 as of 10:37 a.m. in Tokyo, with more than two stocks gaining for each that fell.
Japan’s Nikkei 225 Stock Average lost 0.7% before a meeting between Prime Minister Yukio Hatoyama and Ichiro Ozawa, secretary-general of the ruling party, to discuss the party’s future. Hatoyama pledged appropriate action in the face of plunging approval ratings. Three polls released on May 30 showed Prime Minister Hatoyama’s rating at or below 20% and six in 10 voters think he should quit.
China’s Shanghai Composite Index lost 0.6% after a purchasing managers’ index showed the country’s manufacturing industry expanded at a slower pace in May. A newspaper backed by China's National Bureau of Statistics said that the country's official purchasing managers index was at 53.9 in May, falling from 55.7 in April.
Australia’s S&P/ASX 200 Index dropped 0.6%, while the Kospi Index declined 0.4% in Seoul.
Futures on the Standard & Poor’s 500 Index fell 0.7%, signaling a decline in US markets when they resume trading today after a holiday yesterday.
Exporters in Japan declined as the yen strengthened to 111.59 per euro today from 112.59 at the 3 p.m. close of stock trading in Tokyo yesterday, while appreciating to 90.99 per dollar from 91.52.
Asian markets were also focusing on the Reserve Bank of Australia's rate-setting decision with economists widely expecting the cash rate to be held steady at 4.50%.
In foreign exchange markets, the euro was lower against the US dollar and the yen in thin trading, partly weighed by lower Asian stocks. Traders said comments by the European Central Bank board member Christian Noyer also weighed on the euro and other currencies such as the Australian dollar.
July Nymex crude oil futures were up 50 cents at $74.47 per barrel.
German stocks outperformed other European rivals in the first reaction to a downgrade of Spain by Fitch Ratings.
The Stoxx Europe 600 finished with a rise of 0.3% to 244.79, led by automobile makers and technology firms. Shares of Mercedes-Benz maker Daimler AG rose 1.5% and shares of business software giant SAP rose 1.7%, as the German DAX finished with a rise of 0.3% to 5,964.33.
European stocks also got a lift from comments from Federal Reserve Bank of Chicago President Charles Evans, who said that Europe's debt woes could prompt the US central bank to delay raising interest rates, though he played down the impact of the crisis so far.
Spain's Ibex 35 lagged the broader market, ending down 0.8% to 9,353.30. Fitch Ratings cut Spain's sovereign-debt rating to AA+ from AAA after markets in Europe closed on Friday.
Greece's ASE Composite also closed lower, down 1.2% to 1,550.78. French stocks were also weaker with the CAC-40 down 0.2% to 3,507.56.
France's budget minister, Francois Baroin, reportedly told French television station Canal Plus on Sunday that keeping the country's own AAA credit rating "is an objective that is a stretch." He said that to keep the rating, the country has to carry out planned cuts in spending and cut its deficit.
Volume was thin on Monday, with US and U.K. financial markets both closed for a holiday.
US stocks closed weaker on Friday, weighed down by Spain's downgrade by Fitch. The Dow Jones Industrial Average closed down 1.2%. It was off nearly 8% from where it stood at the end of April, marking the worst monthly drop since February 2009.
Moody's still has a AAA for Spain while S&P has a AA. Standard & Poor's had already downgraded Spain.
All of Spain's most heavily weighted stocks were weaker on Monday.
Economic sentiment in Europe, that had been steadily improving from the lows of 2009, took a dip backward in May as concerns over debt burdens complicated the outlook for euro-area growth. Consumer confidence was particularly bad in southern Europe.
On Monday, the US dollar edged higher against the euro and yen, after ending May trading in North America with its biggest rise since October 2008.
In an interview, the European Central Bank (ECB) president Jean-Claude Trichet denied that an Anglo-Saxon conspiracy was to blame for the rapidly falling euro.
BP shares slid 7.6% in Frankfurt trading. The company is now facing a never-attempted measure to control the Gulf of Mexico oil spill, after its "top kill" effort - stemming the oil by pumping heavy drilling liquids into the well - didn't work.
Over the weekend, the UK's chief treasury secretary David Laws resigned over revelations about his parliamentary expenses. Laws, a Liberal Democrat, had been charged with finding cuts to public spending to tackle Britain's fiscal deficit.
Market may snap four-day winning streak
The market is likely to edge lower in the opening trade, halting a four-day rising trend, tracking weak Asian stocks. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicated that the Nifty could fall 21.50 points at the opening bell.
Asian stocks edged lower on Tuesday as investors speculated over the future of Japan's prime minister and Chinese manufacturing growth slowed. The key benchmark indices in Hong Kong, South Korea, Indonesia, China, Japan and Taiwan were down by between 0.20% to 1.01%.
Data released today showed Chinese manufacturing expanded at a slower pace in May 2010. The Purchasing Managers' Index fell to 53.9 in May 2010 from 55.7 in April 2010, seasonally adjusted.
Trading in US index futures showed the Dow could fall 36 points at the opening bell on Tuesday, 1 June 2010. US markets were closed on Monday, 31 May 2010, for the Memorial Day holiday.
Global ratings firm Fitch Ratings on 28 May 2010 cut Spain's credit rating by one level to AA+ from AAA, saying the country's debt burden is likely to weigh on growth. Fitch cited an inflexible labor market and a restructuring of regional and local savings banks as hindrances to the pace of adjustment. Spain is struggling to lower debt amid a fiscal crisis that prompted the European Union to forge an almost $1 trillion loan package for its weakest economies.
Spain's downgrade follows similar cuts in ratings of Greece and Portugal recently as those nations attempt to grapple with debt problems by implementing austerity measures.
Back home, shares of auto, steel and cement may see action ahead of release of May 2010 sales figures over the next few days. Reliance Communications may see action on reports South Africa's MTN Group may restart merger talks with the company.
As per government data released on 31 May 2010, India's economy grew at 8.6% in the March 2010 quarter driven by robust manufacturing sector on the back of government and consumer spending. The growth was significantly higher than the revised 6.5% expansion in Q3 December 2009 and a 5.8% growth in Q4 March 2009. The manufacturing sector grew 16.3%, farm output rose 0.7%, mining sector expanded 14% and services increased by 8.4% in January-March 2010 quarter from a year earlier.
For the full year to March 2010, the economy expanded 7.4%, above a government forecast of 7.2%. Economic growth had slowed down to 6.7% in year ended March 2009.
The India Meteorological Department (IMD) on 31 May 2010 said that the monsoon has hit the southern coast. The weather office late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.
Six core infrastructure industries registered a 5.1% growth in April 2010 compared with 3.7% rise in April 2009. For the financial year ended March 2010, the core sector posted a growth 5.5% as against 3% in the same period last year.
Data released on 28 May 2010 showed food inflation rose 16.23% in the year through 15 May 2010, lower than previous week's annual rise of 16.49%. The fuel price inflation also slowed to 12.08% from the previous week's 12.33%. The primary articles index was up 15.90%, compared with the previous week's annual reading of 16.19%.
Prime Minister Manmohan Singh in late May 2010 said inflation is showing signs of moderating and the government expects to achieve a medium term target of 10% GDP growth annually. The Prime Minister said he expects inflation to moderate to 5-6% by December 2010. Singh expects 8.5% GDP growth in the year ending March 2011 (FY 2011).
The Reserve Bank of India (RBI) on 26 May 2010, eased rules to boost liquidity at banks to avoid a cash crunch because of payments for corporate advance tax and license fees for third-generation mobile-phone spectrum. As per RBI's circular released on 26 May 2010, banks can borrow as much as 0.5% of their deposits from the central bank under the repurchase agreement till 2 July 2010. In addition, RBI said that as an ad hoc measure, banks can seek a waiver for any shortfall in maintenance of the prescribed 25% statutory liquidity ratio (SLR) while availing the temporary facility.
Besides, the central bank has decided to conduct two rounds of liquidity adjustment facility (LAF) operations till 2 July 2010. Through LAFs, that are conducted at least once a day, banks can avail of funds through the repo window or park surplus cash through the reverse repo route.
The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.
China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.
In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.
The combined net profit of a total of 3,247 companies rose 14.10% to Rs 86993 crore on 25% rise in sales to Rs 917381 crore in the quarter ended March 2010 over the quarter ended March 2009.
Key benchmark indices clocked decent gains in a choppy trade on Monday, 31 May 2010, as robust GDP data and steady progress of monsoon lifted investor sentiment. The BSE 30-share Sensex rose 81.57 points or 0.48% to 16,944.63.
From a recent low of 16022.48 on 25 May 2010, the BSE Sensex gained has 922.15 points or 5.75% in four trading sessions.
As per the provisional data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 586.51 crore while domestic funds bought equities worth a net Rs 73.77 crore on 31 May 2010.
Daily News Roundup - June 1 2010
M&M makes bid to buy South Korea’s bankrupt Ssangyong Motor Corp. (ET)
Reliance Industries made fifth oil discovery in exploration block CB-ONN-2003/1, located in the Cambay Basin, about 130 km from Ahmedabad. (BS)
Reliance Power to buy three gas-based power plants from group firm Reliance Infrastructure for an enterprise value of Rs10.95bn. (ET)
Amtek Auto has acquired a 26.3% stake in group firm Amtek India from the promoters in a deal worth Rs2.15bn to consolidate business under one flagship company. (ET)
ADAG scales up stake to 15.03% in multiplex chain operator Fame India. (ET)
US Exim Bank may extend credit lines to Spicejet, for its maiden purchase of Boeing aircraft. (ET)
City Union Bank to raise Rs 1,000 cr through QIP route. (BS)
HDIL plans to launch 4-6mn square feet of residential projects in the current financial year. (BS)
Ahluwalia Contracts is looking for acquisition or tie-up with a specialised construction firm to help it become an integrated urban infrastructure company. (BS)
Essar Group plans to buy majority stake in AGC Networks from Avaya of the US for US$$44.5mn. (BS)
Dewan Housing Finance raised Rs5bn through a combination of QIP and preferential allotment of equity shares. (BS)
Uttam Galva Steel plans to commission the Wardha unit by June-end. (BS)
Alstom-Schneider plans to make an open offer to acquire 20% additional stake in Areva T&D India. (BS)
SAIL has hinted at a reduction in prices in line with the downward trend overseas. (DNA)
GTL likely to take 26% stake in Qualcomm's BWA foray. (BS)
Kingfisher Airlines repays 40% of its overdue fuel bill and agreed to give bank guarantee as insurance against default on future jet fuel purchases. (ET)
Magma Fincorp expects regulatory clearance for its general insurance venture with a Germany based company during this year. (ET)
Core sector industries expanded by 5.1% in April, a drop from the healthy 7.2% growth in March. (ET)
Foreign exchange reserves up by US$64mn to US$273bn for the week ending May 21. (BL)
Sugarcane production is likely to increase by 10% to over 300mn tons in the 2010-11 crop year. (BS)
The electrical equipment industry clocks 11.25% growth in 2009-10 compared to this, the industry grew only 2.73% last year. (BS)
DoT asked the finance ministry to give defence forces a waiver of about Rs100bn on spectrum charges. (BS)
Value of pan India broadband spectrum has reached Rs52bn at the end of the fourth day of bidding. (BL)
4th straight day of gains for Sensex
Indian markets started off the week with smart gains extending winning streak to fourth straight trading session. Today’s upswing was led by the PSU, Auto and the Pharma stocks. The BSE 30-share Sensex gained 82 points to end at 16,945 and NSE Nifty advanced 20 points at 5,086.
Markets in Asia ended mixed; the Nikkei in Japan ended flat, Australia's S&P/ASX slipped by 0.6% and while the Hang Seng index in Hong Kong ended unchanged.
European indices were trading mixed as well, the DAX in Germany was up 0.6%, the CAC 40 index in France was up 0.2% and the FTSE in the UK was almost unchanged.
Among the BSE sectoral indices, BSE PSU index was the top gainer, the index was up 2.7%, followed by BSE Auto index was up 1.9% and BSE Pharma index was up 1.8%. Even the BSE Mid-Cap index ended higher by 1.8% and the Small-Cap index gained 0.6%.
Among the major losers were, BSE Realty index was the top loser the index lost 0.8% followed by BSE IT index down 0.5%.
Outside the frontline indices, the big gainers in the broader market were Hindustan Copper, United Phos, RCF, Tulip and NMDC. On the other hand, losers included Punj Lloyd, REI Agro, Apollo Hosp and Fortis Healthcare.
Reliance Industries Annual Report - 2009-2010
RELIANCE INDUSTRIES LIMITED
ANNUAL REPORT 2009-2010
DIRECTOR'S REPORT
Dear Shareholders,
Your Directors are pleased to present the 36th Annual Report and the
audited accounts for the financial year ended March 31, 2010.
Financial Results
The financial performance of the Company, for the year ended March 31, 2010
is summarised below:
2009-2010
Rs. crore $ Mn*
Profit before Depreciation,
Interest & Tax 33,041.18 7,359
Less: Interest 1,997.21 445
Depreciation 13,477.01
Less: Transfer from
Revaluation 2,980.48
Reserve 10,496.53 2,338
Profit before Tax 20,547.44 4,576
Less: Provision for
Current Taxation 3,111.77 693
Provision for
Fringe Benefit Tax - -
Provision for
Deferred Tax 1,200.00 267
Profit after Tax 16,235.67 3,616
Add: Balance in Profit
and Loss Account 5,384.19 1,199
Amount Available
for Appropriation 21,619.86 4,815
Appropriations:
General Reserve 14,000.00 3,118
Debenture Redemption Reserve 189.50 42
Dividend on Equity Shares 2,084.67 464
Tax on dividend 346.24 77
Balance carried to Balance Sheet 4,999.45 1,114
21,619.86 4,815
2008-2009
Rs. crore $ Mn*
Profit before Depreciation,
Interest & Tax 25,373.75 5,003
Less: Interest 1,745.23 344
Depreciation 7,182.43
Less: Transfer from
Revaluation 1,987.14
Reserve 5,195.29 1,025
Profit before Tax 18,433.23 3,634
Less: Provision for
Current Taxation 1,206.50 238
Provision for
Fringe Benefit Tax 56.87 11
Provision for
Deferred Tax 1860.54 367
Profit after Tax 15,309.32 3,018
Add: Balance in Profit
and Loss Account 4,363.29 861
Amount Available
for Appropriation 19,672.61 3,879
Appropriations:
General Reserve 11,728.92 2,312
Debenture Redemption Reserve 340.05 67
Dividend on Equity Shares 1,897.05 374
Tax on dividend 322.40 64
Balance carried to Balance Sheet 5,384.19 1,062
19,672.61 3,879
* 1$ = Rs. 44.90 Exchange Rate as on March 31, 2010 (1$ = Rs 50.72 as on
March 31, 2009).
Results of Operations
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 new
benchmarks in terms of sales, profits, networth and assets. Turnover for
the year was Rs. 2,00,400 crore ( $ 44.6 billion) against Rs. 1,46,328
crore in the previous year. Exports were higher by 24% at Rs. 1,10,176
crore ($ 24.5 billion). Profit after tax for the year was Rs. 16,236 crore
($ 3.6 billion) as against Rs. 15,309 crore ($ 3.1 billion).
The Company is one of India's largest contributors to the national
exchequer primarily 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.
Dividend
Your Directors have recommended a dividend of Rs. 7/- per Equity Share
(last year Rs. 13/- per Equity Share on pre bonus share capital) for the
financial year ended March 31, 2010, amounting to Rs. 2,430 crore
(inclusive of tax of Rs. 346 crore) one of the highest ever payout by any
private sector domestic company. The dividend will be paid to members whose
names appear in the Register of Members as on May 11, 2010; in respect of
shares held in dematerialised form, it will be paid to members whose names
are furnished by National Securities Depository Limited and Central
Depository Services (India) Limited as beneficial owners.
The dividend payout for the year under review has been formulated in
accordance with the Company's policy to pay sustainable dividend linked to
long term performance, keeping in view the Company's need for capital for
its growth plans and the intent to finance such plans through internal
accruals to the maximum.
Credit Rating
The Company continues to have the highest domestic credit ratings of AAA
from CRISIL and Fitch. Moody's and S&P have reaffirmed investment grade
ratings for international debt of the Company, as Baa2 and BBB,
respectively. The Company's international rating from S&P is higher than
the country's sovereign rating. Strong credit ratings by leading
international agencies reflect the Company's financial discipline and
prudence.
Employees Stock Option Scheme
The Company implemented the Employees Stock Option Scheme (Scheme'') in
accordance with the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('the
SEBI Guidelines'). The Employees Stock Compensation Committee, constituted
in accordance with the SEBI Guidelines, administers and monitors the
Scheme.
The applicable disclosures as stipulated under the SEBI Guidelines as at
March 31, 2010 (cumulative position) are given below:
a. (1) Options Granted 2,98,13,100 (Pre Bonus)
5,96,26,200 (Post Bonus)
b. (1) Exercise Price
Pre Bonus Post Bonus
Option Exercise Option Exercise
Granted Price Granted Price
2,87,28,000 1284* 5,74,56,000 642*
27,000 1684* 54,000 842*
10,08,000 2292* 20,16,000 1146*
50,100 1289* 1,00,200 644.5*
* Plus applicable taxes, as per law.
(1) In view of issue of Bonus shares in the ratio of one share for every
one share held as on record date, the number of Options has been doubled
and Exercise Price halved.
c. Options Vested 56,88,200
d. Options Exercised 10,71,912
e. The total number of shares arising as a 10,71,912
result of exercise of Options
f. Options Lapsed 85,94,874
g. Variation in terms of Options:
Subject to the conditions under the Scheme, the
vesting schedule from April, 2009 onwards has been
deferred by one year, save and except the options
due for deceased employees.
h. Money realised by exercise 68,81,67,504
of Options
i. Total number of Options in force 499,59,414
[(a) - (d) - (f)]
j. Employee wise details of Options granted
(Post Bonus) to:
i. Senior managerial personnel
1. Shri Nikhil R. Meswani 14,00,000
2. Shri Hital R. Meswani 14,00,000
3. Shri Hardev Singh Kohli 1,00,000
4. Shri P.M.S. Prasad 10,00,000
ii. Any other employee who received a grant in
any one year of Options amounting to 5%
or more of Options granted during that year Nil
iii. Identified employees, who were granted Nil
Options, during any one year, equal to
or exceeding 1% of the issued capital
(excluding outstanding warrants and
conversions) of the Company at the
time of grant
m. Diluted Earnings Per Share (EPS) before Rs. 49.65
exceptional items pursuant to issue of shares
on exercise of Options calculated in
accordance with Accounting Standard (AS)
20 'Earnings Per Share'.
The issuance of equity shares pursuant to exercise of Options does not
affect the profit and loss account of the Company, as the exercise is made
at the market price prevailing as on the date of the grant plus taxes as
applicable.
The Company has received a certificate from the Auditors of the Company
that the Scheme has been implemented in accordance with the SEBI Guidelines
and the resolution passed by the shareholders. The Certificate would be
placed at the Annual General Meeting for inspection by members.
Management's Discussion and Analysis Report
Management's Discussion and Analysis Report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges in India, is presented in a separate section forming part of the
Annual Report.
The Company has entered into various contracts in the area of oil and gas,
refining and petrochemicals businesses. While benefits from such contracts
will accrue in future years, their progress is periodically monitored.
Some of the major events of the year include the following:
KG D6 completed 365 days of 100% uptime and zeroincident production. Gas
production from KG D6 has ramped up to 60 MMSCMD in a short span of 9
months from commencement. KG D6 has current production of about 60 MMSCMD.
The design capacity of the KG D6 deepwater gas production facilities were
assessed and achieved a flow rate of 80 MMSCM.
GSPAs have been executed in line with the Government of India's gas
utilization policy for over 69 MMSCMD in the fertilizers, power, city gas
distribution, steel, LPG, refinery and petrochemical sectors.
During the year, development of Panna-K (PK) area was completed.
The Company had made four new gas discoveries during the year.
* Dhirubhai-43 in Well AA1 in CB10 block
* Dhirubhai-44 in Well R1 in KGVD3 block
* Dhirubhai-45 in Well BF1 in CB10 block
* Dhirubhai-46 in Well AH1 in CB10 block
Subsequent to series of new discoveries in the southern and deeper areas of
the KG D6 block, an optimized development plan has been submitted to DGH in
December 2009.
Major events after the end of the financial year till the date of this
report are as under.
* The Company entered into a joint venture with USA based Atlas Energy,
Inc. (Atlas) under which the Company acquired 40% interest in Atlas's core
Marcellus Shale acreage position.
* The Company has become a partner in approximately 300,000 net acres of
undeveloped leasehold in the core area of the Marcellus Shale in
southwestern Pennsylvania for an acquisition cost of US$ 339 million and an
additional US$ 1.36 billion capital costs under a carry arrangement for 75%
of Atlas's capital costs over an anticipated seven and a half year
development program. While Atlas will serve as the development operator,
Reliance is expected to begin acting as development operator in certain
regions in the coming years as part of the joint venture.
* Atlas will continue acquiring leasehold in the Marcellus shale region and
the Company will have the option to acquire 40% share in all new acreages.
The Company has also obtained the right of first offer with respect to
potential future sales by Atlas of around 280,000 additional Appalachian
acres currently controlled by Atlas (not included in the present joint
venture).
The Hon'ble Supreme Court of India has delivered its judgment in the RNRL-
RIL legal dispute. The judgment recognized the dominant role of the
provisions of the Production Sharing Contract and has upheld the policies
formulated by the Government under which it has the authority to regulate
the production and distribution of natural gas.
In view of the findings of the judgment, the Company can sell gas only at
the price approved by the Government and only to the entities who have been
allocated gas under the Gas Utilisation Policy. RIL has no ability to
deviate from price, quantity and tenure as determined under Government's
policies, or to discriminate amongst various consumers.
The judgment of the Hon'ble Supreme Court has set at rest numerous issues
which had been raised in relation to the gas discovered and produced by the
Company.
Subsidiaries
Ministry of Corporate Affairs, Government of India has granted approval
that the requirement to attach various documents in respect of subsidiary
companies, as set out in sub-section (1) of Section 212 of the Companies
Act, 1956, shall not apply to the Company. Accordingly, the Balance Sheet,
Profit and Loss Account and other documents of the subsidiary companies are
not being attached with the Balance Sheet of the Company.
Financial information of the subsidiary companies, as required by the said
approval, is disclosed in the Annual Report. The Company will make
available the Annual Accounts of the subsidiary companies and the related
detailed information to any member of the Company who may be interested in
obtaining the same. The annual accounts of the subsidiary companies will
also be kept open for inspection at the Registered Office of the Company
and that of the respective subsidiary companies. The Consolidated Financial
Statements presented by the Company include financial results of its
subsidiary companies.
Details of major subsidiaries of the Company are covered in Management's
Discussion and Analysis Report forming part of the Annual Report.
Directors
Shri Pawan Kumar Kapil was appointed as an additional Director effective
May 16, 2010. He was also appointed as wholetime director designated as
Executive Director for three years. In terms of Section 260 of the
Companies Act, 1956 he shall hold office only upto the date of the ensuing
Annual General Meeting. The Company has received requisite notice in
writing from a member proposing his candidature for the office of Director
liable to retire by rotation.
Shri Hital R. Meswani, Shri Mahesh P. Modi, Dr. Dharam Vir Kapur, Dr.
Raghunath A. Mashalkar, Directors, retire by rotation and being eligible,
offer themselves for reappointment at the ensuing Annual General Meeting.
Your Directors express their profound grief on the unexpected sudden demise
of Shri R. Ravimohan on December 28, 2009.
Shri H.S. Kohli, Director has resigned from the Board effective May 16,
2010.
The Board placed on record its deep sense of appreciation for the
invaluable contribution made by Shri H.S. Kohli and Shri R. Ravimohan
during their tenure as wholetime directors of the Company.
Group
Pursuant to intimation from the Promoters, the names of the Promoters and
entities comprising group' are disclosed in the Annual Report for the
purpose of the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997.
Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, it is hereby
confirmed that:
(i) In the preparation of the annual accounts for the year ended March 31,
2010, the applicable accounting standards read with requirements set out
under Schedule VI to the Companies Act, 1956, have been followed and there
are no material departures from the same;
(ii) the Directors have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at March 31, 2010 and of the profit of the Company for the year
ended on that date;
(iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
and
(iv) The Directors have prepared the annual accounts of the Company on a
going concern' basis.
Consolidated Financial Statements
In accordance with the Accounting Standard AS-21 on Consolidated Financial
Statements read with Accounting Standard AS-23 on Accounting for
Investments in Associates and AS-27 on Financial Reporting of Interest in
Joint Ventures, the audited Consolidated Financial Statements are provided
in the Annual Report.
Auditors and Auditors' Report
M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins &
Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered
Accountants, Statutory Auditors of the Company, hold office until the
conclusion of the ensuing Annual General Meeting and are eligible for
reappointment.
The Company has received letters from all of them to the effect that their
reappointment, if made, would be within the prescribed limits under Section
224(1B) of the Companies Act, 1956 and that they are not disqualified for
reappointment within the meaning of Section 226 of the said Act.
The Notes on Accounts referred to in the Auditors' Report are self-
explanatory and do not call for any further comments.
Cost Auditors
The Central Government had directed an audit of the cost accounts
maintained by the Company in respect of textiles, polyester and chemicals
businesses. For conducting the cost audit for these businesses for the
financial year ended March 31, 2010, the Central Government has approved
the appointment of the following cost auditors.
(i) For the textiles business - Shri S. N. Bavadekar, Cost Accountant;
(ii) For the chemicals business - Shri S.N. Bavadekar, Cost Accountant,
M/s. V.J. Talati & Co., Cost Accountants, M/s. Diwanji & Associates, Cost
Accountants, M/s. K.G. Goyal & Associates, Cost Accountants, Shri Suresh D.
Shenoy, Cost Accountant, M/s. Kiran J. Mehta & Co., Cost Accountants; and
(iii) For the polyester business - Shri S. N. Bavadekar, Cost Accountant,
M/s. V.J. Talati & Co., Cost Accountants, M/s. K.G. Goyal & Associates,
Cost Accountants, M/s. V. Kumar & Associates, Cost Accountants.
Secretarial Audit Report
As a measure of good corporate governance practice, the Board of Directors
of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary,
to conduct Secretarial Audit of the Company. The Secretarial Audit Report
for the financial year ended March 31, 2010, is provided in the Annual
Report.
The Secretarial Audit Report confirms that the Company has complied with
all the applicable provisions of the Companies Act, 1956, Depositories Act,
1996, Listing Agreements with the Stock Exchanges, Securities Contracts
(Regulation) Act, 1956 and all the Regulations and Guidelines of SEBI as
applicable to the Company, including the Securities and Exchange Board of
India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
and the Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 1992.
Particulars of Employees
In terms of the provisions of Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975 as amended,
the names and other particulars of the employees are set out in the
annexure to the Directors' Report. Having regard to the provisions of
Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the
aforesaid information is being sent to all the members of the Company and
others entitled thereto. Any member interested in obtaining such
particulars may write to the Company Secretary at the registered office of
the Company.
Energy Conservation, Technology Absorption and Foreign Exchange Earnings
and Outgo
The particulars relating to energy conservation, technology absorption,
foreign exchange earnings and outgo, as required to be disclosed under
Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988
are provided in the Annexure-I to this Report.
Transfer of amounts to Investor Education and Protection Fund
Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956,
dividends, interest on debentures and matured debentures which remained
unpaid or Annexure - I.
Particulars required under the Companies (Disclosure of Particulars in the
Report of board of Directors) Rules 1988.
A. CONSERVATION OF ENERGY
(a) Energy conservation measures taken:
Some major energy conservation measures carried out during the year 2009-10
are listed below:
Allahabad Manufacturing Division
* Energy savings has been achieved by combining steam jet ejectors used in
polymeriser for providing vacuum during polymerisation reaction, minimising
the operation of Mono Ethylene Glycol (MEG) refining column by recycling
process recovered MEG directly to reaction in Continuous Polymerisation
(CP) and optimising utility equipment operation in Utilities plant.
Barabanki Manufacturing Division
* Installation of the lowest diameter impeller in process cooling water
pumps at utilities.
* Reduction in power consumption by optimising lighting load of entire
manufacturing division.
Dahej Manufacturing Division
* Improvement in steam generation by increasing steam generation
temperature at Gas Cracker Unit (GCU).
* Lowering of discharge pressure in Compressed Gas (CG) compressor due to
improvement in operational practices at GCU.
* Optimisation of energy performance of EO Scrubber (C-115) using ASPEN
TECH at MEG plant.
* Improvement in heat recovery by upgradation in Material of Construction
(MOC) of First Effect Evaporator Reboiler (E-530) at MEG plant.
* Reduction in steam consumption by stoppage of one light end (LE) column
by process side improvements at Vinyl Chloride Monomer (VCM) plant.
* Replacement of old inefficient pumps with new energy efficient pumps in
Cooling tower (CT 04) at Utilities unclaimed for a period of 7 years have
been transferred by the Company to the Investor Education and Protection
Fund.
Corporate Governance
The Company is committed to maintain the highest standards of Corporate
Governance and adhere to the Corporate Governance requirements set out by
SEBI. The Company has also implemented several best corporate governance
practices as prevalent globally.
With a view to strengthening the Corporate Governance framework, the
Ministry of Corporate Affairs has incorporated certain provisions in the
Companies Bill 2009. The Ministry has issued a set of voluntary guidelines
in the second half of December 2009 for adoption by the companies. The
Guidelines broadly outline conditions for appointment of directors
(including independent directors), guiding principles to remunerate
directors, responsibilities of the Board, risk management, the enhanced
role of Audit Committee, rotation of audit partners and firms and conduct
of secretarial audit. Your Company while already complying by and large
with these various requirements has already initiated appropriate action
for compliance.
The Report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement forms part of the Annual Report.
The requisite Certificate from the Auditors of the Company confirming
compliance with the conditions of Corporate Governance as stipulated under
the aforesaid Clause 49, is attached to this Report.
Acknowledgement
Your Directors would like to express their appreciation for assistance and
co-operation received from the financial institutions, banks, Government
authorities, customers, vendors and members during the year under review.
Your Directors also wish to place on record their deep sense of
appreciation for the committed services by the executives, staff and
workers of the Company.
For and on behalf of the Board of Directors
Mukesh D. Ambani
Chairman & Managing Director
Date: May 12, 2010
* Minimisation of hydrogen flaring 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.
* Reduction in energy consumption by replacement of main reactor membrane
in CA plant.
* Identification & replacement of faulty steam traps & minimisation of
steam leakages done in CPP & yard piping at CPP plant.
* Recovery of steam condensate from surface condenser of main turbine (TD-
0301) at EPRU.
* Minimisation of lube oil vent flaring by 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 by provision of dehydrator regeneration
gas-gas exchanger at EPRU.
* Implementation of offline fuel optimiser for CPP.
Hazira Manufacturing Division
* Autocut provision for dryer fan motors when drawline is stopped for more
then 30minutes in Polyester Staple Fiber (PSF), Polyester Fiber Fill (PFF)
& CP - 11 plants.
* Replacement of all the motors running below 40% loading with low rating
motors or variable frequency drives (VFD) in PSF plant.
* Reduction 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 Terephthalic Acid (PTA) bin filter in all CP plants.
* Reduction in power consumption by conversion of Industrial Yarn (IDY)
godet drives on all positions from 'delta' to 'star' electrical
configuration in POY/PET Plants.
* Optimisation of Hiboil reflux ratio in main column at VCM plant.
* Improvement in steam generation by performing convection section cleaning
in furnaces at VCM and Cracker plants.
* Improvement in steam generation by recovering waste heat from vent gases
through new heat exchanger E-1122N at Cracker plant.
* Fuel gas preheating from ambient to 7OC in four gas turbines (GTs) using
waste heat from stack at Captive Power Plant & Utilities (CPP&U) plant.
Hoshiarpur Manufacturing Division
* Optimisation of steam consumption in Draw machines in Polyester Staple
Fiber (PSF) plants.
Jamnagar Manufacturing Division
* Reduction in consumption of steam by decreasing operating pressure of
Naphtha Splitter & Depentaniser column by process side improvements in
Aromatics Plant.
* Recovery of hydrogen by diverting Isomer separator gas to platformer
recontact loop, which originally was downgraded to unsaturated gas header
in Aromatics Plant.
* Reduction in power consumption of fuel gas compressor by providing new
tube bundle with additional baffles in inter stage cooler in Hydrogen
Manufacturing Unit -2.
* Minimising Medium Pressure (MP) steam consumption in naphtha splitter
reboiler 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.
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 is 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 Fluidised Catalytic Cracker
(FCC) Plant & by putting restricted orifices in coke drum steam purge
valves at Coker Plant.
* Reduction in fuel consumption by changing the burner tips for all the
furnaces in Platformer.
Nagpur Manufacturing Division
* Reduction in contract demand from 4500 KVA to 4250 KVA to avail rebate on
account of improvement in load factor.
Nagothane Manufacturing Division
* Reduction in power consumption of ethylene compressor 30-K02 by
minimising the interstage kickback flow in Low Density Poly Ethylene (LDPE)
plant.
Naroda Manufacturing Division
* Replacement of inefficient screw compressors to energy efficient
centrifugal compressors for Airjet Looms in Worsted Spinning Plant.
Patalganga Manufacturing Division
* Revamping of insulation in Thermax heater 1 & 2 with Monolane lining.
* Improvement in steam generation capacity of Heat Recovery Steam Generator
(HRSG) - 2 by Dry Ice Cleaning.
Silvassa Manufacturing Division
* Reduction in compressed air generation at supply air blowers by combining
supply air plenum in Texturising Plant 1.
Vadodara Manufacturing Division
* 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 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.
(b) Additional investments / proposals being implemented for reduction of
consumption of energy:
Dahej Manufacturing Division
* Improvement in heat recovery by increase in residue gas exchanger area at
the GCU.
* Enhancements in heat recovery by installation of new E-521 exchanger and
by rerouting of recycle water at MEG plant.
Hazira Manufacturing Division
* Usage of MP steam in 2 rolls of annealer in place of HP steam in the
Continuous Polymerisation (CP)-11 plant.
* Replacement of 65 no. of under-loaded motors with lower rating motors in
CP 11 plant.
* Installation of VFD on cooling tower fans, dow circulation pumps, forced
draft fans, HP Compressor and comfort air blowers in POY plant utilities.
* Replacement of existing bowed superheating modules of HRSG - 1 and 2 with
drainable and finned super heaters in CPP Plant.
* Reduction in main column pressure to minimise consumption of MP steam by
1 Ton Per Hour (TPH) in VCM plant.
* Utilisation of furnace quenches outlet heat to generate chilled water
(CHW) by using Vapour Absorption Chillers (VARs) in VCM plant.
* Utilisation of waste vented Low Pressure (LP) steam to increase deaerator
water temperature in Cracker Plant.
Jamnagar Manufacturing Division (DTA)
* Improvement in heat recovery by replacing Shell & Tube Heat Exchanger to
new Plate-Frame type Rich/lean Amine Exchanger in Amine Treatment Unit
(ATU) - 4.
Jamnagar Manufacturing Division (SEZ)
* Reduction of MP steam consumption by re-routing LCGO pump around to
stripper re-boiler in Coker- 2.
* Heat integration of sweet Vacuum Gas Oil (VGO) in VGO Hydrotreater
(VGOHT) -3 & 4 Unit with Crude in CDU -3 & 4.
* Heat recovery by installation of Feed to Effluent heat exchanger (S-03
C/D) in Diesel Hydro Desulphurisation (DHDS) -2 unit.
* Improvement in recovery of hydrocarbons in Flare Gas Recovery System
(FGRS) by routing of regeneration gases with high nitrogen concentration to
LLP flare in Propylene Recovery Unit (PRU).
Vadodara Manufacturing Division
* Optimisation of steam load on HRSG & Aux Boilers in CPP plant.
(c) Impact of measures at (a) & (b) given above, for reduction of energy
consumption and consequent impact on the cost of production of goods:
Allahabad Manufacturing Division
* Energy savings worth Rs 636 lakh per year has been achieved by combining
steam jet ejectors used in polymeriser for providing vacuum during
polymerisation reaction, minimising the operation of Mono Ethylene Glycol
(MEG) refining column by recycling process recovered MEG directly to
reaction in Continuous Polymerisation (CP) and optimising utility equipment
operation in Utilities plant.
Barabanki Manufacturing Division
* 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 optimising lighting load of entire
complex, thus saving Rs.2 lakh per year towards power consumption.
Dahej Manufacturing Division
* 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.
* Optimisation 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.
* Minimisation 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 & minimisation 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.
* Minimisation 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 optimiser for CPP.
* Estimated saving worth Rs. 79 lakh per year can be achieved by
improvement in heat recovery by increase in residue gas exchanger area at
GCU.
* Estimated saving worth Rs. 114 lakh per year can be achieved by
enhancement in heat recovery by installation of new E-521 exchanger and by
rerouting of recycle water at MEG plant.
Hazira Manufacturing Division
* 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 & optimising 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.
* Potential savings of Rs. 26 lakh per year can be achieved by using MP
steam in 2 rolls of annealer in place of High Pressure (HP) steam in CP 11
plant
* Power savings worth Rs. 62 lakh per year can be achieved by replacement
of 65 no. of under-loaded motors with lower rating motors in CP 11 plant.
* Estimated power savings worth Rs. 89 lakh per year can be achieved by
installation of VFD on cooling tower fans, dow circulation pumps, forced
draft fans, HP Compressor and comfort air blowers in POY plant and
utilities.
* Replacement of existing bowed superheating modules of HRSG - 1 and 2 with
drainable and finned super heaters in CPP Plant will result in an estimated
energy saving potential of Rs. 517 lakh per year.
* Estimated savings worth Rs. 43 lakh per year can be achieved by reduction
in main column pressure to minimise consumption of MP steam by 1 Ton Per
Hour in VCM.
* Utilisation of furnace quench outlet heat to generate Chilled water (CHW)
by using Vapour Absorption Chillers (VARs) with energy saving potential of
Rs. 91 lakh per year in VCM.
* Savings worth Rs. 81 Lakh per year is estimated & can be achieved by
utilisation of waste / vented LP steam to increase deaerator water
temperature in Cracker Plant.
Hoshiarpur Manufacturing Division
* Savings worth Rs. 45 lakh per year has been achieved by change-over from
oil fired boiler to wood fired boiler for steam generation in Utilities.
* Savings worth Rs. 33 lakh per year has been achieved by optimisation of
steam consumption in Draw machines in PSF Plants.
Jamnagar Manufacturing Division
* 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.
* 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.
* Estimated energy savings worth Rs. 680 Lakh per year can be achieved by
improvement in heat recovery by replacing Shell & Tube Heat Exchanger to
new Plate-Frame type Rich/lean Amine Exchanger in Amine Treatment Unit
(ATU) - 4.
Jamnagar Manufacturing Division (SEZ)
* 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 Platformer.
* Estimated savings worth Rs. 773 lakh per year can be achieved by
reduction of MP steam consumption by re-routing LCGO pump around to
stripper re-boiler in Coker-2 plant.
* Estimated savings worth Rs. 752 lakh per year can be achieved by heat
integration of sweet VGO in VGOHT -3 & 4 Unit with Crude in CDU -3 & 4.
* Estimated savings worth Rs. 397 lakh per year can be achieved by heat
recovery by installation of Feed to Effluent heat exchanger (S-03 C/D) in
Diesel Hydro Desulphurisation (DHDS) -2 unit.
* Estimated savings worth Rs. 43 lakh per year can be achieved by
improvement in recovery of hydrocarbons in FGRS by routing of regeneration
gases with high nitrogen concentration to LLP flare in PRU.
Nagpur Manufacturing Division
* Power saving worth Rs.30 lakh per annum has been achieved in power bill
by reduction in the contract demand from 4500 KVA to 4,250 KVA.
Nagothane Manufacturing Division
* Energy savings worth Rs. 26 lakh per year has been achieved by reduction
in power consumption of ethylene compressor 30-K02 by minimising the
interstage kickback flow in LDPE plant.
Naroda Manufacturing Division
* Energy savings worth Rs. 7 lakh per year has been achieved by replacement
of screw compressors to centrifugal compressors for Air-jet Looms in
Worsted Spinning Plant.
Patalganga Manufacturing Division
* Energy savings worth Rs. 84 lakh per year has been achieved by revamping
of insulation in Thermax heater 1 & 2 with Monolane lining.
* Energy savings worth Rs. 310 lakh per year has been achieved by
improvement in steam generation capacity of HRSG - 2 by Dry Ice Cleaning.
Silvassa Manufacturing Division
* Energy savings worth Rs. 40 lakh per year has been achieved by reduction
in generation of compressed air at supply air blower by combining supply
air plenum in Texturising Plant I.
Vadodara Manufacturing Division
* 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.
* 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).
* Estimated energy savings worth Rs. 88 lakh per year can be achieved by
optimisation of steam loading on HRSG & Aux Boilers in CPP plant.
(d) Total energy consumption and energy consumption per unit of production
as per Form A' attached hereto
B. TECHNOLOGY ABSORPTION
(e) Efforts made in technology absorption - as per Form B given below:
Form B
Research and Development (R & D)
1. Specific areas in which the research and development (R & D) is being
carried out by the Company
* Development, evaluation and selection of Fluidized catalytic cracker
(FCC) catalyst and additives.
* Expansion of FCC experimental facilities.
* Technology development to process cheaper and heavier refining
feedstocks.
* Improving of higher value streams recovery from vacuum distilling units.
* Computational fluid dynamics (CFD) studies for trouble shooting in plant
operation.
* Molecular modeling for refining feedstock characterization.
* Upgrading of coker streams in FCC.
* Development of catalytic process for on-purpose Hexene-1 and Octene-1
from ethylene.
* Development of an alternative solvent for ethylene polymerization.
* Regenerable adsorbent for BTX (benzene, toluene and xylenes).
* Bio-filtration technology development for waste water treatment.
* Adsorbent for enhancement of shelf life of fruits and vegetables.
* Development of catalyst for selective hydrogenation of dienes and
acetylenes.
* New PTA (Purified Terephthalic Acid) technology development in progress.
* Catalyst recovery from CTA (Crude Terephthalic Acid) residue.
* Modeling of corrosion in multi phase flow systems.
* Development of dehydrogenation catalyst for Linear Alkyl Benzene (LAB).
* Polyolefin catalyst precursor development.
* Development of the catalyst ligands for production of disentangled ultra-
high molecular weight polyethylene.
* Catalyst for specialty grade polymers.
* Development of high melt strength (HMS) grades of Polypropylene.
* Biaxially-oriented polypropylene (BOPP) and Impact copolymer (ICP) grades
of polypropylene development.
* Development of beta-nucleated high performance Random copolymers (RCP)
pipe grade PP.
* Development of high pressure pipe grade HDPE.
* Design of futuristic BOPP grades.
* Development of cost effective material for solar modules.
* Development of low pill polyester in continuous reactor.
* Development of full dull dope dyed polyester.
* Development of moisture management polyester.
* Cheaper spin finish development for partially oriented yarn (POY).
* New catalyst systems development for bottlegrade resin productivity
enhancement.
* Finishes for specialty products in polyester.
* Hollow and bulky fibres development.
2. Benefits derived as a result of the above R&D
* Potential benefit of Rs. 50 crore/annum from improved FCC performance.
* Potential benefit of Rs. 16 crore/annum from upgrading of coker streams
in FCC.
* Benefit of Rs. 12 crore / annum from higher furnace efficiency in VDU.
* Benefit of Rs. 10 crore/annum saved on design and downtime costs for
refinery flare seal drum.
* Savings of Rs. 5 crore/annum by using in house dehydrogenation catalyst.
* Potential benefits of Rs. 29 crore/annum from Polyolefin catalyst
precursor development.
* Potential benefits of Rs. 2 crore/annum for high melt strength (HMS) PP.
* Potential benefits of Rs. 2 crore/annum for Solar module.
* Potential benefits of Rs. 32 crore/annum from polyester R&D projects.
3. Future plan of action
* Advanced characterization facilities for refining catalysts.
* Specialty Chemicals from C6 to C8 olefin mixture streams.
* Process for PTA from inexpensive raw material.
* Reforming Catalyst for xylenes production.
* Microbial and photocatalytic processes for effluent treatment.
* Anticoking additives for thermal cracking of hydrocarbons.
* Catalyst for ethylene oxidation.
* Micro-meso porous and nano materials for catalytical applications.
* Materials for natural gas storage.
* Acrylic acid from ethylene.
* Development of Ethyl Benzene dealkylation catalyst for aromatics plant.
* Development of dilutant used in polymerization (HDPE).
* Super absorbent polymers.
* Self-healing polybutadiene rubber for tire application
* PP grades for foamed products.
* Inorganic materials from spent catalysts.
* Modeling and simulation of PX (Paraxylene) oxidation reactor.
* Implementation of separation facility for PTA.
* Advanced generation catalyst systems for polypropylene.
* Development of functional polyolefins
* High performance additives for polymers.
* Development of specialty polypropylene grades.
* Improvement in spinning productivity through additives.
* High tenacity industrial yarn development.
* Implementation of polyester catalysts developed in production.
* New spinneret's design for productivity increase.
* Up-scaling of moisture management yarns.
* Barrier property enhancement for PET resin.
4. Expenditure on R & D
Rs. crore
a) Capital 207.33
b) Revenue 137.71
c) Total 345.04
d) Total R & D expenditure is 0.17%
of total turnover.
Technology absorption, adoption and innovation
1. Efforts, in brief, made towards technology absorption, adoption and
innovation:
* Processing of high Nickel feedstock in FCC unit.
* Development and evaluation of better catalysts and additives for FCC
using in-house designed facilities.
* Efforts for upgrading low value FCC bottom in coker.
* Development of new process for upgrading of light olefins to diesel.
* Enhancing propylene recovery in refinery.
* Composite adsorbent for catalyst removal in Polyethylene plants.
* Wax reduction for Polyethylene plants.
* Recovery of ammonium sulphate from waste stream of ACN plant.
* Process for moisture removal from refrigerant gases.
* CFD modeling of combustion systems.
* High capacity revamps in paraxylene plants.
* Adsorbent change in paraxylene plants.
* Innovative method for increasing Benzene /olefin ratio in alkylation at
LAB plant.
* Innovation in plastic processing technology to obtain high performance
products.
* In-house technology development for low pill polyester.
* Bottle to Bottle plant commissioning.
* Cheaper spin finishes trials established for usage.
2. Benefits derived as a result of the above efforts
* 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 (Polyethylene) production has a potential value
generation of Rs. 8 crore/annum.
* Chemical grade recovery of ammonium sulphate has potential benefit of
Rs.2 crore/annum.
3. Information regarding Imported Technology
Product Technology Year of Status
Import Import implement-
From ation/
absorption
Polypropylene at M/s DOW 2008-09 Successfully
Jamnagar. - USA absorbed.
and
implemented.
Specialty grades of M/s DOW 2008-09 Successfully
Polypropylene - USA absorbed.
at Hazira. and
implemented.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
(f) Activities relating to export, initiatives to increase exports,
Developments of New export markets for Products and Services and Export
Plan.
The company has continued to maintain focus and avail of export
opportunities based on economic considerations. During the year the company
has exports (FOB value) worth Rs.1,10,176 crore (US$ 24,538 million).
(g) Total Foreign exchange earned and used:
Rs. Crore
a. Total Foreign Exchange Earned 1,02,701.00
b. Total savings in foreign exchange 72,729.95
through products manufactured by
the Company and deemed exports
(US$ 16,198.21 Million)
sub total (a+b) 1,75,430.95
c. Total foreign Exchange used 1,67,434.29
Form A'
Form for disclosure of particulars with respect to conservation of energy
Part A'
Power & Fuel Consumption Current Year Previous Year
1. Electricity
a) Purchased Units (Lacs) 3,337.19 4,745.13
Total Cost (Rs. In Crores)# 134.89 203.32
Rate/Unit (Rs.) # 4.04 4.28
b) Generation through captive
power facilities
1) Through Steam Turbine/Generator
Units (Lacs) 47,052.53 26,273.13
KWH per unit of fuel 4.93 4.57
Total Cost (Rs. in Crores) 2,309.48 1,670.90
Cost/Unit (Rs.) 4.91 6.36
c) Own Generation
1) Through Diesel Generator
Units (Lacs) 949.72 751.69
KWH per unit of fuel 4.16 4.28
Fuel Cost/Unit (Rs.) 5.83 5.71
2) Through Steam Turbine/Generator
Units (Lacs) 55,353.33 52,947.57
KWH per unit of fuel 4.39 4.28
Fuel Cost/Unit (Rs.) 2.81 3.35
3) Through Wind Mill Turbine
Units (Lacs) 24.24 32.16
Purchased Fuels consumed
2. Furnace Oil
Quantity (K. Ltrs) 92,781.54 316,665.11
Total Cost (Rs. In crores) 186.28 706.25
Average rate per Ltr. (Rs) 20.08 22.30
3. Diesel Oil
Quantity (K. Ltrs) 2,860.00 117,783.37
Total Cost (Rs. In crores) 9.33 228.98
Average rate per Ltr. (Rs) 32.62 19.44
4. Others
(a) Gas
Quantity (1000 M3) 3,800,717.26 1,364,879.10
Total Cost (Rs. In crores) 4,033.09 1,263.44
Average rate per 1000M3 (Rs) 10,611.39 9,256.78
(b) Coal / Husk / Wood Fire
Quantity (MT) 27,896.98 19,808.80
Total Cost (Rs. in crores) 5.71 4.12
Average rate per MT (Rs.) 2,047.90 2,081.01
Internal Fuels consumed
5. Gas
Quantity ( 1000 M3 ) 3,361,717.54 1,952,133.20
6. GT fuels
Quantity ( K.Ltrs) 831,596.35 1,839,821.77
# Excluding Demand Charges
B. Consumption per unit of Production
Product A B C D E F G H
Fabrics (Per 1000 mtrs) 4,969 4,670 2 2 - - 475 488
PFY (per MT) 700 769 12 39 8 11 75 27
PSF (per MT) 357 365 21 36 - 1 81 37
PTA (per MT) 305 310 2 6 - - 9 -
LAB (per MT) 610 615 27 84 1 20 263 114
MEG (per MT) 458 512 - - 3 28 52 39
PVC (per MT) 429 438 - - 1 7 34 26
HDPE (per MT) 567 560 - - 1 3 19 14
PP (per MT) 309 333 - - - 2 55 17
FF (per MT) 666 668 42 42 - - 109 79
PET (per MT) 270 291 - - - - 75 46
PX (per MT) 208 198 40 10 - - 315 187
Petro-products (per MT) 73 73 9 5 - - 73 39
PBR (per MT) 646 669 - - 13 217 512 244
Caustic Soda (per MT) 2,574 2,706 - - 5 15 89 76
Acrylonitrile (per MT) 479 690 - - - 16 (54) (15)
A = Electricity (KWH) Current Year
B = Electricity (KWH) Previous Year
C = Furnace Oil/HSD/HFHSD (Ltrs) Current Year
D = Furnace Oil/HSD/HFHSD (Ltrs) Previous Year
E = LSHS (kgs) Current Year
F = LSHS (kgs) Previous Year
G = Gas (SM3) Current Year
H = Gas (SM3) Previous Year
For and on behalf of the Board of Directors
Mukesh D. Ambani
Chairman & Managing Director
Date: May 12, 2010.
Persons constituting group coming within the definition of 'group' for the
purpose of Regulation 3(1)(e)(i) of the Securitities and Exchange Board of
India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
include the following:
Name of the Entity:
1. Aavaran Textiles Private Limited
2. Abhayaprada Enterprises LLP
3. Adisesh Enterprises LLP
4. Ajitesh Enterprises LLP
5. Amur Trading Private Limited
6. Anumati Mercantile Private Limited
7. Badri Commercials LLP
8. Bahar Trading Private Limited
9. Bhumika Trading Private Limited
10. Bhuvanesh Enterprises LLP
11. Chakradev Enterprises LLP
12. Chakradhar Commercials LLP
13. Chakresh Enterprises LLP
14. Chhatrabhuj Enterprises LLP
15. Deccan Finvest Private Limited
16. Devarshi Commercials LLP
17. Ekansha Enterprise Private Limited
18. Eklavya Mercantile Privatre Limited
19. Farm Enterprises Limited
20. Futura Commercials Private Limited
21. Harinarayan Enterprises LLP
22. Hercules Investments Private Limited
23. Jagadanand Investments And Trading Company Private Limited
24. Jagdishvar Investments And Trading Company Private Limited
25. Janardan Commercials LLP
26. Jogiya Traders Private Limited
27. Kamalakar Enterprises LLP
28. Kankhal Investments And Trading Company Private Limted
29. Kardam Commercials Pirvate Limited
30. Karuna Commercials LLP
31. Kedareshwar Investments And Trading Company Private Limited
32. Krish Commercials Private Limited
33. Kshitij Commercials Private Limited
34. Madhuban Merchandise Private Limited
35. Narahari Enterprises LLP
36. Neutron Enterprises Private Limited
37. Nikhil Investments Company Private Limited
38. Nityapriya Commercials Private Limited
39. Ornate Traders Private Limited
40. Pams Investments And Trading Company Private Limited
41. Pavana Enterprises LLP
42. Petroleum Trust
43. Pitambar Enterprises LLP
44. Priyash Commercials Private Limited
45. Real Fibres Private Limited
46. Reliance Aromatics & Petrochemicals Private Limited
47. Reliance Chemicals Limited
48. Reliance Consolidated Enterprises Private Limited
49. Reliance Consultancy Services Private Limited
50. Reliance Energy & Project Development Private Limited
51. Reliance Global Commercial Limited
52. Reliance Industrial Infrastructure Limited
53. Reliance Petroinvestments Limited
54. Reliance Polyolefins Limited
55. Reliance Ports and Terminals Limited
56. Reliance Universal Commercial Limited
57. Reliance Universal Enterprises Private Limited
58. Reliance Utilities and Power Private Limited
59. Reliance Utilities Private Limited
60. Reliance Welfare Association
61. Rishikesh Enterprises LLP
62. Samarjit Enterprises LLP
63. Sanatan Textrade Private Limited
64. Shripal Enterprises LLP
65. Silvassa Hydrocarbons And Investments Private Limited
66. Srichakra Commercials LLP
67. Sudarshan Enterprises
68. Svar Enterprises LLP
69. Synergy Synthetics Private Limited
70. Taran Enterprises LLP
71. Tattvam Enterprises LLP
72. Terene Industries Private Limited
73. Tresta Trading Private Limited
74. Trilokesh Commercials LLP
75. Vasuprada Enterprises LLP
76. Vishatan Enterprises LLP
77. Vita Investments & Trading Company Private Limited
For and on behalf of the Board of Directors
Mukesh D. Ambani
Chairman & Managing Director
Date: May 12, 2010.
MANAGEMENT DISCUSSION AND ANALYSIS
Forward-looking Statements
This report contains forward-looking statements, which may be identified by
their use of words like plans', expects', will', anticipates',
believes', intends', projects', estimates' or other words of similar
meaning. All statements that address expectations or projections about the
future, including, but not limited to statements about the Company's
strategy for growth, product development, market position, expenditures,
and financial results, are forward-looking statements.
Forward-looking statements are based on certain assumptions and
expectations of future events. The Company cannot guarantee that these
assumptions and expectations are accurate or will be realised. The
Company's actual results, performance or achievements could thus differ
materially from those projected in any such forward-looking statements. The
Company assumes no responsibility to publicly amend, modify or revise any
forward-looking statements, on the basis of any subsequent developments,
information or events.
Overview
The Mantra of Value Creation During the past one year, Reliance Industries
Limited (RIL) has commissioned two of the largest projects of global scale
in the energy sector. This was achieved in a period defined by
significantly high capital costs, global shortage of financial capital and
a resource constraint for large scale projects. The commissioning of these
projects has created several milestones in RIL's corporate history. As
always, RIL shareholders will be the first to reap the benefits of the
commissioning of the oil and gas, and petroleum refining facilities. The
issuance of bonus shares continues RIL's tradition of rewarding
shareholders on a consistent basis. RIL continued to receive global
acknowledgement for its achievements during the year. The Company was
recently rated by the Boston Consulting Group as the fifth most sustainable
value creator globally. The rating also recognises that RIL's value
creation is balanced and well-distributed among all the stakeholders of the
Company. Also, RIL is the only Indian company in the list of the top 25
companies in the world.
For the fifth consecutive year, RIL has featured in the Fortune Global 500
list of the world's largest corporations.
RIL's current rankings are as follows:
* 264 based on Sales
* 117 based on Profits
Other achievements include:
* RIL, ranked at the 11th position, was the only Indian company in the 25
A.T. Kearney Global Champions for 2009.
* The Exploration and Production (E&P) division won the Best Project of
the Year 2009' award for KG-D6 Block Deepwater (D1/D3) Gas Fields
Development Project Kakinada, East coast of India from the Project
Management Institute, India in 2009.
Successful Project Execution and Commissioning - RIL in the elite group of
global deepwater oil and gas operators RIL began gas production within six
and a half years of gas discovery, in comparison to the world average of 9-
10 years for similar deepwater production facilities. Continuous gas
production for about a year, with 100% uptime, once again demonstrates the
Company's flawless commissioning and execution capabilities.
Key highlights of the KG-D6 project were as follows:
* World's largest gas discovery in 2002
* Among the world's largest and most complex deepwater gas production
facility in the world
* Tie Back of 60 kms
* Transforming India's energy landscape
* Capacity of 550,000 Barrels of Oil Equivalent Per Day (BOEPD)
* Equivalent of 40% of India's current oil and gas production and has the
potential to more than double India's gas production
* Among the fastest deepwater field development projects
* Among the lowest Finding & Development (F&D) cost per BOE for similar
deepwater projects
* Global-scale project management; simultaneous execution in 20 locations
* Among the largest marine construction spread
* Equipment weighing 125,000 Metric Tonnes (MT) installed offshore
* 500 line kms of pipelines and umbilicals installed Presently, RIL is
producing approximately 60 Million Metric Standard Cubic Meters Per Day
(MMSCMD) of gas which is being supplied to several priority sectors
identified by the Government of India under its gas utilisation policy.
Since production commenced in April 2009, the field has produced over 14.5
billion cubic metres of gas, contributing significantly to the country's
critical industrial sectors.
RIL is enhancing India's energy landscape.
Production from the Dhirubhai 1 and 3 discoveries of the KG-D6 block is
likely to result in a quantum leap towards achieving India's energy
security as it has the potential to account for 40% of the country's
current hydrocarbon production.
The gas supply from the KG-D6 facility has already impacted various aspects
of the country's economy including:
* The Index of Industrial Production (IIP) has acknowledged the significant
contribution of production from KG-D6 in the double digit growth registered
by the mining sector.
* With increased availability of gas, production of indigenous fertilisers
has increased and the cost of production reduced, thereby resulting in
savings of about Rs. 4,000 crore p.a. in Government subsidies.
* There has been a significant improvement of 30% in gas-based power
generation in the country during the year.
* Production of natural gas from KG-D6 has also reduced the dependence on
more expensive liquid fuels that were being used in the steel, refining and
petrochemicals sectors.
Within a month of emerging as the largest producer of natural gas in the
country, RIL announced a successful assessment of the design capacity of
the KG-D6 deepwater gas production facilities in December 2009. A flow rate
of 80 MMSCM was achieved through the KG-D6 facilities and delivered to the
East-West pipeline.
High Quality Portfolio
RIL's upstream oil and gas strategy is to identify, evaluate and capture
the highest quality resource opportunities at the most competitive cost in
the industry. The strength of the balance sheet and the Company's recent
experience in deepwater exploration and drilling allows RIL to explore for
incremental resource types regardless of life-cycle. This is done across
geological and geographical plays using cutting-edge technology and
capabilities through partnerships with leading global players. Incremental
resource types include unconventional resources such as shale gas, tight
gas, Coal-Bed Methane (CBM), heavy oil and oil sands that can provide
profitable, long plateau production systems in addition to conventional
offshore resources.
RIL's upstream approach is oriented towards ensuring greater value by
sustained production growth and an accelerated development of discoveries
already made. This is achieved through ongoing excellence in project
execution and capital efficiency.
Jamnagar-Global Petroleum Refining Hub With the commissioning of the new
refinery in its Special Economic Zone (SEZ), Jamnagar has now become the
petroleum hub of the world. With 1.24 Million Barrels Per Day (MBPD) of
nominal crude processing capacity, it is the single largest refining
complex in the world. This is equivalent to 1.6% of global capacity or one
third of India's capacity, and places RIL amongst the top ten private
refiners globally.
The second refinery, of larger scale and complexity, was commissioned in a
record time of 36 months despite the fact that it had to be executed under
the most-challenging conditions of scarce availability of project execution
resources due to overheated market conditions from 2005 to 2008. Building
two of the largest and most complex refineries at the same location, in a
decade, is unique in the world of global refining.
The SEZ refinery achieved a flawless start, and the entire complex at
Jamnagar was synchronised in record time. All the processing units of the
SEZ refinery were successfully commissioned and the facility operated in a
stable manner. It achieved peak capacity utilisation rate of 120% during
the year.
The new refinery has been designed to be more complex and flexible as
compared to the first refinery. This enables the new refinery to capture
more opportunities in value upgradation-from the bottom-of-the-barrel to
highly value added products. The new refinery has the world's largest Coker
and Fluid Catalytic Cracker (FCC) plants. In addition, it also has the
world's largest alkylation unit.
Continuing Success in Exploration and Production
This was yet another successful period for RIL's oil and gas exploration
and production business. The first oil discovery was made in the onland
exploratory block CB- ONN-2003/1 (CB 10 A&B) in the Cambay basin awarded
under the NELP-V round of exploration bidding. RIL holds 100% Participating
Interest (PI) in this block. The discovery, named Dhirubhai-43' has been
notified with the Government of India.
The Company also made its third successive gas discovery in the exploration
block KG-DWN-2003/1 (KGV- D3) of NELP-V. The deepwater block KG-DWN-2003/1
is located in the Krishna basin, about 45 kms off the coast in the Bay of
Bengal. The block covers an area of 3,288 sq. kms. RIL holds a 90% PI in
the block. The well KGV-D3-R1, the third in this block was drilled at a
water depth of 1,982 metres and to a total measured depth of 4,113 metres.
This discovery, named Dhirubhai-44' has been notified with the Government
of India.
Financial Performance
Turnover Rs. 2,00,400 crore +37%
$ 44,632 million +55%
EBITDA Rs. 33,041 crore +28%
$ 7,359 million +45%
Cash Profit Rs. 27,933 crore +25%
$ 6,221 million +41%
Net Profit Rs. 16,236 crore +6%
$ 3,616 million +20%
The net profit for the year was at Rs. 16,236 crore ($ 3,616 million) with
a Compounded Annual Growth Rate (CAGR) of 21% over the past ten years.
RIL has announced a dividend of 70% amounting to Rs. 2,430 crore ($ 541
million), including dividend distribution tax. This is one of the highest
payout by any private sector company in India.
Return on Equity was at 16.4% and Return on Capital Employed was at 13.9%
for the year. RIL's net gearing was at 22.3% and the net debt to equity
ratio was 0.31 as on 31 March, 2010.
RIL continues to play a pivotal role in the growth of India's economy and
endeavours to contribute to the nation's progress. It accounts for:
* 14.5% of India's total exports
* 5.6% of the Government's indirect tax revenues
* 5.7% of the total market capitalisation in India
* Weightage of 12.8% in the BSE Sensex
* Weightage of 10.6% in the NSE Nifty
Financial Review
RIL delivered superior financial performance with improvements across key
parameters.
Turnover achieved for the year ended 31 March, 2010 was Rs. 2,00,400 crore
($ 44.6 billion), a growth of 37% over the previous year. Increase in
revenue was due to 50% rise in volumes and a 13% decline in prices. During
the year, exports including deemed exports, were higher by 24% at
Rs.1,10,176 crore ($ 24.5 billion).
Consumption of raw materials increased by 41% from Rs. 1,04,805 crore to
Rs. 1,47,919 crore ($ 32.9 billion). This was mainly on account of higher
crude oil processed in the SEZ refinery. Traded goods purchases were Rs.
2,996 crore ($ 667 million) as compared to previous year of Rs. 2,205
crore.
Employee cost was Rs. 2,350 crore ($ 523 million) for the year as against
Rs. 2,398 crore. The current year figure includes Rs. 20 crore towards
expenditure incurred on Voluntary Retirement Scheme/Special Separation
Scheme announced for the employees of certain units.
Corresponding previous year figure was Rs. 111 crore.
Operating profit before other income increased by 29% from Rs. 23,683 crore
to Rs. 30,581 crore ($ 6.8 billion). Net operating margin for the period
was 15.9% as compared to 16.7% in the previous year.
Other income was higher at Rs. 2,460 crore ($ 548 million) against Rs.2,060
crore primarily on account of increase in interest income.
EBITDA increased by 28% from Rs. 25,743 crore to Rs. 33,041 crore ($ 7.4
billion).
Interest cost was higher at Rs. 1,997 crore ($ 445 million) as against
Rs.1,745 crore. Gross interest cost was lower at Rs. 2,981 crore ($ 664
million) as against Rs. 5,142 crore for the previous year on account of
lower interest rates and exchange differences. Interest capitalised was
lower at Rs. 984 crore ($ 219 million) as against Rs. 3,397 crore in the
previous year due to commissioning of projects.
Depreciation (including depletion and amortisation) was higher at Rs.10,497
crore ($ 2.3 billion) against Rs. 5,195 crore in the previous year
primarily on account of higher depletion charges in oil and gas and
increased depreciation in the refining business segment.
Profit after tax was Rs. 16,236 crore ($ 3.6 billion) as against Rs. 15,309
crore for the previous year, an increase of 6%. Earning per share (EPS)
post allotment of bonus shares for the year was Rs. 49.7 ($ 1.1).
During the year, the Company allotted 6,92,52,623 equity shares of Rs. 10
each to the equity shareholders of the amalgamating company, Reliance
Petroleum Limited. The Company also issued and allotted 162,67,93,078
equity shares to the eligible holders of equity shares in November 2009 as
bonus by capitalising reserves. During the year, the Company has issued and
allotted 5,30,426 equity shares to the eligible employees under ESOS. As a
result, the Company's equity share capital now stands at Rs. 3,270 crore.
Capital expenditure during the year was Rs. 21,943 crore ($ 4.9 billion)
primarily on account of exploration and production, SEZ refinery and
implementation of several value maximisation projects. Details of the
capital expenditure undertaken during the year are as follows:
(In Rs. crore)
FY 2009-10 FY 2008-09
Oil and Gas (E&P) 11,813 10,270
Refining & Marketing 9,383 10,287
Petrochemicals 730 2,514
Common 17 1,642
TOTAL 21,943 24,713
During the year, a total of Rs. 17,972 crore ($ 4.0 billion) was paid in
the form of taxes and duties.
RIL maintained its status as India's largest exporter. Exports, including
deemed exports, were at Rs. 1,10,176 crore ($ 24.5 billion) as against Rs.
89,199 crore in the previous year.
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.
Resources and Liquidity
RIL continued to strengthen its balance sheet and significantly improved
liquidity. This was achieved while continuing to reduce its interest costs,
sale of treasury shares and the continued optimisation of existing long
term resources.
During the year, the Petroleum Trust sold 8.88 crore equity shares
(adjusted for bonus issue) of the Company and realised Rs. 9,334 crore.
Reliance Industrial Investments and Holdings Limited, a subsidiary of RIL,
is beneficiary of the Trust. RIL refinanced $ 800 million of its existing
liabilities at a lower cost, resulting in savings in interest costs. The
Company also raised short term resources in the domestic markets through
the issue of commercial paper aggregating Rs. 18,000 crore at very
competitive rates.
As on 31 March, 2010, RIL's debt was at Rs. 62,495 crore ($13.9 billion),
with long term foreign currency denominated debt of 83%. The average
maturity of the Company's long term debt is about 4 years. The proportion
of short term debt to total debt is conservative at 9.5%.
RIL's gross debt to equity ratio including long term and short term debt as
on 31 March, 2010 was at 0.46, while the net debt to equity ratio was at
0.31. As on 31 March, 2010, RIL's net gearing was 22.3%.
RIL's cash and cash equivalents as at 31 March, 2010 amounted to Rs. 21,874
crore ($ 4.9 billion). These are placed in bank fixed deposits, CDs,
Government securities and bonds. RIL manages its short term liquidity in
order to generate superior returns by investing its surplus funds while
ensuring safety of capital.
Over 100 banks and financial institutions have commitments to RIL,
reflecting the strength of its balance sheet, credit profile and earning
capability. On an ongoing basis, RIL undertakes liability management to
reduce cost of debt and to diversify its liability mix.
RIL's financial discipline and fiscal prudence is reflected in the strong
credit ratings ascribed by rating agencies. Moody's has rated RIL's
international debt at investment grade Baa2 (stable). S&P has rated RIL's
international debt as BBB, which is a notch above India's sovereign rating.
S&P has recently upgraded its outlook on RIL from negative' to stable'.
RIL's long term debt is rated AAA by CRISIL and Ind AAA' by Fitch, the
highest rating awarded by both these agencies. RIL's short term debt is
rated P1+ by CRISIL, the highest credit rating assigned in this category.
Business Review
Oil and Gas Exploration & Production
The economic crisis left an impact on the oil and gas industry globally.
The economic downturn that followed resulted in unprecedented demand
destruction. The industry is on a path of recovery due to fiscal measures
announced by various governments. The major deepwater basins of the world
namely the East coast of India, Gulf of Mexico, Africa and Brazil continue
to witness huge levels of activity and investment.
The structural theme for investment in the sector remains valid. The
world's insatiable need for reliable and affordable energy continues to
grow unabated. This calls for substantial investments, access to resources
and newer technologies to unlock resources from challenging locations. The
International Energy Agency (IEA), in its World Energy Outlook 2009,
estimates that by the year 2030, global energy demand is expected to
increase by 49% from its current level. Oil and natural gas are expected to
remain primary energy sources and are expected to meet 51% of the global
demand. Natural gas, a low-carbon, lowpolluting green fuel-that flows from
RIL's blocks, is creating unprecedented value for the Company's
shareholders and benefiting India. Increasing concern for climate change
augurs well for natural gas as it is an environmentally benign fuel with
carbon emissions far lower than other fossil fuels.
IEA estimates that the world requires investments to the tune of $ 11
trillion in the oil and gas sector over the next 20 years implying an
annual investment of over $ 500 billion.
FY 2009-10 was a year of steady growth. Oil prices rose from an average of
$ 46/barrel (bbl) in January 2009 to touch $ 75/bbl in December 2009.
Average WTI prices remained at $ 70/bbl vis-a-vis $86/bbl for the previous
year. Henry Hub natural gas price averaged at $ 4/Million Metric British
Thermal Unit (MMBTU) for FY 2009-10 as against an average of $ 7.87/MMBTU
in FY 2008-09.
The year 2009 also saw the global oil demand slip to 84.93 MBPD, a decrease
of 1.5% over 2008. IEA forecasts that the global oil demand is set to
increase by 1.67 MBPD or 2.0% to 86.60 MBPD in 2010.
Global Natural Gas Market Growing
Globally, natural gas constitutes 24% of the energy basket while in India
it accounts for a mere 9%. The low share of gas in India's energy
consumption is attributed to limited availability and nascent
infrastructure. Gas accounts for 35% of the energy mix in the former Soviet
Union and Europe, 26% in USA, 17% in Japan and 15% in Korea.
The share of gas in the energy mix is expected to increase to nearly 23% in
2031-32 mainly due to the increasing demand from the industrial sector,
power sector, gas distribution in cities and opportunities in the gas-to-
liquids business.
Sizeable investments globally over the last few years in developing the
natural gas business and related logistical capabilities have resulted in
increased availability of gas in key markets. As in the case of crude oil,
the natural gas industry is beginning to see the advent of short term,
medium term and long term contracts reflecting increased transportation
capabilities and price fungibility. Regional variations in prices are
driven primarily out of differentiated transportation costs.
Energy Landscape in India Set for Change
The Indian economy has been growing steadily in the range of 8-9% in the
recent past (6.7% in FY 2008-09) and is expected to maintain its status as
one of the fastest growing economies in the world with long term GDP
growth estimated to be around 9%. Driven by strong economic growth, energy
consumption in India has been growing at a CAGR of around 5.3% over the
last two decades.
India's per capita energy consumption is 383 Kg of Oil Equivalent (KGOE) as
against the world average of 1,737 KGOE, which indicates a significant
potential for growth in the demand for energy. As per the Integrated Energy
Policy of the Planning Commission, Government of India, India's energy need
is expected to grow four-fold from 433 Million Tonnes of Oil Equivalent
(MTOE) to around 1,856 MTOE by 2032. However, India depends largely on
imports with over 75% of oil and 16% of gas consumption being imported.
The East coast of India covers a vast stretch of sedimentary area of about
2 million sq. kms. The coast has been divided into three major geological
provinces viz. the Mahanadi basin, the Krishna-Godavari basin and the
Cauvery-Palar basin.
RIL has more than 25 blocks in the East coast of India with exploration at
different stages of maturity. Several discoveries have taken place in all
the three basins and a large number of prospects have been identified for
drilling. With drilling success ratio of 54%, RIL's drilling campaign is to
target these basins.
Gas production from KG-D6 was started in a record time of six and a half
years. The production from this block is expected to provide a quantum leap
in energy security to the country. The Krishna-Godavari basin find has been
one of the most important development catalyst to various sectors like
power, fertilisers, petrochemicals, refineries, gas distribution in cities,
etc thereby ensuring energy and food security for the country.
The natural gas sector in the country is evolving and becoming competitive
due to the Government's proactive regulatory approach with respect to
policies in upstream, midstream and downstream. This has led to enhanced
investments by various players and the emergence of competitive markets.
RIL's E&P Business : KG-D6
KG-D6 completed 365 days of 100% uptime and zeroincident 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 the KG-D6 deepwater gas production facilities
were assessed and achieved a flow rate of 80 MMSCM. During FY 2009-10,
total gas production was 14,397 MMSCM.
Six wells from the D26 oil field in the block are under production. Gas
produced from the D26 field was exported to the Onshore Terminal (OT) in
the months of November 2009, December 2009 and February 2010.
Oil production from the D26 field now exceeds 35,000 barrels per day.
During the FY 2009-10, total oil production from this field was 4.04
million barrels.
The facility has undergone extensive quality assurance and quality control
audits with the support of international experts like Det Norske Veritas
(DNV), Ward Associates and Shell Global Solutions. The pipeline network was
put through nitrogen helium tests for leak tests and pressure points. More
than 1,000 punch points were addressed within six months, eliminating risk
factors. Fatigue tests were also carried out on installed infrastructure to
ensure their ability to support the planned 25-year lifespan of the field.
The entire development was put through stringent quality checks in
compliance with the applicable standards, and organisational and project
policies. DNV has carried out certification and verification of all works.
DNV reviewed and verified engineering, fabrication and installation of all
offshore facilities. DNV also carried out the Hazard Identification and
Hazard and Operational Study through the different stages of the project.
Other independent surveyors have included Lloyd's Register and Moody's
International. Extensive and intensive checks were done on all equipment,
which included Factory Acceptance Test, Extended Factory Acceptance Test,
Systems Integrity Test and Site Acceptance Test prior to installation.
Multiple levels of inspection were undertaken by manufacturer's Quality
Control (QC) team, RIL's QC team and third party QC teams to ensure nothing
was left to chance. For the purpose of gas marketing, GSPAs have been
executed with more than 50 customers in the fertiliser, power, city gas
distribution, steel, LPG, refinery and petrochemical sectors.
As part of appraisal activities of 4 discoveries in the southern part of
the KG-D6 block, RIL successfully drilled 4 appraisal wells in FY 2009-10.
The commerciality of these discoveries has been submitted.
In the KG-D6 block, further to the submission of the development plan in
2008 for the 9 satellite gas discoveries, an optimised development plan for
prioritising 4 satellite gas discoveries was submitted to the Directorate
General of Hydrocarbons (DGH) in December 2009.
An integrated development plan for all gas discoveries in the block KG-D6
is being conceptualised to maximise capital efficiency and accelerate
monetisation.
Other Domestic Blocks
The Company made four discoveries during the year which are as follows:
* Well R1 in the KG-V-D3 block
* Well AA1, BF1 and AH1 in on-land CB-10 block
The Company has also submitted a proposal for commerciality for the
following:
* Discoveries D28, D37 and D38 in KG-III-5 block
* Discovery D35 in CY-D5 block
* Discoveries D32 and D40 in NEC-25 block
* For discoveries D20, D30, D31, D34 in KG-D6 block
RIL has successfully drilled 4 appraisal wells in the southern and deeper
parts of the NEC-25 block. Results of these are being incorporated to
generate an integrated development plan for all discoveries to maximise
capital efficiency. Appraisal activities are currently underway in KG-D4,
CY-D5, KG-III-5, KG-III-6, KG-V-D3 and GS-01 blocks.
During the FY 2009-10, two deepwater blocks of NELP-V round namely KK-V-D1
and KK-V-D2 were relinquished due to their poor prospectivity. Currently,
RIL's portfolio consists of 29 exploration blocks. Also, RIL holds 30%
interest in PMT fields. Total domestic oil and gas exploration and
production acreage amounts to 290,633 sq. kms.
Panna-Mukta and Tapti Fields
The development of the Panna-K (PK) area has been completed. Current
production from PK wells is around 5,000 Barrels of Oil Per Day (BOPD) and
around 10 Million Metric Standard Cubic Feet Per Day (MMSCFD) gas.
The South West Panna (SWP) development project was approved in February
2008 with projected 2P reserves of around 4.7 Million Barrels of Oil (MMBO)
from about 42 MMBO in-place reserve. New 3D survey indicated a significant
reduction in 2P reserves at 1.76 MMBO from about 11 MMBO in-place. The
Government has approved abandoning the project. Separately, it has approved
installing the SWP jacket and deck with minor modifications at Panna L (PL)
to advance production by around 12 months and improve the final hydrocarbon
recovery from PL.
The development plan of the PL area has been approved by the DGH in June
2009 for completion in 2011. However, with the Government approving the
installation of SWP facilities at PL, the project is now expected to be
completed in 2010. Initial anticipated total production from PL is
approximately 4,000 BOPD from 6 wells.
To arrest the declining gas production in Tapti, 3 infill wells (2 in South
Tapti and 1 in Mid Tapti) have been approved for drilling in Q3/Q4 FY 2009-
10 by the Management Committee. MTA-6 well has been already drilled and is
currently producing around 35-40 MMSCFD gas. STA-7 well has also been
drilled and is currently producing 35 MMSCFD of gas. The STC well is
currently being drilled and post the drilling of this well, gas production
from Tapti is expected to be ramped up from the current level of around 315
MMSCFD to around 330 MMSCFD. A development plan for Mukta (MB area) is
being planned to be submitted to the Government of India for approval after
the results of a pre-drilled well to be drilled in 2010-11 are reviewed.
Panna-Mukta fields produced 1.8 million tonnes of crude oil and 1,965 MMSCM
of natural gas in FY 2009-10, registering a growth of 9% and 18%
respectively over the previous year. Higher volumes in the first half are
due to full production as compared to lower production registered in the
same period last year on account of downtime due to repairs (PPA Hot Oil
Heater).
Tapti fields produced 187,000 tonnes of condensate and 3,102 MMSCM of
natural gas for FY 2009-10, a decrease of 31% and 26% respectively as
compared to the previous year. The decrease in production was due to a
natural decline in the reserves.
CBM Blocks
The development plan for Sohagpur CBM blocks has been approved by the
Government and development activities have been planned to commence in FY
2010-11 by drilling and completion of additional wells. Prolonged
production testing was undertaken in the wells drilled in Sohagpur CBM
blocks with favourable results. The plan for 2010-11 is to monetise the
production capability from the present as well as the proposed wells.
During the year, two CBM blocks BS-1 and BS-2 were relinquished. With this,
RIL currently holds a total of 3 CBM blocks.
International Business
In April 2010, RIL entered into a joint venture with the USA based Atlas
Energy, Inc. (Atlas) under which RIL acquired 40% interest in Atlas' core
Marcellus Shale acreage position. RIL has become a partner in approximately
300,000 net acres of undeveloped leasehold in the core area of the
Marcellus Shale region in southwestern Pennsylvania for an acquisition cost
of $ 339 million and an additional $ 1.36 billion capital costs under a
carry arrangement for 75% of Atlas's capital costs over an anticipated
seven and a half year development programme.
Low operating costs and proximity to USA northeast gas markets combine to
make the Marcellus Shale region one of the most economically attractive,
unconventional natural gas resources play in North America. The acreage
will support the drilling of over 3,000 wells with a resource potential of
approximately 13.3 Trillion Cubic Feet equivalent (TCFe). While Atlas will
serve as the development operator for the joint venture, RIL is expected to
become a development operator in certain regions in the coming years in the
JV.
Atlas will continue acquiring leasehold in the Marcellus Shale region and
RIL will have the option to acquire 40% share in all new acreages. RIL also
obtained the right of first offer with respect to potential future sales by
Atlas of around 280,000 additional Appalachian acres currently controlled
by Atlas (not included in the present joint venture). The RIL-Atlas joint
venture has the potential to become one of the largest prime acreage
holders in the Marcellus Shale region.
This joint venture will materially increase RIL's resource base and provide
an entirely new platform from which to grow its exploration and production
business while simultaneously enhancing its ability to operate
unconventional projects in the future.
Additionally, RIL has farmed out 20% PI in the blocks Borojo North and
Borojo South in Colombia; and 30% PI in block 18 and 25% PI in block 41 in
Oman. The Regional Government of Kurdistan has assigned third party
participating interest of 20% each in blocks Rovi and Sarta to M/s OVM; the
assigned agreement is yet to be signed by RIL. RIL now has 13 blocks in its
international E&P portfolio including 2 in Peru, 3 in Yemen (1 producing
and 2 exploratory), 2 each in Oman, Kurdistan and Colombia, 1 each in East
Timor and Australia; amounting to a total acreage of over 93,500 sq. kms.
Refining and Marketing
A Year of Stabilisation after the Economic Meltdown This was undoubtedly
one of the toughest years for the refining business globally. Refining
margins dropped to their lowest in a decade. Weak demand, high level of
inventories and high crude prices led to weakening of product cracks and
refining margins across regions. The industry also witnessed a sharp
reduction in refining runs and operating rates in addition to prolonged
maintenance shutdowns and permanent closures. It was also a period that
witnessed the highest ever annual decline in oil demand. Crude oil and
product inventories were at the top end of 5 year average.
Improved economic outlook, positive industrial data and higher demand led
to an improvement in refining margins globally in recent months.
There was a disproportionate impact on oil prices on the back of high
demand. There was a quick recovery from the lows of $ 35/bbl in December
2008 to the high of $ 85/ bbl in April 2010; one of the highest rises in
the last decade. The first half of the year saw crude price sharply
increase from around $ 50/bbl to $ 70/bbl. Demand concerns, supply overhang
and the strengthening of the US dollar resulted in subdued oil prices in
the second half which remained range bound between $ 70/bbl and $ 80/bbl.
Crude price closed at $ 80.7/bbl in March 2010, an increase of 66% on a y-
o-y basis.
Average Crude Oil Prices ($/bbl)
FY 2009-10 FY 2008-09
High Low Average High Low Average
WTI 83.5 45.9 70.6 145.3 31.3 86.8
Brent 80.5 46.5 69.6 144.2 33.7 84.5
Dubai 81.3 47.2 69.5 140.8 36.4 82.8
(Source: Platts)
In this context, what set RIL apart was the complexity of its refineries,
highly competitive operating costs and the ability to maintain high
operating rate of over 100%. The Jamnagar refineries are among the largest
in the world, and also the most complex, with an average complexity of over
12.0 on the Nelson Complexity Index. RIL is among the top 10 private
refining companies globally and owns 25% of the world's most complex
refining capacity. RIL has also become the world's largest producer of
ultraclean fuels at a single location. This resulted in RIL delivering the
best refining margin and achieving the highest operating rate of any large
refining system globally.
Global Industry Overview
The world oil demand in 2009 stood at 84.9 MBPD, a decline of 1.28 MBPD
over 2008. As per the IEA, OECD demand in 2009 for oil fell by 4.4% to 45.5
MBPD on a y-o-y basis while the non-OECD demand rose by 2.1% to 39.5 MBPD.
In January 2009, IEA had forecast world oil demand to contract by 0.51 MBPD
to 85.3 MBPD whereas the actual decline was 1.28 MBPD.
OPEC responded and targeted a compliance of 80-85% to the production cut
levels. However, some countries increased their production towards the end
of the year resulting in the compliance level dropping to 55% by the end of
the year.
The world witnessed low levels of industrial production and global trade.
The economic downturn reduced light product demand and resulted in high
light product stocks which have weighed on margins. Strategic stockpiling
of crude by China, as well as companies playing the contango trade resulted
in a recovery in crude demand and prices.
Light-Heavy Differentials
Light-heavy crude and product differentials have been compressed throughout
2009, resulting in much weaker complex refining margins. This has been
driven by lower crude prices, reduced heavy crude production and an
increase in upgrading capacity. Differentials are likely to remain muted in
the medium term due to a lighter crude slate and increased upgrading
capacity.
Arab light-heavy differential averaged around $ 1.72/bbl making fuel oil
crack stronger than the previous year. While the global crude and petroleum
product markets continue to tighten, the recovery is not even. Petroleum
demand is growing stronger in Asia and other emerging markets as compared
to those in the Atlantic basin. Moreover, demand for light, higher quality
sweet crude is recovering faster than the demand for medium, heavy and sour
crude.
Before the recession, when a lack of sophisticated refinery upgrading
capacity boosted the demand for light crude oil, light-heavy crude oil
spreads widened to record levels. But as the economic downturn reduced
demand, OPEC cut back output of medium-sour grades and new refinery
upgrading capacity came on line in 2009. This combination resulted in a
collapse of the spread between light and heavy grades. More recently,
light-heavy spreads have widened as demand and utilisation rates have
started to improve.
There are four main drivers that continue to support a trend for modestly
wider light-heavy spreads in 2010. First, demand for gasoline and gas oil
at the light end of the barrel is recovering. Secondly, high inventory
level and lower demand for fuel oil in the cargo and bunker market is
impacting heavy-sour crude. Third, as OPEC increases output to meet rising
oil demand, supply of heavy-sour crude barrels has increased, putting
downward pressure on prices and fourthly, temporary and permanent shutdowns
at refineries due to both seasonal maintenance and low margins have reduced
demand for heavy-sour crude.
Demand for Petroleum Products
As per IEA estimates in April 2010, the fall in OECD demand was largely
attributed to Europe and North America. Oil demand in OECD Europe fell by
5.2% to 14.5 MBPD whereas demand in North America fell by 3.7% to 23.3 MBPD
in 2009. On the contrary, demand in non-OECD markets remained resilient
with Asia, including China and India growing at 5.1% to 18.5 MBPD. Demand
in other non-OECD markets including Latin America, Middle East and Africa
remained stable to marginally positive by 1.2% at 16.4 MBPD.
As per IEA estimates, world oil demand in 2010 is expected to rise to 86.60
MBPD, an increase of about 1.67 MBPD over 2009. Demand growth in non-OECD
markets is expected to remain robust and is expected to rise by 1.78 MBPD,
an increase of 2% to 41.24 MBPD. Asia, Middle East and South America are
expected to account for over 83% of global demand growth.
Light Distillates
USA's gasoline consumption has declined by around 3% in 2008 and remained
flat during 2009. The decline in US gasoline demand could be due to
increase in passenger fleet's fuel efficiency gain and high prices of
gasoline during 2008. Loss in gasoline demand in the US demand also
reflects the high unemployment rate and consumers' changing driving
pattern. These trends are cyclical in nature and at least part of the
demand loss could return under an improved economic environment wherein USA
gasoline demand could grow 0.5-1.0% a year in 2010 and 2011. Although
advanced bio-fuels using bio-waste or algae as feedstock, CNG vehicles,
hydrogen fuel cells and electric cars all hold interesting promise, none of
these technologies represent a real threat to the gasoline market over the
next decade.
Equally important is the growth in demand for gasoline in the non-OECD
markets, large parts of which are witnessing significant economic
development and increase in personal vehicle growth in Asian, Latin
American and Middle Eastern countries. There is strong correlation between
the non-OECD gasoline demand growth and their GDP. As a result, worldwide
gasoline consumption could increase by an average of 1.6% annually over the
next 2 years.
Naphtha crack continues to dominate the South East Asian markets with
increasing Chinese demand for naphtha crackers. With increased demand and a
relatively low rate of refinery capacity utilisation, naphtha stocks have
started to draw down across all OECD regions and are below the seasonal
averages. As tighter supply and demand balance has driven down inventories,
naphtha cracks have continued to appreciate in recent months.
A surge in petrochemical demand and a steeply backwardated naphtha market
suggest that, in absence of major external shocks, a cyclical recovery for
the broader economy is imminent. Historically, demand for naphtha, a key
input into petrochemical processes, has led demand for other petroleum
products.
Middle Distillates
Diesel margins were impacted by weak demand in 2009 as a result of economic
slowdown, sluggish industrial activity, capacity additions and distillate
stocks. Distillate stocks in North America are at their highest levels in
two decades, while implied OECD distillate demand has contracted 6% in
2009.
The first half of the year showed stocking of middle distillates in
anticipation of an economic recovery. However poor demand prevented draw
downs, resulting in massive inventories and this impacted diesel cracks.
Towards the end of the year, a colder than normal winter triggered
inventory draw down and hence improving the cracks. Diesel demand in Asia
Pacific, particularly India over specification changes from April 2010,
helped push the diesel cracks in the region to double digits.
Diesel will be the growth fuel going forward, since most of the incremental
demand is expected from non-OECD countries such as China and India. The
importance of diesel and gas oil should not be underestimated, both in
terms of refining profitability and the impact on oil prices. While oil
prices are driven by a variety of factors including strategic stockpiles,
OPEC spare capacity and strength of the US dollar, it is clear that diesel
demand is also a major driver of oil prices. Diesel/gas oil demand is
likely to gradually recover in line with the global economy, but given the
existing level of diesel production capacity and new capacity additions
coming online globally, diesel margins could recover slowly.
China and India are the only countries that are set to grow distillation
capacity and increase their global market share. In terms of upgrading
capacity, it is China and India that should see the most significant
increase in global market share.
As per IATA, passenger demand that fell by 2.9% in 2009 is expected to grow
by 5.6% in 2010. Cargo demand, which fell by 11.1% in 2009, is expected to
grow by 12.0% this year. A strong year-end recovery pushed load factors to
record levels when adjusted for seasonality. By January 2010, the
international passenger load factor was 75.9% while cargo utilisation was
at 49.6%. On the other hand, tighter supply and demand conditions are
expected to see yields improve 2.0% for passenger and 3.1% for cargo.
Asia, Middle East and Latin America are driving the recovery followed by
North America and Europe.
Global trade is recovering and with it, so are jet-kero margins which are
now at cycle average levels. Economic activity in emerging economies and
higher global industrial production is providing support to jet-kero
demand.
Industry estimates indicate that industrial production tends to have a
stronger impact on jet-kero than on distillate demand. Once inventories
come down to more normal levels, crack spreads could strengthen rapidly on
the back of a sustained upturn in global manufacturing in 2010 and beyond.
Medium Term Demand Outlook
Strong non-OECD oil demand growth and discipline regarding the closed'
capacities remain critical to the sustained recovery of the refining cycle.
While around 1.67 MBPD of global oil demand growth (largely non- OECD) is
expected in 2010, about 1.0 MBPD of refining capacity is estimated to ramp
up in 2010, almost equally spread over the four quarters. An estimated 1.43
MBPD of refining capacity has been permanently shutdown.
However, some of this capacity could be resumed in the future as many of
the sites have not been dismantled. About 2.5 MBPD of refining capacity
have been cited as potential closure candidates or been put up for sale.
Most of these refineries are located in Europe, and are more likely to be
sold than shut down due to non-commercial considerations.
While refining utilisation could show improvement, more meaningful
improvement in utilisation rates is expected only in 2011, as oil demand
grows further. Despite divergence in oil demand between OECD and non-OECD
regions, it may be early to differentiate refinery outlook between
geographies as the Asian refiners continue to export to the West. Surplus
in new refining capacity will begin to get consumed by oil demand growth
over the next two years.
While the refining sector is moving through a trough, without any of the
closed capacities coming back into operation, strong global oil demand
growth could pull refining into a sustained cyclical recovery from 2011
onwards. Additional capacity closures would auger well for the industry
outlook in 2010 as well.
In the medium term, structural drivers of demand will continue to undergo
change. Gas oil will continue to be the growth engine followed by naphtha
and gasoline. Residual fuel oil is expected to grow the least due to
continued substitution by natural gas in power generation and industrial
applications. By 2015, demand for gas oil is expected to grow by 2.7 MBPD.
The combined demand for naphtha and gasoline is slated to increase by 2.0
MBPD while demand for fuel oil is expected to grow by 0.4 MBPD.
Demand for gasoline, which currently constitutes 25% of the world petroleum
market could see slow growth. The reduction in demand is more likely in USA
due to the impact of regulatory changes that come into force in 2011.
Higher penetration of diesel cars could also impact demand for gasoline in
Europe. Japan could also experience a reduction in gasoline demand as
vehicle efficiency improves. Increase in demand from non-OECD countries
will be underpinned by the rapidly growing vehicle population in China,
India, Brazil and other emerging markets.
Demand for gasoline in USA is expected to shrink over the medium term
primarily because of structural changes affected by the Energy
Independence and Security Act' bill which was introduced in 2007. Another
factor is the announced acceleration of the USA motor fuel economy standard
that increases the Corporate Average Fuel Economy (CAF) from approximately
26.0 Miles Per Gallon (MPG) to 35.5 MPG by 2016.
Clean Fuels
From 2009, the European Union (EU) has, in a phased manner, migrated to 10
Parts Per Million (PPM) sulphur gas oil. In addition, all ships entering EU
ports from 2010 are required to use the fuels with a maximum level of 0.1%
sulphur. This change has allowed modern refineries like RIL to place
products in EU markets that have already implemented the changeover.
China is likely to switch over to lower sulphur transportation fuels in
2010 with mandated 150 PPM in gasoline (earlier limit of 500 PPM) and 150
PPM in diesel (earlier limit of 500 PPM).
In 2010, in a phased manner, India will also migrate towards using
transport fuel that is compatible with Euro IV vehicle emission standards
in 13 major cities, while the rest of the country will migrate to fuels
that match Euro III specifications.
Meanwhile, product specifications have become more stringent in several
regions of the world. In most of the major oil consuming regions like the
EU, Japan and some Asian countries, sulphur is virtually eliminated from
gasoline and diesel has maximum content of 10 PPM. In USA, this is now 15
PPM for transport diesel and 30 PPM for gasoline whereas Canada already has
a 15 PPM limit for both. In USA, most of the off-road diesel will also be
subject to the 15 PPM maximum limit for sulphur in 2010. Also the Emission
Control Areas (ECAs) along the USA and Canadian coastline proposed sulphur
dioxide (SOx) limitation in bunker fuel from current 15,000 PPM to 10,000
PPM starting July 2010. The European limit on sulphur in gas oil has also
been reduced to 1000 PPM from January 2008. This continuing global trend of
tightening of product specifications across regions will present new trade
opportunities for global complex refiners like RIL, with its ultra-clean
product capabilities.
In response to the global recession, China announced a stimulus plan that
included $ 73 billion for refining and petrochemical industries. The funds
were to be used not only to increase the amount of refining capacity but
also to upgrade existing capacity to produce cleaner fuels. The stimulus
funds were intended for projects that were already under construction or at
advanced planning stages. This along with higher refinery run rates in
China has added pressure on refineries in the OECD region thereby
increasing the likelihood of further closures.
Demand for Petroleum Products in India
During the year, domestic demand for petroleum products increased from
124.1 million tonnes to 130.5 million tonnes, reflecting a growth of 5.1%
in FY 2009-10. Indian refining capacity increased to 179.96 million tonnes
from 177.9 million tonnes during the year.
Product-wise Demand and Growth
(In KT) FY 2009-10 FY 2008-09 Growth (%)
Diesel 56,148 51,649 8.7%
Gasoline 12,818 11,258 13.9%
ATF 4,627 4,454 3.9%
LPG 12,728 11,935 6.6%
Kerosene 9,304 9,303 0.0%
Total 130,542 124,171 5.1%
(incl. others)
Gross Refining Margin
Though signs of economic recovery supported crude prices steadily, poor
demand for products kept the cracks lower than FY 2008-09 levels.
Gasoline cracks improved marginally by $ 0.2/bbl to $ 6.7/ bbl in FY 2009-
10, while both jet-kero and gas oil cracks reduced by 67% individually to $
7.9/bbl and $ 7.3/bbl respectively. Naphtha cracks improved from (-)$
5.5/bbl to (-)$ 0.4/bbl while Fuel Oil (FO) cracks became stronger by
$7.8/bbl to close at (-)$ 4.1/bbl.
Naphtha cracks recovered during the year due to increased demand from
crackers in the Asia Pacific region. Demand for gasoline remained steady in
Asia, led by China registering record growth in automobiles. Reduced air
travel and air cargo movements impacted the jet-kero cracks. Gas oil cracks
were under pressure due to supply overhang on account of huge inventories
of middle distillates. The situation improved from December 2009, first on
the back of a spell of cold weather in the Northern Hemisphere and
thereafter with improved demand. This helped drawdown inventories resulting
in ongoing improvement in gas oil cracks. FO cracks remained strong
throughout the year.
Source: Reuters
RIL's Gross Refining Margin (GRM) for the year was at $ 6.6/bbl, a premium
of $ 3.1/bbl over the Singapore complex margin and an ongoing
outperformance of key global benchmarks.
Refinery Capacity and Utilisation Trends
Several refinery projects planned and under construction prior to the world
recession have come online in 2008 and 2009. As per E.M.C., total new
primary distillation capacity commissioned in these two years is over 4
MBPD, with cost of them getting operational in 2009, located in Middle East
and Asia.
With drop in demand and low refinery margins, refiners all over the world
are reducing operating rates. The average capacity utilisation rates in FY
2009-10 for refineries in North America, Europe and Asia were at 81.2%,
75.8% and 82.0% as compared to 83.6%, 82.8% and 83.2% respectively.
Performance Review
The consolidation of Reliance Petroleum Limited's refining assets with
RIL's existing refinery in Jamnagar gives RIL a capacity of 1.24 MBPD,
which is about 1.6% of the world's refining capacity.
What set RIL apart in the context of global refining is the complexity and
the scale of its refineries. The two Jamnagar refineries that RIL operates
are not only among the largest in the world, but also are the most complex,
with an average complexity of more than 12.0 on the Nelson Complexity
Index. Following the merger, RIL now owns 25% of the world's most complex
refining capacity and has become the world's largest producer of ultra-
clean fuels at a single location.
To support India's strong growth with a drop in global demand, RIL
surrendered the Export Orientated Unit (EOU) status for its 660,000 barrels
per day refinery. This has maintained high utilisation.
Since inception a decade ago, RIL has been able to outperform the benchmark
Singapore complex refining margin. Margins have been comparable with other
complex refiners globally and significantly higher than refiners in China,
where margins are regulated by the Government.
There are two ways in which RIL has been able to outperform the benchmark
index. The complexity of the Jamnagar refineries allows the Company to
process heavy and sour crude from all over the globe reducing its feed
costs. RIL also has the ability to place products in the markets of Europe,
Asia and USA to generate the best margins.
RIL processed 60.9 million tonnes of crude and clocked an average
utilisation of 98.3%, significantly higher than the average utilisation
rates for refineries globally. Exports of refined products were at $ 20.9
billion. This accounted for 32.8 million tonnes of product as compared to
22.6 million tonnes in the previous year.
Production of Petroleum Products [in Kilo Tonnes (KT)]
Product FY 2009-10 FY 2008-09
Gases & distillates 51,400 28,000
Fuel oils and solids 9,400 4,450
Total production 60,800 32,450
Technology Development and Innovation
At RIL, a team of more than 100 engineers and scientists is driving various
Research and Technology (R&T) efforts in the refining arena. Jamnagar
refinery has set up a full scale FCC pilot plant for evaluation/selection
of FCC catalysts and additives, along with the state-of-the-art
laboratory/analytical facilities for advanced crude characterization, NMR
/Infrared Spectroscopy, Inductively Coupled Plasma (ICP) analyzer etc.
R&T has been making extensive use of various advanced techniques like
simulation, mathematical modeling, Computational Fluid Dynamics (CFD)
modelling, and many others to support refining operations, improve product
quality, optimise yield of high value products like propylene/LPG/gasoline
from FCC unit and enhance bottom-of-the-barrel processing. Further to
improve refinery margin, R&T has developed technology for processing heavy
and high TAN opportunity crudes.
RIL's SEZ Refinery
RIL commissioned its new refinery in the SEZ at Jamnagar. This refinery has
the capacity to process 580,000 barrels of crude oil per stream day. The
facility also has the capacity to produce 0.9 million tonnes of
polypropylene per annum. The new refinery is the sixth largest in the
world and has a Nelson Complexity Index of 14.0, making amnagar the largest
and most complex refinery site in the world. This refinery has more than 40
process units apart from a large network of offsites, utilities and other
Infrastructure facilities.
The SEZ refinery has a unique design and path breaking configuration with
Clean Fuels' process plant. It is designed with high level of flexibility
to change grades based on economy and to capture margins based on market
dynamics. The new SEZ refinery is the first refinery in India to produce
Euro-IV grades of gasoline and diesel. The refinery has been the first in
India to produce large number of US grade gasoline such as R-BOB, RFG, US
conventional, 95 Oxy-free and Ultra Low Sulphur Diesel (10 PPM Sulphur)
which are being supplied to the US and
European markets.
The new refinery has some of the world's largest units:
* FCC with Rx Cat technology for maximum propylene production
* Coker - with most advance safety features.
* Alkylation plant (based on Sulphuric acid technology)
* Light Cycle Oil (LCO) hydrocracker
The refinery complex is designed for total water conservation. It has its
own desalination plant and carries out complete recycling of effluent with
zero discharge. It has a state-of-the-art centralised control centre,
laboratory, fire station and a large green belt. The green belt has been
developed across the boundary of the refinery and has got 2.3 million trees
and 0.8 million mangroves. It has over 1 million mango trees - probably the
largest mango plantation in Asia.
It has been an exemplary, historical and a flawless start-up of a chain of
plants in a safe, secure and an incident free manner. The activities were
carried out in a seamless manner such that not even a single day was lost
between construction completion and commissioning of the refinery. All
units were commissioned in shortest possible time schedule in spite of the
tight interdependencies between various units.
The refinery attained a significant milestone by fully stabilizing the
operations in a record time. All its process units have successfully
demonstrated their ability to operate smoothly and safely, producing high
quality transportation fuels. All key processing units at the refinery are
operating at their peak design capacity. The refinery has successfully
processed more than 60 types of crude oils, including difficult crude oils
within a few months of its start-up, thus reflecting superior quality of
assets and capabilities.
Viewed in the context of market conditions, this is a significant
achievement and reflects RIL's ability to produce and place high quality,
value-added products in a challenging market environment.
Domestic Petroleum Marketing
Consistent high rate of growth over the past few years resulted in deficit
of key petroleum products in the country. With planned introduction of
Euro-III and Euro-IV grade of transportation fuels, these deficits are
likely to increase going forward. RIL decided to convert its refinery from
EOU to Domestic Tariff Area (DTA) to meet these domestic deficits and
commenced supplies to PSU oil companies from May 2009.
With softening of crude and product prices last year, RIL restarted
domestic petroleum retail operations in southern and western states.
Domestic retail marketing however continues to suffer due to lack of level
playing field to private oil marketing companies. Hence operations in all
geographies and scaling up of sales would only be possible once prices are
market determined or level playing field is brought for private players as
well.
In February 2010, the Kirit Parikh committee made recommendations to the
Government to allow free market pricing for gasoline and diesel, and to
raise administered prices for kerosene and LPG. The report recommends
raising LPG prices by Rs. 100 per cylinder and at least Rs. 6/litre for
kerosene. It is yet to be seen whether any of these suggestions will be put
into practice and what affect that will have on petroleum product demand in
India. Any positive step by the Government along the lines of these
recommendations will give a positive thrust to RIL's retail business.
Aviation Turbine Fuel (ATF) demand has seen some stabilisation with a
growth of 3.9% in FY 2009-10 as against negative growth of 1.9% in FY 2008-
09. RIL is present at 24 airports in India which collectively account for
30% of total ATF demand in the country. RIL is seeking to expand its
network aggressively to have its presence at 30 airports which will cater
to 95% of total civilian air traffic demand.
The demand for petcoke in India is presently about 8 million tonnes p.a.
with Gujarat and Rajasthan accounting for about 75% of the domestic demand.
Current demand in the country exceeds overall production capacity despite
the commissioning of the Coker at the new refinery in Jamnagar. During FY
2009-10, RIL sold a total of 5.34 million tonnes of petcoke. With the
commissioning of new capacities in the cement industry as well as the
setting up of captive power plants by several major industrial units, the
demand for petcoke is set to increase.
The annual sulphur demand of 3.4 million tonnes in India is met from
domestic production as well as imports. RIL Jamnagar production of 0.85
million tonnes in FY 2009-10 was sold primarily in domestic market
supplemented by some exports. The fertilizer sector consumes sulphur in
various forms and the demand for elemental sulphur in this sector,
particularly from Single Super Phosphates (SSP) is likely to increase due
to the encouraging Nutrient Based Subsidy (NBS) policy announced by the
Government that has introduced subsidy for sulphur as a nutrient in
fertilizers to improve the sulphur deficiency in the soil.
GAPCO
RIL consolidated the operations of its GAPCO subsidiaries in East Africa.
GAPCO owns and operates large storage facilities and has a retail
distribution network in several countries including Tanzania, Uganda and
Kenya. It owns and operates large coastal storage terminals in Dar-e-
Salaam (Tanzania), Mombasa (Kenya) and an inland terminal at Kampala
(Uganda) besides having well located depots in East Africa. It also has a
well located network of retail outlets in Tanzania, Uganda and Rwanda.
Special initiatives to improve the supply infrastructure and sales volumes
have led to superior productivity and higher throughputs. The Mombasa
terminal has been augmented to receive Premium Motor Spirit (PMS), thus
enabling GAPCO Kenya to make a combined diesel and petrol offering to the
retail and independent sectors in Kenya.
GAPCO is also emerging as a key supplier to neighbouring countries and has
signed a term contract for supplies to Zambia from its Dar-e-Salaam
terminal in Tanzania.
Petrochemicals
Overview
As the world economy recovers, the petrochemical industry finds itself
passing through a period of transformation.
Chemical companies benefited mainly due to demand growth in India and
China. Government stimulus policy and closures of non-competitive plants
worldwide have added to the revival of the industry in Asia. The recession
caused slowdown or a decline in many markets globally, although to a
lesser extent in Asian economies. This resulted in unprecedented levels of
fluctuation in commodity prices which impacted chemical sales worldwide.
Economic Recovery Coupled with Operational Excellence
* Strong Earnings
Demand remained inherently weak but for a few bright spots in the Far East.
China's stimulus buoyed consumer demand for both durables and non-durables,
whereas a rebound in Europe and USA lacked in comparison.
Global Polyolefins+PVC Demand
(in MMT) 2007 2008 2009
PP 44.5 43.3 44.4
LDPE 18.7 17.7 17.8
LLDPE 19.2 18.3 18.5
HDPE 31.0 29.5 30.5
PVC 35.3 32.4 31.6
Ethylene 114.3 107.9 110.4
Propylene 72.9 70.3 71.2
Source : CMAI
2009 World's Polyolefin's Demand Reached Near 2007 Level A rally in Asian
prices during mid 2009 attracted large volumes of imports into the region,
which arrived just as demand was beginning to stall. Towards the end of
2009 the industry witnessed substantially improved profits from a year ago
due to improved demand, and cost cutting across the sector.
Product Price Trend : 2009-10
Product Region Peak Low Average
($/MT)
Crude ($/bbl) Dubai 81 47 70
Naphtha MOPS 768 415 623
PP SEA 1345 1015 1173
HDPE SEA 1385 1035 1202
LLDPE SEA 1450 1045 1268
PVC SEA 1050 665 893
Source : Platts
2009 was a year of recovery as prices moved up from the cyclical trough of
2008. New capacity growth in Asia and the Middle East, and a sluggish pace
of economic recovery could impact operating rates in the near future.
Traditionally new capacity creates intense competitive pressure resulting
in lower margins and closure of highcost assets. During the course of last
year however, short term supply outages played a meaningful role in helping
the margin environment. Price trends in 2010 are likely to be driven by
growth in processing capacity, ongoing economic recovery and new supply
initiatives.
Ethylene Scenario
Ethylene is the principal petrochemical building block and a major
feedstock for polymers. It is a raw material used in the manufacture of
polymers, like Polyethylene (PE), polyester, Polyvinyl Chloride (PVC) and
polystyrene, as well as organic chemicals. These products are used in a
variety of industrial markets, such as packaging, transportation,
electronics, textile, construction, etc.
World Ethylene Supply/Demand : 2009
Production by Feedstock Demand by End-Use
Production : 111 MMT Demand : 110 MMT
Naphtha 49% PE 61%
Ethane 33% Ethylene Oxide 14%
Propane 8% EDC 11%
Butane 5% EBZ 6%
Others 5% Others 8%
Source : CMAI
Ethylene from ethane is more prevalent in regions with associated natural
gas, like North America and the Middle East while Naphtha is the major feed
for ethylene production in Europe and Asia.
North American crackers have high flexibility and choose the most economic
feed from the various options of Gas oil, Naphtha, Butane, Propane and
Ethane. During 2009, Ethane remained the favoured feed and accounted for
60% of ethylene production in USA.
In the Middle East, light hydrocarbons like Ethane account for 86% of the
raw materials for ethylene production.
Petrochemicals produced by Middle East oil-producing countries are mainly
bulk ethylene-based products, and their PE and Mono Ethylene Glycol (MEG)
products are very competitive. Middle East producers dominate in ethylene
derivatives global trade owing to their competitive cost position.
Oversupply scenario in 2010 will lead to decline in global Operating Rate
80%.
The world's total ethylene consumption is expected to reach 115 Million
Tonnes (MMT) by the end of 2010 from the current level of 110 MMT. Given
new capacity additions that are expected in the next six to twelve months,
operating rates are likely to be negatively impacted and steadily improve
thereafter.
The global recession has severely impacted demand growth. This is in
conjunction with significant capacity addition that would have caused a
trough' in the petrochemical margin cycle even in the absence of the
recession.
Ethylene Capacity Addition by Regions : 2010-14
North East Asia 35%
Middle East 34%
South East Asia 19%
Indian Subcontinent 14%
CIS & Baltic States 2%
West Europe 1%
Source : CMAI
Planned olefin capacity additions in the Middle East and the Asian
continent during 2009-2011 would substantially change the supply scenario.
The Middle East could account for 40% of global ethylene capacity with Asia
contributing the rest. On the other hand, global ethylene demand will vary
significantly depending on end market and geographic region.
Beyond 2010, this will lead to an oversupply situation that will accelerate
industry restructuring with extensive shutdown and capacity rationalisation
imminent in the western world and other high-cost naphtha-based operations.
Indian Chemical Industry
While most large economies have floundered since the financial crisis,
China and India have gone from strength to strength. They remain two of the
fast growing, most high-profile economies in the world, creating enormous
opportunity.
In 2009, total ethylene capacity in India was estimated at 3 MMT.
Approximately 58% of this is naphtha-based and the rest is based on
Ethane/Propane/Butane. All the ethylene derivatives (PE, PVC, MEG) are
currently in short supply in the country and hence, are being imported.
Derivative supply pressure from the Middle East and the start-up of new
steam crackers in India, coupled with the downturn in the global
petrochemical industry are expected to keep the ethylene margins very
competitive in India over the next five years.
Polymers (PP, PE, PVC)
Global commodity polymer consumption in 2009 was estimated at 176 MMT
almost 8% lower on a y-o-y basis. Polypropylene (PP) is the single largest
polymer segment (25% of major thermoplastic demand), followed by PVC with
roughly 18% of the total plastics market. Combined PE types represent
almost 40% of total consumption. In general, polyolefin (PE and PP) account
for over 60% of total commodity plastics consumption.
World Major Thermoplastics Demand : 2009
World Demand : 176 MMT
PP 25%
PVC 18%
HDPE 17%
LLDPE 11%
LDPE 10%
PET 8%
PS 5%
ABS 4%
PC 2%
Source : CMAI
These materials are used in a wide variety of applications like
agriculture, food packaging, automotive components, appliances etc.
Polyolefins continue to compete with traditional materials like paper,
metal, glass and wood, and even act as substitutes for more expensive
engineering plastics.
The majority of polyolefin capacity additions between 2009 and 2014 will be
in the Middle East, China and several other Asian countries like Singapore,
Thailand and India. China alone will account for 44% of the polypropylene
and 34% of all polyethylene capacity additions globally. Polyolefin
industry plays an important role in economic development, and is one of the
fastest growing sectors within the Indian economy.
While per capita polyethylene consumption in China is approaching the
global average of 30 kg, a large percentage remains export driven rather
than consumed domestically, and understates China's future growth
potential. India's rapid economic growth over last few years has spurred
demand for a wide range of polyolefins. India has a low per capita
polyolefin consumption of 6 kg thus providing ample growth opportunities.
RIL's Production
RIL maintained its leadership in the domestic market with a production
share of 77%. Production during the year ramped up registering a growth of
33% on a y-o-y basis.
Polymer Production in KT
Product FY 2009-10 FY 2008-09
PP 2,399 1,466
PE 1,068 996
PVC 624 614
Total 4,091 3,076
Polypropylene (PP) Business
In 2009, global production capacity for PP was 55.5 MMT and demand 44.4
MMT. Bulk of demand was accounted for by raffia, films & sheet and
injection moulded articles.
After decline in 2008, PP demand grew by 1.4% in 2009. Despite the
consumption growth, the operating rate declined to 81% in 2009 from 85% in
2008 due to higher capacity addition growth.
Inventory correction towards the end of 2008 resulted in vigorous buying
and buildup in 2009. Domestic demand remained firm throughout the year with
strong cumulative growth across the quarters.
RIL's SEZ PP facility was successfully commissioned in 2009. This was
followed by high operating performance, well above the rated capacity. The
additional production was placed in domestic and export markets. The Middle
East has added 2 MMT of PP last year and will add another 1 MMT in 2010.
The new capacities are expected to put pressure on the operating rates
globally.
With a high degree of integration with its refinery, RIL is well placed on
the feedstock front as compared to other PP producers. The Company's focus
on specialty grades, higher realisation, and capturing value through chain
optimisation would help its PP business retain global leadership position.
After seeing a flat growth in 2008, the domestic PP demand witnessed strong
growth at 21% with RIL witnessing 29% growth in volumes. Almost all the end
sectors like packaging, durables, automotive and industrial applications
helped the industry achieve such growth numbers.
Key end-use segments in packaging are bulk packaging for cement, food
grains and chemical packaging. The bulk packaging segment got a fillip for
food grain packaging. Flexible packaging growth is mainly driven by BOPP
for packaging of snack food and garments, while rigid packaging sector
growth depends on a wide variety of end users from processed food industry,
FMCG products, agriculture and fisheries.
The automotive sector is also a large PP consumer.
Additionally, major applications of PP in the durable sector are in washing
machines, refrigerators, mixer grinders, air conditioners etc. With thrust
on infrastructure development and organised retail, growth in demand for PP
in the Indian market is expected to continue. PP nonwoven is also a
promising area of growth.
With the commissioning of the Jamnagar SEZ PP plants, RIL is the 5th
largest producer globally and is well positioned to take advantage of the
fast growing domestic market.
Being consistent with its overall growth strategy, RIL has moved rapidly to
seize most of the existing opportunities. This has been done by identifying
and developing new applications, import substitution through new grades and
replacement of conventional materials to increase consumption in the
domestic market. Although mainly domestic oriented, RIL also exported
products to Asia.
PP: New Grades/Modifications
RIL has a wide Repol grade basket catering to almost all key sectors. With
a view to capitalise on new opportunities, RIL introduced four new grades
during the year in Homopolymer and Impact Copolymer segments. Repol Impact
Copolymer grades have been specified by major customers for automobile
(Bumper/Trims Battery etc.) and appliance sectors. Repol Random Copolymers
have been specified by FMCG companies for packaging of malted/beverage
products.
Raffia and BOPP customers are able to run their lines at globally
competitive speeds with Repol grades. These are significant product
attributes offered by very few global suppliers of PP. Apart from the
traditional segments, RIL has also tapped the non-conventional segments
like geosynthetics and medical applications.
* At Hazira, Polypropylene Plant Line B had been successfully modified to
produce the ICP grades.
* RIL has introduced a new grade Repol SS80N at Nagothane for cast film
application. Repol SS80N is recommended for use as a core layer in
coextruded cast film in both metallisable and non-metallisable
applications.
* High crystalline Impact Copolymer grade Repol B300MN was introduced at
Hazira for automotive compounding to curtail imports.
Polyethylene (PE) Business
Polyethylene continues to be the largest consumed commodity plastic. Global
capacity was 84 MMT and consumption was 66 MMT in 2009. Operating rates
declined to 80% in 2009 as against 83% in 2008 due to supply pressure from
new start-ups in the Middle East.
Asia continues to lead in demand growth as well as on capacity creation.
Nearly 20 MMT of new PE capacity over next five years (2010-14) is expected
across the globe. The Middle East is adding bulk of the new capacity
followed by addition in North East and South East Asia. 4.4 MMT of capacity
has been added in 2009 and an additional 7.7 MMT of capacity is planned for
2010.
PE is widely used in packaging applications in the form of films and sheets
followed by injection moulding, blow moulding and pipes. Bulk of LDPE and
LLDPE is used for film applications whereas HDPE is used in blow moulded
containers and pipes.
In India, HDPE/LLDPE industry registered y-o-y growth of 7%. There was a
71% rise in imports of HDPE/LLDPE. RIL registered a growth of 9%. LDPE
demand grew by 14%. LDPE imports rose by 34%.
PE: New Grades/Modifications
* RIL received certification for PE: 100 Orange Compound for Gas Pipes from
M/s Exova, Sweden. Earlier, RIL got certifications from Bodycote for PE 80
Yellow, PE 80 Black and PE 100 Black made from PE Pipe Grades Relene
45GP004 and Relene 46GP003 respectively. The certification allows use of
RIL grades for production of gas pipes for both domestic and industrial gas
distribution. RIL is the only Indian manufacturer and the 4th in the world
among 440 worldwide PE producers to have the coveted certificates for
coloured PE Pipe Compounds.
* RIL has introduced general purpose blow moulding grade Relene B56003 from
the Gandhar plant to leverage its technological virtues in terms of bimodal
molecular weight distribution, better melt strength & melt swell, ESCR,
weld-line strength and zero
contamination.
* RIL has modified the Resin specification/additive recipe for Relene
LL24FA030 for medium voltage crosslinked cable insulation application and
Relene 53EA010 for tarpaulins and wrapping fabrics.
* RIL had successfully sifted and commissioned EVA lines at the Gandhar
site. Relene EVA1802 has been introduced.
Polyvinyl Chloride (PVC) Business
In 2009, demand for PVC globally dropped by 0.9% to 32.4 MMT. Operating
rate fell to 72% due to diminished demand. The demand reduction is
associated with global recession, and represents the second y-o-y reduction
since 2007. Global per capita demand is expected to decline for the second
time in a row from 5.33 kg to 4.77 kg.
Global PVC capacity stood at 45 MMT, and is expected to reach 49 MMT over
the next 5 years. Around 1.5 MMT of capacity was added in 2009. Global
operating rate is likely to dip further next year as new capacities come on
stream.
PVC consumption in India was 1.8 MMT in FY 2009-10, which represents a
growth of 27% over the previous year. Pipes and fittings continued to be
the major market accounting for 74% of domestic PVC demand. PVC is a
major product for the infrastructure sector.
Irrigation pipes, drinking water supply, various sewerage applications,
profiles for building industry, wire and cable, etc require PVC. This has
resulted in significant demand growth for PVC in the infrastructure sector.
With increasing emphasis and higher budgetary outlays for infrastructure
and housing as well as health and hygiene, PVC consumption is expected to
grow in the coming years.
PVC: New Grades/Modifications
* Reon PVC K6701 has achieved Long Term Hydrostatic Strength (LTHS) testing
for 10,000 hours and has been given a permanent listing by NSF
International USA and Plastic Pipe Products, USA.
* Modified grade of Reon K6701 has been established for low gel/fisheye
applications like shrink film/cling and lamination films.
* Solar panel frames designed and developed in PVC are being used as a cost
effective replacement for aluminum frames.
* High impact, weather resistant PVC profile compound has been developed
for use in windmill blades.
Chemicals Business
Reliance's crackers at Hazira, Nagothane, Dahej and Vadodara are among the
world's most integrated complexes with downstream chemical facilities.
These facilities can use a variety of feedstock, including naphtha, natural
gas liquids and other petroleum feedstock. Reliance is a leading producer
of Linear Alkyl Benzene (LAB) and Butadiene in India. RIL also produces
basic aromatic building blocks of the highest purity, conforming to the
product grades. These include benzene, toluene, mixed-xylene and
orthoxylene. The diverse end-use sectors of these products range from
nylon, unsaturated polyester resins, polyurethanes, oil field chemicals to
food acids.
Benzene
The global Benzene production and demand for FY 2009-10 was about 37 MMT as
against a capacity of 58 MMT resulting in an average operating rate of 64%.
This was mainly due to lower operating rates of naphtha crackers
(accounting for 38% of Benzene production) and of refineries (accounting
for 40% of production).
Ethyl Benzene remains the major end-use of Benzene, followed by Cumene,
Cyclohexane and Nitrobenzene, respectively. Each of the Benzene derivatives
has its own value chain like Ethyl Benzene-Styrene-Polystyrene, Cumene-
Phenol-BPA-Polycarbonate, and Cyclohexane- Caprolactam-Nylon etc.
For the year, RIL produced 673 KT of Benzene, a growth of 1.9% on a y-o-y
basis. Despite being a large exporter, RIL has also retained a domestic
market share of 47%. The Indian market is dominated by Cyclohexane-
Caprolactam, LAB, Nitrobenzene and Chlorobenzene sectors.
During FY 2009-10, RIL exported 404 KT of Benzene to deficit areas like the
US, Europe, the Middle East and Asia. RIL had improved its netback by
enhancing exports to the Middle East in 2009.
Polybutadiene Rubber (PBR)
Polybutadiene Rubber is the second largest synthetic rubber with an annual
global consumption of 2.2 MMT. PBR is used widely in tyres, tread rubber,
conveyor belts, footwear, sports goods, automotive products etc. Global
demand for synthetic rubber in the coming years is expected to grow at 4%
annually, mainly due to faster recovery in the economy and rapid growth of
the automobile sector in India and China. India's current consumption of
PBR is 131 KT and is likely to reach 148 KT by 2013 on the back of capacity
enhancement plans announced. RIL is the only manufacturer of PBR in India
with production of 73 KT for the year.
Butadiene
Butadiene global demand is around 9.4 MMT. Approximately 49% of the total
demand is from the Asian region, followed by 26% from USA and 21% from
Europe. Indian demand is comparatively low at 108 KTA. Overall demand from
downstream industries (which includes products like Styrene Butadiene
Rubber, Polybutadiene Rubber, Acrylonitrile Butadiene Styrene and Styrene
Butadiene latex and Adiponitrile) was growing at 3.4% till October 2008.
Due to the financial crisis, the auto market suffered a major collapse
leading to sharp drop in all elastomer prices. FY 2009-10 has been a year
of economic recovery with no appreciable growth in the demand for
elastomers. During FY 2009-10, butadiene production increased by 10% to 178
KT as against FY 2008-09.
Chlor Alkali
Our chlor alkali capacity consists of 168 KTA of caustic soda and 141 KTA
of chlorine capacity. While the chlorine is captively consumed in the
manufacturing of ethylene di-chloride, caustic soda which is an alkali of
choice in a wide range of applications is sold by the Company. The global
consumption of caustic soda was 64 MMT during FY 2009-10, a y-o-y decline
of 5%. The operating rates averaged at 77%.
China increased its chlor alkali capacity to 27 MMT during 2009. With these
capacity additions, nearly 55% of the global chlor alkali capacity has now
shifted to Asia. The developed world (USA, Europe and Japan) accounts for
35% of the global installed capacity of 79 MMT.
Main consuming sectors of caustic soda, viz., alumina, pulp, textiles and
chemicals have declined by nearly 15-20% in the developed world during the
first three quarters of the financial year. Domestic capacity has
increased to 3.2 MMT by March 2010. Consumption of caustic soda in India
grew 13% to 2.6 MMT over FY 2008-09. Demand from alumina, textiles, fibre
and water treatment sectors grew robustly over FY 2008-09. However, a
weaker global market of chlorine derivatives and a weak monsoon affected
the demand for chlorine derivatives in India.
During FY 2009-10, RIL installed new membranes in its chlor alkali plant,
and also successfully commissioned an exclusive pipeline to transfer and
load caustic soda into ocean going vessels from the connecting jetty. This
has reduced the logistical cost of exports as well as the coastal movement
of caustic soda for RIL. The Company maintained its market share of 6% in
the domestic market.
Linear Alkyl Benzene (LAB)
LAB is a key detergent intermediate and is manufactured from Normal
Paraffin (NP) and Benzene. LAB is used to manufacture Linear Alkyl Benzene
Sulfonic Acid (LABSA), a main active element which provides cleaning power
in synthetic detergents.
In India, most detergents incorporate LAB as the surfactant intermediate of
choice. Per capita consumption of synthetic detergent penetration is less
than 10% of the Western world indicating large growth potential for LAB in
the long term. Growth in the use of synthetic detergents in India is
expected to follow the GDP growth rate in the coming years. LAB growth is
expected to follow suit.
Global LAB consumption continues to grow steadily with growth coming mainly
from developing regions, which augurs well for the future potential of
RIL's LAB plant. The present global LAB consumption level is 3 MMT as
against an installed capacity of 3.45 MMT p.a.
India is a net exporter of LAB with production outstripping demand by a
wide margin. RIL has the world's 5th largest LAB capacity (182 KT), with a
24% domestic market share.
RIL's production increased to 163 KT from 151 KT in FY 2008-09. FY 2009-10
was a challenging year for RIL's LAB business. In the beginning of the
year, prices were under tremendous pressure as a result of lower demand due
to global recession, as well as dumping by Middle East producers to
liquidate their inventories. Demand is improving and both LAB units at
Patalganga and Vadodara have improved operating rates.
Research and Development (R&D), Technology Development and Innovation
RIL has achieved market leadership through innovation in products,
processes and cost competitiveness. Reliance Polymers is working on
developing strategic technology for high performance Polyolefin products
such as BOPP and Impact Polypropylene through innovation in catalyst
systems.
The Intellectual Property Right (IPR) has been filed in the area of
Polypropylene in addition to the assignment of 3 Patent Cooperation Treaty
(PCT). 2 Indian trade mark applications for Catalyst System and Process for
Polyolefins have also been filed. RIL has been awarded the Arch of
Excellence and the Rashtriya Ratan Award during the year for achieving
technological excellence.
Specific areas in which the research and development is being carried out
by the Company are as follows:
* Polyolefin Catalyst Precursor development
* Advanced Injection Moulding Homo PP grade development
* BOPP and ICP grades of Polypropylene development
* HDPE grades development using in-house developed Mg-Ti catalyst system
* Bimodal HDPE pipe grade development-suitable for high pressure gas
distribution application. This is also certified by an independent
international certifying agency.
* Catalyst ligands development for production of Disentangled Ultra-High
Molecular Weigh Polyethylene (D-UHMWPE)
* High Melt Strength (HMS) grades development of Polypropylene for
enhancing the application spectrum up to the engineering plastic
performance
* Development of understanding of grade design of BOPP grades of
Polypropylene for higher line speeds
* Development of cost effective material alternatives for solar modules
* Development of dual purpose additives for Polypropylene
* Development of beta-nucleated high performance RCP pipe grade PP
Technology Absorption, Adoption and Innovation:
Efforts, in brief, made towards technology absorption, adoption and
innovation are as follows:
* Innovation in Catalyst system for production of polypropylene and
polyethylene grades
* Innovation in Catalyst and Catalyst Precursor for Polymer technology
* Innovation in Plastic Processing technology to obtain high performance
products
Polyester Fibre and Filament
In line with GDP growth following a period of slowdown in 2008, global
textile consumption has steadily improved. In 2009, textile demand showed
signs of gathering momentum and registered a marginal growth of 0.2%,
against a drop of 6% in 2008. The primary consuming economy, USA too
gradually recovered and the decline in imports of textile and apparel
products eased from double digit declines to single digit in the last three
months of 2009; but cumulative volumes still are below last year figures by
13%. Polyester demand for textile applications during 2009 increased 3.4%
to 32.4 MMT; staple fibre demand increased by 2.5% to 12.4 MMT while
filament demand increased by 4% to 20.0 MMT. The textile demand for the
next five years is expected to grow at more than 3% CAGR, with polyester
growing at a faster rate than any other fibre.
Polyester is expected to grow at 4% to garner 50% of the total fibre demand
from the current 46% during the same period. The growth is expected to be
skewed towards filament yarn, with growth of 5 MMT to 25 MMT, while staple
fibre is expected to grow by 3 MMT to 16 MMT.
Though the global economy has started to show signs of improvement,
corporate restructuring activities continue with several capacities in high
cost centres of USA and EU being either shut down or shifted to low cost
regions, especially Asia. Further more, during the next 5 years, there
would be polyester capacity addition of 11 MMT with the majority of them in
the Asian region with China accounting for the largest pie.
Polyester staple fibre markets would witness demand growth faster than
capacity addition, thus favouring healthy operating rates. However, surplus
polyester filament yarn capacity addition that happened in the last few
years would keep operating rates subdued. From next year, polyester
filament yarn operating rates are expected to be steady.
The year started on a soft note and as news of economic recovery emerged,
prices of feedstock gradually improved but witnessed volatility in the
latter part of the year. During the year, Paraxylene (PX) prices marked a
high of $ 1200/ MT and a low of $ 845/MT, PTA fluctuated between $ 970/ MT
and $ 780/MT while MEG witnessed major volatility between $ 1040/MT and $
525/MT. Though the polyester demand improved during the year, buying by the
downstream textile industry remained need based and cautiously placed to
eliminate stock losses. Consequently, polyester prices could not match up
with the spike in feedstock prices and thus had to absorb price hikes
during volatile periods. This impacted standalone polyester manufacturers
and RIL being an integrated polyester producer was able to protect chain
margins despite the chain volatility.
Polyethylene Terephthalate (PET)
PET resin caters to a non-textile application i.e. packaging. This is the
fastest growing polyester application, growing at a rate of 7% CAGR for the
last 5 years. PET markets too had borne the brunt of the global economic
slump and market growth slowed to 3.4% in 2009. PET resin market is
expected to grow at 7.5% during the next year on stronger economic growth.
The industry has experienced a major consolidation drive especially in
developed countries. Apart from this structural change, light-weighting
continues to beprevalent, mostly in the developed world.
As a consequence of the dip in feedstock costs during the economic
slowdown, PET resin prices too remained lower during the earlier part of
the year, but gradually increased thereafter and ranged between $ 985/MT
to $ 1300/MT during the year. However, due to surplus capacity and
volatility in intermediate margins, PET margins
remained under pressure.
Fibre Intermediates
Due to excessive capacity addition, market players expected an overflowing
supply of PX, PTA and MEG while on the contrary; markets remained in tight
supply for most part of the year.
Many PX plants planned across the globe either got delayed or faced
scarcity of feedstock preventing on production and timely supply. The tight
supply in the market caused prices to firm and averaged above $ 1000/ MT
during the year. As reported by PCI, a leading polyester chain market
consultant, markets are expected to witness further capacity addition of 3
MMT during 2010, much in excess of demand growth. However, over the coming
years, capacity growth is expected to slow down and support the improvement
of operating rates.
PTA operations too during the year were hampered due to short supply of
feedstock PX, consequently tightening the market of immediate requirements.
As a result of the strong demand and tight supply in the markets, prices
remained strong. Average prices during the year were $ 886/MT and margins
over PX remained firm. In the coming year, capacity addition of 2 MMT is
expected to come online while demand growth is expected to be at 2.3 MMT.
MEG operations at the major producing hub Middle East remained interrupted
by unexpected shutdowns. Markets as a result witnessed significant and
uneven price movements. Prices ranged between $ 525/MT and $ 1,040/ MT,
firming significantly in the latter part of the year. Estimates suggest
that capacity growth in the next few years would slow down, thus easing the
excess supply scenario.
Domestic Scenario
2009 witnessed the Indian textile industry recovering from the slowdown
with strong domestic consumption and renewed export demand.
Earlier, the textile industry, which is a major contributor to export
earnings, had encountered global economic slowdown shocks. Exports
registered month-on-month negative growth for most part of 2009. However,
strong domestic markets and timely government intervention helped the
Indian textile industry to overcome the slowdown effect.
Proactively right from the end of 2008, the Government announced a series
of stimulus packages to support the export community. The Foreign Trade
Policy 2009-2014 also featured some relief measures including addition of
26 new markets in the Focus Market Scheme (FMS) in Latin America and Asia-
Oceania for promotion of exports. This is expected to further boost textile
exports from India. Technical textiles and synthetic textile fabrics were
also included in various incentive schemes. Recently, the Government has
further extended the interest subvention of 2% till March 2011 to help
exporters reduce interest costs.
Textile exports started recovering from the end of 2009 onwards. As per
CRISIL, the recovery was relatively faster in man-made fibre based textiles
as its export dependency is around 30% compared to 42% in the case of the
cotton textile industry. Polyester, being the largest man-made fibre based
textile industry benefited the maximum in this surge in exports.
The demand for polyester products grew by around 15% in FY 2009-10. The
growth momentum is led by PET with 26%, followed by Polyester Filament Yarn
(PFY) at 14% and Polyester Staple Fibre (PSF) at 12%.
PSF demand also got a boost from the firmness in cotton fibre prices.
Cotton prices have continued to rise from October 2009 onwards and
presently. Cotton fibre prices are up 33% y-o-y. This led to fibre
substitution in favour of polyester and hence, supported demand.
Operations at some major textile production centres were affected during
the year due to power supply disruptions. This led to lower operating rates
or partial shutdown of some textile mills.
In order to achieve better cost economics, many polyester texturisers
implemented backward integration to produce polyester yarn during the year
and commissioned new polymerisation plants. This is expected to continue in
the coming years as well.
Among other developments, the Government of India partially rolled back
stimulus packages, by raising the excise duty on polyester from 4% to 8% in
July 2009 and increased it by another 2% on polyester and feedstock alike
in the Union Budget 2010-11, thus bringing them at a uniform rate of 10%.
However, the downstream textile industry continues to enjoy the option of
not being in the excise net.
The investments in the downstream textile industry like new textile parks
are further expected to boost the demand. The much awaited new fibre
policy is expected to provide a level playing field to man-made fibres
vis-a-vis natural fibres. Moreover, the grant of Rs. 200 crore to establish
a zero liquid discharge system at Tirupur in Tamil Nadu is an effort by the
Government to sustain the textile hubs. These measures are expected to
increase textile investments in the days to come.
As per CRISIL estimates, the domestic textile market (readymade garments
and home textiles) is expected to grow at a CAGR of 6-7% between FY 2008-09
and FY 2013-14. Rising income levels and increased growth in rural spending
on textile products will translate into growth in domestic demand for
fabric.
The main demand drivers for textile growth are as follows:
1. Rising overall personal income levels
2. Projected higher spending on textiles in rural areas
3. Increased non-apparel applications like home furnishing and technical
textiles
One notable feature is that in terms of per capita fibre consumption, India
still lags behind, which in a way, indicates the huge potential which can
be tapped. Global all fibre per capita final consumer demand in 2010 is at
10.4 kg, while that of India is at 5 kg. In comparison, per capita
consumption in China is at 16, North America is 31 kg and West Europe is at
22 kg.
PFY is expected to lead the domestic demand growth in the overall textile
chain. Current domestic demand is around 1.9 MMT (up 14% over FY 2008-09),
of which RIL's share is around 32%. Current PSF domestic demand is around
0.8 MMT (up 12% over FY 2008-09), of which RIL's share is around 65%.
PET, which is one of the fastest growing segments in polyester, currently
has a demand of around 0.34 MMT in India, with RIL catering to
approximately half of the demand. The current per capita PET consumption in
India is very low at approximately 0.3 kg compared to the world average of
over 2 kg. There is immense scope to enhance its usage in providing
efficient and economic packaging solutions.
In case of the domestic feedstock scenario, the polyester industry faced
shortage of PTA in 2009, mainly on account of delay of new capacity and
the increased demand due to backward integration by texturisers. The
current PTA demand is 3.3 MMT.
MEG market remained in short supply and the deficit was met by imports.
Current domestic demand is around 1.4 MMT.
PX domestic consumption in FY 2009-10 is around 2.0 MMT.
RIL's Performance
RIL continues to hold top rankings in the polyester and feedstock arenas.
Total polyester capacity is around 2.4 MMT including PET.
The Company is the world's largest producer of polyester staple fibre and
filament yarn with a capacity of around 2 MMT. Besides, in case of
feedstock, it ranks 4th in PX, 7th in PTA and 7th in MEG, as per PCI.
Production volumes of polyester increased by 9% over FY 2008-09 to 1,666
KT. PFY production increased by 12% while PSF and PET increased by 7% and
5% respectively.
RIL's overall domestic market share in polyester is around 43% including
PET. RIL has a deep focus on speciality products and currently, its
differentiated product sales in PFY are at 41% and in PSF at 58%.
Polyester Production in KT
Product FY 2009-10 FY 2008-09
PFY 724 646
PSF 597 559
PET 345 329
Total 1,666 1,534
In case of fibre intermediates, total production (PX, PTA and MEG) is at
4,619 KT in FY 2009-10, up 1.0% over FY 2008-09. PTA production is up by
3.6% while MEG production is down by 4.2% to optimise ethylene oxide
production.
Fibre Intermediates Production in KT
Product FY 2009-10 FY 2008-09
PX 1,875 1,879
PTA 2,049 1,978
MEG 695 726
Total 4,619 4,583
RIL is constantly improving operations and innovating new products for
better margins. During the year, RIL optimised operations and costs at
various plants either through substitution of products or improvement of
existing processes. These steps resulted in reduction in costs.
During the year, RIL introduced high margin flame retardant fibres to
improve performance of textiles in a safe and secure environment. RIL also
launched stretch textured yarns and anti-microbial yarns with superior
functionality. Under sleep products category, after successfully
establishing its national presence in pillows, RIL launched quilts this
year. Within a year of its launch, the product has been well accepted by
the markets.
RIL strives to have a better tomorrow with a cleaner and greener
environment. In this regard, RIL launched speciality fibres that uses post-
consumer bottles and industrial waste for production of pre-coloured
products. This segment predominantly caters to production of fibres for
speciality defence uniforms. Apart from consuming used bottles, these
fibres are also pre-coloured and do not need water for dyeing.
This year RIL also launched Recrobulk fibres from recycled
material. This is a speciality fibre used for manufacturing
of winter wear. RIL is also planning to launch more such
environmental friendly products.
Recron Malaysia
Reliance acquired assets of Hualon Malaysia in 2008. These assets underwent
substantial improvement in order to integrate them into Reliance operations
and product quality.
Most of Recron's manufacturing facilities operated at close to 100%
capacity utilisation despite the global crisis. Several new products,
processes and applications were introduced to garner new markets and
downstream opportunities. Focus was also to ensure higher efficiency in
inventory management and raw material procurement.
Reliance Solar
The solar energy initiative of Reliance aims to bring solar energy systems
and solutions primarily to remote and rural areas in India and bring about
a transformation in the quality of life. As part of this initiative,
Reliance Solar is developing and offering a range of products, systems and
solutions from solar lanterns, home lighting systems, street lighting
systems, water purification systems, brefrigeration systems to solar air
conditioners based on solar energy. These products, systems and solutions
are part of the downstream component of the solar value chain.
Reliance Solar group has built large scale MWp level solar PV plant and is
under process of building more such plants thus providing energy security
to energy dependent domains and businesses and also bridging energy gap in
energy deficient areas. It has also installed and commissioned South-Asia's
largest rooftop plant of 1 MW at Thyagaraj Stadium, Delhi in just 3
months. Reliance Solar also received the IEC - TUV certification for higher
modules in May 2009.
Opportunities
RIL is a unique combination of a play on global economic recovery through
its refining and petrochemical businesses, and participation in India's
robust domestic consumption story through its oil and gas and retail
businesses. RIL has a proven track record of best-in-class project
execution, creating world class assets, achieving economies of scale, use
of contemporary technology and above all, financial discipline.
Natural gas production from the KG-D6 block has stabilised at around 60
MMSCMD. Earnings from this block will continue to be a significant
contributor to RIL's overall cash flows over the next few years. RIL's next
leg of growth would be led by aggressive exploration, development and
appraisal of its existing discoveries and possible inorganic acquisitions.
Today, RIL has significant growth opportunity in the domestic E&P sector,
considering its asset portfolio and proven execution capabilities. Natural
gas continues to be a key component of India's energy basket and meets 9%
of its total energy requirement. Natural gas has primarily been used as a
hydrocarbon feedstock in the fertiliser, petrochemicals and power sectors.
However, the scope of natural gas usage in the country has been increasing
over the last decade. Gas is now progressively being used as a fuel in
transportation and at homes.
While demand for petroleum products is expected to improve marginally over
the next two years to around 87 MBPD, capacity addition is expected to grow
faster than demand growth. New capacity additions have already pressurised
the utilisation rates over the last two years, leading to shut-downs to
adjust the demand-supply balance. This adjustment would lead to average
world refining operating rates to move up marginally to 86% from the
current 85% by 2012 (Source: Oil and Gas Journal). This can lead to
normalisation of GRMs to a certain extent, and a possible increase in
Singapore regional benchmarks.
RIL's exposure to the refining business has increased following the
commissioning of the SEZ refinery. Expansion in GRMs will have a meaningful
impact on the profitability of the company. RIL, with its high complex
refining capacity of 1.24 MBPD at Jamnagar, is poised to benefit from the
global economic turnaround. The Company's superior operational efficiency
vis-a-vis international peer group augurs well with global economic
recovery.
In the petrochemicals business, RIL's operating levels have remained
consistently near 100% throughout the entire down cycle over the last 4-6
quarters, led by strong domestic demand. Domestic demand has seen a strong
resurgent growth across the industry, led by increasing investments in
infrastructure. Additionally, product cracks for RIL have been strong, led
by integrated nature of operations. The overall Indian polymer industry has
grown at 1.5-2 times the GDP growth rate. Among its peers, RIL would
continue to earn superior returns on account of its fully-integrated
operations and robust domestic demand. RIL is expected to be a dominant
player in the domestic petrochemical industry.
Challenges, Risks and Concerns
Last year, one of the biggest challenges for the Company was to complete
its two large projects on time and within budget. The upstream project KG-
D6 had a very safe and reliable start-up and the gas production ramp-up has
been progressing well. The new refinery at Jamnagar has also been flawless
start-up and achieved more than 100% butilisation rate in a record time.
KG-D6 is the world's largest gas producing deepwater facility. It is also
located in the East coast of India, a region known for strong monsoons and
tough water conditions. The challenge for the Company is to ensure optimum
level of production, a safe and steady ramp up towards achieving plateau
level of production and 365 days of uninterrupted operations; while
mandating the highest levels of heath, safety and utmost care for the
benvironment.
The refining and marketing industry is highly competitive with respect to
both feedstock supply and refined product markets. RIL competes
internationally for supplies of crude oil and other feedstock and for
outlets for its refined products. Competitors that have their own
production or extensive retail outlets are at times able to offset losses
from refining operations with profits from producing or retailing
operations, and may be better positioned to withstand periods of depressed
refining margins or feedstock shortages. However, RIL can compete
effectively with its low cost operations, high complexity and ability to
produce and place high quality products in world markets. Prices and
margins of petroleum products are likely to be volatile due to demand
concerns in the OECD markets and new supply.
Over the next 2-3 years, a large number of new low-cost ethylene capacities
are expected to be added in the Middle East region, which may pressurise
cracker margins. Asia is expected to add some incremental capacity over the
same period, further pressurising cracker margins. These capacity additions
will be partially offset by the closure of inefficient capacities in
developed regions, especially North America and Europe. Operating rates are
critical for profitability in the petrochemicals business. On the back of
strong domestic market growth, RIL has been able to maintain very high
operating rates through the cycle. The purchased feedstock and energy
costs account for a substantial portion of the Company's total production
cost and operating expenses. Volatility in these costs could have an impact
on the profitability of the petrochemicals business.
The Company competes worldwide on the basis of integrated operations,
quality, price, technology and customer service. RIL's large exports, which
constitute 55% of its turnover, give rise to market risk exposure related
to change in foreign exchange rates, interest rates, commodity prices and
other market factors.
Internal Controls
RIL has a comprehensive system of internal controls to safeguard the
Company's assets against loss from unauthorised use and ensure proper
authorisation of financial transactions. The Company has an exhaustive
budgetary control system to monitor all expenditures against approved
budgets on an ongoing basis.
The Company's accounting process is based on uniform accounting guideline
that sets out accounting policies and significant processes and deadlines
on a company wide basis. There are binding directives for internal
reconciliations and other accounting operations. The Company maintains a
system of internal controls designed to provide a high degree of assurance
regarding the effectiveness and efficiency of operations, the reliability
of financial controls, and compliance with laws and regulations.
RIL has well established policy towards maintaining the highest standards
of health, safety and environmental norms while maintaining operational
integrity. This policy is strictly adhered to all RIL manufacturing
facilities. The Company has an internal audit function, which is empowered
to examine the adequacy and compliance with policies, plans and statutory
requirements. It is also responsible for assessing and improving the
effectiveness of risk management, control and governance process. The
management duly considers and takes appropriate action on the
recommendations made by the statutory auditors, internal auditors and the
independent Audit Committee of the Board of Directors.
Major Subsidiaries
Reliance Retail Limited
In the last year, Reliance Retail Limited (RRL) continued to fulfill its
commitment of enriching Indian consumer's shopping experience and providing
quality merchandise at an attractive value proposition. More than 3 years
into operation, RRL has now expanded its presence in more than 85 cities
across 14 states in India. RRL forged ahead with its expansion plans and
rolled out stores across the country. RRL's footprint now spans a network
of more than 1,000 stores.
RRL operates several value' & specialty' formats. The value' formats
that RRL operates are: Reliance Fresh', a neighborhood concept, Reliance
Mart', an all under one roof supermarket concept & Reliance Super', a
mini-mart concept. The value' formats offer a wide range and assortment
of products required for daily household needs. The specialty' formats
are: Reliance Digital', a consumer durables & information technology
concept, Reliance Trends', an apparel & accessories concept, Reliance
Wellness', a health, wellness & beauty concept, iStore by Reliance
Digital', an exclusive Apple products concept, Reliance Footprint', a
footwear concept, Reliance Jewels', a jewellery concept, Reliance
TimeOut', a books, music & entertainment concept, Reliance AutoZone', an
automotive products & services concept and Reliance Living', a homeware,
furniture, modular kitchens, furnishings concept.
RRL rapidly expanded the stores network it operates through strategic
partnerships with world-class companies such as Marks & Spencer and Pearl
Europe. RRL also entered into an exclusive distribution arrangement with
Asics Corporation Japan to market Asics brands of shoes and accessories in
India. RRL has recently opened its flagship store under its franchise
agreement with Hamleys and plans to expand the store network in the coming
year. RRL has also expanded its presence in business-tobusiness office
supplies through its joint venture with Office Depot.
Through Reliance One', RRL's loyalty membership program, RRL enjoys the
patronage of over 5.5 million customers.
In the coming year, RRL will continue on its mission to delight the
customers every visit. RRL will continue to provide unprecedented value to
customers across all its formats and stores.
Haryana Special Economic Zone (SEZ)
With a vision to develop industrial infrastructure and support economic
growth, RIL embarked on a mega project with the support of the Government
of Haryana and Haryana State Industrial Investment Development Corporation
(HSIIDC) and established Reliance Haryana SEZ Limited. This is a joint
venture between Reliance Venture Limited (a subsidiary of RIL) and HSIIDC
Limited (a Government of Haryana company), to establish a large scale fully
integrated economic enclave as a SEZ.
To achieve its vision, the Company purchased about 9,600 acres of land and
has also obtained various approvals from both the Government of Haryana as
well as the Government of India to establish the SEZ enclaves.
The Company is seeking approval from the Government of Haryana to undertake
flexible development of the project as an integrated industrial enclave
with all the requisite facilities such as logistics hubs and other
infrastructure ensuring sustainable development of medium and large scale
industries and service activities with sufficient provision for future
growth and expansion.
The Company may bring in a strategic investor to help maximise the
potential of the investments made so far and make it a truly global
investment destination.
Research & Development, Technology Development And Innovation
Research & Development (R&D), Technology Development and Innovation
continues to be an integral part of RIL's agenda for achieving growth,
business profitability, sustainability and rural transformation. The
Reliance Technology Group (RTG), created by consolidating various research
and technology functions is helping create enhanced value delivery by
leveraging all the skills and competencies, and creating new opportunities
at the interfaces. RTG continues to get external perspectives from members
of the Reliance Innovation Council (RIC).
Key objectives of RTG are as follows:
* Develop fit-for-purpose and sustainable technology and its application.
* Provide effective project support and assurance to manufacturing plants
and businesses.
* Provide technical assurance to projects including technology selection
and absorption.
* Proactively identify and support technical opportunities to add value
across RIL's businesses.
* Develop technology strategies suited to create business growth and offset
threats.
* Balance technology sourcing by a flexible strategy of smart buying, fast
customisation and flagship development of key technologies.
* Exploit synergies cutting across technologies/disciplines.
* Improve technical productivity on a continuous basis.
* Develop/recruit staff with skills and motivation to meet current and
future business needs.
* Create a fit-for-purpose process centric organisation.
* Ensure long term technical health of RIL businesses.
* Manage technology and Intellectual Property (IP) assets for the Company.
RTG continues to support improvements in manufacturing operations, e.g.,
through the implementation of advanced process control.
In refining R&D, the major technology focus is on maximising desired
product yields from Fluidised Catalytic Cracker (FCC), enhancing recovery
of higher value products from distilling units, and on increasing
efficiency and reliability of refinery processes by using advanced tools,
e.g., computational fluid dynamics. Efforts are also under way to develop
new processes to widen operating window for crude processing.
In the petrochemicals area, RTG is providing technology support to olefin
crackers, polymers, fibre intermediates, Linear Alkyl Benzene (LAB) and
polyester. In the polymers area, RTG is working on strategic technology for
high performance polyolefin products such as Biaxially Oriented
Polypropylene (BOPP) and Impact Polypropylene through innovation in
catalyst systems.
RTG is also working on the development/commercialisation of new products
e.g., oxygen barrier polyester resin for packaging, material for
fruits/ vegetables preservation and low cost Antimicrobial Polyester. In
addition, RTG is working on emerging technologies such as fuel cells,
carbon fibres, bio-fuels and gasification of various feedstocks.
Some major ongoing/completed projects include:
* Maximising light olefins yields.
* Expansion of testing and pilot plant facilities in refining.
* Technology development to process cheaper and heavier crudes.
* Computational Fluid Dynamics (CFD) studies for trouble shooting.
* Molecular modeling in blending and feed characterisation.
* Value addition by upgrading of coker streams.
* Process development for co-monomers from ethylene.
* Material development for enhancing shelf life of fruits and vegetables.
* Development of new grades of elastomers.
* New Purified Terephthalic Acid (PTA) technology development.
* Catalyst recovery from Crude Terephthalic Acid (CTA)
residues.
* Development of a regenerable adsorbent for removal of olefins in Benzene,
Toluene and Xylene (BTX) streams.
* Development of a dehydrogenation catalyst for LAB.
* Development of a polyolefin catalyst precursor.
* Development of catalyst ligands for the production of disentangled ultra-
high molecular weight polyethylene.
* Development of High Melt Strength (HMS) grades of polypropylene.
* Development of low pill polyester in the continuous reactor.
* Development of full dull dope dyed polyester.
* Development of new catalyst systems for bottle-grade resin productivity
enhancement.
* Finishes for specialty products in polyester.
RIL continues to participate in various collaborative projects in India and
overseas.
The RTG has joined the New Millennium Indian Technology Leadership
Initiative (NMITLI) project on indigenous fuel cell technology development
as the sole industry partner. The work will be a collaborative effort with
Council of Scientific and Industrial Research (CSIR) laboratories including
National Chemical Laboratory (NCL), Pune, to demonstrate Proton Exchange
Membranes (PEM) fuel cell technology over the next two years.
Another initiative with NMITLI is in the area of conversion of bioglycerol
into value added chemicals.
Creation and protection of IP is becoming a core activity at RTG. Systems
and processes have been build to effectively protect the know-how,
innovations, and knowledge generated by the staff.
As per RTG's mission, the Company will continue to create business value
and competitive advantage for RIL by applying (buying, customising,
developing) the right technology, at the right cost, and at the right time
to meet the current and future needs of RIL through the following
initiatives:
* An integrated, central technology organisation to support RIL businesses
and manufacturing facilities.
* A sustained high performance work culture which fosters innovation,
entrepreneurship, inclusiveness, teamwork and continuous improvement.
* A process centric organisation that maximises synergies across all
interfaces, leverages core competencies of various disciplines to maximise
value from current assets and creates new growth opportunities, while
allowing people to develop and contribute to their full capabilities.
Innovation
In a challenging year of demand destruction and the global financial
crisis, 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 occasion and help RIL emerge stronger.
The focus of this initiative was on extreme efficiency, value maximisation
to serve the new market conditions and safety and reliability of assets.
The employees responded overwhelmingly by pouring in a record number of
ideas over a specially built business excellence tool which operated on the
Information Technology (IT) backbone.
This initiative not only helped in surmounting the challenges with a will
to win, but also identified serial ideators, who were recognised and
rewarded by the leadership of RIL. The Leading Expert Access Programme
(LEAP) which gives access to global thought leaders continued to inspire
the people of RIL. Nobel laureates, industry captains and thought leaders
enthralled and enlightened communities with their experiences of life and
work.
The year culminated with the meeting of the RIC, which was organised in
Jamnagar in January 2010. 'Value creation through innovation' was the theme
for this meeting. The meeting witnessed Nobel laureates such as Professors
Lehn and Grubbs, global strategy leaders such as Professor CK Prahalad and
leading thinkers such as Professor Whitesides and Dr. Haseltine work along
with the Chairman Dr. Mashelkar, Mr. Mukesh D. Ambani and the leadership of
RIL in defining the RIL of the future and lay out roadmaps based on the
unique positioning of the Company.
The Reliance Innovation Leadership Centre (RILC) continues to serve the RIC
and builds on the innovation agenda drawn up to make RIL one of the most
innovative companies in the world. It has lined up some exciting and highly
innovative initiatives that will take innovation at RIL to the next level.
RIL continues its quest to make innovation a way of life and ensure that
the next generation of growth is innovation led.
Clean Development Mechanism
The Company has built in-house capacity to develop Clean Development
Mechanism (CDM) projects and obtain the registration and issuance of the
same in the form of Certified Emission Reductions (CERs) from the United
Nations Framework Convention on Climate Change (UNFCCC). RIL's CDM projects
registered with the UNFCCC have been audited during FY10 by their
accredited auditors and UNFCCC issued 99,457 CERs to RIL. Until March 2010,
212,425 CERs were issued to the Company on a cumulative basis.
Additionally, six of RIL's CDM projects have been approved by the board of
Chicago Climate Exchange (CCX) in FY10, which has generated 950,000
Voluntary Emission Reduction (VER) credits.
Further, in FY10, RIL has taken up development of three renewable energy
CDM projects including harnessing solar and biomass energy and country-
wide Jatropha plantation.
Human Resources Development
RIL's talent base, as on March 31, 2010, stands at 23,365 with the average
employee age of 41 years. The aim is to lower the average employee age and
invigorate the youth to take the organisation forward over the next few
decades as indeed the current leaders have done over the last 30 years by
starting early in their 20s and 30s. The entrepreneurial spirit has been a
hallmark of the organisation. The Company continues to nurture this as it
grows exponentially.
Business Transformation-HR Transformation:
To quote RIL CMD, Shri Mukesh D. Ambani, 'The Business Transformation
initiative that we have embarked upon is singularly going to be the most
significant project that Reliance would have ever undertaken in its
organisational history'. While this strategy cuts across Manufacturing,
Businesses and Services, most of the transformation agenda is around and
strongly interlinked with people practices and processes. The mandate is to
build a world class HR organisation with benchmark processes and systems
around Performance Management, Rewards and Recognition, Competency and
Capability Building, Succession Planning, etc. amongst others.
As an ongoing exercise, RIL has continued to look at, identify, create and
execute seamlessly, initiatives which enhance productivity and efficiency.
Towards this end, the Company has put into place a central shared services
organisation for HR, wherein Global Best Practices for HR Shared Services
are integrated. The objective of this centre, apart from leveraging on the
economies of scale, is to provide a world class experience to our people on
all the matters that they have to deal with on a day-to-day basis including
all transactions.
RIL continues to invest in people through various Learning & Development
initiatives, which has seen 3,092,403 man hours of Learning & Development
activities at manufacturing divisions. E-learning as a medium is much
sought after by the employees for upgrading skills and competencies since
people can learn when needed at their own convenience and from where they
may be. The Company has continued to invest in this area through newer and
state-of-the-art modules both in the Technical and Management domains.
In FY 2009-10, 105 Six Sigma projects were completed leading to financial
benefits (annualised) amounting to Rs. 55 crore. Presently, 439 Black Belts
and Green Belts are associated in Six Sigma projects at different sites.
For the success of the projects, 1,896 team members and supervisory
personnel are providing active support.
To further embed Six Sigma and develop a cadre of Reliance Certified Black
Belts (RCBB) across locations, RCBB development plan was launched at each
site. Reliance Certified Black Belt will have the knowledge and skills to
do complex projects and also guide, coach and train others in executing
Green Belt (GB) projects.
Awards and Recognition
Some of the major awards and recognitions conferred on RIL are as follows:
Leadership
In 2009, Shri Mukesh D. Ambani, Chairman and Managing Director of RIL, was
ranked the 5th best performing CEO in the world by the Harvard Business
Review in its ranking of the top 50 global CEOs of all publicly traded
companies that have made it into the Standard & Poor's Global 1200 or BRIC
40 lists since 1997 and also companies from Brazil, Russia, India, and
China.
Shri Mukesh D. Ambani was awarded the Dean's Medal by University of
Pennsylvania's Eduardo Glandt, dean of the School of Engineering and
Applied Science in 2010. The recognition was for his leadership in the
application of engineering and technology.
Shri Mukesh D. Ambani was awarded the Indian Merchant's Chamber (IMC)
Juran Quality Medal for 2009', in 2010.
Shri Hardev Singh Kohli received the Gem of India Award' for his
contributions to usher in excellence in the Indian industry at the All
India Achievers' Conference (AIAC) in 2009.
Corporate Ranking and Ratings
* RIL continues to be featured, for the fifth consecutive year, in the
Fortune Global 500 list of the 'World's Largest Corporations'; ranking for
2009 is as follows:
Ranked 264th in terms of sales
Ranked 117th in terms of profits
* RIL is ranked 75th in 2009, in the FT Global 500 (up from previous year's
80th rank).
* RIL has been ranked as the 5th sustainable value creator globally by the
Boston Consulting Group (BCG) in their report on the Top 25 sustainable
value creators that have been most successful at attaining superior value
creation over a longer period of time.
* RIL, ranked at the 11th position, was the only Indian company in the 25 A
T Kearney Global Champions for 2009.
* RIL is ranked as 15th most innovative company in the world in 2009,
climbing 4 positions from 2008, in a survey conducted by Business Week and
the BCG.
This survey of around 3,000 global CEOs is done to rate the world's top 50
most innovative companies
* The Allahabad Manufacturing Division bagged the Golden Jubilee Award from
the Eastern UP Chamber of Commerce and Industry for extraordinary
accomplishments in 2009.
* The Exploration and Production (E&P) division won the Best Project of
the Year 2009' award for KG-D6 Block Deepwater (D1/D3) Gas Fields
Development Project Kakinada, East coast of India from the Project
Management Institute, India in 2009.
Health, Safety & Environment
* The Allahabad Manufacturing Division received the BSC-5 star
certification for safety and occupational health from the British Safety
Council in 2009.
* The E&P division received the Oil Industry Safety Award from the Ministry
of Petroleum & Natural Gas for Best Overall Safety Performance amongst
Offshore Drilling Rigs' (private and joint venture) in
2009.
* The Dahej Manufacturing Division received the 10th Annual Greentech
Environment Excellence Award 2009' in the Petrochemicals sector from the
Greentech Foundation in 2009.
* The Dahej Manufacturing Division won the Greentech Safety Award 2009-
Gold' in the Petrochemicals sector from the Greentech Foundation in 2009.
* The Dahej Manufacturing Division received Runners up Award in the Gujarat
State Safety Award-2007 (Petroleum Gas Generation & Distribution,
Petrochemicals) category. It was also selected for the lowest Disabling
Injury Index (DII) in 2009.
* The Hazira Manufacturing Division has won the Golden Peacock Award for
Occupational Health & Safety' in 2009.
* The Hazira Manufacturing Division won the annual FICCI Award in the
category of environmental sustainability of businesses in 2009.
* The Jamnagar Manufacturing Division (DTA Refinery) received the
International Safety Award-2008' from the British Safety Council in 2009.
* The Jamnagar Manufacturing Division received the Golden Peacock
Environment Management Award 2009' in the Petrochemicals sector in 2009.
* The Jamnagar Manufacturing Division received the Greentech Environment
Excellence Platinum Award 2009' in the Petroleum Refinery sector in 2009.
* The Naroda Manufacturing Division received a certificate of appreciation
in consideration of safety performance for the year 2008 from the Gujarat
Safety Council and the Director of Industrial Safety and Health in 2009.
* The Patalganga Manufacturing Division was bestowed with the Dahanukar
trophy for the Best Occupational Health Services in an Industry' by the
Indian Association of Occupational Health (IAOH) in 2009.
* The Tapti Offshore Platform received the Best Safety Performance Award
for an Offshore Platform' at the annual Oil Industry Safety Awards in 2009.
Training and Development
* The Dahej Manufacturing Division received the American Society for
Training & Development (ASTD) BEST Award-2008' in 2009.
* The Hazira Manufacturing Division bagged the ASTD Excellence in Practice
Award' for Trucker Safety Training and ASTD Excellence in Practice'
Citation for Total Quality Management (TQM) and Six Sigma training case
studies In 2009.
* The Nagothane Manufacturing Division has been conferred with the ASTD
Excellence in Practice' Citation in 2009.
Quality
* 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 the fourth QC project was awarded distinguished' category
certification by NCQC's Bangalore chapter in 2009.
* The Barabanki Manufacturing Division's two QC projects received
excellent' and distinguished' category certifications from the Quality
Circle National Award in 2009.
* The Hazira Manufacturing Division won the global award for Best TQM
Success Story' at the International Forum of AOTS in 2009.
* The Hazira Manufacturing Division won the Qualtech 2009 Excellence Award
for its Business Transformation in 2009.
* The Hazira Manufacturing Division received the PM SHRAM AWARD' in
recognition of its Kaizen case studies in 2009.
* At both the National and Regional Quality Control Circle Events', The
Hazira Manufacturing Division's Quality Circles have won recognition, in
2009, for showcasing its total employee involvement initiatives in
shopfloor improvement case studies.
Energy and Water Conservation/Efficiency
* The Dahej Manufacturing Division received the India Chemical Council
Award for Excellence in Energy Conservation & Management 2008-09' in 2009.
* The Dahej Manufacturing Division was certified as an Excellent Water
Efficient Unit' under the National Award for Excellence in Water
Management-2009 by the Confederation of Indian Industries (CII) in 2009.
* The Dahej Manufacturing Division received the Excellence in Energy
Conservation & Management Award - 2008' from the Indian Chemical Council
(ICC) in 2009.
* The Hazira Manufacturing Division won the Excellence in Energy
Management 2009' Award at the CII National Energy Summit in 2009 for the
9th time out of the 10 editions till date and for the 6th consecutive time,
thus qualifying for the ENCON Champion of the Year'.
* The Jamnagar Manufacturing Division received the Oil & Gas Conservation
Fortnight (OGCF) Award - 2009 from the Centre for High Technology, Ministry
vof Petroleum & Natural Gas, Government of India (GOI) in 2009.
* The Jamnagar Manufacturing Division received the Jawaharlal Nehru
Centenary Award for Energy Performance of Refineries' for the year 2008-09
from the Centre for High Technology, Ministry of Petroleum & Natural Gas,
GOI in 2009.
* The Jamnagar Manufacturing Division received the National Award for
Excellence in Energy Management-2009' from CII in 2009. Technology,
Patents, R&D and Innovation
* The Jamnagar Manufacturing Division received the National Award for the
Most Innovative Project in Energy Conservation -2009' from CII in 2009.
* The RTG at Hazira Manufacturing Division received the Arch of Excellence
for Innovation' and the Rashtriya Ratan Award' in 2009.
* The RTG at Vadodra Manufacturing Division received the Bhageerat Award'
in 2009.
Corporate Social Responsibility (CSR)
* Gold Medal from the Indian Red Cross Society in recognition of the
Protsaham Scheme'- for educational support to poor meritorious students in
2009.
* Certificate of appreciation from the District Collector, East Godavari
district in 2009 for CSR initiatives in this region.
* The Hazira Manufacturing Division won the Arch of Excellence for CSR
Outrech Programmes' at the AIAC Business Excellence Awards in 2009.
RIL nurtures relationships across the entire range of stakeholders, which
helps the Company understand pertinent issues, develop businesses, enhance
shareholder value and manage risks better. It is the relationship, trust
and commitment to stakeholder interest and the warm reciprocal of the same
by the stakeholders that make RIL robust, resilient and sustainable. RIL
actively integrates stakeholder goals with its own and then pursues them
collaboratively.
RIL plays a cleaning role in the energy sector in its various manufacturing
divisions dealing with petroleum products, petrochemicals and textiles.
RIL's commitment towards excellence in Health, Safety and Environment
Performance is one of the Company's core values. The Company is unwavering
in its policy of safety of persons overrides all production targets',
which drives all employees to continuously break new grounds in safety
management for the benefit of the people, property, environment and the
communities in which RIL operates. This is the Company's responsibility as
a global corporate citizen. The pursuit to achieve world class operational
excellence' has been the key focus of the Company.
Health, Safety & Environment
Health
While the main focus of occupational health services is on medical
surveillance of employees, they also carry out extensive health education
and awareness sessions, health exhibitions and diagnostic camps. All
employees, irrespective of the nature of their work or location, undergo
regular periodic medical examinations. The medical check up facility is
also extended to the Contractors' employees engaged at the manufacturing
sites.
The medical check up facility has been extended to all employees at various
office locations. State-of-the-art Occupational Health Centres (OHCs) have
been established at major office locations. The frequency and the extent
of the medical check up is decided as per the employees' age and not their
grade or designation.
All employees are subjected to health risk assessments and appropriate
measures are taken to prevent medical complications. Employees are also
supported during hospitalisation by regular liaison and cashless
hospitalisation facilities across the country. The Company is moving
towards the concept of wellness as it recognises that a healthy worker is a
productive worker. Health promotional activities are also extended to
employees' family members staying at Company townships.
RIL has provided full-fledged modern hospitals at its other major townships
in Jamnagar, Vadodara, Nagothane and Patalganga, which provide curative
health services to employees and their family members. During the current
year, new facilities were added to the hospitals including a state-of-the-
art, special Burns Treatment unit, at the Dhirubhai Ambani hospital in
Jamnagar.
A new, fully equipped OHC with round-the-clock paramedics and a fully
equipped emergency treatment room was established in the infrastructure
area of the OT, Gadimoga. Further, another first aid centre with a general
shift paramedic was established at Vakalapudi shore base.
Offshore medical evacuation and support medical care and treatment are
given to the family members of the employees. Periodic potable water
sampling analysis and health audits of canteens and guest houses are also
conducted.
The employees of the Company have been traditionally participating in blood
donation campaigns which have been an annual feature at all sites and major
office complexes. The blood thus collected, is donated to local hospitals
and blood banks.
RIL's Change Agents for Safety, Health & workplace Environment (CASHe)
programme - an initiative to promote healthy workplaces and reduce health
and safety risks, has been instrumental in creating a culture of
implementing health, safety and environment projects on a priority basis.
This programme has also helped the Company to improve its performance on
the occupational health and safety front.
Safety
RIL's HSE Management System (HSE-MS) was formulated in FY10 to underpin all
the processes and resources and optimally manage safety. The RIL HSE-MS
provides a formal, organised process whereby the RIL Management and
employees plan, perform, review and improve the safety performance. The
HSE-MS is institutionalised through the Management to establish Company-
wide safety management objectives, guiding principles and processes.
The system encompasses all levels of activities and documentation related
to safety management throughout RIL. The RIL safety management system
establishes a Report on Corporate Social Responsibility hierarchy of
components to facilitate the orderly development and implementation of
safety management throughout the Company.
The Policy, Principles and safety management Standards are used
consistently in implementing safety management across the Company. These
are underpinned with a system of proactive hazard identification, risk
management, controls, training and continuous improvement with auditing as
the most important process.
The Health and Safety Principles' were put forward to articulate the
stakeholders' expectations from the employees of the Company. The Health
and Safety Principles provide a guiding light for the development and
continuous improvement of the company's HSE-MS. The Principles document
the basis on which all employees are provided direction when confronted
with conflicting situations related to Health and Safety issues. The
Principles support the health and safety policy and set out those areas of
activity which are essential to achieving the aspirations of the policy.
These Health and Safety Principles thus are the fundamental beliefs that
guide all actions, from development of safety direction to the performance
of work. The Company's Values and these Health and Safety Principles
underpin both the corporate culture and cooperation across the Company.
Aligning all the Company's processes and activities with these Values is a
key element in achieving success. In this respect, the Health and Safety
Principles are central to what RIL does.
To administer the safety efforts consistently throughout the organisation,
RIL has created an Integrated Safety Organisation (ISO) across sites. This
organisation consists of the Central HSE Committee, headed by the site head
and its supporting subcommittees and the overlapping line organisation.
RIL continues to pursue world class operational excellence on Process
Safety Management (PSM). As part of its strategic partnership with DuPont
Safety Resources, RIL has built capabilities within the Company and
developed in-house experts in various facets of PSM.
Process Hazard Analysis (PHA) at various plants has been initiated to
address and reduce process safety risks. RIL has developed and implemented
various metrics to monitor the process safety performance of various sites.
The Company has allied with various industry bodies such as the Centre for
Chemical Process Safety and the American Institute of Chemical Engineers
of USA which gives it access to industry best practices and learning from
industry incidents. In fact, the fourteen elements of the PSM model are
embedded in the RIL HSE-MS as operational elements.
In FY 2009-10, the KG-D6 block was commissioned without any incidents. As
part of the safety awareness programme, various safety training programmes
were conducted. Further, few proactive initiatives such as the Hazard
Observation Programme were also undertaken through which employees
demonstrated their safety awareness by carrying out safety observations.
The opportunities identified for improvement are being tabulated and
closely monitored by the HSE department till they are addressed and closed
by the action agencies. Monthly safety awards have been introduced for
employees and contractors for following best safe practices. Mock drills
are being conducted to train the employees and contractors on emergency
preparedness to meet any unlikely emergencies. Beside this, presently, the
plant is working on the implementation of the Integrated Management System
(IMS), comprising of ISO 9001, ISO 14001 and OHSAS 18001.
Environment
In its pursuit of excellence towards sustainable development and to go
beyond compliance, RIL continued to integrate its ISO:14001 EMS, ISO:9000
QMS and ISO:18001 OSHA management systems. All environmental initiatives
were addressed to the Company's long term objective of becoming water
positive, carbon neutral and conduct the maximum possible recycling and
reuse of wastes. A management framework with defined structures, roles and
responsibilities, group standards, audits and training has further been
strengthened.
Continuing the journey towards world class environmental performance
through systems and robust processes, in FY 2009-10, nine new RIL group
standards, covering various environmental aspects were developed and
issued. This was further supported by the development and release of
second party audit protocols for the standards. RIL strongly believes that
these actions will be the change agent for reducing the Company's
environmental risks.
Environment impact assessment and risk analysis have been performed for
all new and major expansion projects. In this context, this year the
Company has also developed and 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 continues to give top priority to maintenance and performance
improvements of all pollution abatement facilities like effluent treatment
plants, inside battery limits area, air emission control and waste
disposal facilities at its manufacturing divisions. Rainwater harvesting
and treated effluent recycling is being carried out at most manufacturing
divisions to reduce water dependence on other natural sources. To further
improve the environmental foot print a significant step, RIL has changed
over to use of cleaner fuel at Patalganga, Jamnagar manufacturing
divisions. This has resulted in considerable reduction of suspended
particulate matter and sulphur dioxide emissions in the air.
Training, awareness and learning have been always at the forefront of RIL's
journey to become world class in environmental performance. To meet this
objective, RIL focused on 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. All
manufacturing divisions celebrated the World Environment Day, Earth Day,
Water Day, Ozone Day, etc and created environmental awareness among
employees and surrounding communities and schools.
In these improvement efforts, audits play an important role. Trained and
qualified internal auditors perform internal environmental audits of the
environment management system at regular intervals. RIL also offered its
sites to third party environment audits such as audit by Gujarat Pollution
Control Board (GPCB) recognised auditors in the state of Gujarat; ISO-
14001:2004 audits by accreditation agencies, National Safety Council
environment audit at Hazira Manufacturing Division and Five Star
environment audit by British Safety Council, UK at the Jamnagar, Dahej and
Nagpur manufacturing divisions.
RIL has inculcated a habit to be in harmony with nature and in this
context, afforestation, maintenance of green belts, gardens, vermi-compost
of waste and its use as manure, reuse of treated water in horticulture
activities are routine.
RIL continues to give top priority to all environmental regulatory
compliances at KG-D6 block and tried for optimum water consumption and
reuse of treated waste water.
RIL is committed to creating greenery in and around the KG-D6 project site
by developing a green belt and promoting lush green surroundings at the OT,
Gadimoga to be in harmony with nature.
The green belt is being carried out at the OT site, Infrastructure area at
Gadimoga terminal, haul road and all yards as well as the Vakalapudi shore
base terminal site with a cumulative plantation of over 1,00,000 plants.
Reporting on triple bottom-line performance
RIL commenced reporting, annually, on its triple-bottom line performance,
from FY 2004-05. All its sustainability reports are externally assured and
are GRI checked. The maiden report received in-accordance' status from GRI
and all subsequent reports have been G3 Checked A+' application level
reports. From FY 2006-07, in addition to referring to the GRI G3
sustainability reporting guidelines, RIL refers to the American Petroleum
Institute/the International Petroleum Industry Environmental Conservation
Association's (API/IPIECA) guidelines as well as the United Nations Global
Compact (UNGC) Principles. RIL has also aligned its sustainability
development activities with the focus areas of the World Business Council
for Sustainable Development (WBCSD).
SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT
RIL has a long and strong tradition of supporting the larger communities
that it connects with-from education, health, drinking water, large-scale
development of employable skills, to assistance during natural calamities
such as earthquakes and cyclones.
'I strongly believe that we can, and should do, much more. I also believe
that this effort has to bring into play RIL's strengths of strategic
planning, meticulous detailing and flawless execution on a large format'.
With this perspective in mind, Shri Mukesh D. Ambani announced the launch
of The Reliance Foundation' in November 2009. The Reliance Foundation
would address social development imperatives of India, specifically
quality, formal and vocational eduation, affordable high-quality health
care, meaningful rural development and urban renewal, and protection and
promotion of India's priceless heritage of arts and culture.
Education
Education continues to be one of the major thrust areas of RIL's CSR
interventions. A network of 10 schools caters to over 14,000 students
spread across geographies in India. RIL's CSR cells of its manufacturing
divisions and E&P blocks work zealously, round the year to support the
educational requirement of the surrounding community and schools in the
neighbouring region benefiting thousands of students from the
underpriviledged section of the society.
RIL's project for physically challenged children at Surat, near the Hazira
Manufacturing Division, is fast emerging as a global model of public-
private partnership, supporting physically challenged children's education
with a local NGO. A hostel for physically challenged female students from
the underpriviledged segment of the society has also been constructed. With
the support of state government of Gujarat, the school has been upgraded to
Standard XII, thus becoming first such school in India.
Project Jagruti', the project to tackle dyslexia in Surat, is yet another
public-private partnership based successful CSR programme being run by RIL.
This project is based on the Linda Bell Model for diagnosis of dyslexia.
The project is fully piloted at RIL's J.H. Ambani School in Surat. The
success of this programme has inspired many schools in Surat to replicate
the model. The Reliance Jagruti project for dyslexia is setting the pace
for the business world's response to the social stigma of the mentally
underpriviledged children. Spouses of RIL employees from the Hazira
Manufacturing Division are also supporting this activity. National
Institute of Open Schooling (NIOS) registration has been initiated for the
Academic Year (AY) 2010-11.
RIL has established an Early Intervention & Rehabilitation Centre for
Intellectual & Developmental Disabilities' at Tallarevu to cater to the
needs of such children and others living in Tallarevu Mandal and Yanam
Union Territory. The J.H. Ambani School near Patalganga Manufacturing
Division continues to strengthen the support network for the disadvantaged
and the physically challenged through participation in initiatives being
undertaken by National Society for Equal Opportunities for the Handicapped
(NASEOH), Blind Association and Cancer Society. The school has been awarded
the King-Queen Runner-up trophy for the AY 2009-10 by NASEOH for its
contribution to this social cause. The school has been placed in the
outstanding category amongst all Dayanand Anglo Vedic (DAV) Public schools
across the country and has been bawarded 'Pride of DAV Award' for
meritorious achievements in class X and XII of the CBSE Examination AY
2009-10.
'Reliance Dhirubhai Ambani Protsaham' programme continues to support poor
and brilliant students in pursuing higher studies. Continuous monitoring is
being done to improve the performance of the students by conducting special
classes in English and other subjects. Regular counselling sessions are
also being arranged with experts in personality development and
psychologists for motivating the children to achieve better results.
Further, RIL supplied notebooks, uniforms and bags to students from
Gadimoga and Bhairavapalem panchayats and provided furniture to many
schools to enable the children to have a better learning environment. To
bring better results in high schools, RIL provides vidya volunteers' for
the subjects where there are no regular class teachers.
RIL supports academics and education at all levels. The highlight of the
year was the construction of additional classrooms and equipping them with
furniture for the school at the Air Force Station, Jamnagar and also at
schools of neighboring villages at Kanachikari and Moti Khavdi.
Additionally, RIL extended financial support to academic and cultural
programmes of many educational institutions. Further, RIL plays a pivotal
role in the education of the girl child especially in rural regions. At
many locations near its manufacturing divisions, the Company sponsors
female students from the economically under priviledged segment of the
society.
The Mumbai Indians' (the Indian Premier League's franchise for Mumbai)
Education for All' initiative is a movement to support efforts to provide
quality education to all children. The initiative is the brainchild of Smt.
Nita M. Ambani, a passionate advocate for the cause of education. All
proceeds from wristband sales go to support partner organisations:
Akanksha, Nanhi Kali, Pratham, Teach for India and Ummeed. All these
organisations have taken on the challenge of giving children in Mumbai and
across India the opportunity to receive a great education. They refused to
accept the status quo and have done path breaking work in changing how
children study, learn and grow.
Community Health Care
RIL has developed Community Medical Centres (CMCs) near most of its
manufacturing divisions. These CMCs provide comprehensive health services
covering preventive, promotive and curative health care to the communities
from neighbouring villages. Manufacturing divisions conduct regular health
checkups for children in schools of their respective neighbouring regions.
Doctors advise children and their parents on various health care issues and
personal hygiene. RIL-sponsored Moti Khavdi Medical Centre caters to
patients of surrounding villages with free medical services for needy
patients. Further, RIL has also donated wheel-chairs and stretchers to a
government-run hospital in Jamnagar.
Annually, RIL employees organise and participate in blood donation camps
across manufacturing divisions and offices.
The Dhirubhai Ambani Hospital' at Lodhivali, near RIL's Patalganga
Manufacturing Division provides quality medical care to the surrounding
community. It extends prompt and specialised services to accident victims
on the Mumbai-Pune highway. Trauma patients are provided free life-saving
treatment. Further, the hospital continues to provide poor patients and
senior citizens with free or highly subsidised treatment.
A unique joint initiative of RIL and the National Association of Blind
(NAB), Project Drishti' has undertaken over 8,000 free corneal graft
surgeries for the visually challenged from the underpriviledged segment of
the society. It is the largest corneal grafting surgery project enabled by
a single corporate entity in India. Additionally, many manufacturing
divisions regularly conduct blindness control programmes, comprising free
cataract surgeries as well as distribution of prescription glasses and
free medication like Vitamin A capsules and drops to underpriviledged
children of neighbouring villages.
Further, RIL has initiated a project for the development of cost effective
and user friendly plastic cane. A plastic cane identical to an aluminium
cane has been developed and NAB found it meeting the functional
requirements during trials. As per an initial estimate, the plastic cane
will cost about 60% less than an aluminium cane. The team is also working
on weight reduction of the plastic cane.
The initiative to combat TB, HIV/AIDS' is a unique publicprivate
partnership programme between the Government, NGOs, several agencies and
RIL. It extends from creating awareness to providing care, support and
treatment including free of cost treatment to those who cannot afford the
same. The Hazira Manufacturing Division's DOTS HIV/AIDS Centre is one of
the largest Anti-Retroviral Treatment Centre (ART Centre) in the country.
Manufacturing divisions in Jamnagar and Patalganga too have ART Centre
facilities. This initiative has been expanded to other manufacturing
divisions where activities are largely in the areas of advocacy and
awareness.
Under Project Balkalyan', which is being run by RIL at its Jamnagar
Manufacturing Division, every month, 55 children afflicted with HIV/AIDS
are provided with nutritional support. Further, more than 100 HIV+ children
have been adopted by the Reliance Ladies Club - an initiative of spouses of
RIL executives from the Hazira Manufacturing Division, for educational and
nutritional support.
The Primary Health Centre (PHC)' at Dahej, Gujarat adopted by RIL in FY
2006-07, continues its patronage and renders exemplary service in the
region. Through the PHC, the Company has not only achieved its objective of
providing medical services and facilities to the surrounding villages but
has also conducted numerous programmes of national importance such as the
pulse polio programme, malaria surveillance programme and health checkups
for schools etc. The PHC is one of the few centres that has achieved a 100%
target for conducting family planning operations in FY 2009-10. Further,
RIL has contributed through the Rotary Welfare Trust, Bharuch, Gujarat for
establishing a CT Scan Centre and Cardiac Disorder Diagnostic Centre in
Bharuch. The PHC at Gadimoga, established in FY 2004-05, caters to the
needs of the surrounding village communities. The two sub centres of this
PHCat Bhairavapalem and Laxmipathipuram villages benefit about 6,000
families living in this region.
Manufacturing divisions offer free medical, diagnostic and therapeutic
services including free medicines to neighbouring villages. Mobile Van
Clinics-Health-On- Wheels' which are specially designed mobile
dispensaries equipped with a doctor accompanied by a nurse, move to
neighbouring villages on a scheduled basis all through the week.
Community's Safety
The Road Safety System is the most advanced, cost effective and easy to use
tool for improving public safety Think Growth. Think Transformation. Think
Reliance. 50 and reducing operating economic costs. RIL has
institutionalised road safety training across its numerous manufacturing
divisions. The Company reaches out to over a lakh tanker and truck drivers
annually, who visit the premises for receipt and dispatch of feedstock and
finished goods. Further, road shows and training sessions for tanker
drivers transporting chemicals and hazardous goods are organised at
truckers' plazas. For the first time in the state of Gujarat, the Road
Traffic Office (RTO) near Hazira is being supported by a multimedia based
training facility to render safety awareness to all new license aspirants.
To provide emergency and trauma care to victims of highway accidents, at
Hazira, RIL has tied up with an NGO and adopted a 110 kms stretch on the
state highway in Gujarat starting from Sachin to Bharuch and the state
highway via Hazira-Olpad-Hansot-Ankleshwar. The Hoshiarpur Manufacturing
Division, Punjab, provides round-the-clock free ambulance services on the
National Highway - 70 (a 20 kms stretch from Punjab to Himachal Pradesh).
Rural Infrastructure Development
Reliance Rural Development Trust (RRDT) as a Corporate NGO, continued its
activities under the Gokul Gram Yojana of the state government of Gujarat.
In FY 2009-10, RRDT undertook development of 1,390 village infrastructure
facilities in 1,243 villages of 166 talukas across all 25 districts of the
state of Gujarat. Of these, construction of 971 facilities aggregating
expenditure of Rs 36.58 crore, were completed in FY 2009-10 and the same
were handed over to the respective village authorities. The 971 facilities
include 879 anganwadi buildings pre-nursery schools), 61 cement-concrete
roads, 21 underground RCC sumps of capacities varying from 50,000 litres to
2.5 lakh litres waterstorage capacity and 9 check dams with total water
storage capacity of 12.58 (million cubic feet (mcft) capable of catering
to the irrigation needs of about 1,750 hectares surrounding agricultural
land. The sumps and check-dams constructed are in areas of perennial water
scarcity. Since its inception in 2001 till March 2010, RRDT, under Gokul
Gram Yojana of the state government of Gujarat, has constructed 6,698
village infrastructure facilities with an aggregate expenditure of Rs
261.30 crore. The RRDT initiative, spanning over a decade, has set an
example for sustainable community development work in India by a unique
synergy of a corporate NGO (RRDT) and the state government of Gujarat.
RIL continues to develop rural infrastructure facilities and temples near
the surrounding villages of many of its manufacturing divisions. RIL
completed the Mandal Development Road of 10 kms length connecting Tallarevu
to Bairopalem improving transport infrastructure. The road was dedicated to
the nation by the Hon' Chief Minister of Andhra Pradesh.
Further, a fish drying platform cum jetty at Yanam was brought into
operation this year. It will benefit about 2,000 fisher folk living in
Darialathippa village providing them smooth transit facility to villages
that are on the other side of the Godavari river.
Livelihood Support Programmes
RIL sponsored Self-Help Groups (SHGs) continue to empower women and youth
from the underpriviledged segment through various employment oriented
training and skill development programmes. These include dress making,
health care, helpers for hospitals, nursing, jewellery making, mobile
phone repairing, electrician training, bamboo article making, light motor
vehicle driving training etc.
RIL organised a livelihood workshop mainly focusing on fishermen involving
different stakeholders like farmers, NGOs, research organisations and
government agencies working with fisher folk. The outcome of the workshop
was followed up with the agencies involved. The National Fisheries
Development Board (NFDB) will modernise the fishing harbour at Kakinada
and also develop fish outlets. Further, RIL has promoted organic aqua
culture for the benefit farmers in the Kakinada region.
Seeing the popularity of Polypropylene Non-Woven (PPNW) for various
packaging solutions across the southern part of India, RIL took the
initiative to create a handloom' like excitement in the field of the PPNW
bag. This initiative has helped create an opportunity for housewives to
earn from home apart from giving them financial independence and a sense
of pride. RIL identified few bag making units, manufacturing non-woven bags
in small towns like Madurai, Bhavani, Belgharia and Pune. Units in these
regions were persuaded to give bag making operations on job work basis to
housewives or a group working on a cooperative basis. The housewife
collects cut pieces from the converters, stitches them and supplies it back
to the converter.
Relief Operations
RIL's time tested disaster management and calamity relief operations were
put to use yet again in FY 2009-10. In addition to extending donations, the
RIL team from Jamnagar and Andhra Pradesh worked zealously in flood
affected areas of Krishna, Andhra Pradesh, in October 2009.
Cyclone AILA' hit West Bengal's 24 North & South parganas in May 2009. RIL
reached out to the state government of West Bengal on a war footing to
facilitate speedy construction of a long-lasting embankment, stretching
778 kms, in the cyclone AILA affected region. A proposal to use various
types of Polypropylene (PP) Geosynthetics was made and all technical inputs
were provided to the officials to restore the embankment.
Wildlife and Animal Care
Parapets were constructed on open wells in the Gir forest in Gujarat,
through FY 2009-10, considerably reducing deaths amongst lion cubs.
Heritage Conservation
Keeping in view the plurality of our society with multiple cultures,
traditions and backgrounds, RIL has initiated various activities to
consolidate the Indian ethos of unity in multiplicity.
RIL continues to support and develop the heritage temple and town of
Dwarka. In FY 2009-10, RIL carpeted the bypass road leading to the temple
and also continued the upkeep of the temple and the adjoining areas. In
November 2009, under the state government of Gujarat's Pavitra Yatradham
Vikas Board, RIL commenced development work in the temple square area.
Supporting Indian Culture
Under the aegis of the Gujarat Industries Navratri Festival Society
(GINFS), in FY 2009-10, RIL supported more than a dozen garba troupes and
organisations in Jamnagar, Rajkot, Ahmedabad, Gandhinagar etc. Besides nine
days of traditional garbas, depiction of culture, history, handicrafts,
eateries and specialties of Gujarat through exhibitions, displays and
stalls were part of the special attractions.
RIL continues to support Homage to Abbaji', a musical fiesta designed 10
years ago by the noted musician, Zakir Hussain, in memory of his father and
guru, Late Ustad Allarakha. This unique musical event, held in Mumbai once
a year, offers a platform to national and international artistes of repute
to come on a common stage thus fostering camaraderie, cultural
juxtaposition and harmony.
Supporting Professional Organisations and NGOs
RIL continues to support professional organisations, NGOs and events with
the aim to develop professionalism in the country. Additionally, RIL is
also aiding the development of the Jamnagar Chamber of Commerce and
Industry's (JCCI) new office building to be called the Dhirubhai Ambani
Vanijya Bhavan'.
RIL continues to support and work with Society for Village Development in
Petrochemicals Area (SVADES), an NGO that binds the industry and the rural
community for socioeconomic development. SVADES works in surrounding
villages near Vadodra Manufacturing Division. SVADES focuses on skill
development training and education. HIV AIDS awareness, hygiene and
sanitation are some of the initiatives that SVADES undertook during the
year.
Promoting Sports and Sportspersons
Besides promoting cricket on the global front, RIL actively nurtures young
and talented cricketers and sports bodies. In FY 2009-10, Shri Parimal
Nathwani, Group President (Corporate Affairs) was elected as the Vice
President of the Gujarat Cricket Association.
The Indian Premier League (IPL) offered yet another opportunity to support
and sponsor cricket. Mumbai Indians (MI), the IPL franchise for the city of
Mumbai, is amongst the most followed cricket teams in the IPL. This is yet
another step to help India achieve world class excellence in sports. This
effort, which will foster talent scouting and development of cricket, is
RIL's contribution to creating a healthy sporting ecosystem.
RIL and IMG have entered into an equal joint venture in FY 2009-10 to
develop, market and manage sports and entertainment in India. The venture
will have parallel complementary strategies: to provide and operate world
class infrastructure and coaching facilities in the country to unlock
India's sporting potential and create and operate major sports and
entertainment assets in the country.
Acknowledging and Supporting Talent
Real Heroes' is an initiative of CNN-IBN in partnership with RIL to honour
the silent warriors of change, the ordinary people who have rendered
extraordinary services for the betterment of others. For their
contributions, all 24 Real Heroes are honoured and felicitated at a grand
event Think Growth. Think Transformation. Think Reliance. 52 in Mumbai
with a trophy and a cash prize of Rs. 5 lakh each.
Along with the National Academy of Sciences, India (NASI), RIL instituted
NASI-Reliance Industries Platinum Jubilee Awards Covering Both Physical
and Biological Sciences' by allocating dedicated funds amounting to Rs. 1
crore in 2006. The annual award to scientists is in recognition of their
significant contribution for application-oriented innovations and research.
The award carries cash prize of Rs. 2 lakh and a citation.
RIL and the Stanford Graduate School of Business announced the creation of
the Reliance Dhirubhai India Education Fund' in April 2008 to enable
promising Indian students with financial need to obtain an MBA from
Stanford. Each year, the Stanford Business School may award up to five
Reliance Dhirubhai Fellowships. Reliance Dhirubhai Fellows will receive
full financial support for the two-year Stanford MBA Programme.
In December 2006, jointly with UDCT Alumni Association (UAA), RIL
instituted UAA-Dhirubhai Ambani Lifetime Achievement Award' for innovative
and outstanding contributions in the field of chemical sciences.
Dhirubhai Ambani Foundation
Dhirubhai Ambani Foundation (DAF) has Education and Public Healthcare as
its focus areas. Under its SSC Merit Reward and Undergraduate Scholarship
Schemes instituted in 1996, DAF recognises and assists students who top the
merit lists of Std X and Std XII Board exams. The schemes also take care of
the physically challenged meritorious students of the State Education
Boards. Till date, the schemes have benefited 7,281 students, 1,056 of whom
are physically challenged.
Sir Hurkisondas Nurrotumdas Hospital & Research Centre (HNHRC)' is a
renowned institution in South Mumbai, having rendered quality healthcare to
the society for more than 85 years. It has a 328 bed multi-specialty
tertiary care hospital with some rare specialties like Oro-facial Surgery,
Onco-Surgery, Paediatric Hematology and Paediatric Endocrinology. It is one
of the most renowned institutes for transplant surgeries and eye donations.
Sir Hurkisondas Nurrotumdas Medical Research Society (HNMRS), a non-profit
research organisation based in Mumbai and established in 1974 with the sole
aim of undertaking scientific research in the area of biomedical sciences
and allied disciplines. The HNMRS has undertaken over 150 research projects
on a wide range of topics, most of which are of national importance in the
areas of the preventive, diagnostic, therapeutic, and rehabilitative
aspects of health. Several high-budgeted research projects, of considerable
medical and scientific relevance to the community, have been completed and
are also on hand currently at the HNMRS. Most of the studies done at this
institute have the potential for translation into tangible benefits for
humanity, and several of them have already found expression in terms of
new inventions or innovations which have empowered doctors in the difficult
task of decreasing the mortality and morbidity of disease.
Dhirubhai Ambani International School (DAIS) Dhirubhai Ambani International
School (DAIS), founded in 2003, is the fruition of a dream to offer
educational opportunities to children that make learning a joy and help
bring out the best in them. The academic accomplishments and the all-round
development of children from class LKG to 12 is a fitting tribute to this
noble aspiration. In examinations of all the three streams-the ICSE, the
IGCSE and the IB Diploma held in 2009, the school's children have given an
impressive performance, surpassing that of all the previous years. As
against the average score of 36 (out of the maximum possible score of 45)
achieved by the first four batches of IB students, the fifth batch, the
Class of 2009, attained an average score of 37, compared to the world
average of 29.5. In an even greater accomplishment, 3 of the students
earned the perfect score of 45 points, a score that was achieved only by
86 children worldwide in 2009. For the fourth year in a row, the ICSE batch
has achieved excellent results - earning an average score of 91%, with 29%
of them scoring 95% and above and the topper scoring 96.1%. 87.1% of all
IGCSE grades achieved were A* and A grades, as compared to the world
average of 33% and the Indian average of 38%. Some of the children have
even topped globally in several subjects while some of them are national
toppers. For the fourth year in a row, one of the students received the
Best IGCSE Student in India' award from Cambridge International
Examinations.
The school's performance at the level of university placement continues to
be exemplary. The IB Class of 2010 has earned admission offers from the
world's top universities. 3 students were accepted at Oxbridge, 7 at
Imperial, 32 at Warwick, 21 at University College London, 9 at King's
College and 9 at the London School of Economics, amongst others. Amongst
the Ivy League and other leading universities, Brown has accepted 2
students, Columbia 1, Cornell 2, U-Penn 5, Princeton 2, Yale 1, Stanford 2,
MIT 2, Northwestern 3, Carnegie Mellon 5, Michigan 7, University of
California LA 11, UC Berkeley 6 and New York University 11. Other
reputable universities that have offered admission to the students include
Duke, McGill, British Columbia, University of Toronto and University of
Hong Kong. Students who applied to universities in Singapore as well as
those who plan to continue their studies in India are expected to do
equally well when their admissions are finalised.
Apart from academics, the school's students also work with a number of NGOs
which include Advitya, Akanksha, Committed Communities Development Trust
(CCDT), Muktangan, Pratham, Goonj and Habitat for Humanity. This year, the
IB Diploma students have taken up the initiative to construct houses and
roads in the village Hassachipatti (near Matheran) as well as provide
educational opportunities to children in that area. To fund this project,
students organised a fete in 2010 in which substantial funds were raised.
The academic year 2009-10 also earmarked several other notable and
innovative initiatives. These include the Paigaam' Peace Conference which
fosters a harmonious relationship with people from across the border, the
Annual DAIMUN (Dhirubhai Ambani International School Model United Nations)
Conference which promotes children's leadership potential and commitment to
civic engagement, participation in IAYP (International Award for Young
People) which facilitates overall development of children by challenging
them in areas of physical recreation, skills, service and expeditions; and
the celebration of the Annual Day on the theme I am Mumbai', depicting the
indomitable spirit of Mumbai and an awakening to address the daunting
challenges it faces.
In a fitting tribute to what it has accomplished in taking forward the
Round Square IDEALS, since receiving the Regional Membership in 2008, the
Dhirubhai Ambani International School has received the prestigious Global
Membership of Round Square in 2010. This stature will provide
opportunities to further the ethos of Round Square through broad-based
activities and exchanges that the global member schools fraternity
provides.
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