The Integrated PET Player. B Arun Reliance Industries Limited

Transcription

1 1 The Integrated PET Player B Arun Reliance Industries Limited

2 2 Contents India: An Emerging Economic Super Power Reliance: Largest Indian Private Company Reliance a preferred supplier in Russia

3 3 India: A Glimpse Population Middle Class Teenagers 1050 Mn ~310 Mn 150 Mn India Urban Workers Million plus Cities Mn Small Retailers GDP 2.3 Mn US $ 730 bn Growth % 8 PPP US $ 2863 bn (4th) Land of opportunities

4 4 India s Glory Even though the world has just discovered it, the India growth story is not new. It has been going on for 25 years old What is the India story?

5 5 India Story Aaverage Annual GDP growth Average Annual population growth Literacy Middle Class % Rising GDP growth - Population growth is slowing - Increase in Literacy level - Exploding Middle class India is now the 4th largest economy And it will cross Japan between 2012 and 2014 to become the 3 rd largest

6 6 India: Knowledge Capital Young & skilled manpower Largest number of Engineers 200,000 Scientific professionals & 300,000 Engineers added every year R&D base for 100 of Fortune 500 companies 1300 R&D units, 244 Universities, 200 National Laboratories Cost of 1 Engineer in US = 11 Engineers in India India Provides an Opportunity as R & D Hub

7 7 Growth Drivers India East and S.E. Asia Domestic Services Consumption High tech, capital intensive industry Exports Manufacturing Investment Low tech, labour intensive industry - India s success is market led whereas China s is state induced. - The entrepreneur is at centre of the Indian model

8 8 Reliance India s Proxy Revenues of US$ 20 billion Cash Profit of US$ 3 billion Net Profit of US$ 2 billion 98% of revenues from Refining and Petrochemicals, 2% from E&P & others India and Reliance Revenues equivalent to 2.8% of India s GDP 8.2% of India s total exports, ~ US$ 8 billion Contributing 8% India s indirect taxes 4.7% of the total market capitalization, 11.5% weightage in Sensex What s good for India is good for Reliance

9 9 Reliance Vertical Integration Textiles Fibers 1970s 1980s Value Added Polymers Olefins Fiber Intermediates Petroleum Refining Aromatics Chemicals 1990s 2000s Oil & Gas E & P Backward vertical integration has been the cornerstone

10 Delta - Naphtha to PX $/MT 800 Threshold Delta PX Delta Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '05 Q3 '05 Q1 '06 Q3 '06 Delta based on South East Asian prices 2 out of 24 quarters below threshold

11 Delta - PX to PTA Threshold Delta PTA Delta $/MT Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '05 Q3 '05 Q1 '06 Q3 '06 Delta based on South East Asian prices 6 out of 24 quarters below threshold

12 Delta - PTA/MEG to PET $/MT 500 Threshold Delta PET Delta Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '05 Q3 '05 Q1 '06 Q3 '06 Delta based on South East Asian prices 7 out of 24 quarters below threshold

13 13 Delta - Naphtha to PET Threshold Delta Naphtha - PET Delta $/MT Q1 '00 Q3 '00 Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '05 Q3 '05 Q1 '06 Q3 '06 Delta based on South East Asian prices The last man standing will be an integrated player Competitive Advantage from Integration!

14 14 Domestic Leadership & Global Rankings Leading Market Shares in India Leading Global Position Polyester 55% 1 Polyester (Fibre & Yarn) 3 Paraxylene Fibre Intermediates 78% Polymers 65% 3 Refining (1) 5 Purified Terephthalic Acid Refining 28% 6 7 Polypropylene MEG Dominant market share in India Amongst top 10 global players in all its core businesses Leading domestic market shares and global positions

15 15 Reliance Growth Plan Committed to investing US$ 25 billion in core businesses Investing in the building of a high potential, high growth retail initiative Committed to creating value by building world class assets Management team expects to create significant value on successful implementation of each of these initiatives Growth is life at Reliance

16 16 Polyester Production: Changing Trends Producer KTA DuPont 841 Celanese 605 Hoechst 395 AKZO 316 Eastman 302 Rhone Poulenc 248 Teijin 219 Toray 172 ICI 155 Monsanto 146 Producer KTA Nan Ya 1035 Reliance 779 KoSa 700 Teijin 698 Sam Yang/SS (Huvis) 658 Hualon 575 Far Eastern 604 DuPont 583 Tuntex 561 Toray 543 Producer KTA Reliance 1700 Nan Ya 1080 Sanfangxiang 1050 Yizheng 945 Yuandong 900 Tuntex 885 Far Eastern 781 Huvis 750 Rongsheng 650 Tongkun 640 US, EU, Japan Taiwan, Korea China, India RIL: Leadership in two decades

17 17 Growing Share of Polyester production Mn Tons Mn Tons Mn Tons 2% 26% 39% 27% 4% 39% 28% 5% 39% 33% 30% 28% Filament Staple PET Film Source: PCI One third of total Polyester production will be in PET

18 18 PET Products Product Range Aqua Grade Fast Reheat CSD Hot Fill General Purpose Applications: Beverages- Aseptic filling & Hotfill, Cosmetics, Pharmaceuticals, Sheets, Food Stuffs, Agrochemicals, Lubricants etc. The list of prestigious users of RELPET include Coca-cola, Pepsi Cola, Nestle, Danone, Cadbury, Wrigleys, Amcor, Tetrapack, Uni Levers, RC Cola, San Benedetto, Heineken.

19 19 Reliance Technology Centre World Class R & D facility Centre of excellence for Research and Development in polyester homo and co-polymer fibres, filaments and resins Innovative products in pipeline

20 20 Factors to Impact Russia PET market Ruling of EU for Korea and Taiwan? Possible displacement of 160 KTA from EU The Outlook of Euro ( Market netback Swing) China trade policy related to USD reserve Could topple PET export dynamic Competitiveness of Lithuania PET plant s in Russia? Korea will still dominate Russian PET market

21 21 Reliance Russia Logistic reach India Iran Russia Treaty North South Corridor- Open up logistic solutions Map Western Ports-Better shipping performance Leveraging China Warehouse through Transsiberian Railways, conventional route,mps Containers Map

22 The North South Corridor route Back The Quicker Cheaper route- Multimodal challenge 22

23 Russia- Reach through China Warehouse From Reliance Shanghai Back 23

24 24 India Russia ties Diamond Jubilee celebration of Indo Russian Diplomatic ties in Apr-07 Indo Russian Economic relationship are at Cross roads Glorious strategic partnership in the past with the larger scope of Cooperation in future in political, scientific, trade, economics and defense. Indo Russian trade US$ 2.5 bn excluding arms It s time for India-Russia CECA (Comprehensive Economic Cooperation Agreement) Strategic partnership should be cultivated like a garden Sergei Lunev, Doctor of History Win win scenario for India & Russia

25 25 Summary Why India? A democratic country with huge resource of young, intelligent and dynamic workforce. Why Reliance? The largest private sector company of India. Vertical Integration. World Scale Assets. Globally Competitive. Among world leaders in all its core businesses

26 Thank You 26