Reliance

The Integrated PET Player
B Arun
Reliance Industries Limited
1
Contents
India: An Emerging Economic Super Power
Reliance: Largest Indian Private Company
Reliance a preferred supplier in Russia
2
India: A Glimpse
India
Population
1050 Mn
Middle Class
~310 Mn
Teenagers
150 Mn
Urban Workers
120 Mn
Million plus Cities
23
Small Retailers
2.3 Mn
GDP
US $ 730 bn
Growth %
8
PPP
US $ 2863 bn (4th)
Land of opportunities
3
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?
4
India Story
Aaverage
Annual GDP
growth
Average Annual
population
growth
Literacy
Middle
Class
1950 – 1980
3.5
2.2
52
8
1980 – 2002
6.0
2.0
65
22
2002 – 2006
8.0
1.5
80
32
-
%
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 3rd largest
5
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
6
Growth Drivers
India
Domestic
Services
Consumption
High tech, capital
intensive industry
East and S.E. Asia
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
7
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
8
Value Added
Reliance – Vertical Integration
Polymers
Textiles
1970s
Fibers
1980s
Fiber
Intermediates
Olefins
Chemicals 1990s
Aromatics
Petroleum Refining
2000s
Oil & Gas E & P
Backward vertical integration has been the cornerstone
9
Delta - Naphtha to PX
$/MT
1000
Threshold Delta
PX Delta
800
600
400
200
Q
3
'0
6
'0
6
1
Q
Q
3
'0
5
'0
5
Q
1
'0
4
Q
3
'0
4
1
Q
Q
3
'0
3
'0
3
1
Q
Q
3
'0
2
'0
2
1
Q
3
Q
Q
1
'0
1
'0
1
0
Delta based on South East Asian prices
2 out of 24 quarters below threshold
10
Delta - PX to PTA
$/MT
500
Threshold Delta
PTA Delta
400
300
200
100
Q
3
'0
6
Q
1
'0
5
Q
3
'0
5
Q
1
'0
4
Q
3
'0
4
Q
1
'0
3
Q
3
'0
3
Q
1
'0
2
Q
3
'0
2
Q
1
'0
1
Q
3
'0
1
1
Q
'0
6
0
Delta based on South East Asian prices
6 out of 24 quarters below threshold
11
Delta - PTA/MEG to PET
$/MT
500
Threshold Delta
PET Delta
400
300
200
100
Q
3
'0
6
'0
6
1
Q
Q
3
'0
5
'0
5
1
Q
Q
3
'0
4
'0
4
Q
1
'0
3
3
Q
Q
1
'0
3
'0
2
Q
3
'0
2
1
Q
3
Q
Q
1
'0
1
'0
1
0
Delta based on South East Asian prices
7 out of 24 quarters below threshold
12
Delta - Naphtha to PET
$/MT
800
Threshold Delta
700
Naphtha - PET Delta
600
500
400
300
200
100
'0
6
3
'0
6
Q
1
Q
Q
3
'0
5
'0
5
Q
1
'0
4
Q
3
'0
4
1
Q
Q
3
'0
3
'0
3
Q
1
'0
2
Q
3
'0
2
1
Q
Q
3
'0
1
'0
1
1
Q
3
Q
Q
1
'0
0
'0
0
0
Delta based on South East Asian
prices
The last man standing will be an integrated player
Competitive Advantage from Integration !
13
Domestic Leadership & Global Rankings
Leading Market Shares in India
Polyester
55%
Fibre Intermediates
78%
Polymers
65%
Refining
28%
Dominant market share in India
Leading Global Position
1
Polyester
(Fibre & Yarn)
3
Paraxylene
3
Refining (1)
5
Purified
Terephthalic
Acid
6
MEG
7
Polypropylene
Amongst top 10 global players
in all its core businesses
Leading domestic market shares and global positions
14
Reliance Growth Plan
• Committed to investing US$ 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
15
Polyester Production: Changing Trends
1980
2000
2006
KTA
Producer
1035
Reliance
1700
779
Nan Ya
1080
KoSa
700
Sanfangxiang
1050
316
Teijin
698
Yizheng
945
Eastman
302
Sam Yang/SS (Huvis)
658
Yuandong
900
Rhone Poulenc
248
Hualon
575
Tuntex
885
Teijin
219
Far Eastern
604
Far Eastern
781
Toray
172
DuPont
583
Huvis
750
ICI
155
Tuntex
561
Rongsheng
650
Monsanto
146
Toray
543
Tongkun
640
Producer
KTA
DuPont
841
Nan Ya
Celanese
605
Reliance
Hoechst
395
AKZO
US, EU, Japan
Producer
Taiwan, Korea
KTA
China, India
RIL: Leadership in two decades
16
Growing Share of Polyester production
2001
29 Mn Tons
2005
40 Mn Tons
2010
53 Mn Tons
26%
4%
2%
39%
39%
27%
33%
5%
39%
28%
30%
28%
Filament
Staple
PET
Film
Source: PCI
One third of total Polyester production will be in PET
17
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………….
18
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
19
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
20
Reliance Russia Logistic reach
–
India Iran Russia Treaty
North South Corridor- Open up logistic solutions
–
Western Ports-Better shipping performance
–
Leveraging China Warehouse through Transsiberian
Railways, conventional route ,MPS Containers
Map
Map
21
The North South Corridor route
Back
The Quicker Cheaper route- Multimodal challenge
22
Russia- Reach through China Warehouse
From Reliance Shanghai
Back
23
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
24
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
25
Thank You
26