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Reliance Industries Limited

Financial Presentation H1 FY 2001-02

October 31, 2001

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Forward Looking StatementsThis presentation 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 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 Reliance group companies referred to in this presentation cannot guarantee that these assumptions and expectations are accurate or will be realised. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements. These companies assume no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events, or otherwise.

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Operating Environment

Financial Performance

Business Review

Reliance Petroleum

Reliance Infocom

Value Creation

Summary

Contents

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Operating Environment

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Strong Performance under Difficult Environment

Strong operational and financial performance achieved in

continuing adverse industry environment

General economic slowdown in India and globally led to weak

demand conditions for several of Reliance’s products

Focus on high operating rates, specialities, productivity gains,

integration and reduction in financial costs have contributed to

continued profit growth

Increase in overall uncertainty in view of the recent global

developments

Reliance’s operational and financial strengths have enabled it to maintain performance in difficult industry conditions

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160

200

240

280

320Crude Oil Brent (US$/BBL)

Naphtha FOB AG (US$/MT)

Volatility in Feedstock Prices

Feedstock price volatility has created uncertainty over petrochemicals industry margins

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Trend in Feedstock & Product Prices - International % change in international prices H1 FY’02 over H1 FY’01

International product prices have generally declined in greater proportion than feedstock prices

1%

-5%

-8%

-8%

-13%

-14%

-14%

-16%

-32%

-53%

-6%

PX

POY

PTA

Crude

Naphtha

PE

PP

PSF

MEG

PVC

EDC

Raw Material

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% change in domestic prices H1 FY’02 over H1 FY’01

Declines in domestic prices are less pronounced due to RIL’s superior customer relationships and effective supply chain management initiatives

5%

5%

-6%

-7%

-9%

-10%

-11%

-16%

-51%

-6%

PX

POY

Naphtha

PP

PTA

PSF

MEG

PE

PVC

EDC

Trend in Feedstock & Product Prices - Domestic

Raw Material

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Petrochemicals Industry Margins Under Pressure

Global petrochemical margins under pressure during H1

Leading international petrochemicals companies in US, Europe

and Asia have reported weak performances

Historically low product prices - currently trading 20%-50% below

10 year averages

Uncertain future outlook for margins in view of:

- global demand slowdown

- continued volatility in feedstock prices

The global petrochemicals industry is currently passing through one of the most uncertain and difficult times in recent years

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RIL’s H1 Performance Highlights

Capacity utilisation 104%

Production volumes 5.7 mn. tonnes, up 9%

Domestic sales 88% of total sales

Exports US$ 328 mn. (Rs.1,569

crores)

Market shares polyester 53%

intermediates

78%

polymers 50%

RIL has achieved high capacity utilisation rates despite weak demand conditions for some products

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H1 Financial PerformanceH1 Financial Performance

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RIL+RPL - Financial Highlights

H1 FY 2001-02Rs.crs. $ mn.

Sales 30,000 6,300

Operating Profit 4,600 1,000

Cash Flow 3,500 800

Net Profit 2,200 500

Total Assets 52,000 11,000

Reliance continues to be the No. 1 business group in India in terms of all major financial parameters

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RIL Income Statement for Q2 FY 2001-02

Lower interest costs have contributed to profit growth

Q2 FY 2001-02 Q2 FY 2000-01 % ChangeRs.crs. $ mn. Rs.crs. $ mn.

Sales 6,234 1,302 6,721 1,459 -7%

Trading Sales - - 1,673 363

Total Sales 6,234 1,302 8,394 1,822

EBITDA 1,414 295 1,408 306

Interest 255 53 333 73

Depreciation 422 88 381 83

Tax 34 7 34 7

Deferred Tax 1 - - -

Net Profit 702 147 660 143 6%

Cash Profit 1,124 235 1,041 226 8%

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RIL Income Statement for H1 FY 2001-02

Strong performance in the continuing adverse global and domestic environment in the petrochemicals industry

H1 FY 2001-02 H1 FY 2000-01 % ChangeRs.crs. $ mn. Rs.crs. $ mn.

Sales 12,624 2,637 12,856 2,791 (2%)

Trading Sales - - 2,153 467 -

Total Sales 12,624 2,637 15,009 3,258 (16%)

EBITDA 2,716 567 2,643 574 3%

Interest 512 107 631 137 (19%)

Depreciation 818 171 747 162 10%

Tax 64 13 62 13 -

Deferred Tax 2 - - - -

Net Profit 1,320 276 1,203 261 10%

Cash Profit 2,138 447 1,950 423 10%

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Income Statement - Consolidated H1 2001-02 Q2 FY 2001-02 H1 FY 2001-02

Rs.crs $ mn. Rs.crs. $ mn.

Sales 6,234 1,302 12,624 2,637

Total Expenditure 4,996 1,044 10,211 2,133

Operating Profit 1,238 259 2,413 504

Share in Income of Associates 220 46 502 105

Other Income 163 34 251 52

Interest 256 53 514 107

Depreciation 422 88 818 171

Tax 35 7 66 14

Net Profit 908 190 1,768 369

Consolidated net profit reflects the true picture of RIL’s returns on its investments

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Segment Information

Petrochemicals Refining Others

Segment Revenue 11,902 17,331 722

Segment Results (EBIT) 1,378 1,371 416

Capital Employed 15,544 18,318 5,034

Return on Capital Employed (ROCE) 18% 15% 17%

Return on Capital Employed significantly higher than cost of capital for a large petrochemical and refining enterprise

Rs CroresRs Crores

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Factors Contributing to RIL’s Profit Growth

Lower raw material prices

Greater focus on speciality products, contributing to higher

margins

Continued focus on cost, productivity and efficiency

Interest cost savings, owing to prepayment and refinancing

Aggressive efforts to enhance sales realisation through speciality grades, and cost reduction measures have delivered results

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RIL Profitability Ratios

Margins have improved in a tough operating environment

H1 FY 2001-02 FY 2000-01

OPM %* 19.2% 17.4%

NPM % 14.9% 13.2%

ROE % 19.6% 18.1%

ROCE % 18.4% 18.0%

EPS - Rs. ($) 25.1 (0.52) 22.8 (0.49)

Cash EPS - Rs($) 40.6 (0.85) 38.1(0.83)

* excluding FX gains

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At the current market price, RIL shares are trading at 7.5 times consolidated EPS

H1 FY 2001-02

NPM % 20.0%

ROE % 25.4%

ROCE % 15.6%

EPS - Rs. ($) 33.6 (0.70)

Consolidated Profitability Ratios

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RIL Liquidity Ratios

RIL’s strong cash flows and refinancing efforts have enabled reduction of interest costs

H1 FY 2001-02 FY 2000-01

Debt : Equity 0.72 0.72

Gearing 44% 41%

Interest Cover 3.7x 3.3x

Total Debt/Cash Flow 2.0x 1.8x

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Reliance is India’s Largest Exporter Reliance is by far the largest exporter in India - manufactured

exports of US$ 1.08 billion (Rs. 5,150 crores) in the first half

The current exports represent 120 times growth over the annual

exports of Rs. 86 crores (US$ 25 million) just 5 years ago

Individually too, RIL and RPL are India’s top 2 exporters - still

only 12% of RIL’s and 21% of RPL’s sales come from exports

RIL’s manufactured exports were US$ 328 mn (Rs. 1,569

crores) in the first half

RIL exports products to over 90 countries, including to the most

quality conscious customers globally

Reliance’s high exports demonstrate the international quality of its products, and its ability to compete against global leaders

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Business ReviewBusiness Review

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RIL’s Product Mix

Composition of RIL’s sales

Petrochemicals businesses dominate RIL’s portfolio - share of oil and gas business likely to increase

Chemicals11%

Plastics & Int.34%

Fabrics1%

Polyester22%

Fibre Int.29%

Oil & Gas3%

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Oil & Gas - Update

RIL is India’s largest private sector E&P operator in India, with

total acreage of over 175,000 square kms

Well balanced E&P portfolio comprising 25 onshore and

offshore, deep and shallow water blocks

Exploration work progressing well - drilling of first well likely next

year

Exploration capex expected to be Rs. 1,500 - 2,000 crores (US $

300 - 400 million) over next 3 years

Oil and Gas operations are likely to make an enhanced contribution to RIL’s future revenue and profit growth

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Oil and Gas - Production Growth

8%

Oil Production in kTGas Production in kTOE

Oil

191206

150

200

250

H1 FY'01 H1 FY'02

Gas

335 334

300

350

H1 FY'01 H1 FY'02

Output from the 2 currently producing oil and gas fields of Panna-

Mukta and Tapti (PMT) has further increased in H1

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Polyester - Production Growth

Reliance

355

412

300

350

400

450

H1 FY'01 H1 FY'02

16%9%

Production in ‘000 tonnes

Industry

707

772

650

700

750

800

H1 FY'01 H1 FY'02

Polyester demand increased by only 3% during the first half, reflecting weak demand conditions in the domestic markets

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Polyester - Prospects

Demand slowdown in H1 due to seasonal factors, Diwali timing,

inventory drawdown, and lower demand from apparels segment

Reliance is responding by creating new markets for speciality

grades and growing high potential segments

Increasing focus on polyester grades finding application in

segments with higher growth potential such as home furnishings,

automobiles, and industrial textiles

Polyester demand in India likely to grow at double digit rates over

the long term - CARG of 15% over last 10 years

Reliance has a strategy in place for countering temporary demand slowdown and taking advantage of the long term growth opportunity

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Fibre Intermediates - Production Trend

RIL’s lower production only reflects RIL’s planned shutdowns and the impact of new industry capacity operating at fuller levels

Production in ‘000 tonnes

Reliance

1489

1402

1350

1400

1450

1500

H1 FY'01 H1 FY'02

Industry

18271804

1750

1800

1850

H1 FY'01 H1 FY'02

-1% -6%

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Polymers - Production Growth

16%

Production in ‘000 tonnes

Industry

1455

1683

130014001500160017001800

H1 FY'01 H1 FY'02

Reliance

763

841

700

750

800

850

H1 FY'01 H1 FY'02

10%

Polymers demand has shown further strong growth of 15% during the first half - on top of 11% growth in FY 2000-01

Higher relative industry production growth reflects the impact of new industry capacities operating at fuller rates during H1

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Polymers - Update

Healthy demand growth for RIL’s polymers during H1:

- PP 17%

- PE 12%

- PVC 16%

Demand from high growth user industries like telecom, packaging,

food and beverages, consumer durables

Domestic demand / supply balance is progressively improving with

healthy growth

RIL is the leading player in the rapidly growing polymers market in India with a 50% market share

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Reliance PetroleumReliance Petroleum

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RPL - Mixed Demand Trends

LPG and gasoline continue to register strong demand growth

Negative growth rates for middle distillates

Y-o-Y growth in half yearly demand

LPG 10.2%

Gasoline 5.8%

HSD -5.3%

SKO -5.6%

All Products -1.5%

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RPL – Higher Operating Rates

RPL’s high operating rates despite the domestic demand slowdown reflect : Integration with group’s downstream operations Ability to tap exports markets Flexibility of product slate

Operating Rates (April - Sept 2001)

84% 86% 87% 91%

107%

Asia-Pacific

India-excl.RPL

Europe N. America RPL

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Capacity Utilization – RPL vs. Indian Peers

H1 Capacity

Utilization

RPL 107%

IOC (Incl. CPCL & BRPL) 85%

BPCL (Incl. KRL & NRL) 101%

HPCL 94%

MRPL 53%

RPL has operated at significantly higher capacity utilisation rates compared to other Indian refineries

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RPL - Income Statement for H1 FY 2001-02

RPL is India’s largest private sector company in terms of sales

H1 FY2001-02 H1 FY2000-01 %Rs.crs. $ mn. Rs.crs. $ mn. Change

Gross Sales 17,331 3,620 14,308 3,106 21%

EBITDA 1,830 382 1,479 321 24%

Interest 489 102 456 99

Depreciation 407 85 297 64

Tax 67 14 54 12

Net Profit 867 181 672 146 29%

Cash Profit 1,274 266 969 210 31%

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RPL - Factors Contributing to Profit Growth

High capacity utilisation rates of 107% leading to 14% volume

growth from 12.6 to 14.4 million tonnes

Improved product mix to take advantage of niche opportunities

Import tariff rationalisation in October, 2000, as well as in March

and April, 2001, leading to higher effective import tariff

differentials

Stability of earnings through risk management

Advantageous price setting mechanism for export cargoes

Ongoing productivity gains and cost reductions

Strong volume growth and superiority of RPL refinery’s configuration have contributed significantly to net profit growth

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Trends in Benchmark GRMs

RPL has reported consistently higher and less volatile GRMs

July-Sep Oct-Dec Jan-Mar Apr-June July-Sep

2000 2000 2001 2001 2001

RPL 6.4 6.4 5.3 5.7 4.9

US Gulf Coast 1.3 2 3.3 3 1

Mediterranean 5 4.8 2.9 2.8 1

Rotterdam 2.6 3.1 2.5 2.4 1.2

Singapore 4.5 2.7 3.1 2.3 1.5

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RPL - Factors Contributing to Higher GRMs

High complexity - Ability to process heavy and sour varieties of

crude oil

Superior product slate - leading to higher value addition per

barrel

Ability to optimise product mix in response to market conditions

Favourable location and access to world class infrastructure -

leading to lower freight/logistics costs

World class risk management techniques employed to hedge

margins

RPL’s fundamental strengths ensure superior GRMs, even under difficult industry conditions

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RPL - Profitability Ratios

RPL’s ROE ranks amongst the highest in refining companies globally

Q2 FY2001-02 Q2 FY2000-01

OPM % 9.31 9.34

NPM % 4.86 4.47

ROE % 17.7% 23.2%

Annualised EPS - Rs. ($) 3.34 (0.07) 3.13 (0.07)

Annualised CEPS - Rs. ($) 4.90 (0.10) 4.50 (0.10)

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RPL - Profitability Ratios

RPL’s ROE ranks amongst the highest in refining companies globally

H1 FY2001-02 H1 FY2000-01

OPM % 9.8 9.8

NPM % 5.0 4.7

ROE % 19.5 20.9

Annualised EPS - Rs. ($) 3.34 (0.07) 3.13 (0.07)

Annualised CEPS - Rs. ($) 4.90 (0.10) 4.51 (0.10)

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RPL - Liquidity Ratios

RPL’s strong liquidity ratios reflect healthy cash flows and conservative financial position

H1 FY2001-02 FY2000-01

Debt : Equity 0.83 0.83

Gearing 45.1% 43.9%

Interest Cover 3.26 2.98

Total Debt / Cash Flow 2.26 2.95

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RPL - India’s Largest Exporter

RPL is India’s largest exporter with exports of US$ 1,375 mn (Rs.

6,410 crores) in FY 2001

H1 exports of RPL’s products have increased 67% to US$ 759 mn

(Rs. 3,581crores)

RPL exported 3.6 million tonnes of products during H1 - Gasoline,

HSD, and naphtha were the largest items of exports

RPL’s products have been exported to 14 countries, including to

the most quality conscious customers globally

RPL’s exports reflect global competitiveness, international quality of products, operational flexibility and world class logistics capabilities

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RPL - Future Growth Strategies Capacity increase possible through debottlenceking at marginal

cost - capital cost advantage will be further enhanced

Investments in pipeline infrastructure - will result in smooth evacuation of products and enhanced cost competitiveness

Evaluating a multi-pronged strategy to enter the business of retail marketing of controlled products in India:

- potential joint ventures and alliances

- acquisitions of marketing and distribution assets (participating in disinvestment of government owned oil PSU IBP)

- development of its own distribution and marketing infrastructure

RPL’s entry into marketing will enhance integration and provide opportunities for generating attractive returns

Cellular BusinessCellular Business

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Reliance’s GSM Circles

Reliance’s

existing GSM

mobile

operations span

1/3rd of India’s

geographical

area and cover

nearly 400

million people

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Reliance Telecom - Update

Reliance has successfully established an extensive GSM network in the central and eastern part of the country

54% growth in GSM based cellular subscriber base over last six

months as compared to industry growth rate of 34%

Subscriber base has crossed 300,000 mark with services in 118

cities across 15 states

Leading market shares in most circles

Pre-paid services account for over 90% of cellular revenues – low

risk strategy

Strength of Reliance Mobile brand and expertise in building retail

consumer franchise demonstrated

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Kolkata GSM Circle

Kolkata circle forms a synergistic fit with Reliance’s existing GSM cellular operations in the Eastern region

Won the Kolkata GSM license for Rs. 78 crores (US$ 16

million) under the fourth cellular license bidding

Presence in Kolkata circle to offer synergy in operations and

marketing efforts in the entire Eastern region

Acquisition of Kolkata circle to enable superior roaming

facilities throughout the region

Roll out plans being finalised

Reliance InfocomReliance Infocom

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National footprint with licences signed for providing fixed line

services in 18 circles

Fixed line licences also enable tapping of mobile segment through

WLL services – in addition to existing GSM business

First company to receive National Long Distance (NLD) LOI

Work on 60,000 route kms, world class IP backbone on schedule

– project on target for completion by end 2002

Participating in process for disinvestment of VSNL, India’s

monopoly international long distance carrier - ILD services to be

opened up to private sector in April, 2002

Reliance Infocom - Current Status

Reliance Infocom’s comprehensive business model targets opportunities in high growth voice and data markets

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Reliance Infocom to be the holding company for all infocom and

related businesses of Reliance group

Reliance Infocom to invest up to Rs. 25,000 crores (US$ 5 bn)

over the next 5 years

Project proposed to be financed with 2:1 debt:equity

RIL is the lead investor with 45% equity stake

Reliance Infocom - Investment Plans

Reliance’s infocom investments are likely to yield attractive returns, and create superior value for RIL’s shareholders

Value CreationValue Creation

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RIL’s Share Price Performance

RIL shares have consistently outperformed the broad market over all time frames - Compounded return of 19 % per annum over the last 5 years

% changePeriod RIL Sensex Nifty

1 year -16% -20% -17%

2 year 8% -33% -27%

3 year 130% 5% 16%

5 year 142% -7% 4%

10 year 206% 59% -

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RIL’s Share Buyback Philosophy

Our consistent and transparent policy regarding share buyback:

Rs. 303 not an automatic trigger for buyback

Share price decline part of global market meltdown

RIL shares have been outperforming Sensex and other

leading stocks over all time frames

Buyback not a mechanism for providing exit to short term

traders / speculators / operators

Investment of cash flows directed towards highest return

investments

RIL’s share buyback program is focussed on enhancing value for long term shareholders

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RIL’s Beta Has Declined

Significant reduction in share price volatility, beta and WACC achieved over the last few years

RIL Beta

0.5

1.0

1.5

2.0

1995 1996 1997 1998 1999 2000 2001

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Value Creation

Market recognition of value creation in the company has led to superior share price performance

Consistent focus on value creation as operating managers:

Through margin improvement – focus on productivity

improvements and higher margin products

Through capital efficiency – stretching and sweating existing

assets, focus on high returns investment for future growth

Through financial efficiency - continuous innovation to lower

financial costs and reduce the cost of capital

SummarySummary

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SummaryRIL is on track to deliver more than 11 million tonnes in

production volume in the current financial year

RIL has reported good performance in a very difficult industry

environment, reflecting the strength of its cost and market

positions, and the success of its business strategies

Global petrochemicals margins are likely to remain under

pressure, owing to the world-wide slowdown in demand

RIL’s future investments in oil and gas and infocom are likely to

generate attractive returns in the medium to long term

Reliance will endeavour to continue to perform well and create superior value for all its shareholders, despite the tough operating environment for the global petrochemicals industry

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Reliance Industries Limited

India’s World Class Corporation