Kishor Jhalaria

Reliance Industries Ltd.

20 Aug 2018

India’s place in the new Asian landscape –

Petchem supply demand and competitiveness

Forward Looking Statement

This 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 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.

2

1.Indian Economy: Growth & Outlook

2.Implications for Petrochemicals in India

3.Indian Petchem Demand and supply

and competitiveness

3

AGENDA

4

A few interesting facts about India

7th largest country by area, 2nd most populous ~ 1.3 Bn People

At ~ 7.4 % GDP 2018-19 (F), India is the fastest growing economy

Youngest Nation – Expected average age of ~29 years by 2025

Low cost YET highly skilled manpower: 2nd most no. of English

speakers

Highly diversified: 29 states, multiple languages, dialects – Allows

mass customization of goods and services

Burgeoning Consumption – Will have largest middle class population

by 2027

Growth in per capita purchasing power - Household savings 3x in last

8 years

India – World’s most diverse nation

Sources: IMF, Reuters, World Bank, World Economic Forum

5

Economy is Scaling new heights, against all odds

After 150 years,

India overtakes

UK to become

the world’s 5th

largest

economy

India emerges as

2nd fastest

growing market in

passenger cars

and aviation

Sensex crosses 37500

for the first time even as

Brent crude spiked

above $75/barrel in July

2018

Sources: IMF, Reuters, World Bank

6

Indian Economy is at an inflection point

India’s GDP

$1Trn.

$2 Trn.

$3 Trn.

60

Years taken to

reach

8

5Sustained &

Faster growth

rates

In the midst of an expansion

to position India as one of

the three largest

economies in the world

Has reached an

inflection

point

This inflection point reflects the

growth trajectory of developed

economies

India’s GDP

growth pegged at

~7- 8% p.a.

Requires sustained

investment in basic

building blocks, like

Petrochemicals

Sources: IMF, Reuters, World Bank

7

Rising Incomes Feeding Aspirations

➢ Consumption spiking across markets

➢ Affordable housing

➢ White goods

➢ Branded goods & apparels

➢ Automobiles

➢ Electronics

2016 2017 2018 2019 2020 2021

6.8

7.2

7.7 7.8 7.98.1

India – GDP Growth Rate Forecast, IMF Growth in %

Avg. Household

Income ($)2441 6393 18448

Source: BCG CCI proprietary income database; BCG analysis, IMF forecast July’17

Continued growth is driving up purchasing power

8

Well Structured Government Initiatives such as…

GST

• Robust integrated comprehensive tax compliance

• Widening tax base, reducing cost of operation

Make in India

• To raise share of manufacturing from 16% of GDP (current)

to 25%

• Built on four pillars: New Processes, New Infrastructure, New

Sectors, New Mindset

Infrastructure Development Initiatives

• Investing in roads, railways and ports

• Connectivity to remote parts of the country

• Shelter and power to all Indians

….Causing a tectonic shift from Un-organized to Organized economy

9

Changing macro trends driving growth across

industries

CAGR 20.6% CAGR 41.4% CAGR 15.7%

CAGR

PV 13.4% | CV 12.2%

CAGR 15.9% CAGR

8.7%

• Economic & Population

Growth

• Increasing Urbanization

& Changing

Demographic Mix

• Increasing Energy

Demand & Production

• Higher Disposable

Incomes

• Rapid Digitization

• Sustainability

Primary “enablers”(aka Petrochemicals) set to grow to at an exceptional rate

CAGR estimates for FY 16-20 (E)

Sources: Assocham-TechSci Research report | NEC Technology and Assocham study | CMA, CMIE Database, TechSciResearch | SIAM, NEMMP 2020, TechSci Research; | ASSOCHAM-IITTM study; | PHD Chamber of Commerce

10

AGENDA

1.Indian Economy: Growth & Outlook

2.Implications for Petrochemicals in India

3.Indian Petchem Demand and supply and

competitiveness

11

Petrochemicals: Demand Drivers

Robust macro trends & evolving demographics driving demand

• Make in India• Swachh Bharat• Smart Cities• GST• Food Security

• Rising middle class

• Higher disposable

Income

• Imp in standard of

living

• LOCAL SUPPLY

• Retail –Food packaging

• Agriculture/ Irrigation

• Healthcare• Automobiles• White Goods

• Infrastructure• Housing• Automobiles• Electronics goodEco

Growth

New end uses

Demand Drivers

Govt. Policies / Program

➢ India’s Per Capita

consumption

lower across

all key

Petrochemical

products

➢ Low Consumption

and a large

population →

Huge volume

potential

12

Petchem Per Capita Consumption - India v/s

World Per Capita Consumption –

2017 (E)

ChinaGlobal Avg.

(Kg/person)

Po

lym

ers

India

PP3.7 9.2 18.3

PE4.0 12.8 20

2.6

PVC12.45.7

PET0.9 3.82.9

PBR /

SBR 0.39 1.550.96

Fibre5.8 17.212

Ela

sto

mer

Fib

re

Strong, growing & sustainable consumption and demand

Sources: Consultant Estimates, RIL Internal Estimates

India getting uniquely positioned for RAPID

Petrochemicals Growth:

➢ Conducive Government Policies

➢ Economical Stability – Robust Fundamentals

➢ Young and Skilled Man Power

➢ Huge Demand Potential across all Sectors

➢ But a HIGHLY Competitive Market

13

In Summary …………

Best of India is yet to arrive….

14

AGENDA

1.Indian Economy: Growth & Outlook

2.Implications for Petrochemicals in India

3.Indian Petchem Demand and supply and

competitiveness

2.2

10.7 0.7 0.9

0.2

2.9

0.40.6

0.3

0.5 0.40.1

PP PE

• ~2.5 MMT PE capacity addition by RIL, OPAL,

GAIL & BCPL (past 24-36 months)

• Sizeable proportion of PP integrated with

refinery FCC’s

• PP capacity nearly at par with PE (no on-

purpose C3”)

15

Polyolefins Capacity in India

Sources: Consultant Estimates

Polyolefins Players & Capacities in India

Do

mesti

c P

E c

ap

acit

y

Do

ub

led

in

past

2 y

ears

16

Global Ethylene Cash Cost Curve Steepened

with Rising Crude…

0

200

400

600

800

1000

1200

2 11 21 32 39 45 52 58 64 72 79 84 89 94 100 106 114 121 128 137 143 147 151 157 162 166 169

Q2/2019 Q1/2019 Q2/2018

Q1 2019: Crude ~72.1 $/bbl

Q4 2018: Crude 63.9 $/bbl

Q1 2018 Crude 49.7 $/bbl

European & JKT

Naphtha Crackers

Other Smaller

Gas Crackers &

MTO

Middle East

Gas

Crackers

Asian

Naphtha

Crackers

US Gas

Crackers

Cumulative Global Ethylene Capacity (MMT)

Ca

sh

Co

st

( $

/ M

T E

+P

)

(Source: RIL internal estimates)Note: Crude prices are average of Dubai Crude for the quarter

Various Indian Crackers

17

0

2

4

6

8

10

2010 2017 2025E

MM

T

Demand Capacity

Indian PE market balance

• HPCL Mittal Energy planning to add 1.2 MMT PE

capacity over next 4-5 years (refinery integrated)

• GAIL / HPCL JV Mixed feed cracker in East Coast of

India (20??)

• Mega-refinery cum petchem complex in West Coast of

India (20??)Sources: Consultant Estimates

18

0

2

4

6

8

10

2010 2017 2025E

MM

T

Demand Capacity

Indian PP market balance

Sources: Consultant Estimates

• IOCL’s 700 KTA PP capacity (Paradip) is expected to come in 2019

• HPCL Mittal Energy planning to add 500 KTA PP capacity over next

4-5 years (refinery integrated)

• GAIL / HPCL JV Mixed feed cracker in East Coast of India (20??)

• Mega-refinery cum petchem complex in West Coast of India (20??)

19

0

2

4

6

2010 2017 2025E

MM

T

Demand Capacity

India PVC Supply Demand

Sources: Consultant Estimates

• DCW Ltd to add 60 KTA PVC capacity

• GAIL/HPCL JV to build 300 kta PVC in East

Coast India (20??)

20

In Conclusion ……………

Unparalleled Demographic Advantage in India

Various initiatives of Government of India

Improvement in Purchasing Power, wealth distribution

INDIA POISED FOR RAPID GROWTH ACROSS MULTIPLE PETCHEMS FAMILIES

Integration with oil refining - Reasonably competitive

cost position

Home market with high growth potential

Sources: IMF, Reuters, World Bank, World Economic Forum

• Indian economy is an elephant that’s starting to run

• India can be almost what China was for the world

economy

• India has 3 decades before it hits the point where the

working age population starts to decline

• IMF views India as a “long run source of global growth”

21

Quote from IMF (Aug-2018)