The Integrated PET Player - B Arun Reliance Industries Limited
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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
Population 1050 Mn
Middle Class ~310 Mn
Teenagers 150 Mn
Urban Workers 120 Mn
India
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 Average Annual
Middle %
Annual GDP population Literacy
Class
growth growth
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
5India: 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
6Growth Drivers
India East and S.E. Asia
Domestic Exports
Services Manufacturing
Consumption Investment
High tech, capital Low tech, labour
intensive industry intensive industry
- India’s success is market led whereas China’s is
state induced.
- The entrepreneur is at centre of the Indian model
7Reliance – 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
8Reliance – Vertical Integration
Textiles 1970s
Fibers 1980s
Fiber
Polymers Chemicals 1990s
Intermediates
Value Added
Olefins Aromatics
2000s
Petroleum Refining
Oil & Gas E & P
Backward vertical integration has been the cornerstone
9Delta - Naphtha to PX
1000 $/MT
Threshold Delta PX Delta
800
600
400
200
0
5
1
1
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1
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Q
Q
Q
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Delta based on South East Asian prices
2 out of 24 quarters below threshold
10Delta - PX to PTA
$/MT
500
Threshold Delta PTA Delta
400
300
200
100
0
1
1
2
2
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Q
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Delta based on South East Asian prices
6 out of 24 quarters below threshold
11Delta - PTA/MEG to PET
$/MT
500
Threshold Delta PET Delta
400
300
200
100
0
1
1
2
2
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Delta based on South East Asian prices
7 out of 24 quarters below threshold
12Delta - Naphtha to PET
$/MT
800
Threshold Delta Naphtha - PET Delta
700
600
500
400
300
200
100
0
0
0
1
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Delta based on South East Asian
prices
The last man standing will be an integrated player
Competitive Advantage from Integration !
13Domestic Leadership & Global Rankings
Leading Market Shares in India Leading Global Position
1 Polyester 3 Paraxylene
Polyester 55% (Fibre & Yarn)
Fibre Intermediates 78%
3 Refining (1) 5 Purified
Terephthalic
Polymers 65% Acid
Refining 28% 6 MEG 7 Polypropylene
Amongst top 10 global players
Dominant market share in India
in all its core businesses
Leading domestic market shares and global positions
14Reliance Growth Plan
• Committed to investing US$ 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
15Polyester Production: Changing Trends
1980 2000 2006
Producer KTA Producer KTA Producer KTA
DuPont 841 Nan Ya 1035 Reliance 1700
Celanese 605 Reliance 779 Nan Ya 1080
Hoechst 395 KoSa 700 Sanfangxiang 1050
AKZO 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
US, EU, Japan Taiwan, Korea China, India
RIL: Leadership in two decades
16Growing Share of Polyester production
2001 2005 2010
29 Mn Tons 40 Mn Tons 53 Mn Tons
2%
26% 39%
4%
27% 39%
33%
5%
28% 39%
30%
28%
Filament Staple PET Film
Source: PCI
One third of total Polyester production will be in PET
17PET 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………….
18Reliance 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
19Factors 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
20Reliance Russia Logistic reach
– India Iran Russia Treaty Map
North South Corridor- Open up logistic solutions
– Western Ports-Better shipping performance
– Leveraging China Warehouse through Transsiberian Map
Railways, conventional route ,MPS Containers
21The North South Corridor route
Back
The Quicker Cheaper route- Multimodal challenge
22Russia- Reach through China Warehouse
Back
From Reliance Shanghai
23India 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 Co-
operation 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
24Summary
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
25Thank You
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