1 Reliance Industries Limited Financial Presentation H1 FY October 31, 2001

2 Forward Looking Statements 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 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.

3 Operating Environment Financial Performance Business Review Reliance Petroleum Reliance Infocom Value Creation Summary Contents

4 Operating Environment

5 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

6 Volatility in Feedstock Prices Feedstock price volatility has created uncertainty over petrochemicals industry margins

7 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 Raw Material

8 % 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 Trend in Feedstock & Product Prices - Domestic Raw Material

9 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

10 RIL’s H1 Performance Highlights Capacity utilisation104% Production volumes5.7 mn. tonnes, up 9% Domestic sales 88% of total sales ExportsUS$ 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

11 H1 Financial Performance

12 RIL+RPL - Financial Highlights H1 FY Rs.crs.$ mn. Sales30,0006,300 Operating Profit4,6001,000 Cash Flow3, Net Profit2, Total Assets52,00011,000 Reliance continues to be the No. 1 business group in India in terms of all major financial parameters

13 RIL Income Statement for Q2 FY Lower interest costs have contributed to profit growth Q2 FY Q2 FY % Change Rs.crs.$ mn.Rs.crs.$ mn. Sales6,2341,3026,7211,459-7% Trading Sales--1, Total Sales6,2341,3028,3941,822 EBITDA1, , Interest Depreciation Tax Deferred Tax1--- Net Profit % Cash Profit1, , %

14 RIL Income Statement for H1 FY Strong performance in the continuing adverse global and domestic environment in the petrochemicals industry H1 FY H1 FY % Change Rs.crs.$ mn.Rs.crs.$ mn. Sales12,6242,63712,8562,791(2%) Trading Sales--2, Total Sales12,6242,63715,0093,258(16%) EBITDA2, , % Interest (19%) Depreciation % Tax Deferred Tax2---- Net Profit1, , % Cash Profit2, , %

15 Income Statement - Consolidated H Q2 FY H1 FY Rs.crs$ mn.Rs.crs.$ mn. Sales6,2341,30212,6242,637 Total Expenditure4,9961,04410,2112,133 Operating Profit1, , Share in Income of Associates Other Income Interest Depreciation Tax Net Profit , Consolidated net profit reflects the true picture of RIL’s returns on its investments

16 Segment Information PetrochemicalsRefiningOthers Segment Revenue11,90217, Segment Results (EBIT)1,3781, Capital Employed15,54418,3185,034 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 Crores

17 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

18 RIL Profitability Ratios Margins have improved in a tough operating environment H1 FY FY 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

19 At the current market price, RIL shares are trading at 7.5 times consolidated EPS H1 FY NPM %20.0% ROE %25.4% ROCE %15.6% EPS - Rs. ($) 33.6 (0.70) Consolidated Profitability Ratios

20 RIL Liquidity Ratios RIL’s strong cash flows and refinancing efforts have enabled reduction of interest costs H1 FY FY Debt : Equity Gearing44%41% Interest Cover3.7x3.3x Total Debt/Cash Flow2.0x1.8x

21 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

22 Business Review

23 RIL’s Product Mix Composition of RIL’s sales Petrochemicals businesses dominate RIL’s portfolio - share of oil and gas business likely to increase

24 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, ,000 crores (US $ million) over next 3 years Oil and Gas operations are likely to make an enhanced contribution to RIL’s future revenue and profit growth

25 Oil and Gas - Production Growth 8% Oil Production in kT Gas Production in kTOE Output from the 2 currently producing oil and gas fields of Panna- Mukta and Tapti (PMT) has further increased in H1

26 Polyester - Production Growth 16% 9% Production in ‘000 tonnes Polyester demand increased by only 3% during the first half, reflecting weak demand conditions in the domestic markets

27 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

28 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 -1% -6%

29 Polymers - Production Growth 16% Production in ‘000 tonnes 10% Polymers demand has shown further strong growth of 15% during the first half - on top of 11% growth in FY Higher relative industry production growth reflects the impact of new industry capacities operating at fuller rates during H1

30 Polymers - Update Healthy demand growth for RIL’s polymers during H1: - PP17% - PE12% - PVC16% 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

31 Reliance Petroleum

32 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 LPG10.2% Gasoline5.8% HSD-5.3% SKO-5.6% All Products-1.5%

33 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

34 Capacity Utilization – RPL vs. Indian Peers H1 Capacity Utilization RPL107% IOC (Incl. CPCL & BRPL)85% BPCL (Incl. KRL & NRL) 101% HPCL94% MRPL53% RPL has operated at significantly higher capacity utilisation rates compared to other Indian refineries

35 RPL - Income Statement for H1 FY RPL is India’s largest private sector company in terms of sales H1 FY H1 FY % Rs.crs.$ mn.Rs.crs.$ mn. Change Gross Sales17,3313,62014,3083,10621% EBITDA1, , % Interest Depreciation Tax Net Profit % Cash Profit1, %

36 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

37 Trends in Benchmark GRMs RPL has reported consistently higher and less volatile GRMs July-SepOct-DecJan-MarApr-JuneJuly-Sep RPL US Gulf Coast Mediterranean Rotterdam Singapore

38 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

39 RPL - Profitability Ratios RPL’s ROE ranks amongst the highest in refining companies globally Q2 FY Q2 FY OPM % NPM % 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)

40 RPL - Profitability Ratios RPL’s ROE ranks amongst the highest in refining companies globally H1 FY H1 FY OPM % NPM % ROE % Annualised EPS - Rs. ($)3.34 (0.07)3.13 (0.07) Annualised CEPS - Rs. ($)4.90 (0.10)4.51 (0.10)

41 RPL - Liquidity Ratios RPL’s strong liquidity ratios reflect healthy cash flows and conservative financial position H1 FY FY Debt : Equity Gearing45.1%43.9% Interest Cover Total Debt / Cash Flow

42 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

43 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 Business

45 Reliance’s GSM Circles Reliance’s existing GSM mobile operations span 1/3rd of India’s geographical area and cover nearly 400 million people

46 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

47 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 Infocom

49 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

50 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 Creation

52 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 % change PeriodRILSensexNifty 1 year-16%-20%-17% 2 year8%-33%-27% 3 year130%5%16% 5 year142%-7%4% 10 year 206%59% -

53 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

54 RIL’s Beta Has Declined Significant reduction in share price volatility, beta and WACC achieved over the last few years

55 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

Summary

57 Summary RIL 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

58 Reliance Industries Limited India’s World Class Corporation