Reliance Industries. Stock performance (1 year) 21 May 2013 Annual Report Update Sector: Oil and Gas 20,112 6,114

Transcription

1 BSE SENSEX S&P CNX 20,112 6,114 Bloomberg RIL IN Equity Shares (m) 3,228.0 M.Cap. (INR b)/(usd b) 2692/ Week Range (INR) 955/674 1,6,12 Rel. Perf. (%) -1/-3/-4 Valuation summary (INR b) Y/E March E 2015E Sales 3,721 3,663 3,616 EBITDA Adj. PAT Adj. EPS (INR) EPS Gr. (%) BV/Sh.(INR) RoE (%) RoCE (%) Payout (%) Valuations P/E (x) P/BV (x) EV/EBITDA (x) Div. Yield (%) Shareholding pattern % As on Mar-13 Dec-12 Mar-12 Promoter Dom. Inst Foreign Others Stock performance (1 year) 21 May 2013 Annual Report Update Sector: Oil and Gas Reliance Industries CMP: INR827 TP: INR870 Neutral Focus shifts to new big capex in core businesses 25% of CE in non-core businesses; Retail turns EBITDA positive Reliance Industries' (RIL) FY13 annual report indicated management focus on next capex cycle, so as to leverage integration capabilities at Jamnagar. Key highlights: Capital Employed (CE) in new non-core businesses reach USD12b; Organized Retail business turns EBITDA positive. Balance sheet (BS) strong with net cash at INR106b; Profitability under pressure due to high cash balance and long gestation investments. Investments on BS declined due to sale of Yemen block; No downgrades in 1P reserves. Energy expenses increased ~3.2x in the last two years (higher cost of LNG); new capex to partly address this issue. New projects to lead next phase of growth; Retail, Shale Gas and Telecom other key focus areas While turnaround in the Retail business (EBITDA of INR780m in FY13 v/s loss of INR3.4b in FY12) is positive, any meaningful addition to earnings is expected only in FY16/17, when its large projects (pet coke gasification/offgas cracker) commission. Updates on new projects: 1. Polyester expansion: Capacity to start commissioning from FY Petcoke gasification: Procurement of long lead items is ongoing; could be completed in 36 months. Expects GRM addition of USD2.5/bbl. 3. Off-gas cracker: Technology suppliers, project management and EPC contractors finalized; likely to commission by 2016/17. RIL has already invested >USD12b in other businesses like Retail, Telecom, Shale Gas, Hotels, etc. Retail, Shale Gas and BWA are the prime focus areas. Balance sheet robust; net cash at INR100b in FY13 While gross debt grew by INR41b in FY13 to INR724b, cash and equivalents grew by INR127b to INR830b. RIL's capex in FY13 was insignificant in relation to its cash earnings - its net cash grew from INR20b to INR100b (5x) during the year. Profitability ratios under pressure, led by cash and business downturn Despite better performance in refining, weak performance of the Petchem and E&P businesses has led to sharp decline in EBITDA margin from 15.4% in FY11 and 10.2% in FY12 to 8.5% in FY13. RoCE for the Petchem/E&P segments has declined from 20%/10% a year ago to 13%/7% in FY13. Investors are advised to refer through disclosures made at the end of the Research Report. Key things to watch: (1) Gas pricing, (2) DGH approvals for E&P program, (3) Developments on USD12b capex plan, and (4) Updates on BWA and Retail forays. Maintain Neutral For FY14/FY15, we model (a) GRM at USD9/bbl, (b) KG-D6 gas price at USD4.2/7/ mmbtu, and (c) KG-D6 gas volumes at 13/15mmscmd. Core business outlook (90% of earnings) remains subdued and we expect RoE to hover at ~12%. The stock trades at 11x FY15E adjusted EPS and at an EV of 8.2x FY15E EBITDA. Neutral. Harshad Borawake (HarshadBorawake@MotilalOswal.com); Kunal Gupta (Kunal.Gupta@MotilalOswal.com);

2 New projects to lead next phase of growth Polyester expansion: Capacity to start commissioning from FY14. Petcoke gasification: Procurement of long lead items is ongoing; could be completed in 36 months. Management expects GRM addition of USD2.5/bbl. Off-gas cracker: Technology suppliers, project management and EPC contractors finalized; likely to commission by 2016/17. RIL has already invested ~USD12b in other businesses like Retail, Telecom, etc. Significant capital employed in new long gestation projects (USD b) 60% of capital employed is in cash (29%, non-core investments (23%) and CWIP (6%) *Standalone Break-up of Consolidated Capital Employed: Investments in new business at >USD12b (USDb) 21 May

3 Balance sheet analysis RIL s balance sheet remains strong, with net cash as at the end of FY13. SA and Cons BS: Higher consolidated debt led by borrowings for Shale gas and BWA Standalone Balance Sheet Consolidated Balance Sheet In INRb FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Shareholder Funds 1,264 1,372 1,515 1,661 1,800 1,214 1,416 1,550 1,702 1,830 Total Debt Deferred tax Liability Total Liabilities 2,100 2,106 2,305 2,466 2,646 2,072 2,169 2,463 2,649 2,839 NFA 1,003 1,533 1,332 1,097 1,097 1,070 1,602 1,581 1,388 1,335 CWIP Intangibles assets under devp. NA NA NA NA NFA + CWIP 1,694 1,654 1,555 1,215 1,289 1,809 1,772 1,863 1,642 1,834 Investments Net Current Assets Total Assets 2,100 2,106 2,305 2,466 2,646 2,072 2,169 2,463 2,649 2,839 Capitalization of intangible assets under development could increase Depreciation / depletion charge in future Net cash grew 5x in FY13: While gross debt grew by INR41b in FY13 to INR724b, cash and equivalents grew by INR127b to INR830b. RIL s capex in FY13 was insignificant in relation to its cash earnings its net cash grew from INR20b to INR100b (5x) during the year. With no major capex compared to cash earnings, net cash grew 5x in FY13 (INR b) FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gross debt Cash & Cash equiv Net debt Debt / Equity Net Debt / Equity N i l Decrease in investments led by sale of Yemen block: There were no major changes in the balance sheet in FY13. However, there was a marginal decline in investments due to sale of the Yemen block during the year. With no new major investments, sale of Yemen block brings down total investments (INR b) FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Chg (%) Shareholders Funds ,264 1,372 1,515 1,661 1, Total Debt (7.0) Deferred tax Liability Total Liabilities ,258 2,100 2,106 2,265 2,368 2, NFA + CWIP ,694 1,654 1,549 1,215 1, Investments (2.8) Net Current Assets Total Assets ,258 2,100 2,106 2,265 2,369 2, May

4 Investments increased in liquid securities and Infocom business, but decreased in E&P business (due to sale of Yemen block) (INR b) FY09 FY10 FY11 FY12 FY13 Chg. (%) Investments Liquid Investments BWA Foray E&P Retail Others Total Increase in CWIP driven by investment in new polyester capacity (INR b) FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 YoY Chg (%) Gross Block ,042 1,496 2,159 2,213 2,055 2, Depreciation , Net Block ,003 1,533 1,427 1,137 1, CWIP Total (GFA + CWIP) 919 1,071 1,272 2,187 2,280 2,240 2,092 2, YoY Chg Profitability ratios under pressure, led by cash and business downturn: Weak performance of the Petchem and E&P businesses has led to sharp decline in EBITDA margin from 15.4% in FY11 and 10.2% in FY12 to 8.5% in FY13. RoCE for Petchem/E&P segments declined during FY13 to 13%/7% from 20%/10% a year ago. RIL has significant cash (and equivalents) at its disposal for investment INR b USD b Cash on balance sheet (March 2013) Treasury shares Total 1, Current market cap 2, Cash as % of market cap 40% Total assets (March 2013) 2, Cash as % of total assets 41% High cash balances impacting return ratios 21 May

5 Income statement analysis Consolidated PAT lower than standalone: Consolidated PAT for FY13 was INR201b, lower than the standalone PAT of INR210b due to losses in Reliance Retail, Recron Malaysia and other non-core operations. This was despite consolidated EBITDA of INR322b being higher than standalone EBITDA of INR308b (see table below for reconciliation of standalone and consolidated EBITDA). Comparing standalone and consolidated P&L (INR b) Standalone P&L Consol. P&L Y/E March FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Net Sales 1,418 1,925 2,482 3,299 3,603 1,512 2,037 2,658 3,585 3,971 Change (%) EBITDA % of Net Sales Depreciation Interest Other Income PBT Tax Rate (%) PAT Reconciliation of standalone and consolidated EBITDA (INR b) Particulars FY12 FY13 Remarks Consolidated EBITDA Standalone EBITDA Difference Reconciliation RHUSA (Shale Gas) Average Production increased 93% YoY from 5.9 mmscmd in 4QFY12 to 11.9 mmscmd in 4QFY13 Recron Malaysia Swing in profitability is surprising with reference to the headline polyester margins GAPCO Reliance Retail Crossed INR100b in sales, turned EBITDA positive for the first time Others Total *EBITDA includes other income Interest capitalized is expected to increase with capex on new projects (INR b) FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Total Debt Total Debt (with RPL) Gross Interest Interest Capitalized As a % of gross interest 42% 31% 45% 66% 33% 17% 14% 11% Interest Interest rate (%) 6.9% 6.1% 8.3% 4.4% 4.4% 5.1% 6.0% Debt / Equity (x) Net Debt/Equity (x) (0.05) Nil 21 May

6 Expenditure on electricity, power and fuel has increased ~3.2x in last two years: In FY13, expenditure on electricity, power and fuel surged to INR71.6b against INR40.9b in FY12 and INR22.6b in FY11, primarily due to higher cost of imported LNG used for refinery operations. Other income at INR80b increased ~30%, led by high cash balance. Sharp increase in energy costs: Expect petcoke gasification project to partly address this issue (INR b) FY08 FY09 FY10 FY11 FY12 FY13 RM Cost 982 1,066 1,470 1,915 2,754 3,033 As a % of net sales Stores, chem & pack materials As a % of net sales Electric power, fuel & water As a % of net sales Sales & distribution exps As a % of net sales Employee Cost + Prof. Fees As a % of net sales Forex change (10) 5 (7) (4) 2 (1) Others 24 (4) Total Expenses 1,101 1,185 1,619 2,101 2,963 3,295 *FY09 other exp -ve due to large transfer to project development expenditure of INR34b Positive free cash flow: RIL reported free cash flow (operating cash flow less capex) of INR171b in FY13 compared to INR190b in FY12 mainly due to investment in buyback of shares and higher purchases of fixed assets. Leverage ratios at comfortable levels FCF remains strong (INR b) 21 May

7 Analysis of key subsidiaries Organised retail business turns EBITDA positive: RIL s Retail business turned EBITDA positive during FY13 v/s a loss of INR3.4b in FY12. Its FY13 revenue grew 42% to INR108b (v/s INR73.6b in FY12), driven by same store sales (SSS) growth of 7-18% across formats. RIL has invested ~INR100b till date in the Retail business. Of its total Retail sales, ~65% is contributed by 13m loyalty customers. RIL currently operates 1,466 stores (184 new stores in FY13) in 129 cities and has an area of 9msf. Top-10 Retail subsidiaries by assets and revenues (INR b) Top 10 by assets Chg (%) Reliance Retail Reliance Fresh Reliance Universal Enterprises Reliance digital Retail Reliance Trends Reliance Gems and Jewels Reliance Brands Limited Reliance Footprint Reliance Dairy Foods Reliance Leisures Limited * Retail business turns EBITDA positive, but bottomline still in red (INR b) Total Assets Total Revenue PBT (6) (6) (3) PAT (5) (4) (3) Top 10 by revenues Chg (%) Reliance Fresh Reliance digital Retail Reliance Trends Reliance Gems and Jewels Reliance Dairy Foods Strategic Manpower Solutions Reliance Footprint Reliance Leisures Reliance Supply Chain Solutions Reliance Brands Limited Strong sales growth traction across categories RIL s Retail business presence across India 21 May

8 Of RIL s other key subsidiaries, Gapco (owns fuel retail business in Africa) generated positive returns while Recron (own polyester capacities in Malaysia) turned PBT negative during the year. Its IPL subsidiary was also marginally PAT negative for FY13. Summary of other key subsidiaries (INR b) Subsidiary Assets Revenues PBT PAT Gapco Kenya Limited Gapco Tanzania Limited Gapco Uganda Limited Gapco Rwanda Limited Gapoil (Zanzibar) Limited Total Polyester business in Malaysia Recron (Malaysia) Sdn Bhd IPL cricket Indiawin Sports Private Limited Update on US shale gas business RIL s gross shale gas production grew 127% to 118.5bcf. Its cumulative investments in this segment surged to USD5.7b. RIL expects the growth momentum in its shale gas business to continue in FY14. Also, during FY13, RIL completed its carry obligations in the Carrizo and Pioneer JVs. This gives them improved governance rights and increased alignment on activity levels. Details of shale gas business (INR b) FY12 FY13 YoY chg. (%) Revenues EBITDA Proved Reserves (bcf) 788 1, Gross prodn (bcf) Cum wells Drilled Total Producing wells Cumulative capex Update on Telecom business RIL plans to provide reliable and fast internet connectivity through its subsidiary, Reliance Jio Infocomm Limited "RJIL" (formerly Infotel Broadband Services Limited; Broadband Wireless Access (BWA) spectrum in all the 22 telecom circles of India). Currently, broadband in India has only ~1% market penetration (15m broadband connections, excluding internet access by wireless phone subscribers). RJIL plans to use TDD LTE technology for its country-wide next generation network deployment to provide connectivity and related digital services to its customers. RJIL has finalized key agreements with its technology partners, service providers, infrastructure providers, application partners, device manufacturers and other strategic partners for the project. RJIL has also completed the detailed planning for Pan India implementation of the infrastructure needed for the project. 21 May

9 Other Key Highlights No changes in 1P and 1P+developed gas reserves, except for production adjustment RIL s net production of Oil and Gas was 0.6mmt (down 35.5%) and 6.7bcm (down 47.5%), respectively during FY13. The decline was primarily due to lower production at its KG- D6 fields. There is no major change in Oil and Gas reserves for the year (post production for FY13). RIL s proved reserves stand at 663mmboe of Oil and Gas as at the end of FY13. With no new additions, E&P reserves declined 7%, led by production during the year Proved Reserves FY09 FY10 FY11 FY12 FY13 As a % of Remarks open. bal. Crude Oil (mmt) Opening Balance Transf. of inter. to 3rd party Addition/(deletion) Production Led by production during the year Closing Balance Natural Gas (bcm) Opening Balance Transf. of inter. to 3rd party Addition/(deletion) Production Led by production during the year Closing Balance Total (Oil + Gas) In mmtoe In mmboe 1,544 1,483 1, Completed 38.5% of announced buyback program RIL completed its buyback program in January 2013 and bought back 46.2m shares, 38.5% of the total buyback quantity of 120m shares offered in January Total investment in the buyback was INR33.7b and the average price at which the shares were bought back was INR726.7/share (maximum price set at INR870/share). RIL bought and extinguished 42.6m shares for INR30.4b in FY13. RIL bought back 46.2m shares at an average price of INR727/share Buyback details FY12 FY13 Total Total to be bought back (mn shares) Bought back till date (mn shares) % bought back (%) 3.5% 35.0% 38.5% Avg. Price (INR/sh) Amount spent (INRb) Total amount to be spent (INRb) % of total amt spent (%) 3.0% 29.2% 32.2% Source: Company, BSE and MOSL 21 May

10 Key related-party transactions increased by ~20% (INR m) FY09 FY10 FY11 FY12 FY13 Arranged company-wise Reliance Ports and Terminals 12,597 27,726 26,352 25,940 31,140 Reliance Utilities and Power Private 2,899 2,858 2,920 3,690 13,250 Reliance Utilities Private 3,959 6,745 6,253 7,710 - Reliance Gas Transportation Infra. (RGTIL) 71 3,490 6,523 2,350 1,960 Reliance Jamnagar Infrastructure 600 3,732 3,930 3,500 - Reliance Corporate IT Park ,215 2,580 7,520 Donations to Reliance Foundations and others ,100 2,180 Relaince Commercial Dealers ,580 Gujarat Chemicals Port Terminal Company Reliance Retail 937 1, Reliance Petro Marketing Ltd , Reliance Fresh Reliance Europe Reliance Supply Chain Solutions Reliance Industrial Infrastructure Reliance Infosolutions Private Reliance Trends Reliance Fin. Distr. and Advisory Services Reliance Polyolefins Reliance Petroinvestments Total 22,697 48,434 50,595 49,790 59,820 Production volume up 8% in Polymers, down 3% in Polyester (k tons) KT FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 YoY (%) Polymer PP 1,285 1,641 1,712 1,466 2,399 2,497 2,740 2, PE 1,031 1,011 1, , , PVC Total Polymer 2,935 3,214 3,374 3,076 4,091 4,106 4,455 4, Polyester PFY PSF PET Total Polyester 1,274 1,638 1,572 1,534 1,666 1,710 1,662 1, Polyester Intermediates PX 1,395 1,779 1,878 1,879 1,875 1,840 2,004 1, PTA 1,304 1,777 2,035 1,978 2,049 2,033 2,069 2, MEG Total Intermed. 3,475 4,337 4,714 4,583 4,619 4,548 4,756 4, Total 7,684 9,189 9,660 9,193 10,376 10,364 10,873 10, May

11 Excerpts from M.D&A Segmental Outlook - Core businesses Refining: RIL's Jamnagar refinery continues to benefit by processing advantaged crude sourced from diverse markets and produce clean fuels at low operating costs. This year witnessed a reduction in refining capacity, primarily because of closures of refineries in the West. Four major refining assets, Markus Hook - US East Coast, Hovensa and Aruba - US off shore and Coryton - UK, ceased operations this year. Some of these locations are planned to be converted into import facilities. Capacity additions in 2012 were primarily for expansions in the existing refineries. This was offset by closures in the US, Europe and Asia/Far East, leading to a net capacity reduction of about 250 KBPD. Oil demand growth, much higher at 850 KBPD, was also supportive of higher margins. Petroleum Marketing: At the end of the year, 287 retail outlets were operational in Southern and Western regions and North Eastern states of India. Resuming operation in all geographies and scaling up of sales would be possible after clarity on implementation of market determined prices for gasoline and diesel. E&P: The next wave of projects in KG-D6 block are envisaged to be undertaken over the next three to five years and entail a potential total investment in excess of USD5b to develop around 4 tcf of discovered natural gas resources. At current international LNG prices, it would cost more than USD50b to import this volume of gas into India. Petrochemicals: RIL continued its domestic market leadership in Polymers with 28% market share in PE and PVC while it has 64% market share in PP. The CAGR growth for the demands for PFY and PSF are expected to be 8.6% and 5.4%, respectively. Polyester is likely to account for a major 60% of incremental domestic fibre demand between 2012 and Segmental Outlook - New businesses Organized Retail: India's retail market is expected to grow at 7% over the next 10 years, reaching a size of USD850b by Traditional retail is expected to grow at 5% and reach a size of USD650b, while organised retail is expected to grow at 25% and reach a size of USD200b by US Shale: Reflecting on the current demand-supply dynamics, natural gas prices are expected to be stable around the current levels in Impact of gas exports could be seen from 2015 onwards. Reliance expects to see continued growth momentum in the shale business during FY Infocomm: Today, broadband in India has only around 1% market penetration (15 million broadband connections - excluding internet access by wireless phone subscribers) as against 860 mn mobile users. 21 May

12 RIL's global positioning in key products Largest refining capacity at any single location Largest producer of polyester fiber and yarn 5th largest producer of Paraxylene (PX) 5th largest producer of Polypropylene (PP) 8th largest producer of Mono Ethylene Glycol (MEG) 9th largest producer of Purified Terephthalic Acid (PTA) Reliance Industires: A 10 Year Snapshot (INR b) FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Net Sales ,117 1,334 1,418 1,925 2,482 3,299 3,603 EBITDA EBITDA margin (%) Depreciation As a % of gross block Other Income As a % of PBT Interest As a % of PBT PBT Tax Effective tax rate (%) Adj. PAT PAT margin (%) Dividend incl. tax Dicidend payout incl. tax (%) RoE RoCE May

13 Valuation and view In FY14/FY15, we model (a) GRM at USD9/bbl, (b) KG-D6 gas price at USD4.2/7/ mmbtu, and (c) KG-D6 gas volumes at 13/15mmscmd. While turnaround in the Retail business (EBITDA of INR780m in FY13 v/s loss of INR3.4b in FY12) is positive, any meaningful earnings addition is expected only in FY16/17, when its large projects (pet coke gasification/off-gas cracker) commission. Core business (90% of earnings) outlook remains subdued and we expect RoE to hover at ~12%. The stock trades at 11x FY15E adjusted EPS and at an EV of 8.2x FY15E EBITDA. Our SOTP-based target price is INR870. Maintain Neutral. Key things to watch: (1) Gas pricing, (2) DGH approvals for E&P program, (3) Margin trend in Refining and Petchem, (4) Developments on USD12b capex plan, and (5) Updates on BWA and Retail forays. RIL: Sum of the parts (SOTP) valuation Business USD b INR b Adj. INR/sh Remarks/Methodology Core business: 32 1, Refining 119 1, Core business FY15E EBITDA Petchem FY15E EBITDA, implied USD1123/ Nelson complexity bpd E&P Initiatives: Includes KG-D6, NEC-25, CBM, KG-III-6 and Yemen block KG - D6 Gas DCF; 60% stake; Plateau of 40mmscmd (KG Basin) in FY18; 7tcf cumulative; 4.4tcf remaining KG - D6 MA1 Oil DCF; 60% stake; 43mmbbls (KG Basin) recovery; (LT Brent - USD90/bbl) NEC DCF; 60% stake; OGIP of 3tcf, prodn likely (Mahanadi basin) in 2016/17 KG-DWN-2003/1 (D3) Prospective resources of 695mmboe as per Hardy; RIL (60%) Sohagpur East & West DCF; 100% stake; OGIP of 3.65 TCF, (CBM) assumed 50% recovery PMT Currently producing; FY15E EBITDA Investment in Shale Gas JV with Atlas, Pioneer & Carrizo; valued at 2x equity investment Investments Includes Reliance Retail, RGTIL, RIIL and SEZ RGTIL, RIIL At book value Fuel Retailing At 0.5x investment value BWA BWA Foray SEZ Valued at 0.5x equity investment Reliance Retail % subsidiary of RIL; 0.5x equity investment Less: Net Debt / (cash) FY13E Total Base Value 46 2, Based on fully diluted equity shares of 2,920m (excl 309m treasury shares) Source: Company/MOSL 21 May

14 Financials and Valuation RIL Income Statement (INR Billion) Y/E March E 2015E Net Sales 1,925 2,482 3,299 3,721 3,663 3,616 Change (%) EBITDA % of Net Sales Depreciation Interest Other Income PBT Tax Rate* (%) PAT Adj. PAT Change (%) Key Operating Metrics GRM (USD/bbl) KG-D6 production (mmscmd) Balance Sheet (INR Billion) Y/E March E 2015E Share Cap. (incl sh. Susp.) Reserves Net Worth 1,372 1,515 1,661 1,807 1,987 2,181 Total Loans Deferred Tax Capital Employed 2,106 2,305 2,466 2,618 2,801 2,998 Gross Fixed Assets Less: Depreciation Net Fixed Assets 1,533 1,427 1,137 1,094 1,055 1,043 Capital WIP Investments Curr. Assets, L & Adv. Inventory Debtors Cash & Bank Balance Loans&Adv.and Other CA Current Liab. & Prov. Liabilities Provisions Net Current Assets Application of Funds 2,106 2,305 2,466 2,618 2,801 2,998 E: MOSL Estimates 21 May

15 Financials and Valuation Ratios Y/E March E 2015E Basic (INR) EPS Adj. EPS (ex Treasury) Cash EPS Adj. Book Value DPS Payout (incl. Div. Tax.) Valuation (x) P/E Adj. P/E Cash P/E EV / EBITDA EV / Sales Adj. Price / Book Value Dividend Yield (%) Profitability Ratios (%) RoE RoCE Turnover Ratios Debtors (No. of Days) Fixed Asset Turnover (x) Leverage Ratio Net Debt / Equity (x) Cash Flow Statement (INR Billion) Y/E March E 2015E OP/(Loss) before Tax Depreciation Interest /Other Income Direct Taxes Paid (Inc)/Dec in Wkg. Capital Other op activities CF from Op. Activity (Inc)/Dec in FA & CWIP (Pur)/Sale of Investments Other In activities CF from Inv. Activity Change in Equity Inc / (Dec) in Debt Dividends Paid CF from Fin. Activity Inc / ( Dec) in Cash Add: Opening Balance Closing Balance May

16 Disclosures This report is for personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. Disclosure of Interest Statement Reliance Industries 1. Analyst ownership of the stock No 2. Group/Directors ownership of the stock No 3. Broking relationship with company covered No 4. Investment Banking relationship with company covered No Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues. Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions. For U.K. This report is intended for distribution only to persons having professional experience in matters relating to investments as described in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity to which this document relates is only available to investment professionals and will be engaged in only with such persons. For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account. For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Nihar Oza Kadambari Balachandran niharoza.sg@motilaloswal.com kadambari.balachandran@motilaloswal.com Contact: (+65) Contact: (+65) / Office address: 21 (Suite 31), 16 Collyer Quay, Singapore Motilal Oswal Securities Ltd Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai Phone: reports@motilaloswal.com