Reliance Industries Limited

Growth is Life

Salil Sane 126

Darshak Shah 129 Roopesh Shah - 134

Saurin Shah 135 Kewal Sharma 137 Milind Shinde - 140

Agenda
Introduction to the Reliance Group Organizational Structure Vision & Mission Statement Core Values & Commitment Internal & External Environment Porters 5 Forces Mckinseys Model Strategic Plans M&As Core & distinctive Competence Our Critical Evaluation & Analysis

Intro: Milestones achieved

Founded by Late Shri Dhirubhai Ambani as Reliance Commercial Corporation in 1966 RIL IPO was out in 1977 pioneering an equity cult Maintained a CAGR of 20-25% in Turnover, net profit, cash profit since 1977 Reliance Petroleum Limited public issue - India's largest public offering in 1993 For setting an outstanding example of leadership, Dhirubhai Ambani was awarded the Dean's Medal by the Wharton School, University of Pennsylvania, USA, in 1998

Intro contd..
Major Group Companies are Reliance Industries Limited (including main subsidiary Reliance Retail Limited) and Reliance Industrial Infrastructure Limited RIL launched Infocomm in 2002 which brought a major revolution in the mobile tariff rates Reliance Infocomm acquired FLAG Telecom in 2003 which was the worlds largest private undersea fiber optic cable system running 65,000 Kms spanning 4 continents RIL was the only Indian company to be in the Fortune 500 in 2004 Reliance Retail entered the organized retail market in India with the launch of its convenience store format under the brand name of Reliance Fresh RIL is rated as 15th most innovative company in the world in 2008-9 RIL is ranked 75th in 2009, in the FT Global 500 (up from previous year's 80th rank) Jamnagar Manufacturing Division bagged the 'Refinery of the Year Award for 2008', for second successive year from 'Petroleum Federation of India'

Org Structure - RIL

Shri Dhirubhai D. Ambani Shri Mukesh H.

Founder Chairman Reliance Group Chairman & Managing December 28, 1932 - July Director 6, 2002

Mukesh Ambani

Shri. Nikhil Meswani Executive Director

Shri. Hital Meswani Executive Director

Shri. H.S.Kohli Executive Director

Shri. PMS Prasad Executive Director

Business Divisions
Exploration & Production : Enhancing India's energy landscape. KGD6 will result in a quantum leap towards achieving India's energy security as it will account for 40% of the Country's current hydrocarbon production. Petroleum Refining and Marketing :RIL has 1.24 million barrels per day (MBPD) of crude processing capacity, the largest at any single location in the world

Petrochemicals : The world's largest producers of polymers. Polymer production in 2008-09 (Polypropylene, Polyethylene and Polyvinyl Chloride) is 3,076 kilo tonnes.

Retail : Based on its core growth strategy of backward integration, RRL has made rapid progress towards building an entire value chain starting from the farmers to the end consumers.

Textile : RILs flagship brand VIMAL is one of the most trusted brands of premium textiles in the country

Vision & Mission

VISION :
"Our dreams have to be bigger. Our ambition higher. Our commitment deeper. And our efforts greater. This is my dream for Reliance and for India." - Dhirubhai Ambani "Growth has no limit at Reliance. I keep revising my vision. Only when you dream it you can do it. - Dhirubhai Ambani

MISSION :
In the light of anticipated robust growth in the Indian economy, and our earnings growth forecast, we will endeavour to double the value of Reliance in the next five years. We plan to achieve this goal through focused growth, capital efficiency and a single minded emphasis on shareholder value

Core Values
Reliance believes that any business conduct can be ethical only when it rests on the nine core values

Honesty Integrity Respect Fairness Purposefulness Trust Responsibility Citizenship Caring

Commitment
Reliance is committed to holistic growth by concentrating on following aspects
Quality Corporate Citizenship
Research & Development

Energy Conservation Human Resource Development

Health, Safety & Environment

Ideologies
"Dreams and Vision are the most potent fuels in the world." "Impossible is an inspiring word" "Hands on thinking, hands off execution." "First time it is learning. Second time it is a mistake." "Sense of urgency" "Think. Anticipate. Be prepared." "Measuring success differently. Asking the right questions."

Internal Environment

Internal: Clear objectives of org. from Top Management Skilled Managers with higher level of decision power Key Positions held by close family members Family Feud arising out of ownership issues post DHA era

External Environment

Liberalization of Indian economy Increase in per capita spending capacity & changing consumer habit Change in the government policies Favorable environment for Telecom and IT

Porters 5 Force Analysis

Potential Entrants
Barriers Due to high input cost Economies of scale Political Influence on Govt. Reg.

Bargaining power of Buyer

Few suppliers of crude No alternative to crude Suppliers threat of forward integration.

Industry Rivalry (As

demand exceeds supply, no intense rivalry)

Bargaining power of suppliers

Monopolistic Market No alternative for their inputs

Threat of Substitutes
No alternative to plastic in various applications No alternative to petroleum products

McKinseys 7S model
Shared Values
Shareholder Interest People Care Consumer Focus Excellence in Execution Team Work Proactive Innovation

Staff
Young, dynamic, motivated Best, Well Qualified Trained.

Strategy
Customer Focused Innovation Execution with Speed Empowerment & Entrepreneurship

Structure
Dynamic Derives mutual synergies

Systems
Leadership development Meritocracy Entrepreneurial Environment Competitive compensation

Skills
Excellence in Quality Stakeholder value creation Responsive to External Environment Hold core values of group Develop workforces skills

Style
Action and Result Oriented Employees first Aggressive Market player

Strategic Plans
Expansion through Integration :

This is a classic example where backward integration was used as a method of expansion.

Strategic Plans
Expansion through Diversification:
Reliances diversification has occurred in the 1990s when the company turned aggressively towards Petrochemicals and Telecommunications, Petroleum Marketing, Retail Finance. Forayed into Retail Space by forming 27 new companies under Reliance Retail, e.g. Reliance Fresh, Reliance Trends

Strategic Plans
Changing according to Economy & consumer habits

Economic condition of the country and buying power of the customers were quickly identified and Reliance forayed into business with high margins. Considering changing consumer habits relaunched Vimal as premium Brand. Forayed into IPL, Reliance Jewels, Education

Strategic Plans
Generation of Finance:
Cheap sources of capital saved from high interest rates from bank and other financial institutions. Manipulation by single individual and institution is not possible. Prudent working capital & financial management

Mergers & Acquisitions

Derive synergies, Expand markets Organic growth

Mergers & Acquisitions

Key Mergers
Reliance Industries And Reliance Petroleum 2002 & 2009 Key Acquisitions Polyester manufacturer 'Trevira' -2004 IPCL -2002 BSES- 2003 FLAG Telecom- 2003 NOCIL 2004

RIL-RPL Merger in 2002

External Environment faced Petrochemical prices were soft and the economy was down, leading to demand contraction Internal Environment faced Difficult period in its then main business of petrochemicals for about 2 quarters in FY 2001-02

Strategy adopted RIL announced the merger of RPL with itself backdated from April 1,2001

Benefits gained Back-dating helped RIL to mask their under-performance by combining the cash-rich RPL business with itself The merger of the original RPL in 2002 benefited RIL in terms of a large depreciation cover along with other tax benefits as RPL supplied a couple of products to RIL The Share Exchange Ratio was in favor of RILs share holders (1:11) Merger placed RIL biggest refinery in world at single location, Largest in India .

RIL-RPL Merger in 2009

External Environment faced
There were potential losses facing the company in crude futures market positions, currency exposure and in the foray into retailing

Internal Environment faced

The last couple of quarters of this fiscal (FY 2008-9) had been difficult ones for RIL Earnings actually declined in the third quarter ended December 2008 the first such decline in 12 quarters

Strategy adopted
RIL announced the merger of RPL with itself

Benefits gained
Mask their under-performance by combining the cash-rich RPL business with itself In the present instance, the merged RIL will benefit tremendously from the tax benefits that the New RPL enjoys by virtue of its location in a special economic zone (SEZ) The Share Exchange Ratio was in favor of RILs share holders (1:16) RIL added a new, state-of-the-art refinery asset to its balance-sheet with just a tiny equity expansion (worth few hundreds of crores vis a vis a 27,000 crore refinery project)

Acquisition of Trevira - 2004

Benefits:
Reliance became the largest polyester fiber and yarns producer in the world. Addition of a well known brand amongst customers and producers of synthetic fabrics. Addition of valuable patents and technologies together with strong R&D setup Synergy will provide comprehensive and innovative solutions for apparel and industrial applications of polyester to customers worldwide.

Acquisition of IPCL - 2002

Strategy: By acquiring IPCL, Reliance has effectively denied IOC the opportunity to get foothold in the domestic petrochemical industry. Benefits: Dominant player in the domestic petrochemical industry with a market share exceeding 70% across most of the product categories or near monopoly for few products. Immense synergies in feedstock sourcing and transportation because complexes of both the companies are located in same region

Core & distinctive Competence

Project implementation skills Capability to raise cheap finance Capability to manage the environment Vertical integration Operating at high productivity with innovative solutions. Adopting cutting edge technology Identifying high growth opportunities Business Continuity Planning in all critical areas of business

Core & distinctive Competence

Critical Evaluation
Reliance has demonstrated business acumen which has made them one of the most admired business conglomerates in world. Economies of scale. Biggest and best in every field. Adaptation to changing environment. RILs indebtedness witnessed a phenomenal increase during the fiscal year 2007. The total debt of the company increased at a rate of 23% from INR218,660 million (approximately $4,845.5 million) in the fiscal year ending 2006 to INR269,520 million (approximately $5,972.5 million) in the fiscal year ending 2007. Aggressive diversification, may lead to problems Foray in Petroleum marketing was unsuccessful due to government policies Viewed with skepticism & as market manipulator among certain sections of community.

Thank You !