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Reliance Industries
BSE: 500325|NSE: RELIANCE|ISIN: INE002A01018|SECTOR: Refineries
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Chairman's Speech (Reliance Industries) Year : Mar '13
Dear Fellow Shareowners,
 
 The global economic scenario in FY 2012-13 continued to be fraught with
 challenges. Major economies witnessed slower growth and the Eurozone
 was full of uncertainty. As the year progressed, business environment
 remained difficult and operating in such a testing environment proved
 challenging.
 
 Despite the global challenges, we saw constructive demand growth in
 most of our businesses. Global oil demand was up by 0.9 million barrels
 per day in 2012. The demand for polymers and polyester products in
 India grew by 12% and 5%, respectively. We combined the strength of our
 portfolio and integrated business model with prudent management to
 realise revenue growth of 9% and net profit growth of 5%.
 
 Reliance achieved a record turnover of Rs. 371,119 crore ($ 68.4
 billion) and net profit of Rs. 21,003 crore ($ 3.9 billion). RIL also
 achieved highest ever exports of Rs. 239,226 crore ($ 44.1 billion)
 during the year. The growth in earnings was largely driven by strong
 and improved refining margins during the year. We maintained high
 operating rates at all our manufacturing locations. Our businesses have
 delivered industry leading performances.  This is a reflection of the
 quality of our assets and growing demand for our products and services
 across the world.
 
 Our Jamnagar refinery complex operated at over 110% of design capacity.
 The refineries achieved record crude processing of 68.5 MMT, surpassing
 its previous record. Refining margin environment remained volatile
 throughout the year. Despite that we achieved GRMs of $ 9.2/bbl for the
 year, which was highest in the last four years. RIL''s Jamnagar refinery
 continues to benefit by processing advantaged crude sourced from
 diverse markets and produce clean fuels at low operating costs. We have
 been successful in placing our products globally in the markets with
 most stringent specifications. Our Company also received the
 International Refiner of the Year Award from HART Energy, USA, which is
 a true testimony of our world-class assets and operations. Reliance is
 the only Asian refiner to have been conferred this award twice.
 
 Reliances petrochemicals business saw a mixed trend last year. The
 domestic demand for petrochemical products remained strong although
 margins were impacted by regional market conditions. The ethylene chain
 margins remained stable while polyester chain margins came under
 pressure due to excess supply, high inventory levels and slower demand
 growth in some key markets. We believe urbanisation and rising
 aspirations of the Indian consumer will continue to drive demand across
 all end uses, in particular apparel, housing, automobiles, organised
 retailing and communication. Per capita consumption of plastics in
 India is expected to rise from 7 kg to 20 kg over the next decade and
 our planned expansion is well timed to participate in this growth
 opportunity.
 
 In our domestic upstream business, we have rationalised our portfolio
 in terms of prospectively and risk profile. Production from the KG-D6
 block continued to decline during the year. To augment the production
 from the current fields, we have planned various activities including
 work-overs, side tracks and compressor addition to maximise recovery.
 Additionally, both RIL and BP have submitted the KG-D6 block
 enhancement plan using existing infrastructure to increase production
 from the block. Under this plan, we are planning to invest in a series
 of projects to develop around 4 trillion cubic feet of discovered
 natural gas resources from the block. The field development plan for
 the R-Series project has been submitted to the Government of India for
 approval. This along with other projects is expected to add incremental
 production in the next four to five years. We believe gas from these
 projects will deliver energy to millions of Indians and would
 significantly help India in reducing import dependence.
 
 Reliance has made significant investments in the US shale gas ventures
 over the last two years.  Production growth from our investments in
 unconventional liquids-rich resource plays in North America has
 reinforced our confidence in creating long term value for our
 shareholders from this diversification. US shale gas business achieved
 record revenues and EBITDA for the year 2012.  Revenues and EBITDA more
 than doubled to $ 545 million and $ 422 million respectively in 2012.
 Our share of production in 2012 was at 101 BCFe, an increase of 166% in
 comparison to the previous year.  With improvement in the US gas prices
 and continued focus on the liquids-rich acreage in the Eagle Ford area,
 Reliance is expected to grow this business sustainably over the next
 few years.
 
 Our major investments during the year were mainly concentrated on
 expanding capacity and boosting production capability. Our focus is to
 maximise the benefit of being an integrated energy Company.
 Integration with the refinery at Jamnagar provides us with a unique
 advantage in sourcing feedstock for further value addition into
 petrochemicals. Reliance made a significant progress in its proposed
 expansion plan in the petrochemicals business. Our new cracker will
 source the feedstock from complex refineries and build world-scale
 globally competitive cracker capacity.  We have completed technology
 selection and engineering contractor selection for most projects.  We
 have already commenced the order placement for some of the long lead
 equipments. We are confident of meeting our stated time lines in terms
 of all project executions and will see commencement of capacity
 additions starting this financial year.
 
 We are also setting up the world''s largest petcock gasification
 facility at Jamnagar. On completion of this project, it will provide us
 long-term sustainable energy security for the entire Jamnagar complex
 at a globally competitive cost. This will help us in reducing our
 overall energy bill significantly.  Effectively, these large projects,
 off-gas cracker and gasification are being implemented without relying
 on any new externally sourced feedstock.
 
 We are delighted to see our retail business achieving a milestone of
 annual revenue crossing RS. 10,000 crore in FY 2012-13. Our revenues
 have grown by 42% on a year on year basis. More importantly, Reliance
 Retail has turned EBITDA positive last year. We have added 184 stores
 during the year, taking total number of stores to 1,466 by the end of
 the year. Our nationwide footprint, new store additions and strong same
 store sales growth has certainly strengthened our position in this
 sector.
 
 We believe India has a unique opportunity to surpass the world and
 become a leader in delivery of digital content. Reliance JioInfocomm
 Ltd.  (RJIL) plans to provide reliable fast internet connectivity on
 pan India basis. In addition to connectivity, RJIL also plans to enable
 end- to-end solutions that address the entire value chain across
 various digital services in key domains of national interest such as
 education, healthcare, security, financial services, government-citizen
 interfaces and entertainment. RJIL has finalised key agreements with
 its technology partners, service providers, infrastructure providers,
 application partners, device manufacturers and other strategic partners
 for the project.
 
 Participating and investing in India''s growth has been the fundamental
 principle of Reliance''s evolution. Reliance has always maintained its
 conservative financial profile and investment grade ratings while
 pursuing future growth opportunities. At Reliance, we have been and
 continue to remain focused on creating long-term shareholder value.
 
 We are among the top 100 companies in the world and have been globally
 felicitated consistently for shareholder value creation over the past
 three decades.
 
 We are committed towards investing in Reliance''s future.  We are
 confident that our large capital expenditure programme will enable us
 to take full advantage of our market leadership positions and achieve
 our growth ambitions.
 
 I would like to thank all our colleagues in India and around the world
 for their hard work and valued contribution during 2012-13. Together we
 have much to look forward to as we strive to make our company even
 stronger and continue to focus on delivering for our customers.
 
 I am grateful to the Board of Directors for their unwavering support
 and guidance. I take this opportunity to express my gratitude to all
 our stakeholders, who have reposed trust in us and extended their
 constant support.
 
 With best wishes,
 
 Sincerely,
 
 Mukesh D. Ambani
 
 Chairman & Managing Director
 
 16 April 2013
Source : Dion Global Solutions Limited
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