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Working with BP to address complex geology of KG-D6: Mukesh Ambani

Acknowledging the problem s being faced in the KG-D6 basin with respect to gas production, Chairman of Reliance Industries Limited, Mukesh Ambani said that the company has witnessed some disappointment with KG-D6 gas reserves and the basin has witnessed some geological challenges, reports said. Ambani was speaking at the Annual General Meeting of the company.

Subject to receiving the requisite approvals, we hope to add around 30 mmscmd of additional production through the new wave of planned developments. We are all set to proceed with the development of two coal bed methane blocks in Sohagpur, Madhya Pradesh, the Chairman said.

RIL is working with BP to address complex geology of KG-D6, Ambani said. Reliance holds 60% in KG—D6, UK’s BP Plc holds 30% while Niko Resources of Canada holds the remaining 10%.
The output from Reliance Industries’ biggest gas fields in the KG-D6 block have touched a record low of 28 million standard cubic meters per day as the company closed six wells due to water and sand ingress.

RIL has bought back 27mn share at a cost of Rs. 19.29bn which represents 22.5% of the cap set by the Board in terms of number of shares, Ambani said. The oil and gas major had opened its buyback on Feb 1.
The largest gasification unit is being built at Jamnagar which would add 40% to its margin within the next three years, Ambani said.
The facility would convert Petroleum coke to Synthetic Gas which would be used as feedstock and fuel at the integrated Jamnagar complex.
RIL’s refining margin is in excess of $8 per barrel, he said.

The company's petrochem capacity was expected to rise to 25mn tonnes.

Infocus News

Partnering for India’s new future: Mukesh Ambani

Thirty Eighth AGM

My Dear Shareowners, It gives me great pleasure to welcome you to the 38th Annual General Meeting of Reliance Industries Limited. The Company's accounts for the year ended March 31, 2012, along with the Directors' and Auditors' report, a Letter to the Shareholders, and Management's Discussions and Analysis, have already been circulated to you. With your permission, I would like to take them as read.

1. Strategic Perspective

Dear Shareowners, At the Annual General Meeting last year, I talked of transformation being at the top of the business agenda of Reliance. Transformation at Reliance is about institutionalising the competencies and capabilities of our organisation and people, expanding the breadth and efficiency of our businesses and to create value for all our stakeholders. Transformation at Reliance is to reinvent ourselves to take on the new challenges that lie ahead of us. And to harness the tremendous opportunities on our continuous path of value creation.  In our transformation initiative, Reliance has spent more than six million man-hours of the best brains – both from Reliance and major global consultancies.

This transformation initiative will create a robust process-driven effective organisation that will attract and retain best talent with the objective of continuously outperforming its global peers. This effort – in both scope and outcome is unique and unparalleled. This further strengthens our ability to create continuous value across businesses for a long time. Reliance continues on this path through strengthening our core businesses, investing for growth in India and building
new businesses that meet the needs of our society.

Partnering with global leaders across all our businesses brings expertise, technology, products, brands and capital for growth. Our partnership with BP is an example of this strategy to bring the best technology and capital to invest in the critical energy sector in India. Our partnerships with leading global retail brands bring products that meet aspirations of our people. And our partnerships with farmer organisations, under the auspices of the Reliance Foundation, seek to restore the pride of place for agriculture in India. Partnerships will be an important feature of our future growth. These partnerships are formed on the strong foundations of trust, of shared vision and strategic intent. In my address today, I will be sharing with you insights on all these partnerships -vital for our growth and prosperity.
 
2. Global Economy and Reliance

Dear Shareowners, The international business environment has become more challenging today than at any time in modern history. We have seen two unprecedented economic shocks in the last five years with low growth and recession-like conditions in most major economies.

The business environment in the past year has been marked by exceptional volatility in input prices and margins across the chain. Geopolitical changes leading to supply shortages and price dislocations added to the challenge of managing our businesses. In spite of these adverse conditions, Reliance has grown stronger by expanding its asset base and significantly improving its financial position.
 
We have also improved our competitive position in our core businesses. It is today among the most profitable companies in its sectors globally. It has a consistent record of growth in earnings and dividend payout during this period.
 
3. Indian Economy and Reliance

Businesses of Reliance are equally influenced by developments in the Indian economy. High rates of domestic inflation, adverse foreign exchange rate movements, continuing state subsidies for petroleum products and slowdown in rate of economic growth have had an impact on doing business in India. Reliance however firmly believes in India's latent potential for economic growth, opportunities for investments and untapped entrepreneurial energies. Reliance continues to be in the mindset of investing in India and in her future. We believe that India is poised to be one of the growth engines of the global economy over the next decade. Its demographics, talent pool and a democratic society give it a unique position among emerging countries globally. Reliance has always been an integral part of India's growth. Our investments in the Petrochemicals business, Upstream Oil and Refining business will meet India's growing needs. Through our investments in organised retail, we will create employment opportunities in significant numbers, both in urban and rural areas. Our digital services business will revolutionise the lives of millions of Indians by giving them access and opportunities. These new investments, on the back of a robust balance sheet, will create new waves of growth and value for Reliance.
 
4. Business and Financial Performance

Dear Shareowners, As we enter our thirty fifth year since our IPO, it is an appropriate moment to look back at our achievements. Reliance has a unique track record of organic growth and value creation since it became a public company 34 years ago. This accomplishment has very few parallels among industrial companies globally. For its large family of shareholders, we have created value by consistent profitable growth and continuous investment in business opportunities. Rs. 1,000 invested at the time of IPO in Reliance in 1977-78 has grown to Rs. 7.78 lakhs at a CAGR of 21.6%.In this period our revenues have grown 27% year on year on a compounded basis.  The company's profits have grown 29% year on year on a compounded basis. I am pleased to report another year of record performance by the company, despite the tough global and Indian economic operating environment.

For the year under review, Reliance recorded its highest ever revenues of Rs. 339,792 crore (USD 66.8 billion), a growth of 31% over the previous year.

We exported Rs. 208,042 crore (USD 40.9 billion) worth of products to over 100 countries.

This was the highest ever exports achieved with an increase of 42% over the previous year.

The volatility in crude prices, subdued margin outlook for transportation fuels as well as petrochemicals and lower than anticipated production from the KG D6 block resulted in profits remaining at the same level as last year. We have recommended the highest ever dividend payout in the history of the company – Rs. 2,941 crore. The Board of the company has also approved the largest ever buyback of its shares, to date, in India's corporate history by setting aside upto Rs. 10,440 crore for this purpose.

We have, to date, bought back 2.7 crore shares at a cost of Rs. 1,929 crore – this represents 22.5 % of the cap set by the Board in terms of number of shares. The buyback represents highly accretive use of cash by the company. It will supplement earnings growth from operations, for higher EPS, in the near future. We are also reinvesting our cash flows at accelerated pace in new projects and new businesses. These will bear fruition and growth in earnings over the next few years.
 
5. Petrochemicals

Dear Shareholders, Our Petrochemicals business is the foundation of our growth over the past 34 yrs. The products from this business touch the life of all of us in many ways.  Beginning from commodities like synthetic fibers and plastic raw materials, your company today also manufactures  surfactants, elastomers, intermediates and several other value added chemicals. Read more…

Domestic News

Bring ATF under PNGRB ambit, says Civil Aviation Ministry Panel

A Civil Aviation Ministry panel has recommended that the Ministry of Petroleum and Natural Gas bring aviation turbine fuel, ATF, under the ambit of the Petroleum and Natural Gas Regulatory Board's, PNGRB, so that the Board can take action to protect the interest of users, reports said.

The recommendation has been made in order to reduce the cost of jet fuel for domestic airlines. Jet fuel costs account for 40-50% of the operating costs of domestic airlines.
The panel also recommended that PNGRB should also regulate all ATF infrastructure outside the airports including the pipelines as well as connecting intermediate storage infrastructure.

In order to reduce the tax burden of ATF on the airlines, the panel has also recommended bringing ATF under the ‘Declared goods' category so that it attracts a uniform 4% sales tax across the country. Sales tax on ATF currently varies between 4% and 30% in different states.

The Committee has also suggested that states charge a specific rate of duty on ATF instead of the ad-valorem rate levied at present.
Separately, in an unprecedented move, a civil service officer, Rajiv Nayan Choubey, has been selected to head oil regulator Directorate-General of Hydrocarbons (DGH). Choubey is a 1981-IAS from Tamil Nadu cadre.

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International News

Honeywell 's UOP hydrogen technology to be installed in Russia

UOP LLC, a Honeywell  company, announced today that it has been selected by Haldor Topsoe to provide technology to purify hydrogen from a steam reforming unit to be installed at the Antipinsky Refinery in Tyumen, Russia.
 
Honeywell’s UOP Polybed PSA (Pressure Swing Adsorption) System will recover and purify hydrogen to help the refinery meet the increasing need for clean transportation fuels such as diesel and gasoline.
 
“UOP’s hydrogen purification technology will allow the Antipinksy Refinery to meet today’s challenge of producing cleaner fuels more efficiently,” said Rebecca Liebert, vice president and general manager for gas processing and hydrogen at Honeywell’s UOP. “The impressive hydrogen recovery rates and proven reliability of our solution will help the refinery improve its profitability and ensure dependable operation.”
 
The new hydrogen unit, which is scheduled to start-up in 2013, is part of the refinery’s plan to increase its capacity of crude oil processing by as much as 7 million tons per year. It will also enable the production of fuel products that meet the European Union’s Euro-5 emission standards aimed at reducing emissions from light duty vehicles.
 
Refineries use hydrogen in the hydrocracking process to convert heavy oils to lighter, higher-value products such as transportation fuels. Hydrogen is also used in the hydrotreating process to remove contaminants and improve the quality of end products.

To date, Honeywell’s UOP has provided more than 900 Polybed PSA Systems worldwide, including more than 390 units to purify hydrogen from steam reformers, such as at the Antipinsky Refinery. Honeywell’s UOP has provided Polybed™ PSA Systems for many Haldor Topsoe hydrogen plants around the world.
 
The Polybed PSA System is a skid-mounted, modular unit that comes complete with vessels, valve skid, adsorbents, control systems and embedded process technology. The process uses proprietary UOP adsorbents to adsorb impurities at high pressure from hydrogen-containing waste streams and subsequently reject them at low pressure. The system allows hydrogen to be recovered and upgraded to more than 99.9% purity to meet downstream processing requirements.
 
In addition to recovering and purifying hydrogen from steam reformers, Polybed PSA Systems can be used to produce hydrogen from other sources, including refinery off-gases, ethylene off-gas, methanol off-gas and partial oxidation/syngas.

Haldor Topsoe is a global supplier of catalysts and technologies, headquartered in Lyngby, Denmark.

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