27-11-2012, 01:02 PM
Reliance Industries Limited
1Reliance Industries.ppt (Size: 601 KB / Downloads: 64)
Financial Objectives
Emphasis on capital productivity, and returns, to generate attractive spreads over cost of capital
Targets of minimum 20% ROE, and 20% 5 year EPS CARG, across business cycles
Conservative gearing - maintain top end credit ratings
New investments based on achievement of hurdle rates of 20% ROCE, and low gestation period to further enhance ROE
Operating Environment: 2000-01
No improvement in the global petrochemicals industry cycle:
- High crude and naphtha prices
- Supply imbalances for most finished products globally
- Weakness in product selling prices
- Relative weakness in regional currencies
Destocking of inventory, impacting normal demand growth
Devastating earthquake in the state of Gujarat, leading to paralysis of overall business activities for 2-3 weeks
Conservative Financial Management
AAA credit rating from CRISIL and FITCH for domestic debt
International debt rated BB (Stable outlook) from S&P and Ba2 from Moody’s - constrained by sovereign ceiling
Remitted nearly US$ 850 mn (Rs. 3,800 crs.) during the year - no offshore balances as on 31.3.2001
US$ denominated exports, and oil and gas, revenues provide 7 times cover for RIL’s annual forex debt service obligation
Debt Management and Interest Cost Savings
Repaid nearly Rs. 2,100 crs. (US$ 450 mn) of high cost domestic debt during the year
Repurchased and refinanced US$ 157 mn of offshore bonds during the year - 19% of issued amount bought back so far
Continuous programme of refinancing of long term loans, at lower costs, without impacting average maturity of 11 years
Commercial paper programme with the highest P1+ rating
Enhanced export financing, to reduce short term interest costs
Reliance’s Oil & Gas Strategy
Oil imports the single largest import item for India
Crude oil also Reliance’s major feedstock
Reliance’s investments in E&P will :
- contribute to higher energy security for the country; and
- enhance integration levels for Reliance
Reliance adopting a low risk strategy in acquiring E&P assets