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Ril Rpl Merger

M
manishsonowal

This document summarizes a merger between Reliance Industries Limited (RIL) and Reliance Petroleum Limited (RPL). Some key points: - RIL was India's largest private company with $33 billion in revenue from refining and petrochemicals. RPL had a newer 580,000 barrel per day refinery. - The merger combined their operations to create one of the world's largest refining companies by capacity. It aimed to unlock synergies in crude sourcing, product placement, and operations. - The merger ratio was 1 RIL share for every 16 RPL shares. It increased RIL's equity base by 4.4% while reducing the promoter holding slightly

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RIL RPL Merger Presentation Maryam Alwajih 10020241031 Subin Sajan 10020241053 Manish Sonowal 10020241118 Vijaya Manga 10020241026 Rani Palatty 10020241076
Reliance Industries Scenario before merger-Indias largest private sector enterprise with strong financials: Revenue exceeds $ 33 billion* Exports of about $ 21 billion* EBITDA of over $ 5 billion* Significant global player in Refining and Petrochemicals - contribute 98% to revenues RIL at an inflection point Production of gas and oil from KG D6 to double Indias gas availability Investment in a world-class, complex refinery asset Indias most valuable company
Robust Growth Since IPO
RIL Refining Mantras for Success In 1999, RIL commissioned a large, world class, complex refinery in record time at competitive capital cost Created industry benchmarks across various operating parameters Product slate designed to cater to fast growing transportation fuels segment and stringent product specifications, across regions Processed over 80 heavy/sour crude variants from across the world Consistently demonstrated higher GRMs compared to global benchmarks
RIL: Unparalleled Refining Efficiency
RILs Refining Performance High quality of refining asset and operations resulting in consistent and superior performance across business cycles
Particulars Units Q4 FY10 Q1 FY11 Q2FY11 Q3 FY11 Q4FY11 RIL's reported GRM $/bbl 7.5 7.3 7.9 9 9.2 Singapores complex' $/bbl 4.9 3.7 4.2 5.5 7.4 Premium over Singapore GRM $/bbl 2.6 3.6 3.7 3.5 1.8 Crude Throughput MMT 16.7 16.9 16.9 16.1 16.7
RIL's reported GRM $/bbl Singapores complex' $/bbl Premium over Singapore GRM $/bbl Crude Throughput MMT 16.7 16.9 16.9 16.7 16.1 9 9.2 7.9 7.5 7.3 7.4 5.5 4.9 4.2 3.7 3.6 3.7 3.5 2.6 1.8 Q4 FY10 Q1 FY11 Q2FY11 Q3 FY11 Q4FY11
TOP 6 REFINERY wrt BPD Name of Refinery Barrels per Day Jamnagar Refinery (Reliance Industries limited) 13,00,000 Paraguana Refinery Complex (PDVSA) 9,40,000 Baytown Refinery (ExxonMobil) 5,72,500 Baton Rouge Refinery (ExxonMobil) 5,03,000 Hovensa LLC (PDVSA) (Hess Corporation) 5,00,000 Abadan Refinery 4,50,000
Barrels per Day 1,300,000 940,000 572,500 503,000 500,000 450,000 Jamnagar Paraguana Baytown Baton Rouge Hovensa LLC Abadan Refinery Refinery Refinery Refinery (PDVSA) (Hess Refinery (Reliance Complex (ExxonMobil) (ExxonMobil) Corporation) Industries (PDVSA) limited)
RPL Crude processing capacity of 580,000 barrels/day, completed in a record time of 36 months Higher complexity: Nelson Complexity Index of 14.0 Among the top 5% refineries globally with capability to process ultraheavy crude (Average API of 24) Built to supply ultra-clean fuels to meet the worlds evolving needs Focus on high growth transportation fuel segment Lowest US$/complexity-barrel cost among recently built refinery projects Crude refining commenced on 25th Dec 08 and first parcel of product exported in Jan 09
Merger Highlights
Merger Details Appointed date of 1st April 2008 Merger ratio of 1 share of RIL for every 16 shares of RPL RPL shares held by RIL were cancelled. No fresh treasury stock created RIL issued 6.92 crore shares to RPL shareholders 4.4% increase in equity base from Rs 1,574 crore shares to Rs 1,643 crore Promoter holding in RIL reduced from 49% to 47%
Merger Rationale Unlock synergies from combined operations Crude sourcing, Product placement, Supply Chain Optimization Greater flexibility in operations planning Expansion of refined product range Optimized utilization of secondary process units and infrastructure Efficient utilization of combined cash flows Integrated energy companies consistently get higher valuations vis--vis pure refiners; Mitigate Holding Company discount EPS accretive
Amalgamated Entity RPL transforms into a diversified business with less cyclicality RIL shareholders benefit from participating in state of the art refinery without execution risk Mitigate holding company discount Integrated company valuation versus standalone refinery
Integrated vs Standalone refineries On a longer-term, sustainable basis, markets ascribe superior valuations to integrate energy companies vis-a-vis standalone refiners
RIL vs RPL RILs superior performance relative to RPL demonstrates its evolution as a world-class integrated energy company
Current Valuations Current valuation reflects premium for integrated players across all parameters
Post Merger Highlights
Advisors Valuation Advisors Ernst & Young Pvt. Ltd. And Morgan Stanley India Co. Pvt. Ltd. Transaction Advisors J.M. Financial Services Pvt. Ltd. and Kotak Mahindra Capital Co Ltd. Fairness Opinion DSP Merrill Lynch Ltd. (for RIL) and Citigroup Global Markets India Pvt. Ltd (for RPL) Legal Advisor Amarchand & Mangaldas & Suresh A. Shroff & Co. Tax Advisor PriceWaterhouse and Coopers Pvt. Ltd.
RIL Shareholding Merger results in the creation of the worlds largest shareholder family of around 3.7 million shareholders; Promoters diluted by 2%.
Impact of Merger Proposal RIL among top 10 private sector refining companies globally Owned 2 of the worlds 3 largest, most complex modern refineries Worlds largest producer of ultra-clean fuels at a single location Among 50 most profitable companies globally Among five largest producers of Polypropylene
Worlds Largest Refining Companies RIL to be amongst Top 10 non-state owned refining companies globally RIL has doubled its refining capacity with focus on scale and complexity
Top 5 Complex Refineries Globally
Global Polypropylene Rankings Merger takes RIL in to a Top 5 PP producer globally
Non Dependency on outside fund a great positive Crude prices movement- Key to margins Discovery of Oil and Gas fields in KG D6
The RIL wrt PE Ratio, EV/EBITDA, PBV is overvalued in the FY 09,10,11 when compare with the Global Refining averages. Though RPL entered late into KG-D6, after merge the growth rate was increased. Jamnagar petroleum complex is the largest refinery with 13,00,000 BPD GRM in FY 2011-USD $ 9.2 per barrel
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Ril Rpl Merger

  • 1. RIL RPL Merger Presentation Maryam Alwajih 10020241031 Subin Sajan 10020241053 Manish Sonowal 10020241118 Vijaya Manga 10020241026 Rani Palatty 10020241076
  • 2. Reliance Industries Scenario before merger-Indias largest private sector enterprise with strong financials: Revenue exceeds $ 33 billion* Exports of about $ 21 billion* EBITDA of over $ 5 billion* Significant global player in Refining and Petrochemicals - contribute 98% to revenues RIL at an inflection point Production of gas and oil from KG D6 to double Indias gas availability Investment in a world-class, complex refinery asset Indias most valuable company
  • 4. RIL Refining Mantras for Success In 1999, RIL commissioned a large, world class, complex refinery in record time at competitive capital cost Created industry benchmarks across various operating parameters Product slate designed to cater to fast growing transportation fuels segment and stringent product specifications, across regions Processed over 80 heavy/sour crude variants from across the world Consistently demonstrated higher GRMs compared to global benchmarks
  • 6. RILs Refining Performance High quality of refining asset and operations resulting in consistent and superior performance across business cycles
  • 7. Particulars Units Q4 FY10 Q1 FY11 Q2FY11 Q3 FY11 Q4FY11 RIL's reported GRM $/bbl 7.5 7.3 7.9 9 9.2 Singapores complex' $/bbl 4.9 3.7 4.2 5.5 7.4 Premium over Singapore GRM $/bbl 2.6 3.6 3.7 3.5 1.8 Crude Throughput MMT 16.7 16.9 16.9 16.1 16.7
  • 8. RIL's reported GRM $/bbl Singapores complex' $/bbl Premium over Singapore GRM $/bbl Crude Throughput MMT 16.7 16.9 16.9 16.7 16.1 9 9.2 7.9 7.5 7.3 7.4 5.5 4.9 4.2 3.7 3.6 3.7 3.5 2.6 1.8 Q4 FY10 Q1 FY11 Q2FY11 Q3 FY11 Q4FY11
  • 9. TOP 6 REFINERY wrt BPD Name of Refinery Barrels per Day Jamnagar Refinery (Reliance Industries limited) 13,00,000 Paraguana Refinery Complex (PDVSA) 9,40,000 Baytown Refinery (ExxonMobil) 5,72,500 Baton Rouge Refinery (ExxonMobil) 5,03,000 Hovensa LLC (PDVSA) (Hess Corporation) 5,00,000 Abadan Refinery 4,50,000
  • 10. Barrels per Day 1,300,000 940,000 572,500 503,000 500,000 450,000 Jamnagar Paraguana Baytown Baton Rouge Hovensa LLC Abadan Refinery Refinery Refinery Refinery (PDVSA) (Hess Refinery (Reliance Complex (ExxonMobil) (ExxonMobil) Corporation) Industries (PDVSA) limited)
  • 11. RPL Crude processing capacity of 580,000 barrels/day, completed in a record time of 36 months Higher complexity: Nelson Complexity Index of 14.0 Among the top 5% refineries globally with capability to process ultraheavy crude (Average API of 24) Built to supply ultra-clean fuels to meet the worlds evolving needs Focus on high growth transportation fuel segment Lowest US$/complexity-barrel cost among recently built refinery projects Crude refining commenced on 25th Dec 08 and first parcel of product exported in Jan 09
  • 13. Merger Details Appointed date of 1st April 2008 Merger ratio of 1 share of RIL for every 16 shares of RPL RPL shares held by RIL were cancelled. No fresh treasury stock created RIL issued 6.92 crore shares to RPL shareholders 4.4% increase in equity base from Rs 1,574 crore shares to Rs 1,643 crore Promoter holding in RIL reduced from 49% to 47%
  • 14. Merger Rationale Unlock synergies from combined operations Crude sourcing, Product placement, Supply Chain Optimization Greater flexibility in operations planning Expansion of refined product range Optimized utilization of secondary process units and infrastructure Efficient utilization of combined cash flows Integrated energy companies consistently get higher valuations vis--vis pure refiners; Mitigate Holding Company discount EPS accretive
  • 15. Amalgamated Entity RPL transforms into a diversified business with less cyclicality RIL shareholders benefit from participating in state of the art refinery without execution risk Mitigate holding company discount Integrated company valuation versus standalone refinery
  • 16. Integrated vs Standalone refineries On a longer-term, sustainable basis, markets ascribe superior valuations to integrate energy companies vis-a-vis standalone refiners
  • 17. RIL vs RPL RILs superior performance relative to RPL demonstrates its evolution as a world-class integrated energy company
  • 18. Current Valuations Current valuation reflects premium for integrated players across all parameters
  • 20. Advisors Valuation Advisors Ernst & Young Pvt. Ltd. And Morgan Stanley India Co. Pvt. Ltd. Transaction Advisors J.M. Financial Services Pvt. Ltd. and Kotak Mahindra Capital Co Ltd. Fairness Opinion DSP Merrill Lynch Ltd. (for RIL) and Citigroup Global Markets India Pvt. Ltd (for RPL) Legal Advisor Amarchand & Mangaldas & Suresh A. Shroff & Co. Tax Advisor PriceWaterhouse and Coopers Pvt. Ltd.
  • 21. RIL Shareholding Merger results in the creation of the worlds largest shareholder family of around 3.7 million shareholders; Promoters diluted by 2%.
  • 22. Impact of Merger Proposal RIL among top 10 private sector refining companies globally Owned 2 of the worlds 3 largest, most complex modern refineries Worlds largest producer of ultra-clean fuels at a single location Among 50 most profitable companies globally Among five largest producers of Polypropylene
  • 23. Worlds Largest Refining Companies RIL to be amongst Top 10 non-state owned refining companies globally RIL has doubled its refining capacity with focus on scale and complexity
  • 24. Top 5 Complex Refineries Globally
  • 25. Global Polypropylene Rankings Merger takes RIL in to a Top 5 PP producer globally
  • 26. Non Dependency on outside fund a great positive Crude prices movement- Key to margins Discovery of Oil and Gas fields in KG D6
  • 27. The RIL wrt PE Ratio, EV/EBITDA, PBV is overvalued in the FY 09,10,11 when compare with the Global Refining averages. Though RPL entered late into KG-D6, after merge the growth rate was increased. Jamnagar petroleum complex is the largest refinery with 13,00,000 BPD GRM in FY 2011-USD $ 9.2 per barrel

Editor's Notes

  • #8: Gross Refining Margin (GRM) is the difference between the total value of Petroleum products and price of crude.