Indian Polyolefin Overview1st Nov’18

MUKUL KHANNABUSINESS HEAD-PP

RELIANCE INDUSTRIES LIMITED

Forward Looking Statement

This presentation contains forward-looking statements which may be identified by their use of

words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or

other words of similar meaning. All statements that address expectations or projections about the

future, including, but not limited to, statements about the strategy for growth, product

development, market position, expenditures, and financial results, are forward-looking

statements.

Forward-looking statements are based on certain assumptions and expectations of future events.

The companies referred to in this presentation cannot guarantee that these assumptions and

expectations are accurate or will be realized. The actual results, performance or achievements,

could thus differ materially from those projected in any such forward-looking statements. These

companies assume no responsibility to publicly amend, modify or revise any forward looking

statements, on the basis of any subsequent developments, information or events, or otherwise.

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Contents

Global Environment

Feed Stock

Polyolefin-Global Demand/Supply

Indian Polyolefin Market Overview

Circular Economy

4

Major Challenges…

Oil Price Volatility

Geopolitical Implications Domestic Plastic Items BanExchange rate Fluctuations Iran Sanctions

5

Changing competitive landscape

Means new challenges and opportunities

A whirlwind of global forces –

some expected, others not

• The US shale gas

• Oil prices

• Saudi Arabia access to cheap gas feedstock

• China's capacity build-up/increasing self sufficiency

• Iranian sanctions

Reshaping the petrochemical landscape

6

Current Year: Expected to be 3.3%

Boost from fiscal stimulus and strengthening business investment butinflationary pressures and policy tightening might restrain growth in 2020–21

Growth is estimated to be slow but remains above trend

China’s growth projected to ease as the government aims to reduce excessesin industrial capacity, debt, housing, and shadow banking

Asia’s other emerging markets predicted to sustainrobust growth

Global Economic Growth

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Rising crude prices vs stable Gas

Olefins Cash Cost

8

0

200

400

600

800

1000

12000 5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

105

110

115

120

125

130

135

140

145

150

155

160

165

170

Cas

h C

os

t ($

/MT

E+

P )

Cumulative Capacity (MMTPA)

Other SmallerCrackers &

MTO

Middle EastGas Crackers

Asia & JKT Naphtha

Crackers & CTO

US Gas Crackers

European NaphthaCrackers

9

Key to competitiveness of the industry

• Shift toward lighter, cost-advantaged feedstock

• Increasing pressure on higher-cost producers, either throughincreased imports or the loss of exports

• Growth of cost advantaged capacity growth, particularly in NEAsia & North America, will exacerbate competitive pressures

• Disadvantaged feedstock regions, particularly in West Europeand South America, are not expected to see any capacityexpansions

• Leading to:

• Industry consolidation

• Operations optimization

• Production of higher-value performance products

Cost Competitiveness

Feedstock Capacity Change

Choice of Feedstock to determine Competitive Advantage

FY 2016 – FY 2021

10

Naphtha

Incremental Capacities C2

Optimization of Costs with increased Ethane !!!

MMT : 2016 - 2021

11

Incremental Capacities C3

MMT : 2016 - 2021

12

13

World Polyolefin Demand: Past & Future

Global PO demand expected to touch 189 MMT by 2020

2005-10 2010-15 2015-20 2020-25

PE 3.3% 3.6% 4.3% 3.8%

PP 5.0% 4.4% 4.7% 3.9%

CARG (%)

Source: IHS Markit

CAGR(%)

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PP Global capacity addition

0

1

2

3

4

5

6

2016 2017 2018 2019 2020

Qty

(M

MT)

PP Incremental Capacities

West Europe

Southeast Asia

South America

Northeast Asia

North America

Middle East

Indian Subcontinent

CIS & Baltic States

Central Europe

Africa

Data Source: IHS

China PP Scenario

15

China PP Capacity is expected to grow by 11 MMT in 5 years

2

3

2

3

12

3

2 2

0

1

2

3

4

2014 2015 2016 2017 2018 2019 2020 2021 2022

Ne

w C

apac

ity

Ad

dit

ion

(M

MT)

Capacity Addition

Data Source: IHS

16

PP: Net Trade Flow

Source: IHS

0.1

2.3

2018 2023

North America

-1.8

-2.7

2018 2023

Africa

-1.0

-1.3

2018 2023

Europe -0.3

-1.0

2018 2023

North East Asia

-2.2

-6.3

2018 2023

South Asia

-1.1

0.3

2018 2023

South East Asia

0.2

0.9

2018 2023

North Asia

-0.4

-1.1

-2.0

-1.0

0.0

2018 2023

South America

6.67.9

2018 2023

Middle East

Data Source: IHS

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PE Global capacity additions

1.0

7

1.6

1

0.5

2

0.4

9

0.4

7

0.1

1 0.4

6

0.1

9

0.5

5

0.5

9

0.5

4

0.1

7

0.7

2

0.4

3

0

0.5

1

1.5

2

2.5

3

2016 2017 2018 2019 2020

0.2

3

0.2

5

0.3

3 0.5

1

0.5

1

0.5

7 0.7

4

0.3

0.1

5

0.1

8

0.6

1

0.3

2

0.1

5

0.4

0

0.5

1

1.5

2

2.5

2016 2017 2018 2019 2020

0.8

8

0.7

3

0.6

5

0.2

0.7

0.1

8

0.8

7

0.2

9

0.4

60

.4

0.2

9

0.7

30.4

0.3

9

0.1

5

0

0.5

1

1.5

2

2.5

2016 2017 2018 2019 2020

NAM NEA SEA ME ISC CIS EUR

PELLDPE LDPE HDPE

Data Source: IHS

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China PE Scenario

0.60.4

0.20.0

0.4

0.7

1.3

1.1 1.1

0

1

2

2014 2015 2016 2017 2018 2019 2020 2021 2022

Cap

acit

y (M

MT)

China HDPE Capacity Growth

0.6 0.6

0.3

0.5 0.50.3

1.11.0 0.9

0

1

2

2014 2015 2016 2017 2018 2019 2020 2021 2022

Cap

acit

y (M

MT)

China LLDPE Capacity Growth

0.0 0.0

0.5 0.6

0.3

0.0

0.3

0.5 0.6

0

1

2

2014 2015 2016 2017 2018 2019 2020 2021 2022

Cap

acit

y (M

MT)

China LDPE Capacity Growth

China PE Capacity is expected to grow by 9 MMT in 5 years

Data Source: IHS

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PE: Net Trade Flow

Source: IHS-2.9

-3.7

2018 2023

Africa

-0.9-1.1

2018 2023

Europe

-0.2

2.3

2018 2023

North Asia

-1.6

-3.4

2018 2023

South Asia

13.6

14.0

2018 2023

Middle East

6.4

10.8

2018 2023

North America

-11.7

-15.8

2018 2023

Northeast Asia

-1.8

-2.7

2018 2023

South America

-0.1

0.2

2018 2023

Southeast Asia

Data Source: IHS

• 50 million new homes under “housing for all by 2020”

• 5.5 billion mobile users by 2020

• Diamond quadrilateral – network of high speed trains

• Plans to add 11 LNG terminals over next 7 years

• $150 bn increased infrastructure investment on highways & shipping by 2020

• Thriving organised retail @ 20-25% p.a.

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Rapidly growing economy ~ 7.2% GDP 2018-19 2nd fastest growing services economy

Youngest nation- expected average age of 29 years by 2025

Expected to have largest middle class population by 2027

Low cost and highly skilled manpower- 2nd most English speakers

Triggers fuelling

growth in Indian

Economy

Indian Economy

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Capacity: From 30 KT (in 1978) to 5.2 MMT

(in 2018)

2019Paradip (700KTA)

BCPL

PP Development Story

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Capacity: From 12 KT (in 1959) to 5.7 MMT

(in 2018)

1959

1961

1968

1992

2016

ICI company, Rishra (12 KTA)

Union Carbide, Chembur

Polyolefins India, (50 KTA)

RIL, Nagothane (350 KTA)

• RIL, Hazira (225 KTA)

• RIL, Jamnagar (950 KTA)

• OPAL, Dahej (1060 KTA)

• BCPL, Dibrugarh (220 KTA)

• GAIL, Pata-2 (450 KTA)2010IOCL, Panipat (650 KTA)

1997

RIL, Hazira (225 KTA) 2000GAIL, Auraiya (355 KTA)1999

• RIL, Dahej (180 KTA)• HPL, Haldia (700 KTA)

1990IPCL, Baroda (100 KTA)

2018

PE Development Story

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Demand(MMT) 2012 2017 2022

CAGR (2012-2017)

CAGR (2017-2022)

PP 3 5 7 9% 9%

PE 4 5 8 7% 8%

Total 7 10 15 8% 9%

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5

5

7

8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

PP PE

2012 2017 2022MMT

Indian Polyolefin demand

Robust growth to continue for the next five years

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PP domestic capacity to increase by another 700KTA with upcoming IOCL Paradip plant by Q4 [FY18-19]PE especially LLDPE/LDPE manufacturing capacity has undergone a step increase with J3

MMT MMT

Indian Polyolefin Demand-Supply Balance

2

3

4

5

6

2016 2017 2018 2019 2020

PE

Domestic Supply Demand

3

4

5

6

7

2016 2017 2018 2019 2020

PP

Domestic Supply Demand

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2.22.9

4.4

7.4

8.5

10.3

0

2

4

6

8

10

12

2010 2015 2020

India WorldKg/ Person PP

2.43.2

4.6

10.7

12.1

14.4

0

2

4

6

8

10

12

14

16

2010 2015 2020

India WorldKg/ PersonPE

Indian polymer industry shows a huge potential for growth driven by robust demand drivers

Polymer Per Capita Consumption- India Vs. Global

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Domestic Consumption

Source: IHS

1%

3%

8%

19%

34%

35%

2017

4.8 MMT

2017

5.2 MMT

13%

6%

7%

10%

15%

49%

PP PE

Plastic Waste Management

Recycling

Incineration

Landfilling

Polymer blended bitumen roads

Co processing in cement kilns

Waste Plastic to Oil/Pyrolysis

Rapid population growth, urbanization and industrial growth have led to severe problem of waste generation

The current plastic waste generation in India is around 26000 T/day (~9.5 Million ton per annum) out of which 60% is getting recycled

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Circular Economy Concept

• Create Awareness

• Proper segregation of waste at source

• Organized rag-picker community

• Lower end application use

• Waste to useful products

• Waste to energy

Optimize resource yields by circulating products and components and keeping value at the highest levels possible

A circular economy is a regenerative system inwhich resource input and waste, emission, andenergy leakage are minimized by closing, andnarrowing energy and material loops

Organized Rag-picker community

Few alternate usage

A. Waste Plastics Used to make Roads

B. Waste tetra pack and other single use flexible packing used to make garden benches and chairs

C. Waste HDPE material 3-D printed to make decorative pieces

A B

C

Waste to energy

Plastics have high calorific value and hence can be pyrolysed to produce energy which can further be used by:1. Cement Industry2. Steel Industry3. Glass Industry

Note: Currently Cement industry are not paying any premium for buying waste plastics, to make the circular economy cost protective this has to be changed.

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• Through “Swachh India Abhiyan - Clean India Program” government has put lot of emphasis in cleaning of India. • Media campaign by use of celebrities and prime minister himself

• Emphasis on the segregation major change management effort in educating masses is in progress.

• Appointment of “Swachhta Adhikari” in each ward.

• The performance is observed in real time on Swachhta dashboard.

• Plastic waste management rule 2016 are also published along with Solid waste management rule 2016, • Extended producer responsibility (EPR), where brands are responsible for collection of the waste generated by their products.

• CPHEEO (Central Public Health Engineering and Environmental Organization) manual is also released in 2016• Detail on management of waste, technologies and roles played by each stakeholder, with examples, case studies and best practices on

waste management.

• NTPC -100 waste-to-energy plants, this will help in end of life for plastics going to landfill.

• Pune Zero waste is another key example is creating waste free cities working with municipalities

……This should further increase plastics recycling rate in India

Government Initiatives

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Thank You